Iain McKenzie MP: Achieving fair fuel prices across the UK

Scottish Labour MP Iain McKenzie writes about his debate in parliament on fuel prices in the UK and calls for greater transparency in the supply chain. The cost of fuel is finally down to a level not seen since 2010 – but many motorists are still waiting for cheaper petrol prices where they live. In my own constituency of Inverclyde petrol is 4ppl higher than neighbouring areas, and similar disparities exist throughout the UK. The opaque way in which fuel is priced means it is hard to get to the bottom of why these variations exist. We are led to believe this is due to an intense pump price battle between supermarkets and some independent retailers. Yet, the rapid growth of supermarket forecourts has meant many independent and even oil company owned petrol stations have had to close, killing off competition. Labour have called for the Competition and Market Authority to launch an investigation into prices on the forecourt, so motorists know how much their fuel really costs and to make this market more competitive. However it is not just retail prices that need looked at. We also need to find out where profits are being made in the supply chain. Much like the energy sector, price rises go up like a rocket when there is an increase in the wholesale cost, but fall like a feather if there is a decrease in price. The AA have called for transparency in the supply chain, and for petrol wholesalers to reveal their prices. I believe we need something similar to what Labour have proposed for the energy sector: a regulator to enforce fair and proportionate price reduction. The Government’s increase in VAT from 17.5% to 20% has no doubt also contributed to the higher cost of petrol. More than 60% of what motorists pay goes to the Exchequer in fuel duty and VAT – the highest level in the EU for taxation on diesel and the second highest for petrol. During the course of this Parliament Labour have called for postponements to increases in fuel duty, arguing this would be unacceptable due to the increased cost of living. At the very least it is worth considering dropping this VAT hike on fuel to ease the burden on motorists. This is a pressing issue - six out of ten workers still rely on car to get to their place of work. Poorer households are slipping into transport poverty, and SME’s are making staff redundant due to the high price of fuel. In today’s world a car is not a luxury, but a necessity. I want this debate to make us think about how we make fuel prices fair regardless of where someone lives in the country. That means an open, transparent and fair market and supply chain, alongside lower VAT on fuel.