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Mr. Twigg: I am grateful to my hon. Friend for that intervention. We can consider several options for creating incentives to move freight to rail, but we must make it competitive for businesses to do so. The Government have made clear commitments on public transport and on moving more freight by rail. Most people would support those policies.
Sir Robert Smith: Rail freight is attractive and preferable, but the hon. Gentleman must realise that since Lord Beeching, in vast tracts of Scotland, such as my constituency, rail freight is not an option because there is not even a railway line.
Mr. Twigg: Many years of Tory Government are responsible for most of that. I do not know West Aberdeenshire and Kincardine very well, but in my area, with the Mersey and Liverpool docks, the Manchester ship canal, the west coast line and rail links to Wales and Holyhead, freight is an attractive option. The hon. Gentleman will accept that I cannot talk for every part of the country.
Whatever happens, companies in the haulage industry will face some difficulties. There are questions of competitiveness and efficiency, and there will always be some shake-out or change. However, in response to the point that there has been no consultation on the clause, I must say that the Government have set up a forum with the haulage industry. Last week, my right hon. Friend the Minister of Transport said:
"It is not I who maintain that the road haulage forum is constructive. Let me quote the Freight Transport Association after the first meeting, which stated that it was
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'very impressed and encouraged by the will, intent and urgency of the forum to get to grips with our industry's problems without delay'."--[Official Report, 21 April 1999; Vol. 329, c. 964.]
6.45 pm
One further problem must be addressed. The Conservative party has not offered any alternative with which to fill the funding gap if the escalator were abolished. That is often the case with the Conservatives of course. Perhaps they would cut social security, benefit for disabled people, education or investment in public transport. Who knows? The Conservatives have not said, and that says much about them. They have no policy, but the Government do have a policy and that policy will succeed in the best interests of the country.
Mr. Swinney:
I shall concentrate on some important points. We are dealing with a vital subject that affects all walks of life in our economy. The hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) has mentioned the lack of availability of public transport links in his constituency, and my neighbouring constituency is similarly large and rural.
We should begin with some history of the fuel duty escalator, which was introduced by the Conservatives in 1993 at 3 per cent. It was subsequently increased to 5 per cent., and the Chancellor has increased it to 6 per cent. above inflation. We are not, we should recall, dealing with the matter as a one-off issue: this is the third time that I, a Member elected in 1997, have dealt with it under a Labour Government.
It is not unrealistic to expect that by the end of this Parliament a gallon of petrol will cost £4.30, and a gallon of diesel £4.35. When we consider those costs, we can clearly see the difference they make to the working of the economy and to the increased cost base affecting many of our constituents and the businesses that employ them.
It is ironic that we are considering spiralling fuel costs at a time when this country--particularly Scotland--is producing oil. We are an oil-producing country, but we have some of the highest petrol prices in Europe. The rate at which prices have increased, and their levels in comparison with those of several of our European competitors, are important issues.
I shall concentrate on what I consider to be the real impact of the fuel duty escalator in four specific areas. First, it affects employment. The Freight Transport Association has supplied several Members with estimates of the impact that it considers the escalator will have on employment. It suggests that more than 50,000 jobs could be at risk as a result of the resulting increase in business costs.
We have already heard of the danger of haulage companies deciding to up sticks from the United Kingdom to find alternative bases in Europe. From my political position, I find that argument fascinating. I am often told, particularly at the moment by Labour Members, that the possibility of constitutional change may mean businesses automatically leaving Scotland. Yet I hear from Ministers that there is absolutely no way in which the application
of punitive fuel duty escalators will mean that businesses will want to leave the United Kingdom for other parts of Europe. That is a curiously contradictory argument.
Secondly, the escalator will have an impact on the cost of services. In large rural areas such as the constituency that I represent, every walk of life is affected by increases in fuel costs. It hits the cost of goods put on the shelves of local shops with fragile budgets in isolated areas. It impacts on the costs that local authorities have to bear to provide home help services and other care support in rural areas. The cost of all aspects of services will increase. The burden does not fall only on shopkeepers who are trying to sustain businesses in fragile areas but on local authorities that are already wrestling with enormous pressures on their budgets while continuing to extend and broaden the services provided to vulnerable people.
Mr. Leslie:
How much revenue would be forgone to Scottish public services if the fuel duty escalator was not kept?
Mr. Swinney:
I can divide the figure in the Red Book to make a calculation about the Scottish economy, but the Government must get their lines of argument correct. I have listened for a good few hours, albeit with a time-out to make some telephone calls, to Ministers saying that this is all about environmental targets. Either it is about money or the environment; it cannot be both or either as it suits them. We have become terribly familiar with that characteristic under this Government.
The third area on which the fuel duty escalator impacts is infrastructure, on which I have some sympathy with the hon. Member for Twickenham (Dr. Cable). He said that the collapse of the political consensus on the issue came about partly because road users did not feel that the penalty of the fuel duty escalator flowed through into investment in infrastructure. That is a fair point. People who are almost dependent on roads, particularly in rural areas, do not feel that infrastructure is being improved enough. When we try even to secure modest road improvements in Scotland, there seems to be paralysis in the Scottish Office in determining where they will be made. Those issues directly affect our communities.
Finally, there is the question of rural communities. I have considered the impact on jobs and service provision but we must also consider the matter in terms of the purpose of the Government's measures. If they are designed to reduce car and lorry usage and the volume of traffic--I accept that that is a possible Government motive--we must consider how realistic it is to expect such a change of road use pattern. In most of my constituency, people who want to be employed somewhere five, 10 or 20 miles away could not sustain such jobs using public transport; it would at least be very difficult.
The Government have made much of their measures to try to compensate for the disadvantages of rural areas, such as the rural transport fund. Its resources were enhanced by the Chancellor in his March Budget statement. Given the nature of my constituency, I was keenly interested in how the fund would work and what impact it would have there. I thought that it might have been a genuine attempt by the Government to mollify some of the harsher effects of their policy. To my horror, I found that in my large rural constituency in Scotland,
only three petrol stations would be eligible for assistance. One has already gone out of business, so we are down to two. In vast areas, the supply of petrol is doubtful. I doubt whether the Government's measures will make much difference. If the Government want to deliver their objectives on fuel usage and the impact on the environment, they must recognise that a stronger and more sophisticated public transport system is the key, not penalising road users for whom fuel is essential.
Debates such as this are always better informed by real experience. Two cases have come to my attention, one from within my constituency, one from without. Last week, I visited Bellwood Nurseries, an interesting company near the town of Alyth that supplies mature trees for landscaping contracts throughout the United Kingdom and western Europe. It is trying to make its way in the world through the great commitment of its management and staff. It estimates that its haulage costs will increase by about £10,000 because of the application of the fuel duty escalator. It would break commercial confidentiality if I told the Committee the proportion of its profits involved, but it is a substantial aspect of its cost base. Into the bargain, the most competitive company in the provision of haulage services to Bellwood Nurseries is leaving the Scottish economy to relocate to Calais. Bellwood Nurseries will have to procure alternative, more expensive haulage services on top of already higher costs as a result of the fuel duty escalator. That is a double whammy of rising fuel costs and the demise of a competitive haulage sector.
I have mentioned the example from outwith my constituency before. Norfrost in Caithness is a successful refrigeration equipment company. It transports its products across the United Kingdom and Europe and is heavily dependent on road haulage. It is increasingly trying to diversify into a broader range of freight transport services by using rail. It finds the support that it is being given for that positive. It estimates that the fuel duty escalator will add £100,000 to its annual running costs, a severe competitive disadvantage.
I met some hauliers earlier this afternoon. One mentioned a haulage company in Scotland that is registering its vehicles in the Republic of Ireland and having its MOTs done there to save £4,000 per vehicle in registration costs. I have not had a chance to consider that closely this afternoon, but the numbers are alarming.
The Chief Secretary's argument, which I am sure that we will hear again from the Economic Secretary, stressed the environment and the protection given to rural areas. He also said how supportive the Government were of the road haulage industry. I was therefore surprised to read in the newspapers the other day the refreshing candour of one of Labour's candidates for the Scottish Parliament, Mr. Jim Stevens, who is standing for the constituency represented in Westminster by my hon. Friend the Member for Galloway and Upper Nithsdale (Mr. Morgan). Mr. Stevens labelled the fuel duty escalator
"a poll tax on wheels".
He said that rural voters were "seeing through" the Government's argument and that compensation in the form of rural transport services amounted to nothing. He said:
"That becomes irrelevant in an area like Galloway where people have little alternative to the car and where there is no public transport.
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Fuel price rises of this order hit people in rural areas, especially the poor, hard and much harder than people in urban areas. The tax is regressive because it hits poor people as much as it hits rich people.
And it is a double whammy because petrol companies subsidise prices in urban areas which runs totally against Government environmental policy aimed at reducing car pollution in cities."
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