Fuel Prices and the Cost of Living

Angus Brendan MacNeil Excerpts

Wednesday 16th March 2011 Commons Chamber

[Brandon Lewis]

rose—

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

rose—

[Ms Eagle]

I have given way to the hon. Member for Great Yarmouth.

That statement shows that this Government are run by a Prime Minister who does not do detail and who appears to be at odds with his own Chief Secretary. The OBR has shown that a temporary rise in oil prices generates a £100 million surplus in the first year for the Treasury, but that that turns rapidly to a net revenue loss of £700 million the year after. What the Government gain from higher oil tax revenues, they lose from the effects of higher prices on consumption and the requirement to spend more on indexing pensions and benefits. A permanent rise causes permanent losses to the public finances. The Prime Minister has to stop pretending that there is a windfall in rising oil prices that he can share out, because it simply does not exist. [Interruption.]

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[Ms Eagle]

I want to get to the end of my remarks, and I have given way a lot.

[Mr MacNeil]

Will the hon. Lady give way?

[Ms Eagle]

I will give way to the hon. Gentleman before I finish.

[Mr MacNeil]

I am not sure what the hon. Lady thought about living standards in the Outer Hebrides when, time after time, she stood at the Dispatch Box as a Minister and said what she could not do and why she could not do it. Does she, in her quieter moments, regret not approaching the European Commission for a rural fuel derogation for the Hebrides and other islands in Scotland?

[Ms Eagle]

Why does the hon. Gentleman not want to help the whole of Scotland? Why does he want to help only a tiny bit of Scotland?

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[Ian Murray]

I am delighted that the hon. Gentleman has managed to ingrain himself with the propaganda being put out by the Conservative and Liberal Democrat parties about the deficit. He has given me a wonderful opportunity to go back to the start of that list so that he can take it all in.

There is no doubt that the Government’s cuts in public services are going too far, too fast and too deep. Everyone knows that the deficit must be reduced, but reducing it over time would protect my constituents from the ideological cuts that the Government are introducing under the veil of the deficit.

Let me return to what is happening to that squeezed middle manager at HMRC. He faces increased national insurance contributions and an increase in VAT to 20%. His pension will be cut because it will be linked to CPI instead of RPI. He faces tuition fees for his two children. He has lost his child benefit because he is a higher-rate taxpayer, and record commodity prices are pushing up food prices. He faces a high inflation rate, partly owing to the increase in VAT to 20%. His salary has been frozen. He has job insecurity. He faces increased energy prices, increased borrowing costs and lower interest on his savings, all because of this Government. Moreover—this brings us back to the motion—the price of fuel means that the cost of filling up the family car has gone through the roof. The Chancellor of the Exchequer is taking an extra £59 million from the Scottish people because of the increase in VAT, which is directly related to the cost of the fuel that they put in their cars.

[Mr MacNeil]

Will the hon. Gentleman give way?

[Ian Murray]

I will not, if the hon. Gentleman does not mind.

Each time people drive down the street, they see the large neon sign at every petrol station, and that is having yet another damaging effect on consumer confidence.

What are we left with? We are left with a broken promise from the Government on VAT, and a broken promise on the fuel duty stabiliser. Many people in East Lothian and Edinburgh South voted for the Conservatives because they had made that promise before the election. Time after time, promises made to ordinary people in my constituency and throughout the country are broken, and it is about time that Ministers did something about it.

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[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

I am grateful for the opportunity to speak in this debate and convey the feelings of my constituents about fuel prices. In Na h-Eileanan an Iar—as the good Speaker himself would say and, of course, did say—we are paying the highest tax per litre in the UK; we are doing so consistently, at a range of fuel stations throughout the entire constituency. That has been the situation throughout the life of this Government and indeed the previous one. The last lot—the Labour Government—made excuses; this lot—the Tory and Liberal Government—are making promises. The upshot at the pumps in Ness, in Uig, in Back, in Stornoway, in Lochs, in Tarbert, Harris, in Lochmaddy, in Balivanich, in Creagorry, in Daliburgh and in Castlebay is the same; excuses and promises equal exactly the same.

The rural fuel derogation has been announced twice at Liberal Democrat conferences that have been six months apart, but there has still been no formal approach to the EU Commission. Can we be given an indication of how long it typically takes to get such a measure approved by the EU Commission, especially as it has given approvals in respect of far less rural areas in other places in Europe than the Hebrides and other Scottish islands?

[Mr Andrew Turner (Isle of Wight) (Con)]

I hope that the hon. Gentleman is not speaking only of Scottish islands, because the Isles of Scilly are included in this and I hope that the Isle of Wight will be too.

[Mr MacNeil]

As the hon. Gentleman knows, and as I have demonstrated in the past, I have great sympathy for the Isle of Wight and indeed for the Cornish Isles of Scilly, so I hope that this will extend to them as well.

May I suggest that the Government put in place a maximum percentage that can be taken at the pumps in taxation, or at the very least a desired percentage to be taken in taxation, just as the inflation rate seems to be a desired rate and a target for the country? I say that because in the UK 62% of the price of petrol is duty, which is the highest level in Europe—the lowest level in Europe is 46%. May I also ask the Government to examine the fuel distribution network, because many people have long had deep concerns about profiteering between refineries and retailers in what seems to be a very opaque business model? We have to ensure that any gains we make in the—so far promised—rural fuel derogation are felt at island pumps and are not snaffled away elsewhere.

We know what fuel tax is doing to people’s pockets on a daily basis up and down the land: it is affecting the poorest more, as this is a highly regressive tax. In areas such as mine, where wages are below the national average, the cost of living is higher and fuel poverty is high—my constituency has the highest in the land—the regressive nature of this tax is really felt. The tax pulls money out of the economy from families, businesses and individuals, and from local authority budgets and health board budgets. Clearly we need help and I ask the Government to provide it in tackling fuel tax and in taking the foot of high fuel tax off the neck of the islands’ economy.

When I last spoke in the House on this matter, on 7 February, I said—I have checked the Hansard record—that fuel was £1.44 a litre. My office in Stornoway tells me that it is now £1.48 a litre, and I shudder to think what it might be the next time I speak on this issue in the House, because the cost seems to be going in one direction. Before the staff at Benbecula airport correct me, yet again, on the price, I point out that the price in Uist will inevitably be higher. I understand that the price in Uist and Benbecula is more than £1.50 a litre. Consistently, throughout the length of my constituency, we are paying the highest fuel tax in the UK. The simple re-announcements of the intention to have a rural fuel derogation without any change coming at the island pumps are greeted with nausea by my constituents, who are tired of hearing pious words and are instead looking for pious actions.

[Gemma Doyle (West Dunbartonshire) (Lab/Co-op)]

Can the hon. Gentleman explain to my constituents why his party is interested in giving help only to Scots in rural areas and not to people in my constituency?

[Mr MacNeil]

I will indeed. I imagine that in West Dunbartonshire the price of fuel is 15p to 20p a litre lower. How I wish we could enjoy the prices of West Dunbartonshire. I also wish that the hon. Lady could express some sympathy for the voters, constituents and people of the Western Isles who have suffered higher fuel prices than many other areas in the UK as a result of the policies of successive Governments.

[Gemma Doyle]

For the purposes of clarification, let me assure the hon. Gentleman that fuel in West Dunbartonshire is currently £1.36 a litre for unleaded and £1.43 for diesel—not far behind the prices he quoted for his area.

[Mr MacNeil]

I have every sympathy for the people of West Dunbartonshire—those are high prices—but with our prices of £1.48 and £1.50 a litre, I wish that we could enjoy prices such as £1.36 a litre. If I went back to the Outer Hebrides tomorrow and announced a price of £1.36, I would be regarded as some sort of hero, but unfortunately I cannot do that. I have sympathy with the hon. Lady but I am afraid that she must reciprocate and understand the problems that come when fuel poverty is higher, the cost of living is higher and wages are lower. The pilot project in the Outer Hebrides and other islands in Scotland is the right way to go. If it is a success, I hope we can extend it. I find the lack of sympathy from Labour Members about the problems in the Outer Hebrides somewhat distressing.

[Cathy Jamieson]

Having visited the hon. Gentleman’s constituency in the past, I understand some of the difficulties his constituents face, but does he agree that although we are talking about derogations, stabilisers and all sorts of things people want action now and that there is an opportunity for the Government to act next week? Will he support the Labour motion today to ensure that the maximum pressure is piled on the Government?

[Mr MacNeil]

I probably will support the Labour amendment, but at my own risk. I am grateful for the hon. Lady’s words. She is very welcome back in Na h-Eileanan an Iar at any time of her choosing. I would be more than pleased to show her around the islands or to entertain her in Stornoway—at my expense.

I must wind up, because I have to speak at a meeting at 3 o’clock about coastguards, which are a very important issue in my constituency. The last time I spoke about this issue I said that the rural fuel derogation was not like Christmas because Christmas had been and gone. It seems to me that it will not be like Easter either, because it looks like Easter will also come and go while we are still waiting.