Wednesday, June 27, 2012

Fuel Duty Rise Postponed

You never know where you are with this government. One minute they are sternly soldiering on with dispensing the bitter medicine of austerity, and scolding us that getting the deficit down is the number one priority. But now, less than two months on from the budget, Generous George is cutting fuel duty, and getting the deficit down is - erm - the number two priority. And this is just when the UK's deficit-reduction targets are in danger of being missed due to weak borrowing figures. “We are on the side of working families and businesses," said the Chancellor. The same Chancellor that said in February, "Any tax cut would have to be paid for...what we are not going to do in the Budget is borrow any more money to either increase spending or cut taxes...We can’t have any deficit finance measure in that sense because getting the Budget deficit down which is now happening is an incredibly important part of keeping economic stability in Britain."

So why fuel duty? Why not cut VAT? Fuel duty only helps families who rely mainly on the car to get around. And it helps most those who drive high mileages in big, thirsty cars. In other words, it is regressive. And it conspicuously doesn't help those who have been hit by above-inflation increases in rail and bus fares. Or those who choose more active modes of travel.

What is also curious is the timing. The oil price today is $92/bbl, compared to $125/bbl in April. So the pump price is coming down of its own accord. It would have made a lot more sense to cut duty in April than it does today.

Depending on whose figures you use, this tax cut will cost the government somewhere between £0.5bn and £1.5bn, which will of course be added to the deficit. That, as I've written before, is money that could be spent lessening the nation's dependency on fossil fuels, instead of cementing it in. Increasing active travel would improve health, reducing NHS costs. It would reduce travel costs, thereby increasing the amount of disposable income that families have. The problem with making anything - including motoring - cheaper, is it makes it more attractive. Do we really want to be sending the signal that people should be continuing with their car-dependent lifestyles, secure in the knowledge that the Government will carry on cutting fuel duty in response to the fact that the oil price is going up? The reason the oil price is going up is because we're burning through the world's reserves at an increasing - and unsustainable -  rate. A fuel duty cut might be easier to justify if it were accompanied by measures to reduce oil dependency, but it isn't. Or tax cuts could be targeted in a way that doesn't benefit rich, profligate motorists in gas-guzzling SUVs more than those who drive low-emissions vehichles and do so as sparingly as possible.

Meanwhile, in other news,  a report says that British children are among the unhappiest in the world and "spending too much time sat unsupervised in front of televisions, games consoles and the internet in their bedroom instead of playing outdoors". Goodness me. And I thought kids loved PS3s and the web and all that. “Children are living increasingly sedentary, media-saturated lives and are spending less and less time in contact with the natural world. This is having profound consequences for our children’s health, especially with regard to what has been called the ‘modern epidemic’ of obesity.With increasing fears about traffic and stranger-danger, children’s freedom to play outside has been profoundly restricted and yet statistically the most dangerous place to be is actually in their own home and bedrooms, especially with so many children now having access to unsupervised digital technology." Bedrooms are dangerous? Who'd have thought it? I won't be able to sleep at night for worrying now. Maybe I'll sleep in the garage with my bike instead.

The BBC's response to the fuel duty cut was to go to a petrol station and ask a bunch of motorists what they thought of it. Unsurprisingly, issues such as obesity, oil-dependency, traffic danger, energy security, climate change, square-eyed children or even the need to reduce the deficit didn't come up. Although we don't like to admit it, we're leaving all of that to our children and grandchildren to take care of - and somehow I don't think they'll thank us for leaving them to play computer games in their bedrooms while we screwed up the economy and the planet.

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