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Fuel Duty (Rural Areas)

As ever, Sir Nicholas, it is a pleasure to serve under your chairmanship. I, too, congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on securing this debate on an issue of great importance to him and his constituents. That has been borne out by the passion with which he and other hon. Members have spoken. The Government recognise that fuel prices have risen in recent months, and we are sensitive to the impact of high fuel prices on people throughout the country, many of whom have few alternatives to driving. For people living in remote areas, including those in Scotland, road transport is particularly important. My first point is that the principal driver behind the recent increases in fuel prices is not Government policy, but changes in the international oil market. Over the past two years, the price of a barrel of oil has varied between $42 and $132 dollars, and the price of fuel by more than 30 pence a litre. I understand the case that hon. Members have made today, and I, too, run the risk of raising the blood pressure of the hon. Member for Orkney and Shetland because I do not believe that it is appropriate or feasible to set a different fuel duty rate for rural areas. I will give three reasons. First, it is important that the Government remain consistent with the principle of UK-wide taxation. Secondly, there would be many practical difficulties with pursuing a reduced fuel duty rate in reality. Thirdly, it is uncertain whether there would be any benefit at the pump. I will address those three matters, but I will not spend so much time on the first, as the other two are more pertinent to the debate. It is a general principle of the UK tax system that excise duties are levied at the same rate for specific goods throughout the UK. We know that fuel duty is not popular with motorists, but it is important to support public finances, and thereby to protect stability, employment and growth.