Clause 13
Finance Bill
9:45 am
Stewart Hosie (Spokesperson (Economy; Home Affairs; Treasury; Women); Dundee East, Scottish National Party)
Before I speak on new clause 4, it is worth noting the context within which the debate is taking place. When I proposed a similar measure on 6 July 2005, I said that, according to the AA, the price of unleaded petrol had risen to 86p a litre, up 6p in the previous six months. Fuel is now priced at anything from £1.10 to in excess of £1.30 a litre.
I said then that Brent crude had touched $60 a barrel, up from an average price across the piece of $50. In the run-up to the recent Budget, the price was an average of $83.60 a barrel, an increase from the $68 forecast in the pre-Budget report. In the quarter before this year’s Budget, the price of a barrel averaged $94. In four of the five working days up to the Budget, we saw record closing prices for North sea oil, and the Red Book forecast £56 billion of revenue in the next six years, which was up from the previous six-year forecast of £38 billion. Oil has gone from $60 a barrel in 2005 to an annual average, up to the Budget, of $83.60 via a last-quarter score of $94 a barrel. I checked the spot price a couple of days ago: it was $123.97—nearly $124 a barrel. It is in the context of massively rising oil prices and high price spikes for fuel at the pumps that I am proposing the new clause.
The impact on people is also worth noting. When we debated that similar proposal in 2006, the AA estimated that the monthly increase in the cost of fuel for a two-car household had risen by £13.18—a 6p rise on the litre. By April this year, the corresponding rise for a two-car household was £32.97 a month—nearly £33. The measure has been proposed in the knowledge that the Treasury, not content with the normal indexed rises, has proposed in the Budget an additional, above-indexation escalator from 2010.
The new clause would do three things: it would oblige the Chancellor to publish a forecast yield figure at every Budget and pre-Budget for fuel duty and associated VAT for a range of prices up to 50 per cent. above his anticipated yield, and to develop a mechanism by which to use the windfall on VAT gain to offset the duty; and allow the regulator to be removed when the price drops back to the baseline, or when the new yield forecast is made in subsequent Budget and pre-Budget statements. The latter proposal is important because I have been criticised in previous debates that the proposal was for a one-way escalator and that it would not afford the opportunity to return. The proposal makes it clear that the new yield forecast can be set to take in qualitative rises in prices and not simply spikes.
The proposal is partly probing, but it may come back in another form at a later stage in the proceedings. I want to hear what the Government and the Opposition think of the three elements of proposed new subsection (1AB) to the Hydrocarbon Oils Duties Act 1979; namely, that an offset might be introduced universally, that one might be introduced to assist remote rural areas and, in particular, that one might be directed towards the haulage industry, which is of massive concern to me. That is probably why the Road Haulage Association is backing the new clause and calling on MPs from all parties to set aside political considerations and support that or a similar measure.
We will all have had representations from our constituents and from hauliers. We know, certainly in Scotland, that the cost of all goods is driven up as the cost of haulage increases. I know from my part of the country that the competitiveness of Scottish business has been reduced because of increased transportation costs. Even well known companies, such as Ramage, are going into administration, citing, among other things, the cost of fuel as a key factor. When a company such as that, which in parts of the country was as well known as Eddie Stobart—people would look out for those wagons—goes into administration citing fuel costs as a factor in that decision, something is seriously wrong.
I do not want to take up too much more time, but it is important that the Government understand that this is not all someone else’s problem. Of the average £37,000 that it costs each year to provide fuel for a 44-tonne truck, the Government already take £25,000—of course, they take more when the price at the pump rises. Therefore, the Government cannot abdicate responsibility for some of the problems. They will be happy to force a typical 20-vehicle company to generate £30,000 a year more to pay for a 2p rise in duty. They are happy to take the VAT windfall when the price at the pump rises and they are happy to take the £56 billion that it has been forecast will come from higher oil prices over the next six years.
Fundamentally, the new clause says that it is time for the Government to put something back when prices not only bite a little but tip companies over the edge, put too much pressure on remote rural areas and force ordinary families to find hundreds of pounds extra a year simply to do the basics. I cannot put it any better than Geoff Dossetter, the Freight Transport Association’s director of external affairs. He was quoted in the Sunday Herald on 13 April as saying:
“It’s barking mad. We’ve already got the highest diesel taxes in Europe.”
With that, I will conclude. I want to hear not only what the Government have to say but what the other parties have to say, particularly on the possibility of the fuel tax regulator concept being introduced to offer at least some assistance to the road haulage industry.