Today’s newspapers are all reporting on yesterday’s budget. Fairly predictably, most of the front pages champion the change to fuel duty. The chancellor’s speech was written to highlight that very measure, saving it to the end. “We have put fuel into the tank of the British economy”, he concluded, and the nation’s journalists looked no further for their headlines.
It’s definitely a popular measure. Complaining about the price of petrol is something of a national pastime in Britain, and cutting 1p off the pump price has played very well. (The VAT rise added 3p, so ultimately Osborne has raised the price of petrol by 2p overall, but never mind.)
In helping ordinary people to deal with the rising price of oil, the government’s new Fair Fuel Stabiliser is pretty smart. It balances fuel duty against the price of oil at the time, stabilising the price for consumers. Rather than the Treasury taking the hit, taxes on oil profits from the North Sea will rise to offset the cost. When the oil price spikes, oil companies make record profits, so taxing those profits to offset the price for consumers seems eminently sensible.
Where the new policy falls down is that it doesn’t acknowledge the deeper, long-term problems of oil use. George Osborne doesn’t explain why the oil price is high and rising, other than to mention “events like those in the Middle East.” No mention is made of rising demand, or of the fact that despite that rising demand, conventional oil production has been more or less on a plateau since 2005. High oil prices are here to stay.
If the government did acknowledge this, it could still press ahead with the stabiliser mechanism and even a temporary tax cut. But it would also need a whole other strand to the budget – huge investment in public transport. Reopening local train networks, making coach travel more efficient, funding school buses. Aside from a modest investment in the railways, this was entirely absent.
In other words, it’s a budget in denial. The government is unpopular enough without telling people that we’re addicted to oil, and that we need to start thinking about life after the car. Instead, it’s offering us a fossil fuel bribe.
The Sun,which is still Britain’s best-selling newspaper, sums up this short-term head-in-the-sand approach to the oil price with it’s gleeful Beatle-referencing front page: ‘Britain you can drive your car (beep beep, beep beep… yeah!)
PS. It’s remarkable how the hyperbole is swirling about the cut in fuel tax. The Automobile Association praised the cut, saying it was a “much needed tourniquet to drivers haemorrhaging money from record pump prices”.
A little later in the same press release, they say “1p off duty will cut 50p off a typical 30-litre refill. A two-car family will save £2.12 a month on petrol.”
Is £2.12 a month ‘haemorrhaging money’?