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Finance Bill

The hon. Gentleman is absolutely right and makes an important point. The issue affects more or less every business in my constituency and, I am sure, in his. The disproportionate cost of fuel has a knock-on effect on businesses and customers. I will not stray from the matter under discussion to talk about the effect on parcel delivery charges, for example, but that is another bone of contention—a hardy perennial perhaps. People rightly feel strongly that the excessive parcel charges they must pay are not justified by the fuel price, and that that does not begin to cover the differential. Hon. Members will be aware that research by Highlands and Islands Enterprise shows that fuel accounts for 18 per cent. of the costs of people living in the highlands and islands, compared with 13 per cent. across the country as a whole. That goes some way to show the substantially greater economic burden on the rural communities that I and others represent. The merits of our proposal are many, and I will not develop all of them at length, although I am sure that the paper written by my hon. Friend the Member for Caithness, Sutherland and Easter Ross could be read into the record if that was felt necessary. First, the proposal offers a clear route forward to applying the principle that we are trying to set out. The Scottish Executive's eightfold urban-rural classification scheme provides a ready, well worked out, carefully thought-through basis on which to apply a discount. English MPs will know that Natural England has produced a similar—it is not precisely the same—classification for England. I differ slightly with my hon. Friend the Member for Argyll and Bute in that I think that the discount could usefully be applied to three of the categories. I would add to the two that he mentioned the category of remote rural—areas with a population of fewer than 3,000 people, within a 30 to 60-minute drive of a settlement with a population of 10,000 or more. Even if those three groups in the classification were included within the scope of the application of the proposal, it would still mean that areas lived in by roughly only 3 per cent. of the population of Scotland would benefit from it. It is worth placing it on record that although the scheme would benefit many of the rural areas in my constituency, the large city of Inverness, which has slightly higher prices than other parts of the country, would not be a direct beneficiary. Last year, I was involved in protracted but successful negotiations with Tesco to persuade it to reduce its petrol price in the city of Inverness, so Inverness has benefited in other ways from Liberal Democrat Members' efforts to reduce the cost of fuel. The scheme would not directly benefit the city of Inverness, but it certainly would benefit the rest of the rural highlands and islands. There is some merit in the suggestion made by my hon. Friend the Member for Argyll and Bute, that starting the scheme in island areas would be a good way to establish the principle and check for fraud and so on—issues that he rightly addressed, but on which I do not intend to focus. That would be a good way of starting the ball rolling. There are established international precedents for our proposal. Indeed, a derogation from the European Union's energy products directive explicitly allows member states to have differential levels of fuel duty. That power is already exercised by the Governments of France, Greece and Portugal. Each of them has chosen to use the measure to benefit geographically remote, sparsely populated areas that they consider sufficiently important to merit use of the power for their benefit. There is no legal barrier to the United Kingdom Government using the same power—