UNDER PRESSURE?

Under pressure?

The Chancellor's announcement that the proposed fuel duty rise of 3 pence (which was set to be introduced in August) but has now been scrapped should be welcomed for what it is - a U-Turn. George Osborne's decision comes after a long campaign jointly led by Plaid Cymru and the SNP which put sustained pressure on the government to act over the issue which proved to be another 'elephant in the room' as far as the latest Budget was concerned.

Plaid Cymru Parliamentary Leader Elfyn Llwyd MP said:

"I am very pleased that the Chancellor has finally seen sense and scrapped this damaging proposal which would have put even more strain on businesses and ordinary people's pockets during a time of financial crisis.

"This was the elephant in the room as far as the Budget was concerned, with the Chancellor repeatedly ignoring the fact that soaring fuel prices were the main drivers of rising inflation.

"Rising fuel costs impact the daily lives of the majority of ordinary people, particularly in rural areas such as my Dwyfor Meirionnydd constituency where efficient transport is essential.

"This latest in a string of government u-turns will offer people some relief as they struggle to make ends meet - at least until the end of the year as the Chancellor has noted.

"However, it is a shame that it took until this morning for the Labour Party to declare its support for this hugely important campaign. Had they acted sooner, a full cross-party campaign may have pressured the Chancellor into changing his mind months ago.

"Sadly, Labour's lethargy and the Coalition's complacency has yet again left many people suffering unnecessarily.

"Plaid Cymru alongside the SNP have been calling for a genuine fuel duty stabiliser for nearly a decade and that is yet to be achieved, but at least this further damage has been avoided.

"We can only hope that in future, campaigns which put people before politics will be met with greater enthusiasm from all parties."

TIME FOR A FUEL DUTY REGULATOR

Rapidly rising fuel prices have prompted calls for the introduction of a fuel regulator. While we are all getting hammered by high fuel prices, the situation is worse in the more rural areas of Wales. The introduction of a fuel regulator who would cut fuel duty when prices spike unexpectedly, freezing the price at the pump. George Osborne, in the Budget later this month should introduce a genuine fuel duty stabiliser, something that is supported by motoring organisations and the Federation for Small Business, this would cap the price of petrol at the pump if it increases beyond expectation.

The Chancellor should also look at extending the rural fuel duty derogation which is currently being trialled in parts of Scotland where 5p per litre is cut from the bill. Plaid (and the SNP) have long recognised this problem and have been pushing for it in Budgets in 2005 and 2008 with widespread support from real people outside parliament. New Labour ignored the problems of rising fuel prices, the Conservatives simply lifted the idea, watered it down and re-branded it as their own.

We are all suffering from the consequences of the massive hike in the cost of fuel recently, not all of it down to the rising cost of oil. The Tory-led Government's VAT increase and fuel duty hike last year merely pushed the price of a litre up. Businesses and especially families in rural areas, where a car is a necessity not a luxury are facing the pain because of these choices. For the short-term we need to have a fuel duty stabiliser and a special price for fuel in rural areas, but we also need to diversify and invest in renewable energy alternatives to reduce our reliance upon oil and other fossil fuels.

FUEL PRICES DEBATE

Plaid and the SNP have a debate at Westminster (this afternoon) which will help to pressurise the UK government into taking action on rising fuel prices (which is hitting all of us either directly or indirectly). Plaid and the SNP are calling for the Con Dem Government to consider a regulator to cut fuel duty when oil prices rise. Both parties will make their case during an opposition debate in the Commons.

Speaking ahead of the debate, Plaid Cymru spokesperson for Transport, Jonathan Edwards MP, said:

“Plaid Cymru and the SNP recognised this problem long ago – we pushed for it in Budgets in 2005 and 2008 with widespread support from real people outside parliament. Unfortunately, Labour stubbornly ignored the problems of rising fuel prices while the Conservatives scared of supporting our idea decided to steal it, water it down and re-brand it as their own. There has been a massive hike in the cost of fuel recently, not all of it down to the rising cost of oil. The Tory-led Government's VAT increase and fuel duty hike have pushed the price of a litre up by at least 3.5p in the last month alone.Businesses and especially families in rural areas, especially in many parts of Wales, where a car is a necessity not a luxury are those who are facing the pain because of these choices. For the short-term we need to have a fuel duty stabiliser and a special price for fuel in rural areas, but we also need to diversify and invest in renewable energy alternatives to reduce our reliance upon oil and other fossil fuels.”

SNP Treasury spokesperson Stewart Hosie MP said:

"This may be the only opportunity MPs will have to debate fuel prices ahead of the Budget in March and the fuel duty increase in April, and so it is crucial that we persuade the Tory-led government to honour its pre-election pledge and establish a fuel duty regulator.The country is crying out for action to bring down fuel prices, and this SNP / Plaid debate will be a focus for that. Westminster's inaction has made this an enormous issue for the Scottish Parliament elections in May. Its a huge issue on the doorstep and the forecourts because and a key illustration of why we need to build up Scotland’s Parliament, and equip it with the full powers of financial responsibility. A Fuel Duty Regulator – which the Tories supported before the election – would bring duty down when oil prices go up. Cutting fuel by 10p per litre in Scotland would only cost about half of the estimated £1 billion in extra revenue the Treasury is set to rake in as a result of rising oil prices. It's a national scandal that in Europe's oil-richest country, Scots are paying among the highest fuel prices.”

Plaid Cymru / SNP motion:


This House notes the oil price has reached $100 a barrel; that diesel in the UK is the most expensive in Europe; further notes that the combination of the 1 January 2011 duty rise and the VAT increase is estimated to have added 3.5p to the cost of a litre of fuel; 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 and businesses already struggling with high inflation and the impact of the recent VAT rise; condemns the government's continued dithering over the implementation of a fuel duty regulator (or stabiliser) as neither a sustainable or stable way to make tax policy; further recognises the specific additional fuel costs for those living in remote and rural parts of the UK; is concerned that diesel in such places is approaching £7 per gallon; condemns the Government for its failure to prioritise the implementation of a fuel duty derogation; and calls for the introduction of a fuel duty derogation to the most remote areas at the earliest opportunity.

The Conservative Party had promised to look into a "fair fuel stabiliser" in their election manifesto, back in January, David Cameron was considering ways to help cash-strapped motorists. More recently, however,  Cameron has played down the possibility of a "fair fuel stabiliser" to limit fuel duty rises. The fact that UK Government benefits to the tune of 600 million a week in fuel duty may be a contributory factor in relation to the PM’s indecision, just as it was with former New Labour PM, Gordon Brown, perhaps Mr Cameron should declare an interest?

TIME TO DECLARE AN INTEREST?

Everybody is getting hit hard by the high fuel prices, if the Prime Minister breaks his promises on introducing a fuel duty stabiliser then the poorest in society suffering more than the rest of us. The Conservative Party promised to look into a "fair fuel stabiliser" in their election manifesto, in early January, David Cameron said he was considering ways to help cash-strapped motorists. More recently Cameron has played down the possibility of a "fair fuel stabiliser" to limit fuel duty rises. The fact that UK Government benefits to the tune of 600 million a week in fuel duty may be a contributory factor in relation to the PM’s indecision, just as it was with former New Labour PM, Gordon Brown, perhaps Mr Cameron should declare an interest?

There is an urgent need to see measures put in place to stabilise prices before they rocket even higher. Implementing a Fuel Duty Regulator would at least bring duty down when oil prices go up – and cap prices at the petrol pump. I think that there is little chance that Cameron will keep to his word or his election pledge on introducing a fuel duty stabiliser, as this UK Coalition Government seems to have shed any real principles as regularly as the snow melts in warmer weather.

The Federation of Small Businesses (FSB) says the UK now has the second highest diesel price in Europe - something which it says is causing great difficulties for hauliers and other businesses dependent on road transport. They point out that in Europe, the total price is split about 50/50 between the cost of the fuel itself and tax, yet, in the UK, the average product price is 38% of the total, with the remaining 62% coming from tax. Fuel duty already costs 58.95p for every litre. Average prices at the pump are now around 127p per litre and the Retail Motor Industry Federation has written to the Chancellor asking him to scrap the planned fuel duty increase, due in April.

Prices reached $147 a barrel before the recession in 2008 but are currently about $100 a barrel. The average price of petrol is rising at the highest rate for 10 years. The average cost of a litre of unleaded petrol has gone up by 6.13p since mid-December to a record 128.27p (£5.83 a gallon). The price of diesel is even higher and in some rural areas the cost of fuel is more than 20p a litre above the average figure. There are further increases in duty planned for April as well as expected rises in the price of oil. The 4th January VAT hike to 20% and a simultaneous rise in fuel duty, did little to help matters, as motorists saw 3.5p added to the cost of a litre.

Plaid Cymru has long favoured a new system of regulating tax on fuel in order to mitigate the effects of high prices at the pumps, and for a fuel duty regulator to cap the price of petrol at the pump when it rises too quickly. Wholesale oil prices will inevitably rise over the next few years as the world economy re-builds itself in the face of an increasing demand for oil and all of us will pay for higher fuel prices directly or indirectly. What's needed is an increase in sustained investment in renewable energy sources which would boost our economy without damaging the planet. It is scandalous that Wales was left out of recent pilot programmes for electric cars, but recent experience tells that for many Westminster Governments (Conservative or New Labour) Wales is so often out of sight and out of mind.

LAST EVENING'S HUSTINGS

The NFU Monmouthshire Hustings took place last night (at Alice Springs Golf Club, near Usk) and was well attended (which seems to be the pattern of Hustings of late). The questions covered a wide range of topics, some of which related to farming (and agriculture) including the economy, the banking crisis, supermarkets, party funding, fuel prices and micro- generation. 

Not surprisingly there was a focus on the future of farming (especially focusing on how the next generation of young farmers will get into the business. This is something that Elin Jones AM, Plaid Minister of Rural Affairs has began to address with the Young Entrants scheme. The farmers present were well aware of the Minister's ongoing activities on their behalf.

The slow but steady increase in fuel costs will have a harder impact in rural areas (where there is a lack of public transport) and also on food prices, where rising costs will hit both consumers and producers, with increased prices, falling profit margins and higher fuel bills - something that will hit both production and transportation costs. None of this is good news for either our farmers or us their customers.

One thing, we in Wales, cannot afford to neglect of the important agricultural sector, which still makes a significant contribution to our rural economy. And speaking of the farmers old traditional friends, it's worth remembering that not that long ago in the 1980's it was a Tory Secretary of State who literally sat by and quietly did nothing when many of our Dairy farmers got hammered into the ground by cuts in the milk quota.

Oddly enough when I mentioned this last night it was not picked up by the incumbent Tory MP who chose not to say a word on the subject. Whoever emerges from this Westminster election, in pole position (or on top of the pile) never again must any Welsh Minister fail to stand up and be counted and to fail to argue their corner on behalf of Welsh farmers.

We need to take practical steps to give Welsh farmers a fighting chance of making a real living; securing 80% of publicly procured food locally by 2015 is a realistic and practical aim. This is something that could provide the first practical step towards helping Welsh farmers and other producers make the most of the new opportunities that will arise from higher public purchasing of local products.

PLAID BUDGET RESPONSE 2010 (from Elfyn Llwyd MP)

"Last year I warned that the Welsh budget – the money that pays for our public services, our health, our education – was under threat because of cuts made at Westminster. The London parties said we were scare-mongering, but Wednesday’s UK Budget confirmed our worst fears.

The figures published yesterday showed a 5% real terms cut in the Welsh budget, hundreds of millions of pounds, not from some fantasy point in the future but in the 2010-11 financial year which starts in two weeks time. We will have £800m less to spend on Welsh public services in the next year than we should, and between now and 2014 we are likely to be much more than the £3bn worse off that we first thought a year ago.

This is neither fair funding nor a fair deal for Wales. Plaid Cymru were the only party to see this. We were the only ones who cared about our Welsh public services, about our council jobs, health and education, and the only ones facing up to the reality of the situation.

But we in Wales have no have say in these cuts. These are cuts imposed upon us by Labour and Tory masters in London, at Westminster. What’s worse is that Wales has been under-funded for many years and will continue to lose out in the future, as shown by the independent Holtham Commission, which estimates that Wales is losing at least £300m per year under the current system.

Under Labour, public spending in England and Scotland grew faster than in Wales. We in Wales have been taken for granted, and it is still only Plaid Cymru who are fighting for fairer funding, based around the needs of the people of Wales, the outcome recommended by the Holtham Commission.

Despite the successes of the One Wales Government such as ReAct and ProAct, hard working families and businesses all across Wales will still be feeling the pinch when new fuel duty rises kick in next week on what will inevitably go down as ‘April Fuels Day’.

By next January Labour will have increased fuel duty by a massive 17% since December 2008. This means that fuel duty will make up 59p in every litre when people go to the pump. It is a regressive tax that will hit families, businesses and public services budgets hard, and especially those in more rural areas who have less choice in how they travel or how far they have to go for the services they use.

When the time comes we will be fighting these tax rises and repeating our call for a fuel duty regulator which would cap prices at the pump. Labour introduced an even stealthier tax when they froze the income tax threshold. This will increase the amount of tax being paid by hard-working people and impact strongly upon low-paid families here in Wales. In contrast, Plaid would have increased this threshold by £1,000, taking thousands of people in Wales out of paying income tax altogether and putting more money in people’s pockets.

That’s why, in Plaid Cymru, we’re different. We put people first

We would also have increased the basic state pension for over-80s to the level of pension state guarantee to fight pensioner and fuel poverty, whilst increasing taxes on those who are very well off through bringing down the threshold for paying the 50% tax rate and levelling capital gains tax with income tax for example.

This can be afforded – by taking away tax breaks from the already well-off. They don’t need it… our pensioners and those on low incomes, do.

When times are tough it is a question of priorities – and only Plaid Cymru would put the people of Wales first, while Labour and the Tories are more worried by fat cat pin-striped City bankers who are back to their old tricks now after we risked billions of pounds of our money to bail them out.

Our economic future in Wales depends on there being a hung parliament, with neither Labour nor the Tories in overall control. It’s only when your votes matter that they start to pay attention to ordinary people. Plaid Cymru doesn’t owe anything to the City of London, only to the people of Wales – that’s why we’re different. Our policies reflect that and we go to Westminster to get the best deal for Wales, not to listen to anybody else."

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.