Spring Statement: It could have been worse

(but it could have been so much better)

The Spring Statement (or mini-budget) announced by Rishi Sunak contained few surprises in the end as he struck a cautious note on Government finances. The predicted 5p cut in fuel duty was announced to great fanfare but in reality will make little difference to forecourt prices or people struggling to make ends meet. It represents a £5bn giveaway for the motorist that will mostly go straight into the pockets of the richer middle classes who drive more and in their bigger gas guzzling SUVs.

The good news is that the cut is only meant to be for 12 months, but we all know that once cut, these things become very hard to reinstate. There’s bound to be a strong lobby to keep it permanent. If that is the case it could undermine the switch to electric vehicles depending on what the price of oil is at the time, plus leave a hole in the country’s finances which will increasingly come under pressure as the economy is impacted by the various external pressures.

Make no mistake, people are struggling with a cost of living crisis. Fuel costs play their part in that, but there are better ways of targeting that support, so that it makes a real difference to those who need most help, and doesn’t line the pockets of those that don’t.

But standing back from the motoring lobby and the need to appease his more extreme backbenchers, there are four reasons why Rishi Sunak was wrong to do this. These are not minor issues either:

1. We urgently need to reduce our carbon emissions to give us a fighting chance of limiting the highly damaging consequences of climate change. The fuel duty cut will potentially make this less likely longer term but it’s the messaging that is most harmful, undermining the fact we need to be cutting car and oil use.
2. Not only do we urgently need to wean ourselves off Putin’s oil and gas to stop funding his war in Ukraine, it’s also important to reduce demand for oil or we’ll end up reliant on other unsavoury regimes. Encouraging people to carry on driving plays into Putin’s hands short term and in the longer term it means he’ll still be able to sell his oil at a healthy price, even when discounted.
3. Reducing demand for oil internationally is one of the best ways of reducing prices and we should be leading the way on this for both the reasons outlined above.
4. The poorest people are least likely to drive and more likely to be reliant on other ways of getting around such as walking, cycling or catching the bus. There was nothing for them in this mini-budget which begs the question of how serious is the Government’s Levelling Up agenda.

Opportunities Gone Begging

In contrast, the Chancellor could have used the fuel tax giveaway to fund free, or low-cost, bus services, providing every village with an hourly bus service, for at least 12 hours a day, 7 days a week. That would have been truly transformational, putting the bus front and centre of tackling climate change and undermining Putin’s war chest. Combined with a concerted publicity campaign, it could have led to a switch from car to bus, reducing emissions, driving up patronage and getting people used to using a bus again.

We know that this is affordable from the work that CPRE and Campaign for Better Transport did with the report Every Village, Every Hour, which found that this would cost £2.7bn annually, just over half what the Chancellor has frittered away on motorists and making things worse.

There’s still plenty of things the Government could do such as cutting speed limits, encouraging a faster roll out of safe cycle routes, making walking safer and more attractive and promoting car free days amongst many other measures. All of these would help lead to a rapid move away from car use creating a healthier, safer and more resilient society.

It’s still not too late for action, so we’d encourage people write to their MP calling on the Government to deliver on some of the suggestions listed above or see these ideas from The Institute for Economic Affairs on how to reduce oil use quickly. Finally, stay in touch with what’s going on by signing up to our monthly newsletter.