If you’re happy to help finance tax credits, defence spending and cleaning up the diesel emissions blunders look away now. But if you think it’s unfair for drivers to bankroll all these government-spending plans then read on. Our contacts in the Treasury say there’s an 80% chance fuel duty will be raised in the Autumn Statement. And that’s despite FairFuelUK giving the Chancellor evidence from the CEBR proving that low transport costs have actually improved tax revenues and significantly stimulated economic growth. In 72 hours 12,000 of you also emailed the Treasury stressing the importance of this historic evidence and asking for the current freeze in duty levels to continue for the length of this Parliament. You’ve asked this because it makes clear and prudent financial sense.
But politics doesn’t work that way. When the government gets rudely snubbed on tax credit changes and events force them to unpick their defence cuts where do they come to rattling their tins? To the long-suffering 37 million drivers who for years have been the uncomplaining financiers of government spending. And what’s so frustrating for all those hard working businesses and families is that there’s now no doubt at all that keeping fuel duty low (its still the highest of the G7 economies) has brought wide-ranging and powerful benefits to this country’s economy. Nobody can now argue with any authority that stifling economic growth with high transport taxes is a good thing - quite the opposite in fact. Raise duty and you slow economic activity and reduce GDP. This is now an immutable and well-documented fact.
That the Treasury is actively considering raising duty is bad enough but what’s worse is that they may try to wrap it in some pseudo-environmental cloak of helping to improve air quality. Raising the duty on diesel by just a penny may, to the casual observer, be justified environmentally but it will cost us £9 billion in lost economic activity and higher prices and have no effect whatsoever on reducing the number of the worst polluting cars and vans on our roads. If the Treasury tries to argue that raising diesel duty is going to reduce the level of pollutants in the air this will be a ponderous whopper of some magnitude and they’ll instantly lose both credibility and integrity. Watch out for this because it’s a PR disaster that will backfire badly and show that they’ve ignored evidence-based research and the wishes of tens of thousands of our supporters. This will be an act of panicked arrogance.
What happens in the next few weeks will be a test of the Treasury’s wisdom and financial credibility. Do they take the easy but hugely dangerous option of raising duty because they badly need the cash or will they understand that every shred of evidence now proves that such a policy will slow our economic growth? You’d think that this would be an easy bet and that reason will prevail. But desperate politicians can do desperate things and their contempt and lack of understanding for road users continues to surprise everybody. Meddling with fuel duty in the Autumn Statement could turn out to be one of the defining moments in this government’s fiscal history. Get it wrong and they could look very foolish indeed.