£1.30 a litre – more than 80p for the government

 

              I have always thought the oil companies miss an important presentational trick. They should put on the pump and on the receipt for fuel how much is UK tax. When almost two thirds of the fuel price is tax, people might like to know that so much of their very large bill is going to their local hospital or school, not to the fat cats of the oil company.

              All western governments tax petrol and diesel heavily, though the UK is one of the highest chargers whilst the US is still relatively low. The G7 countries take more money from the fuel consumer than OPEC or the other oil producers  who supply the raw material. The UK government takes almost twice as much  in tax as  OPEC gets from the sale.

             The VAT rise is tax on tax, and has taken UK fuel prices to new highs at the pump. Meanwhile the oil price itself is around $90 a barrel, compared with a high of over $140. It is time for the UK government to dust down its idea of a fuel price stabiliser operated through variable taxes on fuel, starting now with a reduction, to take some of the inflationary pressure of this latest move out of the system.

              Anyone from the US reading this might spare a thought for all those of us paying more than $9 a gallon.

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67 Comments

  1. Posted January 8, 2011 at 7:07 am | Permalink

    “Anyone from the US reading this might spare a thought for all those of us paying more than $9 a gallon.”

    Say that to an American and they will respond with “Free health care.”

    • lifelogic
      Posted January 8, 2011 at 11:05 am | Permalink

      Sometimes free but very rationed and with big waiting lists and rather poor results. Also very often procedures and drugs simply not made available to the elderly and certain patients. Poorly run and managed as a virtual monopoly overall and generally run for the convenience of the people running it. Look at the number of elderly who do not even get fed properly in hospital.

      The customers can see us and ring us when (and if) we feel like seeing them. They have little choice anyway so tough for them. We already have taken their money , taken under threat of imprisonment, anyway so best not to see them at all if possible.

      The US system is not the ideal either as the US litigation culture and the power of the legal, insurance and medical professions needs to be curbed there somewhat but better than the UK.

      • Stuart Rose
        Posted January 8, 2011 at 12:56 pm | Permalink

        The American replying, “Free health care” would be missing a very obvious point, namely that it isn’t free. For a start it costs at least 80p for every £1.30 spent on petrol, as well as some proportion of all the other taxes on which 40-50% of your income is spent.

      • Bazman
        Posted January 8, 2011 at 1:47 pm | Permalink

        Tell that to the millions without any healthcare and the other millions who have run out of healthcare payments or are being given the run-around by insurance companies.

        • lifelogic
          Posted January 8, 2011 at 4:25 pm | Permalink

          The US system is far from ideal, as I said, but better than the UK’s where very many die from lack of proper care. Just compare the overall figures for life expectancy for many of the serious conditions in the UK and US.

          In a good system the money need to be with (or follow) the patient but you need to avoid the problems of an over powerful medical profession, insurance industry, drugs industry and excessive litigation culture and under (and often over) diagnosis and treatment for profit. A doctor being paid large fees to treat you might perhaps think you would benefit from on going treatment/consultations for the rest of your life and doubtless the literature from the drug company will support his profitable decision!

          It could all be done it just needs the right structures and honest people running it but I doubt it will happen.

        • libertarian
          Posted January 8, 2011 at 7:41 pm | Permalink

          Bazman

          You’ve not heard of the public health care in the US then?

          The U.S. Census Bureau reported that a record 50.7 million Americans—16.7% of the population—were uninsured in 2009. More money per person is spent on health care in the USA than in any other nation in the world, and a greater percentage of total income in the nation is spent on health care in the USA than in any United Nations member state except for East Timor. Despite the fact that not all people in America are insured, the USA has the third highest public healthcare expenditure per capita.

      • lifelogic
        Posted January 9, 2011 at 9:24 pm | Permalink

        Today I read that the government wants us to give 10% of our income to charity too. This on top of the 50% the state extorts already for very little return. Could you please explain to Cameron that in order to earn any money at all most people do need to eat and cloth themselves and their families, pay their mortgage, heat, light, insure and maintain the house, save for a pension, pay off any student loans, buy medicines, perhaps spectacles and get to and from work so probably will need a car too.

        Does he own a calculator by any chance or could he please buy one on his tax free MP’s expenses. He might also note that the costs of travel to and from work and the costs of a second home are usually taxable expenses (unless you are an MP of course).

        Clearly it is somewhat easier if you do start off with inherited capital or an inherited house as many old Etonians do. He should not however imagine his contacts are typical. Anyway with 50% tax rates 40% IHT and the pound devaluing, as rapidly as it is, they are likely to become even rarer as his regime continues.

    • Jamess
      Posted January 8, 2011 at 9:32 pm | Permalink

      Who gets free health care cover?

      If we were given a tax rebate on half of the cost of the average person to the NHS for leaving the NHS and going private, millions would leave and get better health care, reducing NHS waiting times for those remaining, and decreasing the cost of the NHS faster than loss of tax revenue (most of which, of course, would be reclaimed back through taxing private healthcare).

  2. Posted January 8, 2011 at 7:45 am | Permalink

    Hello John,

    Yes very true. I’ll pass on your suggestion to those I know in the industry.
    Mainly within Shell.

    Saw Michael Gove last week at our Deepcut Development Public Meeting.
    MOD, Transport and Local Councillors all present to disuss the scale and
    some of the available design options.

    Good meeting, went well.

    Best wishes
    Brian Curnow

  3. lifelogic
    Posted January 8, 2011 at 7:45 am | Permalink

    All products should give a cost before tax on them at the shops. Perhaps even an estimate of the cost of pointless regulations too and tax (on their supplies and staff tax and NI too). So perhaps gin would be £12 with tax £1.20 without tax and regulations. Fuel £1.30 or 35p without tax and pointless regulations. PAYE should be abolished and tax paid at the year end so more visible to all.

    Also much is not going to the local school or the (usually rather badly run) local hospital it is going on the EU, Irish botched bail outs, silly vanity projects, overpaid and pensioned government managers and their pensions, often on corrupt contracts and corrupt overseas aid programs.

    These taxes and pointless regulations render UK business totally unable to compete in many areas and just push the jobs and tax base overseas.

    • lifelogic
      Posted January 8, 2011 at 7:55 am | Permalink

      Also there is no good reason to tax road fuel so much more highly than tractor red diesel, ship fuel, heating fuel, gas or electricity – why distort the market so road travel is very expensive but warming your house is relatively very cheap. There is more scope to save fuel at home anyway. Why not tax trains and buses the same as cars on fuel and VAT so there is a level playing field? After all they are not usually any “greener” all things considered.

      • JimF
        Posted January 8, 2011 at 7:38 pm | Permalink

        Because the roads need mending and the sea doesn’t 🙂

        • lifelogic
          Posted January 9, 2011 at 11:18 am | Permalink

          The ports inlets and rail tracks do need maintenance and very little of the fuel duty and vehicle tax raised is actually spent on road maintenance anyway.

        • alan jutson
          Posted January 9, 2011 at 5:13 pm | Permalink

          Jim F

          Additional Sea/River costs.
          Maintainance of Buoys
          Coastal erosion.
          Flood prevention.
          River bank erosion.
          You also need a river licence to operate a boat on the Thames friend of ours (who we have holidays with on occassion) with a power cruiser pays nearly £1,000 per year just to use the river.
          Mooring costs £5,000 (private marina)
          You cannot now use red Diesel in your boat (unless its for commercial use) as Gordon Brown allowed the EU to stop such use about 18 months ago.

          Normal fuel rates now apply (more expensive than on land) less an allowance for using diesel for heating on the boat. Typical tax allowance for the split is I believe 60% propulsion normal tax rate, 40% heating lower tax rate, per litre.

          Last time we went from Henley to Ramsgate (Thames to Sea) return. Last year £700 in fuel alone without Marina charges.
          From memory about 160 nautical miles return.

          Five years ago same journey, same boat, same speed, same weather conditions, same 4 poeple on board, cost was £200.

          Not now cheap to run a boat.

          By Brown giving in to the EU you will now find many power boats for sale, and a few boat manufacturers have since gone bust.

          Welcome to the law of unintended consequences, which seems to be rather obvious to most us, but seems to fail politicians.

  4. norman
    Posted January 8, 2011 at 7:49 am | Permalink

    A colleague of mine was complaining about the fact that it cost him £73 to fill his car this week. I pointed out that if government never taxed fuel it would have cost him around £25 (I wasn’t aware of the actual figures so seems I was a little off). We should all do this with friends and colleagues whenever this comes up in conversation.

    Or when you yourself are making a journey, calculate what it would cost you with and without taxes. We now live in such a highly taxed environment that the figures are becoming startling, in every activity we undertake, not just transport.

    Maybe not so good an idea if you suffer from high blood pressure, don’t want to cause accidents.

  5. Mick Anderson
    Posted January 8, 2011 at 7:59 am | Permalink

    I remember the Conservative suggestion for a fuel stabiliser.

    However, considering that they have just raised fuel duty as well as VAT, I now put that memory down as normal (spin ed) electioneering.

  6. lifelogic
    Posted January 8, 2011 at 8:06 am | Permalink

    Perhaps the taxpayers alliance could do the tax regulation computations for products as a mobile phone app just to depress us every time we bought fuel or something. If people new what the state was costing they might finally rebel – not that they will be able to do much through the ballot box any more given the system of so called democracy we now have.

  7. alan jutson
    Posted January 8, 2011 at 8:32 am | Permalink

    John

    Good idea to have seperate tax listed on all reciepts, especially as its now a very large proportion of the final cost of almost everything (even some types of foodstuffs).

    Not sure about the idea that you feel good about the amount of tax being spent on runing hospitals and schools, most may think its going to waste on undeserved benefits, quango’s and the like, and should thus be very significantly lower.

    As for the price of fuel, its now got to quite excessive levels. Very few people go out for a country ride for pleasure any more, most journey’s are essential, either getting to work, transporting goods, people or tradesmen . Given that rail fares are also some of the highest in Europe, and many bus services do not run after the rush hour (outside of Cities) you have no choice but to use your own transport if you want to be independent and have some control of your own time.

    Cars have never been greener or more fuel efficient, So industry has done its bit, but still the motorist is hammered when on the move, and even when stationary given the price of some car parks and parking permits.

    What do we get in return for all of this tax. Poorly serviced roads, built in obstructions (humps and chicanes), a proliferation of traffic lights, yellow lines, congestion charge areas, and reduced expensive parking.

    With the government now taking nearly half of ALL working peoples wages, MORE THAN HALF from the better paid, you really do wonder if its worth working at all, after all, Benefits seem to be free of any tax and rise with inflation.

    • John McEvoy
      Posted January 9, 2011 at 9:12 am | Permalink

      “What do we get in return for all of this tax” You forgot the fines and harassment in the form of speed cameras and speed traps.

      • alan jutson
        Posted January 9, 2011 at 5:19 pm | Permalink

        John McEvoy

        Yes, and when you flash your lights to warn oncoming motorists of a speed trap ahead, you get taken to court and found guilty of obstruction of the Police in doing their duty (recent case in the Press)

        Thought Cameras were supposed to be a deterent against speed, so the flasher was surely helping the police, and the motorist at the same time, which is to get people to drive within the speed limit.

  8. Posted January 8, 2011 at 8:32 am | Permalink

    The problem is that the fuel rises are not needed to pay for the local school. It is difficult to believe that they are needed to reduce the deficit when David Cameron gaily whips MPs into voting hundreds of millions of pounds extra to the EU.

    Our membership bill is about £15 billion for this year alone. What do we get? Obligations to spend even more, about £150 billion on ‘carbon reduction’, ‘smart meters’, ‘wind turbines’ and other PC rubbish we can do without. If we just got out of the EU, it would be amazing how quickly we could reduce the deficit, making a bit more available for things voters want, like hospitals and schools.

  9. Brian Tomkinson
    Posted January 8, 2011 at 9:53 am | Permalink

    Whilst sharing your sentiments about the high proportion of the price of fuel going in tax, I think that your suggestion that we should be told that this is going to our local hospitals and schools is spin worthy of instant elevation to government.
    This government being even remotely interested in reducing inflation is also I fear totally fanciful. Why don’t they do as they said they would and reduce spending instead of increasing it?

    • John C
      Posted January 8, 2011 at 11:00 am | Permalink

      “Why don’t they do as they said they would and reduce spending instead of increasing it?”

      They said they would reduce the increase in spending. As Mr Redwood has consistently said, govt. spending is going up in cash term every year of this parliament.

      • Brian Tomkinson
        Posted January 9, 2011 at 4:49 pm | Permalink

        John C,

        The following is a direct quote from the 2010 Conservative Party manifesto:
        “We will significantly accelerate the reduction of the structural deficit over the course of a Parliament, with the main burden of deficit reduction borne by reduced spending rather than increased taxes.”

  10. Brigham
    Posted January 8, 2011 at 10:07 am | Permalink

    High taxes on fuel are stupid. Trying to get budding entrepreneurs going, is supposedly, this government’s objective. Nothing could be more off putting than enormous fuel bills when working out a new enterprise. Less dogma, more thought please.

  11. Geoff not Hoon
    Posted January 8, 2011 at 10:19 am | Permalink

    Mr. Redwood, The sad thing about the rise and rise of fuel prices, whether tax or not, is the push it has created to electric cars and motorcycles. Not one manufacturer of electric vehicles will face up to the reality of the emissions created in generating the electricity to power these vehicles. In recent months and not for the second time we have serious research suggesting Britain could suffer power outs in coming years due to a lack of investment in new generation such as nuclear. BMW have an electric mini already available on lease in California but BMW, like most sensible folk, still believe hydrogen offers the best solution in the longer term. If anyone wants to see how far the electric ‘solution’ has developed take a look at the web site of “Better Planet” Good choice of initials ay??

    • lifelogic
      Posted January 8, 2011 at 6:41 pm | Permalink

      Spot on battery electric cars are nonsense for most people even with the tax advantages and do not expect the tax advantage to stay long once you have bought one of these white elephants.

    • Sam Kirklee
      Posted January 9, 2011 at 9:37 am | Permalink

      One small difficulty with hydrogen you(other name left out) have overlooked is that unlike fossil fuels it is a nett cost in energy terms. It takes more energy to make than it gives out, whereas oil and coal give more energy out than it takes to extract and use them. At the present almost all the hydrogen used by these wonder cars is made using fossil fuels. That little problem added to the vast cost of refitting every single petrol station with gas tanks and replacing the entire car, van and truck fleet rather deflates the hydrogen bubble. Oh, and don’t forget the thought of 10 million potential bombs driving around the countryside, a hydrogen tank really goes off well with a blast around 10 times that of a petrol tank exploding. Just in case you’re thinking of hydrogen fuel cells don’t. The cost is so extreme that it’ll never happen in our lifetimes.
      Reply: Makers and owners of these cars would tell you they are safe and that your figures are over the top.

      • Mark
        Posted January 9, 2011 at 5:06 pm | Permalink

        There’s no denying the basic physics. The Gas Law implies that hydrogen has to be kept at very high pressure in order to try to reduce the volume taken up for a given level of energy stored. Those tanks have to be thick and heavy – and at the high pressures, hydrogen gradually turns the inside into a sponge, weakening it – so the tank has a limited life on safety grounds. At around 800 atmospheres, hydrogen takes up about three times the volume of an equivalent in petrol. That means limited range or sacrificing boot capacity. Just the energy stored in in compression in hydrogen compressed to 150 litres at 800 atm is about 12MJ, or the kinetic energy of a 2 tonne car travelling at 77 metres/second or about 170mph. That would make a hole in most brick walls.

  12. backofanenvelope
    Posted January 8, 2011 at 12:05 pm | Permalink

    I have often wondered why the oil companies don’t post large signs on their forecourts showing the pre-tax price. Anyone on here with connections to an oil company who would like to comment?

  13. Geoff not Hoon
    Posted January 8, 2011 at 12:35 pm | Permalink

    Mr. Redwood, Humble apologies the web site I referred to should be “better place” not planet.

  14. Acorn
    Posted January 8, 2011 at 1:02 pm | Permalink

    JR, this University education funding thing, is starting to look a bit of a Horlicks. A classic piece of subsidising multiple levels between the funder; the supplier and the end user of a service entity. That is, trying to modify the balance between the “supply side” and the “demand side”; which always ends in a mass of confusion and regulation, at all levels. As one who believes in demand side / end user subsidy only in public goods, is there any chance of a rethink.

    Can we not let the University system run at market prices and issue education vouchers to the students at some statistically appropriate level, with scholarship funding by government; private and voluntary organisations (with tax breaks)? The government bit being for subjects the country needs but the private side is not interested in. Such as how to write an EU directive on the curvature of a banana. As always the student customers would decide what courses they want – having studied the employment chances of a given course – and the competition between universities, would decide the price of that course. There would be a level of student contribution; on the basis that, free at the point of use leads to abuse.

    We could do something very similar with the health industry, only subsidising the end user again. BTW; I paraphrase a conversation; “… think the plan is the GP fund holders will eventually be bought out by the very organisations they will shortly be buying services from … public and private Hospitals with there own GPs as employees … two flu jabs for the price of one while stocks last”.

    • Mark
      Posted January 8, 2011 at 6:49 pm | Permalink

      I agree the tuition fees thing is a mess. Perhaps if access to courses required investment of substantial effort rather than dumbed down exams there would be no need to charge students. After all, you don’t pay to do a job: you have to demonstrate that you are good enough to do it. Of course, there would be many fewer students who made the cut – but the investment in their education would pay off. Meantime, more resource could be put into improving schools that are clearly failing. Making children stay on until 18 is simply adding more cost – more need for buildings and teachers. It’s improvements in teaching standards and increased rigour that we need.

  15. Mark
    Posted January 8, 2011 at 1:34 pm | Permalink

    Of course, the taxes are not just duty and VAT on fuel. There are also taxes paid on costs of employment and on profits in refining, distribution and marketing. There are also the taxes paid on the North Sea production. In 2009-10, that was £6.4bn , down from £12.9bn the year before mainly because of lower oil prices. The variable element of tax on motor fuel is the VAT which is now simply 1/6th of the pump price (and the duty is 58.95 ppl). We consumed about 35 million tonnes of motor fuels last year – or a little under 45 billion litres: that’s about half our oil production.

    If the stabiliser is implemented then the revenue loss from lower VAT and duty is probably offset by higher North Sea taxes. It is in the Government interest to set the benchmark stabiliser pump price high, because it protects against a fall in North Sea revenue. Expect it to be implemented if we get another big oil price spike towards $150, and put on the back burner if oil prices drop back towards $50.

  16. James G
    Posted January 8, 2011 at 1:38 pm | Permalink

    £1.30 I wish, you should try the Northern Isles where we both have oil terminals on our door step and have to pay the highest price, about £1.45, in the UK. (writer thinks without providing evidence) price fixing involved but no one from this government or the last seems to be willing to listen or do any thing about that. I suppose it might mean that they would loose the extra VAT revenue if the price was lower.

    • James G
      Posted January 8, 2011 at 7:50 pm | Permalink

      I would like to add a little evidence as requested. It would cost roughly the same for a bus to go from Orkney to Aberdeen and back by ferry and fill up in Aberdeen as it would cost to fill up in Orkney. The fuel is shipped via tanker to the Islands and stored in large tanks, ships are known to be cheapest form of travel for bulk goods. Some fuel stations have been able to acquire fuel at a cheaper rate by taking from a company that transports via a normal road tanker that comes across on the ferry. These firms have then been refused fuel when they have needed fuel from the traditional supplier. This is without looking closely at the problem, I am sure if I dug deeper I would find more compelling evidence.

  17. Bazman
    Posted January 8, 2011 at 2:16 pm | Permalink

    Communism is alive and well in Britain Politicians and business leaders cutting the cost of everything except their own lifestyles. Did you ever think the BP oil spill and the banking crisis was ever caused by anything else?
    I belive that if a Tory government could get away with it they would abolish all income and direct tax to be replaced with VAT or tolls on everything.
    This tax is difficult to avoid even for cowboy builders who would have to pay VAT on their materials. Another advantage is that it turns companies into tax collectors. The thinking behind this being that the poor should pay for their own services which they disproportionately use more than the rich. Twenty quid for a gallon of petrol makes it quite cheap if you are on a 100k a year and not taxed.
    As cars become more efficient the price of fuel is set to rise even further. The next generation of Mondeo will probably do 60+ mpg and any government will want to maintain its tax take. Apparently to actually see less cars on the road fuel will have to be about £2.00 a litre.
    It will be interesting to see what happens when the average worker cannot afford to travel to the richer parts of the country to do work like the menial and necessary jobs in London. The will probably got around by the use of a system of minimum wage work hotels subsidised by the taxpayer not by pay rises from the employers.

    • JimF
      Posted January 8, 2011 at 7:43 pm | Permalink

      Is that 100k miles or salary? Maybe both in which case things aren’t so bright.
      As they aren’t if a portion of your working week is spent calculating tax for the government, and having it ripped out of your cashflow.

  18. Andrew Gately
    Posted January 8, 2011 at 3:04 pm | Permalink

    The VAT rise was a mistake, a far more sensible option would have been to raise the basic rate of tax.

    The VAT rise has led to inflation, inflation will lead to higher interest rates, higher interest rates will lead to higher mortgage payments.

    • Sam Kirklee
      Posted January 9, 2011 at 9:45 am | Permalink

      Yes the VAT rise was a mistake, no a rise on income tax would not be better. A huge cut in government spending would be better. 20% in the first year would be reasonable followed by some real savings after that. Every country that has gone that route has seen a sharp drop in economic activity for a year or so then very strong growth after that.

  19. Mark
    Posted January 8, 2011 at 5:16 pm | Permalink

    A US gallon is only 3.785 litres, considerably less than than a imperial gallon. If only the pound were still worth $9/3.785/1.30 = $1.83……

  20. Ian Wragg
    Posted January 8, 2011 at 5:49 pm | Permalink

    I can’t wait for the legislation banning electric cars from motorways. After some bad snow or fog when thousands of them run out of charge keeping the heaters and lights on it will be very funny seeing all these stranded tree huggers at the side of the road.
    The windmills should be connected to hydogen electrolyser plants to make the fuel for the fuel cells and if the wind dropped it wouldn’t affect the grid. This could possibly make the windmills economically attractive without a £50 per MW subsidy.

    • lifelogic
      Posted January 9, 2011 at 4:55 pm | Permalink

      Fuel cells certainly won’t make the nonsense windmills economic without the huge pointless subsidy they get. Just do the sums.

  21. Javelin
    Posted January 8, 2011 at 6:06 pm | Permalink

    Simple question. When will Government stop Growing?

    • lifelogic
      Posted January 9, 2011 at 5:00 pm | Permalink

      “Simple question. When will Government stop Growing?”

      When they run out of thing and people to tax and no one is daft enough to lend them any more either or when we get a sensible government.

      The former looks rather more likely than the later.

  22. Ian Dempster
    Posted January 8, 2011 at 9:04 pm | Permalink

    Mr Redwood,

    I remember that all pumps used to have the fuel cost and the tax listed separately, (back in the days when it was around five shilling a gallon) but a government of the day, and I suspect it was a Labour one, outlawed the practice.

    Regards

    Ian

  23. Posted January 8, 2011 at 9:20 pm | Permalink

    Back in the summer when Osborne + Clegg were taking suggestions from the public online, I made a suggestion of binning the 2 taxes on fuel, and replacing with a single transparent fuel tax, called something along the lines of “Fuel Sales Tax” (or “FST”) – basically same idea as V.A.T, but given a different name + set at a different rate for fuel (e.g. 25 – 65%, depending on what the government bean counters deem appropriate).

  24. Posted January 8, 2011 at 10:49 pm | Permalink

    I do understand the fact the government uses motorists as cash cows in this country. But a fuel price stabiliser is really not the answer – I’m surprised that someone like yourself, who believes in the free market, would suggest it.

    Such a stabiliser would destroy price signals in the fuel market. A fuel price stabiliser also means a demand stabiliser, which means that the market function of balancing supply and demand would be upset.

    I am also cynical enough to imagine that government would be very happy to introduce a stabiliser when oil prices happened to be falling (and therefore the stabiliser meant increasing taxes), and might quietly drop it when prices rose again.

    Reply: When the government takes almost two thirds of the price there is not much left of market signals and pricing

  25. Posted January 9, 2011 at 12:04 am | Permalink

    Although at times it is inconvenient, I like the US system of quoting prices without sales tax. Every time you buy something you are reminded of how much the government takes which must be some incentive for them to keep the tax at a visibly acceptable level.
    Here, apparently, it is illegal to quote prices without the VAT and duty added, I wonder why!
    I can imagine the uproar if the price at the pumps was given as 50p plus taxes!

  26. John McEvoy
    Posted January 9, 2011 at 9:18 am | Permalink

    As a tax-payng entrepreneur, one gets the feeling that the main intention of the Government is to get as much heavy baggage onto your back as quickly as possible. The insouicance with which Osborne announced 20% VAT is ‘permanent’, then took an £11,000 ski-ing holiday in Klosters is an example of Government priorities at work.

  27. CDR
    Posted January 9, 2011 at 10:11 am | Permalink

    Electric cars will barely happen. Lithium supplies for batteries come from virtually just one source in the world; not exactly an ideal set-up. Hydrogen is clean and more enviro-friendly; and we’ve also had people running cars on water. Unfortunately, in the case of the latter, one may run the risk of being visited by the men-in-black and “closed down”.

  28. Posted January 9, 2011 at 10:26 am | Permalink

    Why is the government pushing electric cars? Why hydrogen fuel cell cars?

    A number of US “back yard” car enthusiasts have adapted scrap cars to run purely on water – by substituting the petrol engine with one which splits water into hydrogen and oxygen.

    Of course, government can’t tax water at a rate of 68% the entire ‘green’ CO2 scam on would die a rapid death. At a stroke, the government would lose a great deal of OUR money.

    Isn’t it astonishing that the government profits from the sale of fossil fuels, and from punishing the use of fossil fuels?

    • Bazman
      Posted January 9, 2011 at 2:12 pm | Permalink

      I have an amazing and cheap process that can turn water into wine and beer, with further development into whisky. The government customs and excise would be straight on my back if I released my products onto the market. Showing that the government is in collusion with drinks manufactures to keep the price of drinks artificiality high. I suspect that oil companies and the state are all in the same bed to. It’s a conspiracy son.

    • Posted January 9, 2011 at 2:18 pm | Permalink

      Unfortunately the energy required to split water into hydrogen and oxygen is exactly the same amount of energy released when you combine them back into water – so even a perfectly efficient “engine” doing this would produce no net energy. As an energy storage mechanism this is fine – exactly what fuel cells have been doing for years, including those which power the Space Shuttle while in orbit – but “powered by water” it isn’t, it’s just storing energy from some other source.

  29. David John Wilson
    Posted January 9, 2011 at 12:20 pm | Permalink

    There would seem to be a strong case for reducing the VAT rate on petrol to 5% and balancing this with a comparable rise in fuel tax. This would reduce the effect of changes to the basic fuel price. At the same time it would help to reduce th higher prices paid in remote areas.

  30. Bazman
    Posted January 9, 2011 at 2:24 pm | Permalink

    Even if you provide your own fuel such as used chip fat, you still have to pay the same duty to use the vehicle on the road as if you where using low sulphur diesel. Presumably you would be prosecuted by the ‘frying squad’ for non compliance. I thank you.

  31. John M
    Posted January 9, 2011 at 2:46 pm | Permalink

    Dear Mr Redwood,
    Whilst it’s all very comforting to know that you feel our pain, none of your words (or David Cameron’s) mean a damn thing to me when petrol is £6.50/gallon. The January tax rises have put almost £2.50 on a single tankful for me.

    When are we going to see some action rather than platitudes? What does your Government intend to do about the next tax rise which is due in April 2011?

    Not enough is being done quickly enough to tackle bloated Government spending. The levels of fuel duty are way beyond a joke but then the Treasury knows it has a captive audience doesn’t it? The 2001 fuel protests kicked off when petrol nudged over 80p/litre. How long does the Government think it has before we have another one?

    Reply: I am proposing that the Coalition government changes its policy and does abate fuel duty. I did not stand for election as a Coalition supporter.

  32. alan jutson
    Posted January 9, 2011 at 5:32 pm | Permalink

    John

    Just visited Windsor today with intent to have a nice walk along the Thames with family in two cars (6 people).

    Windor Leisure Centre (out of Town) charging £7.00 for 4 hours and over.
    Windsor Centre car park £3.00 per hour.
    Most residential streets now resident permit parking only.
    Holme Park (a walk out of Town) free on a Sunday, if you can find a space (no luck).
    Spoke to a Parking attendant to discuss situation, he agreed charges all now out of hand, and told me charges went up today from £2.70 per hour to £3.00 due to rise in VAT.
    I said thats B……s, he agreed, but said that was the Councils reason.

    Will not be visiting Winsor again if I can help it, wonder what the shopkeepers think !!!!

    We returned, had a walk and lunch out where we could park for free.

    Result Winsor traders lost out on a £70.00 spend, and will lose again everytime we would have gone, but will now go elsewhere.

    • Bazman
      Posted January 9, 2011 at 9:46 pm | Permalink

      Makes you wonder what the Queen pays?

  33. Richard Calhoun
    Posted January 9, 2011 at 9:38 pm | Permalink

    Digressing slightly, isn’t it time we increased the tax on fuel to take out the very expensive road tax system we have in this country. Closing down the DVLA would save many hundreds of million for the taxpayer.

    This would have the added benefit of every motorist paying for each mile he drives rather than the road tax system which is the same whether you drive 3000 miles or 30ooo miles per annum

    • alan jutson
      Posted January 10, 2011 at 9:58 am | Permalink

      Rich

      Both myself and others have blogged on this many times. I have again today.

      Its too simple and too fair by a mile. (pay by the mile), pay for your vehicle choice in cost of MPG (would encourage more fuel efficient vehicles at a stroke), there will not be any tax dodgers, so police will have more time to do other things, so it will never catch on.

      Present system also deters Classic car owners who use their car very little (I am not one) So our Car manufacturing history suffers as well.

      Why is it that Politicians do not understand simplicity, and cost effective measures.

      • alan jutson
        Posted January 10, 2011 at 10:01 am | Permalink

        Richard Calhoun

        On reading back apologies for not typing in your full name, must have had a senior moment. Or just getting angry and frustrated with our leaders and systems yet again.

      • Richard Calhoun
        Posted January 10, 2011 at 8:00 pm | Permalink

        “Why is it that Politicians do not understand simplicity, and cost effective measure”

        Good question, I think the answer must be that once in power they are frit of anything to radical and encouraged to be frit by their civil servants.

  34. Magnolia
    Posted January 10, 2011 at 9:11 am | Permalink

    There’s another problem developing with car fuel in my small rural market town.
    Over the last ten years all the independent petrol stations have closed down and we only have the large supermarkets selling it now. This has increased traffic to the centre of the town and will make it much more unpleasant when we have a future shortage of supply.
    Could the very high rates of tax have contributed to the lack of competition for a thriving market to survive? Are the supermarkets selling petrol at a loss supported by their other profits and therefore undercutting the competition to extinction? I used to be able to choose from five petrol stations where as now I can only choose from two within a five mile radius from my home.

  35. stevered
    Posted January 10, 2011 at 11:10 am | Permalink

    A person driving 20k miles in the UK will pay about £1300 fuel tax. This would cover most private health insurance. In the US, they pay about$4k for medical cover and have to watch get out clauses in the contract, which are slipped in frequently. So we pay for expensive and inefficient consultants and management, but the Americans pay for expensive medical fees, ambulance chasing legal parasites and insurance company sales and profits with mega salaries. There must be another way.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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