MAKING THE CASE FOR A FUEL DUTY REGULATOR

There is a more than reasonable case for a fuel duty regulator who would cap the price of petrol at the pump when it rises too quickly. A rise in oil prices means an increase in petrol prices, which in turn leads, as petrol prices increase, to an increase in the amount the Government receive from VAT.

Under the fuel duty regulator plan, the Government will announce an expected yield from fuel duty and VAT in every Budget and PBR which will show the relationship between fuel duty and VAT. If there was a fuel regulator, then this would mean that if there was an unexpected spike in oil prices, fuel duty would be frozen while the increase in VAT caused by the price spike means that the Government would receive the predicted yield.

When there was a massive spike in prices in 2008, the Government found itself with an unexpected windfall while ordinary families were left struggling to survive.The purpose is not necessarily to prevent an increase in fuel duty but to smooth the shocks that come about from a volatile market. This protects poorer families and those living in rural areas who are more reliant upon cars, as well as any industry which requires petrol, e.g. haulage, taxis etc. It also impacts upon the public sector, such as police and ambulances.

The regulator as suggested only works in one direction. There is not an alternative if the market slows down. Over the longer term there is no future of fossil fuel based transport systems, Plaid favours the development of sustainable public transport which would enable people to reduce fossil fuel usage where possible, we believe in developing a sustainable green economy and more research and development to normalise more environmentally sustainable methods of transport than those which are oil-based (e.g. electric cars).

Now the idea of fuel regulator is not a new idea, Plaid and the SNP put down a motion (in 2008) on this very subject, which when it went to a vote on 2nd July 2008 resulted in a result of 308 to 14. Labour voted against, Conservatives and Liberal Democrats sat on their hand and abstained, while Plaid and the SNP voted for. Some two weeks later, on the 16th July 2008, the Tories put down a similar motion. That time Labour and the Liberal Democrats voted together against the motion, while Plaid voted in favour.

An Early Day Motion, was tabled this week by Plaid’s Adam Price MP and the SNP’s Stewart Hosie MP, reads:

That this House notes the recent unexpected spike in the price of petrol at the pump, recognises that unexpected increases in the price of fuel impacts significantly upon hard-working families, businesses of all sizes, seriously affects those living in rural areas who have no transport alternative except private cars, and impacts upon the costs of public services; recognises the need for greater research, development and support for reducing our dependency upon oil for everyday use, but in the short-term calls for a freeze on fuel duty in this Budget to protect those affected by the current price spike and further calls for a fuel duty regulator to prevent unexpected spikes in prices from affecting hard working families in future.