In 1997 Tony Blair was looking for Mondeo Man’s vote. At this election motorists could again be pivotal. Ordinary drivers, Focus Families if that isn’t an alliteration too far, are feeling the pinch with petrol prices going through the roof. Andrew Hawkins, Chairman of the polling company ComRes, has argued that if “the Conservatives can turn this issue to their advantage it could be the electoral driver they need to seal that deal”, as it can motivate key groups like skilled manual and clerical workers to turn out for them. With that in mind, I find it a little strange that the Conservatives don't appear to have addressed motorists at all in their new "contract". Motorists have been let down on a number of fronts and any party that campaigns on plans to change that over the next week could be rewarded with the keys to 10 Downing Street.
The underlying reason why petrol prices are so high is the massive rates of tax on motor fuel. As of February this year, 65 per cent of the price of unleaded petrol at the pump is tax. That rate is only higher in two countries in the entire EU27. For diesel, 64 per cent of the pump price is tax which gives Britain the highest taxed diesel in Europe. That taxation is far more than is needed to pay for road spending or to account for road transport’s greenhouse gas emissions. Even after accounting for those costs motorists are still being singled out to the tune of £18.4 billion. And despite all that we are still getting repeated increases in Fuel Duty rates. The Government are starting a new version of the Fuel Price Escalator with plans to increase rates by 1 penny per litre above inflation every year.
While taxes are the biggest component in high petrol prices, the sharp rise in prices in the last few months is being driven by a rise in the cost of the raw material, oil. Part of the problem is that global oil prices have risen thanks to rising demand from growing developing economies. When I looked at the numbers earlier this month, Brent Crude had gone from around $79.1 a barrel at the beginning of the year to $85.1 a barrel. But the effect of that 7.6 per cent rise in oil prices is compounded by the fact that the stuff is priced in dollars. As the value of the pound has been falling, that has made it more expensive for us to get the dollars we need to buy oil. The price of Brent Crude in pounds has gone up nearly twice as much, by 13.9 per cent.
We have got used to the idea that a weaker pound is good news, as it helps exporters. And of course that is true. But it does mean that our sterling-denominated incomes are worth a lot less when it comes to buying things abroad. Anyone who has been on holiday recently will have felt the pinch. The same process is driving up the price of petrol at the pump.
The reason the pound is so weak is that politicians aren’t setting out credible plans to deal with our nightmarish deficit. So the real story here is that motorists are paying twice for politicians’ failure to get a grip on wasteful spending. Once in high taxes and then again in the weaker pound which makes dollar-denominated oil more expensive and pushes up petrol prices.
To rub salt in that wound, higher spending hasn’t meant a revitalised road network. Ten times as much is spent on the railways per passenger kilometre, and eight times as much per freight tonne kilometre. We have much less motorway than our European competitors however you look at it: compared to the size of the country; the population; or the number of cars on the road. The transport budget is almost certain to come under huge pressure in the next few years, as part of efforts to reduce government borrowing, but politicians are still announcing grandiose rail projects. It is hard to see where that leaves the road network. Motorists just aren’t treated as a priority despite their value to the Exchequer.
Part of the reason might be that politicians spend most of their time in Westminster where at the last census just 12 per cent of people said they got to work by car or van. Things are very different in the rest of the country, and particularly in extremely marginal constituencies like the Tory target of Harlow where that figure is 67 per cent. In the Liberal Democrat target - and scene of Brown's latest disgrace - Rochdale it is nearly 66 per cent. A party that set out plans for a lower tax burden on motorists over time, focussing transport spending on the road network and the busiest commuter trains to cut congestion and cuts in spending to restore the public finances to health could win over motorists and win big at the election.
If none of the parties can look outside the Westminster village for long enough to realise that appealing to motorists is in their interests, and if petrol prices stay at this kind of level or rise, then look out for new fuel protests. The protests in 2000 worked; the lorry drivers’ bold action led to an extremely valuable real terms fall in Fuel Duty. With the raw deal motorists are getting at the moment, it is hard to argue that new protests aren’t justified.
