Dammit, I agree with the Lib Dems
Dear Vince Cable,
It seems that we share a common perspective on the latest Conservative proposal for changing taxes. Fuel duty is certainly a sensitive issue at the moment and the announcement was timed to hurt Labour badly. Unfortunately I’m a little cautious about singing the praises of this proposal as it seems a little isolated.
The mechanism that George Osborne wants to introduce is simple enough. A ‘fair fuel stabiliser’ would mean that fuel tax falls as oil prices rise, and vice versa. I don’t think it has escaped anyone’s attention that the government have been making a mint out of the recent oil price hikes, although no-one has seen any evidence of them passing the extra few billion they have made onto the taxpayer. I don’t know if your calculations show anything different, but in theory this seems to be revenue-neutral for the Treasury as over time the government revenue should equalise out if oil continues to rise and fall on a fairly regular basis. However, this is where we both share an element of scepticism. Like you said, George Osborne is “presuming a knowledge of future trends in oil prices which is not shared by most people who look at these professionally”. I mean, what happens if oil prices hit $200 a barrel – surely the (future Conservative) government’s tax revenues would almost disappear and they’d be screwed. Who knows what oil prices are going to do in the next month, let alone several years! How will the Conservatives set the ’starting point’ for the oil prices to fluctuate either side of? What happens if they set the bar too high or too low?
I’m not convinced, I’m really not. How can anyone make a policy that is wholly based around relatively stable oil prices over time? If you’d asked someone twelve months ago what would happen to oil prices, would they have predicted that we’d be where we are now? I think not. I don’t find myself agreeing with the Lib Dems very often, but on this ocassion I’m right there with you.
Yours sincerely,
A.Tory
Witanagemot Blogs
The two questions which raised their heads when I saw this proposal were:
-What happens if the oil price doesn’t come down? (Will the government start subsidising petrol to keep the price stable?)
-What is the ideal price of petrol according to Osborne?
Exactly my point. If oil stays high and government revenues are badly hit, they would presumably have to move the goalposts – which links into your second point of how on earth does the government set the baseline price of oil for this scheme? They can’t set it if oil prices are falling or rising to any great degree, but even if oil prices are stable there is no reason to think that will remain the case in the long run.
Honestly, I think this is a terrible idea to pursue even though it will get motorists onside.
“Honestly, I think this is a terrible idea to pursue even though it will get motorists onside.”
Sad to say, I think that is the only thing that matters to Tory HQ at the moment…
Look for Gordon to steal it at the earliest possible moment!
Not sure Gordon will go after this one as it would cripple government finances – which are already on their knees thanks to Labour’s mismanagement over the past 11 years.
It doesn’t sound like this is necessarily going to become part of Conservative policy, but your point about playing to the voters is hard to disagree with.
This merely supports suspicions that the Tories are playing to a crowd. Gideon Osbourne (over whom you must surely have had misgivings before) throws a scrap of red meat to the Clarksonites, & damn the consequences. Sayeeda Warsi wants to criminalise khat, thus pleasing the authoritarians, the vaguely-racists & Mail readers in general with another sloppy policy.
I like some of what is coming out of CCHQ, such as their education policy, but it seems that they, like Brown, don’t dare offend some imaginary Mail reader… who is probably a paper tiger anyway, if he exists at all outside cynical politicians’ imaginations.
Of course the Conservatives aren’t going to offend anyone, but it does make for slightly dull and predictable policies. I’m the kind of Conservative who doesn’t mind standing up for their principles but strategically it would be very stupid for the Conservatives to do the same.
I actually have a lot of time for Osborne, although he hasn’t had much of a chance to show what he’s capable of.
I can’t help thinking that these half-baked ideas just go to show that the Tories are trying to grab headlines rather than come up with a coherent strategy – which is precisely what people hate about the Labour government.
Cameron has had a lot of success in developing a narrative, rather than making bold pronouncements that he may not be able to keep to. I think he is doing the job of leader of the opposition well, as much as I probably wouldn’t like what he did in office.
I also agree with Jackie Ashley, in the Guardian today, that there are some divisions within Tory ranks, & Cameron is having to do a balancing act to hold them together… though I think he has performed quite well. There hasn’t been a Mail-reading or right-libertarian exodus, as some imagined there would be.
On that note, there’s a very strong Bob Piper post about the future of the right-wing blogosphere today.
What is Osbourne doing? Doesn’t he realise that the normal, intelligent Tories want tax cuts that are funded by actually pushing through some reforms in public services. If the costs of the company I work for go up, my boss doesn’t slash the profit margins to keep the price the same (well, he might at the start on a short term blip, but in general, if his costs go up he’ll charge more). Also, doesn’t Osbourne realise the stick he’ll get if the price per barrel falls yet the price at the pumps stay high. CHQ – why don’t you trust us to be able to vote for good policies rather than assuming we’re daft and have to be fed this headline-friendly tosh?
you’ve missed the whole point of the proposal – when oil prices rise the government gets lots of money from the north sea, and when they fall it faces an unexpected shortfall – osborne’s proposal would actually insulate the public finances from fluctuations in oil prices, reducing the risk. Cable doesn’t have a clue what he’s talking about, as usual