HC Deb 06 April 2000 vol 347 cc1143-5
6. Mr. Nicholas Soames (Mid-Sussex)

What recent representations he has received on the level of petrol duty. [116606]

The Paymaster General (Dawn Primarolo)

Before the Budget, Treasury Ministers received a number of representations about the level of petrol duty. Representations were received from the AA, the RAC and the Petrol Retailers Association. In addition, many private individuals contacted their Members of Parliament, who then wrote to Treasury Ministers on their behalf.

Mr. Soames

The Paymaster General will recognise that all those people will have been gravely disappointed by the outcome of the Budget. Will she confirm that the average motorist is now paying more than £200 extra a year in petrol tax under Labour? Does she not realise that for many people, particularly in rural areas, a car is essential, not a luxury, as it is for her? Does she further agree that with the regrettable closure of banks and other rural services, old people are being put at a grave disadvantage, with inadequate means to support a car?

Dawn Primarolo

I am glad to see the hon. Gentleman in the House. I remind him that his party introduced the escalator. In the Budget we made no real increase in the level of petrol duty—the lowest increase for nearly a decade. The Conservatives failed to match that in government. I take his concern for people living in rural areas with a pinch of salt, because when the Conservative Government had the opportunity to act, they failed to do so.

Mr. Christopher Leslie (Shipley)

I welcome the decision to have no real increase in petrol duty this year. Will my hon. Friend take this opportunity to confirm that much of the recent price rise in petrol has been a result of profit taking by oil companies, perhaps including the oil exploration company Kerr McGee, to which the shadow Chancellor is a paid consultant?

Dawn Primarolo

The world price of oil has clearly contributed to the rise in prices at petrol pumps. That is outside the control of the Government. The AA welcomed the Budget, for the first time in a decade. It particularly welcomed the £280 million investment in the transport fund and the fact that there was no real increase in the price of petrol.

Mr. Eric Forth (Bromley and Chislehurst)

Will the Minister explain why the penal rate of tax on vehicle petrol is justified on environmental grounds—presumably to discourage use—when the Government reduced the tax on domestic fuel, which causes even more pollution?

Dawn Primarolo

I am slightly surprised that the right hon. Gentleman seems to be staking out a policy on behalf of the Opposition for raising VAT on domestic fuel and returning to the habits of Conservatives when in government, which the shadow Chancellor continually denounces. The Opposition need to make up their minds. Do they or do they not agree with reaching the Kyoto targets? Do they or do they not agree that we should have environmental obligations? If they do, will they explain why they oppose every measure to meet these obligations and deny all the steps that they took to take us further away from them?

Mr. Lindsay Hoyle (Chorley)

I welcome the removal of the fuel escalator—without doubt, its removal was welcomed throughout the country—but those of us who represent rural areas wish to see a way forward to reduce the cost of travel within our areas. Between now and the next Budget. what policies can be brought forward to make petrol cheaper and to ensure that rural petrol stations continue to survive?

Dawn Primarolo

I remind my hon. Friend that the Government took note of the particular problems for those living in rural areas and the transport difficulties that they experience, first with the transport fund and secondly with the reduction in vehicle excise duty, especially for the owners of smaller vehicles. The Government's policy across vehicle excise duty, petrol prices and investment in transport offers a balanced way forward both for those who live in rural areas and for those who live in our cities.

Mr. Howard Flight (Arundel and South Downs)

Will the Minister confirm that by using the little trick of raising petrol duty by an inflation index of 3.4 per cent. in comparison with the 1.2 per cent. inflation index for personal allowances, the Government have levied a further £500 million of tax on British working families?

Dawn Primarolo

I think that I am right in saying that the hon. Gentleman has never been in government, so I suppose he can be forgiven for not knowing how the tax system works. The methodology used for this year's increase is exactly the same as that which has been used in previous years. It is the same methodology that the Conservative Government used.