Today at the
Freedom Zone, I said
we urgently need lower fuel taxes, alongside Martin Vickers MP, Mark Wallace, Simon Richards, and Peter Carroll from the FairFuelUK campaign.
For many months now, I have campaigned for cheaper petrol, with the All-Party Group for Fair Fuel. This is because rip-off petrol prices are the number one issue in Harlow, my home-town.
We have started an
e-petition, which has received over 100,000 signatures. It is the third most popular e-petition, and will help us to force an MP's debate in Parliament on the issue.
Now I accept that George Osborne has taken some action. He scrapped Labour’s “fuel tax escalator”, delayed some “inflationary” tax increases, and cut fuel duty by 1p. But we urgently need to do more.
We need NO NEW FUEL TAXES IN THIS PARLIAMENT.
It is worth looking at the arguments in detail. Ultimately, I am campaigning for cheaper petrol, because...
- Fuel is already a huge burden. According to figures released by the Royal Automobile Club, the average motorist in my constituency of Harlow is getting fleeced for £1,700 a year just to fill up the family car. This is one tenth of the average local salary. The Government defines “fuel poverty” as spending a tenth of your income just heating your home, but what about spending a tenth of your income just driving to work? 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'.
- High petrol prices are causing unemployment. Businesses are under immense pressure, especially the road freight industry. Unemployment has stayed at around 2.5 million since the election, with petrol prices hitting 150 pence in some places, and there is increasing evidence that these are linked. In 2006, for example, when petrol was just 95p per litre, experts at the London School of Economics, and University College London, published a major piece of 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. The insolvency firm SFP have said that three quarters of transport business failures in the past year have been caused by excessive fuel prices, compared with Europe.
- UK Haulage firms are being taxed out of existence. Facing higher taxes than in countries such as Ireland, UK Haulage firms are being driven out of business. The Government has taken some action, as foreign lorry drivers are to be charged up to £9 a day to use our roads. But still, foreign drivers – who number one in eight of all those on the roads – have a huge advantage over British drivers as they pay no road tax or other charges.
- The wholesale oil markets are not competitive enough. As the Sunday Times reported a few weeks ago, the cost of oil has fallen by 18% in the past four months, but UK petrol prices have risen by nearly 2% over the same period. Data over the past 4 years, from the AA, shows exactly the same pattern. Cheaper oil is not being passed on to motorists, or businesses, and someone somewhere is making a lot of money out of that. The problem is not forecourts or supermarket retailers, which are very competitive: the problem is the wholesale market, which is dominated by just a few major firms. The lack of competition is similar to the beer market, where pubs are tied by strict contracts to the big brewers.
- Remember the Laffer Curve. Petrol is now so astronomically expensive, that it is now COSTING the Government money. This is because fewer people can afford to drive, leading to lower tax revenues. As I have raised in Parliament, figures from the AA show that the Treasury received £637 million less in revenue from petrol taxes than in the equivalent quarter three years ago. If this is true, it is disastrous. We urgently need a Laffer curve study of petrol taxes, by the Office of Budget Responsibility, or the Treasury, to see whether high taxes are actually making the deficit worse.
- The release of “strategic oil stocks” has helped investment banks, not motorists. This summer, Western countries staged the first release of 60 million barrels of "strategic oil stocks”. This was supposed to cut petrol prices for struggling motorists. But according to the US Department of Energy, much of the subsidised oil was actually diverted away from consumers, and hoarded instead by major American banks. The US Government has confirmed, for example, that JPMorgan bought over 150 million dollars-worth of the oil stocks, and instead of selling these on to motorists, they appear to have hoarded the oil on offshore tankers, waiting for prices to rise. As Bloomberg reported in 2008, they routinely do the same thing with heating oil. There is nothing wrong with trading. But if oil is subsidised by the taxpayer, is should go towards helping struggling motorists, not towards bank profits.
- Cutting fuel duty now must be a priority for the Chancellor, over and above the clamour to cut taxes for millionaires. Rip-off petrol prices are now so high they are a poverty trap, keeping people on benefits, as job-seekers can’t afford to travel, and businesses are struggling to stay afloat.
- Environmentalism has become a luxury for the rich. To those 'do-gooders' who say we shouldn't be using cars, I say: Get In The Real World. In Harlow, the question is not whether can you afford to have a car - but whether can you afford not to.
- Expensive energy costs are THE NUMBER ONE CONCERN for voters. As Conservative Home has
repeatedly said, electricity, gas, and petrol prices now outstrip all other issues in terms of public concern. Polling by Populus shows that two thirds of voters are “very concerned”, and a staggering nine out of ten voters are “concerned” overall. The Labour Party are waking up to the political realities of this, hence Ed Miliband is calling for reform of energy firms.
That is why my e-petition calls on the Government to:
1) Scrap the planned 4p fuel duty increases, which are scheduled for January and August 2012.
2) Create a price stabilisation mechanism that smooths out fluctuations in the pump price.
3) Pressure big oil companies to pass on cheaper oil to motorists.
4) Set up a Commission to look at market competitiveness, and radical ways of cutting fuel taxes in the longer term - especially around this issue of the Laffer Curve, and whether high taxes are actually costing us money.
by Robert Halfon - www.roberthalfon.blogspot.com
