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[Un-allotted Half Day] — Fuel Costs

Part of Opposition Day – in the House of Commons at 5:35 pm on 7th February 2011.

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Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Treasury) 5:35 pm, 7th February 2011

As I said, I am coming on to the derogation, but it is not my place to express such opinions.

In principle, on paper, the fuel duty stabiliser sounds like a fairly simple, reasonable proposition-as oil prices go up, fuel duty goes down, and as oil prices drop, fuel duty goes up, so the motorist pays more or less the same for fuel and the Exchequer gets more or less the same in revenue. However, economics are not that simple.

The idea of the regulator has been floated for some time. During the debate on the 2008 Finance Bill, the Scottish National party spokesman, the hon. Member for Dundee East, suggested that a statutory instrument should implement an automatic mechanism so that as additional income from VAT receipts came in, it could be used to offset fuel duty in direct proportion. However, the regulator was based on rises in oil prices, not on rises in VAT receipts. It was assumed that one would flow from other-the hon. Gentleman reiterated that assumption today-but that is not necessarily the case, as the Office for Budget Responsibility has said.