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Even that is an optimistic reading of what the Opposition have proposed. A close reading of pages 3 and 4 of their consultation document, which they put out last July, suggests that their so-called stabiliser might be based on fuel prices rather than oil prices, which is another odd way of doing it. If we were to interpret the Oppositions proposal in this way, todays average petrol price figures quoted from the same source as they used, PetrolPrices.com, would mean that the fuel duty stabiliser would put an immediate 5.5p on the price of unleaded fuel. If such a mechanism were introduced in the future, there would be potential for significant gaps in the public finance forecast.
It is clear that these proposals are populist. They would not work in practice, they achieve the opposite of what they claim on the tin, and they do not achieve stability at all. They achieve unreliability and great volatility. I therefore hope that the House will vote against them.
Stewart Hosie: The Minister has spoken for some time. In her usual generous way, she explained the Governments position carefully. At the beginning she spoke about persistence. That is correct. We recognised that there is a problem. She also criticised the concept, and at one point spoke about trying to manipulate commodity prices. The price of oil, the commodity, may drive the policy, but there is no attempt at all to manipulate the commodity price. The amendment is designed to smooth out the price at the pump as a consequence of movements in commodity prices.
The Minister also spoke about VAT. We have not spoken of a VAT windfall. We have spoken of a value equivalent to the increase in VAT, which would be generated by an increase in the price at the pump. That is a perfectly reasonable measure to use.
The hon. Member for Taunton (Mr. Browne), who speaks for the Liberals, made a number of spurious claims. He ignored the ability to reset the baseline, which was vital. He chose a starting point for his example which, if not random, was certainly chosen to
I recognise that, as the Minister said, the price cannot be fully stabilised. The argument is that it is simply smoothed out. The Governments other argument was that it would be difficult to determine whether a change
was a spike or a structural change in the price. The whole point about setting regular dates when the measure would be revisitedand about allowing for that flexibilityis to ensure that we identify whether there is a real spike, an upward trend or a systemic or structural change to the price.
We need to do something about the issue and take action. I have heard the criticisms and arguments from the Exchequer Secretary and her hon. Friends, because she, too, has been persistent for many years. However, in the absence of a Government alternative or, even, any recognition of the real difficulties for families, businesses and hauliers, I beg leave to press my amendment to a Division.
I am delighted to move amendment 5, which stands in my name and that of several of my hon. Friends. Hon. Members will notice that this amendment is similar to amendments that have been tabled by hon. Friends on the Liberal Democrat Benches in previous years, and I make no apology for returning to the subject this year. The aim of the amendment is to tackle the continuing unfairness of the fuel premium that drivers have to pay in remote rural areas. This serious problem has a severe impact on the economy of those areas on the mainland and on all our islands.
Mr. Angus MacNeil (Na h-Eileanan an Iar) (SNP): The hon. Gentleman will be aware that, in constituencies such as mine and his own, we pay more tax per litre of fuel than in any other part of the United Kingdom. That anomaly should not continue, and a fuel duty regulator is urgently needed by our island communities so that our taxes can be fair, equal and level across the country.
Mr. Reid: The hon. Gentleman is absolutely right to say that his constituents and mine pay more tax on our fuel than people in the rest of the country. The way to tackle that is through the proposal in our amendment for a rural fuel discount.
People who live in remote rural areas suffer a triple whammy on their fuel. First, by necessity, they have to travel long distances. Secondly, the price of fuel is higher than in urban areas. Thirdly, there is a complete lack of public transport. The premium that people in remote areas have to pay for their fuel varies. I will give some examples that compare the prices in my own constituency with those charged in Glasgow. Close to the eastern boundary of my constituency, which is closer to Glasgow, the price tends to be 1p or 2p a litre higher than it is in the city. Moving to the furthest part of the mainland from Glasgow, the price differential around Campbeltown, down at the tip of the Kintyre peninsula, was 6p a litre more than in Glasgow the last time I checked. The price tends to be even higher at some of the small filling stations in the more rural parts of the mainland.
On the islands, the price differential in Rothesay on the Isle of Bute was 5p a litre when I checked recently. That is bad enough, but the price differential becomes far larger on the Atlantic islands. On the larger islands such as Mull and Islay, the price of fuel is usually about 15p a litre higher than in Glasgow, and as much as 30p higher on smaller islands such as Coll and Colonsay. That price differential, which has to be paid by local
people going about their ordinary daily lives and by local businesses, makes daily life and running a business much more difficult in those areas.
Mr. MacNeil: I am grateful to the hon. Gentleman for giving way again; he is most kind. When I first raised this issue with the Treasury three years ago, I was told that if a fuel duty regulator such as that proposed in the amendment was brought in for the islands, people would travel from places such as Glasgow to buy fuel in Stornoway, Benbecula or Barra. That was clearly nonsense, and the hon. Gentlemans proposal represents at least a step towards the kind of parity that is sadly lacking at the moment, as we can see from his figures.
Mr. Reid: The hon. Gentleman is absolutely right. The Treasury has certainly used that argument in relation to the mainland, although even Treasury Ministers have not tried to argue that that would be the case for the islands. I will describe later how that supposed pitfall can be overcome on the mainland. Clearly, no one would pay the extortionate fares charged by Caledonian MacBrayne to go to the islands in my constituency.
Mr. Reid: The hon. Gentleman is tempting me, but he knows perfectly well that the Scottish Government treat my constituency much less fairly than his. However, I shall return to the subject of the debate before you intervene, Sir Michael.
In remote areas, the car is an essential, not a luxury. Let us consider the purpose of the high fuel duty. One argument that the Government put forward is that it is designed to encourage people to change their behaviour and to use public transport instead of their cars. However, that fails completely in remote rural areas because of the complete lack of public transport alternatives. No environmental purpose would be served by local councils in remote areas subsidising more buses, because they would be running with only one or two passengers, and a couple of passengers on a bus are clearly a great deal less environmentally friendly than people using a car.
John Thurso: Is my hon. Friend aware that Royal Mail, in its pre-privatisation mode, has slashed post bus services in many of our constituencies? As a result, there are now no post buses, and no bus services of any kind, on the north coast of Scotland.
To add insult to injury, as well as paying a higher price for their fuel, people pay more to the Exchequer in tax because the higher price means that VAT is higher as well. A basic principle of taxation is that it should be equitable, but it is clearly not equitable for an area to pay more VAT than is paid in other parts of the country. What makes the position even more perverse is that fuel costs are lower in areas with public transport alternatives than in areas with none.
Dan Rogerson (North Cornwall) (LD): My hon. Friend is making a strong case. As he has pointed out, a key element of the problem is that it is harder to run businesses and other services in some rural areas. Although some may view such areas as prosperous, wages are often very low, and the economy is under threat for all sorts of other reasons.
Mr. Reid: I am not sure whether my hon. Friend has been reading my speech over my shoulder, but I was about to make that very point. In the highlands and islands, incomes are much lower than in the rest of the country, but the Treasury is asking people there to spend far more on fuel and to pay more tax on it. Fuel represents a greater share of disposable income in the highlands and islands in the first place.
The purpose of amendment 5 is to identify a workable solution to the problem: reducing the premium that people are paying for their fuel in remote rural areas. On previous occasions, the Chancellor and other Treasury Ministers, including the Exchequer Secretary, have expressed sympathy and a desire to look at the evidence. As a result, my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) produced a paper, a copy of which I have with me. My hon. Friend circulated the paper, sending it to, among others, the Chancellor, and the amendment is based on it.
Scottish national statistics include what is described as the eightfold urban-rural classification, which is shown on a map in my hon. Friends paper along with the definitions. I understand that similar definitions exist in other parts of the United Kingdom. The Treasury could use various classifications depending on exactly where it wanted to target the scheme, but in Scotland I should prefer it to include all the islands as well as two of the mainland classifications: very remote rural areas with a population of under 3,000 and more than a 60-minute travel time to a settlement with a population of over 10,000, and very remote small towns with a population of between 3,000 and 10,000 and more than a 60-minute travel time to a settlement with a population of over 10,000. Other definitions could be used, however, and the amendment allows the Treasury to define the area to be covered by the scheme in regulations.
So it is perfectly possible to define the area to be covered by the scheme, but we also needand the amendment provides fora simple method of passing the tax rebate through the system. To do that, we need only designate the retail filling stations. Different filling stations would be eligible for different levels of discount depending on where they were situated. Obviously, a far higher discount would apply on islands than on remote parts of the mainland.
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