Chief Secretary to the Treasury James Murray has defended the Government’s approach to rising fuel and energy costs after being challenged over reports the Treasury is making £20million a day from oil and gas levies.
Speaking to GB News, he argued it was too simplistic to suggest higher fuel prices automatically meant a straightforward windfall for the Government, saying household spending often shifted away from other areas when fuel costs rose.
He said: “When the price of fuel and energy goes up, VAT on fuel, for instance when you fill up at the petrol station, goes up as well. But usually what happens is that people spend less on everything else, so the VAT from everything else goes down.
“It’s not quite as straightforward as saying there’s more money coming in because more money is being spent on fuel. Overall, revenue can go in the other direction because people are spending less on other items.”
Murray said higher fuel and energy prices were bad news for households and pointed to the extension of the 5p fuel duty cut until September, as well as a fall in the energy price cap.
He said: “Higher energy prices and higher fuel prices would be bad news for everyone. It’s bad news for the country. It’s bad news for people wanting to fill up their cars. It’s not what we want to see happen.
“That’s why we’ve extended the 5p fuel duty cut until September and why tomorrow the energy price cap is going to fall.
“What people can know is that, because of decisions the Chancellor took at the Budget last November, energy prices will fall tomorrow and stay lower for April, May and June, whatever happens overseas.”
Asked whether Sir Keir Starmer risked alienating major employers by summoning business leaders for talks on pricing, Murray said the Government’s relationship with business remained central to its economic plans.
He said: “This is about working together with businesses on our shared goals.
“We have a huge shared agenda with businesses because we all want to grow the economy. That’s in all of our interests, to make sure we’ve got more jobs, a bigger economy, better productivity and people being better off.
“Businesses are our partner in what we want to achieve.”
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