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If the hon. Gentleman will sit down, I shall make my point clear. I understand the problems faced by people in remote areas. I know that life there can be more expensive, but the same is true even in my semi-rural area. For example, people who live 15 miles away from the centre of Braintree have to pay higher fuel prices, for some strange reason. In those circumstances, how do we define remote? Various definitions have been offered in the debate so far. People in Caithness, Sutherland and Easter Ross are said to live in a remote area, and the hon. Member for
Argyll and BruteBute, rathersaid that people on the islands inhabit an even more remote area. However, people living in central London might regard Bromley and Chislehurst as remote.
Sir Robert Smith: Why does the hon. Gentleman think that the UK is so feeble in its inability to understand the problems of remote rural areas, when Greece, Portugal and France understand them perfectly well?
I turn now to the question of cost. Liberal Democrat Front-Bench Members told us that they had no idea of how much their proposal would cost. What a surprisebut then the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) came to the rescue and got his calculator out. He said that the cost could be £3 million or £10 million or £20 million. Are there any higher bids? Once again, the Liberal Democrats have not thought out the costs of their proposals at all.
Julia Goldsworthy: Will the hon. Gentleman concede that new clause is purely an enabling provision and so has no cost implications? Given that that is so, why does he think that the Government should choose to reject it?
Mr. Newmark: Call me a simple soul, but new clause 4 does imply a cost. I shall not rehearse the arguments offered by hon. Members on the Liberal Democrat Front Bench, but I am sure that they will back me up when I say that their proposal does represent a cost to the Exchequer.
John Thurso: I have no idea how to work a calculator. I was quoting from a report. The figure of £3.5 million that I gave pertained to the highlands, and was a maximum. For the benefit of the House, I extrapolated what that might be as a maximum for the UK. If the hon. Gentleman reads Hansard, he will find that what he said about my remarks is wrong.
Mr. Newmark: I should be surprised to find that what I said is wrong. Unless the hon. Gentleman produces a definition of what is remote, I do not know how he can come up with a figure of £20 million in his analysis.
I turn now to new clause 6, which would require the Chancellor to forecast oil prices. I cannot pretend that the right hon. Gentleman has any greater forecasting powers than Mystic Meg, and there is no evidence that his skills in that respect have been especially good in the past. It is ludicrous to expect the Chancellor to provide a forecast of oil prices. We should all be multimillionaires by now, especially the right hon. Gentleman, if we could actually forecast the price of oil over the next 12 months.
If the Lib Dems want to show their true green credentials, they should be figuring out a way to tax carbon emissions. How can one do that? I do not want to digress from the new clauses, but focusing on carbon emissions and charges on them, perhaps through vehicle excise dutyalthough not the modest premium added by the Chancellorand seriously charging Chelsea tractors that emit huge amounts of carbon would have been a far more sensible way forward.
John Healey: We have had a lengthy debate on these proposals: nine speeches and four interventions. Clearly, the Chamber is not full of German and Italian football fans, but for those who have a passing interest, the score is still 0-0 after 65 minutes. However, I am told that it is an excellent game.
The hon. Members for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) and for Dundee, East (Stewart Hosie) introduced their new clauses in measured tones, but that did not disguise the flaws in their arguments. The hon. Member for Inverness, Nairn, Badenoch and Strathspey, who moved new clause 4, laid great stress on the price of fuel for those living in rural areas in his constituency, but it is important to remember that the costs of fuel and vehicle excise duty are just two of the many factors that contribute to the costs of motoring and the cost of living.
The cost of living varies from region to region across the country. The hon. Gentleman may like to consult the recent regional comparisons of the retail prices index published by the Office for National Statistics. The RPI for Scotland is 5.5 per cent. lower than the UK average, while the RPI for London is 9.7 per cent. above the UK average. The price of a pint of beer in London is significantly higher than elsewhere in the country, but we do not make tax adjustments to compensate for that.
Mr. Carmichael: Surely the hon. Gentleman accepts that the RPI is not uniform across Scotland as a whole. There are variations in significant price indicators in different parts of the country. It is much lower in places such as Glasgow and Edinburgh than in the remote rural areas that we have been discussing tonight.
John Healey: My point is that the cost of living and its components vary. Where the cost of a particular commodity is high, we do not necessarily compensate by making the sort of tax adjustments that the hon. Gentleman and his hon. Friends are advocating.
As the Minister knows from my earlier remarks, the reason for our proposals is that in
rural areas, especially where there is no access to public transport, getting around by car is a necessity, not a choice. It is not a consumer choice in the way that going for a pint of beer in a London pub might be; it is essential for the future economic viability of rural communities. That is why there is a special case to be made.
John Healey: The Government recognise that, which is why we introduced the special rural transport fund to support the pressures and needs of rural transport. The hon. Gentleman may be interested in the fact that spending per head on transport in Scotland is 29 per cent. higher than in the rest of the UK.
My hon. Friend the Member for Wolverhampton, South-West (Rob Marris) raised a couple of important points, one of which links to the point that I made just now and which he tempted me to make when he intervened. He said that, if the principle of uniform tax rates were changed, allocations for public expenditure would, inevitably, have to be reviewed, too. When that point was put to the hon. Member for Inverness, Nairn, Badenoch and Strathspey he said no, point blank. On that question, the Liberals want to have their cake and eat it.
The second major flaw in the proposal is that it is in conflict with the environmental objectives that we can pursue through vehicle excise duty and fuel duty. Clearly, the importance of environmental objectives applies equally to those who live in rural areas. If we follow the logic of the Liberal proposal, the cost of going green is not borne equally by everyone but borne in particular by those who do not happen to live in rural areas. Our policy on fuel duty is well established. The duty rates should rise each year at least in line with inflation, as we seek both to meet our targets to fund essential public services and our obligations to tackle climate change.
John Healey: Let me correct the hon. Lady. She will be well aware that the UKs policy is not to interfere in the fiscal decisions of other member states. We therefore did not support the French, but we did not oppose them, when they made their proposal for reduced regional rates. I hope that that helps the hon. Lady.
John Healey: Let me correct the hon. Gentleman. France has not yet done this. The proposal is due to be introduced in 2007. In fact, what the French are proposingit would be interesting to find out whether the Liberals will propose it as wellis a real increase in fuel duties that could be offset in certain regions at that point.
The policy that we have established on fuel duty must take account of all the relevant economic, social
and environmental factors, but, of course, it is important that fuel prices are no higher than they need to be. On prices, it is important that we are clear about what is driving the level and volatility of our fuel prices. Road fuel duty is lower in real terms now, at 47.1p per litre, than in 1999, when it was 47.21p per litre. That is the equivalent of a fall in the price of road fuel of 7p per litre. So the high and volatile prices are a problem not of fuel duty, but of the international market and international prices. The best way to deal with international prices is not by imposing the complex mechanisms that are proposed in new clauses 4 or 6, but by the efforts that we are making to support the efforts of producing countries and consuming countries to increase the stability of the oil market and to improve its functioning.
Sir Robert Smith: The Financial Secretary says that he is trying to solve the problem by improving stability in the production of oil and gas. Therefore, will he ensure that the Treasury does not cause any fears to investors about the production of oil and gas in the UK? If we lecture all the other producing nations to maximise their production, we must maximise our production as well.
John Healey: I would take the hon. Gentlemans intervention more seriously if he had been present during the debates on the Bill about the changes that have been made to the regime and its possible impact on investment and exploitation. In short, the mechanisms proposed in new clauses 4 and 6 would introduce significant complexity but do little to bring greater stability to the UK market.
I thought that we had been through the issue raised by the hon. Member for Dundee, East in previous debates. The hon. Member for Wycombe (Mr. Goodman) is nodding his assent. In fact, we have been through that issue. New clause 6 is based on the central, important misconception that high fuel prices lead to an overall increase in VAT receiptswhat the hon. Member for Dundee, East describes as a windfall in VATbut that is not necessarily the case. When people have to spend more on one commodity, they tend to spend less on others, so the overall amount of VAT receipts usually remains unchanged.
Stewart Hosie: The Financial Secretary knows that we are talking about the VAT on petrol, not the rest of the VAT take, and there was no criticism or argument when we used the example last year that a 6p rise, from 80p to 86p, would have led to a 1.2p reduction or offset in the additional VAT collected. Those figures seemed to be widely recognised last year, and I hope that he will agree that the offset model would at least work and not have a fiscal impact on the forecast yield to the Treasury.
John Healey: No. The hon. Gentlemans problem is this: if people are spending more because the price of fuel, including the VAT element, is higher, they will tend to spend less on other commodities on which VAT is also charged. The overall yield for VAT is usually unchanged. There is no windfall VAT gain through higher fuel prices.
UK vehicle excise duty and fuel duty rates are set at the current rates for very good reasons: first, to raise revenue to fund essential services and secondly, to help to achieve our environmental objectives and obligations. Those reasons apply equally to rural areas. We are seeing the worst of the Liberal Democratsthey are facing two ways at once. Their leader promises to hit people with an £8 billion rise in environmental tax. That is on top of the £12 billion that he needs to raise through increases in other taxes. They are suggesting a top rate of VED that is 10 times the current rate. Then, in this debate, they are advocating a cut in VED for certain special areas in which they have a special interest.
Apart from lacking a convincing intellectual or principled case for the amendments, introducing a separate rate of VED for remote rural areas would also create obvious problems with fraud and administration. A moments reflection would bring hon. Members to realise that. Clearly motorists could register vehicles in the designated remote areas while using the vehicles exclusively or largely in urban areas. Of course, that is going to be a problem. In Committee of the whole House, the hon. Member for Falmouth and Camborne (Julia Goldsworthy) quoted the Countryside Agency. If she looks at its figures in other respects, she will see that, in sparsely populated areas, about one in 10 houses are second homes or holiday homes. Inevitably, we would have that problem.
Danny Alexander: I shall not detain the House for long. We have had an interesting debate. The points that have been made by my hon. Friends make a sound case for pressing the new clause to a vote. From my point of view, the various attempts to pronounce the name of my constituency were the most interesting aspect of the remarks made from the Labour and Conservative Benches. I will award marks out of 10 later. The arguments against the measure do not hold water, so I would like to press the new clause to a vote.
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