'This was brewing all summer but we just didn't see it coming'

Analysis: Government caught out slow-brewing discontent

By Andrew Grice and Michael Harrison

Sir John Browne, the chief executive of BP Amoco, was on business in America when he was interrupted by the call from Tony Blair at lunchtime on Tuesday. According to senior sources within the oil giant, the conversation was brisk and businesslike but polite.

The Prime Minister told Sir John that he expected BP to get its petrol tankers on the move. The oil boss told Mr Blair that he was happy to oblige but BP needed assurances that police protection would be in place to safeguard its drivers from threats and intimidation.

Mr Blair's hectic round of calls to oil company bosses continued until 2am yesterday. Four hours later, he was up again reading the overnight report from Cobra, the Whitehall group that handles national emergencies. It was a little more upbeat than the doom-laden one submitted 24 hours earlier, saying there was "some movement" of tankers and "not enough" to make a substantial difference to supplies.

As Mr Blair last night completed another marathon day in which oil companies were summoned to Downing Street for face-to-face talks, the fact that he was devoting so many hours to the Government's response reflected both his personal style and the severity of the crisis.

The protests have caught by surprise a government that sets so much store on focus groups and prides itself on keeping its pulse on the nation's temperature. "This has been brewing since the summer but we just didn't see it coming," one minister said yesterday.

The absence of Mr Blair and some of his closest aides from Downing Street on Monday may have contributed to the slow response to the rapidly deepening fuel crisis. But once Mr Blair returned to London to take charge he did so with relish and "grim determination", according to close aides.

Some ministers are privately blaming Gordon Brown's intransigence for the current problems, drawing a parallel with the Chancellor's refusal to raise the basic state pension by more than 75p a week, which enraged many pensioners.

Mr Blair and John Prescott have tried to send a signal that, while there can be no surrender to the fuel protesters, the Government will do something about fuel duty in the next Budget.

Yesterday Mr Prescott admitted there was "some substance" in the claims that the Government could afford a cut in fuel duties. Mr Brown adopted a more conciliatory tone yesterday, promising to "look and listen" before drawing up his next Budget next March. But he insisted he would not "make decisions based on barricades and blockades" or the short-term volatility of the oil price.

Although this year's Budget scrapped the "fuel duty escalator" under which the tax on fuel rose by 6 percentage points on top of inflation, the Treasury's spending plans are based on duty rising in line with inflation. A freeze on duty, which Mr Prescott may recommend in his Budget submission to the Treasury, would cost the Exchequer #585m a year.

Although ministers admit public opinion is hostile to the Government at present, they believe it can be turned round as the effect of the blockade hits essential services such as the NHS. "Blair can come out of this stronger by showing strong leadership," said one ally.

One minister suggested yesterday that the oil companies were colluding with the protesters. "We have had the crazy position at some refineries where the police have had to ask the oil firms to request them to protect drivers. They don't seem in a hurry to get on with it."

The industry is very sensitive to the charge that it has allowed the crisis to spread to throw the spotlight on to the Government's fuel duties  the highest in the Western world  and help to protect their own profit margins.

One senior oil executive said: "It is a disgrace that we are getting this sort of stick from the Government. You might expect it from some sleazy opposition but not the government of the day.

"In any event, it is irrelevant to us whether the price of petrol is high or low. We don't make any more money out of it, we just keep collecting the tax for the Revenue. Why would we put our balls in the vice when we make a profit of 1p a litre and the Government takes 61.5p in tax and duty?"

Relations between the oil industry and the Government have been fraught since Labour came to power. Mr Brown had intended to introduce a tough new tax regime in the North Sea but was forced to drop his plans when the oil price collapsed last year.

The Government is now discovering how formidable an opponent the oil industry is. It contributes 370,000 United Kingdom jobs, #30bn in taxes and #5bn to the balance of payments. And, for now, it has the public on its side

http://www.independent.co.uk/news/UK/Transport/2000-09/fuelanalysis140900.shtml

-- Martin Thompson (mthom1927@aol.com), September 14, 2000

Answers

That ratio of 61 to 1 -- what the government takes in compared to what the oil companies take in -- is sure appalling. No wonder they have a crisis.

-- RogerT (rogerT@c-zone.net), September 14, 2000.