Fuel duty cut sends the wrong message

23 March 2022
Fuel duty cut sends the wrong message

Either the public finances have improved noticeably or the Chancellor is throwing caution to the wind. Never mind the huge national debt run up by Covid, the effects of Brexit, or the looming economic problems caused by the Russia-Ukraine war, this was a giveaway spring statement from Rishi Sunak. It even sounded like a pre-election statement, though in this case perhaps he was thinking of the election by the narrow electorate of Tory MPs who choose a Prime Minister.

The raising of the National Insurance threshold and the pledge to cut the basic rate of income tax will be widely welcomed. One giveaway, however, is more regressive.

We have already had fuel duty frozen for 12 years while bus and train fares have risen inexorably. Indeed, if the cost of fuel for car drivers had simply risen at the same rate as bus fares, petrol at the pumps would now be well over £2 a litre.

So while the Department for Transport has been busy designing strategies to boost rail and bus, and the Treasury itself has sensibly provided emergency support to the sectors to enable them to build back from COVID, now the Chancellor is pulling the rug from under the bus and train.

The fuel duty cut does little for those who are poorest, and obviously nothing for those 35% of the lowest income households that don’t have a car. Moreover, there is not even a guarantee that the cut will be passed onto the motorist. The fuel companies may simply pocket the gain and keep prices where they are.

What is certain is that this sends exactly the wrong signals. It says climate change doesn’t matter. It says it is more important to please affluent SUV owners than help the poorest with their travel costs – and a recent analysis showed that London, Birmingham and Manchester were the most expensive cities for public transport costs out of thirty European cities measured. And it says it doesn’t matter if we end up using more oil, even if it comes from Russia in the meantime.

The Chancellor says this is a temporary cut. I can already see the lines of Tory MPs and motoring organisations queuing up to argue in a few months’ time that it must become permanent.

If the Chancellor genuinely has money to spare, he should have reversed the recent swingeing 3.8% increase in rail fares, and capped the out of control rises in bus fares. By the way, when was the last time we saw him on a bus or a train?