Fuel Prices

Angus Brendan MacNeil Excerpts

Tuesday 15th November 2011 Commons Chamber

[Mr Alan Reid (Argyll and Bute) (LD)]

I congratulate my hon. Friend the Member for Harlow (Robert Halfon) on his campaign to secure today’s debate.

I represent a sparsely populated constituency where long drives for essential business are common, so I am well aware of the impact of high fuel prices on individuals and businesses. For example, the price of fuel on some of the larger islands in my constituency, such as Mull and Islay, is typically about 15p to 20p a litre higher than in a city centre supermarket, and on the smaller islands, such as Coll and Colonsay, the price is usually about 30p a litre higher. It should be stressed that this is not because of profiteering by the local filling stations. The reasons for the higher prices are low turnover, compared with all the fixed costs that a rural filling station has to pay, and the costs of the distribution network. The costs of fuel distribution in the highlands and islands are very high, and I hope that the Office of Fair Trading will investigate them.

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

I understand exactly what the hon. Gentleman is saying about Coll and Colonsay, but he will know that a newspaper on Coll and Colonsay costs the same as in the city centre. Should the Government not move towards more parity and equality between islands such as Coll and Colonsay—or, indeed, Na h-Eileanan an Iar—and city centres?

[Mr Reid]

I agree with the hon. Gentleman, and I hope that he will give credit to the Government for what they are doing on fuel duty on islands. The high price of fuel obviously has a great impact on people’s living standards, and makes it difficult for anyone trying to run a business on an island or in a remote rural area.

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[Stewart Hosie]

Indeed, they can. What that organisation said at the time was:

“Transport is…a vital component of the fishing industry and cost increases there have applied even greater pressure, felt more acutely by the more remote fishing areas of the North West and the Northern Isles.”

I was paraphrasing what it said, as we have a whole four minutes each to speak. The point is that the response to spiralling costs under Labour was a fuel duty escalator, not a fuel duty stabiliser. The Labour Government set their face against every attempt to introduce a price stabilisation mechanism and, most cynically of all, increased duty to compensate for the temporary reduction in VAT.

The coalition’s response was to introduce the “fair fuel stabiliser”. That is what they called it. However, instead of using the windfall they already had from the North sea, they engaged in a smash-and-grab raid of £2 billion extra, with an increase in the supplementary charge. Hon. Members will remember that that led EnCore Oil to suggest that no tax would be paid on undeveloped and undiscovered oil. Other organisations said that very large projects were no longer viable because of the surprise Budget move. Chevron warned that the measure had

“shaken investor confidence to the core.”

Everyone was singing from the same hymn sheet except the Chancellor, who said that he

“did not expect investment to be damaged.”—[Official Report, 3 May 2011; Vol. 527, c. 604.]

[Mr MacNeil]

Does my hon. Friend agree that the Chancellor’s reckless smash-and-grab of North sea taxation has endangered investment in Scotland?

[Stewart Hosie]

It has indeed. There were stark and powerful warnings from the sector at the time that went on for a considerable time, and forced some limited changes to the regime. In the cold light of day, this month, the Aberdeen and Grampian chamber of commerce, along with others, carried out a survey that revealed that:

“50% of operators say Chancellor’s tax hike harmed North Sea investment.”

That policy did little to help the haulier and the motorist, but it did a great deal to damage the oil and gas sector.

Of course, it is not just the oil and gas sector and the traditional users of haulage who have been damaged. This week I have been contacted by a building company—a static business, not a haulage business—in my constituency, which told me that over the past few years, fuel as a proportion of its overheads has rocketed to 20%. We are not just causing inflation for goods that are moved, we are not just putting the haulage sector under pressure, we are not just making it difficult for people even to afford to go to work: the increasing cost of fuel as a proportion of overheads is driving other sectors to the wall too. These are very difficult times indeed.

This is only a Back-Bench debate—I am delighted that we have secured it—but the strength of feeling is very clear. There is now a body of opinion saying that constant high price rises, and the spikes in the price at the pump, are damaging the entire economy. I hope that the Minister is listening carefully to what has been said, and that action will be taken quickly.

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[Fiona O'Donnell]

I shall not give way at this point because I am keen to make progress and allow others to contribute.

My constituency is largely rural and my constituents rely heavily on their cars not just to get to the shops but to engage in the big society—to take their daughters to Brownies and their sons to Scouts, or their sons to Brownies and their daughters to Scouts. They go out to reach the cheaper petrol at Asda up at Dunbar. That is the reality of living in East Lothian. My constituents suffer a double whammy and I find it really hard to listen to the hon. Member for Dundee East (Stewart Hosie) going on about what this Government have not done, because another Government could do something to make things easier for my constituents to get around East Lothian—the Scottish National party Government in Holyrood could re-regulate the buses.

[Mr MacNeil]

Will the hon. Lady give way?

[Fiona O'Donnell]

No I will not. The hon. Gentleman should sit down and listen to what I am going to say before being so eager to get to his feet. He should let me finish this point.

The Scottish Government could have re-regulated the buses so that we could have a service in East Lothian that meets the needs of my constituents, instead of meeting the party election funding of the SNP Government. They have not taken advantage of that option, so in East Lothian we have the double whammy of rising prices at the pumps and a poor local bus service that is being further cut by an SNP council.

[Fiona O'Donnell]

My hon. Friend and neighbour is absolutely right. The SNP should stop talking about what they want other people to do and which other powers they want and instead start using the powers they have.

[Mr MacNeil]

The hon. Lady has to ask herself whether she wants the Conservative Government here in Westminster to have taxation powers over Scotland or whether she wants Scotland’s powers back in Scotland at the Scottish Parliament.

[Fiona O'Donnell]

That is not the only choice. I want a UK Government who do the best for all the people in the UK—not just those in the Western Isles, Glasgow and Edinburgh, but those in Liverpool and London too. I note that the hon. Gentleman did not say why his party in Holyrood did not support a private Member’s Bill to re-regulate the buses. He should stop whingeing about what he cannot do and start doing something with the powers he has.

[Mr MacNeil]

Will the hon. Lady give way?

[Fiona O'Donnell]

No; the last interruption was not very satisfactory—I am not taking another risk.

I find myself in a familiar situation. I spoke in a similar debate not very long ago about a haulage company in East Lothian that was about to go bust because of fuel prices. I remember an hon. Member from somewhere on the Government Benches saying something about claiming back VAT. Unfortunately, I did not realise at that time that the company was not even registered for VAT, so that was not an option. The company has gone out of business and those jobs have gone. Others in East Lothian are trying to find work but the reality is that those jobs as a rule are not in the county—they are in Edinburgh. Given the poor local provision of public transport, they are forced to take to their cars. That is a real problem for making work pay for my constituents. If the Government are serious about getting people back to work they have to enable rural communities.

I am sorry that the hon. Member for Penrith and The Border (Rory Stewart) is not here. His contribution was not so much a speech as a postcard from some rural fantasy that he sent to the House. He spoke about how important this debate and this motion are, but I remember the last time there was a debate on this issue in which the will of the House was unanimously expressed—

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

It is an honour to wind up the debate, which has been far ranging and widespread, both geographically and in content. Luckily, it was a virtual tour of our constituencies—had it been a driving tour, it would have cost a veritable fortune.

The debate has taken place after much pressure from outside, and I pay tribute to the hon. Member for Harlow (Robert Halfon) who, since coming to the House, has been a great champion of this issue. In fact, in the previous Parliament, he might well have spoken for the Scottish National party and Plaid Cymru. I hope that I am not damaging his career too much by giving the praise that only an SNP Member could give to boost it in that way.

The right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) and my hon. Friend the Member for Dundee East (Stewart Hosie) have pointed out that the House has been rotating around us nationalists. The hon. Member for Foyle (Mark Durkan) pointed out in an intervention that the SNP has been constant on the issue, and whoever has been in government and opposition have played their points as such. The price of diesel, at £7 a gallon in my constituency, is damaging to families and, in particular, to businesses.

[Tom Blenkinsop]

Will the hon. Gentleman give way?

[Mr MacNeil]

I cannot give way.

Many hon. Members, including the hon. Members for Worcester (Mr Walker) and for Beverley and Holderness (Mr Stuart), pointed out that tax was up, but revenue was down. As the hon. Member for Camborne and Redruth (George Eustice) said, it is a regressive tax, which is something that we should change. Three years ago, Iceland had a huge crash, but today it has lower unemployment and a greater growth rate. Interestingly, the cost of its fuel is about two thirds the cost in the UK. The UK has the highest petrol taxes in Europe, with Greece in second place. The message is surely going out to the Treasury and the Chancellor: no tax rises in January.

Question put and agreed to.

Resolved,

That this House welcomes the 1p cut in fuel duty at the 2011 Budget, the abolition of the fuel tax escalator, the establishment of a fair fuel stabiliser and the Government’s acknowledgement that high petrol and diesel prices are a serious problem; notes that in the context of the Government’s efforts to tackle the deficit and 5 put the public finances on a sustainable path, ensuring stable tax revenues is vital for sustainable growth; however, believes that high fuel prices are causing immense difficulties for small and medium-sized enterprises vital to economic recovery; further notes reports that some low-paid workers are paying a tenth of their income just to fill up the family car and that high fuel prices are particularly damaging for the road freight industry; considers that high rates of fuel duty may have led to lower tax revenues in recent years, after reports from leading motoring organisations suggested that fuel duty revenues were at least £1 billion lower in the first six months of 2011 compared with 2008; and calls on the Government to consider the effect that increased taxes on fuel will have on the economy, examine ways of working with industry to ensure that falls in oil prices are passed on to consumers, to take account of market competitiveness, and to consider the feasibility of a price stabilisation mechanism that would work alongside the fair fuel stabiliser to address fluctuations in the pump price.