Gordon sticks a small plaster on the gaping wound of fuel prices
Today it was announced that the government will be scrapping their October rise in fuel duty. Already delayed from March this has come as a welcome concession from the government who have driven the knife into the motorists wallet solidly over the last decade.
Record oil prices have caused a 20% hike in fuel prices since the beginning of 2008. Much of the current economic gloom has been caused by the soaring cost. The Bank of England blame the high inflation on the fuel costs, businesses are suffering as a result, families are struggling to find the extra cash to pay for it.
Indeed while inflation remains high the Bank of England seem intent on using interest rates to keep it under control. At a time when mortgage payments are crippling many working households and repossessions are set to double to over 50,000, rising interest rates certainly wont be a welcome strategy.
In Prime Ministers Question time today Gordon Brown confirmed that he did think petrol and Diesel prices were indeed too high. Quite amazing coming from a man who has stuck by a policy of increasing them year on year since his party came into office. He rattled off a number of initiatives he had set in motion that would lower the cost. Many of these involved long term solutions to drill for oil in untapped areas, nothing that will help the short term problems facing the struggling people of Britain.
Critics of the plans to scrap the 2 pence rise have pointed out the £1 billion shortfall the treasury will suffer as a result. It seems this short sighted economic approach is where the government are getting things wrong. While fuel costs remain high businesses suffer, the economy falters and growth goes into reverse. The treasury have already benefited from an extra £2 billion in revenue raised from the current oil price. This comes from the VAT on fuel and taxes of the oil companies larger profits.
As the economy nose dives in recession the loss to the treasury in unearned and therefore unpaid taxes will be worse than anything they can remember. It’s worth remembering that 97% of everything we buy, eat and wear is brought to us on the back of a haulage truck. An industry who are being squeezed out of business as foreign drivers from Europe fill up with cheap fuel then drive onto UK shores to compete with an unfair advantage.
Yet again it seems the answer is starring Gordon and Alistair in the face: Slash the duty on fuel. Yet for some reason they just can’t grasp the concept. The benefits would include lower inflation, a stimulation of the economy and massive relief for families who are feeling the pain that Gordon still refuses to acknowledge. Of course the green eco lobby would be furious at a lowering of duty. The choice is simple it seems, we use fuel and go bust, or we use fuel and don’t go bust. It seems Labour expect us to believe that if we pay vast sums of cash to emit carbon it’s then it’s all OK and planet earth will live to see another day. Do they know something we don’t? Is taxed carbon output actually better for the environment?
Filed under: The Cost of Motoring