A host of new policies, but MPS just want a cut in fuel tax
Government gets £4.4m a day in fuel VAT as cost of filling a tank soars to more than £100
CONSERVATIVE MPS have urged Boris Johnson to match European fuel tax cuts to ease the cost-of-living crisis, as he attempted to reset his premiership in a major speech.
Mr Johnson announced a series of wide-ranging policies in Blackpool yesterday amid calls by senior Tories that he must go further with fuel tax cuts.
The Treasury has slashed duty by just 5p per litre, compared with 17p in Ireland and Spain, and 25p in Germany.
Analysis by The Daily Telegraph shows that the Government receives an extra £4.4million per day in fuel VAT compared with before the conflict in Ukraine, which led to a dramatic increase in prices. The average cost of filling a car up with petrol is now over £100 for the first time, averaging more than 182p per litre.
Asked whether he would go further on fuel tax, as other European countries have, Mr Johnson suggested the high prices were the result of retailers not passing on tax savings to consumers.
“We made a cut already, the biggest cut ever in fuel duty,” he said. “What I want to see is those cuts in taxation not just swallowed up in one gulp, without touching the gullet of the fuel companies, I want to see those cuts having an impact on the pumps.”
Sir Iain Duncan Smith, the former Tory leader, said: “Getting the burden down on people at the moment is critical and I would personally like to see tax cuts. They should cut the VAT and the green levies now. They’re ridiculous and are costing the earth.”
The AA has called for a 10p cut to the duty, which currently stands at 52.95p per litre following March’s 5p cut. It said duty should vary depending on wholesale prices, allowing the Government to impose a “stabiliser” on costs, while the RAC said crossing the £100-per-tank threshold was a “dark day”.
A Government spokesman denied there had been a “VAT windfall”. “In March the OBR forecasted lower VAT receipts for this year than they did in the autumn,” he said. As two more rail unions announced strike action yesterday, Mr Johnson also vowed not to “surrender” as he struck a defiant tone at a separate Cabinet meeting.
He said the Government will not simply “roll over” to the union barons on their threat to cripple the country’s railway system at a time when driving is becoming prohibitively expensive.
The Prime Minister told Cabinet that the Department for Transport and rail industry had his “1,000 per cent support in this fight”, according to the Daily Mail.
Return of 95 per cent mortgages
Mr Johnson said the Government would launch a review of the mortgage market to find ways to make it easier for first-time buyers to take out loans and improve access to low-deposit lending. He said he wanted to ensure a “ready stream” of low-deposit mortgages. “We have got to help people get deposits, but we need to have many more 95 per cent mortgages,” he said.
“It is punitively difficult for so many people now in this country; it doesn’t need to be that way, that’s one of the reasons we are reforming it.”
The review will be led by an independent chairman supported by officials from the Treasury and Housing departments and will conclude in the autumn.
A separate Bank of England review is looking at loosening mortgage affordability tests introduced after the financial crisis. But experts warned it was a dangerous time to open up the market to higher-risk borrowers.
UK Finance, the financial trade body, said it was not provided with any detail on what the review would include ahead of Mr Johnson’s announcement.
Right to buy
The Prime Minister also announced an extension to Margaret Thatcher’s Rightto-buy policy. He said that people renting properties from housing associations would be given the right to buy their homes.
But it emerged that no new government money will be given to the policy and the number of people who can benefit from it will be capped, although an exact figure was not given.
It led to criticism that few people would benefit from the scheme and that the problem of too little social housing in the UK would be exacerbated.
Every housing association property sold will be replaced by the Government, Mr Johnson said, but it was unclear how this would be funded given the lack of new money.
He added: “We will finish the right
to-own reforms Margaret Thatcher began in the Eighties, ending the absurd position where first-time buyers spend their life savings on flats, only to find themselves being charged hundreds of pounds for painting their own doors or unable even to own a pet dog.”
Housebuilding
Mr Johnson admitted he could not guarantee he would stay true to his pledge to build 300,000 houses a year. The 2019 manifesto pledged to reach the new target by the mid-2020s.
But the Government only delivered 216,000 new homes last year, and 243,000 in the 2019-20 financial year.
Mr Johnson said he couldn’t give a “cast-iron guarantee” that he would achieve 300,000 homes by the middle of the decade, or “in any particular year”.
“You’ve got to make sure that you’re not building everywhere on precious green belt land,” he said. Downing Street has ditched proposed reforms to planning and housebuilding, after Tories blamed them for their by-election defeat in Chesham and Amersham.
Shrinking the state
Mr Johnson pledged to bring public spending under control and reduce the size of the state, declaring that ministers needed to ditch “the mindset that we had during Covid: that the answer to every problem is more state spending”.
“The overall burden of taxation is now very high, and sooner or later… that burden must come down,” he said.
Tax and spend
Mr Johnson said the Government would continue supporting those worst hit financially but noted the limit of what
could be done given the global problems. “When a country faces an inflationary problem, you can’t just pay more or spend more. You have to find ways of tackling the underlying causes of inflation,” he said.
Help with household bills
Mr Johnson said that “over the next few weeks,” ministers would announce “reforms to help people cut costs in every area of household expenditure, from food to energy to childcare to transport and housing”.
Borrowing a Labour slogan, the Prime Minister repeatedly said that the Government was “on your side”.
“We need to grow and eat more of our own food in this country and it is sensible to protect British agriculture from cut price or substandard food from overseas,” he said.