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likely to increase the amount of duty lost through fraud
by creating greater opportunities and incentives for false accounting or fuel smuggling.
The Minister offered no evidence in support of that assertion, although she had five and a half months in which to come up with it. When she responds to the debate, will she undertake to place the evidence that she acquired over those five and a half months in the House of Commons Library? We shall wait to hear what she has to say.
Having different duty rates in different areas could well create perverse incentives for motorists to drive further in order to fill up on low-duty fuel, both distorting the fuel market and resulting in an increase in CO2 emissions, contrary to the Governments policy of seeking to reduce polluting emissions.
I consider that to be the most illuminating example of Treasury thinking that we have seen so far. The Minister honestly presents to us, and expects us to take seriously, the proposition that someone will embark on a 12-hour ferry journey from Aberdeen to Shetland in order to buy petrol that will still be about 10p dearer than it would have been in Aberdeen. That is obviously the way the Treasurys mind works, and when we understand that, we understand why the economy is in the mess that it is in today.
My hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander)who, unfortunately, is no longer in the Chamberreferred to the impact of high fuel costs on prices, which I think is widely accepted. There is, however, an even wider impact. The higher prices paid by people in our communities make living in those communities that much more difficult. As a consequence of the increased costs, we see the continuation of population driftand if there is a single threat to my communities that is greater and more immediate than the high cost of fuel, it is a declining population.
Mr. MacNeil: The hon. Gentleman is making a very good case. Peoplecertainly people in my constituencyrecognise that we have had no joy whatever from the Treasury, which fails to realise that tax on a litre of petrol is actually higher. However, my disappointment with the Treasury is matched only by my disappointment with the Office of Fair Trading. I think that, like me, the hon. Gentleman has met representatives of the OFT in the past year. When told of the two types of contract between the island and the mainland, they did not want to investigate at all.
I have been to the Office of Fair Trading, and its representatives have come to see me. I can tell Members that the only thing one can be sure about is that the Office of Fair Trading is an office. It understands nothing about trading, and it certainly has no concept of fairness. That, however, is a debate for
another day, although I could cheerfully hold forth on it for another 20 minutes without drawing breath. I promise that I will not do that, Mrs. Heal. [Interruption.] If the hon. Member for Stockport (Ann Coffey) wants me to do it, I will cheerfully do itno, she is more interested in her BlackBerry. Very wise.
The point about population decline is that, in the present economic circumstances, communities in the highlands and islands, especially the islands, become particularly vulnerable, and the problem becomes particularly acute. As I have indicated already to the hon. Member for South-West Hertfordshire and to others, I am a forgiving man, so I am prepared to offer the Minister one more opportunity tonightunnecessarily perhaps and perhaps it is unwise to be so generous, but that is the sort of man I am. She can take the proposal seriously. If she has massive problems with defining where to draw lines on maps, let her take the lines that nature has drawn for her. She can start with a scheme that applies to island communities only. Then we will know the truth about the assertions about people driving great distances to get cheap fuel, which costs them more. Then we will know the truth about fraud and duty evasion, and then we will know the truth about the extra costs of transport. Give us a pilot scheme that applies to island communities only. Let us see how that works and do something, instead of just offering the warm words that we have had in the past.
Mr. Jeremy Browne: Thank you, Mrs. Heal, for giving me an opportunity briefly to contribute to this debate, which is important. I am delighted to see so many of my colleagues, who are standing up for the rural communities of the UK. It is notable, I am afraid to say, that, with the honourable exception of the hon. Member for Stroud (Mr. Drew), who has been here for part of our deliberations, no Conservative or Labour MPs feel that it is worth their while defending the interests of rural communities. That is a source of some regret.
I will not rehearse the arguments that have been advanced for amendment 5, because those have been advanced powerfully and passionately by a number of my hon. Friends. I congratulate my hon. Friend the Member for Argyll and Bute (Mr. Reid) on again raising this important subject and my colleagues representing constituencies in Scotland, England and Wales, who have all championed the interests of their constituents so persuasively and made a robust but highly considered case to the Treasury Minister.
I do not think that anyone is claiming that the amendment has every final detail in it. That is not the intention, but it provides a valuable framework by which the Treasury could progress. The Treasury would have to put its mind to how things would work in practice, but it has been ably assisted in that task by the contributions of my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander), who spoke about how it would work in practice and even put figures on the number of people who would be able to benefit from the proposals.
My hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) has spoken on the subject many times and even produced a detailed report explaining how the proposal could work in practice. We have also heard from my hon. Friend the Member for Orkney and Shetland (Mr. Carmichael), who put more
flesh on the bones, so I do not think it is fair for either Conservative Front Benchers or Treasury Ministers to claim, as they do, I am afraid, that this is an empty amendment. It inevitably provides a framework, because that is the way these proposals are often tabled, but behind it is a large amount of work that we have happily volunteered and are continuing to volunteer to the Treasury. We hope that its finest minds will be put to work to ensure that the scheme can be implemented.
For all the reasons given by my hon. Friends, this is a point of not only great economic importance but great sensitivity in rural communities throughout the UK. It is essential that all parties try to come up with a workable scheme that satisfies the legitimate requirements that have been persuasively articulated by my hon. Friends throughout the deliberations on the amendment.
Angela Eagle: We have had a passionate debate, and it is right that I should begin by acknowledging the genuine issues surrounding the fact that cars are a necessity in remote rural areas. No one in their right mind could think otherwise. Some rural areas are not served by regular bus routes, so having a vehicle, and having access to petrol with which to run it, can be seen as a necessity. I also acknowledge the worries that have been expressed about higher fuel prices, to which all the Members who have spoken in the debate clearly respond, as it comes up regularly in their contacts with their constituents. I would have expected that to be the case; the fact that I do not represent glens or remote rural areas does not mean that I do not understand that such issues come up in Members meetings with their constituents. They rightly receive those representations and reflect in this House the frustration and anger, and worry and sense of unfairness felt by their constituents. That is them doing their job, as I would expect.
Mr. Carmichael: The hon. Lady says that we have a legitimate case. Does she not therefore think that our constituents deserve that case to be addressed better than by the rather spurious arguments put in her correspondence of which I have reminded her tonight?
Angela Eagle: I intend to deal with some of those points. By acknowledging certain issues and that the fuel price in one area might be different from the fuel price in another area, and that in some areas, particularly the islands, there are higher fuel prices because of the costs of getting petrol out to them
Angela Eagle: Let me finish my point. I have listened to what has been a long debate, and I would appreciate it if the hon. Gentleman would let me make some preliminary comments so that I can address some of the issues that have been raised. I acknowledge real issues of difficulty, but nobody is saying that fuel prices ought to be directly connected to duty rates, because although those rates have an effect on fuel prices, they are not the whole story.
It is only right that I acknowledge that fuel prices account for a higher percentage of the cost of living in remote rural areas. The hon. Member for Argyll and Bute (Mr. Reid), who moved the amendment, has proposed a reasonably specific measure, which Members representing
rural areas have presented to us before over the years. As the process has gone on, we have had debates about that measure. As well as hearing from Members from Scotland and its remote rural areas or islands, we have heard from Northern Irish Members, and the hon. Member for Somerton and Frome (Mr. Heath), who has his own rural areas to represent. I acknowledge the cost issues for those who live in rural areas, but I think that other Membersparticularly opposition Membersought also to acknowledge that their solution to this is not an easy one and that it is not without its own difficulties. In a grown-up debate on the issue, I would acknowledge the problems related to the higher fuel prices and other Members would acknowledge that the solution that they are pushing is not without its problems. If we were to do that, we might have the chance of a reasonable discussion.
Mr. MacNeil: I am grateful to the Minister for giving way. Will she acknowledge that the highest fuel prices mentioned in the debate are up in Stornoway, where petrol costs £1.03 and diesel costs £1.13? Will she therefore acknowledge that people living on the islands of Scotland are paying more tax per litre of fuel in duty and VAT than those living anywhere else in the country? The argument is about tax fairness. The tax the Exchequer gets from a litre of petrol in Stornoway should be the same as it gets from a litre of petrol in London.
Angela Eagle: By definition, that can be the case only if fuel prices are exactly the same everywhere in the countrythat is the logical response to the hon. Gentlemans point. Nobody is arguing that there is a direct 100 per cent. connection between the rate of fuel duty and the price. I do not know whether he is suggesting any opposite or different approach, but in the UK we leave petrol producers to decide on the price. The Government levy a duty, but there is not always an easy connection between the level of duty and the price at the pump. When there is more competition the price at the pump can be driven lower than it is when there is no competition, as has been said by several opposition Members. That much is true, but this is about whether they are arguing that we should maintain one set level of petrol priceit is almost like the universal service obligation for the post. Setting a commodity price, albeit an important one, at the UK level represents a very different approach from the one to which we have become used over the years.
Mr. Heath: The fact is that the people who need petrol the most pay the most and can afford it least, whereas those who need it the least pay the least and can afford it mostthat is the basic equation. If the Exchequer Secretary does not accept the proposal that my hon. Friend the Member for Argyll and Bute (Mr. Reid) is making, surely it is incumbent on a Government who believe in social justice and good economy to find an alternative way of dealing with that basic problem.
I was going to discuss the issue that the hon. Gentleman raises. I just wanted to make the point that it is not obvious that trying to manipulate the duty in different ways would have a predictable read-through to the price at the pump. There is no guarantee that it
would, without our setting an actual price for petrol. We have never done that in the UK and it may well not be legal. The amendment assumes that predictability. Nobody on the opposition Benches has questioned that, but there are big question marks around it.
It is also not necessarily the case that those who are least able to afford it pay the highest prices in all cases, because great variation in price exists across the country and sometimes from one petrol station to another. The difference in prices on the various websites demonstrates that variation. It is greater in the highlands and islands than anywhere else, but there is a lot of variation and there is no obvious logic to the prices that one pays at the pump, despite the fact that fuel duty is the same across the country. That needs to be acknowledged and it might point to the fact that trying to manipulate the fuel duty is not the answer.
John Thurso: I accept the point that the Exchequer Secretary madesolving this problem is not without its difficultiesand I, for one, am entirely ready to engage in a process with her. If her officials have read the paper that I sent them last year, they will know that every one of the points that she just made is answered. The premium is pretty constant in the north and the price varies. This proposal deals with a reduction in the premium, but the price continues to vary. The mechanism that I set out, through the supply chain, means that the money is guaranteed to go to the motoristit cannot do anything but. May I suggest to the officials who briefed her, perhaps this evening, that they need to liaise with the officials who read the notes I submitted?
Angela Eagle: The hon. Gentlemans paper has been much prayed in aid and I pay tribute to the work that he has done to try to solve some of the practical problems. His eightfold classification would produce many tiny little pockets scattered all over Scotland, especially south Scotland, where the duty differential would apply. Not all of those areas experience higher fuel prices than the norm, within a reasonable fluctuation. Not all of them have similar prices either, as there is a wide variation. Some of that variation has to do with the normal workings of the petrol market and the fact that we do not mandate a single price for petrol across the country. Some of it may well have to do with rurality, but that is difficult to distinguish. Drawing boundaries on that basis would create many tiny little areas where fuel duty was lower than in other areas.
Another aspect of the plan produced by Opposition Members is to move the duty point from petrol distribution networks and oil companies to individual petrol stations, but that would be very difficult to achieve administratively and is not something that I would wish to do unless I could see major benefits accruing from the change. I do not believe that major benefits would accrue from that change, and that is another practical and administrative difficulty with the solution that hon. Members have produced.
Mr. Carmichael: Was my hon. Friend as struck as I was by the fact that the Exchequer Secretary accepted that there was a problem, but her only contribution to the debate was to highlight problems with the solution that we have suggested? She offered absolutely no solution of her own. What consequences await a party that identifies problems, but lacks the will or the guts to do anything about them?
Mr. Reid: I perhaps have a less combative style than my hon. Friend, but I share his sentiments. The Labour and Conservative parties have not come out of the debate well. My constituents and those of other hon. Members who represent the highlands and islands may be punished at the pumps, but come 4 June the Labour and Conservative candidates may well be punished at the ballot box for the approach that their parties have taken tonight.
Danny Alexander: My hon. Friend may be less combative than my hon. Friend the Member for Orkney and Shetland (Mr. Carmichael), but does he agree that it is a strange approach for Ministers to take to say that they have identified a problem, but that they refuse to lift a finger to try to solve it? That may have been the approach that they have taken to most of the economic problems facing the country, but on this occasion the Exchequer Secretary admitted that there is a problem. I suggest that pressure is applied to the Government so that they come forward with their own solution.
Mr. Reid: My hon. Friend makes an important point. The only good thing to come out of the debate was the acknowledgement from the Government that a problem exists. However, as my hon. Friend the Member for Orkney and Shetland pointed out earlier, that acknowledgement was made more than a year ago in Treasury questions. I will at least acknowledge that the Government are sympathetic and that they realise that there is a problem. However, as my hon. Friend said, it is incumbent on the Government to come forward with a solution if they do not like the solution that we have proposed.
Mr. MacNeil: The Minister and the team at the Exchequer are cleverwe know thatbut the wilful misunderstanding that we saw tonight would never have happened if this matter were decided in Edinburgh. My constituents will be looking on and thinking that this underlines the reasons for Scottish independence. A wilful lack of understanding such as that which is being shown tonight could not and would not happen in an independent Scotland.
Mr. Reid: I do not want to stray too far from the debate, but a brief response to that intervention is that my island constituents do not like the policies of the hon. Gentlemans Government in Edinburgh. They only benefit his constituency
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