Help for Andy. Sometimes you gotta help out a Labour leadership candidate in need, so this one is for Andy Burnham. The above graph shows the average price of a litre of unleaded petrol across the whole of the last Parliament – it was roughly 116p last month. I’ve done a separate graph for diesel, which you can see by clicking here.
Tax to the max. Aw, who am I kidding? The actual reason for this To The Point post is the news that George Osborne might increase fuel duty – in line with inflation – in his forthcoming Budget. The graph shows how much of a litre’s cost is taken up by that duty, as well as by VAT and the basic commodity price. And it is rather a lot. 57.95p, or 50.1 per cent, of last month’s 116p was accounted for by fuel duty. 77.24p, or 66.7 per cent, was accounted for by tax in general.
Osborne’s fight… It could, however, have been much worse. The flatness of that dark blue area on the graph is testament to Osborne’s efforts to control fuel duty, which has been frozen at 57.95p since March 2011. Had he not done so, and simply followed Alistair Darling’s plans, it would now be 20 per cent higher. But he did do so, and motorists have enjoyed what amounts to a 22 per cent real-terms cut in the levy. This has lost the Exchequer about £6.2 billion of taxpayers’ cash in the current financial year.
…and oil’s fightback. But what sticks out to my eyes, aside from the high overall rate of tax, is the inconstancy of petrol prices. They went from roughly 115p in September 2010 to a high of 142p in April 2012 to a new low of 107p in February of this year, with various palpitations in between. And none of this is due to anything written in Osborne’s Budgets. As he put it himself, in his New Year’s address of 2014, ‘there’s no point pretending that there’s some magic wand a Chancellor can wave to make the whole country feel richer than it actually is – or that I can control the global oil price from an office in Whitehall.’
Throwing in the towel. This, I suspect, is why the Chancellor is considering raising fuel duty rates now. For the past few years, he has been generous with pennies. But his munificence can be either undone or surpassed by a single day’s trading on the oil markets. Perhaps motorists’ plaudits are no longer enough of a reward for this Sisyphean struggle. Perhaps Osborne would rather hang on to the money in the first place.