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Mr. Andrew Turner: When one wants a constructive debate to take place, one starts by providing information. It would not have been difficult for the Liberal Democrats to ask questions, table questions to Ministers, seek the advice of civil servants and ask their research assistants to do some work in the Library to formulate a range of options, as my local authority did when we took control from the Liberal Democrats and introduced a 50p bus fare for every person under the age of 19 on the island to travel anywhere on the island. That was done before we took control. The Liberal Democrats have ample facilities, as have all of us in the House—I can see, Mr. Deputy Speaker, that you want me to shut up—to undertake that work. I wish they had done so, because they would be taken more seriously.
Julia Goldsworthy: If the hon. Gentleman has such resources at his fingertips, he could have raised the issue himself. If the communities that my hon. Friends described had access to buses, they would happily provide subsidised fares, but for many of those communities there are no bus services and to provide them would be worse for the environment. An equivalent service to the one in the hon. Gentleman’s constituency could not be provided.
I draw the
hon. Gentleman’s attention to the comments made to those on his
Front Bench in the discussion of minimum pensions income. His
Front-Bench team will remind him why it is not possible to give
detailed information. The reason why we refer to
Treasury regulations is that there is no UK definition of a remote rural
area. There are definitions that apply to England and Wales, but if
those were mentioned in the new clauses and amendments, they would not
include Scotland. My hon. Friend the Member for Inverness, Nairn,
Badenoch and Strathspey (Danny Alexander) is therefore trying to
produce enabling measures in order to provoke a debate. Transport costs
alone make fuel significantly more expensive in the highlands than in
more densely populated parts of the UK. We are trying to respond to
problems experienced across the country. All the amendments and new
clauses in the group try to deal with those problems in different
ways.
One solution would be to more forward more quickly on road user charging, which would be a more flexible way of discouraging car journeys in congested areas, which cause the most pollution, while not penalising those who do not generate congestion and who do not have access to public transport alternatives. If the Minister can tell us that the Government intend to push forward on such a long-term policy, we would welcome it, and we would welcome a time scale.
Costs are much higher in rural areas and there is no immediate solution. The 2003 national travel survey for England showed that half the residents in rural settlements of fewer than 3,000 people lived within30 minutes’ walk of a bus stop. That compares with95 per cent. of people living in larger urban areas. I am sure that in many parts of the constituency of my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey people will have an even longer walk.
Those rural residents are likely to spend more per week on transport than their urban counterparts. The expenditure and food survey for 2002-03 showed that households in rural areas with a population of fewer than 3,000 spent more than £70 a week on transport, compared with £45.50 for those living in urban areas. Half their expenditure goes in operating costs, a large proportion of which is the cost of fuel.
New clause 4 seeks to lower the rate of duty in remote areas, as defined by the Treasury, and would give the Government the powers to apply for a derogation from the energy products directive, as has recently been successfully undertaken by the French Government. I understand that that was unanimously approved by the EU, as was referred to earlier, which means that it must have had the support of the UK Government. Why does the Minister think that remote and rural areas in the UK do not fulfil the same objective socio-economic conditions as the regions in which the derogation is applied in France?
Because of the lack of transport alternatives, consumers are unable to respond to price incentives. They just have to bear the higher cost, since there will be no cheaper alternative. Hence this proposal is logical and fair, not least because incomes also tend to be lower in more isolated and often more economically deprived constituencies. Although I represent a constituency at the opposite end of the UK to that of my hon. Friend, many of the experiences and difficulties that he has described are familiar to me and my constituents.
The
amendments tabled in my name seek to achieve similar ends to the new
clause, but I am not proposing that both alternatives should be put
forward
simultaneously. As I have said, we seek to propose a range of
alternatives to highlight the situation and provide the Government with
a range of approaches. We know that the alternative proposed by my hon.
Friend works because it has been applied in other countries.
Unfortunately, because all our amendments have not been selected we
will not be able to vote on the whole package that we have proposed, so
I hope that my hon. Friend will press his new clause to allow the
Treasury at least to consider the issues.
The fundamental reason for providing such a concession in my amendments is to recognise the high cost of travel in rural areas. They allow for the revalorisation of fuel duty to continue. We welcomed that when the Chancellor announced it in the Budget. If that continues, and if it is the Government’s intention to increase the share of green taxation as a proportion of the total tax take, it will be those people whose behaviour will not be affected by the increases who will have to bear the costs. Therefore, we seek some way of offsetting those costs for people who cannot change their behaviour.
I draw the Minister’s attention to two issues. The first is the extent to which the differential for the new highest band, which the Chancellor announced in the Budget, will impact on behaviour, and how it will encourage more environmentally responsible choices. In his Budget speech, the Chancellor said:
“I want to do more to encourage cleaner fuels and cars. I propose to radically reform vehicle excise duty. I am introducing...a new band of £210 for the small number of new cars that are the most polluting”.—[ Official Report, 22 March 2006; Vol. 444, c. 295.]
In a written answer the Financial Secretary gave the number of people who would be persuaded by that amazing new band to change their behaviour. As a result of these proposals, carbon emissions will fall by a fraction—less than 1 per cent. Therefore, our amendments seek to point out the incredibly limited impact that the Government’s proposals will have and to present ways in which they might like to achieve a more significant impact on behaviour. In this respect, people in rural areas, as well as in urban areas, will have the opportunity to exercise choice to offset those costs. When they are purchasing a new car they can decide, like people in urban areas, to buy a car with lower emissions. However, they cannot decide how much they pay for their fuel. That is the inequality that we seek to address.
I hope that the Government will at least recognise some of the difficult circumstances that many of my constituents and those of my hon. Friend and others in rural areas across the country face, and I hope that they are prepared to take on board the need to recognise their difficult circumstances. If he does not wish to accept any of our proposals, I would be interested to hear how he plans to ensure that people in rural areas are protected from any further measures that the Government may plan to take in relation to fuel duty and vehicle excise duty that will significantly increase their transport costs despite the fact that ultimately they will have no alternative to the car and hence will have to bear those costs rather than change their behaviour to the benefit of the environment.
Rob Marris: I have to say that we are having a somewhat confused debate. The proponents of the motor fuel— [ Interruption. ] I want to offer some clarity to the hon. Member for Eastleigh (Chris Huhne), which Members of his party have signally failed to do. I will not address any remarks to new clause 6, but I shall speak to new clause 4 andthe amendments. The hon. Member for Wycombe(Mr. Goodman) gave an interesting figure. He will correct me if I am wrong, but I think that he said that 29 per cent. of the population would be in a rural area.
8.45 pm
Mr. Paul Goodman: It depends— [Laughter.] It depends on which of the two definitions of rural area one accepts. The Liberal Democrats have not been able to tell us which of the two they accept, so when they laughed, they were laughing at themselves.
Rob Marris: It will not surprise the hon. Gentleman to learn that I entirely agree, because I was using the only figure that has been cited in the debate, so far as I am aware.
Danny Alexander: The new clause makes it clear that the definition should be subject to Treasury regulations, but in answer to an earlier intervention I mentioned the Scottish Executive’s rural petrol stations grant scheme as a model that might be worth considering. The definition used in that scheme would apply to 5.37 per cent. of the population of Scotland. I hope that that point at least manages to inform the hon. Gentleman on one particular possibility that might well be adopted when the Treasury or civil servants come to look at this matter, because I am sure that his party will support the new clause.
Rob Marris: I am glad that the hon. Gentleman has come up with a figure, but for the moment I shall stick with the figure on which I have based my calculations, as it was the only one before us before that intervention.
There are approximately 20 million private motor cars on United Kingdom roads. I estimate that the average rate of vehicle excise duty is £150 a vehicle, based on clause 13. That would generate vehicle excise duty of approximately £3 billion a year. If we take29 per cent. of that, that means that the Liberal Democrats are proposing, in round terms, an almost£1 billion giveaway.
Chris Huhne (Eastleigh) (LD): It was made clear that the 29 per cent. figure referred only to Scotland, which represents a small proportion of the total UK. The hon. Gentleman cannot take the total UK car stock and then extrapolate from the Scottish proportion. As we have discussed in previous debates, the Countryside Agency uses a more robust definition of rurality that applies to England and Wales. This point highlights why it is important to give the Treasury the option through regulations to establish a definition that applies to the length of the UK. However, the hon. Gentleman cannot extrapolate in the way that he has.
Rob Marris: I apologise to the hon. Gentleman. I thought that his colleagues were moving an amendment to the Bill that would cover the whole of the UK, as provisions on vehicle excise do. Therefore, I based my calculations on the whole of the UK, and at least I have the guts to put forward some figures,which thus far he and his hon. Friends have not done. They are talking about a giveaway of approximately£1 billion, based on the 29 per cent. cited by the hon. Member for Wycombe. If we use the figure of 5.4 per cent., the giveaway is about £150 million—it is difficult for me to do that calculation in my head. They should at least put forward some figures.
Let us look at new clause 4. The hon. Member for Orkney and Shetland (Mr. Carmichael) did not seem to understand the mathematics of what I put forward in my intervention, so I am having to make a speech. New clause 4 would give the Treasury some power, but the hon. Members who support it will not indicate any way in which that power might be exercised, so I will make a suggestion. If they do not like the figures, they can come up with others. That way, at least we will then have some figures before us in this debate.
Page 13 of the Red Book tells us that excise duties in the UK raise £40 billion a year. If half of that comes from vehicles—excise duties come in from other sources, too—the amount is £20 billion. I suspect that I am making a conservative estimate of the proportion of excise duties that come from vehicles, but I will use it. If we take off the figure that I gave earlier as an estimate of the total UK vehicle duty, which was£3.3 billion a year, based on 20 million private vehicles and with an average excise tax disc duty of £150, that leaves us with £16.7 billion coming principally from fuel, and 29 per cent. of that is about £5 billion. New clause 4 does not give us any formula for by how much its supporters wish vehicle excise duty to be cut, but if it were cut by 50 per cent. in rural areas, that would amount to a £2.5 billion giveaway. On the only figures before us—others can put forward their own figures—these amendments would provide for a tax giveaway of getting on for £2.5 billion to £3.5 billion. That is a great deal of money. It is being said, cavalierly, “We cannot put any price on this. We have not looked at the figures and it is all up to the Treasury.” That is irresponsible in a debate on the Finance Bill. As ever, the Liberal Democrats are under-prepared. They have not done their homework.
Julia Goldsworthy: I was talking about some of the difficulties that people in remote rural areas may face when considering their transport options.
Rob Marris: Of course there are difficulties for people in remote rural areas. However, if we consider wealth generation in the UK, it comes principally from urban areas, especially London, where we are now situated, and the south-east. I represent a constituency in the west midlands.
A
principled position is being put forward about helping people with
their travel costs in remote rural areas. I understand that. However,
Liberal Democrat Members refuse to set out any figures because they
have not done their homework. The hon. Member for Falmouth and Camborne
(Julia Goldsworthy)—she will correct me if I am wrong—has
a reputation for
bunking off from this place to go on sports programmes on television,
and helicoptering around the United Kingdom. She then comes forward as
a proponent of green taxes. In addition, she comes forward with vehicle
excise duty proposals in amendments Nos. 124 and 129, which would cut
vehicle excise duty and cut also green taxes. It is the most brass neck
that I have seen in five years in the
Chamber.
Mr. Carmichael: Perhaps the hon. Gentleman is a little jealous that no one has invited him on to such a programme.
Rob Marris: Were I to be invited on to such a programme, I would not participate. That is because I do not believe in moonlighting. I gave up my practice as a solicitor—where I made more money than I do in this Chamber—as soon as I was elected.
Julia Goldsworthy: I am sure that the hon. Gentleman would approve of the worthy cause—the money raised for charity, and the fee that I received from it, was donated to the Cornwall air ambulance, which is funded entirely from charitable donations and provides an essential service—
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I think that it would be a good idea if we returned to the new clause that is before the House.
Rob Marris: I will do that, Mr. Deputy Speaker.
It just seems to me that helicoptering around the United Kingdom and then proposing green taxes in the proposals that are before us, which go against green taxes, is the height of hypocrisy and brass neck. On that basis, if on no other, I urge Government Members to vote against the proposal if there is a Division.
Stewart Hosie: I shall speak primarily to new clause 6, but I shall take up some points that arise from new clause 4.
The hon. Member for Falmouth and Camborne (Julia Goldsworthy) said that she was delighted to raise these matters again—I am paraphrasing—so as to spark debate. I was intrigued by the use of the word “again”. When we discussed a similar amendment last year, the Liberals opposed it. When we discussed these matters generally on the Floor of the House, the Liberals—
Chris Huhne: Ah ha.
Stewart Hosie: I think that I can finish the sentence without a strange Liberal “Ah”.
To come to the substance of the matter, in Committee on the Floor of the House, the Liberals, understandably because it is their policy, concentrated on vehicle excise duty rather than on fuel duty, an issue that was raised elsewhere.
Chris
Huhne: The hon. Gentleman knows well that the debate last
year arose from a general proposal from the Scottish National party to
reduce fuel duty for
the entire United Kingdom. That was not something that we could
conceivably support if we held any responsible attitude towards the
burning of fossil fuels and the impact on climate
change.
Stewart Hosie: I say to the hon. Gentleman with a straight face that the proposals from his party today will not stop the burning of fossil fuels. The cost of doing so would be reduced in rural areas, for very good reason.
Chris Huhne: The key point, which my hon. Friend the Member for Falmouth and Camborne (Julia Goldsworthy) made explicitly, is that the proposal is designed to be part of a package that will, taken inits whole, have a dramatic effect in providing a disincentive to the burning of fossil fuels, and therefore improving our contribution to tackling climate change. If we do not deal with the problems in rural areas, there will be a serious difficulty in using price incentives through fuel duty and through vehicle excise duty to tackle climate change. It is precisely to enable that process to go forward that we have put forward the proposals that are before the House. It is unfortunate, given the arcane rules of the House, that we are not able fully to debate the other parts of the package. However, as we know from—
Mr. Deputy Speaker: Order. I think that the hon. Gentleman should stop at that point.
Stewart Hosie: If the hon. Member for Eastleigh (Chris Huhne) chooses to get to his feet later, we know what his speech will be about.
The hon. Member for Orkney and Shetland(Mr. Carmichael), whom I like and admire, mentioned VAT on three or four occasions during his contribution on new clause 4. It is disappointing that new clause 4 does not use VAT gain to offset duty, which is my proposal. That is a sensible way around the problem, not least because a VAT windfall would not have a fiscal impact on the Treasury—it would minimise the gain, while not reducing the Government’s expected take.
New clauses 4 and 6 would allow the Treasury to define “sparsely populated rural areas”. The hon. Member for Fareham (Mr. Hoban) and I have referred to the various definitions, such as the sevenfold model, which can cover up to 90 per cent. of the population and up to 30 per cent. of the land mass. Those definitions are clearly inappropriate, and those outcomes are clearly not what the Liberal Democrats intended. If an offset or a straight reduction in fuel duty were to apply to sparsely populated rural areas, the Treasury should define it in statute.
There has been a great deal of discussion about derogation, which the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) has mentioned. We will not vote on new clause 4 tonight, which is disappointing because it may provide a way forward, and I hope that we can build a consensus on the issue.
New clause 6 addresses the ongoing problems caused by high fuel prices. Last year, a similar amendment attracted cross-party support and the support of the Road Haulage Association, and I am delighted to tell the Financial Secretary that the RHA welcomes new clause 6 today—if I hold up the RHA press release to the right camera, someone will take a picture of it. The press release states:
“Last year the Burns inquiry invested much time and effort in highlighting the plight of our industry and although we are still a long way from seeing a solution to the problem, it is encouraging to know that we have the support of the Scottish National Party. We shall now be pushing more strongly than ever to get the same recognition from our own Parliament; in particular the Chancellor of the Exchequer.”
John Healey: The hon. Gentleman may be interested to know that yesterday I met the RHA, the Freight Transport Association and Mr. Robbie Burns, not one of whom mentioned the SNP proposals.
Stewart Hosie: Perhaps they were overawed by the Financial Secretary. Roger King certainly welcomed our proposals today, and I would be delighted to forward the Financial Secretary a copy of the RHA’s press release.
The proposal would result in the introduction of a mechanism so that high oil prices would trigger lower fuel duty—fuel duties and VAT make up about 60 per cent. of the total price of a litre of petrol or diesel. In that case, the Chancellor would provide by statutory instrument that where the price of crude oil rose above the published forecast price, additional revenue from VAT on fuel would be applied to offset some of the rise in duty.
It will come as no surprise that the hon. Members who backed similar amendments last year represented rural and semi-rural constituencies, but it is not only those in rural constituencies in Scotland, Wales, Northern Ireland and parts of England who suffer from high petrol and diesel prices. No nation, no region and no part of the UK is exempt from the problem of rising fuel prices, because every product in every shop is carried on the road by a haulier at some point.
There has been a lot of banter in the Chamber about some of the proposals. I do not intend to make a lengthy speech, because it would be unfair on those hon. Members who have stayed in the Chamber and because the arguments have been rehearsed on many occasions. I hope that the Financial Secretary begins to take on board the serious manner in which we are tackling the grave concerns of the road haulage industry and especially the serious problems in sparsely populated rural areas. In some rural areas in my constituency, there are no filling stations between major towns and the nearest city. As one moves into the countryside, more and more independent stations find that they simply cannot continue.
9 pm
I am unlikely
to push new clause 6 to a vote. The parliamentary arithmetic would make
that an unprofitable exercise. As I have done previously, I ask the
Financial Secretary to take on board from the Road Haulage Association
and the industry generally—the big companies and the small
traders—
the pain that has been suffered, the inflationary pressure building
underneath because of high costs being driven up by haulage, and the
problems of remote and rural Scotland and all sparsely populated rural
areas in the UK. I ask him to make some positive noises in response to
the debate so that we can look forward to a tempering of the high and
spiking prices, which many of us experience in our
constituencies.
John Thurso: I shall shortly consider cost and I hope to be able to provide some detail to hon. Members who have asked questions. I say that now so that they do not try to intervene before I reach that point in my remarks.
First, I shall comment briefly on new clause 6, about which the hon. Member for Dundee, East (Stewart Hosie) spoke. When I first read it, I had some sympathy with it but I soon decided that it was superficial sympathy. There are two fundamental problems with new clause 6 and the answer that he tried to provide.
First, the major disadvantage that my constituents and those of some of my hon. Friends suffer is the huge differential in price for diesel and petrol, which can range, depending on the cycle, from 6p or 7p at its most benign through an average of approximately 9p in the five years that I have been tacking the price to close to 14p in May 2003, which was the worst example. The problem is, as the hon. Member for Dundee, East admitted when I intervened on him in Committee, that his proposed system locks in the inequality. The price nationally would be held but the inequality would remain.
Stewart Hosie: It is true that the amendment that I tabled in Committee contained no specific proposal to alleviate rural prices. However, I specifically took on board the hon. Gentleman’s comments in proposed new section (1AB)(b) to the Hydrocarbon Oil Duties Act 1979 in new clause 6. That new paragraph refers to
“providing specific fuel duty reductions targeted at fuel sold in sparsely populated areas”.
I therefore hope that he will reconsider his previous sentence.
John Thurso: I am grateful for the intervention but it does not answer the question.
The second problem, which is fundamental, is that, if new clause 6 were accepted, the price of oil would be capped and there would be no opportunity to try to amend behaviour, as my colleagues wish, through taxes that give an incentive to those who have the opportunity to use alternatives in the form of public transport.
Stewart Hosie: Members of another party made that point in a previous debate. The point of using the windfall VAT to offset some of the duty rise is precisely that it does not impact on planned environmental increases. With the greatest respect, the hon. Gentleman has missed that point, too.
John
Thurso: I am grateful to the hon. Gentleman for that
explanation, but that is not how I read his clause, and I do not think
that that is the effect that most observers and commentators envisage.
However, I started by having some sympathy for his proposal, and
he and I clearly share a desire to do the right thing. I suggest that
his objective of getting rid of the inequality suffered by our
constituents who live in remote areas would best be achieved by
supporting new clause 4.
The problem is that we have become trapped by the wrong details and we are asking the wrong questions. The best approach would be to start by identifying the objective of the exercise. That objective is not to try to find a definition that fits; it is to identify the relatively small number of parts of the United Kingdom in which fuel is at such a premium that residents suffer great inequity. Let us look at that problem and design a scheme that addresses only that problem. All our discussions about whether to adopt formula X, Y or Z are irrelevant. New clause 4 would permit the Treasury to undertake the necessary work to address the problem. A number of schemes might fit the purpose, but the starting point should be to ask what we are seeking to achieve, and then to design the appropriate scheme.
I now want to address the question of cost. In January 2000, the Highland Council and Highlands and Islands Enterprise commissioned EKOS Ltd to produce a report on the scale of the problem. It stated:
“The total additional expenditures per annum on motoring by Highlands and Islands households, due to higher motoring costs as a whole, are approximately £88 million. This equates to approaching 3 per cent. of the region’s Gross Domestic Product. Of this, £17.8 million per annum is attributable to higher fuel prices, of which approximately £2.7 million is in the form of additional VAT paid because of the higher fuel prices in the region.”
If we wished to get rid of the premium—at an average of 9p—we could simply apply the 9p to those figures, and the cost to the highlands and islands would be no more than £3.5 million, allowing for inflation since 2000. That is a long way short of the £2 billion or£3 billion that has been suggested. In seeking to achieve our objective in the highlands, the Treasury would therefore have to bear the phenomenal cost of only about £3.5 million. If I extrapolate that calculation across similar areas using similar definitions, I estimate that the total cost for the United Kingdom would be no more than £20 million. But even if I am out by 100 per cent., and the total would be nearer to £40 million, that would still be a very small sum to achieve that objective. Furthermore, if the expenditure of£17.8 million that I have just described were diverted into general expenditure, we could create 592 full-time equivalent jobs in the highlands.
Another part of the equation
that we need to consider is to be found in that same helpful report. It
estimates that the average income in the highland area is much lower
than in the rest of Scotland, and that prices are higher. Consequently,
highland residents have 76p to spend on goods and services for
every£1 that the average Scottish resident has. In
other words, the average highland resident is about 24 per cent. worse
off than those who live in the rest of Scotland. On top of that, they
have to pay between10 and 20 per cent. more for their fuel.
That is the genuine burden under which my constituents and those of my
hon. Friends labour. Hon. Members may not have visited the areas to
which I am referring. I extend an open invitation to all of them to do
so at any time. I can do that, because my constituency is so far away
that I know very few will take advantage of the invitation.
Nevertheless, they will all be welcome.
For many miles in those parts of my constituency there is no public transport of any kind. Where there is transport, it consists of a bus that travels in one direction on one day and travels back on the following day. That is not really a viable option. A car, or a private vehicle of some sort, is therefore an absolute necessity, particularly in much of rural Sutherland but also in many parts of Caithness. A real burden—real inequity—is suffered by people with the lowest incomes in the United Kingdom, and I think that reducing that burden is a worthwhile objective for us as legislators.
I commend new clause 4. It does not seek to impose regulation; it merely seeks to give the Treasury power to do so. When I last raised the issue, during a Westminster Hall debate in 2003, I argued for a derogation. That was because I had always been told by the Treasury that it could not take this action. The Treasury’s case was holed below the waterline when the French went and did it with the acquiescence and support of our Ministers. We need no longer ask “Can we do this or not?” We now know that we can, and the question has become “Why do the Government notdo it?”
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