George Osborne's idea of a fuel duty stabiliser is attracting attacks because it is fundamentally a good idea. It also demonstrates the Tories understand the damage fuel price rises are doing both to the economy and to family budgets. In other words, Osborne is saying: "I feel your pain". Osborne has opened the plan up to consultation and has made clear it is not yet a pledge. The important point is that the Shadow Chancellor he has signalled he wants to do something on fuel duty, which the man in the street will appreciate. Vince Cable has something of a point when he says the idea is somewhat dependent on predictions of future oil prices, I suspect, but that doesn't mean the idea is flawed.
Labour has so far done nothing at all on fuel duty, beyond hinting that it will shelve the 2p rise in October. Big deal.
48 comments:
"I feel your pain" is all very well. the Tory tasked with policy in this area Tim Yeo wants the escalator to be ramped up AND supports the VED banding (as did the front bench until recently).
This is feel good quackery rather than a real Tory proposal. Is Osborne a thickie? I don't think he's really thick. There is a glimmer there.
So he will understand how key prices like oil (with VAT and duty) and food (mostly without either) and household goods (mostly with VAT) and entertainment (VAT) and alcohol (both) and conveyancing (duty) and so on all interact together so that the Public Funds don't simply expand if oil goes up.
George Osborne is to economics what mickey mouse is to Tory announcements Iain.
PS Labour did give many people £120 extra tax back on top of a 2p tax cut. The former being specifically a recognition of fuel and food pain.
Its a very good idea. However, I do wonder how you would account for such a variable tax in the budget.
Osborne needs to lock himself in a room with Alan Duncan and together produce a coherent Energy Plan for the UK. This has been quite beyond Labour.
The main thrust should be to set a clear timetable with actions to eliminate or massively reduce reliance on imports - and to achieve this through wide diversification of the source of fuel feedstocks (it's not only oil that can be used to make liquid transport fuels).
I may be missing something but surely the unpredictability of fuel prices is the reason for taking this kind of approach? Not sure what Vince thinks he's criticising .
I'm completely with Vince Cable. Any system along these lines assumes that over time, oil prices will fluctuate around a given fixed point - which is fantasy economics.
Can't see why Labour is shelving the 2p rise. No one will notice it, no one will say thankyou and no one will change their vote as a result. They might as well just go ahead and slap the 2p on and take the money.
That is a good idea Iain but I do worry that if Brown goes ( as he may actually do ) , Cameron is so far left now that New Labour will be able to outflank to the right.
The real point is the over-all tax burden and such a change is likely be set at a level whereby overtime taxes will actually rise.
I see a new Labour Leader coming in and changing everything by offering real tax cuts. Mc No Shame has twice recommended this and it is the only way for the any new broom.
I have stuck with the project for a long time now but I believe there is a danger of fighting last years war in very different political and economic times .So yes fine , but tax and spending has got to be re jigged
I have misgivings about this idea. Certainly any reduction in fuel duty would be popular, but George Osborne's proposal looks over-complicated and would look a lot less attractive if oil prices fall.
Any increased base price (from BP et al) is further inflated by duty/ies and then still further inflated by VAT, HMG benefit from such increase - it is these that George is seeking to balance.
I'm not sure of the exact numbers, but surely someone has come up with some samples/costings.
And don't forget, our good friends in Brussels get a proportion of our entire VAT take. They must be laughing about the 50% (more - less ?) increase in our fuel-related VAT.
Whiffler
Yesterday on Andrew Marr it was clear that it was a good idea because the staunch Labour luvvie was particularly petulant towards G.O.
OT.
Very sensible of Boris to drop the lewis inquiry. Means the story is now dead and will not resurface.
"...has made clear it is not yet a pledge."
Well knock me down with a feather!
Next - cut VED. The rises proposed by Darling are really really stupid in all sorts of ways. F'rinstance. Hits the less well off very hard. And peole who have no alternative - e.g. me. Slows down car sales just at the time when the economy needs activity. And as new car sales are slowed pollution (if you believe in such things) will increase as modern cars pollute (-ditto-) much less than old ones. Also will drive new car purchasers to arbitrage new car tax by buying in Europe.
My view? Cut VED to fifty quid on all cars and light vans and let fuel prices do the anti-pollution work on their own. After all it's useage not ownership that causes pollution (if you believe in such things).
Osborne shamele4ssly stole that from the SNP
BUT BUT
5 days ago he did not vote for that very motion in finance - hypocrite
I think it is a good idea. And yet as recently as Oct 2006 the Conservatives were condemning the idea of a fuel duty stabiliser as a 'green stealth tax'. It was then being proposed by David Miliband in a letter to Gordon Brown, leaked to the Daily Mail.
http://www.dailymail.co.uk/news/article-413300/Miliband-unveils-green-stealth-tax.html
What happens if the current price surge is not a blip? What is the "ideal" price of petrol, according to Osborne?
I think you should all stop wasting petrol, it's your own fault oil keeps going up in price
Gordon just fuels our pain.
If this is such a great idea why did the Conservatives fail to support identical proposals put forward by the SNP just last week in the House of Commons?
Ian for heavens sake stop Browns ugly face filling my screen every time my mouse moves over your Total Politics ad - PLEASE its putting me off visiting your blog
"George Osborne's idea of a fuel duty stabiliser is attracting attacks"
There's a surprise!
One of the (many) problems with this government is that after 11 years in office they still behave as if they were in opposition.
The sooner that they are back there the better.
all stolen from SNP
yet 5 days ago Osborne helped block this same step
Oil has been steady against gold and silver for decades. Oil is not going up in price, it is the value of the government's money that has being degraded by years of reckless printing to pay for war and welfare. The rising taxes on fuel are another part government imposed inflationary vicious circle.
With his assets and incopme this is very touching!
This should really be a no brainer for the Government. As the price of fuel goes up and down, so their revenue goes up and down - simply because of the VAT imposed. They are reluctant to (refuse to openly) admit this, prefering to say that as fuel price goes up, so their percentage of the selling price goes down (sympathy vote?)- true - because the duty remains the same. If they pegged their revenue, by adjusting the tax take to compensate for the VAT, they would be no better or worse off (good for budget planning)and we would be the beneficiaries.
It's not the perfect plan and will still need some refinement but as I mentioned in my post today, at least the Tories are talking in a language that mirrors the public's aspirations, rather than the condescending tones of one Mr. Broon!
Oh for goodness sake! It's not rocket science. Keep it simple: Cut duties! Cut taxes! Cut escalators! Cut out weasel words like 'sharing the proceeds of growth.'
The plain fact is, the government takes too large a share of the gross national product. Give us back some of our hard-earned money so we can spend it as we think best.
You can bet if the idea is popular, Labour will nick it despite saying it will create a £3billion hole in the budget for NHS and Education.
Heavens spare us!
Even Gordon has said "I feel your pain" (or similar), what is required is action, not words. A press release is not action either. suggesting that the Conservatives are considering this plan, but not promising to do it, is just more hot air.
Let me give you a reason why it's not going to be Tory policy though: in two, three, or ten year's time, we can expect oil prices to return to more normal levels (because the US$ will at some point recover). At that point, if the Conservatives were in power, the proportion of duty on fuel would escalate while oil prices fall.
Do you really think motorists won't notice that they're not benefiting from falling international oil prices? Do you think they might say "oh well, never mind!"? Hell no, they'll protest just like they did when that previous petrol duty wheeze - the fuel price escalator - was fingered as the cause of high petrol prices!
The current habit of proposing populist soundbites (not policy even) is sowing the seeds of discontent with a future Conservative government. The FT recently pointed this out too: http://www.ft.com/cms/s/0/3a800a9e-49f6-11dd-891a-000077b07658.html?nclick_check=1
Still, I suppose anything to get into power is the order of the day for the Conservatives (and hang the consequences)!
Whats the betting that an idea which will be strangely similar will appear in the pre-Budget speech?
When the Tories let everyone know that they will halve duty on fuel to be funded by a wholesale cull of the civil service and quangos to fund it, then there will be something to get excited about.
My brother felt fuel pain and is attaching a water to hydrogen converter to his car's engine, costing £130 installed, or £100 if you install it yourself. It will give him an extra 120 miles per 40 litre tank. Everyone thinks it's a con but it works. See www.water4gas.com.
And no I am not an agent.
Yvette Cooper apparently can waste no time in dismissing the plan as "dishonest" on the BBC Daily Politics Showbut was unable to say what the Government would do and just kept spouting rubbish about difficult global circumstances and that the Chancellor "would look at the 2p duty rise in November. Bloody typical just like her boss - "It's all the publics fault and the fault of global forces. "Nuthin' to do with us Guv"
Yvette can you please tell Gordon that we're fed up to the back teeth with your excuses. If you are too incomptent(or too arrogant to care much either way) to come up with ideas and all you can do is rubbish others ideas without offering an alternative then better the whole lot of you sling your hook starting with Gordon
We have had this scheme in France. You can set it such that when the fuel price rises, duty stays on hold but you take more in VAT, so it's fiscally neutral, always the same amount raised.
You can also set long term increases in fuel duty if you want to play the environmental card, to allow people to adjust to high prices.
It just allows short term fluctuations to be ironed out.
Yes, very good. But would George Osbourne's position not have substantially more credibility if he'd persuaded his colleagues to back the SNP amendment to the Finance Bill last week which would have done exactly that?
It is not a fundamentally good idea, it is an idiot idea because it fundamentally goes against basic economic principles, ie having prices acting as a signal to allow optimal allocation of resources.
Apart from anything else, fuel prices will still go up because they are geared to supply and demand. All that will happen is that oil companies will benefit instead of the exchequer.
If you think that high fuel taxes are good, then let's have them. If you think that low fuel taxes are better, then reduce them and either reduce govt spending or get the taxes elsewhere. But choose one or the other.
I know you didn't intend this but you've got two slogans in your heading:
"I fuel your pain!" - Gordon Brown
"I feel your pain!" - Opposition parties
I don't agree at all - this idea is ill-thought through
It's a perfectly sound idea. As the price of crude oil rises, so too does income levied on the upstream barrel ant the production end. So you simply review the pump price up or down periodically, according to what you're collecting from the upstream.
Osborne: I feel your pain
Don't make me laugh - this guy's a millionaire! When was the last time he felt a pinch in his wallet at the pumps.
I feel your Pain (Translation) = I feel my political expediency meter throbbing.
Dropping duty when the price goes up and cutting it when the price goes down - sounds to me like, we'll pay the same - just HM Government will take a smaller cut. He has not said "we will make fuel cheaper at the pumps"
/Cynicism>
And in practical terms, his idea will fuel our pain.
Just another way of raising more tax.
If this is done on an annual basis (surely he's not thinking of tracking the market by the minute?) what will happen is that next year's treasury prediction will lead to a rise in duty, and next year, the prediction might well result in a fall in duty.
The rises will not balance the falls, of course, because the central idea is to raise more tax.
A 5p reduction now would save me £2on a £50 tank. Big deal.
Every time fuel at the pump goes up 10p a litre, 7p goes to the Chancellor and 3p to the increased cost of oil. The government is making more out of fuel price rises than the oil companies, retailers and everyone else involved. Labour government - the cause of fuel poverty.
an interesting attempt by Osborne, and his '5 Principles' may be sound, but it's more complex than he has acknowledged
The tax take from the North Sea is a very complex and non-linear matter, being a function of much more than oil price.
He does recognise that North Sea production is declining, "so the operation of any Fair Fuel Stabiliser should be reviewed every Parliament".
In fact, for both reasons, far from being the sort of mechanism that can be used in a fire-and-forget, automatic fashion, the *Stabiliser* would need not just to be reviewed, but to be tinkered with, all the time. In other words it would become an entirely political football.
How he imagines it will meet his 4th and 5th Principles ...
provide greater certainty about the price of
carbon; and
should be transparent and simple to administer
... is anyone's guess
Fiddling with pennies here and there goes nowhere.
The pain is caused by the excessive taxation of the entire country. Look at it, just what isn't taxed nowadays?
There needs to be a total rethink but a good start would be to abolish stamp duty, IHT and slash VAT.
How to pay ? Dismantle Brown's dictatorial nanny state with its rebates & credits and get rid of the million paper pushers hired to administer(?) it. Impose discipline on MPs allowances, full accountability required.
Will we hear this from the Loyal Opposition ? No, of course not, no guts and not really conservatives either.
What an extraordinary debate this is.
We are paying over 60% tax on petrol and both parties are happy with this status quo which means that re this tax (as with so many other taxes) the Tories are just Socialists who dare not speak their name.(File under elephants and drawing rooms)
Manipulating prices and urinating over the concept of supply and demand. I expect this of socialists, not Tories.
Didn't he actually say, "I fuel your pain"?
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