Budget 2013: George Osborne must scrap the fuel duty rise

Families urgently need help with the cost of living. The Chancellor should take action on fuel duty and then examine a 10p tax rate.

I am a moderniser. But I believe that the one area of modernisation that the Conservative Party should focus on is helping those on lower incomes, who are struggling to make a living. We need a Ronseal politics, which is easy to define. This is not about getting hung up about backgrounds, or what school you went to. In fact, most families would love to send their children to posh schools. But it's about being on the side of the poorest, even if we don't believe in the big state redistributionist welfarism of the Labour Party. David Cameron’s declaration that "Conservatives are not the party of the better off, but the party for the want-to-be-better-off" should run through everything that we do - every speech, every Budget line, every policy decision. It must be our narrative, our metaphorical "washing line", holding all the clothes pegs together.

 
This means picking some battles. Policies only get attention if there is a scrap to get them through. I will come on to the cost of living in a moment, but other suggestions might include support for the family around housing and the right to buy; the cost of childcare; and Michael Gove’s education reforms. These need to be pursued relentlessly, both through intellectual firepower and personal stories. A mirror image of what Labour have done on the 50p rate.
 
Modernisation also means being counter-intuitive. Conservatives should not be afraid to appropriate the language of the left, or build alliances with trade unions, pressure groups and the Big Society. We must show that our policies are compassionate. Language and manner are incredibly important.
 
So when it comes to the Budget, this means a focus on lower earners and the cost of living. There is no more toxic tax than fuel duty. In my constituency of Harlow, the question is not whether you can afford to have a car, but whether you can afford not to. Like it or not, Britain is a great car economy. Seventy one per cent of us still drive to work. Rocketing fuel prices are also draining investment away from the more productive parts of the economy. The AA estimates that a 3p rise at the pumps switches an extra £1.8m into fuel sales, out of peoples’ pockets, every day. In 2011, Sir Terry Leahy of Tesco blamed fuel prices for the GDP slowdown, saying: "Filling up the family car has gone up 70 per cent in two years, causing what was a steady recovery to go sideways."
 
Petrol prices are also an issue of social justice. In reality, fuel duty is a tax on everything as it pushes up the cost of public transport and road haulage. In November 2011, the ONS stated that fuel taxes are shockingly regressive. Two years ago, an ordinary car-owner in Harlow was spending £1,700 a year on filling up the family car. Sadly, this trend has got worse, not better. According to the RAC Foundation, 800,000 British families now spend a quarter of their income on running a car. The poorest decile of households in the UK are shelling out at least 27 per cent of their disposable income on buying and running a vehicle. This is a national scandal. Given that two-thirds of the pump-price of petrol and diesel is tax, this is largely a crisis of our own making. All sensible people agree that taxes should be broadly progressive. That is why fuel duty needs reform.
 
George Osborne gets this. He has cancelled or delayed every single fuel duty rise that Labour left behind in their 2009 and 2010 Budgets - and he has done this at a time of immense strain on the public finances.
 
Fuel is now 10p cheaper per litre as a result. According to the AA, that has meant £6m more for families to spend in Britain’s real economy, every single day; £2.2bn more annually left in Britain’s collective pocket. Given his record, I am urging the Chancellor to go further in this Budget and to scrap September’s planned rise in fuel duty.
 
The second campaign that I am pressing for - in the longer term - is a major tax reform: something that is easily understood; is totemic; and helps those on lowest incomes. Namely: the restoration of the 10p income tax-rate. I believe that progressive reductions of income tax must be a moral mission for Conservatives. For example, a 10p band introduced above the current personal allowance (say between £9,440 and £12,000) would hand back more than £250 a year to a worker on minimum wage, and would help them to earn much closer to a living wage in cash-terms. Conservatives could also look to widen out a 10p band over time. This could help more middle earners as well.
 
Restoring a proper, generous 10p rate would be totemic. People would notice it. In my view, Ed Miliband's half-hearted conversion to the idea was a missed opportunity, as Labour’s proposals would only mean an extra £34 a year for a family (according to Policy Exchange) and even their new "mansion tax" doesn't fund it all. Such a tax will set a dangerous precedent, and no doubt will rapidly become a "homes tax" as the band gets lower and lower. That's not what Britain needs. Besides, the coalition have already brought in a de facto "mansion tax" by hiking stamp duty on more expensive homes. What we need instead is a substantive income tax reform - as set out on Great Gordon Brown Repeal Bill
 
Some people say, "just keep raising the personal allowance". I think this would be unwise. Everyone should pay something towards public services, even if only a little. Nigel Lawson started off as a Chancellor prioritising tax allowances. But later he changed course. He said: "I wished to create a large constituency in favour of income-tax reductions. The last thing I wanted to do was to reduce the size of that constituency by taking people out of tax altogether."
 
Consider a second analogy. Suppose that you and your friends have have gone out to an expensive restaurant for a large meal, and finally it comes to splitting the bill. Under my proposals, most people would still contribute something, albeit the poorest would pay the least as a share of their income. But is it really sensible that more and more of the table have a totally free ride, on the grounds that this "avoids complexity"? As a Conservative, this makes me uneasy. What lavish choices will your friends order next time, if they know that you are paying the cheque?
 
For the Budget next week, money is tight. So how might we pay for a freeze in fuel duty? There are many places to start: restricting elderly benefits to poorer pensioners, for example, or ringfencing the extra revenues that are expected from the new 45p rate of income tax. But it is striking, how one-sided this debate is. Whenever one argues for tax cuts, there is a clamour of voices saying, "how are you going to pay for it?" And yet, when large unfunded rises in government spending are announced - Vince Cable’s £1bn "British business bank" for example, or several of DECC’s carbon schemes - nobody really asks where the money is coming from. Fiscal discipline must be about controlling spending, as much as a broad tax base.
 
But, however it is paid for, families urgently need help with the cost of living. If Conservatives are to win the next general election, it will be because we have helped fundamentally with things like the cost of filling up the family car. Fuel duty has become a toxic tax. Keeping petrol and diesel costs down will reduce poverty, help to boost jobs, and secure the GDP growth that we so desperately need. When the economy recovers, then we can look at other reforms - such as the 10p rate - but what we need right now is a cost of living Budget
 
Robert Halfon is Conservative MP for Harlow. He tweets at @halfon4harlowMP

 

Fuel duty protestors stand outside Parliament on March 7, 2012 in London. Photograph: Getty Images.

Robert Halfon is Conservative MP for Harlow. He tweets at @halfon4harlowMP

Show Hide image

Europe’s last Blairite: Can Manuel Valls win the French presidency?

He first made a name for himself protesting against halal supermarkets. Now, he could be the man to take down François Hollande.

The election of François Hollande as the president of France in 2012 coincided with the high-water mark of Ed Miliband’s leadership of the Labour Party. That year, Labour posted its best local election results in 17 years, gaining 823 councillors and winning control of 32 councils in a performance that has not yet been surpassed or equalled.

Gazing across the Channel, the Milibandites were given hope. Hollande showed that a wonkish career politician could triumph over a charismatic centre-right incumbent.

The UK’s shattered Blairites looked to a different star rising in French politics: Manuel Valls. At the time of Hollande’s victory, Valls was the mayor of Évry, a small suburb of Paris, where he made a name for himself by campaigning against halal supermarkets.

His father, Xavier, was a Spanish painter and his mother, Luisangela, was Swiss-Italian. They met and married in Paris, and Valls was born in Barcelona while the couple were on holiday.

In 2009 Valls urged the Parti Socialiste (PS) to drop the adjective “socialist” from its name, and he ran for the presidential nomination two years later on what he described as a Blairiste platform. This included scrapping the 35-hour working week, which hardly applies outside of big business and the public sector but carries symbolic weight for the French left. Valls’s programme found few supporters and he came fifth in a field of six, with just 6 per cent of the vote.

Yet this was enough to earn him the post of interior minister under Hollande. While Valls’s boss quickly fell from favour – within six months Hollande’s approval ratings had dropped to 36 per cent, thanks to a budget that combined tax rises with deep spending cuts – his own popularity soared.

He may have run as an heir to Blair but his popularity in France benefited from a series of remarks that were closer in tone to Ukip’s Nigel Farage. When he said that most Romany gypsies should be sent “back to the borders”, he was condemned by both his activists and Amnesty International. Yet it also boosted his approval ratings.

One of the facets of French politics that reliably confuse outsiders is how anti-Islamic sentiment is common across the left-right divide. Direct comparisons with the ideological terrain of Westminster politics are often unhelpful. For instance, Valls supported the attempt to ban the burkini, saying in August, “Marianne [the French symbol] has a naked breast because she is feeding the people! She is not veiled, because she is free! That is the republic!”

By the spring of 2014, he was still frequently topping the charts – at least in terms of personal appeal. A survey for French Elle found that 20 per cent of women would like to have “a torrid affair” with the lantern-jawed minister, something that pleased his second wife, Anne Gravoin, who pronounced herself “delighted” with the poll. (She married Valls in 2010. He also has four children by his first wife, Nathalie Soulié.)

Yet it was a chilly time for the French left, which was sharply repudiated in municipal elections, losing 155 towns. Hollande sacked his incumbent prime minister, Jean-Marc Ayrault, and appointed Valls in his place. He hoped, perhaps, that some of Valls’s popularity would rub off on to him.

And perhaps Valls, a student of “Third Way” politics, hoped that he could emulate the success of Bill Clinton, who turned sharply to the right following Democratic losses in the US 1994 midterm elections and won a great victory in 1996. Under Valls’s premiership, Hollande’s administration swung right, implementing tough policies on law and order and pursuing supply-side reforms in an attempt to revive the French economy. Neither the economic recovery, nor the great victory, emerged.

With the date of the next presidential election set for 2017, Hollande was in trouble. His approval ratings were terrible and he faced a challenge from his former minister Arnaud Montebourg, who resigned from the government over its rightward turn in 2014.

Then, on 27 November, Prime Minister Valls suggested in an interview that he would challenge the incumbent president in the PS primary. After this, Hollande knew that his chances of victory were almost non-existent.

On 1 December, Hollande became the first incumbent French president ever to announce that he would not run for a second term, leaving Valls free to announce his bid. He duly stood down as prime minister on 5 December.

Under the French system, unless a single candidate can secure more than half of the vote in the first round of the presidential election, the top two candidates face a run-off. The current polls rate Marine Le Pen of the Front National as the favourite to win the first round, but she is expected to lose the second.

Few expect a PS candidate to make the run-off. So Hollande’s decision to drop out of his party’s primary turns that contest into an internal struggle for dominance rather than a choice of potential leader for France. The deeper question is: who will rebuild the party from the wreckage?

So although Valls has the highest international profile of the left’s candidates, no one should rule out a repeat of his crushing defeat in 2011.

He once hoped to strike a Blairite bargain with the left: victory in exchange for heresy. Because of the wasting effect of his years in Hollande’s government, however, he now offers only heresy. It would not be a surprise if the Socialists preferred the purity of Arnaud Montebourg. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

This article first appeared in the 08 December 2016 issue of the New Statesman, Brexit to Trump