IMPACT IN NORTHERN IRELAND OF CROSS-BORDER
ROAD FUEL PRICE DIFFERENTIALS
CONCLUSIONS
62. This is a very difficult issue. There is no
doubt that the differential in fuel prices across the land border
in the island of Ireland has serious consequences for fuel suppliers
and road hauliers. It is also a wider problem in that, besides
distorting trading patterns, it appears to have become a means
of funding for paramilitaries and racketeers. It is therefore
damaging the social fabric of Northern Ireland.
63. It would appear that the Government's position
can be summed up as sympathy for those affected, but that wider
policy considerations, such as the UK's Kyoto commitments and
the Single Market and consequent limitations imposed by EU law,
prevail, although the Government does not condone smuggling and
is keen to limit it. There is a certain irony in this situation,
in that the present position actually assists the United Kingdom
with its Kyoto targets, as cross-border purchases and smuggled
fuel count against the Republic of Ireland quota.[133]
64. There is a clear paradox, seen in the context
of the geographical reality of the island of Ireland, between
the Kyoto obligations of the Republic of Ireland, which is permitted
a 13% increase in overall emissions of the basket of six 'greenhouse
gases' to 2008-12, and those of Northern Ireland, which is part
of a country required to decrease such emissions by 12.5% over
that period.[134]
Government policy should recognise this: there are no marked industrial
and environmental differences between the two jurisdictions in
the island, and some of the consequences of different fiscal treatment
are at the root of this Report.
65. While we note that the Economic Secretary
considers[135]
that Customs and Excise now has the resources necessary to tackle
the problem of road fuel smuggling in Northern Ireland, we recommend
that its staffing in this area be kept closely under review by
Ministers, and that the Government should not hesitate to increase
further the staff resources devoted to tackling the problem if
to do so would be cost-effective.
66. We also detected an element of complacency
on the part of the Government about the significance of the problem.
Lord Dubs commented:[136]
".... We believe
the overall policy is important, both for Britain and for Northern
Ireland, and there is sometimes a price to be paid for it. That
price is that, because we have a land border, we have certain
difficulties. I am concerned, on behalf of the business interests
who are suffering, but we have had in the past situations where
the movement has been the other way and people have found that
things are much cheaper in the Republic and they have gone there.
At times it has been cheaper in Northern Ireland. This changes
from time to time."
The Economic Secretary said:[137]
"... £100 million
in the context of £21 billion overall from fuel duties as
a whole is really a very, very small part of the overall picture."
and:[138]
".... in relation
to duty, particularly duty on petrol and diesel, then until the
European Union does set minimum rates [cross-border fuel
procurement] is a problem that we will have to live
with and it is a problem we will clearly take into account in
terms of setting the overall United Kingdom policy and it is an
issue that in terms of its immediate impact within Northern Ireland
will obviously need to be dealt with within the context of Northern
Ireland structures."
We would only reiterate that the impact on the
Province is severe and that the loss of £100 million in revenue
is material.
67. We recommend that the Government investigates
further the experience of other EU Member States in dealing with
the problems of price and duty differentials across national borders
in relation to road fuels. The Treasury could provide us with
no information on this, which slightly surprised us as there are
other material differences in fuel duties and prices across Member
States' borders and corresponding difficulties: the existence
of the Dutch scheme alone is evidence of that. It may be that,
at European level, a consensus might emerge on measures to mitigate
the impact of the road fuel duty and price differentials between
Member States which are both effective and consistent with the
principles of the Single Market.
68. The Economic Secretary commented[139]
that a draft Energy Products Directive[140]
that would restructure the European Community framework for the
taxation of energy products was under consideration. She pointed
out that a part of the Directive, which the Government would support
and which would increase the minimum rates of duty on road fuels,
would, if agreed, assist in reducing the duty differentials between
Northern Ireland and the Republic of Ireland. The Economic Secretary
cautioned, though, that acceptance of the Directive seemed to
be "quite some way off".[141]
We recommend that the Government seek to encourage both the Presidency
and the Commission to make early progress on agreeing this aspect
at least of the Energy Products Directive.
133 Appendix 13, p.95. Back
134 Appendix
13, p. 94. Back
135 Q251,
262. Back
136 Q242. Back
137 Q280. Back
138 Q270. Back
139 Q269. Back
140 European
Community Directive No. 6793/97, currently awaiting debate in
European Standing Committee B. Back
141 Q269. Back
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