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Fuel Duty (Rural Areas)

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. I want to endorse what other hon. Members have said this morning and suggest a pilot scheme on one or two islands. There is absolutely no possibility of people taking advantage of the reduced cost of fuel by travelling to an island on which such a scheme operates, as it simply would not be worth paying the ferry fare, and there is no possibility of fraud because an island is clearly separated from the rest of the country. The lower fuel duty would apply at petrol stations on that island and nowhere else, so there seems to be no possibility of fraud at all.