U-turn in the right direction

Wednesday 27 June 2012

GEORGE Osborne achieved a personal best for a speedy U-turn yesterday.

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As recently as Tuesday, Transport Secretary Justine Greening suggested in the Commons that the inflation-linked 3p a litre increase in fuel duty would go ahead as planned in August. Nor apparently was the matter discussed at Cabinet yesterday, despite a strong call from Labour Shadow Chancellor Ed Balls for a change of heart. So Mr Osborne's screeching handbrake turn came out of the blue.

Nevertheless, it is welcome, especially in rural Scotland where households and businesses suffer a four-fold penalty: they pay the highest fuel prices in the UK; they have to make longer journeys to work, to school and to shops; public transport is inadequate or non-existent; and average wages are lower.Those who argue for above-inflation fuel duty increases to reflect the environmental costs of private motoring and encourage drivers to switch to public transport neglect the plight of the rural poor and the widening gap in fuel prices between town and country. Fuel duty is also regressive, hitting the poorest hardest. It is argued that the poorest cannot afford to drive but in remote areas they cannot afford not to. Besides, high fuel prices also have a knock-on effect on the cost of travelling by public transport and, via freight charges, on food and other essentials. At a time when millions of households are struggling to square the circle of static wages and rising costs, a deferred tax rise that will save an average £35 to £40 a year is worth having. Every little helps.Mr Osborne's move was all the more surprising at a time when prices at the pumps have been falling as a result of falling oil prices, the strength of sterling, higher output from OPEC and competition between supermarkets. Against that backdrop, and if the trend were to be sustained, the duty rise would have been less noticeable. The change of heart will still cost the Treasury more than £500m. The Coalition seems to be able to find money when it suits it politically and could find a lot more if a serious attempt were made to tackle tax avoidance by wealth individuals like Jimmy Carr and companies such as Vodafone. That, rather than its obsession with benefit fraud, has far more potential to raise revenue that could make a real difference to the lives of the most vulnerable. The latest U-turn does little to dispel the impression that the Government is all over the place on policy. The lack of discussion in cabinet is also worrying. Tony Blair's period in office was caricatured by the then Opposition as "sofa government" because of the way power was concentrated in few hands. Now we appear to have "quad government", in which important decisions are taken by the Prime Minister and Chancellor along with Nick Clegg and Danny Alexander. The omnishambles continues.

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U-turn in the right direction

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