Sunak Under Pressure to Cut Fuel Duty

[yorksrob]

I see from various newspaper front pages that Chancellor Rishie Sunak is coming under pressure to make a substantial cut in fuel duty to ease the cost of living crisis.

If this is in the cards, one wonders whether rail passengers will see a similar car in fares.

(Rhetorical answer: not holding my breath).

Newspaper headlines: Russia accused of genocide, and 'fuel duty cut'

Several of Monday's papers lead with Ukraine likening Vladimir Putin's actions to those of the Nazis.

www.bbc.co.uk

Source, BBC newspaper review:

e.g. from the "Current Bun" headline, "Don't be a fuel Rishie"

And the mail:

"Rishi's set to cut fuel duty"

 

[Grumpy Git]

If he cuts fuel duty, he also cuts the amount received from VAT too.

 

[CaptainHaddock]

I'd rather he cut beer duty! No sector was harder hit than hospitality by the pandemic so he should be focussing on that rather than appeasing those who have the luxury of owning a private vehicle.

 

[3rd rail land]

If he cuts fuel duty people will start demanding rail fares are lowered to. As someone who doesn't own a private vehicle I would be rather miffed if rail fares stayed the same but fuel duty was lowered.

 

[yorksrob]

I'd rather he cut beer duty! No sector weas harder hit than hospitality by the pandemic so he should be focussing on that rather than appeasing those who have the luxury of owning a private vehicle.

That would certainly help with my cost of living crisis

 

[Bletchleyite]

If he cuts fuel duty, he also cuts the amount received from VAT too.

The VAT on fuel has of course already provided a nice unplanned "windfall" tax increase for them. No great problem in balancing that by cutting duty a little. Increasing fuel duty to push people to EVs is a great idea, but the EV market isn't quite ready for that yet - it needs about 10 years or so for a market in used vehicles to grow. And it will need to be a gradual, stepped increase to give people time to make financial plans to switch to EV/move house to reduce travel; all big, steep increases do is bankrupt people which ends up costing the state more.

 

[yorksrob]

If he cuts fuel duty people will start demanding rail fares are lowered to. As someone who doesn't own a private vehicle I would be rather miffed if rail fares stayed the same but fuel duty was lowered.

Alas, it seems to have been that way for several years !

 

[Bletchleyite]

If he cuts fuel duty people will start demanding rail fares are lowered to. As someone who doesn't own a private vehicle I would be rather miffed if rail fares stayed the same but fuel duty was lowered.

Your rail journey receives subsidy (on most TOCs), so I don't think you have any right to feel aggrieved in that manner, rather you should be pleased your journey does receive subsidy.

 

[3rd rail land]

Your rail journey receives subsidy (on most TOCs), so I don't think you have any right to feel aggrieved in that manner, rather you should be pleased your journey does receive subsidy.

That is one viewpoint. My view however is that rail fares are rather higher than that of our mainland Europe counterparts. Granted I am sure there are some exceptions such as Switzerland but on the whole rail fares are much higher in the UK. For example last year I did a 62 mile trip in Italy by rail and I can assure you it would have cost me more in the UK than the €11.70 I paid. A fair bit more I suspect. This was a walk up standard class ticket BTW.

Without government subsidy I strongly suspect prices would rise to the point where so few people would use rail that the railway in the UK would no longer be viable. Take Transport for London as an example. Without large sums form the government to bail them out on multiple occasions they would have gone bankrupt by now. Without public transport in London how would people get anywhere? We'd see a huge rise in vehicles on the roads and people would endlessly be sitting in traffic jams and journeys would take even longer than they do now and the average speed of a vehicle ion London is already at or close to single figures!

 

[Scott1]

Your rail journey receives subsidy (on most TOCs), so I don't think you have any right to feel aggrieved in that manner, rather you should be pleased your journey does receive subsidy.

So do car journeys, but when roads are repaired or upgraded its an "investment", when the railway gets moneys its a "subsidy".

 

[AndrewE]

Your rail journey receives subsidy (on most TOCs), so I don't think you have any right to feel aggrieved in that manner, rather you should be pleased your journey does receive subsidy.

As do all road users. A better reply would have been to ask why the government seems to be making public transport less attractive (poorer services and rising costs) compared with car use.

Fuel duty has decreased continuously for a decade or so now.

 

[ExRes]

The VAT on fuel has of course already provided a nice unplanned "windfall" tax increase for them. No great problem in balancing that by cutting duty a little. Increasing fuel duty to push people to EVs is a great idea, but the EV market isn't quite ready for that yet - it needs about 10 years or so for a market in used vehicles to grow. And it will need to be a gradual, stepped increase to give people time to make financial plans to switch to EV/move house to reduce travel; all big, steep increases do is bankrupt people which ends up costing the state more.

I don't know to what extent you mean by "Increasing fuel duty to push people to EVs", the cost of electricity is also increasing and the people who seem to believe that EVs mean freedom from taxation and running costs will be sadly mistaken, and that's without the direct and indirect costs of providing nationwide vehicle charging access

 

[Bletchleyite]

So do car journeys, but when roads are repaired or upgraded its an "investment", when the railway gets moneys its a "subsidy".

I don't have figures, but I would be utterly astonished if it were the case that the cost of road building and maintenance exceeded the income directly attributable to the purchase, maintenance and use of road vehicles, i.e. the sum of VAT on purchase and all repairs, plus the total income from vehicle excise duty, plus VAT and duty on fuels and other fluids.

So far as I understand, road vehicles operate at a profit to the country as a whole if you do that calculation.

No, those taxes are not hypothecated, but hypothecation is not really relevant to the overall situation.

== Doublepost prevention - post automatically merged: 21 Mar 2022 ==

I don't know to what extent you mean by "Increasing fuel duty to push people to EVs", the cost of electricity is also increasing and the people who seem to believe that EVs mean freedom from taxation and running costs will be sadly mistaken, and that's without the direct and indirect costs of providing nationwide vehicle charging access

I mean that as personal EV use becomes more viable and the market develops, ICE fuels should, and certainly will, see considerable taxation increases in order to further encourage people to move to EVs. The more the cost of electricity rises, the bigger these increases need to be, as it will be necessary to ensure EV use is cheaper than ICE use or people won't switch.

Another option is that road pricing is introduced applying to all vehicles, and ICE fuel tax is paid on top.

 

[DynamicSpirit]

Your rail journey receives subsidy (on most TOCs), so I don't think you have any right to feel aggrieved in that manner, rather you should be pleased your journey does receive subsidy.

While acknowledging that subsidy exists, the problem is that calculation doesn't account for the damage done by car journeys to other people. In short, when a car drives past me or my house, no-one directly compensates me for being forced me to breathe in the pollutants that car generates, or the noise it causes, or the general degradation in the environment I live in. And when the car driver eventually needs additional medical care later on in life because s/he destroyed his/her own health by driving everywhere and not exercising, no-one gives me a choice of whether I should pay extra taxes to pay for their self-inflicted medical needs. And when I go out walking or cycling - or really go anywhere outside that's near a road, once again no-one compensates me for the increased risk to my life that arises from so many people driving. A proper comparison of fuel duty vs. rail subsidies would need to take those into account.

(Of course, rail journeys cause some of the same problems, but to a much lesser extent).

 

[Bletchleyite]

While acknowledging that subsidy exists, the problem is that calculation doesn't account for the damage done by car journeys to other people. In short, when a car drives past me or my house, no-one directly compensates me for being forced me to breathe in the pollutants that car generates, or the noise it causes, or the general degradation in the environment I live in. And when the car driver eventually needs additional medical care later on in life because s/he destroyed his/her own health by driving everywhere and not exercising, no-one gives me a choice of whether I should pay extra taxes to pay for their self-inflicted medical needs. And when I go out walking or cycling - or really go anywhere outside that's near a road, once again no-one compensates me for the increased risk to my life that arises from so many people driving. A proper comparison of fuel duty vs. rail subsidies would need to take those into account.

(Of course, rail journeys cause some of the same problems, but to a much lesser extent).

However, almost everyone still benefits from road vehicles even if they don't own one. They might use a taxi occasionally, or a diesel bus with two people on it (much more polluting than two small petrol cars with one in each), or they might receive a food delivery in a diesel van and so on.

It therefore is nowhere near that simple.

I'm in favour of increasing subsidy to and capacity on the railway network to promote use. However, feeling aggrieved that a subsidised industry doesn't get more subsidy is not appropriate. Particularly as pouring that subsidy into the railway specifically would not necessarily be the best way to reduce the most damaging car journeys - local ones. For that, money would be better spent on Dutch style segregated cycle infrastructure, electric buses and new tram networks, not heavy rail (other than local heavy rail around cities which needs to be electrified in preference to simply reducing fares).

 

[DarloRich]

If he cuts fuel duty people will start demanding rail fares are lowered to. As someone who doesn't own a private vehicle I would be rather miffed if rail fares stayed the same but fuel duty was lowered.

Rail fares wont fall. Road users are a bigger voting block to win over.

 

[Bletchleyite]

Rail fares wont fall. Road users are a bigger voting block to win over.

Other than the outrageous Anytime fares charged on some services, I'd not overall cut the fare take for now, rather I'd increase subsidy into infrastructure like electrification and capacity gain. Stuff like two-hourly services on local urban stopping routes (e.g. the CLC route out of Manchester) wouldn't get people out of their cars if they weren't just free but people were paid a tenner a time to use them. They just aren't useful. Half hourly is the bare minimum for an urban route.

HS2 is that capacity gain for the WCML and MML, but you need the Eastern leg in full for it to do that for the ECML, and it's needed elsewhere too, e.g. the predominance of 2-car DMU services all over the North.

 

[3rd rail land]

Rail fares wont fall. Road users are a bigger voting block to win over.

Totally agree but I'll still feel very aggrieved if fuel duty gets a cut but not rail fares. If fares won't be cut the at least sort out things that turn people away from rail such as short formed services that leave people behind due to overcrowding.

 

[Bletchleyite]

If fares won't be cut the at least sort out things that turn people away from rail such as short formed services that leave people behind due to overcrowding.

That's more my point. Don't cut fares, spend on infrastructure, electrification and rolling stock so the railway isn't just a distress purchase. But also on Dutch style cycle facilities everywhere (at the expense of roadspace for cars if needs be) and on local bus too, as those will do far more for the most damaging car journeys than heavy rail ever will.

HS2 for instance is very worthwhile, but it'll do nothing for people driving around Manchester (though the full build will allow slight increases in south Manchester local services).

 

[DynamicSpirit]

However, almost everyone still benefits from road vehicles even if they don't own one. They might use a taxi occasionally, or a diesel bus with two people on it (much more polluting than two small petrol cars with one in each), or they might receive a food delivery in a diesel van and so on.

Sure. And on those rare occasions when I use taxi, it seems fair that I should pay for it at a rate that covers the direct costs to the driver of running the taxi, the need for the driver to get a decent remuneration for his time AND the degradation to the environment and the (indirect) harm caused to other people's lives by my use of the taxi. Ditto when I buy food, it seems fair that I should pay a price that covers the cost the shop of obtaining and supplying the food, an allowance for the shop to make a reasonable profit AND the damage caused to the environment and to other people's lives by the various processes involved in delivering that food.

I'm in favour of increasing subsidy to and capacity on the railway network to promote use. However, feeling aggrieved that a subsidised industry doesn't get more subsidy is not appropriate. Particularly as pouring that subsidy into the railway specifically would not necessarily be the best way to reduce the most damaging car journeys - local ones. For that, money would be better spent on Dutch style segregated cycle infrastructure, electric buses and new tram networks, not heavy rail (other than local heavy rail around cities which needs to be electrified in preference to simply reducing fares).

I do actually somewhat agree with you there. I personally feel grateful for the subsidy that the railways receive and I don't feel aggrieved that it doesn't receive more. I though feel that it's more complex to the extent that raising fares can put people off travelling by rail, which then causes a complicated sequence of other effects that are overall bad for society. (I suspect you're not going to disagree with that).

However I think there is a case for non-car-owners to feel somewhat aggrieved by the way that any rise in the cost of motoring is often treated by the Government as completely unfair and unacceptable, while comparable rises in the cost of public transport are often treated as simply a normal inflation thing. I fear that, as @DarloRich says, this comes down to the sizes of the different voting blocs.

 

[ChrisC]

I'd rather he cut beer duty! No sector was harder hit than hospitality by the pandemic so he should be focussing on that rather than appeasing those who have the luxury of owning a private vehicle.

Owning a car is not a luxury for me but a necessity. However, rather than cutting fuel duty I would prefer a bus service that ran more frequently than every 2 hours, ran before 8am, after 6pm and on Sundays. I would then seriously consider not owning a car if where I lived had a useable bus service. A shop in the village would also help. We do have a pub so cutting beer duty may not be too bad an idea.

I do wonder if in those areas where local bus and rail travel is adequate there will be an increase in people using public transport as the price of fuel rises. Bus day tickets are very competitively priced in many areas. If I had an adequate bus service I could travel quite long distances with a £5.95 day ticket.

 

[Bletchleyite]

I do actually agree with you there. I personally feel grateful for the subsidy that the railways receive and I don't feel aggrieved that it doesn't receive more. I though feel that it's more complex to the extent that raising fares can put people off travelling by rail, which then causes a complicated sequence of other effects that are overall bad for society. (I suspect you're not going to disagree with that).

Indeed, I do agree. But the way to get fares down on public transport is not simply to leave it as it is and chuck more subsidy at it, but rather to improve it and massively increase capacity so as to get more people to use it, which makes it more viable and might well even reduce the overall subsidy needed. Capex over opex. For instance, Metrolink in Manchester is proven to allow the system to operate with zero opex to the taxpayer (i.e. no operating subsidy) once the conversion and additional trams are paid for, so get doing that to e.g. Atherton, Rose Hill, Hadfield etc.

== Doublepost prevention - post automatically merged: 21 Mar 2022 ==

A shop in the village would also help.

An interesting point there - very little effort is put into considering what might actually reduce car journeys. It won't work everywhere, but could it be argued that for some rural locations subsidising the provision of a quality local shop or mobile shop (of the sort of nature of a Tesco Express or Co-op) might actually be better than a fairly useless bus service? Mr and Mrs Two-Jags won't use that bus, but they very likely will shop at that sort of shop, perhaps doing a big delivery once a month then doing top up shops there. Particularly were it a Little Waitrose

Or similarly grants for setting up a local butcher, baker and candlestick maker, as it were?

 

[DarloRich]

Totally agree but I'll still feel very aggrieved if fuel duty gets a cut but not rail fares. If fares won't be cut the at least sort out things that turn people away from rail such as short formed services that leave people behind due to overcrowding.

Not going to happen. DfT want savings. DfT shall have savings.

 

[Bletchleyite]

Not going to happen. DfT want savings. DfT shall have savings.

It's quite ironic that just coughing up a bit of capex could mean they lose the opex entirely (see Metrolink). Subsidy of unattractive, infrequent diesel urban services is needed because people avoid them unless they have to*. Make it more frequent and electric and the case changes somewhat.

Will the Marston Vale ever make a profit? Clearly not. But the Atherton line, Rose Hill and Hadfield? Well, the rest of Metrolink in my understanding breaks even, so why not? Their hinterland is no different from the other routes.

* And still will even if fuel goes up. Office workers will be mostly looking at home working to save fuel, not using the bus.

 

[DynamicSpirit]

Owning a car is not a luxury for me but a necessity. However, rather than cutting fuel duty I would prefer a bus service that ran more frequently than every 2 hours, ran before 8am, after 6pm and on Sundays. I would then seriously consider not owning a car if where I lived had a useable bus service. A shop in the village would also help. We do have a pub so cutting beer duty may not be too bad an idea.

That's reasonable.

The problem with the argument for cutting fuel duty is of course that some car journeys are necessary (people travelling to work where there are no public transport alternatives, tradesmen carrying lots of tools, etc.) while other car journeys are purely a matter of choice (people driving half a mile to the chippy on a Friday night). Even if you accept the argument that people whose car journeys are essential need help, you hit the problem that you can't do that without at the same time incentivising more non-necessary car journeys.

In the end, if the Government feels a need to do something to ease the cost of living crisis, then cutting fuel duties seems completely the wrong way to go about it. Far better to cut some tax or increase some benefit that would benefit all people (or all people who need it) irrespective of whether they drive or not. Something like, reducing the planned NI increase would be much fairer all round than cutting fuel duties.

 

[Bletchleyite]

In the end, if the Government feels a need to do something to ease the cost of living crisis, then cutting fuel duties seems completely the wrong way to go about it. Far better to cut some tax or increase some benefit that would benefit all people (or all people who need it) irrespective of whether they drive or not. Something like, reducing the planned NI increase would be much fairer all round than cutting fuel duties.

As I already stated, pretty much everyone is impacted by fuel cost. Even if you don't drive and never take a taxi or a lift off others nor travel by diesel bus, every product you ever purchase has been carried at some point in a diesel lorry or van.

It's not really a simple reduction, anyway, it's balancing the added VAT from the price increase.

 

[Railwaysceptic]

I do wonder if in those areas where local bus and rail travel is adequate there will be an increase in people using public transport as the price of fuel rises. Bus day tickets are very competitively priced in many areas. If I had an adequate bus service I could travel quite long distances with a £5.95 day ticket.

I speak only for myself and do not suggest that my situation is typical. I live in London where provision of public transport is more than adequate and is available to me free of charge because I qualify for a Freedom Pass. Nevertheless I have a car which I will still use and the increase in petrol prices will not cause me to use public transport more often.

 

[ashkeba]

I'd rather he cut beer duty! No sector was harder hit than hospitality by the pandemic so he should be focussing on that rather than appeasing those who have the luxury of owning a private vehicle.

Yes, this. Also. if he stimulates fuel sales, that will increase use, push fuel profits up including those in Russia. It would be a foolish move in many ways but Putin will like it.

 

[exbrel]

Your rail journey receives subsidy (on most TOCs), so I don't think you have any right to feel aggrieved in that manner, rather you should be pleased your journey does receive subsidy.

and that it does run, and to time...

 

[Glenn1969]

I don't have figures, but I would be utterly astonished if it were the case that the cost of road building and maintenance exceeded the income directly attributable to the purchase, maintenance and use of road vehicles, i.e. the sum of VAT on purchase and all repairs, plus the total income from vehicle excise duty, plus VAT and duty on fuels and other fluids.

So far as I understand, road vehicles operate at a profit to the country as a whole if you do that calculation.

No, those taxes are not hypothecated, but hypothecation is not really relevant to the overall situation.

== Doublepost prevention - post automatically merged: 21 Mar 2022 ==



I mean that as personal EV use becomes more viable and the market develops, ICE fuels should, and certainly will, see considerable taxation increases in order to further encourage people to move to EVs. The more the cost of electricity rises, the bigger these increases need to be, as it will be necessary to ensure EV use is cheaper than ICE use or people won't switch.

Another option is that road pricing is introduced applying to all vehicles, and ICE fuel tax is paid on top.

Is it still the case that 90% of all journeys are made by car? If so it doesn't help rail's case for investment ?