Fuel tax rise cancelled

 

           It’s good news that today the Chancellor has announced he will not press ahead with a 3p a litre fuel tax rise this August. He has listened to those of us who have warned about the impact of fuel prices on living standards and inflation.

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57 Comments

  1. Paul Danon
    Posted June 26, 2012 at 4:10 pm | Permalink

    We must tax these drivers off the roads so that accidents, noise and pollution are reduced, and so that public transport is revived.

    • Tad Davison
      Posted June 27, 2012 at 8:07 am | Permalink

      What about disabled people who have absolutely no alternative but to use their cars?

      Tad

      • lifelogic
        Posted June 27, 2012 at 2:27 pm | Permalink

        Or people who need to carry tools or need to travel at 3am in the morning or call off on route to drop kids off, or do not have 3 hours to do a journey that can be done in a car in 40 mins rather more directly?

  2. Horatio McSherry
    Posted June 26, 2012 at 4:21 pm | Permalink

    John, it shouldn’t be going up at all, let alone just for now.

  3. Tad Davison
    Posted June 26, 2012 at 4:38 pm | Permalink

    I’ve posted this elsewhere too, but perhaps worth a read so we can look at the measure in it’s proper context and perspective.

    3p per litre for a full six months. Now let me see.

    I do about 200 miles per week. At roughly 50 MPG (yes, my diesel will do that easily) that’s 4 gallons multiplied by 4.546 to convert to litres giving 18.184 litres per week.

    Multiply that by 3p = 0.54552 pence per week

    Multiply that by 26 weeks = £14.18

    Let’s all go on holiday to Disney Land!

    All I can say about this measure, is it’s a very, very small step in the right direction. Much more needs to be done, like stopping our payments to the EU!

    Then we can make some REAL progress!

    Tad Davison

    Cambridge

    • lifelogic
      Posted June 27, 2012 at 8:53 am | Permalink

      And it is just a deferral it seems.

    • Alan
      Posted June 27, 2012 at 9:17 am | Permalink

      If you stopped making your payments to the EU you would only gain about £25 in 6 months, if the figures I have seen on the UK contribution are right.

  4. lifelogic
    Posted June 26, 2012 at 4:58 pm | Permalink

    Amazing how quickly they can react to comments on your site. Just this one alas. Perhaps they have finally got the message that they can tax no more. If they do try to they will get less tax and put more on the dole. The only way is for them to cut their endless waste. The good news is there is masses of it that can be cut without anyone even noticing. (other than the people fired, get rid of pay offs over 3 months first).

  5. Tad Davison
    Posted June 26, 2012 at 5:03 pm | Permalink

    And another thing. It was reported on the news, that the treasury were able to fund this because of unexpected savings from other departments. I keep looking at the increased borrowing for May, and wonder if we’re being told the truth, the whole truth, and nothing but the truth!

    Tad Davison

    Cambridge

    • norman
      Posted June 27, 2012 at 5:57 am | Permalink

      Osborne boasted a couple of months ago that we could afford to give another £10bn to the Eurozone because of all the savings he had made.

      We’re not even in the same country as the truth.

      • Tad Davison
        Posted June 27, 2012 at 8:34 am | Permalink

        Absolutely! I’ve already had my say on that very subject on local radio this morning!

        The Tories are going to get trounced at the next election, unless they carry out the most vital U turn of all, and get us out of the EU!

        Tad

    • Cliff. Wokingham.
      Posted June 27, 2012 at 9:53 am | Permalink

      I suspect that the way this notion works is as follows:-

      Department forecasts that they will need to spend ten pounds which the government will have to borrow.
      The department only spends five pounds.
      The government then says we have five pounds extra to spend.

      It is economics of the mad house or, perhaps all our economists, government officials, accountants etc are just victims of our crazy education/indoctrination system.

      I could imagine going in to see my bank manager having first spent all my money, maxed out all my credit cards, blown my overdraft and had been put on short time at work and thus had my income reduced, and asking him to lend me money I could not afford to pay back so that I could make a large charity donation……This is what we’re in effect doing with our crazy overseas aid policy and our contributions to the EUSSR bailouts through the back door. I would imagine my bank manager would speak in Russian to me; well it would end in off, anyway!

  6. Brian Tomkinson
    Posted June 26, 2012 at 5:03 pm | Permalink

    Who leaked it to Balls so that he could get the suggestion in first? George isn’t quite as good a political strategist as he thinks he is.

  7. Cliff. Wokingham.
    Posted June 26, 2012 at 6:13 pm | Permalink

    John:

    I welcome the news however, the tax on fuel is way too high and helps prevent our country from being competitive.

    This is one of the only examples where we pay tax on a tax; VAT on fuel duty…..A tax on a tax.

    I would like some pressure put onto government to make it a requirement that fuel retailers, petrol stations and utility companies, show a full breakdown of the charges; ie. They must show the cost of the fuel, the amount of duty charged and the VAT. This would shock many people and may make the government think before robbing the public in the future.

    • Bob
      Posted June 27, 2012 at 8:52 am | Permalink

      The government get about 60% of the money you pay at the pump, and they would prefer not to publicise that information too openly.

      As I’ve said a few times before, Osborne should concentrate on getting spending under control.

      A caller to LBC radio yesterday claimed that the NHS were paying about ten times the normal price for printer cartridges – I hope the National Audit Office were listening?

    • Gewyne
      Posted June 27, 2012 at 12:28 pm | Permalink

      If I was a retailer i’d break it down of my own accord for customers. We hear about the petroleum companies being greedy because of forecourt prices – i’d let people know where the blame really lies.

  8. Iain Gill
    Posted June 26, 2012 at 6:59 pm | Permalink

    go on get the home secretary to stop printing intra company transfer visas like confetti and you may get somewhere close to having an electable party

    • zorro
      Posted June 27, 2012 at 3:23 pm | Permalink

      http://www.homeoffice.gov.uk/publications/science-research-statistics/research-statistics/immigration-asylum-research/immigration-q1-2012/

      Their website shows official figures for Tier 2 intra Company transfer – Out of country visas 44,595 (including 29,393 main applicants and 15,202 dependants) and 12,119 In country grants or extensions (including 6,353 main applicants and 5,766 dependants). That makes a grand total of 56,704 including main applicants and dependants under this category in the year up to March 2012……

      Zorro

    • Bob
      Posted June 27, 2012 at 5:31 pm | Permalink

      “stop printing intra company transfer visas like confetti and you may get somewhere close to having an electable party”

      It may take a bit more than that Ian.

      • Bob
        Posted June 27, 2012 at 6:01 pm | Permalink

        At the very least, a change of leader.

  9. Jon
    Posted June 26, 2012 at 7:18 pm | Permalink

    At work in EC2 I have noticed an increasing number of logistics lorries heading east

    1. Towards Stratford
    2. Ladened with French diesel with those taxes headed for the French treasury.

  10. Brigham
    Posted June 26, 2012 at 7:34 pm | Permalink

    I have always thought that high fuel prices is the biggest disincentive to growth, so I look forward to lower fuel costs leading to recovery.

    • norman
      Posted June 27, 2012 at 6:01 am | Permalink

      Fuel costs are being lowered? Where are you reading that?

  11. Max Dunbar
    Posted June 26, 2012 at 8:03 pm | Permalink

    Was it not obvious that the 3 pence tax increase on fuel was a most un-conservative thing to impose on the taxpayer in the first place? An unnecesarry self-inflicted wound. The leadership look weak and to say that they have “listened” is really not good enough. They had plenty of time to listen to us before.

  12. Adam5x5
    Posted June 26, 2012 at 8:13 pm | Permalink

    While this is good news and is to be welcomed, we shouldn’t get too excited. The majority of the fuel cost is still tax.

    If the government was really on the side of the populace, then this tax burden would be reduced as it would reduce the cost of living significantly.

    but still, a step in the right direction.

    • Bob
      Posted June 27, 2012 at 5:36 pm | Permalink

      “…but still, a step in the right direction.”

      It’s a deferment until January 2013.

      More hesitation than step.

  13. Paul H
    Posted June 26, 2012 at 8:45 pm | Permalink

    But is in going to cut spending commensurately or simply increase borrowing? That is also inflationary …

    • lifelogic
      Posted June 27, 2012 at 4:59 am | Permalink

      Doubtless more borrowing is the plan.

      • Bob
        Posted June 27, 2012 at 5:37 pm | Permalink

        Couldn’t he borrow back the ten billion he gave to the IMF?

  14. John Eustace
    Posted June 26, 2012 at 9:02 pm | Permalink

    Good news I agree but odd timing in light of your previous article about borrowing coming in significantly higher than planned? Also with inflation coming in low and further reduced by this measure I worry the BoE will succumb to pressure to print more money.

    I would prefer to see investment in capital projects instead of welfare spending or tax cuts (except where tax rates are counter productively high)- it was a mistake to slash capital spending as the easy way to make savings on entering government. Now that time has passed it should be possible to reduce wasteful current spending further and refocus on investment in our infrastructure.

  15. Trevor Butler
    Posted June 26, 2012 at 9:08 pm | Permalink

    For once – in spite of the BBC calling it that – I do not think this is a U turn – its a sensible economic decision – its a pity we can’t have a few more!

    • Tad Davison
      Posted June 27, 2012 at 8:49 am | Permalink

      But handled incredibly badly don’t ya think?

      Tad

    • Bob
      Posted June 27, 2012 at 5:44 pm | Permalink

      Not really a U-Turn, more like a diversion.
      We’ll still get there, but it’ll take another six months.

  16. Mark
    Posted June 26, 2012 at 9:21 pm | Permalink

    Yes, it’s good news. But he should never have taken so long to work out the answer, opening himself to ridicule in the process.

    He should know that raising the rate is unlikely to generate significant revenue, because it speeds the penetration of more fuel efficient vehicles at the expense of writing off others before they have completed their useful lives (incidentally probably increasing carbon emissions because of the energy consumed in manufacture and scrappage outweighing the fuel savings, and the premature investment in replacement vehicles being less fuel efficient models than later ones would have been).

    It also would further erode our competitiveness: we have the most expensive diesel in the EU already. The negative impact on employment and businesses in the UK would further reduce the overall tax take, while increasing the spend on welfare.

    It might be interesting to know how much UK tax is avoided by trucks filling up in Eire and on the Continent, taking advantage of much lower taxes: perhaps if our prices were tax competitive the lower rates might even be offset by more tax paid here. There is also a small but rising component of evasion through neutralising the dye in lower taxed red diesel (or simply using red diesel, or diluting the fuel with lower taxed heating oils).

    • stred
      Posted June 27, 2012 at 8:01 am | Permalink

      Continental lorries arrive with a full tank paying french lower duty and can complete the trip before refuelling. They bash hell out of the motorways and only pay a toll if they chose to use the Dartford crossing. When we arrive in France we have to paytolls which cost more than the fuel per km.

      Instead of tolling (sorry congestion charging) the poor British car and van driver, causing long delays, cost and pollution, the tolling equipment could be moved to the channel ports and used to toll entering lorries for use of the whole road network. This is what the Swiss do, but for a yearly permit.

      If the charge applied to all lorries, including British, the Eurocrats could do nothing. If they did try we could argue that the French do it to us already. No doubt the goons in the MoT would not agree.

  17. Andy
    Posted June 26, 2012 at 9:31 pm | Permalink

    I have a great idea! He should propose to raise the duty by 10p a litre in 2013.

    Then we can all have a street party when he changes his mind about that.

  18. Paul
    Posted June 26, 2012 at 11:04 pm | Permalink

    Great. It is good news. Now all he has to do is resign so we can all have some even better news.

  19. Gordon
    Posted June 26, 2012 at 11:48 pm | Permalink

    Mr Redwood,
    I read your blog each day and am almost always impressed, as a constituent of Wokingham, with your clarity, commonsense and integrity, the reasons why I vote for you. the quality of your respondents inhibits me, lifelogic, zorro et al are very intelligent and I feel intimidated by their grasp of the points you are usually making. I see however, that I am the first to respond to this post. So here goes!
    I despair of your ‘leaders’ Osborne and Cameron they provide only contradictions, which according to Aristotle are impossible! They both state that our recovery will come from the ‘private sector’ but do one thing (no increase in an already inflated tax on fuel) but no referendum on withdrawal from the EU to allow escape from the regulations, taxation etc., imposed upon us by Brussels.
    So no contradictions then, they must be lying!

    What is the strategy to increase growth, David and George please explain!

    Mr. Redwood I do understand your position, it is difficult, I just hope that we can increase the numbers of ‘conservatives’ in the Conservative Party, for me is not important I will be long gone, but I do worry for my grandchildren that they will inherit a shambles.

    Meanwhile, Cameron, Clegg and Osborne will lead the tories to ignominious defeat (by design) in 2015, and toddle off to their sinecures in Brussels.

    • alan jutson
      Posted June 27, 2012 at 7:50 am | Permalink

      Gordon

      Welcome.

      Yes, a first post is always a bit fraught, with perhaps some concern as to how it may be received (I had similar concerns a few years ago), but in the end you just have to say it, as you think it is, we all have different opinions, thats what makes the World go around.

      More importantly, it gives John some feedback, so he in turn can perhaps give some feedback to his Party Leaders in the hope that it will make a difference.

      If only more MPs would engage with their constituants and the general public in such a manner.

      On the fuel situation, Osbourne has cancelled a rise, which would have been stupid to impose.

      The fact that we now cheer commonsense, is a sad reflection on the way his mind works (more taxes), his ability, and a sign of the times.

      • Bob
        Posted June 27, 2012 at 5:58 pm | Permalink

        @Alan,

        Agree with the gist of your comment, but I have to point out that Ossie hasn’t cancelled the rise. He’s just change the implementation date from Aug 2012 to Jan 2013.

        Here’s a link for Paxman vs Chole Smith:
        http://www.bbc.co.uk/news/uk-politics-18608133

    • lifelogic
      Posted June 27, 2012 at 9:01 am | Permalink

      The strategy for growth seems to be to stave business of funding and over regulate and over tax them into an early exit from the country.

      • uanime5
        Posted June 27, 2012 at 3:41 pm | Permalink

        How is this plan going anyway? How many companies have left and how many are likely to leave in the next 6 months?

    • Tad Davison
      Posted June 27, 2012 at 9:24 am | Permalink

      Gordon,

      I exclude myself, but the most powerful, compelling, and rational arguments I hear, always emanate from fervent anti-Europeans. Many of whom, have given up on the Conservative party as the latter no longer represents their views and opinions.

      Until the disatrous Mr Major came along, and exposed the subterranean vain of Euro-enthusiasm within the Conservative party, I could not even contemplate voting for another political party. It still seems somehow odd that I should choose anyone else, but I have to acknowledge the truth. The Conservative party has become just another social democratic party, barely descernable from the other two.

      But that doesn’t relegate like-minded anti-EU people to the margins. It is the three main parties that have marginalised themselves, we are just as mainstream as ever.

      Take a look at the breakdown and turnouts in recent times. All three are scrabbling around for the same portion of a diminishing number. When all the time, there is a massive number of disaffected voters just waiting to be led by the right person.

      I think the Tories time might now have passed. Would you go back to a spouse who persistently promised to be faithful, but then did everything they possibly could to belong to another? That’s exactly how it is with the Tories and the EU, but they need us and use us in the meantime, to achieve their underhanded ends.

      You’re right to lend your support to John Redwood, but he’s one of the few Tories I’d now vote for. I wouldn’t give a candle for most of the rest!

      Tad Davison

      Cambridge

      • Gordon
        Posted June 27, 2012 at 3:06 pm | Permalink

        thanks Tad, yes but I think Mr. Redwood has about one huundred like minded colleagues, we need to help him get some more.

    • zorro
      Posted June 27, 2012 at 7:44 pm | Permalink

      Go for it Gordon! Never fear expressing your legitimate views, they are the lifeblood of a thriving democracy…..To quote a (biblical) Proverb 11:14…..’For lack of guidance a nation falls, but many advisers make victory sure.’….I’m sure that John appreciates it.

      zorro

      • Gordon
        Posted June 27, 2012 at 9:52 pm | Permalink

        Thanks Zorro, I feel like I among friends here, albeit, intelligent friends with common sense and justice as a common denominator.

  20. Gerry Dorrian
    Posted June 27, 2012 at 2:09 am | Permalink

    Interesting how Labour slammed the Tories for “U-turns” when they were only acting pragmatically! Have they been running on ideology for so long now that they don’t recognise common sense and electoral prudence?

  21. Mike Stallard
    Posted June 27, 2012 at 6:21 am | Permalink

    I am as surprised as M. Paxman was yesterday that a government whose top priority is reducing the deficit and debt left by the Scottish Genius has not bothered to reform the scandalous tax system. No wonder the take is so very low – and getting lower.
    But his last question was the killer: “Are you incompetent?”

  22. oldtimer
    Posted June 27, 2012 at 8:19 am | Permalink

    This is helpful but, as has already been pointed out, it does not reduce fuel prices. It merely stops them being ratcheted up again in the future.

    He should now concentrate on what is happening to income tax and CGT receipts. These are not being delivered in the amounts the Chancellor wants or needs. Perhaps you can remind him in a future post just what needs to be done to increase his tax take on these accounts.

  23. Vimeiro
    Posted June 27, 2012 at 8:22 am | Permalink

    It’s not acancellation, it’s just a postponement of an increase

  24. Caterpillar
    Posted June 27, 2012 at 8:39 am | Permalink

    Well there are plenty more things the Chancellor ought to be concentrating on. Nonetheless as a tactical move, being associated with fuel prices at a time when oil price falls have fed through to some extent is a nice little trick.

    I’d rather the Chancellor simplified taxes and NI, normalised monetary policy and, with the rest of Govt, started to tighten entitlements and NHS, and spend on infrastructure investments instead.

  25. David John Wilson
    Posted June 27, 2012 at 8:40 am | Permalink

    Once again the government has chosen a quick and easy solution when better uses for the same money even in the area of transport could have been found.

    It would have been much better to have used the money to fund a reduction in VED. This has the following advantages

    1) It could have been targetted at commercial vehicles thus:
    2) Reducing the cash flow problems of the companies affected.
    3) Improving the competetive position of our transport companies against continental vehicles
    4) Increasing the help given to the poor, many of whom cannot afford their own vehicles.

    5) The people who do not tax their cars would not receive any advantage.
    6) It would maintain the pressure on people to use their vehicles efficiently and to purchase greener cars.

    • Andy
      Posted June 28, 2012 at 9:04 pm | Permalink

      Or they could just get rid of VED and put the cost onto fuell. I still do not understand why they do not do this. It would get rid of a huge department, still raise as much money, target costs to high mileage and poor economy drivers, etc. It also gets rid of the problem of avoidance and would free up police and court time and costs. Less admin for car owners as well.

  26. Iain
    Posted June 27, 2012 at 8:58 am | Permalink

    Good news?

    What this showed us is that N10 and No11 are policy free zones, and we have Government by PR gesture.

    We know the Transport Secretary wasn’t included in the decision, for she was prattling on about the importance of dealing with the deficit.

    We heard that this wasn’t discussed at Cabinet.

    We saw on Newsnight that the Financial Secretary wasn’t in the decision making loop.

    So who and where and when was this decision made?

    It might have been good news if delaying the tax ( note it was sold to us by the Financial Secretary as a tax delayed, NOT cancelled, otherwise there was going to be a an even bigger hole in the finances to account for ) was part of a well thought out strategy/policy, but it clearly wasn’t and what you are left with the idea that the country is being run by a couple of people who haven’t a clue.

  27. Lindsay McDougall
    Posted June 27, 2012 at 2:20 pm | Permalink

    Two cheers only. In principle I like the decision but at a time when income tax receipts have dropped by 7% and borrowing has hit £18 billion a month, maybe we need to worry about eplacing the revenue.

  28. Christopher Ekstrom
    Posted June 27, 2012 at 2:23 pm | Permalink

    After taxing your petrol to the point that the Americans would (quite rightly! Nod to the BBC) conduct an armed insurrection (of course we let them take our guns) the kindly Chacellor has spared us a 3 pence raise. We are back to grovelling before the Sheriff of Nottingham for sparing a crust of bread. This state of affairs is so pathetic that soon you will accept when they confiscate your automobile; after all the taxes didn’t work as we pay over 80% on a liter now. England a Nation, end all speech codes & enjoy total freedom of speech, out of euroland, UKIP!

  29. Bazman
    Posted June 27, 2012 at 5:07 pm | Permalink

    Still taxing the pensioners and cutting taxes for the rich. There must be some evidence if any jobs have been created by this cut and specifically which jobs in which areas. Feeling something is right without proof is not enough. Tell it to your boss this if you think it is.

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    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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