I beg to move,
That this House
believes that, at a time when the cost of living is rising and our economic recovery is fragile, it cannot be right to increase fuel duty by the planned 3 pence in January 2013;
calls upon the Chancellor of the Exchequer to cancel this rise in fuel duty at least until next April;
and believes that this change could be funded by clamping down on known tax avoidance schemes.
Everyone in the House knows that families are feeling the squeeze, that low and middle-income families are hardest hit, that prices are rising higher than wages, that small businesses are struggling and that the economy is still fragile, all of which makes it exactly the wrong time to hike up fuel costs. At the outset, I urge hon. Members on both sides of the House to join us and back our call to delay the January fuel duty rise. I particularly appeal to hon. Members who have rightly voiced concerns in recent months to do so. Difficult decisions have to be made to get the deficit down—we understand that. Yes, there were times in the past when Labour put up fuel duty, and no one disputes that.
I can tell the hon. Gentleman that on something like 13 occasions the Labour Government decided not to put up fuel duty, to delay an increase or to change it because of economic circumstances, which was absolutely the right thing to do. We looked at the economic circumstances, and made decisions to delay or cancel when that was the right thing to do, including at the height of the economic crisis.
I hope my hon. Friend noted that about a fortnight ago there was an Adjournment debate in the House with cross-party support for a freeze on the increase. Although Conservative Members may go on about the increase under Labour, we must remember that they are in government now and that they could have stopped this 18 months ago.
My hon. Friend makes a good point. It is regrettable that some hon. Members who only a few weeks ago called for the very thing that our motion calls for now seem to have cold feet. Given that the economic recovery is fragile, the Government should back the motion.
What is the total taxation on a litre of petrol, how does it affect the general public, and is it something that should be advertised in every forecourt in the land?
My hon. Friend makes an interesting point, because it is about 81p per litre at the moment. He is absolutely right: when people go to the forecourt to fill up their car, they want to know exactly how much it is going to cost. They do not go to the forecourt and think about what might have been; they think about what the price is in the here and now. Petrol is 15p a litre more than it was at the general election, and it is 5p a litre more than it was in the summer, when the Government last deferred a rise. Let us remember that the Chancellor made that decision after pressure from the Opposition.
May I make a bit more progress, as we want to hear what the Government are doing? Their own figures tell us that the price of petrol is now more than 136p a litre. In my constituency, prices at a rural petrol station at the weekend were 139.9p a litre for petrol, and 144.9p for diesel. Only this morning, I heard a price of 160p a litre in the Scottish highlands.
When Labour was in power, other island MPs and I consistently went to see Labour Ministers to ask for an island fuel duty discount. It was refused. Within a year, this Government introduced that policy. Will the hon. Lady tell us what the Labour party’s policy is on a rural fuel discount?
The hon. Lady said at the outset that this is not the time to put up fuel duty. Will she tell us whether, each and every time Labour put up fuel duty over the past 13 years, it was the right thing to do, or do we have great joy in heaven with the repenting of the Labour hordes this evening?
Once again, I am rather disappointed with the hon. Gentleman’s approach. I should have thought that he, too, would want to be able to go back and tell his constituents that he had supported a motion to ensure that the rise does not go ahead. The tax on a tank of petrol at the general election was £37.60. It has now risen to £40.30, and if the 3p rise goes ahead on
On the day that the International Energy Agency has warned that two thirds of fossil fuels need to remain under the ground if we are to avoid catastrophic climate change, does the hon. Lady not see a contradiction in arguing for lower fuel prices, especially since the cost of motoring has fallen in the past 10 years while the cost of public transport has risen? Would a more consistent position not be to seek to support struggling households directly, using the money—
Order. The hon. Lady is testing the patience of the House. It is unfair. We are going to have to introduce a time limit already. If she wishes to speak, would she please put her name down? She cannot make a speech now. Short interventions are needed on both sides
I gave way because I respect what Caroline Lucas has to say, but I hope she will understand the real pressures on families and the pressures that individuals are facing as they try to get to work and go about their business.
It is not just Labour that is calling for the increase to be postponed. FairFuelUK, backed by the RAC and the Road Haulage Association, among others, has consistently and determinedly campaigned for lower fuel duty.
The public are seldom interested in Opposition day debates, but they are interested in this one. My constituents have contacted me about it. Many organisations have contacted us because they care passionately about the issue. Should the Government not recognise that this is a big worry for all our constituents?
I hope the Government recognise that this is a big worry for constituents. We are all familiar with the e-mail campaigns and the correspondence that we have had through the FairFuelUK campaigns and from our constituents. FairFuelUK has produced a comprehensive report, which I know it has presented to the Chief Secretary to the Treasury. It sets out the impact of retaining the January rise, and gives a stark warning that about 35,000 jobs could be at risk.
No, I want to make a little progress.
The Federation of Small Businesses says that 85% of its members said that their car or van is crucial or very important to their business, and just over half its members said that rising fuel costs were one of the main concerns for their businesses in the third quarter of 2012.
No. I have given way already and I want to make some progress. It is important that people hear why we are proposing the motion tonight.
Almost 20% of FSB members identified fuel costs as a barrier to growth. Not only those organisations but—[Interruption.] Hon. Members on the Government
Benches—those who tend to think they are the champions of industry—might want to listen to the voice of industry. The Petrol Retailers Association has reminded us of the impact of VAT and the impact on the price of fuel if the 3p per litre increase goes ahead in January.
Those are the voices of industry, but it is not just industry that will be affected:
“We must remember that motorists are not a lobby group. They are mums driving to school, children on buses and pensioners hit by inflation. When the cost of road haulage rises, the price of everything else rises too.”—[Hansard, 23 May 2012; Vol. 545, c. 140WH.]
I am genuinely sorry that the hon. Gentleman adopts that tone because I know that he has worked determinedly to raise the issue. I am sure that his constituents will want to know exactly what the Chancellor is going to do. Our shadow Chancellor has said what he thinks, whereas the Chancellor seems to be debating by a nod and a wink, and nothing is determined.
Those on the Government Benches may want to listen to the consumer organisation Which?, which has told us that 85% of people polled recently were worried about the cost of fuel. That is up nine points since the previous poll in July. One in 10 people polled admitted that they had had to dip into savings to meet the costs of motoring. Many of these people rely on their cars to get to work, to get their kids to school, to take up education and training opportunities, or perhaps to care for elderly relatives.
As I said earlier, these are tough economic times and hard-pressed families out there know that only too well. They are the ones who are suffering most from this out-of-touch Government’s failed austerity plan, which has delivered the longest double-dip recession since the second world war—a plan that is failing on the deficit, with borrowing higher so far this year than last.
I will give way in a moment, but it is important that this is heard.
The Prime Minister once promised not to balance the books on the backs of the poor. He also says that we’re all in it together, so perhaps Mr Jones would like to tell me what his constituents think should be done in January. Should the 3p rise be delayed?
I thank the hon. Lady for giving way. She said that we should listen to the voice of industry and of consumer groups. Did the Labour party listen to those groups when it put fuel duty up by 55% during its time in government?
Again, I regret the tone of the hon. Gentleman’s contribution. This is one issue on which we had the opportunity to unite and send a message to constituents, to all those who have contacted us and to businesses that are struggling, that the whole House could come together and agree. It is disappointing that the parties on the Government Benches have not done that.
My constituents and others are disappointed that while the Prime Minister and the Chancellor focus on giving tax cuts to millionaires, millions of families, businesses and pensioners are being forced to pay more. The cuts in child tax credits and child benefit, the hike in VAT and the cuts in age-related personal allowances have hit people hard throughout the country, just at the time when they and the economy need help.
The Leader of the Opposition has called this slow, remorseless squeeze
“a quiet crisis that is unfolding day by day in kitchens and living rooms in every town, village and city up and down this country”.
That is exactly what it is.
I will give way in a moment.
I suspect that I can predict what those on the Government Benches are going to say. They will tell us that we should celebrate the fact that the economy is finally out of a double-dip recession and things are back on track. Perhaps Mr Spencer is, however, going to tell me how many e-mails and letters he has had, asking him to back the 3p cut.
Does the hon. Lady acknowledge that words are cheap and deeds are what count? That is a simple philosophy. Her Government put up the tax and our Government have frozen it. It seems simple to me.
I agree that words are cheap and deeds are more important. That is why every constituent is going to be looking tonight to see which Lobby hon. Members are walking through and whether they back the delay or not.
I want to move on, because it is important that we get to the meat of the debate.
As has been said in earlier discussions on the economy, any recovery we have seen so far is fragile at best. Labour has put forward proposals that we believe the Government should put in place: a jobs plan to boost the economy, including using funds from the 4G mobile auction to build 100,000 affordable homes; a temporary VAT cut, which would cut around 3p off the price of a litre of petrol and give an immediate £450 boost for a couple with children; help for our high streets and pensioners; and a bank bonus tax to fund jobs for young people who are out of work. The Opposition believe that the Chancellor should use his autumn statement to help those on low and middle incomes with the rising cost of living.
I have given way to the hon. Gentleman already and want to make some progress.
We believe that the Chancellor should rethink his plan to give a tax cut to millionaires in April while putting up taxes for pensioners. As the shadow Chancellor announced on Friday, we believe that the Chancellor should cancel the 3p rise in fuel duty planned for January until at least April.
Does the hon. Lady agree that one of the unfairest aspects of the planned duty rise is the disproportionate effect of such taxation on folk in rural areas, as they have no alternative forms of transport and have further to travel?
The hon. Lady makes a valid point. I am certainly well aware of the problems faced by people in rural areas where there might be no alternative. I hope that she will support our motion this evening.
The Chancellor and the Prime Minister might never have had to worry about the cost of filling up their cars, but millions of people across the country worry about that every day, as we are hearing. To be fair, some Government Members recognise that and have been vocal about it, or at least they were until today, when they suddenly appeared to go quiet.
My hon. Friend makes a valid point. We have neighbouring constituencies, so I am certainly aware of the difficulties some of his constituents face in trying to access fuel at an affordable cost. He will also be aware that although there have been some price reductions by the big supermarkets, which can afford to use fuel as a loss leader, the small and independent garages, many of which his constituents rely on, do not have that luxury. Many of those small retailers are under increasing pressure as a result of tighter margins and are having to take smaller deliveries of fuel to ensure that cash flow does not become a problem. Those are often the businesses that serve rural areas. If they cannot continue to operate, customers will face having to travel many more miles just to fill up the tank.
It was only after pressure from Labour and campaigns such as FairFuelUK that the Chancellor decided to delay the last rise until 2013. Indeed, if we look back on what could be called the fastest U-turn in history, we see that he backed down only hours after Labour called for that help for businesses and families. We welcomed his climbdown then, and we and millions of motorists up and down the country would welcome a renewed commitment from the Government.
Does the hon. Lady acknowledge that it was her Government who put in place the fuel duty escalator, which is the whole problem facing British motorists today? Does she accept that?
The hon. Lady must also recognise that it was in her Government’s Budget. What we are asking the Chancellor to do is listen. We have heard a great deal about how he is in listening mode, but I do not know how long he must listen before making the decision. According to the House of Commons Library, the cost of delaying the fuel duty rise again until April 2013 would be around £350 million, and we think that could be paid for through a clampdown on tax avoidance. I am conscious that Mr Redwood wishes to intervene.
I am very grateful. Will the hon. Lady explain which specific tax loopholes Labour would close that the Government are not already closing, and why does Labour not provide any money after April when they would be putting the tax up again?
I absolutely will explain that. We think that there are loopholes that can be closed, and I am sure that the Government will also want to close every possible loophole. For example, there is a growing problem with some employment agencies forcing workers to become employees of umbrella companies. They then falsely inflate the workers’ travel and other expense claims, reducing tax and national insurance and pocketing the avoided tax as profits. Her Majesty’s Revenue and Customs forecast in 2008 that the cost to the Exchequer of that avoidance would be around £650 million by 2012-13. More recent reports have suggested that the current tax loss could be as high as £1 billion. Even if only a proportion of that money was recouped, it could pay for the fuel duty rise to be postponed.
As I said earlier, I know that many Government Members feel strongly about this issue. We have heard over the weekend and today all the talk about the Chancellor being in listening mode, but at the same time the Treasury’s official line is that no decision has been taken. Nods and winks are no good to families struggling in the run-up to Christmas. The approach that says “It will be all right on the night” is no use to the small business trying to balance the books and plan for the first quarter of next year. If the Chancellor has made up his mind to delay the duty rise, his Ministers should say so, and they should say so today. If we do not hear that announcement loud and clear, every hon. Member who wants to see the increase dropped should not only talk the talk tonight, but walk the walk; they should walk into the Lobby with us and vote for the 3p increase to be delayed.
I beg to move an amendment, to leave out from “House”
to the end and add:
“notes that as a result of the action this Government has taken to cut, cancel and delay fuel duty rises families will save around £159 on fuel costs by April 2013;
further notes that under the previous administration’s plans, voted for by the Leader of the Opposition and the Shadow Chancellor, pump prices would be 10 pence higher than they currently are;
also notes that motorists in island communities are benefiting from the fuel duty discount pilot scheme;
recognises that this Government has introduced a number of other measures to support families including a £1,100 increase in the personal income tax allowance from April 2013, three years of council tax freezes and a cap on rail fares;
commends that these measures have been in part affordable because of the Government’s record of success in tackling tax avoidance and evasion which is on track to raise an additional £7 billion per annum by the end of this Parliament;
and welcomes the Government’s commitment to do more to help with the cost of living in the future subject to the constraints of the public finances.”
I see that Cathy Jamieson has been abandoned by her boss—
My boss is in Brussels on Government business. The hon. Lady’s boss is probably too busy cooking lasagne for someone. As usual, he is busy chasing the headlines and has left her to pick up the pieces.
Rising living costs have made life difficult for millions of households. I know that first hand. Like millions of others, I have lived under financial distress, so I know what it is like to worry about paying the bills and living within a tight budget, and the Government know about that, too. Times are tough. We inherited the biggest deficit in the developed world and the largest in our peacetime history, and international commodity prices continue to rise, raising the cost of living. Since May 2010, the price of wheat is up 72% and the price of Brent crude is up 31%. While talking about commodity prices, I note that the price of gold is up 40%. Had the previous Prime Minister, Mr Brown, not recklessly sold off the nation’s gold reserves, our country would be £10 billion richer. That is money we could have used to help hard-working families.
To clear up the mess left by the Labour party, we have had to make tough decisions, but we have prioritised the cost of living wherever we can. We have cut income tax, frozen council tax, capped rail fare increases and, moving on to the Opposition’s motion, we have delayed and cancelled the fuel duty rises that they supported.
The Minister states that the price of wheat has gone up. Bread and butter prices have clearly increased dramatically. Is this not exactly the wrong time for the Government to put 3p on the price of a litre of fuel?
That is exactly why the Government have taken action on the cost of living, which I will move on to shortly. Let me first talk about the Labour party’s record. It will not admit that it delivered the biggest deficit in the developed world. The shadow Chancellor said only three weeks ago that under Labour
“there was not a structural deficit”.
In fact, there was a structural deficit of £71 billion in 2007-08—more than 5% of this country’s GDP. We should thank him. Whenever anyone might need reminding why the Labour party must never be allowed to run this country again, the shadow Chancellor steps up to the plate—and this motion is another reminder.
On tax avoidance, will my hon. Friend confirm that this Government have done far more than Labour ever did to reclaim tax due to the Exchequer, and does he agree that the Opposition should give credit where it is due?
The Minister finds himself in a strange set of circumstances whereby he is having to take the Opposition’s advice to abandon the policy that they pursued in government. What does he think it will be next—returning the top rate of income tax to the 40% that it was for most of their time in office, or perhaps reintroducing the 10p rate?
My hon. Friend is absolutely right to point out that the Opposition are all over the place.
If we had found a way to halt all the rises that Labour had planned, we would have done so, but if we had gone ahead with its plans, fuel duty would have continued to rise. Fuel would be 10p per litre more expensive by now, costing the average Ford Focus driver £159 extra by April 2013. Let us put to bed once and for all the idea that Labour is the party fighting to support people on the cost of living.
I can tell the hon. Gentleman that because of the policies of the Government he supported, there were 12 rises in fuel duty, so it is a lot higher today than it would have been otherwise.
This Government are taking action. Since the coalition came together, our economic plans have won international credibility. We have cut the deficit by a quarter. Because of this, we have secured record low interest rates and opened up Britain for business once again.
The Opposition’s motion has absolutely no credibility given their record in government, and that is why I certainly will not support it. My hon. Friend is right to point out that the Government have done some good things in this respect. May I send him a message from the people of Brigg and
Goole, which is that we welcome what has been done thus far but desperately want this rise to be cancelled or delayed again?
My hon. Friend makes himself absolutely clear. He has been an avid campaigner on this issue, and his point of view is certainly being taken on board.
These low interest rates have helped hard-working families up and down the country with their cost of living. With interest rates low, mortgage bills are also low. If interest rates rose by just 1%, average mortgage bills would increase by almost £1,000 a year.
Who is trying more to help hard-working people with the cost of living—a Government who have frozen council tax for the past three years or a Government who doubled council tax during their term in office?
As my hon. Friend knows, many of my constituents live in sparsely populated rural areas, and the cost of fuel has an immense impact on their family finances, yet they realise that running the country with massive deficits puts their children’s futures at risk and means that money that could have been spent on public services is instead spent as Labour wants—on interest.
There is opportunism not only on fuel duty but on tax avoidance. Under the previous Government, income tax paid by hard-working families in the working nation rose by 81%, but Labour Members let business off the hook, with corporation tax receipts going up by only 6%, because they were so obsessed with the prawn cocktail circuit.
We all know that the Government inherited a mess, but does the Minister accept that the increase in fuel duty will harm recovery by holding back businesses and households?
I think that the hon. Lady would welcome the action that the Government have already taken on the cost of living and on fuel duty.
This Government have also been working hard to get people into work. There are more people in employment than ever before. Unlike Labour, we have no problem in welcoming the fact that the private sector has created over 1 million jobs over the past two years. That equates to more net new jobs created in the private sector in two years than were created in 10 years under Labour. With this support in place, we have strained every sinew to cut taxes where we can to ease the cost of living. We have cut fuel duty—a cut that Labour opposed—and frozen it for nearly two years. Fuel is now 10p cheaper than it would have been under Labour, helping family budgets. We have cut income tax for 25 million people and lifted 2 million people out of income tax altogether. We have frozen council tax for two years and announced that we will do it again next year. This Government have saved families £220 per annum on the average council tax bill. We have capped increases in rail fares so that commuters do not face substantially above-inflation rises.
If the hon. Lady is referring to the previous Budget, the changes we made to the top tax rate were covered more than six times by other changes that we announced. This Government want to create a tax system that is both efficient and helps to create jobs.
My hon. Friend makes a good point and shows again where this Government are taking action to balance the nation’s finances.
We are doing a lot more to try to help those in need. We are investing more than £4.5 billion over this Parliament in affordable housing, delivering 170,000 new homes. We have replaced Labour's ineffective stamp duty relief with schemes that work, such as Firstbuy and NewBuy, helping more than 25,000 first-time buyers to find their way on to the first rung of the housing ladder.
Let us look at Labour's claims on tax avoidance. It wants us to clamp down on a scheme that uses a specific tax relief around travel expenses—a relief about which in 2008 the Labour Government, when presented with the facts, chose to do nothing.
I will in a moment.
The Labour Government, when presented with the facts about this tax relief in 2008, chose to do nothing. They declared:
“The Government has considered—
The hon. Lady does not want me to tell the House what the Labour Government did when they looked at this tax loophole. They declared:
“The Government has considered all the consultation responses and believes that on balance the negative effects of changing existing legislation outweigh the benefits"
To address just this issue, this Government have already strengthened HMRC's enforcement and compliance teams, and protected tens of millions of pounds of revenue. So the nub of today's debate is a call to clamp down on avoidance of a relief that the Opposition declared they could do nothing about, to pay for a cut in fuel duty that they supported. Mr Deputy Speaker, you couldn't make it up.
It would be great if the Minister spoke to the fuel duty motion—[ Interruption. ] The fuel duty part of the motion. He talks about tax avoidance. Many of my constituents used to work at HMRC—they do not any more because his Government got rid of them. How can he be serious about tax avoidance when he has not provided the new inspectors he promised and has cut some of the staff who were there when the Government took office?
The motion mentions tax avoidance—he really should read his own party’s motion. The number of HMRC employees went down from 96,000 to 66,000 under his Government.
Labour Members had 13 years to clamp down more widely on tax avoidance. They had 13 years to do what they are calling for today. Did they take that chance? No. There were 13 years of inaction, and a consultation gathering dust in the Treasury archives. Even then, their figures simply do not add up. They claim that clamping down on this tax relief would bring in £650 million, but figures released while they were in power show it would bring in significantly less. If they ever want to regain credibility on the economy, they need to apologise for the mess in which they left the economy and learn to stop making irresponsible, unfunded promises.
Only the deluded or those who want to avoid tax will oppose the closing of tax loopholes. Many people have criticised some companies for avoiding tax, but a company called Stemcor pays only £163,000 from the £65 million of profits it makes each year—about 0.1% of its revenues. If companies are to be criticised, should not Stemcor be criticised?
I thank my hon. Friend for that point. It would not be appropriate for me to talk about any individual company, but he makes a good point. Any company that is engaged in aggressive tax avoidance needs to explain itself.
Tax avoidance ran rife under Labour. We have taken action. We are investing £900 million to tackle tax avoidance and evasion, which will deliver £7 billion a year by 2014. We have already signed a groundbreaking agreement with Switzerland to make it much more difficult to evade tax. In March this year, HMRC closed a business property loss scheme within a week of its disclosure. At the G20, the Chancellor and his German counterpart announced concerted co-operation to close gaps in international standards and to crack down on international tax avoidance. Labour's former City Minister, Lord Myners, was on the radio only this morning welcoming this progress.
Underpinning all this progress, we are introducing a general anti-abuse rule so that no one can follow the letter of the law but abuse the spirit and get away with it—something else on which the Labour party never delivered. This is what real action on tax avoidance looks like.
This Government do not shy away from making tough decisions. We are getting on with cleaning up the mess left behind by the previous Government, and we are doing everything we can to help hard-working families with the cost of living and putting money back into their pockets. Our action on fuel duty is a part of this. Fuel duty is currently 20% lower in real terms compared with its peak in March 2000, and 7% lower compared with May 2010. If we had continued the policies of the previous Government, pump prices would, quite simply, be higher—fuel would be 10p more expensive per litre. I know that some hon. Members will call for a further freeze in fuel duty today. I can assure them that the Government understand the financial pressures that hard-working families are facing. Subject to the constraints of the public finances, this Government are determined to keep helping families with the cost of living.
Order. I remind Members that the time limit on speeches is seven minutes.
I am disappointed by the Minister’s speech—I have heard it several times before. Whenever he addresses the House he uses the same argument: the previous Government got us into a mess. Today, my constituents are suffering from high petrol and diesel prices, which is why the motion, which I shall support, was tabled.
I will in a moment, but given the time limit I do want to make some progress.
I want to raise three issues, the first of which is the impact of fuel duty on businesses, especially those in peripheral areas of the United Kingdom. The Government also chose to impose a VAT increase, despite the Prime Minister having told the country before the election that they had no intention of doing so. Every time constituents throughout the country put petrol or diesel in their cars they pay an extra 3p per litre because of the tax introduced by this Chancellor of the Exchequer.
Scottish National party Members always use that line on fuel duty, and I am not going to waste my time on it—[ Interruption. ] If the hon. Gentleman had checked the record, he would know that I have been consistent on fuel duty. I have followed SNP Members through the Lobby on that. Previous Labour Chancellors froze the duty following pressure from people. That is on the record. We can play games about previous Governments, but the serious issue is the cost—
No. I want to make progress. The serious problem is that our constituents are paying 15p per litre more for petrol under this Government than they paid under the previous Government. Government Members can use nonsense hypotheticals, and say, “It would be 10p more expensive under a Labour Government,” but the fuel escalator was introduced by the Major Government. We could use the same argument, and say, “Had we stuck to that, fuel would by so many pence more expensive.” The reality is that it is 15% more expensive today.
I will not give way—I want to make progress.
VAT is hurting families and businesses. Hauliers and small businesses in my constituency are paying extra fuel duty and VAT on their fuel. The impact is on goods—[ Interruption. ] The Lord Commissioner of Her Majesty's Treasury, the hon. Member for Scarborough and Whitby (Mr Goodwill), says from a sedentary position that they get the money back, but he should listen to businesses. They tell me that fuel duty and VAT impacts on their businesses. Are they wrong? He needs to listen to businesses rather than make silly party political points in the Chamber. That is the reality of the situation: they pay more for fuel.
There is a double whammy because, as the Minister said, businesses also pay more for raw materials. They are being badly hurt. The debate should concentrate on what our constituents are telling us.
In Northern Ireland, 25% of every worker’s wage is spent on fuel getting to and from work. Another 10% is spent on heating oil. Does the hon. Gentleman believe that the VAT increase should not go ahead for that reason, and that concessions should be made for people in Northern Ireland, where the price of fuel is higher than anywhere else in the UK?
The motion calls for a freeze on duty, but Labour introduced a previous debate on temporarily cutting VAT to help hard-working businesses and people across the country. Businesses are being hurt.
We rightly say that road transport is hit hard, but ferry companies—this is a serious point that nobody raises—must, because of the high prices, put fares up and cut back on the time their service takes so they can cut fuel costs. The problems that British businesses face are real. In my part of the world, the extra fuel duties mean problems getting goods to market and getting people to the workplace. This is a real issue for real people. I hope hon. Members remember that tonight.
Jim Shannon mentioned periphery areas. Northern Ireland has the highest fuel duty in the UK, but it is closely followed by periphery areas of Wales. Guto Bebb, who is not in his place, made a political point about council tax in Wales. The reality is that the Government cut revenue and capital spend in Wales, so those authorities have to make their decisions, but they are not responsible for fuel tax. Fuel tax lies at the door of the Government. Incumbents have the opportunity to increase fuel duty when they believe that is necessary and to reduce it when it hurts business and our constituents. Now is the time for this Government to think seriously about that.
The Minister is listening—he says the Government always listen and that they are in listening mode—but he needs to take action, and to tell businesses tonight whether or not he intends do so. It is no use the Chancellor and Government Back Benchers getting together, cloak and dagger, to say that the motion is opportunism. The reality is that many of those same Back Benchers have introduced the same motion and supported it in a Back-Bench debate. We need consistency from Government Members, because they know their constituents are feeling the pinch.
The hon. Gentleman makes a strong speech. He has shown personal consistency, but it is reasonable for Government Members to say that many of his colleagues show anything but. If he wants this duty freeze, what does he want to do to raise the money? Can tax loopholes instantly provide the money, does he want a cut in Government spending, or is he, like most of his colleagues, in favour of ever more borrowing?
FairFuelUK’s argument is that money is lost to the Exchequer because of the serious impact of fuel duty on businesses. If we had growth in our economy, which all hon. Members want, the Exchequer would get more money, and businesses would be able to reinvest. That is one way. I would like the 4G windfall money to be used to help to alleviate small businesses—[ Interruption. ] The hon. Member for Scarborough and Whitby says the Opposition have spent the money, but that is not true—we are not sure how much it will be or how it will be spent. I should also point out to him that the Opposition do not spend the money; the Treasury makes those decisions. It is about time the Government took responsibility for their actions rather than making knockabout comments.
My final remark is about the ordinary family. In my part of the UK and many periphery areas, motorists do not go on luxury outings. Motorists are families taking their children to school and students getting to college and university. People in remote areas need their cars for the weekly shop because public transport is not available. It is great when people can take alternative transport, such as in central London and large cities, but that is not a choice in periphery and remote areas.
There is a choice tonight: hon. Members can vote for the motion or the amendment. They should vote for what their constituents want, and do what Members on both sides of the House have been asked to do. They should put loud and clear pressure on the Chancellor. If he is in listening mode, he will listen to the will of the House and suspend the 3p tax increase that he proposes to introduce in January, so that families can have a bit of a break and go into Christmas and the new year in the knowledge that they will have more money to spend, and so that businesses have more money to reinvest.
Albert Owen has shown the merit of consistency over many years, but that is not a quality shared by the first two signatories to the Opposition motion—the Leader of the Opposition and Ed Balls—who, in proposing the motion, have shown that they are a very long way from being ready to form a Government. As my hon. Friend the Minister has shown so eloquently, the motion is riddled with contradictions and hypocritical, and shows that the Opposition do not understand in any way the appalling legacy with which the coalition Government have been charged with dealing by the British people.
I hope Opposition Members, and especially Opposition Front Benchers, have read the motion—at least one of them will be a little embarrassed by it—which states:
“That this House believes that, at a time when the cost of living is rising and our economic recovery is fragile”.
At least we have a begrudging admission from them that there is an economic recovery. That there is a recovery has taken a while to come out.
Before the hon. Gentleman answers that question, I remind hon. Members that, if they intervene, and if they drop down the speaking list, they will understand why—they keep adding minutes to the debate.
I thank the hon. Lady for her comment, because it helps me to remind her that, when Britain was in recession at the back end of 2008, fuel duty went up by 2p. When it was in recession at the beginning of 2009, fuel duty went up by 2p. When it was in recession in September 2009, fuel duty went up by 2p. When there was a faltering recovery—which was probably credit fuelled—in March 2010, on the eve of an election, at the point when the figures showed that the economy was recovering, fuel duty went up by 1p. So much for the correlation between recession and fuel duty increases.
At least FairFuelUK sticks to its position. My point is that Labour put up fuel duty in government when the country was in a deep recession and increased it by marginally less when the country was showing signs of a credit-fuelled recovery—coincidentally, on the eve of an election—yet now, when there has been 1% growth in GDP, Labour objects to an increase in fuel duty that was programmed at that point by the previous Government. What Labour lacks in consistency it also lacks in remembrance of what it did previously, faced with the worst recession this country has ever suffered, when the Labour Government put duel duty up by 6p over 18 months.
I shall turn to disposable incomes and the cost of living in the round now, as it is mentioned in the motion. Of course times are incredibly difficult, for my constituents and most of our constituents. The cost of living and disposable incomes have come under considerable pressure, but a large part of that has resulted from the need to balance the books. We were left the largest deficit in peacetime history, which—as the Minister reminded us—we now understand was £71 billion before the recession came. Yet the inheritance was not just one of deficit in 2008, but one where real wages fell in the period from 2003 to 2008, when GDP figures showed at least nominal growth—of 11% perhaps —in the economy. Real wages for anyone who happened to be a middle-income earner stagnated in that period, while real wages for those in the bottom quartile fell by 0.4%. Therefore, when the country was growing under the previous Administration, incomes were falling for the vast majority of people in real terms.
The reason we now have to take painful steps to rebalance the economy is to address the fundamental problems that the previous Government not only failed to address, but in many instances laid the foundations for. This country cannot survive on the economic model built by a previous Chancellor of the Exchequer and leader of this nation. It was that model which broke so spectacularly in 2008, and it is this model which we are trying, little by little, to repair. The least the Opposition could do is recognise the problems that they gave this new coalition Government to sort out, yet we have before us a motion that is a consummate exploration of inconsistency and hypocrisy. What I would say to those on the Government Front Bench is this: do not listen to the Opposition when they give lectures on tax avoidance or fuel duty, because they have none to give.
I suggest that we have a system that will not work in the long term. The problem with fuel taxation is that—as the Office for Budget Responsibility has probably underestimated—it will cost the Exchequer some £13 billion by 2026. Fuel taxation is a system that has been modified so many times to allow for low-emission vehicles, heavy goods vehicles and rural drivers that it is becoming a sieve for the Exchequer, and it needs fundamental reform. I would push Ministers to think seriously again about road tolling, so that we can stop this silly exercise, which we now have year in, year out, of deciding whether to put up taxes—decisions that are often completely countermanded the next day or within a week by volatile rises and drops in the price of oil—and moreover allow ourselves to manage the vast assets that we have in the road infrastructure in this country. At the moment, there is no demand management and complete resource misallocation in maintenance and investment, all of which could be remedied by a sensible road tolling system, which would help us to target help specifically at those constituents whom many in this Chamber will talk about this evening.
We have before us an inconsistent and hypocritical motion—a motion that tells us nothing, apart from the fact that Her Majesty’s Opposition are a long way from forming Her Majesty’s Government. I therefore commend the amendment, which my hon. Friend the Economic Secretary has moved, and, in so doing, hope that he will look again at road tolling, so that we can stop this perennial debate once and for all.
It is a pleasure to follow Ben Gummer. He will be glad to know that I intend not to lecture, but to plead for hard-pressed motorists up and down the country, who are seeing fuel prices devastating both the private motorist and businesses.
In Inverclyde, my constituents are forced into choosing between paying more for fuel and doing without other essentials, or digging into their savings to meet the ever-increasing cost of motoring. A car is an absolute necessity for many of my constituents. I have a varied constituency. Many people live in outlaying areas some distance from the main bus and train links, so they are required to use their cars daily, with the increase in rail and bus fares giving them little consolation.
The weekly cost of filling up the fuel tank is for ever growing. The additional financial outlay to bring that fuel gauge to where it once used to reach means people digging deep into their resources. That is on top of road tax and insurance costs, not to mention maintenance against wear and tear, all of which adds to the joys of motoring. In Inverclyde, the price of a litre of fuel averages around £1.39 a litre. The two large supermarket petrol stations in my constituency kindly keep close to each other’s price, thus making it relatively easy to work out the average, although I do one supermarket an injustice. Morrisons in Inverclyde has decided to offer 15p off a litre for those spending £60 or more in the shop—and yes, Mr Deputy Speaker, it’s beginning to look a lot like Christmas.
This House has been united before on fuel prices, calling on the Government to drop the intended fuel escalator rise planned for earlier this year. I pay tribute to Robert Halfon for securing that earlier debate. We on the Opposition Benches believe that a freeze in fuel duty will stimulate growth and create jobs. Fuel duty is having a huge effect on the UK’s road freight industry. The 3p increase in fuel duty planned for January will add £15 a week to the running cost of a vehicle. A fleet of 50 vehicles will have to recover £37,000 a year. The recovery of such costs simply drives up inflation in the supply chain and makes our haulage industry uncompetitive compared with its foreign rivals, who pay much less for their fuel. Indeed, foreign trucks enter the UK full of cheaper fuel—they have enough to work in the UK for a full week. Because they pay no fuel duty here, they can easily undercut our UK hauliers, thereby driving them out of business and creating unemployment in the UK.
May I take up the hon. Gentleman’s point about drivers from other jurisdictions? Does he agree that the Treasury is actually losing money because of the duty increase? Drivers in Northern Ireland, particularly haulage drivers, cross the border to the Irish Republic to avail themselves of cheaper fuel. Tens of thousands of litres of fuel per day have been purchased in the Republic rather than in Northern Ireland, and duty has been lost to the Treasury as a result.
I entirely agree with the hon. Gentleman. Moreover, I can tell the House that 30% of lorries carrying goods across the border from Scotland to the south-east of the UK are not from this country.
I hope that Members on both sides of the House will be able to unite again in calling on the Government not to apply the 3p increase in January and to give the hard-pressed motorist a better start to the new year. If the Government really want to enter into the festive spirit, the Chancellor may wish to drop the VAT increase on fuel, thus taking yet another 3p off the price at the pump.
The Opposition are right to highlight the issue of the cost of living, and it is timely that we are having a debate about the pressures on it. It is particularly timely that we are having a debate about the pressures that the outgoing Labour Government imposed on the cost of living, which still remain. I am thinking of the hidden increases in petrol duty, and all the other measures that they left in place or that were needed if we were to try to combat the deficit.
There is no doubt that the squeeze on people’s real living standards has been very severe in the last four years. It was most severe under Labour during its slump, but it has continued under the coalition Government. One of the reasons for the intensity of that squeeze on real incomes is the fact that price inflation has remained obstinately high, partly as a result of indirect taxation and partly, as the Minister said, as a result of world pressures on commodity markets.
I find myself unable to support the motion, which may come as no surprise to any Member on either side of the House. I consider it to be defective in two important ways. First, I do not think that a temporary three-month freeze will solve the problem. A double whammy in April, which is what Labour proposes, could be even worse, because people will not have become used to the rising fuel price that was inherent in the Labour plans.
The right hon. Gentleman suggests that three months do not constitute a long period, but they will be three months of cold weather, during which people will be having to cope with an increase of up to 11% in their energy bills. The three-month freeze would make a difference.
I am all in favour of lowering energy bills, although that is probably a topic for another day and another debate. I have made many suggestions to the Government, all of which I think Labour would find unpalatable. I have, for instance, suggested possible methods of making gas much cheaper, thus reducing prices for all our constituents and affecting real incomes in a way that would please me, but is not often favoured by my party.
I think that the first part of the motion is flawed because what it proposes would not solve the underlying problem, namely, the tax increases left by the outgoing Government, but I am not very happy with the second part either. The Minister said that he did not think the Opposition had done their sums properly before proposing the measure to deal with tax avoidance, which they say would pay for the temporary lower duty rate. It was interesting to hear from him that the Labour Government had considered a scheme relating to travel costs, but had decided that it would be unwise to pursue it. We do not know whether they made that decision because of the impact that it would have on people or because it would not bring in enough revenue, but it appears from what the Minister said that there was an issue involving the amount of revenue that it would raise. For those two reasons—it would not solve the duty problem, and the numbers do not add up—I think that it would be unwise for the House to support the motion.
As for the coalition Government’s amendment, I find myself particularly in agreement with the final words, in which we are asked to welcome
“the Government’s commitment to do more to help with the cost of living in future”.
I was interested to hear the Minister not only say that he understood the points that many of my right hon. and hon. Friends had been making about the level of fuel duties, but imply that action might be forthcoming in the autumn statement and the subsequent Budget statement to tackle that or related problems. I shall be happy if the Government tackle the over-burden of taxation in a variety of ways. I do not think that we need be too prescriptive tonight. We know that an autumn statement is coming up, and we know that there will be a Budget statement after that. However, I want to address my few remarks in this short debate to the issue of what the commitment to do more to help people in the future might amount to in those two important statements of Government policy.
The first point that I hope the Government will grasp is that this country’s problem is not that it is undertaxed. If we look at the budgets and the state of the national finances, we see that there is every sign that successive Governments have tried to increase the tax burden substantially to keep pace with accelerating current public spending. I think that we have now reached the point of no return—the point of saturation. The high rate of income tax introduced by Labour has led to a big fall in income tax receipts at the top level, which is not very surprising—and which, of course, is of no interest to Labour Members. They had their little jibe about millionaires, but they should be asking themselves what tax rate will cause rich people to make the maximum contribution to filling the massive financial hole in which we find ourselves.
We are well above that rate now, as the figures clearly indicate. I think that the Government will find that their higher rate of capital gains tax also collects rather less revenue than before, or than they would like, and that fuel duties, while probably still contributing some increment to taxation, are not creating as big an increment as they would like either, as people simply cannot afford all the fuel that they used to buy because the duties are so high.
We know that more than 60% of the pump price—and the price of petrol and diesel in this country is currently very high—goes, in one form or another, to the UK Government. Of course, part of the rest of the price goes in taxes to other Governments so that they can produce the fuel in the first place. A massive amount of tax is being taken by the British Government directly, along with the 60%-plus that is taken by them indirectly through the tax on oil companies, and by foreign Governments in their taxation on the oil. The motorist is seen as an easy target for huge amounts of tax in an attempt to meet the bills. I hope that, when considering ways of easing the cost of living, the Government will bear in mind that motorists and business drivers—people who are trying to power the economic recovery—are incurring very large bills through this particular tax.
I think that all Members agree with two propositions about the economy. First, we would like it to grow faster, and secondly we would like to make big cuts in public spending by getting people back to work, so that they can earn more in jobs than they can receive in out-of-work benefits. Those are the aims that the Government must pursue. They have told us that they wish to make work more worth while. It is now clear that the economy has had a good job generation capability in the private sector over the last couple of years or so, and that is very welcome. However, we now need to ensure that we can reduce public spending by getting many more people into jobs, so that they require less benefit support, and we need to do that partly by cutting tax rates, so that we can collect more revenue in a friendlier way.
There is no doubt that we have tax saturation, and the Government need to take that on board for the purposes of the autumn statement and the Budget. We should reject the rather foolish motion, which was never going to ensnare many Conservatives—Labour will have to get better at ensnaring Conservatives, if that is its game—and support, and ensure that the Government deliver on, their proposal to do more about the cost of living, because that is a very real issue which worries many of our constituents.
I was intrigued by the Economic Secretary’s arguments when he moved the amendment. He is no longer in his place, but wherever he is at the moment, I hope he can afford enough fuel to return to planet Earth, as that was not a place he was able to inhabit much during his contribution. He spoke of the fanfare of international approval for the Chancellor’s policies, yet the OECD says that this year demand in our country will be one tenth of that in the United States and in the lowest fifth among EU countries. He said this Government dealt in costed spending commitments, from the very Dispatch Box where a few weeks ago the Prime Minister caused chaos in the energy industry by saying every consumer would be on the lowest possible tariff. The Economic Secretary also boasted about taking action on high commodity prices on behalf of a Government who are blocking the enactment of a global Dodd-Frank Bill in line with the successful approach in the United States.
Last week’s election in the United States showed that for voters both across the Atlantic and in the United Kingdom the key issue is living standards. During the longest journey out of an economic slump in Britain for 140 years, living standards have declined at a more prolific rate than during the recessions presided over by the Conservative party in the 1980s and 1990s. As last month’s Office for National Statistics study of well-being showed, on the net national incomes measure, incomes in the second quarter of 2012 were 13.2% lower than before the start of the great recession in 2008. We should be under no illusion: a real economic recovery for millions of lower and middle-income people in this country will not happen until these trends show signs of being reversed.
Tax credits helped to sustain family incomes in that period, but that is precisely the part of the tax and benefit system that is under such great assault from the Government the right hon. Gentleman supports.
We need a long-term strategy to tackle declining living standards, but there are short-term measures we can take now that will help ordinary families. We can have a cut in VAT and not proceed with the 3p rise in fuel duty next January. Both those measures would help to restore growth to an economy that has been starved of it for a year, and which is smaller now than at the time of the Chancellor’s comprehensive spending review of October 2010.
Despite a decrease in the headline consumer prices index inflation rate from 5.2% to 2.2% since last October, costs of basic goods such as electricity and food are going up. Average electricity bills are up by £200 since the coalition took office, taking the average bill to £1,310 a year. Costs for childminders for the over-2s in Scotland have risen at nearly twice the CPI inflation rate this year. Living costs are, therefore, soaring for millions of people.
I entirely agree. Most of the jobs that have been created over the last couple of years have been part-time, insecure, low-hours posts. We have soaring under-employment in our country, with as many as 3.3 million people unable to secure sufficient working hours to make work pay. Nothing in the amendment would deal with that trend.
Combined with a VAT rise under this Government, fuel duty rises are particularly regressive. In 2009-10 the poorest quintile paid 3.5% of their disposable income in fuel duty, compared with just 1.8% paid by the top quintile. Overall, in the first year of this Government indirect taxes took 31% of the disposable income of people in the lowest fifth of earners, compared with just 13% among the wealthiest fifth of earners, and that was an increase from the previous fiscal year. According to the latest ONS study of factors affecting the retail prices index and CPI inflation measures, two of the major factors driving upward pressures were the price of clothing and footwear, which rose by 4.7% between August and September this year, and the rising cost of motor fuel, with petrol up by 3.9p per litre and diesel up by 3.5p per litre, compared with falls of 0.3p per litre in the previous year. These changes contributed 0.12% to the shift in the CPI inflation rate. In the year to this September, motor fuel costs alone rose by 2.8%. The case for action is therefore clear.
All these trends must be considered in the context of our low growth. The International Monetary Fund recently downgraded its estimate for UK GDP by 0.6% for this year and by a further 0.3% for next year. That is a crushing verdict, showing that the Government’s policies have sucked even more demand from the economy—as much as an additional £76 billion given the new evidence of the destructive multiplier effects of the Chancellor’s austerity measures. As the National Institute of Economic and Social Research has established, implementing the Government’s preferred rise in fuel duty in January would further weaken growth by 0.1% of GDP next year and keep unemployment higher than it needs to be some 48 months since the downturn began.
That is why I hope Members across the House will tonight take this opportunity to release some of the pressures ordinary households and businesses are facing by voting to postpone any rise in fuel duty until at least April.
The hon. Gentleman referred only to postponing the fuel duty increase. I want to put it on record that I think the Government should cancel the increase, and I hope they will do so. Why is the hon. Gentleman only in favour of postponing it? Why not cancel it?
If the hon. Gentleman has the courage of the convictions he has just expressed, he should join us in the Lobby tonight. That will be the evidence his constituents will be looking for tomorrow morning.
On incomes, millions of ordinary people are under huge pressure because of the collapse in real wages, which has hit particularly hard since the onset of the current recession.
I am running out of time, and I am sure the hon. Gentleman will have a chance to make his own speech.
Since 2007, real wages have declined by about 4% for the vast majority of ordinary people, damaging their spending power and weakening prospects for a consumer-led economic recovery. In my constituency, almost three in 10 workers, including half of all the 10,000 part-time workers, earn less than the living wage of £7.45 an hour. The increases in fuel duty have hit them especially hard. As the Resolution Foundation’s recent Commission on Living Standards report established, just 12p in every £1 of growth generated in Britain finds its way into the pay packets of workers in the lower half of the income scale. They need help on fuel costs tonight.
Britain stands at a crossroads. Without a change in policy, people will be no better off in 2020 than they were in 2001, but with the right kind of reforms on pay, tax and benefits, that can be reversed and we can see the gap between rich and poor falling once again. Tonight we can make our contribution to supporting growth and improving the living standards of our constituents over the next few months, by rejecting the Government amendment and boosting much needed job creation by cutting fuel duty.
I believe that, as has been said, fuel duty has become a toxic tax, and that the public have just had enough. I also believe that the Government are listening, and that that is shown by their amendment, as highlighted by my right hon. Friend Mr Redwood. I am disappointed with Labour’s smokescreen. This debate is really about hiding the record of the shadow Chancellor and many years of putting up fuel duty. I have to say to the hon. Member for Kilmarnock and Loudoun
(Cathy Jamieson) that when I was campaigning hard last year, organising and working hard with FairFuelUK to get the Government to cut fuel duty, the Government cut fuel duty in the 2011 Budget but the hon. Lady, the shadow Chancellor and their party voted to keep fuel duty up, so let us have no discussion about who is being opportunistic. I am disappointed that the Labour party has chosen to conduct the debate in this way.
The heart of the debate should be the figures published by the Office for National Statistics almost a year ago. Its data proved that fuel duty is regressive and hits poorest Brits the hardest. It is with that fact in mind that we should consider the recent history, or at least the past five years, of the debate in the House on petrol taxes. In 2007, the shadow Chancellor said:
“In this Budget, we have set out further actions to advance the environment agenda, including…a fuel duty increase of more than inflation”,
and that that
“demonstrates the Government’s commitment to tackling climate change”.—[Hansard, 26 March 2007; Vol. 458, c. 1265.]
I think that that sums up the shadow Chancellor’s principles on the issue. I have to say that he makes the Vicar of Bray look like Gandhi. In reality, the shadow Chancellor’s petrol tax had very little to do with climate change, because families could not change their behaviour to respond to it. Like scrapping the 10p rate, it was a tax on the poor.
That is why I am sceptical when the Opposition motion makes much of the small delays that Labour has sometimes applied to its increases in fuel duty. If one looks at the substance of the Budgets of 2009 and 2010, one sees that it programmed in massive fuel hikes for 2010, 2011, 2012 and 2013. That is what we are dealing with today, and why I have campaigned, with many of my colleagues, to cut the cost of fuel duty. The argument is therefore not about whether we believe that the fuel duty rise should not go ahead—I passionately believe that—but about tactics. It is sensible and right to wait for the autumn statement. Given the Government’s record—they cut fuel duty last year and have stopped two planned fuel duty rises—I believe it is right to wait for the autumn statement.
The hon. Gentleman has been consistent on this issue. He has also been campaigning hard for transparency on fuel duty matters. On that theme, will he tell the House what discussions he has had with the Chancellor? Which report in the newspapers is right: that the 3p rise will not go ahead and there will be a cut, or that there will be a 2p increase in the autumn statement?
Unfortunately, I am just a brand-new MP and I do not have the luxury of having discussions with the Chancellor. I have no idea what is in his lunchbox, but I do know that the Government have a record of cutting fuel duty. That is something that I am proud of and to which I can give strong support.
I am hugely grateful to my hon. Friend and, I have to say, to many colleagues in this House, some of whom are on the Opposition Benches. My hon. Friend Martin Vickers has done a huge amount of work behind the scenes, as have many other colleagues. We will have to wait and see what the Government say in the autumn statement, but I am happy to support them because I believe that they are in serious listening mode.
I have three concerns about the Labour motion. First, it is a non-binding motion; it is just gesture politics. My constituents care about the price of petrol, not the politics. Secondly, the only way that we can stop the petrol tax is through the autumn statement on
Thirdly, we need a long-term settlement for cheaper petrol. My right hon. Friend the Member for Wokingham is exactly right. The motion proposes a three-month oil rush, which would lead to motorists being hammered with a 7p tax rise in April 2013. The only way to get the long-term settlement is to work constructively with the Government and look at reform and how we can permanently lower fuel duty.
I may if I have time, but I will continue for the moment.
I believe that the Government are in strong listening mode, and I would not go into their Lobby tonight if I did not believe that to be the case. If we look at the Treasury amendment carefully, we see that it does not rule out stopping the planned rise in January. That is a significant move from a few months ago, when the Government said that the rise would go ahead. As I said, the Treasury team have done more to cut fuel prices than Labour did in a decade. We do not have to work at Bletchley Park to read the signals the Treasury is sending about helping with the cost of living—it is written in black and white.
I will continue to ask the Government to lower fuel duty, but I want to end where I started: this is a matter of social justice. I have stuck my head above the parapet and tabled several motions urging the Government to cut fuel duty. Inevitably, the focus in the media today has been on the economics, but this is about social justice. The average person in Harlow spends £1,700 a year filling up the family car—one tenth of their income. In essence, those families are facing fuel poverty. According to data published last year, three quarters of bankruptcies in the transport sector were the result of fuel costs. High fuel prices are adding to Britain’s dole queues. Furthermore, as the AA shows, families are choosing between buying food and filling up at the pumps.
I urge the Chancellor and the Treasury to listen to the thousands of Harlow residents who have written to me, and take action. Given everything the Treasury team have done in the past two years to cut fuel duty and given that the Chancellor’s amendment leaves the door open to cuts in fuel duty, we should at least wait for the autumn statement before casting judgment. That is why I will be proud to vote with the Government tonight, and I urge the House to vote for the amendment. I would not support the Government if I did not believe they had genuinely taken this on board. I hope they do not let us down.
We have heard many high-quality speeches tonight, including a powerful argument from my hon. Friend Cathy Jamieson and from Robert Halfon, who made a genuine plea—I think—to the Chancellor at the end of his speech, urging him to listen carefully.
The hon. Gentleman is absolutely right about the social issues around the fuel price increase, but it is not just the fuel increase that is causing problems. The cost of living has risen across the country, and these higher costs are taking particular hold in the south-west and my constituency. Average wages are rising nowhere close to inflation, and hard-working families are finding it harder to make ends meet. And this at a time when the south-west has been dealt another blow from this out-of-touch Government, who have allowed 20 NHS trusts to create a pay cartel in order to slash wages for NHS workers in Plymouth and across the region.
Wages in the south-west are already among the lowest in the country, with more than one in five employees—430,000 working people—earning less than the living wage. With prices for almost all commodities rising, in a recent survey more than 40% of workers in the region said that their finances were worse off now than just a month ago—and fuel has clearly been a major part of both the increase in the cost of living and their perception of how hard things are getting.
Families in the south-west have experienced a double burden in terms of wages and the cost of utilities. Water charges in the south-west are among the highest in the country, with customers paying £150 more than the national average on their yearly water bills, while energy bills and fuel prices are increasingly unaffordable across whole swathes of the country, as we have heard. Figures given in a written answer on
The south-west has a large rural population. My constituency is not rural, but Plymouth depends on its hinterland. The wider economic benefits to the region and Plymouth come from people in our travel-to-work area, which is largely rural. In addition to the high water costs and low wages, people in the rural hinterland are paying about £10 a week more on petrol, diesel and motor oil than the average UK household. Rural populations are struggling with the cost of living in general—on average about £2,000 per year for a rural household over and above that of urban inner-city town dwellers such as my constituents. Of course, some of the people in the south-west will have chosen to live in a rural area. Some might well have a second home there and be quite well off, but there are huge swathes of the population across Cornwall and Devon who are agricultural workers or who are working in small food processing factories, and they are not on very high incomes at all.
Bus services in rural areas are infrequent, so elderly people often need to drive to Derriford hospital. That can be a long journey for a lot of people. They might need to be driven to the hospital. This all costs money. Young people can feel isolated in rural areas. Unless their parents can afford to drive them into town, they can be stuck and feel very much out of the loop. That is not good for social cohesion. We know that many families are having to curtail the number of journeys they make. Travelling to and from rural areas for work can also be extortionately expensive. I recently met a Plymouth man who travelled out to Liskeard to work. He had been unemployed, and he was delighted to have got a job in Liskeard, but the petrol was costing him between £60 and £70 a week and the situation was becoming unsustainable. He was really keen to work, and he was willing to travel long distances, but it was becoming impossible.
I am sure that the hon. Lady is aware that we have a land border in Northern Ireland. Robert Halfon seemed to have inside knowledge that the price of fuel might not go up, but if it were to do so, the amount of fuel smuggling from the Republic of Ireland to Northern Ireland would increase, and the Exchequer would lose a lot of revenue.
There has also been a huge increase in housing costs. Average house prices are now 11.5 times higher than the median income, and private rents are set to rise by an estimated 65% over the next 10 years. That will create huge cost of living issues for people in my constituency. Road fuel prices are higher by about 2.1p a litre in rural areas and, on average, people who live in rural areas travel 53% further than those who live in urban areas. They are also less able to access public transport alternatives. In my area, there are poor rail services down to Plymouth and we have no airport. All those factors push people into cars, and rises in the price of fuel make it extremely difficult for our economy and the economies of individual families to thrive.
I shall finish my speech early because you pulled me up for intervening, Mr Deputy Speaker. I hope that the Chancellor will have listened to his colleagues on the Government Benches, and that he will also take seriously those on the Opposition Benches as we go through the Lobby tonight to make it absolutely clear that we need a temporary halt to the increase.
I should just like to point out to the hon. Lady that she has not given me back a minute, because she has taken an intervention. So we ended up with nothing!
It is a pleasure to follow Alison Seabeck who, like me, represents a periphery
constituency. It is appropriate that we are having this debate now, less than a month before the Chancellor delivers his autumn statement on
Fuel duty is a highly regressive form of taxation, which hits those on low and fixed incomes particularly hard. Those in isolated, more remote periphery locations such as East Anglia and my Waveney constituency feel the impact hardest. The car there is very much a necessity and not a luxury. In Waveney, the average monthly distance to travel to work is just over 400 miles, while in Kensington and Chelsea, where salaries are dramatically higher and where there is a far better public transport system, it is just under 210 miles.
I am acutely aware of the dilemma of those constituents who travel to work from, say, Lowestoft to Norwich—a round trip of 50 miles every day. At the moment, their commuting costs are biting savagely into their weekly budgets. Moreover, there are jobs in the leisure, tourism and care sectors where the hours of work are such that using public transport is no option whatsoever.
I am very much aware of the excellent campaigning work carried out by FairFuelUK, championed by my hon. Friend Robert Halfon. As well as highlighting the crippling impact of fuel duty on households and businesses, it backed up its case with hard evidence. Its most recent research, carried out by the National Institute of Economic and Social Research, shows that if the 3p rise goes ahead, 35,000 jobs will be placed at risk, growth will be cut by 0.1% and 40% less tax revenue than the Government had predicted will be raised. In the weeks leading up to
Over the past two and a half years, the Government have pursued the right course for the British economy. There is no such place as a safe harbour in the world today, but they have taken us out of the eye of the storm. Interest rates remain low; there has been no run on the pound; and the markets are looking at other countries that have failed to put their houses in order. Plenty of obstacles remain ahead: the ongoing crisis in the eurozone; rising food prices as a result of poor harvests around the globe; and fluctuating oil prices, which have the potential to stall the recovery.
There is a concern, too, that anti-competitive practices in the petrol trade are distorting the market. It has been suggested that £30 a barrel is added through speculation. This results in consumers not paying a fair price at the pumps. It is vital that the UK economy is not exposed to such unfair profiteering. I urge the Government to ensure that the oil market is fully transparent and that a suitable supervisory framework is in place, with increased fines for market manipulation.
While it is right that we are having this debate tonight, there are fundamental flaws in the Opposition motion. First, the Government have a proven track record of listening and of understanding the impact of fuel duty on families and businesses. They have already delayed and cancelled increases that the previous Administration put in place. Fuel is 10p a litre cheaper than it would otherwise have been, while the Government’s policies in this area have delivered savings to families of £159 a year.
Secondly, the feedback from FairFuelUK’s meeting with my right hon. Friend the Chief Secretary to the Treasury suggests that the Treasury is studying seriously the report produced and presented to it. I get the impression that its findings are being carefully considered and will be taken fully into account in the autumn statement.
Finally, I fear that the Opposition’s means of paying for this postponement do not stand up to scrutiny. The Government have already secured many of the savings that can be achieved through successful clamping down on tax evasion and avoidance. I fear there is nothing much left there.
I shall oppose the Opposition motion and support the amendment. In doing so, I say that the time to scrap the increase in fuel duty is in the autumn statement on
I am disappointed that we have been forced to call this debate this evening. It shows just how out of touch with the public this Government are that they have yet to postpone January’s 3p increase in fuel tax. Dropping hints about the autumn statement is just not good enough at this stage.
I am sure that the high volume of correspondence I have received on fuel prices is replicated for Members across the Chamber, as fuel prices are now cutting into the quality of life of each of our constituents. In particular, I have been hearing from those who live in the rural and farming areas of my constituency. Rural sparsity, combined with the ongoing decline in rural bus services and a loss of local services, means that a car is a necessity in many rural areas, not a luxury. The Scottish Labour party has been calling for the re-regulation of bus services, as the Scottish Government’s policies have resulted in essential routes being unsubsidised and in many cases scrapped. Although voluntary projects such as the “Getting Better Together” project, in Shotts, and our regional transport partnership, Strathclyde Partnership for Transport, are working hard to fill the gaps, it will take direct action from the Government—to start with, by regulating our bus services—to fix this problem across the board.
The point is that the public transport infrastructure at this point is not at a level that could possibly allow the majority of people in rural communities to give up their cars without risking their quality of life and becoming increasingly isolated. The situation is becoming impossible for those who are having to decide to give up their cars, when there are little, if any, alternative forms of transport where they live. Every rise in fuel costs places a disproportionate burden on our rural communities, and now they feel that enough is enough.
It makes no sense to the Opposition that the Government, who postponed the fuel tax rise in August, seem to be ploughing ahead with this rise. Although we are cautiously coming out of a double-dip recession, most people have yet to feel this in their pockets. They are not yet seeing the difference in their bank statements at the end of the month. Incomes are still frozen, and the cost of essential bills continues to rocket. Those living in our towns are not escaping the assault on their standard of living, either. Increasingly, many have had to make difficult choices every day about using their car or paying other important bills.
Chapelhall, where I live, is home to many commuters. Commuters live where they can access more affordable housing, and homes are cheaper the further away they are from public transport links. Commuters also have to travel further to find jobs, as the employment market has yet to recover fully. This means that millions of commuters across the UK depend entirely on their cars to access work. Rocketing fuel costs are making work pay less.
I am particularly concerned about those of my constituents living with a disability that makes it difficult to travel. Labour introduced Motability way back in the 1970s to ensure that those living with a disability who require a car in order to travel can afford it. However, the costs are mounting for those running a car on Motability, and I have yet to hear the Government announce an increase in disability living allowance alongside the planned increase in fuel tax in order to plug the gaps caused by these additional costs. Some of the most vulnerable in our society will have to limit their car use, to the extent that it will jeopardise their chances of having a decent quality of life.
I am grateful to the hon. Lady for giving way, and for her speech. Given what she has just said, does she not recognise that the Government increased benefits by 5% and still froze fuel duty this year?
I thank the hon. Gentleman for his intervention, but the Government have taken other measures such as increasing VAT and cutting other benefits, which have had an adverse effect on the people I am speaking about. The fact that the Office of Fair Trading is conducting an inquiry into fuel prices reflects the public’s deep concern about the cost of fuel.
In press reports today, Government Back Benchers referred repeatedly to this debate as the cost of living debate; I have not heard it called the fuel duty debate at all. In his opening speech, the Minister seemed to talk about everything but fuel duty. It seems that Government Members want to talk about anything other than fuel tonight, because they know that the country is not on their side. I expected more Tory Back Benchers to be in the Chamber this evening trying to explain to their constituents why they are voting against our motion on fuel duty. I suspect that many of them are watching ITV to see their colleague in the “bug burial” in the jungle.
It is clear to Opposition Members, and to the thousands of constituents who have written to us about fuel duty in recent weeks and months, that the Government will be out of touch with the people of this country, who have been drastically affected by the increased cost of living, if they do not announce this evening the postponement of January’s fuel tax increase.
It is a pleasure to follow Pamela Nash. I gently point out to her that there are twice as many Government Back Benchers here tonight than Labour Back Benchers, and that is for an Opposition day debate, but we will let that one lie.
It is great pleasure to participate in this debate, and I congratulate the Opposition on tabling this motion, because it gives us all an opportunity to stand back and admire the brazen brass neck, the unbridled cynicism and the naked opportunism that characterises it. It seems that the shadow Chancellor is almost congenitally unable to stand and watch a bandwagon pass by without having the urge to jump aboard it. However, it seems that he has been overtaken with uncharacteristic modesty this evening, because he is not here; he has fallen silent. For the past few days he has been beating his chest, beating the drum and complaining about fuel duty increases, but now, this evening, he has donned the mantle of the mute. A week after Guy Fawkes night, he has lit the blue touch paper and withdrawn to a safe distance, leaving his ciphers and his sidekicks to propose and support his motion—and well he might, because we have heard a chorus of amnesia from Labour Members. We have heard them speak forgetting all they have done in the past, forgetting what they are saying while they are saying it and forgetting everything they have said when they have sat down. But we will not forget: we will not forget the meagre 75p increase in pensions; we will not forget the 12 hikes in fuel duty; and we will not forget the increase in fuel poverty between 2004 and 2009. I want to touch on that issue, because during Labour’s tenure—
All I will confirm is that fuel duty would have increased many more times had Labour’s Budget been implemented and that 2.8 million more people fell into fuel poverty between 2004 and 2010 as a result of the policies that the Labour Government pursued. The fact of the matter is that energy prices went up on the watch of the Leader of the Opposition, when he was Secretary of State—that is all he did; he stood there and watched as millions more people fell into fuel poverty.
I am pleased to say that in my constituency fuel poverty has fallen by 5% in the past year or so, and we estimate that by 2020 it will have fallen by about 25%. Thanks to the Government introducing and increasing the cold weather payments, and thanks to the discount of about £120 a year that will help 600,000 vulnerable pensioners, these people will be better off. The Government are helping them, but it is not enough. If we try to stick sticking plaster over a problem such as fuel poverty, we will not resolve it. That is like treating pneumonia with Angiers junior aspirin. What we really need to do is get to the actual causes of fuel poverty. In the 10 years between 2000 and 2010, under the previous Labour Government, £25 billion was spent on trying to alleviate fuel poverty yet the increases in fuel prices swamped those measures. Now, three quarters of those who live in the most energy-inefficient homes are in fuel poverty compared with one in 20 of those living in the most energy-efficient.
If we are serious about dealing with the problem of fuel poverty and dealing with one of the greatest challenges in the cost of living, we need to get a grip on the demand side of the equation. That means ensuring that homes are properly insulated. Not only that, but they should have proper and modern boilers and smart meters so that people can for the first time take control over their energy demands and reduce them. That is what the green deal is all about.
We need also to deal with the supply side of the energy equation. A generation ago, there were 15 energy suppliers, but that number has now reduced to just six. A generation ago, energy bills were relatively straightforward but now people are confused by an array of tariffs. A generation ago, 75% of people rarely if ever switched their energy suppliers. That is still the case. If we are serious about dealing with one of the biggest challenges and biggest drains on people’s means, we need to deal with energy costs.
I hope that the Government’s proposals in the draft Energy Bill, to which I look forward, will ensure that people are put on the best and cheapest tariffs and that we invest in new nuclear and shale gas, which Labour left behind for 10 years, so that we secure our energy supply and are not exposed to international gas and hydrocarbon volatility, which has caused so much distress to bill payers over the past 10 years. The Government must also be careful in that Bill, because although we need to ensure that we have a sufficient, resilient and diverse supply of energy, we must ensure that the mechanism to deliver that capacity does not place undue burdens on the industry that will deliver it.
The industry reckons that the capacity mechanism could increase its costs, which it could pass on, by anywhere between £3 billion and £13 billion, meaning that anywhere north of £14 a year could be added to energy bills. We need to ensure that the Energy Bill does not have the perverse effect of adding to energy bills as it tries to reduce them. I hope that the Minister will pass on that message to his colleagues in the Department of Energy and Climate Change.
For the moment, let us thank the Labour party for tabling the motion and enjoy the theatre of the absurd. It is an absurd prospect: the Labour party introduced the fuel duty escalator, increased fuel duty and wanted to hike it again if it won the last election, but it is now proposing to freeze fuel duty by closing the tax loopholes that its own labyrinthine Treasury policies allowed. I am sure that the Chancellor is aware of the cost to the country of fuel duty, but I think that the country is also aware of the cost to it of the previous Labour Government—a grisly experiment that it will not want to repeat.
Anyone who listened to “The Westminster Hour” last night—perhaps it is only sad political anoraks who do so—will know that Ministers and Government Whips have been at their Back Benchers over the weekend, and no doubt for some days before, feeding them the line that they should not worry because everything will be all right in the autumn statement and the fuel rise will not really happen, so there is no need for them to vote against the Government tonight. Clearly, the Government are terrified that there will be more votes against them. However, it is not fair to people in Britain to tell them, with a nod and a wink, “It should be all right.” Government Members have sought to criticise our motion, on the ground that we should find a way to pay for not going ahead with the increase, but what they are really saying—Robert Halfon gave this away completely—is, “This is not going to happen, but we will not tell you how we are going to pay for it.” Therefore, they cannot lecture us and accuse us of hypocrisy.
On the issue of fiscal strategies and paying for things, does the hon. Lady really think that it is a compelling case to say that the catch-all concept of addressing tax avoidance is the way that the Opposition will pay for any reductions that they make to duty? This afternoon, I sat on the Public Accounts Committee and listened to evidence from Google, Amazon and Starbucks, and it quickly became apparent to me that, over 13 years, the Labour Government allowed crony capitalism and did nothing about tax avoidance.
I thank the hon. Gentleman for his intervention. I think he has just walked into the Chamber to make it; I do not think he was present throughout the debate. I am glad that he and his Government want to act on these issues, and we look forward to seeing—perhaps in the autumn statement—the measures that they intend to put in place.
We heard from the Minister nothing about the fuel duty increase, but a lot of rehashed issues to do with the economy. There have been accusations that the Opposition are suffering from amnesia, but the amnesia that the Government are suffering from is even more profound; they seem to have forgotten that when, two and a half years ago, they came into office, they had an emergency Budget, which, we were told, would sort out the economy. If Ministers recall, at the time of that Budget and in the autumn statement of 2010, we were told that the economy would grow over the next two years, and that they would reduce, and indeed eliminate, the deficit in their term in government. They have since had to concede that there has not been that growth, and that they will not eliminate the deficit over that period, so if anyone has amnesia, it is the Government. That happened because of the absolute insistence on trying to cut the deficit so quickly, including by making cuts in investment spending; that has produced a lot of the problems that we have.
Even some of the Government’s supporters, including David Smith, who writes on economics in The Sunday Times, said recently that it was a huge mistake for the Government to cut investment in their first year—in their emergency Budget—and in their next Budget. They have tried, in some small way, to say that they will reinstate investment, but the damage has been done. Investment that could have been made in affordable housing and school building was cut—for ideological reasons, I would contend. As a result, there has been no growth for most of the period, and people have suffered from very high prices, in many respects, at a time when many people are on short time, and are not earning what they did.
Does the hon. Lady think that Scottish Labour’s cuts commission’s plans to do away with free personal care and free bus passes for the elderly, and to introduce tuition fees, would lower the cost of living for Scottish people, who are suffering in the very conditions that she describes?
Cuts have been made in Scotland—the hon. Gentleman should be absolutely clear about that. They have been made to social care in Scotland, partly because of the council tax freeze. I heard the Economic Secretary boast about that freeze, but it is an extremely regressive policy. For people who do not pay council tax because they receive council tax benefit, that policy has not benefited them by one penny. In Scotland, those people have not benefited for five years. Indeed, it gives a far greater benefit to people who pay the highest level of tax.
As a result of the council tax freeze, councils in Scotland have suffered a great deal, as councils in England are now suffering. A service that has suffered is social care. I will not take lessons from the hon. Gentleman, because cuts have already been made in Scotland as a result of his Government’s policies. Those things will happen in England too. I would not be as proud as the Economic Secretary of the council tax freeze, because it has a severe downside for many people who depend heavily on the services that councils provide, which are important for their living standards. We must not forget that.
As my hon. Friend Fiona O'Donnell mentioned, people who work in social care are not only on low wages but they are told by their employers, who often have outsourced contracts from councils that are trying desperately to make savings, to use their own car to travel to do the job. They are not usually paid for travel time, and they are not refunded if they have to park somewhere and pay parking charges. They are on the lowest income levels, they are working hard in a hugely important service, and they deserve much more attention from us. They are suffering from the increases in fuel tax.
The Minister said yet again all this stuff about all the jobs that the Government claim have been created. As I have said before, if we say that there have been 1 million new jobs since the election and that that is a huge improvement, we should remember that, at the beginning of 2011, only eight months after the Government came to power, they said that they had created 500,000 jobs. I contend that those jobs were created as a result of the economic stimulus from the previous Government. In the following 22 months, another 500,000 jobs were created at a slower rate of growth. Many of those jobs are part time, which has increased spending on welfare benefits, thus increasing the problems that the Government face in trying to balance their financial books. People with part-time jobs claim housing benefit—98% of new housing benefit claimants are people in employment—and they claim more tax credits, because their hours of work have decreased. That is not a stable basis on which to proceed. If the Government want to scrap the proposed fuel increase in January, perhaps they should simply tell the nation that today.
Order. I am reducing the time limit to six minutes for remaining speeches. I remind speakers that we have to conclude the debate before the winding-up speeches begin at 9.40 pm. If there are lots of interventions, that will cut speeches even further. I call Martin Vickers.
It is a pleasure to take part in a debate that has featured knowledgeable and passionate speeches. I make no bones about it: what my constituents want—what I want—is the postponement and preferably the cancellation of the increase.
It is not unknown for Oppositions to jump on bandwagons—my hon. Friend Christopher Pincher referred to that—but it is strange when an Opposition do so to abandon their own policies. The wheels have come off this bandwagon. Effective opposition is hardly evident this evening. What we are hearing is, “We don’t like our policy that we introduced. We’d like you to postpone it for three months.” Is that positive opposition? Clearly, Labour Members are going to have much more time on their hands to consider how to build effective opposition.
I remind the House that already, thanks to the actions of this Government, petrol is 10p a litre cheaper than it would have been had Labour’s increases been introduced. My hon. Friend Robert Halfon, who has done some sterling work on the issue, mentioned that the cost of living is not just about fuel. It is about energy and a host of other things. The proposed increase goes to the heart of those cost of living issues.
I represent a predominantly working-class constituency where the average wage is about £20,500. That is £3,000 less than the average for the Yorkshire and Humberside region. We have had a few setbacks in recent weeks, most notably the 500 redundancies at Kimberly-Clark in Barton-upon-Humber, but there is growth in the local area. In particular, the road haulage industry represents an important part of the local economy. It is based around the Immingham-Stallingborough area and it is vital to the local economy.
Many speakers have mentioned being out on the periphery. Cleethorpes is a peripheral area. The surrounding hinterland is rural and many of the people who live there work on the Humber bank, a considerable distance away. There is no doubt that the tax in question affects them greatly.
In Rossendale and Darwen, we have a rural hinterland. We are a working-class constituency and we have low wages. We are already paying the 3p fuel tax because our fuel is 3p more expensive in Tesco in Rawtenstall than it is in the adjoining town. Will my hon. Friend say what experience he has in his constituency of this rural disparity in fuel prices?
I thank my hon. Friend for his intervention. Yes, the situation that he describes in his constituency is very similar to mine. However, it is welcome that North Lincolnshire council, which is Conservative controlled, is particularly mindful of the impact of motoring costs and is at present considering the possibility of extending free parking, which has been an issue in the local area. That shows how local authorities can help to boost the local economy, particularly the high streets.
When I was preparing for this debate, I skimmed through the debate that we had about a year ago, to which I contributed. That debate took place before the Chancellor made a previous reduction. I noticed that I referred to fairness. I caution the Government again that it is rather dangerous always to talk about fairness. Of course all policies are intended to be fair. I am well aware that the Government want to be fair, but human nature being what it is, a policy is fair only if it benefits us. If it benefits our neighbour, we tend to think it is unfair. I urge the Government to reflect that when they talk about these issues.
It matters not whether our constituents are white-collared, blue-collared or dog-collared, for that matter. They are all hit by fuel increases. The Chancellor may already have made his decision, but if not, I urge him to reflect on the contributions that have been made this evening. It is a vital subject, which will not go away. The idea that the Labour party has proposed tonight, that we abandon the rise or cancel it for three months, is nonsense. If the Opposition are trying to tempt Conservative rebels into the Lobby, they should at least have a positive view and suggest three years, rather than just three months. It is pathetic.
My hon. Friend makes an important point. I have certainly studied the FairFuelUK report. Indeed, the all-party group on fair fuel, which is chaired by my hon. Friend the Member for Harlow, has done considerable work on it, and I urge the Government to reflect on its recommendations.
I know that the Government have listened to the debate. Their amendment makes it clear that they want to do more to help with the cost of living, but who could disagree with that? What we actually want to see is some positive response from them. I know that they are not going to announce this evening what will be in the autumn statement, but we are three weeks away from something that could have a decisive impact on the local economy, certainly in my constituency, and a real impact on hard-working households there. I will conclude by saying to the Labour party, “Get your act together.” I will certainly be supporting the Government in the Lobby this evening and know that is in the best interests of those I represent.
Order. I have to reduce the time limit again to five minutes, because interventions have slowed us down. I remind Members that if they take interventions it will have to come off their time, because we will start the wind-ups at 20 minutes to 10.
As Nadine Dorries is gathering votes from Government Members as we sit here, we find out that she lasted only five minutes of a bush tucker trial. Meanwhile, back in the real world, her constituents and mine are suffering grievously because of the cuts in living standards that have resulted from the Conservative party’s economic policies. The real struggle of many of our constituents stands in stark contrast to her outrageous behaviour. The impact of fuel prices is one of many worries that have brought living standards under attack. I wonder how many people out there in the country think it is appropriate for a Member of this House to be away for five weeks—
And that is when the country faces the toughest economic situation of modern times—[ Interruption. ] Goodness knows what the hon. Lady’s constituents think, but what of her colleagues? Judging by their reaction to what I have just said, they clearly approve. They have all said that they want to scrap the fuel duty rise, but they will not vote for it. Maybe they should all be in Australia cheering on Nadine, rather than rejecting efforts to help all our constituents.
There are many pressures on living standards and a lot of money has been taken out of the economy, affecting businesses and jobs and delivering hardship for many people in this country. As I have said, it is extraordinary that Government Members will not vote for a measure that would do exactly what they all say they support.
Let me say a little about some of my constituents—the pensioners, working families, young people out of work and commuters—all of whom will be hit by the Government’s failure to cancel the fuel duty rise. Pensioners, some of whom have to choose between heating and eating, face increased food prices and, at the same time, will have to pay more for bus and taxi fares or, if they have a car—some pensioners do—they will find it very expensive to run. It is no wonder we are seeing more and more people relying on food banks. The Government tell pensioners to deal with rising energy costs by going on the internet and looking at uSwitch, but my pensioners tell me that most of them have never used a computer, let alone the internet, and so would not know where to start. How is that a solution to rising energy costs and falling living standards? You tell me, Madam Deputy Speaker, or perhaps the Minister can tell me when he winds up the debate. That is before the granny tax has taken money from pensioners to pay for tax cuts for millionaires. Then there was the young man whose building firm was wound up because he and his partner could not get any work. He now works in a shop for £6.50 an hour and barely has enough money coming in to put food on the table and pay the rent, let alone put fuel in his car.
The least we could do is to make some kind of move to help these people by cancelling the fuel tax increase. As I said in an earlier intervention, and as FairFuelUK has demonstrated, its effect would be a fall in GDP and a loss of 35,000 jobs, so no jobs would be created for the more than 1 million young people who are out of work. At the same time, the tax credit cuts will hit part-time workers, and that is where jobs are being created. Part-time jobs have increased, but not the full-time ones that would help to build prosperity. Many small businesses tell me that they are getting by with fewer staff who are working longer hours. HGV owner-drivers tell me that the cost of filling their lorries has gone up and up, and all those increased fuel costs have to be passed on, either through cuts in their own income or price rises that hit the living standards of those on the lowest incomes. VAT is up, fuel prices are up, food prices are up, energy prices are up, and taxes are up—except, of course, for those millionaires.
Tonight we, as the House of Commons, have an opportunity to vote to cancel the fuel duty rise, not least because of the impact that it would have in the coldest part of the year when people rely on fuel for their cars more than at any other time. The Government have an opportunity, if they choose, to do this by closing tax avoidance loopholes and targeting the Starbucks, Amazons and Googles of this world, thereby helping those whose living standards have suffered.
Like all right hon. and hon. Members on the Government Benches, I welcome this debate and the opportunity that it presents to highlight the gross hypocrisy of Labour Members over fuel duty and the cost of living. Despite their contributions to the debate and the words in their motion, Labour’s record in government shows how shallow is their so-called concern about this issue. Today’s debate ranks as nothing more than a sanctimonious attempt by Labour Members to exploit the anxiety of the public for nothing more than superficial reasons of political opportunism. It is exactly these kinds of antics that erode public trust and confidence in politics.
Labour Members have come to the House today to argue for freezes in fuel duty, but at the time of their last Budget in March 2010 they came here to pledge the continuation of above-inflation increases in fuel duty for the duration of this Parliament. They may be afflicted by the collective amnesia that we have seen today regarding their record in office, but my constituents remember the misery inflicted on them as Labour presided over huge increases in the cost of fuel and the cost of living. In particular, they remember what happened in 2000, when the price of petrol at the pump surpassed 80p per litre. They have not forgotten the appalling way in which the Labour Government handled the matter back then and their failure to get to grips with the crisis and the impact that the fuel price increases were having on businesses and families. Despite various promises at the time, no action followed. Fuel prices consistently increased under the Labour Government. If Labour Members were genuinely concerned about the impact of the level of fuel duty on families and businesses throughout the country, they would not have increased fuel duty 12 times when they were in power.
By contrast, this Government have recognised the burden that fuel costs add to household budgets and businesses. As my hon. Friend the Minister highlighted, they should be congratulated on freezing Labour’s planned fuel duty increases and abolishing the fuel duty escalator, even managing to cut fuel duty by 1p. It is now 10p a litre lower than it would have been under a Labour Government, saving families £159 this year alone. The overall tax burden under this Government is lower than it would have been under Labour, as is the deficit. This country has been saved from the indignity of taking a begging bowl to the International Monetary Fund by dealing with the financial mess that the previous Government left for this Government. As a staunch believer in the power of low-tax economies, I would like the Government to go further in cutting this duty and lowering the overall tax burden, but of course Ministers are limited in what they can do because of the huge levels of borrowing for public spending that have existed.
One astonishing thing about fuel duty is that it raises far more money than is spent on our roads. The mismatch between the amount raised from motorists and the amount spent on improving our road network has caused huge concern to my constituents. Under Labour, revenue received from fuel duty rose considerably. In 1996-97, total receipts from excise duty on oils were £17.2 billion. However, when the Labour party left office, they were around £27 billion, and that is without taking vehicle excise duty into consideration. Despite that extra money from motorists—over 50% more in cash terms—Labour failed to invest in the road network, especially in Essex. My constituents have not forgotten that. Vital road schemes, such as the project to dual the A120, were completely axed. Labour pillaged the pockets of motorists in my constituency and gave them nothing in return. Instead of investing in infrastructure in Essex, Labour blew the money on unsustainable levels of public spending and the rising cost of debt interest payments. Many other schemes, including the Dartford road crossing, also demonstrate that point.
In conclusion, I want the cost of motoring to fall and investment in our road infrastructure in Essex to increase. That will never be achieved by anything suggested by the Labour party, including the shallow statements that we have heard today, hence my opposition to the motion.
It is an honour to follow Priti Patel and her characteristically warm-hearted contribution to the debate.
This has been an important and much-needed debate. Members on both sides of the House have shown the strength of feeling that is out there on our roads against the extra burden that this fuel duty rise would place on families and businesses, at a time when prices are still rising faster than wages. Households that are already suffering from the Government’s failed economic policies cannot afford to be hit by an extra 3p per litre, especially with fuel duty already 15p more per litre than it was at the general election.
My hon. Friend Albert Owen well summed up as hypothetical nonsense Conservative Members’ attempts to distract from their failure to support the motion by suggesting that were Labour in government the fuel duty might be 10p per litre more. Labour Members have been calling for a temporary VAT cut to take 3p per litre off the price of fuel immediately, but with the Government refusing to act, we are now calling on Members to support the motion to delay this extra tax that will hit families and businesses, slowing growth even further.
A clampdown on tax avoidance by employment agencies and umbrella companies would raise more than enough money to delay this rise until April. It would also bring an end to the exploitation of workers under those schemes, who are often left worse off as agencies pocket the extra profit from avoiding tax, leaving employees at risk of being pursued for that tax in later years.
There have been many excellent contributions to this debate, as well as some not so excellent. Many Members, especially those from rural communities, have raised concerns about the impact that the increase in fuel duty will have on them, and I mention in particular my hon. Friends the Members for Inverclyde (Mr McKenzie) and for Airdrie and Shotts (Pamela Nash). Peter Aldous made a well-considered and reasonable contribution to the debate, but unfortunately failed to explain why he will not support the motion tonight. Robert Halfon has long campaigned on this issue. He concluded his characteristically well-considered speech by saying that he is proud to support the Government tonight as the Chancellor is in “serious listening mode”, but that he hopes they will not let us down. Well, many of our constituents are sitting at home tonight, hoping that the Government will not let them down. Our economy has just emerged from a double-dip recession—a recession, I must add, that was made in Downing street. That emergence is welcome but there is no room for complacency. Our recovery is still fragile and people are feeling the struggle.
In government, Labour either cut, froze or delayed planned fuel duty rises 13 times because we thought it was appropriate, and did so twice following the financial crisis because we recognised that in a fragile economic environment, a postponement would provide practical help to ordinary people and businesses feeling the squeeze. The Government claim that they are in strong “listening mode”—Members on the Government Benches certainly seem to have been given that reassurance.
How will Government Members explain to their constituents why they have not voted for a freeze in fuel duty tonight, when the overwhelming consensus is that that is much needed by families and businesses up and down the country?
Let us hope the Chancellor is listening to the debate. The price of a litre of petrol is now £1.36, 5p more than when the Chancellor agreed to defer the duty increase in August and 15p more than at the general election. The tax on a tank of petrol in 2010 was £37.60, but it has now risen to £40.30. If we do not delay the 3p increase tonight—if hon. Members do not vote to freeze it—it will go up again in January to £42.20. A family could spend £200 a year more on fuel tax in 2013 than they spent in 2010. Families cannot afford that £200. The increase in VAT has cost a family with children £450 each year, pensioners are facing extra burdens after the granny tax, cuts in child tax credits will cost some families up to £545 a year, and cuts to working tax credits mean that those on low incomes will lose up to
£3,870 a year if they cannot increase their hours at work. That is the impact of this Government’s polices on family budgets.
Small businesses, too, are struggling. The Government’s flagship project Merlin agreement with the banks has flopped and failed, and much-needed cash is simply not getting through to help businesses to expand and create jobs. Businesses need a break, and a freeze in fuel duty would provide it. That is why the Opposition have tabled the motion. We want to give the Government and Government Back Benchers the chance to join us and vote in favour of easing the burden for people up and down the country who will be hit by the fuel duty increase.
It is clear how the Opposition proposal could be paid for. The Government need to take urgent action to crack down on tax avoidance schemes by employment agencies and umbrella companies that classify part of their employees’ pay as a reimbursement for travel and subsistence expenses and claim back the tax relief. In most cases, employees do not see even a fraction of the extra profits that companies make as a result. In some cases, workers are not even aware that their pay is being manipulated in that way, but if they end up with too few national insurance contributions, they lose out. They could even be liable to repay the tax and national insurance and end up personally out of pocket if Her Majesty’s Revenue and Customs successfully challenges the scheme. HMRC’s figures forecast that the tax loss from such schemes in 2012-13 will be £650 million, but more recent estimates put the figure at more like £1 billion, as more companies jump on the bandwagon. Even a conservative estimate of what could be raised from clamping down on that one area of tax avoidance would more than cover the £350 million needed to pay for the fuel duty delay.
The Opposition understand that the rules exist, but enforcement has been lacking. The Government’s cuts to HMRC—an additional 10,000 jobs are set to be lost by 2015, and £2.1 billion has been taken out of its budget—have made the job even harder. It is essential that we take action. Companies that play fair and pay their tax properly and transparently are disadvantaged by those that cheat the system. The tax that should be paid and is avoided, or in some cases illegally evaded, is sorely needed to support our struggling economy.
The Government have lots of tough talk on tax avoidance but very little action. The Opposition motion calls on the Government to get a grip and clamp down on tax avoidance and to use the money where it is needed. Government Members know that that is what their constituents want and need. Nods and winks from the Chancellor will not fill their petrol tanks. Without a proper commitment from him, Members should support the motion tonight. If MPs unite today and vote for the motion, the Prime Minister and the Chancellor will have no choice but to see sense and give that reassurance to families, motorists and businesses that we are on their side.
We have seen this evening how what might have looked like a clever wheeze to the Opposition on Friday looks opportunistic on Monday and merely exposes their lack of credibility and consistency. That is perhaps a pity: as my right hon. Friend Mr Redwood pointed out, the cost of living is an important issue.
I thank my right hon. and hon. Friends for their contributions today—and, indeed, Opposition Members. In particular, I thank my right hon. Friend Ben Gummer, for Waveney (Peter Aldous), for Tamworth (Christopher Pincher), for Cleethorpes (Martin Vickers) and for Witham (Priti Patel) and, perhaps above all, my hon. Friend Robert Halfon, who, unlike Labour, has a record of consistency on fuel duty.
Given the general sense of amnesia on the part of the Opposition, perhaps I can begin by setting out a little of the context, which was the set of policies proposed by the former Chancellor of the Exchequer, Mr Darling, for reducing the deficit—his discretionary fiscal tightening. It was a plan seen as inadequate by the International Monetary Fund, the CBI, the Governor of the Bank of England, the credit rating agencies and, judging by the general election result, the British people. In lacking credibility, the plan ran the risk of leading to higher interest rates, and as my hon. Friend the Economic Secretary pointed out, for a mortgage of £100,000, a 1% increase in mortgage rates would lead to an additional £1,000 in mortgage payments.
What did the Darling plan not include? It did not include anything to increase the personal allowance for income tax, which under our policies has resulted in cash savings of £546 for basic-rate taxpayers, or anything on council tax. Our freeze—in contrast to the average 5% increases we saw from Labour—saved average band D households nearly £220. What was actually in the Darling plan? We had an increase in employers’ national insurance contributions—the jobs tax, which was largely reversed by us, although that does not stop Labour calling for cuts in employer’s national insurance contributions. Most pertinent for today, we also saw fuel duty increases, with a 1p increase on
The argument we have heard this evening from Labour is: “It’s all very well; we made the announcement, but we had no intention of implementing those proposals”—that is one for fiscal credibility from Labour. Alternatively, the decision has been completely ignored, so that one could have missed the fact that any scheduled increases in fuel duty are Labour’s proposed rises. Now Labour’s argument is: “We intend to save the nation from our very own policies.” It is as though the last Labour Government never existed, but unfortunately for all of us they did, and we are having to live with the consequences.
We know that high oil prices are causing real difficulties in ensuring that motoring remains affordable. We have listened to hard-pressed motorists and businesses, and we have acted. This Government have acted by easing the burden on motorists by £5.5 billion between 2011 and 2013 and by cutting fuel duty. We acted by cancelling the previous Government’s fuel duty escalator for the rest of the Parliament and by introducing a fair fuel stabiliser, so that fuel duty will increase by inflation only when oil prices are high. We acted to ensure that there will be no increase in fuel duty this year by deferring the next increase to January. That action ensures that duty at the pump will have been frozen for 21 months, and pump prices are now 10p lower than under Labour’s plans. Even following the inflation increase in January, average pump prices could still be approximately 6p a litre lower than if we had implemented the previous Government’s fuel duty escalator in 2011 and 2012. That means that a typical Ford Focus driver will be £159 better off between 2011 and 2013, and that the average haulier will benefit by approximately £4,900 during the same period.
Labour Members argue that we could do more about tax avoidance, but that ignores the fact that under the present Government, yield raised by HMRC will increase by approximately 50%. It also ignores the fact that it was their party that voted against proposals to deal with disguised remuneration—a particular form of tax avoidance—which are now saving us £750 million a year. Instead, we hear about umbrella companies that are inflating workers’ travel and food expenses and reducing tax and national insurance contributions.
“Ministers have failed to take tough action to stop it happening.”
What he did not mention was that the Ministers in question must have been those who consulted on the matter in 2008 and then decided not to change the law. Even four years on, the shadow Chancellor cannot stop himself briefing against the Treasury team of the right hon. Member for Edinburgh South West.
Incidentally, HMRC has strengthened compliance in this area. It has, among other things, won a large case worth £158 million. Moreover, changes in the national minimum wage scored an increase of £90 million, while protecting low-paid workers.
The fact is that it is this Government who are reinvesting money in HMRC, enabling us to secure an additional yield of £7 billion by the end of the current Parliament. It is this Government who are increasing the number of people working in compliance and enforcement in HMRC. It is this Government who are introducing a general anti-abuse rule. It is this Government who have passed legislation to deal with disguised remuneration. None of those measures were introduced by the Labour party when it had the opportunity to do so.
We have recognised the impact that high pump prices are having on motorists, families and businesses. The last Government had no credible plan to deal with the debts that they created and no credible plan to support motorists, but we have listened and responded. We have cut fuel duty, we have scrapped the fuel duty escalator, we have ensured that there will be no increase in fuel duty this year, we will have kept fuel duty frozen for 21 months, we will continue to support motorists with our fair fuel stabiliser, and we have tackled tax avoidance. We taken action not only on fuel duty, but on council tax and on income tax.
The British people know that this is a Government who, within the considerable constraints left to us by the Labour party, will take action to protect them from rising pressures and difficulties with the cost of living. The Labour party has tabled an incredible, opportunist motion. I urge the House to reject it and to support the Government’s amendment, safe in the knowledge that we will do all we can to protect the British people from the rising cost of living.
Question accordingly agreed to.
The Deputy Speaker declared the main Question, as amended, to be agreed to (
That this House notes that as a result of the action this Government has taken to cut, cancel and delay fuel duty rises families will save around £159 on fuel costs by April 2013; further notes that under the previous administration’s plans, voted for by the Leader of the Opposition and the Shadow Chancellor, pump prices would be 10 pence higher than they currently are; also notes that motorists in island communities are benefiting from the fuel duty discount pilot scheme; recognises that this Government has introduced a number of other measures to support families including a £1,100 increase in the personal income tax allowance from April 2013, three years of council tax freezes and a cap on
rail fares; commends that these measures have been in part affordable because of the Government’s record of success in tackling tax avoidance and evasion which is on track to raise an additional £7 billion per annum by the end of this Parliament; and welcomes the Government’s commitment to do more to help with the cost of living in the future subject to the constraints of the public finances.’.