Petrol Tax (Promulgation) (Hansard, 8 February 2000)

§ Mr. Tony Baldry (Banbury)

I beg to move, That leave be given to bring in a Bill to impose an obligation on petrol retailers to display prominently at the point of sale of petrol a notice showing the percentage and amount of the cost of a litre of petrol which go to the Exchequer by way of tax and duty. The Bill will make it a statutory obligation that, at petrol pumps, the amount of tax per litre is clearly displayed. Rightly, over the years, Parliament has sought to ensure that, as far as possible, consumers have available the greatest possible information, on the basis of which they can make sensible judgments. Clearly, critical information for consumers is the true price of goods.

That is why, for example, at petrol stations, for a long time, there has been a clear indicator on petrol pumps of the equivalent cost of petrol in gallons and litres, so that consumers do not become confused. However, the Government are increasingly raising revenue by stealth taxes. It must be right that consumers, as both purchasers and taxpayers, have a full understanding of what they are actually paying to the Treasury and how much of what they are spending is going in tax. It is no good the Government trumpeting that they are not increasing the standard rate of income tax if they are simply increasing by stealth indirect taxes, often to the disproportionate cost of poorer members of the community.

Recent research by the AA showed that huge numbers of motorists are still unaware of how much of the price of a litre of petrol goes to the Government. Even after an intensive campaign last year, the AA estimated that only about one motorist in three is aware of that. It is plausible that those figures have tailed off further since and that, even if they have not, the vast majority of drivers are still completely in the dark. The Bill will bring to the attention of all motorists the substantial proportion of the cost of a litre of petrol that goes straight to the Treasury and Government.

The latest figures from the European Union weekly oil bulletin, compiled from petrol prices and tax rates in every member state, show that the UK petrol pump price is the highest in Europe. In most comparisons, it is considerably higher.

As I am sure hon. Members are aware, in this country, one pays at the pumps on average 73p for a litre of petrol. A litre would cost 64p in France, and only 60p in Germany. In Greece, a litre would be almost half our cost. In Europe generally, on average, it would be 14p per litre less than it is here.

The considerable price difference is not the fault of petrol distributors. Indeed, as we are one of the few European countries whose pre-tax price is less than the European Union average, the absurd price difference is even more perplexing. The fact is that our pre-tax petrol price is the second lowest in Europe but, despite that, the petrol price paid by United Kingdom motorists is twice that paid by motorists in Greece, for example.

As our pre-tax price is one of the lowest, it seems reasonable to expect the pump price here to be lower. That substantial difference is the fault not of retailers but of the Government, who force prices sky high with 80 per cent. taxation. A staggering £8 of every £10 spent on petrol goes in tax. Consequently, Britain's petrol tax rate is 119 almost 10 per cent. higher than that of all our European Union neighbours. Another consequence is that we end up with crazy situations in which Britain's retailers might pay one quarter less for petrol in Holland, yet our Exchequer takes a disproportionate 10 per cent. more in tax. The only reason for the difference is the need to fill the Exchequer's coffers and the Chancellor's election war chest.

As the first step towards bringing us into line with Europe, it would be fair to make the public fully aware of the amount of tax being paid. My Bill would bring to the attention of all motorists just how high a proportion of the cost of petrol is paid in tax. It would also bring to motorists' attention the fact that petrol tax now costs them more than £15 billion annually, and that—because of increases imposed since 1997, in the past three Budgets—petrol tax costs each motorist a further £150 per year.

If retailers have to raise prices to try to make a profit, the consequence for motorists is serious. Last month, the cost of unleaded petrol increased by more than 7p a litre, which is an additional burden created soley by the Government and forced directly on the motorist. It is clear that the vast majority of motorists are completely unaware—although they need to be made aware—that the burden is a burden simply because of the Government.

It is obvious, too, that the burden hurts most those who are least well-off and those who live in rural areas. The Government's tax on petrol is a double blow to those who live in the countryside. Those people have to contend not only with excessively high petrol costs but with a cost that will increase even further, when petrol is distributed to rural areas. Clearly, small rural filling stations have to pay a significant premium because of the distribution cost of petrol. The premium adversely affects the price of rural forecourts' petrol, with some prices as much as 10 per cent. higher. That only makes life more expensive for the rural driver.

As an extensive and detailed paper by the Institute for Fiscal Studies recently showed, one small increase in petrol tax can have a hugely distorted effect on a household's cost of living. That effect can only increase for those living in rural areas. Consequently, the situation can be very difficult if one is a less affluent rural driver.

Moreover, rural motorists tend to use their cars the most, simply because they have to use their cars the most. According to the Department of the Environment, Transport and the Regions, 85 per cent. of those who live in the countryside own a car, compared with the national average of 69 per cent. The Department also estimates that annual car mileage in the countryside is one third more than it is in urban areas. The reason for that difference is that, invariably, in the countryside, there is no viable alternative to the car.

Those who live in rural areas simply cannot rely on a bus service that is "Not Saturdays" or "Fridays and Saturdays Only". In some parts of my constituency, on a Friday, if one wants to catch a bus from a village to Banbury, one will have to do so before 5.30 pm or wait until Monday. It is a familiar situation that, as a recent survey by the Rural Development Commission revealed, must be reflected in many rural constituencies. The survey confirmed just how insufficient public transport is in the countryside, and discovered that, in the past decade, the number of parishes with absolutely no bus service had steadily increased, to almost one quarter of all villages.

120 The survey also found that, even in rural areas that did have some sort of service, another quarter of villages were without a daily service. A necessary conclusion must be that, at the very least, half of Britain's rural communities have to live without remotely sufficient public transport. The commission found an even poorer situation in rail services in rural areas. The truly astonishing fact is that, for 97 per cent. of those areas, there is no rail service at all.

Public transport provision is inadequate or non-existent for many people who live in the countryside. That is why so many of them have to use a car. The Department of the Environment, Transport and the Regions estimates that the number of journeys involving public transport is a quarter lower in the countryside than elsewhere. That should be blamed not on local councils, but on the Government, who have made less than 5 per cent. of the revenue generated from petrol tax available for public transport.

A bad situation is made even worse by Government policies, including the likely relaxation of planning policy guidance notes, which will create more out-of-town shopping centres away from residential areas and force drivers to use cars more. Even if public transport services were more reliable, those centres would be inaccessible. The south-east regional planning guidance looks likely to mean more housing and more travelling, mostly by car.

It is not surprising that rural motorists are hurt most by the Government's petrol tax. The Bill would make it clear why the tax was hurting by making it clear how much tax motorists were paying. That is only fair to motorists as consumers and taxpayers. Neither is it surprising that the amount of petrol consumed has risen. The Department of Trade and Industry estimates that 5 per cent. more petrol is being consumed since the general election. The increases in petrol tax, generating around £2 billion in revenue for every increase above inflation, have clearly not been introduced because of a loss in revenue from lower sales. That is all the more galling for motorists who have been unfairly penalised.

The Chancellor has announced plans in the pre-Budget report, after considerable pressure from the Conservatives, to abandon the fuel tax escalator. Even if he keeps that pledge, it will only put a stop to the automatic rise in petrol tax and will not remove the rises that the Government have already put in place. Neither will it alter the purpose of the Bill. The first and fairest step for all consumers must surely be a full public understanding of how much the Government are syphoning off in tax on petrol.

Question put and agreed to.

Bill ordered to be brought in by Mr. Tony Baldry, Mr. David Curry, Sir Peter Emery, Mr. John Gummer, Mr. Robert Jackson, Mr. Michael Mates, Miss Anne McIntosh, Mr. Nicholas Soames.