Budget aftermath: Oil companies ‘can’t pass on costs’
By politics.co.uk staff
The government has frantically rejected arguments that oil companies would recoup their costs in extra tax as a result of the Budget.
Labour has insisted that without any regulation to stop them, oil companies would put up prices at the pump to get back the £2 billion they will be paying in extra tax.
“We will be watching like a hawk to make sure that motorists get the benefit of the budget changes and make sure that there’s no funny business,” George Osborne said at one of a number of media appearances this morning.
“We’ve got an international oil market. The petrol that you put in your car doesn’t just come from the North Sea, it comes from the Middle East, Russia and so on.
“This idea that they’re not going to be able to pass on this cut is a bit of a myth being put around by the Labour party at the moment and I would suggest to people to ignore it.”
But Labour insisted the chancellor was powerless to prevent prices going up at the pumps.
“Can George Osborne guarantee they won’t just push that straight back up at the pumps? No he cannot,” shadow chancellor Ed Balls said.
“What he should have done is cut VAT on petrol and he didn’t.”
The Conservatives argue that cutting VAT on petrol would have been illegal under EU law, as it would have set up too many VAT rates in Britain.
Mr Balls spent much of the morning focusing on changes to winter fuel payments. The shadow chancellor said some pensions could lose £100 a year, because the extra one-off top-up payments, which were introduced in 2008 and kept ever since, have been allowed to end.
“I’ve inherited the plans that Gordon Brown put in place and I haven’t changed them at all so the winter fuel payments are exactly as Gordon Brown set out a couple of years ago,” Mr Osborne responded.
“I haven’t changed those at all.”
The chancellor enjoyed a welcome piece of good news after the Budget, when advertising firm WPP moved its tax headquarters back to the UK, following a further cut in corporation tax.
“I think it looks as though we will make that recommendation,” WPP boss Sir Martin Sorrell told the Today programme.
