Robert Halfon is a member of the 1922 Committee Executive and MP for Harlow
This is the first in a series of five articles this week on Popular Conservativism – and approaches to policy
More than any other Government in recent decades, the Chancellor has done everything possible to keep down the cost of petrol and diesel.
This is the first Parliament in which fuel duty has not just been frozen, but also cut (in 2011) by one pence. By contrast, Labour, which goes on about the ‘cost of living crisis’, not only increased fuel duty, and escalated the escalator, but also voted against all the Coalition’s fuel duty cuts in the recent Budgets. In tax terms, fuel duty is 13p cheaper than it would have been had Osborne carried on with Labour’s Budget plans.
Yet despite the efforts made by the Government, fuel duty remains a number one cost of living indicator. The average motorist on average earnings spends £1,700 a year filling up the family car. Although petrol and diesel prices have gone down a little in recent weeks, they still remain a major brake on improving the cost of living.
So what can be done?
First; Transparency. When we pay for our motoring fuel, we should know how much the Government is taking in tax, and how much is taken by the oil companies. Fuel duty cuts, or freezes each year, should be shown on our petrol receipts, with additional information on how much tax the Government is spending on the road network. Information on our petrol receipts would ensure that the motorist would know if oil companies were ripping off the consumer, if the oil price fell internationally.
Second; Tax Cuts: when the country is in an economic position to do so, fuel duty should be a prime candidate for a tax cut. Every penny off fuel duty saves individual motorists and businesses millions, and cuts the cost of food and the price of public transport. In essence, a fuel duty cut is a tax cut for everyone. There should also be a long-term look at the burden of petrol and diesel tax which, including VAT, are around 60 per cent. Perhaps motorists would be more accepting of road tolls if there was a concomitant decrease in fuel duty.
Third; Fair Competition. The Government should not be afraid to put pressure on the oil companies if there is evidence that motorists are being ripped off. There are too often cases of a rocket and feather approach at the pumps. When the global oil price increases, petrol prices go up pretty quickly. When the international cost of oil falls, it takes much longer to feed through at the pumps. The OFT should carry out a full – at least, year long inquiry – looking at anti-competitive behaviour by the main oil companies.
Transparency in fuel pricing, cutting fuel duty and ensuring fair competition would do much to alleviate the cost of motoring. It would be recognised by the public as a serious response to dealing with what has become a major burden. Unlike Labour on energy prices, Conservatives are in a good position here because the Government has earned the trust of the public by freezing fuel duty thus far.