Select Committee on Trade and Industry Fifth Report


60. There is no doubt that some sectors of UK industry have been and still are concerned about the level of fuel taxation in the UK. The fuel protests indicated how important an issue it is for some sectors of UK industry, and for an appreciable proportion of the general public. We hope that the chaos precipitated by the last fuel crisis will not be repeated. We trust that the Government have now sufficiently robust procedures in place to deal with any future interruption of supply.

61. It is difficult to isolate the effects of fuel taxation levels from the wider economic conditions within which industry operates. Fuel costs make up a relatively small proportion of the costs of UK business overall. Nonetheless, sectors that are heavily reliant on transport and which are operating under already tight margins will doubtless feel the pinch. High fuel taxation levels have no doubt adversely affected some businesses, but any analysis of the overall impact on business must also take into account the external environment. We remain to be convinced that any decline in UK competitiveness in recent times can be attributed to any significant degree to high fuel taxation levels.

62. Over and above taxation levels, the price of motor fuel is heavily reliant on the volatile market for crude oil. The Minister for Energy told us "we will certainly encourage everybody to be vigilant about what exactly is happening in the petrol and diesel markets, so that if there are reduced world oil prices then the customer should benefit at the filling station".[206] Given that time lags have occurred in the past between movements on the world crude oil markets and prices on forecourts, we recommend that the Government keep a close watch on the relationship between the price of crude oil and that paid by customers at the pumps, and identify publicly any companies which fail to fulfil the undertaking given to Ministers that cuts in duty will be speedily passed on to customers.

206  Q481  Back

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