Belfast Telegraph

Rising oil costs put us on a slippery slope to poverty

The PM must make good on his promise to introduce a fuel duty stabiliser, says David Simpson

Fuel prices in Northern Ireland are higher than anywhere else in the United Kingdom. The January AA Fuel Price Report showed that both petrol and diesel sustained a bigger monthly hike than any other UK region.

Motorists in Ulster now pay 129.1 pence-per-litre (ppl), on average, for petrol - up 6.5p since December. Diesel has risen by 7p-per-litre in a month, with drivers now paying an average price of 133.5 ppl.

The president of the Automobile Association, Edmund King, said that many drivers can simply no longer afford to run a car. With retail petrol sales for the first nine months of 2010 down nearly 13% compared to before the credit crunch, the affordability of driving stands out as a major public policy question.

Compared to a year ago, petrol now costs 16.3p-a-litre more and diesel 18.98p. Filling a typical 50-litre fuel tank has increased by £8.15 for petrol and £9.49 for diesel.

During the years of the Labour government fuel duty was a major public concern that resonated throughout the country. In 2000, when average prices were 80p-a-litre for unleaded and 80.8p for diesel, rising fuel prices prompted protests which brought the country to a standstill.

The depth of public anger over the issue was such that it was the only time during the 1997-2001 Parliament that Labour fell behind the Conservatives in the opinion polls.

When he was the Leader of the Opposition, the prime minister made much of his intention to introduce a fuel duty stabiliser, which would protect hard-pressed families against rises in the price of crude oil.

Basically, what happens is that, as the price of crude goes up, the rate of fuel duty charged on petrol will go down in order to keep prices stable.

Before the May 2010 general election, a Conservative spokesman said, in relation to a fuel duty stabiliser: "We are very straight with people. This is not a tax giveaway - instead it is a sensible, balanced policy that protects families from big increases in the oil price."

I agree with those sentiments and have been disappointed by attempts to renege on that position by the larger partner in the coalition.

Over the last few weeks, the prime minister has been back-tracking on his previously stated position on this issue, throwing up concerns about the practicality of introducing such a scheme. If he had concerns about the practicality, why make the pledge when in Opposition?

Due to the fact that Northern Ireland shares a land border with the Republic, businesses on the British side of the border, such as garages and service stations, are put at risk by increases in the price of oil and petrol. Many businesses in my constituency have been hard hit by people electing to cross the border in order to purchase fuel.

This has a negative knock-on effect for HM Treasury in terms of fuel duty payments.

The Government takes about two-thirds of the price of a litre of petrol as things stand, so the price of a fuel duty stabiliser could be accommodated. I urge the prime minister to make good his promise on this issue and ensure that the scheme is applied to Northern Ireland.

John Walker, the national chairman of the Federation of Small Business, summarised the pressure that businesses are facing when he said: "(The current fuel regime) is placing strain on already hard-hit businesses' cash-flow. It is imperative the Government introduces the stabiliser to avoid a relentless flow of fuel duty increases that simply put small firms on a knife-edge."

The Government must act now to relieve this strain and provide businesses in Upper Bann and throughout the rest of the United Kingdom with a much-needed boost.

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