Clause 15

Finance Bill – in a Public Bill Committee at 3:45 pm on 21st May 2009.

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Rates and rebates from Spring 2009

Question proposed, That the clause stand part of the Bill.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

Fuel duty was debated at some length on the Floor of the House, and I have no intention of running through the whole argument again. However, I should like once again to put on record our concern at how the Government address it. Sometimes, fuel duty announcements are postponed and postponed again, and it is then unexpectedly increased. We have seen a great deal of evidence of that in the past couple of years.

Clearly, the Government feel that they have the political ability when oil prices are lower to raise fuel duty, but it is difficult for them to do so when oil prices are higher.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I differentiate future duty increases and those that have already been implemented. What cumulative losses would the Exchequer have incurred, and what consequent increases in public debt would have resulted, if the Conservative-Scottish National party vote on the Floor of the House not to proceed with the April 2009 duty increase had been successful? The policy would obviously have had an impact on the public finances as a whole.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

We voted that way on the Budget resolutions, as was made clear by my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond), because the way in which the Government addressed fuel duty was lacking a coherent structure. They have increased it and decreased it, and not implemented previously announced proposals. We have advocated, as we said on the Floor of the House, a fair fuel stabiliser. Given that we have debated the policy before, I have no intention of offering another detailed explanation.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I am not seeking to debate that Conservative policy again, but I wanted to make this specific point: the Government may or may not have a coherent policy for fuel duty increases, but surely any Opposition party that is even vaguely serious about assuming office would have made an estimate of the adverse impact on the public finances of voting against a duty increase that had already taken effect. It would have cost the Exchequer a certain amount every day, had the joint Conservative-SNP policy been successful. I cannot believe that anyone who wished to be in office would not have made that calculation and shared it with the Committee.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

I am somewhat confused by the hon. Gentleman’s position, given that his party voted against the September increase. I am not going to question him as to what the cost to the Exchequer of that would be. Our position on the Budget resolution reflected our concern about that lack of a coherent framework. I put that again on the record as an explanation for our vote  on that Budget resolution. We have debated fuel duty before and, given the time, I have no intention of reopening that debate again.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I shall make an extremely brief point because these subjects have been discussed at length. I wanted to expand briefly on the two interventions that I have just made. There is a difference between April 2009 and September 2009. In May, April has already happened and September has yet to happen. I do not know what the price of fuel will be in September, but I certainly knew in May what the price of fuel was in April. The decision, or otherwise, not to go ahead with September 2009 duty increases is not costing the Exchequer anything today, whereas it would have done if the Conservative-SNP amendment had been passed, because every single person at the pump today would be contributing less in taxation.

Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

The ready reckoner is that every 2p rise is £1 billion a year.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

The patterns of demand could vary slightly throughout the year, but if one divided the figure by 365 one could get a daily clock running on the level of extra public borrowing that the Conservative party supports through this measure alone. I note that the SNP has lost interest in the subject, but the concern is that when we have a public deficit of £175 billion, no serious political party should vote with minority parties, from Scotland or anywhere else, to produce good publicity for election leaflets without regard for the public finances. I do not doubt that there are people in the Conservative party who have honourable intentions to go with their burning ambitions, but I fear that unless they have coherence to go with them they will end up being disappointed.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

Order. I think that the hon. Gentleman is referring back to a debate that we have already had. I shall be grateful if he can limit himself to the clause.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I had no more to add, Mr. Atkinson. We have managed to get to a figure. It is helpful to cost the Conservative proposals, and we will now bear those in mind every time we hear any lectures or concerns expressed about the state of the public finances.

Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

I suspect that we have just had the outline of a Lib Dem Focus leaflet. I am sure that hon. Members will look forward to seeing it coming through their doors soon.

The main fuel duty rose by 1.84p per litre on 1 April this year. Duty on rebated oils rose in proportion to the main fuel duty increase on the same date, while duty on road fuel gases increased such that the duty differential for compressed natural gas was maintained, but the differential for liquefied petroleum gas was reduced by 1p per litre. The clause also increases the duty rates for leaded petrol and aviation gasoline, with effect from 1 May 2009. Duty on leaded petrol will increase on that date by 1.84p per litre and duty on avgas will increase by 2.31 pence per litre. I felt that I had to get that on the record.

Question put and agreed to.

Clause 15 accordingly ordered to stand part of the Bill

Ordered, That further consideration be now adjourned. —(Mr. Blizzard.)

Adjourned till Tuesday 2 June at half-past Ten o’clock.