Friday, 25 November 2011

Fuel Prices

Rarely has an issue prompted such a large flurry of e-mails into my inbox as the parliamentary debate on fuel prices held last week. I received literally hundreds of messages from constituents concerned at the damaging effect that such high prices are having on businesses and families, and so I was pleased to be called to speak in the debate.

In his last budget, George Osborne announced several measures to address this issue, such as scrapping Labour’s planned rise in fuel duty and the so called "fuel price escalator" where fuel tax automatically rises above inflation year in, year out. The government also announced a pilot scheme for a rural rebate of five pence off every litre and a trial is planned on the Isles of Scilly very soon.

These measures may have stopped the problem getting worse, but it is now time for the Government to reassess fuel duty all together, in particular addressing the issue of what is essentially a tax on businesses located in peripheral regions.

When I was in business in Cornwall, I would often drive the lorry that took strawberries from Trevaskis Farm to Birmingham. The reality is that Cornwall is 300 miles away from London. A typical 16-tonne lorry doing a round trip would incur, in total, tax of around £220, just on that one trip. Let us compare that with a lorry driving from Birmingham to London and back: the tax would be only £80. A similar business operating in Cornwall has to pay three times more tax than one in Birmingham. That is unfair, and it is felt acutely by businesses in the primary sector, particularly in areas such as fishing and farming, in which Cornwall has competitive strengths. Our unique climate gives us an advantage in allowing us to produce early potatoes and cauliflowers during the winter. We should have a policy that reinforces those advantages, not that seeks to undermine them.

The irony is that places such as Cornwall have EU grants and regional growth funds to help develop businesses in areas where we have strengths, including food processing, farming, and green energy. But at the same time we are undermining those efforts by regressive taxation through high fuel duties. The impact of which is to compound the single most important disadvantage that a peninsula like Cornwall has which is its distance from the market.

In my speech to Parliament during the debate I made a suggestion on how we might go forward. Alongside the rural rebate that is currently being piloted (and that I hope is rolled out in Cornwall as soon as possible) I think we should introduce a rebate scheme that takes into account the comparatively long distances that businesses in peripheral areas have to travel to market. To be eligible, a business would have to be located in a county such as Cornwall. The rebate would be available only on fuel supplies delivered to an address in the area. Difficult problems often require creative solutions; it should not be beyond the wit of man to come up with such a scheme and it could be a powerful driver of growth and jobs here in Cornwall.

George Eustice can be contacted at or 1 Trevenson Street, Camborne, Cornwall TR14 8JD or on 020 72197032.