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House of Commons

Tuesday 13 December 2005

The House met at half-past Two o'clock

PRAYERS

[Mr. Speaker in the Chair]

Oral Answers to Questions

SCOTLAND

The Secretary of State was asked—

Scotland Act

1. Anne Moffat (East Lothian) (Lab): Whether he plans to amend the Scotland Act 1998. [35557]

The Secretary of State for Scotland (Mr. Alistair Darling): There are no plans to revisit the Scotland Act through primary legislation.

Anne Moffat: I thank my right hon. Friend for that answer and I am glad that there are no immediate plans to look at the Scotland Act. However, will he consider revisiting the Scotland Act when we have the genuine and mature energy review, debate and consultation? If the Scottish Parliament tries to hold up the prospect of having nuclear energy as part of future energy provision, would we perhaps need to examine the Act to take the planning laws away from the Scottish Parliament?

Mr. Darling: No, I do not think that that would be necessary or desirable. I repeat that there are no plans to revisit the Scotland Act through primary legislation. However, I agree strongly with my hon. Friend about the need for a sensible debate on the future generation of electricity not only in Scotland, but throughout the whole United Kingdom. As the Prime Minister has said, that must include a consideration of nuclear energy. I know that many people in the Scottish Parliament have a philosophical objection to that and that others take a more pragmatic view by saying that we must decide how we would deal with nuclear waste. I was interested that the Liberal spokesman, the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso), has said publicly that he has an open mind on nuclear energy, which, as I understand it, represents something of a departure from Liberal policy.

Mr. Alex Salmond (Banff and Buchan) (SNP): On energy, should we not reopen consideration of the Scotland Act to devolve control of the oil and gas industry to the Scottish Parliament? We know that revenues are reaching a record level of £12 billion, but jobs and exploration are likely to reduce as a result of
 
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the Chancellor's clumsy tax hike. We know that the First Minister of Scotland was not consulted—no surprise there—but was the Secretary of State consulted about the tax hike that will affect many Scottish jobs, or is he just a cipher of the Chancellor?

Mr. Darling: As the House knows, I have many discussions with my right hon. Friend the Chancellor about a range of matters. On North sea oil taxation, it is necessary to strike the right balance between oil producers and consumers. We want to promote exploration in the North sea—indeed, there has been considerable exploration over the past few years—but it must be borne in mind that the return on capital was forecast to be 40 per cent. for oil companies in 2005 compared with just 13 per cent. for other non-financial companies. The Government have also said that they are committed to making no further increases in North sea oil taxation in the lifetime of this Parliament and have introduced additional incentives to help exploration. I recall that, in 2002, when we last changed the oil taxation regime for the North sea, the hon. Gentleman predicted the end of exploration as we knew it. Since then, exploration has increased and North sea oil activity has proved to be remarkably robust. He is ever the opportunist and ever ready to make the wrong calls, and it is not just us who believe that, but, increasingly, members of his own party.

Mr. Jim McGovern (Dundee, West) (Lab): Is my right hon. Friend aware of the curious alliance that is demanding that the Scotland Act be revisited: a combination of the nationalists, Greens, Trotskyists and The Sunday Times Scotland? Does he agree that any idea that gathers the support of such an alliance must be mad, bad and, indeed, dangerous?

Mr. Darling: Talking of alliances, I noticed that the hon. Member for Banff and Buchan (Mr. Salmond) was on the same platform as the Greens and the Scottish Socialists, who want to shut down the North sea completely—as well as capitalism. He has been building an odd pro-business alliance, and, as I said, he keeps making the wrong calls. I agree with my hon. Friend. I see no need to reopen the Scotland Act and it is not the Government's intention to do so.

Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): I draw the attention of the House to my entry in the Register of Members' Interests.

In answer to the hon. Member for Banff and Buchan (Mr. Salmond), the Secretary of State said that the high oil price justified the high tax. Will he thus send a signal to the industry that if the oil price falls, the tax that has been justified by the high price will fall in line with that fall in price so that investors are encouraged by knowing that there will be a more stable regime in the long term?

Mr. Darling: I thought that the hon. Gentleman was going to explain his policy on nuclear energy, as we have heard the policy of his hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso). As for the North sea, I drew the attention of the House to the fact that the return on capital is 40 per cent. in the North sea oil sector and 13 per cent. for other non-financial companies. The Chancellor made
 
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it clear last week that, having reached a decision, he does not propose to revisit the matter in this Parliament.

Rosemary McKenna (Cumbernauld, Kilsyth and Kirkintilloch, East) (Lab): Without asking my right hon. Friend to speculate on how many women will be selected for safe Tory seats in Scotland, does he agree that one of the great successes of the Scotland Act is the creation of the Scottish Parliament, given the number of women, particularly Labour women, who became MSPs?

Mr. Darling: I agree. It is entirely right and long overdue that the Scottish Parliament should be far more representative of the Scottish population, and I am pleased that our party led the way in making sure that that was the case. The Conservative Front Bench gives a misleading impression of Scottish Tories. While I am delighted to see both the hon. Member for Epping Forest (Mrs. Laing) and the hon. Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), there is only one Conservative MP in Scotland, so there is considerable gender imbalance. I see in the press that, no matter what the new Tory leader says about having more women candidates, that policy will not apply in Scotland.

Fuel Prices

2. Mr. Brian H. Donohoe (Central Ayrshire) (Lab): What assessment he has made of the effect of rising fuel prices on businesses in Scotland; and if he will make a statement. [35558]

The Secretary of State for Scotland (Mr. Alistair Darling): In his pre-Budget report, my right hon. Friend the Chancellor confirmed that he would freeze petrol, diesel and road fuel gases duties this financial year, which will help businesses in Scotland and, of course, elsewhere.

Mr. Donohoe: My right hon. Friend may not be aware of my meeting with three of the five biggest users of gas energy in Scotland, all of whom are experiencing immense difficulties in sustaining their businesses over the winter. Consequently, 2,000 jobs in north Ayrshire could be affected in an already fragile economy. Will he do me the favour of meeting a small delegation from my constituency and north Ayrshire to discuss the matter further?

Mr. Darling: I understand the point made by my hon. Friend. The decision by my right hon. Friend the Chancellor to freeze duties on fuels was a helpful one. The supply of energy is a separate issue and my hon. Friend will know that the Department of Trade Industry, which has the lead responsibility, has taken a number of measures to safeguard supplies this winter and in future years. I will have a word with my hon. Friend after Question Time, but it may be better for him to speak directly to the DTI, which has the policy lead in this area.

David Mundell (Dumfriesshire, Clydesdale and Tweeddale) (Con): May I begin in the new way by agreeing with the hon. Member for Central Ayrshire
 
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(Mr. Donohoe)? On fuel prices, does the Secretary of State agree with the conclusion of the report by the Select Committee on Trade and Industry on gas supplies that the Government are not doing enough for businesses and the vulnerable? Given the severer climate in Scotland, what is he going to do about that?

Mr. Darling: I welcome the hon. Gentleman to the Dispatch Box. On behalf of the Government, may I say that we are sorry that the hon. Member for Epping Forest (Mrs. Laing) no longer speaks for the Conservative party, but we should all be grateful for her willingness to stand in during her party's hour of need? It was good of her to return today to give the impression that there are two Scottish Conservatives rather than just one.

I have not had an opportunity to read the report by the Trade and Industry Committee but I am aware of it. As I told my hon. Friend the Member for Central Ayrshire (Mr. Donohoe), the Government are taking action to ensure that we have security of supply not just this winter but in future winters.

In the spirit of agreement—it is obviously the new mood—may I tell the hon. Gentleman that the Government, too, are concerned about fuel poverty, but we have been concerned about it ever since 1997? That is why we introduced the winter fuel allowance, which was opposed by the Conservative party, and is worth £200 this year and £300 for the over-80s. We have introduced measures to help to insulate homes, and the Scottish Executive have devoted £64 million to help pensioners and other people. If he really believes that something ought to be done about fuel poverty, he and his party must vote to support such measures. In particular, they must vote for the necessary money to support those schemes. In the past seven or eight years, however, they have opposed just about every single measure that we have introduced to tackle fuel poverty.

David Mundell: Given the likely impact on fuel prices, jobs and the wider Scottish economy of the Chancellor's £2 billion smash-and-grab raid on the oil industry, did the Chancellor consult the Secretary of State on his proposals, and if not, why not?

Mr. Darling: The hon. Gentleman will no doubt learn that one of the problems with prepared questions is that he should have listened to what I said a few moments ago. I have many discussions with my right hon. Friend on a range of matters. I repeat the point that I made earlier: it is important that the Government strike the right balance between the interests of encouraging exploration in the North sea, just as we have done over the past few years, and making sure that there is a fair return for the British taxpayer. Looking at the present level of prices and the return of capital, the Chancellor took the decision that it was right to change the level of taxation. I should point out that the level of taxation in the North sea is less than it is in comparable countries such as Norway, another North sea oil producer, and it is competitive against tax rates in other parts of the world. I believe that the measure was absolutely necessary and it was also the right thing to do. Similar predictions about the future of North sea oil were made three years ago and they were wrong. I suspect that the predictions made now are wrong as well.
 
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Michael Connarty (Linlithgow and East Falkirk) (Lab): May I turn to the serious question of the damaging effect of gas prices on the business community in Scotland and the rest of the UK? Is my right hon. Friend aware that the interconnector with Europe, which can run at 50 million cu m a day, has a flow-through of only 26 million cu m a day at present, and that the liquefied natural gas terminal at Canvey Island, which can take four tankers a month, is unloading only one a month? Shell has undertaken a big maintenance project on the gas flow from the North sea in November and December, thereby forcing the price up. Is my right hon. Friend aware that what we have here is an invidious monopoly where the suppliers also control transmission, and they are hiking the prices that people have to pay on the spot market because the long-term price was 90p per therm when it should probably be 60p, if the gas were only allowed to flow? We are being manipulated by the owners.

Mr. Darling: I am aware that there have been problems in relation to the supply of gas through the interconnector and, as the Chancellor said in his pre-Budget report last year, the Government are making representations to the European Commission because we believe that, for our market to work properly, it needs to be liberalised. It must be possible for people to buy and sell gas across different countries, and for it to be supplied. As I said earlier, the Secretary of State for Trade and Industry and the Minister for Energy are pursuing a variety of measures that, I believe, will increase the supply of oil available to us not just this year, but in the future.

John Thurso (Caithness, Sutherland and Easter Ross) (LD): The cost of fuel for motorists in rural Scotland is as much as 10p a litre more than for motorists in urban areas. The long-term answer to that is probably national road user charging, but that is some years away. Will the Secretary of State consider a short-term remedy: the use of the derogation available under EU directives 92/81 and 92/82, which permit lower fuel tax for remote areas? Will he discuss that with the Chancellor? Why should those who have little or no public transport be penalised in this way, when the Government clearly have a solution to the problem?

Mr. Darling: I am surprised that the hon. Gentleman is so critical of rural transport in Scotland, when after all it is the responsibility of his Liberal Democrat colleague, the Minister for Transport and Telecommunications in Scotland. I am surprised the hon. Gentleman has not made representations to him to try to improve the situation. I am sure that he would be very ready to listen, since they are in the same party.

There would be some difficulty with the hon. Gentleman's specific proposal. Wherever the line was drawn, anomalies would arise with somebody living just outside such a line having to pay more fuel duty than someone living just over it, so that would not provide the solution that the hon. Gentleman has in mind. I appreciate that, in rural communities, especially where people have to travel long distances and there are difficulties with public transport, there are additional pressures, but I do not think that particular measure would help.
 
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