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Mr. Bacon: Is it not true that many people who were in the Western Isles in that period are no longer there? By how much has the population of the Western Isles declined since then?

Mr. MacDonald: It has declined at the same rate in every decade except one since the 1920s. It did not decline in the 1970s, when a Labour Government were in power. That, however, was not a big factor in the change—it was the fact that local government reorganisation led to the setting up of a single-tier local authority and a consequent increase in employment in the islands. The hon. Gentleman is right that there has been a constant decline in the population in the Western Isles and other remote and rural parts of Scotland. In the past, the search for jobs drove people out, but nowadays things are a lot more complicated. In 1987, unemployment was over 20 per cent. in my constituency, but it is now 4.3 per cent., and has never been lower. We are now doing something that was inconceivable 20 years ago—importing immigrant labour. I go to factories in my constituency where Russians, Romanians and Bulgarians are working. I talk to the skippers of fishing boats, who tell me—the west coast industry is in a very different position from that of the Scottish east coast, and is much more prosperous and stable—that they are paying the best wages ever but are still short of people to man their boats, so they have to tap into the east European labour market. The population decline is continuing to some extent, but it is underpinned by different factors are equally serious and in need of remedy.

Angus Robertson (Moray) (SNP): The hon. Gentleman will know that, throughout the highlands and islands, the whisky industry is an important employer, although I appreciate that there are no distilleries in the Western Isles. Does he believe that the introduction of strip stamps will harm the industry, or does he think it is a good thing?

Mr. MacDonald: The hon. Gentleman is right that that industry is not to be found in my constituency, so I do not have any specialist expertise. I shall therefore listen with interest to subsequent debates when he discusses the matter with the relevant Minister.

I turn to another couple of items of particular relevance to my constituency. Clauses 5 and 14 deal with fuel duty, which is of particular concern to my constituents. About four years ago, I had an
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Adjournment debate about the regressive impact of fuel duty on remote and rural locations such as the Western Isles. Since that time, the Government have dropped the automatic escalator and the duty has basically gone up in line with inflation. As a result, we can see from the Red Book that the revenue raised from fuel duty has hardly risen from the time of my Adjournment debate about four years ago and is still around £23 billion.

I am glad, of course, that the Government dropped the escalator, and I accept that there are strong environmental arguments and reasons for the level of fuel duty, but I still maintain that it is a regressive form of taxation. Only three other taxes raise sums similar to or greater than fuel duty—income tax, VAT and corporation tax. Yet whereas each of those three big taxes has exemptions, bandings or some other device built in to make it more progressive, fuel duty is still a flat-rate, one-size-fits-all tax across the whole United Kingdom. There are exemptions to and variations in it, but they are designed to make it more efficiently green and environmental, not more progressive.

Fuel duty is regressive because remote rural areas tend to have lower incomes than the national average, but much higher car ownership and a much greater need to use cars than the rest of the country. For example, car ownership is 70 per cent. in the highlands and islands, compared with about 50 per cent. in urban areas, but incomes in the highlands and islands are only 70 per cent. of the national average. Those figures make it clear that car transport in remote areas is essential, not an optional extra, and essential, moreover, for people on low incomes. That should be recognised in the way that fuel duty is levied in the United Kingdom to allow for the difference between remote rural areas and the rest of the country.

The arguments with regard to air passenger duty are similar. My constituency and Orkney and Shetland are the only ones in Britain where the health service routinely uses air transport to carry patients and staff. Air transport therefore represents a lifeline service. It is not a luxury travel option. The Government are to be congratulated on having recognised that to a significant extent by exempting flights originating within the highlands and islands from the air passenger duty, but flights coming into the islands from the mainland still have to pay tax.

Although air passenger duty is not mentioned in this year's Finance Bill, I am well aware that the green lobby is constantly agitating and arguing for higher taxes on air transport, so I take the opportunity to make the point to Ministers that, if they are minded to take on those representations from the green lobby, they must first tackle the issue of air transport in the highlands and islands.

The final matter that I want to raise has already been mentioned—the excellent Lyons report on dispersing civil service jobs, which was published with the Budget last month. I recall writing a few years ago to the then Minister for the Civil Service suggesting that the performance and innovation unit should be asked to look into the case for relocation. To my disappointment, little interest was shown in that suggestion, but I am delighted that the Chancellor is now pursuing jobs dispersal with such vigour. My constituency has managed to attract more than 100 new civil service jobs in the past year, principally from the Department of
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Trade and Industry and the Department for Work and Pensions. Recruitment for those jobs is happening now, and the reports from those Departments suggest that individuals with higher educational attainments than those who would have been recruited in London or the south-east are applying.

The Lyons report says that the public sector could gain £2 billion over 15 years from the job dispersal policy, but it is important to recognise that the biggest benefits are more immediate than that time scale suggests. The public sector will gain immediately by recruiting higher-quality staff and by increasing staff retention, and the communities that receive those jobs will experience a much needed, direct boost to their local economies.

The civil service will, of course, resist the Lyons proposals. Some hon. Members know that that point was highlighted in Scotland, where it took a great deal of effort by the Scottish Executive to get a reluctant Scottish National Heritage to move from Edinburgh to Inverness. However, the wider public interest is undoubtedly paramount, and it is best served by a determined, extensive and sustained policy of civil service job relocation. I urge the Government to make that policy one of their most important priorities.

5.51 pm

Mr. Michael Jack (Fylde) (Con): I begin by reminding the House of my declaration in the Register of Members' Interests, and in particular of my position as a non-executive director of a retail tile company.

Some time before 2 o'clock on Sunday afternoon, I ran past the Paymaster General's office. Despite the pain and suffering and the need for mind to triumph over matter, I sent up a silent incantation that the 26 miles did not include too many for the Chancellor of the Exchequer and Customs and Excise. I am grateful to the Paymaster General for her clarification of what the Chief Secretary said in response to those who raised the issue of VAT and the London marathon.

I have read some of the comments in the newspapers, and although the Treasury statement makes it clear that charitable donations are not liable to VAT, the relationship between VAT and the golden bond is still cloudy, particularly on the narrow point of charities asking those who secure places in the marathon by the golden bond route to raise a fixed sum of money. Those charities are trying to cover an overhead for securing a place in the race, and it is important that they are not burdened by an unanticipated bill.

I ran for the National Osteoporosis Society, which hopes to raise about £60,000. All hon. Members hope that all the money raised not only for the National Osteoporosis Society but the other excellent charities for which people gave an enormous amount of time and energy on Sunday goes to the intended good causes. It would be helpful if a clear and definitive guide were published, because the same problem is likely to arise on the great north run, where secured places are also a feature of fund raising. The matter must be clarified because it is confusing.

I pay tribute to the Paymaster General. Over the past year, she has listened to representations on a number of tax issues, for which I am personally grateful. I am also pleased that Treasury Front Benchers continue to
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support the tax law rewrite exercise with vigour and enthusiasm, and I concur with the Paymaster General that it is nice to see that some parts of the Finance Bill are more legible than previously—at least somebody is listening. I am however disappointed that this year's Bill, like last year's, does not suggest that the Government want to go further than rewriting tax law in plainer language and a better form, and study how they can genuinely simplify and improve our tax system's operation. I will have more to say about that when I consider clause 290.

I very much welcome hon. Members' remarks about transparency in the operation of the economy. The time has come when Ministers should publish annually in the Red Book—I must say to my hon. Friend the Member for Grantham and Stamford (Mr. Davies) that I still call it that, notwithstanding the fact that the colour of its cover has changed—a cash flow for the British economy. If the Treasury is willing to put on record the model by which it works out the economic modelling of the United Kingdom, it should be able to put on record the assumptions by which tax revenues are worked out, to enable us to see with greater clarity how the cash flow of the economy is working. As even Ministers recognise, by the time we reach the end of the figures in the Red Book, the proportion of gross domestic product that is raised by tax will have increased.

My right hon. and hon. Friends on the Front Bench have tabled a reasoned amendment with which I have much sympathy, because it points to the lack of improvement in UK productivity and relates that to the problems that it causes to competitiveness. As I think Liberal Front Benchers would agree, the Chancellor has over the years introduced many micro-management measures, but we have had no feedback on what they have achieved individually. Given the degree to which the economy is managed through the tax system, we should demand a proper impact analysis of any measure that is introduced. It is no use introducing measures with great claims that they will improve the running of the economy if the overall facts on productivity, and therefore competitiveness, do not line up in that direction.

For those of us who have stamina for legislation, 309   clauses, 42 schedules and 574 pages beckon, and I look forward to our forthcoming debates. One part of the Bill deals with hydrocarbon duties and reduces the preferential rates of duty that red diesel has enjoyed. For those of us with an interest in agricultural and rural matters—I think that the hon. Member for Western Isles (Mr. MacDonald) will sympathise with me—that is not welcome, given that agriculture is only now pulling out of one of the worst phases of its cyclical downturn. Incomes are rising, but not to a very high level. It is not a particularly clever time to make such a move, as farmers must face it against a background of ferocious price competition from their principal customers, the supermarkets. The Government have again been somewhat mean-minded in the help that they give to biodiesel.

I am sorry that the Economic Secretary is not in his place to reflect on the fact that over the past 12 months no move has been made towards trying to start an indigenous biodiesel industry, based on UK-grown
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oilseed rape, with processing in this country. Investment has been made in the plant in Motherwell, which will produce an additional 4.5 million litres of that fuel, but it will use cooking oils and fats as its initial feedstock. If the Government are genuinely interested in the agenda of sustainability, improved environment and reduced carbon dioxide emissions, they must make their mind up on the matter. If they give a 40p duty derogation for liquefied petroleum gas because they rate heartily the air improvements that result from that road fuel, they should at least increase beyond the amount in the Bill the duty derogation for biodiesel. Let us forget for a moment the Treasury's worries that that would in some way sponsor a massive rush of imports. If we do not follow the biodiesel route of our own volition, the product will be imported.

There is a cost-free way of including biodiesel in our fuel source and giving the local industry a chance to generate. In the context of the Energy Bill, we should support efforts to require a target for blending biodiesel and normal hydrocarbon fuels so that the resulting price was whatever it happened to be. More Treasury money would not therefore be required to enable us to have a proper biodiesel industry. If nothing else, the Treasury could, with a 2 per cent. target, adopt the same techniques as for the renewables obligation in electricity and blend the tax position. Although that would result in a small increase in price, especially of diesel fuel, it would get our home-grown biodiesel off the ground.

Clause 118, which is entitled "'Film-related losses' and 'non-taxable consideration'", leads me to the subject of tax avoidance, which I wish to examine in some detail. The Government had a love-in with the film industry, rushed to the barricades to help it in every way, but were caught out. Clause 118 is a classic illustration of that. A measure was devised to try to help the film industry but was exploited, and a loophole was created that now has to be filled.

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