To deal with the various points raised, first with regard to petrol, the price comparison I used is in relation to premium grade petrol, in order to maintain comparability in different figures. The position is that pre-budget the retail price of premium grade petrol was 289.1p per gallon. It will, by the addition of 10p a gallon, become 299.1p per gallon. That figure compares with the post-budget figure last year of 288.5p per gallon. This is an increase of 3.7 per cent so that, including the budget increase, petrol will have risen in price by only 3.7 per cent in the past year. By comparison, the general CPI increase — the latest figure available is for last November — is 6.7 per cent in the period. With the budget increase, the increase in petrol price is only half what it is for consumer goods generally. This reflects the downward trend in petrol prices. Since October last the price has dropped by 6.4p. It would seem likely to me, speaking now as a layman, that the OPEC decision to reduce their price of oil by $1 a barrel, still leaving it above the spot price, is likely to lead to further reductions in the period ahead. It seems to me, on the face of it, probable that, allowing for that, petrol prices, within a month or so — perhaps it will take a little longer to come through the pipeline to reach us from source — but over the next couple of months, will drop further, which could well mean that between October last and, say, next April, you could have a full 10p reduction in the basic price, offsetting fully the increase in excise duty and VAT of 10p. That is speculative, I admit. One cannot be certain of the exact figure. Already, two-thirds of the increase imposed here has been discounted by the price reductions which have taken place in the last couple of months, of December and January. In real terms of purchasing power of money and in terms of people's incomes, the price of petrol is lower, after this budget, than it was after the last budget. The increase imposed, therefore, is modest in these circumstances. Another Government, perhaps, could have attempted opportunistically to increase the price by more, while still not raising it above the level, in real terms, that it was at a year ago. We felt that we should limit the increase to this amount on the basis that over the three months before and after the budget the decline in oil prices will more or less offset this, so you will have a period of relative stability in petrol prices despite the increase to the Exchequer.
In looking for money and obviously we have to raise additional money in order to keep within the parameters of the plan, as we have done — and at the same time pursuing the commitments in the plan, both to holding down the level of taxation to the same as last year, 36.7 per cent to be precise, and to adjusting bands and allowances with a view to helping people paying income tax, preventing an erosion of their position by inflation, additional funds have to be raised and limited tax increases in this budget include one on petrol. It is perhaps the most defensible in many ways although, of course, tobacco and cigarettes are health cases as well. In this instance, because of the trend in oil prices and because the increase in price, even after the budget, will only be 3.7 per cent over the past year, I do not think that anybody could seriously quarrel with this. I am not too sure that the Deputy is seriously quarrelling with it, although he obviously has to make his point.
With regard to the effect on consumption, it will be negligible. It is not possible to measure it because it is so small. It is expected that there will be increases of up to 5 per cent in the consumption of Derv and any decline in petrol consumption will be so marginal as to be incalculable. This again indicates that it is obviously an area where some tax increases are reasonably justified.
With regard to the other resolution mentioned by the Deputy — road tax on private motor cars — the position is that the increase will be of 50p on cars not exceeding 8 horse power, which constitute between one-fifth and a quarter of all cars. That is a 6 per cent increase, which is small again, within the rate of inflation. The actual road tax on smaller cars will be, in real terms, no higher but fractionally lower than they were a year ago.
For cars with a horse power of 9 to 15, there is an increase of £1. That is a large group of cars — 700,000. It is the great majority of cars. The increase per horse power of £1 obviously means paying some £9 to £15 more, depending on the horse power in that range.
With the larger cars, which constitute quite a small group — about 7 per cent of the total — I do not think that any of us would worry too much about the position of this group who have these larger cars and can afford the few pounds extra. There is £2 per horse power increase there, which obviously could involve an increase of £32 to £40. That particular social group could well afford that. The increases, therefore, are very modest. They compare favourably with those in other recent budgets. For cars not exceeding 8 horse power, the increases in the last three budgets have been, respectively, £1, £2 and £1. In this budget it is only 50p. For the nine to 12 horse power group, for example, in 1982 and 1983 the increase was £2 per horsepower whereas in this budget, as in the last one, it is £1 only. Therefore for the great majority of people the increases are modest and compare favourably with those in a number of recent budgets. I do not think they will involve any severe hardship because of the relatively small amounts involved: a car not exceeding eight horse power, 50 pence per horse power — then £4 is hardly a heavy impost.
I think that answers the points raised by the Deputy. At least I hope I have answered but I am more than happy to come back with any supplementary points he may have or, if I have failed to answer any question, to take it up.
