Pressure Mounting to Reduce Price of Fuel

MOT test
MOT test

The UK government is facing increasing pressure from its own supporters to reduce the price of petrol and diesel. This comes as both fuels continue to break records at the pump, with no end in sight as conflict continues in eastern Europe. Although the government has defended its record on trying to combat the cost of living crisis, influential groups who would normally support it are now lining up along with traditional opposition in calling for much more robust action. With a petition due to be debated in parliament on the matter, the voices calling for a change in policy would seem to be growing ever louder.

Fuel Petition

Under British law, any petition which reaches 100,000 signatures has to be considered for debate in parliament. Just such a petition, entitled “Reduce fuel duty and VAT by 40% for a period of 2 years”, reached over 102,000 signatures, and is to be debated in May 2022. According to its authors, taking this action on VAT would make up for the last two years, which has seen prices at the pump rise at unprecedented rates. For drivers of diesel powered vehicles in particular, this situation is extremely worrying, and ultimately unsustainable. Also, as many delivery trucks use diesel, this is certain to add to the already serious top line figure of 9% inflation on essentials like food.

In the process of collating the petition, its designers corresponded with those who signed it. They asked those people exactly how these fuel rises affected their daily lives, and what overall effect this was having on them. For more than a third of signatories (38%), the main problem is that they need their cars and vans for their livelihoods; not being able to drive is just not an option for them, which means they will have to pay whatever the price. There are already industry reports that this fuel inflation is leading vehicle owners to defer their MOT test, as they are frightened of what any repairs and replacements might cost them.

Spring Statement

For its part, the government’s position is that it has already done as much as it possibly can to alleviate the situation. In the chancellor’s spring statement, he announced a 5p per litre reduction of duty on petrol and diesel; this on top of other tax-related measures aimed at easy pressures on households’ overall budget. Critics point out, however, that fuel producers had not passed on the full amount of this reduction onto their customers. As it happened, about the time of the spring statement, the price of petrol from refineries actually fell by 16p per litre; customers did not see this fall at the pumps.

There is also a reported issue about those pumps themselves. According to industry sources, supermarkets have the most competitive prices when it comes to filling a tank; more so than the fuel suppliers themselves. Although still not quite managing the announced 5% reduction, the best supermarket forecourts pass on 4.7p per litre for petrol, and 4.6p for diesel. Unfortunately, however, exactly where these cheapest prices are available is very much dependent on geography, rather than the name of the supermarket involved. Already, motorists face a postcode lottery when it comes to MOT test centre access.

Windfall Calls

For many critics, the government should impose a one off, windfall tax on fuel companies. Certainly, the architects of the fuel duty petition would agree that such a tax would cater for their request, with the oil industry itself barely noticing. One leading company alone saw its profits increase by more than 100% in the first quarter of 2022, to more than $6 billion. A windfall tax was effected by the government in 1997, as a response to “excess profits” accrued by privatised industries. The tax brought in £4.8 billion to the treasury, and funded an entire raft of policy measures.

The current government, however, opposes such a tax on what are generally agreed to be excess profits made by the oil industry. They say taking such action would “put off” businesses looking to invest in the UK, as it strives to shake of the effects of pandemic lockdowns and post-Brexit trading practises. In fact, the CEO of that profit busting oil company has stated that a windfall tax would have no impact on its plans for future investment. While this game of political football is played out, meanwhile, many owners of petrol and diesel fuelled vehicles continue to face real hardship.

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