Ultra-low Sulphur Petrol (Hansard, 21 February 2001)

§ Lord McIntosh of Haringey

The Chancellor of the Exchequer announced in the Pre-Budget Report in November that the Government would reduce duty on ultra-low sulphur petrol (ULSP) on Budget day this year, in recognition of its environmental benefits, subject to consultation and it being widely available.

Ministers have today met the major oil companies to discuss this issue. On the basis of that meeting, I am glad to say that we believe that the oil companies are on track to meet their target to supply ULSP nationwide at their retail sites by the end of March.

Ministers also asked representatives of independent petrol retailers to meet us today. They operate over 5,000 retail sites across the country. Many are small businesses, often playing a vital role supplying rural and urban communities.

Although some independents are already supplying up to 50 per cent ULSP, their representatives indicated that they anticipate that it could take independent retailers longer to complete the nationwide transition to ULSP than for the major oil companies, because of constraints on the capacity of UK oil refineries.

The independent retailers could move faster by increasing imports, but this might cause uncertainty in the wholesale and retail markets and would not necessarily be to the benefit of motorists.

The Government's objectives are to ensure that everyone should be able to share the environmental benefits of ULSP, and the benefits of the duty cut associated with it. It is in the whole country's interests that these objectives are achieved, and achieved as smoothly as possible.

Any decisions on actual duty rates will be taken and announced by the Chancellor in the Budget itself but, as a sensible measure that will be supported by independent petrol retailers, to guarantee that all motorists would benefit from a cut in duty on Budget day, I can announce that the Government intend to match any reduction in duty on ULSP that is announced in the Budget with a reduction in duty on unleaded petrol for a temporary period until 14 June 2001.

This will ensure that the introduction of ULSP across the country will happen in the smoothest way, and that car-drivers—especially in rural areas supplied by independent petrol retailers—will be able to benefit from any duty cut that is announced in the Budget for ULSP. We want to match nationwide availability at 98WA the major oil companies with all motorists benefiting from any duty cut at independent stations too.

In this way we best achieve our aims set out in November—first, that the long-term benefits to the environment are achieved; second, that motorists would be able to benefit from a cut in petrol duty on Budget day; and third, that the benefit would go to all motorists in all areas.