Mr Speaker, I would not be here today without...
- the 116 MPs who have signed this motion,
- the 111,000 people who have signed the e-petition,
- The Sun's KEEP IT DOWN campaign,
- The FairFuelUK campaign,
- the Backbench Committee,
- my Hon. Friend the Member for Cleethorpes, and the Member for Na h-Eileanan an Iar.
Briefly, I want to look at:
- Why fuel duty is the number one issue in Britain;
- The financial impact;
- The economic impact; and finally
- The social impact.
1. WHY FUEL DUTY IS THE NUMBER ONE ISSUE IN BRITAIN.
With the agreement of FairFuelUK, today's Motion has been framed to unite the House, and to win as much support as possible.
This has been successful: Last week, a poll in The Sun showed that 85 per cent of people now believe "the duty rise in January must be cancelled". Other polls confirm this.
We have the highest diesel price in Europe, and one of the highest petrol prices.
The Government's own figures say that sales of petrol and diesel have been falling since 2008, because fuel is becoming unaffordable.
In real terms, adjusted for inflation, motoring fuel has never been this expensive - except for just TWICE in history, during historic crises of supply, the Suez crisis and the OPEC blockade.
This is being driven by high taxes, and we have to be realistic and truthful about who pays the lion's share of fuel duty.
It is ordinary families, driving to work.
It is mums driving their children to school.
It is small businesses, who have no choice but to use their vans and lorries.
It is non-motorists, who depend on buses, and who are also being crucified by rocketing food prices, as the cost of road haulage goes through the roof.
It is the jobless, who are struggling to get off benefits and out of the poverty trap, but cannot afford to drive to work.
Fuel duty is a tax on struggling and vulnerable Britons: I accept that the Government needs to raise revenue, but let us at least be honest about who pays this tax.
2. THE HISTORY OF FUEL DUTY, AND WHY FUEL IS NOW SO EXPENSIVE.
When fuel duty was first introduced in the 1920s, it was a third of its current level, in real terms - but, as ever, taxes have had "the engine of a Rolls Royce and the brakes of a lawnmower,” and have been rocketing up ever since.
The "fuel tax escalator” was introduced in 1993. Labour accelerated it to 6 per cent above inflation, in each year, after 1997. It was finally halted in November 2000, when massive fuel protests brought Britain to a standstill.
Fuel duty became a stealth tax, a second income tax.
The Coalition Government abolished the fuel escalator this year, cut duty by 1p, and also introduced a semi-stabiliser, which means that duty will now only rise quicker than inflation, if oil prices are low "for a sustained period”.
But for most people filling up the family car, our prices are still the most expensive in Europe.
Even bankrupt socialist nations, such as Spain, now have lower rates of fuel tax than Britain.
Research has shown - for example - that residents in my constituency of Harlow are now paying £42 million pounds in fuel taxes every single year.
High fuel taxes are crushing our economy, making our small businesses uncompetitive, and hurting families and the unemployed as well.
But tax is not the only problem: big oil companies are behaving like a cartel, with a stranglehold over the market.
Brian Madderson, of the Retail Motor Industry Petrol, says the small forecourts he represents are now forced to buy fuel from the big players at a set wholesale price, on a daily basis, rather than on weekly or monthly terms.
There is absolutely no competition from wholesalers on these terms. The Enterprise Act 2002 gives Ministers powers to ask for an independent market study: that is what we need.
There is also the issue that prices are quick to rise, but sluggish coming down.
In the last four months, oil has fallen eight per cent, but fuel prices have stayed static.
Oil firms protest that they are forced to buy raw materials in dollars, and currency fluctuations have made price cuts impossible.
But analysis shows that this is false: the cost of Brent crude has fallen by nearly 20 per cent since April this year. And yet the dollar has risen just six per cent.
Big oil firms shouldn't hide behind currency fluctuation.
Statistics from the UK Petroleum Industry Association (funded by major oil companies) also show that in early 2010 the price of crude fell steadily. And yet retail fuel prices stayed high for months. Why?
Ultimately the only way to resolve this is open book accounting.
If big oil companies want to prove their innocence, why don't they volunteer to publish their financial data?
3. THE FINANCIAL IMPACT.
I want to turn to the financial impact.
Since 2008, our consumption of diesel and petrol has declined, and the Government forecasts it to continue to plummet next year.
Petrol is now so astronomically expensive, that it is driving people off the road, and costing the Exchequer money.
In the run-up to this debate, lots of people said:
"We all want lower fuel duty. But how can we pay for it?”
This is back-to-front: evidence suggests we are on the wrong side of the Laffer curve, and that lower taxes might actually increase revenues.
The Government's own figures show that between January and June this year, "1.7 billion fewer litres of petrol and diesel were sold compared to the first half of 2008”.
The AA believes that this equates to £1 billion pounds in lost revenue for the Treasury.
As the Chancellor said earlier this year, we must "put fuel into the tank of the British economy”. Cutting fuel duty is the way to do it.
4. THE ECONOMIC IMPACT
The economic impact of all this is disastrous.
Earlier this month, ex-Tesco boss, Sir Terry Leahy, blamed the catastrophic slump in retail sales on the cost of fuel. He told The Sun:
"I don't think people fully appreciated what an oil shock we've had. Filling up the family car has gone up 70% in two years, causing what was a steady recovery to go sideways.”
UK haulage firms are being driven out of business, as they face higher taxes here than in nearby countries such as Ireland, with whom we share a land-border.
To its credit, the Government has taken some action, and foreign lorry drivers are now charged up to £9 a day to use our roads.
But still, the insolvency firm SFP have said three quarters of transport business failures in the last year have been caused by excessive fuel prices.
Fuel prices are literally adding to our dole queues.
In 2006, for example, when petrol was just 95p per litre, experts at the LSE and UCL, published research showing that unemployed workers who could not afford to drive, or commute to jobs, "stayed unemployed for longer”.
Since then fuel prices have surged by 40%, despite the recession and many workers suffering from redundancy or wage-freezes.
I accept that the Government is working on a "rural fuel duty rebate”, for remote islands like the Outer Hebrides - which is welcome - but it will help only a tiny number of motorists.
5. THE SOCIAL IMPACT
Let me explain how this hits my constituency. In Harlow, on average people are spending £1,700 a year just to fill their tank: a tenth of the average Harlow salary.
I met a Harlow man called Barry Metcalf a few weeks ago: he is self-employed, and uses his own car to commute to West Ham for work.
He now spends nearly £60 a week on fuel, and has seen a 35 per cent increase in the last year or two alone.
The Government defines "fuel poverty” as spending a tenth of your income on heating bills. But what about spending a tenth of your income just driving to work?
Of that £1,700 - around £1,000 is taxation. That is why fuel duty is like a second income tax.
The Office of National Statistics confirmed just yesterday that fuel duty is regressive: the poorest are hit twice as hard as the richest.
Fuel duty is not just about economics, it is an issue of social justice.
This is especially true in rural communities, which are being destroyed by fuel prices.
CONCLUSION: TAX CUTS MUST BE A MORAL CREED.
In conclusion, there is a strong case for cutting fuel taxes - financial, economic, and social.
That is why we are urging the Government to...
- Scrap the planned 4p fuel duty increases, which are scheduled for January and August 2012.
- Create a price stabilisation mechanism that smooths out fluctuations in the pump price.
- Pressure big oil companies to pass on cheaper oil to motorists.
- Set up a Commission to look at market competitiveness, and radical ways of cutting fuel taxes in the longer term.
But there is an ethical case for cutting fuel duty, too.
We must show that tax cuts can be a moral creed.
We must show that this is a Government for the many, not the few.
A Government that cuts taxes for millions of British workers, not just for millionaires.
I urge the Government to listen to the 116 MPs who have signed the motion; to the 111,000 people who have signed the FairFuelUK e-petition; and to the many millions of families, small businesses, and pensioners struggling with fuel costs.
We must treat this is a serious issue, and I hope members will support the motion.
Robert Halfon MP - working hard for Harlow