Clause 13
Finance Bill
10:00 am
Nick Palmer (PPS (Malcolm Wicks, Minister of State), Department for Business, Enterprise & Regulatory Reform; Broxtowe, Labour)
I have a couple of questions. First, although the hon. Member for Dundee, East has allowed for the possibility of fuel prices falling back to a level originally envisaged, he will be aware that current fuel prices are driven partly by the limited supplies of fossil fuels in the world but also by considerable political instability in countries such as Venezuela, Iraq, Iran and, potentially, Russia, and it is at least possible, and some serious analysts are suggesting, that there will be a substantial fall in fuel prices at some point. We may think that unlikely, but the new clause does not allow for any reaction at that point. It is still a ratchet: if prices go up, the Government are forced in effect to reduce the duty, but if prices go down, the beneficiaries simply pocket the proceeds.
To that extent, the measure seems slightly populist, because if there is a sustained rise in fuel prices, the terms of trade will have moved against Britain and there will be a collective problem for us all. If we attempt to protect only the people immediately affected—for instance, the road haulage industry—we are redistributing the impact of the oil price rise on to everyone else. In particular, I do not think that the hon. Gentleman’s proposal to protect rural areas will work. If garages in certain postcodes were subject to lower duty, there would be substantial fuel smuggling, as we see across the border between Northern Ireland and the Republic of Ireland. It is not possible, within one country or in a remotely open economy, to have selective duty in different areas.
Finally, let us consider the environmental impact of fuel duty. Many of my constituents, like those of the hon. Member for Dundee, East, are worried about the impact of rising fuel prices, but if our reaction to a real world problem with the supply of fossil fuels is always effectively to subsidise prices, in the long run we are avoiding dealing with climate change and the decline in fossil fuels. There is a tendency for all parties to talk the talk on these issues without walking the walk. We need to consider the impact of the crucial decision that is to be made on how world affairs affect the environment in Britain and accept that, sometimes, a change in behaviour is needed on the part of our consumers and our Government.