Before every Budget, the Treasury leaks the prospect of a hike in fuel duty, and well-paid experts debate its merits. It is never easy to alter the Treasury’s innate instinct to put up taxes, but common sense has prevailed due to years of objective campaigning and lobbying backbench MPs hard. As the Guardian’s Gaby Hinsliff once reported, ‘it’s been one of the most successful lobbying campaigns in modern political history, successfully diverting billions from the treasury with barely a squeak.’
This time, the stage is different. It will be extremely hard for us at FairFuelUK to convince a nation crippled by economic uncertainty and unprecedented debt to maintain the freeze, yet alone a much needed and beneficial cut.
Rishi’s imminent Covid reparation Budget, we know, will present us with some unpalatable tax changes. Add a well-financed environmental vocal minority smelling fossil fuel blood, opportunistically demanding drivers pay for the cost of Covid, the longest freeze in any excise levy is undeniably now under threat. But with the economy so fragile it is not the time for tax rises. They’d be premature and make very little difference to the nation’s debt level. Tax hikes will emphatically dent business, consumer confidence and hold back recovery.
And here’s why. For every 1p increase in duty, an extra half a billion pounds is calculated to be generated. But this extra tax income masks its real cost to businesses, their reduced profits and cutback in consumer’s disposable income. Business investment would decline, and jobs put at risk, in a climate of already huge Covid unemployment. The net tax rise would result in a negative contribution to the Exchequer.
Bikers, motorists, van drivers, taxis and truckers provide, unfailingly each year, the 5th largest income stream to the Exchequer. 70% of what we put into our tanks, is tax. In contrast, Ireland takes 67%, Germany 65%, Luxembourg & Spain 57%, and Malta a mere 54%. Immorally, there’s even VAT on the duty itself too. And Whitehall jungle drums say Rishi is to increase the driver’s tax burden even further. Hard pressed road users are already subject to punitive congestion charges, ultra-low emission costs and enforced devaluation of their prized vehicles. And a Conservative Government wants to make their burden even heavier. Its not what they gave Boris, his massive majority for.
It really is time the nation understands what 10 years freeze in fuel duty has done so positively for all of us. The brilliant economic brains at the CEBR in 2018 demonstrated that, had the freeze not occurred, inflation would be nearly 7%, due to Labour’s ill-informed fuel duty escalator. It is now circa 1.1%! Bewilderingly, in 2011 the Tories had no plans to scrap Gordon Brown’s punitive draconian taxation strategy until I founded FairFuelUK, strengthened by the prodigious political lobbying efforts of Robert Halfon MP in Westminster.
Had the fuel duty escalator continued as planned, fuel duty today alone would be nearly 90p per litre rather than the current 57.95p, 55% higher. This would translate in overall fuel prices hitting £1.80. The CEBR showed the consequential impact of higher inflation to be £14.5bn each year, just in funding UK’s outstanding government liabilities. That is over £116bn over the then 8 years of a freeze. And the good news, CEBR estimated household expenditure was £24.2 billion higher in 2018, because of the freeze. This equated to 1.21% of total GDP. We are currently assessing the benefits of the fuel duty freeze to the present day. Watch this space.
Without FairFuelUK, imagine what a £1.80 cost to fill up would have done to the 5th largest economy in the world. A sobering thought. When the pandemic Budget is being formulated, the Chancellor must listen objectively to all stakeholders and not just those highly financed green groups and their baseless, emotionally charged ‘climate emergency’ calls to inflict more ineffective crippling costs on drivers.
Rishi Sunak empirically knows lower fuel duty and less driving costs, as published by his very own department back in 2014 coupled with CEBR’s economic analysis, massively benefits growth in GDP, jobs, inflation, business investment and consumer spending. All of which is urgently needed now! He knows this very well but must be wary of the bias swayed by the Lycra clad special advisors increasing in number in every Government department, who are hell bent on punishing drivers in their pockets.
And let’s not pretend, that electric vehicles are the cure-all – if you’re got a nice house with a drive or a garage, and you can afford an electric vehicle, happy days. But if you’re in trouble financially, on a low income, run a small business and you need to get around, then a massive shift to electric cars, motorcycles and vans is just a dream by environmentalists and gullible politicians. And, barring a mechanical miracle, that electric dream is set to become a nightmare for most of the British travelling public, because it’s a policy without a plan.
Rishi, do not screw the commercial, and yes, the social heartbeat of our economy, to appease the environmental lobby to pay off the Covid debt. Have the political guts and cut fuel duty now and watch the economy rocket!