Fuel Duty — Balance against oil prices — rejected — 16 Jul 2008 at 18:50

The majority of MPs voted against the motion, which read:^[1]

• This House
• notes that oil prices are now almost $150 per barrel;
• further notes that diesel in the UK is the most expensive in Europe; acknowledges the sharp rises in fuel prices over the past year and the resulting impact on headline inflation figures;
• recognises the financial pressure this places on hard-pressed families already struggling with soaring food and housing costs;
• condemns the Government's continued dithering over the implementation of the two pence increase in fuel duty, planned for the autumn, as neither a sustainable nor a stable way to make tax policy;
• further notes that a balancing mechanism to adjust fuel duty in line with changes in the price of oil would have reduced the current price of petrol by five pence per litre since March 2008; and
• calls upon the Government to consider the implementation of such a balancing mechanism to ensure that the burden of rising oil prices is shared fairly between government and families, the sensitivity of the public finances to changing oil prices is reduced and the cost of carbon can be stabilised to send consistent environmental signals.

In its place the an alternative motion was proposed:^[2]

• This House
• recognises the pressure that the increase in fuel prices, caused by pressures from the international oil market, has put on business and families;
• welcomes the Chancellor's decision to defer the planned two pence per litre increase in fuel duty that was due to take place in April 2008;
• notes that while fuel prices have increased by over 20 per cent. since last October, fuel duty has stayed constant;
• also notes that had the escalator introduced in 1993 been in place since 1999, fuel duty would now be 29 pence per litre higher;
• supports the Government's global leadership on this issue, in particular at the recent Jeddah Energy Meeting, and welcomes the Government's intention to host a follow up to this meeting in London later this year;
• further recognises that the Government does not receive a significant windfall when oil prices rise, because any additional revenues from the North Sea are likely to be offset by other effects; and
• therefore further notes that a system which would automatically cut fuel duty when oil prices rise would be destabilising, creating volatility for the public finances and uncertainty for the financing of public services, and would create considerable pressure for tax increases elsewhere.

which passed without a further vote.

Note that when this proposal was made to the Finance Act earlier in the year to actually establish such a balancing mechanism in law, virtually no Libdem or Conservative MPs voted either way.^[3]

Citizens interested in the subject might also be interested in another scheme relating to rural petrol prices which was proposed at the same time.^[4]

• [1] Philip Hammond MP speech, House of Commons, 16 July 2008
• [2] Yvette Cooper MP speech, House of Commons, 16 July 2008
• [3] Finance Act - General fuel duty regulator - rejected, House of Commons Division, 2 July 2008
• [4] Finance Bill - Remote rural fuel discount scheme - rejected, House of Commons Division, 2 July 2008

Debate in Parliament | Source |