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10 Feb 2010 : Column 263WH—continued
9.56 am
Albert Owen (Ynys Môn) (Lab): I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on securing this very important debate. I know that he has been fighting for relief for rural, peripheral and, particularly in the case of his own constituency, island communities.
Ynys Môn, or the Isle of Anglesey, which I represent, is an island. It is on the periphery, but it is also connected to the mainland by two road bridges and one rail bridge. It is quite unique in that sense, but it still has many of the characteristics that the hon. Gentleman has talked about.
In many ways, I consider the Isle of Anglesey to be the heart and soul of the British isles, if we look at colleagues in the west, in Ireland, and indeed in Northern Ireland. However, it is a peripheral area that is difficult to get to. It suffers from a double whammy: there are the high fuel charges that the hon. Gentleman talked about and, in addition, my constituents do not really have an alternative other than to travel great distances to get cheaper fuel.
Also, the limited number of petrol stations-independent petrol stations and larger retailers-on the island is problematic. Because there is very little choice, the prices are kept artificially high by the market. Furthermore, to pick up the point made by the hon. Member for Ribble Valley (Mr. Evans), there is limited public transport, so the alternative for my constituents is just not there.
I want to make it clear that we are talking about not only Chelsea tractors; we are talking about ordinary family vehicles. We are talking about people who need their vehicles to go to work, to go to the shops, to take their children to participate in activities in the evenings and to go to the clubs that we all support.
There is a strong case to help peripheral areas by looking at the fuel duty, perhaps through a pilot scheme of some nature. It would be difficult to contain such a pilot scheme in the mainland, and I also understand that it would be difficult to contain in areas such as my constituency, where there is a land bridge. However, the issue needs to be looked at, because, as the hon. Member for Orkney and Shetland and his colleagues have said, a
number of these peripheral areas have some of the lowest gross value added in the whole of the United Kingdom.
Mr. Roger Williams (Brecon and Radnorshire) (LD): I am very well aware of the particular situation in the hon. Gentleman's Ynys Môn constituency. My hon. Friend the Member for Orkney and Shetland (Mr. Carmichael) said that he would not want to speculate as to why the Treasury would resist this demand so strenuously. Does the hon. Gentleman think that Treasury officials in France and indeed in Greece are resisting a derogation so strongly, or does he think that they are trying to support their remote communities?
Albert Owen: I am no expert on Greece or France, or on how people there conduct their internal lobbying. However, what I will say in honesty to the hon. Gentleman is that, to be fair to the Treasury, I lobbied against the vehicle excise duty that the Treasury was imposing. That crude mechanism would have hit not only the Chelsea tractors, but vehicles and motorists in my constituency. When I lobbied against it, the Treasury did listen; it modified the vehicle excise changes to help people in my constituency.
There is therefore a glimmer of hope there that the Treasury is indeed listening to Members of Parliament. I led a delegation to the Chancellor because I thought that that crude mechanism that the Treasury was bringing in for good environmental reasons-I must say that it was supported by many Opposition Members at the time-was imperfect and that it would hurt my constituents the most. I lobbied, the Treasury listened, and it did not impose that duty.
Older cars are essential for many people in my area because they cannot afford to change them, although the scrappage scheme has helped. However, those cars often use more petrol than smaller vehicles. The bad weather has shown that 4x4s are essential in communities in my area and that of the hon. Member for Orkney and Shetland. Such communities would grind to a halt without them.
We are being penalised for living further west. I have looked at websites that compare prices, and the eye-watering figures that the hon. Gentleman gave are not quite replicated in my area, but there is a huge differential. The further west people live in north Wales, the more they pay for petrol. In my home town of Holyhead, which is in the westernmost area, Tesco is the main retailer and there are few independents. It charges 114p to 116p per litre for diesel, and 112p to 113p per litre for the cheapest unleaded petrol. In Llandudno, which is 60 or 70 miles away, the price is about 110p per litre for petrol and 111p for diesel. In Chester, which is not a great distance away once one is on the A55, the cost is as little as 108p per litre-that is 6p cheaper. Many people commute to buy their petrol in Chester or Cheshire rather than helping the local community, because higher prices have been forced on their local areas.
Mr. Andrew Turner:
Hon. Members have talked about the westernmost and the northernmost, so may I speak from the southern point of view? Simon and Sally Perry of VentnorBlog give regular updates on fuel prices in the local area. Local residents are able to save money by following their advice and finding the lowest local price for petrol and diesel. The village of Whitwell has a
petrol station, albeit an expensive one, but no post office. The Government are making people go further away and taxing them on the extra cost of going there.
Albert Owen: I thank the hon. Gentleman for that point, but the price of petrol is the fault not just of the Government, but of retailers, distributers and oil companies. He is right that businesses are decoupled. It is important to note that a petrol station and convenience store can be a great draw for customers to come to an area, and particularly for passing trade.
There are many retailers in north Wales, but they all charge more the further west they are, and that should be examined. The OFT has held a number of inquiries that have said there are no market failures, but that is blatantly wrong. It has only to check the websites or to go to these areas to see the day-to-day prices that people are forced to pay. I would like the OFT or another body to do another study to look at this live and topical issue that affects people today. Supermarkets say that they charge universal prices across the UK in their stores, but they do not do the same on their petrol forecourts, and that must be examined.
The hon. Member for Orkney and Shetland spoke about the impact on the economy, which it is important to consider. Tourism is a big trade in my area, as it is in many peripheral areas. Many people look at the websites and decide to fill up before they come into the local communities because they will get a better deal. People are voting with their wheels, which has a considerable impact.
The hon. Gentleman rightly mentioned the agricultural community, which is hit with a double whammy: not only does it pay a higher proportion of tax on red diesel because of the escalator, but people from agricultural communities have to travel great distances and so pay more for everyday activities through normal motoring charges.
The people of Ynys Môn whom I represent are concerned about the environment; they just do not have alternatives in many cases. Local government should consider this issue because there is no joined-up thinking. Many local transport schemes do not match. After school, many of the bus services finish so people travelling to sport or leisure centres and clubs in rural areas have no alternative to the private car.
Fuel prices are hurting ordinary families in my area and many other areas. The oil companies and the retailers are hurting ordinary families by adding extra costs. A crude fuel tax on top of that is making the problem worse. That started with the fuel escalator under a previous Government. That was stopped for a while and the fuel differentials moved a little in my area. The hon. Member for East Londonderry (Mr. Campbell) mentioned people crossing the border from Northern Ireland into the Republic. My constituency is only a few miles from the Republic of Ireland, and in the '80s and '90s, many people came over from the Republic and purchased petrol as they travelled through north-west Wales. When the escalator hit and the prices went up, the opposite happened. There is now a differential of a few pence, but passing trade still comes off the ferries and goes straight through to Cheshire to fill up with petrol.
I heard what you said, Sir Nicholas, and I will conclude my remarks because other hon. Members want to speak. The Minister is a reasonable person. As I said, the
Treasury looked at the vehicle excise duty because of the impact that it was having in many areas, including peripheral and rural areas. I hope that she and her officials understand the strength of feeling in peripheral areas and islands across the UK because this is a real issue. It is hurting communities and ordinary families greatly. The Treasury was right not to put the fuel duty escalator in its Budgets straight away, but it has reverted to it. I hope that she and her officials will consider having pilot schemes in peripheral areas to try to create a level playing field across the UK.
Sir Nicholas Winterton (in the Chair): Order. I make the plea again for speeches to be brief and succinct so that I can fit in all Members who want to speak.
10.7 am
Danny Alexander (Inverness, Nairn, Badenoch and Strathspey) (LD): Thank you, Sir Nicholas. I will be brief.
I congratulate my hon. Friend the Member for Orkney and Shetland (Mr. Carmichael) on securing this important debate. It is a subject that hon. Members from the highlands and islands have returned to again and again over the years and to which we will continue to return until we find a Minister who listens to our legitimate concerns, such as those raised by the hon. Member for Ynys Môn (Albert Owen).
I will begin by describing the experiences of people in my constituency. It is not an island constituency, but a large area in the mainland of the highlands. None the less, it is in a similar position to that described by my hon. Friend the Member for Orkney and Shetland. There is effectively a triple whammy that hits people in remote and rural areas: they have to travel longer distances; they face significantly higher fuel prices; and there are often little or no public transport alternatives. As has been said, for most people in such areas a car is a necessity, not a luxury. That could not have been demonstrated more clearly than by last month's cold spell, during which public transport was badly affected, and if people were able to get around at all, it was only by using their own vehicles.
To those problems, I add the fact that incomes are significantly lower in the highlands and islands. The average income is about 85 per cent. of the Scottish average, which in turn is lower than the UK average. As well as spending a lot of money on petrol or diesel to fuel their cars, people in my constituency, by and large, spend much more money than people in the rest of the country on oil to heat their homes. That is yet another cost burden that benefits oil companies and oil distribution companies. People in my constituency, particularly those in the most rural and remote areas, are spending a greater proportion of their already lower incomes on running their cars and heating their homes. They therefore have a great deal less disposable income to spend on other things.
Of course, many things could be done to relieve that burden. I will talk about the fuel derogation in a moment, but first I suggest that investment in public transport could make a difference. Like many of my colleagues, I am deeply disappointed by the lack of progress that the
Edinburgh Scottish National party Government have made on investment in public transport, particularly in the railways. It is deeply disappointing that no SNP Members are here to take part in the debate, when they claim to represent the whole of Scotland. This is an Edinburgh SNP Government, not a highlands and islands Government.
There are actions that can be taken. I was involved for many years in campaigning to persuade the Tesco store in Inverness to reduce its petrol prices to the level at the store down the road in Elgin, and we were finally successful only after we had held a meeting with the chief executive himself. However, the Government have by far the greatest power to address the issue, and the Minister should look at experience in other European countries. The European energy products directive allows a derogation to provide for a reduced rate of fuel duty in specific areas. Greece, France and Portugal have taken advantage of the derogation, and I see no legal or practical barrier preventing the UK Government from doing the same. The only barrier is the lack of political will, which, as my hon. Friend the Member for Orkney and Shetland said, stems from a complete lack of understanding of the way in which people are suffering.
My hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) has proposed an entirely workable scheme, and I proposed a similar scheme a couple of years ago, although it was not entirely the same. A scheme could therefore operate in a variety of ways, and all the Treasury's objections have been answered by our proposals and by the way in which schemes have operated in the other European countries I mentioned.
Like my hon. Friends, I would support a pilot in island communities, which would demonstrate that a scheme was workable. The pilot could easily be extended to remote and rural parts of the mainland-anything to get the door ajar. I can see no practical objection from the Government's point of view to a pilot in island areas. I spent the first few years of my life on the island of Colonsay, in the constituency of my hon. Friend the Member for Argyll and Bute (Mr. Reid), and such a community, or a similar community on Orkney and Shetland, would be an ideal place to demonstrate a scheme's workability and social and economic benefits.
In the context of the recession, from which we are potentially only just starting to emerge, our proposals would also provide an economic stimulus to the islands and the remote and rural areas in which they were implemented, and I hope that the Treasury will consider them for that reason as well. Overall, the cost to the Treasury would be small, but the benefit to the communities affected would be enormous, as those of us who represent them know.
This issue is a critical test of the Government's commitment to fairness. Applying a reduced rate of fuel duty, which is allowed by European law, to remote and rural parts of the country would demonstrate that the Government understand the importance of treating all parts of the United Kingdom fairly. This is, or is supposed to be, a British Government, and they should understand and be sensitive to the needs, demands and economic interests of all parts of the country, including the highlands and islands. I therefore hope-almost against hope, on the basis of previous experience-that
the Minister will show more sensitivity and understanding and more of a willingness to grapple with these problems than any of her predecessors.
Sir Nicholas Winterton (in the Chair): I thank the hon. Gentleman for his brevity.
10.13 am
Mrs. Anne McGuire (Stirling) (Lab): Like others, I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael).
I represent a large rural constituency, although it is on the mainland. Even though my constituency is only the size of Luxembourg, unlike constituencies in other parts of Scotland, which are the size of Belgium, I have seen the pressure that the price differential has put on rural petrol stations. I do not totally blame the Government for that, and there are major issues for the oil companies to address. We are talking about people not just travelling 40 or 50 miles to fill up their petrol tanks, but filling up their tanks in hub communities throughout rural areas when they go to work or go shopping. That is where we see the serious knock-on effect.
I want to make one or two points to reinforce some of the arguments that have been made. The Office of Fair Trading-what a disappointment! It would not know a market failure in rural and remote communities if one came up and slapped it in the face. There have been two investigations, and I had issues with the OFT a few years ago about how the price differential was working in rural communities. The OFT needs to get out and about to understand exactly what is happening in some rural communities and to see how the oil companies are not helping matters.
I ask the Minister to look at the derogation. I appreciate that there are many practical difficulties with instituting a pilot in mainland communities, but I see no reason why it would not be possible to institute one in self-contained communities that can be reached only after a five-hour ferry journey or, in the case of Shetland, a 13-hour ferry journey. The Treasury would gain great respect in such communities if it looked at ways of assisting their economies. I hope that it will consider the pleas that have been made here and in the Scottish Parliament, including by my Labour colleague, Des McNulty, who was quoted by the hon. Member for Orkney and Shetland. I hope that the Treasury will look at ways of using existing legislation to manage petrol and fuel prices more equitably in remote and rural communities.
As has been said, we are not talking about vast drains on Treasury income or a massive raid on Treasury coffers. These are small island communities of 10,000 people or fewer. We are simply asking for a scheme to be considered in Scotland, Wales and other parts of the United Kingdom. If we cannot get a solution for my rural community, I hope that we will at least see some movement as a result of the debate.
Sir Nicholas Winterton (in the Chair): I thank the right hon. Lady for her brevity.
10.17 am
Mr. Alan Reid (Argyll and Bute) (LD):
I congratulate my hon. Friend the Member for Orkney and Shetland (Mr. Carmichael) on obtaining the debate. As he said,
we have turned to this subject over many years and raised it repeatedly in debates on Finance Bills. It is a pleasure to follow the right hon. Member for Stirling (Mrs. McGuire), and I wholeheartedly agree with what she said about the need to reduce fuel prices in remote rural areas.
People living in remote rural areas suffer a triple whammy. They must, of necessity, travel longer distances, the price of fuel is higher than in urban areas and there is a lack of public transport alternatives. In the remote mainland part of my constituency, the price of fuel is usually several pence higher than in Glasgow, and the same is true on the Isle of Bute, but it is on the Atlantic islands that we see eye-watering differences from the price of fuel in cities such as Glasgow. On the larger islands of Mull and Islay, the price is usually about 15p a litre higher; on the smaller islands of Coll and Colonsay, which my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) mentioned, the price is often about 30p a litre higher. Those prices have to be paid by people going about their daily lives, as well as by local businesses, which means that the cost is passed on and reflected in the price of all commodities to local people.
There is an environmental argument for taxing fuel, but it works only if the tax persuades people to adopt an alternative form of transport, and there is no alternative in remote communities in the highlands and islands. There is no point in the council's subsidising buses if they run around with only one or two passengers; in those circumstances, the car is a more efficient method of transport.
As well as paying a higher price for fuel, people in remote areas also pay more tax to the Treasury because VAT is a proportion of the price, and the higher the price, the higher the amount paid in VAT. One principle of taxation is that it should be equitable, but it is clearly not equitable that people in remote areas pay more tax on their fuel than people in the cities. It is perverse that people who have no choice but to pay higher fuel prices and who are often on lower incomes pay most in tax. We have raised that point in Finance Bills over the years, but Treasury Ministers have come up with arguments for why our proposals could not be accepted, so in response to those objections we have refined our proposals.
Two years ago, my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) submitted to the Treasury a detailed paper on the matter, which I believe was entirely watertight, and there was absolutely no reason why its proposals could not be implemented. The Chancellor, in response to a parliamentary question from my hon. Friend the Member for Orkney and Shetland, indicated sympathy with our position. Despite the watertight case we put to the Treasury two years ago, which it was unable to rebut, and the Chancellor's words of sympathy, we appear to have made no progress over the past two years.
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