Mr. Paul Johnson:

In each case, there is a default and the default is the rise in line with price inflation. Tobacco tends to go up somewhat quicker than that over time. Regarding alcohol, I cannot remember how it averaged out but we get different policies every year depending on how much of a cheer the Chancellor wants when he announces that beer duty is not going up. The big one really has been the failure to index petrol and diesel taxation, which has been stuck at the same nominal level for 12 years. As I said earlier, that is one of the biggest tax cuts we have had in real terms over the past 12 years. One of the bizarre aspects of this is that the default remains that it goes up in line with prices and, therefore, the deal with Government policies is that, next year, it will go up in line with prices and, therefore, all the fiscal forecasts must assume that fuel duties will rise in line with inflation knowing full well that they never do so it is a very odd sort of world in which official policy - the law - states this will rise in line with inflation next year and it is always undone in the budget yet you must forecast if you are the official forecaster on the assumption that something will happen that you know will not happen. That is an example of very poor and un-transparent policy making. When the Chancellor looks at his budget numbers, the numbers always assume that this thing is going up in line with prices, which always flatter the truth. It is a relatively small point but it is a slightly absurd situation that we have reached.