Setting a match to the debate on petrol inflation

INFLATION is now rising faster than wages, and Britain faces a cost-of-living crisis. Astronomical fuel prices are the number one issue in my constituency: they are creating a poverty trap, and are a major brake on economic growth.

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 oil cartel’s blockade.

Ultimately, the problem is tax. Rip-off fuel taxes are crushing our economy, making our businesses uncompetitive, and hurting families and the unemployed as well. Right now, 66 per cent of the price at the petrol pump is taxation.

Even Greece and Spain, with all their debts, now have lower rates of fuel tax than Britain. How can this be right?

Inevitably, the recession hit sales of petrol and diesel in 2008. But even now that the British economy is growing – albeit slowly – sales continue to fall.

Since 1970, Britain’s consumption of petrol and diesel has risen to approximately 35m litres a year. But 2008 was the high-water mark. Since then, our consumption has fallen year-on-year, and the Department of Energy and Climate Change forecasts that it will continue to plummet next year.

Petrol is now so astronomically expensive that it is driving people off the road, and costing the exchequer money.

The government’s own figures show that between January and June this year, 1.7bn fewer litres of petrol and diesel were sold (compared to the first half of 2008). The AA believes that this equates to £1bn pounds in lost revenue for the Treasury.

This is disastrous: the government’s plan to balance the books depends on raising an extra £5bn from fuel duty revenues a year by the end of this parliament.

With fuel sales down last year; down this year; and estimated to be down next year, where will that extra £5bn in revenues come from?

The only way of squaring this circle is to scrap the planned increases in fuel duty for 2012, and to keep taxes as low as possible, to boost demand.

As the chancellor said earlier this year, we must “put fuel into the tank of the British economy”: we must flatten anything that gets in the way of growth.

To his credit, George Osborne did cut fuel duty by 1p at the budget this year, and delayed the inflationary tax rises. But we have to go further, for the sake of the ordinary businesses and citizens it affects.

That is why today I will move a formal motion in Parliament, triggering a debate on cheaper petrol. So far, 107 MPs from across the House of Commons have signed my motion, and over 110,000 members of the public have signed an e-petition supporting the FairFuelUK campaign. It is vital that the government treats this as a priority, and acts now to keep petrol prices low.

Robert Halfon is MP for Harlow. He is campaigning with FairFuelUK for lower fuel taxes. www.fairfueluk.com.