Fresh demands on fuel
May 29 2008 by William Green, The Journal
BUSINESS leaders and campaigners yesterday renewed calls for fuel and car tax rises to be axed amid confusion about the Government’s response to the row.
The demands came as Downing Street tried to play down speculation of a U-turn, although Chancellor Alistair Darling confirmed he would review a 2p fuel duty increase closer to its planned introduction in October.
Number 10 and Mr Darling stressed that the priority was to cut the high oil price by working internationally, rather than axing changes to vehicle excise duty.
The news comes despite a Labour rebellion and claims that up to 18 million people could face higher excise duty bills of up to £245 a year as an exemption from top bands for older cars ends.
The Prime Minister’s official spokesman said: “Of course we understand the concerns consumers face, but we also need to take into account the need to ensure economic stability, to fund public services and to promote energy efficiency.”
He claimed the impact of higher oil prices on public finances tended to be neutral over time, despite the Government pocketing an extra £505m in taxes – through VAT and North Sea oil duties – in just six weeks.
On vehicle excise duty, the spokesman added: “This won’t come into full effect until 2010.
“So in that sense it is not retrospective and clearly this is about encouraging more energy-efficient use of cars and affecting future choices.”
Mr Darling promised to revisit a planned fuel tax rise, but insisted green excise duty incentives were vital to encourage use of less polluting cars, with most people paying less or the same in real terms.
The Prime Minister said high oil prices were here to stay, with global demand outstripping supply, but wanted to help the hardest hit by focusing on international action to bring down bills.
Ross Smith, from the North East Chamber of Commerce, said: “The Government must recognise that some of these proposed changes are now untenable and could easily prove unsustainable for some businesses.”
The AA motoring organisation said axing the planned 2p fuel tax rise was the absolute minimum.
And Blyth Valley MP Ronnie Campbell, who has led calls for a rethink on excise duty, said: “We are hitting people who are on the lowest incomes and have to keep a car for several years because they cannot afford to change it and might not be able to sell it.”
Bid to boost North Sea output
MOVES to boost North Sea oil production were yesterday unveiled as Gordon Brown warned the country faces the third great oil shock in decades.
Two new North Sea developments, West Don and Don South West, are due to start production in the first half of next year, expected to produce up to 50,000 barrels of oil a day at their peak, with total output of 50 million barrels.
Mr Brown also promised incentives to find new oil fields and make better use of existing production areas.
Extra oil and gas fields could be carved out of unprofitable parts of around 30 existing fields, which could see additional daily production of 20,000 barrels of oil.
But the maximum increase would only be a tiny fraction of the 1.8 million barrels used daily by the UK.
The news came after Mr Brown and Chancellor Alistair Darling met UK oil bosses, whose industry makes Britain the world’s 12th biggest oil producer.
Last year the industry contributed £9bn to Treasury coffers but this total is expected to rise with price hikes.
The Prime Minister said: "I met the oil producers because we are facing the third great oil shock in decades."
Oil prices had risen from $11 a barrel when he was Chancellor to $130, said Mr Brown who insisted he understood the impact on petrol, energy and food bills.
"The important thing is to get the supply in Britain as much as possible so that we have energy security," said Mr Brown.
