Following an invitation to the Treasury from the Chief Secretary to FairFuelUK, the Government explains how they now recognise that lower fuel duty can indeed be an economic stimulus not just a cash cow.
The Government agrees with FairFuelUK that low fuel duty helps the economy.
At a very constructive Treasury meeting on Monday with Danny Alexander and FairFuelUK’s Spokesman Quentin Willson and its Founder Howard Cox, the Chief Secretary to The Treasury presented the government’s recently published fuel duty dynamic modelling which supports the fuel campaign group’s long-held contention that lower fuel duty increases jobs, GDP and economic activity.
FairFuelUK presented their own dynamic modelling in 2012 that showed a 3p cut in duty would generate 70,000 jobs, increase GDP by 0.2% and would lower inflation. The Minister’s economic model of what has happened in the life of this Parliament suggests, following a 1p cut in March 2011 and the continuing freeze in duty, that GDP will increase even more by 0.3% to 0.5% in the longer term. Their model shows that the increased exchequer revenues resulting from the increase in economic activity will pay for around half of the initial cost of the Government’s action on fuel duty.
The Government recognises the impact that persistently high pump prices have on the cost of living and business costs, and has taken action to support the motorist, resulting in the longest duty freeze for over 20 years. Stopping Labour’s planned duty increases has followed extensive campaigning by FairFuelUK in the last 3.5 years.
Quentin Willson said: ‘This is an historic moment in fuel taxation. No other government has been brave enough to sacrifice fuel duty revenues to stimulate growth. And it’s worked. We’ve had stable duty levels since 2011 and that’s given everyone confidence to spend more and helped lower inflation too. But let’s not stop there.”
Danny Alexander said: 'I’ve met Quentin Wilson and Howard Cox on a number of occasions. That campaign has made – and continues to make – a very significant impact in Parliament, in Whitehall and in the Treasury.....because fuel duty has frozen…It doesn’t mean that our relationship will! We want to maintain a high level of dialogue with you… And we want to keep working, to support the work that you do.'
Howard Cox said: 'The meeting with Danny Alexander marks an important point in the Campaign, in that FairFuelUK has indeed helped to influence Government Economic Policy and direction. They now recognise that the huge tax take on 32m road users, combined with the UK being the highest fuel duty State in the EU, was impacting on economic growth. The result: By the end of the parliament, pump prices will be nearly 20p per litre lower than under Labour’s fuel duty plans. BUT the campign will continue to fight for a significant cut in duty before the general election.'