Fuel Prices in Remoter Rural Areas
As members will be aware, the report on fuel prices in remoter rural areas was published during the recess. I invite our two reporters, Rhoda Grant and Fergus Ewing, to comment on the report.
I was not involved in drawing up the report because, although Fergus Ewing and I were allowed to sit in on the evidence-taking sessions, we did not take part in writing the report. One of the things that has come out of the evidence loud and clear is that the oil companies are keen to make the same amount of profit from oil, regardless of where it is sold. If they sell it to a supermarket, they can afford to sell it cheaper because there will be a bigger turnover. The cost of delivering small quantities of petrol to rural filling stations must be absorbed by the station and the people who buy their petrol there.
The report has produced a few suggestions, some of which I agree with and some of which I do not. Overall, the process was useful.
I was on the Enterprise and Lifelong Learning Committee until 23 November 2001 and that committee began its inquiry in January 2000. The remit was to inquire into the pricing of vehicle fuel in remote rural areas, in particular to establish the basis for the higher prices that are charged by fuel stations in remoter areas and to determine whether that practice was reasonable.
I am the committee's reporter on the issue and I understood that, in accordance with committee rules, I was not permitted to attend private meetings of the Enterprise and Lifelong Learning Committee. That might be a gap or a mistake in the rules, which the Procedures Committee might consider. It is difficult for me to report fully without having had access to the private meetings, which included meetings with the oil companies, some of which displayed some candour in giving out commercial information.
The Enterprise and Lifelong Learning Committee's report is very full and presents a number of solutions. The second sentence in paragraph 27 is interesting:
"Brian Wilson … stated in a speech in January 2000 that the Government considers it is not solely, or even mainly, responsible for finding solutions to price differentials."
I find that comment from Mr Wilson surprising, given his affinity for the Highlands and Islands of Scotland. In contrast, and perhaps more happily, I understand that, in response to this committee's "Report on the Impact of Changing Employment Patterns in Rural Scotland", the Minister for Environment and Rural Development said:
"The distribution and retail of fuel in Highlands and Islands is inherently high cost. The Scottish Executive is not persuaded that bulk buying can significantly affect this. We are, however, open to innovative thinking and practical evidence that such schemes can offer worthwhile price cuts."
That is relevant. I hope that we all wish to find a solution to the problem, which has afflicted the Highlands and Islands of Scotland, and other parts of rural Scotland, for decades—I remember quoting on 31 January an editorial that appeared in The Press and Journal in 1976. It is a complicated problem and one to which successive Governments have provided no answers. Brian Wilson does not believe that the Government has the responsibility for finding the answer, but I hope that the committee will take a different view.
The way forward could be to invite the Minister for Environment and Rural Development to address the committee to tell us what steps, if any, the Executive plans to take to find a solution to the problem, difficult thought it is. In particular, it would be useful to hear the Executive's response to the recommendations in part E, paragraphs 45 to 47, of the Enterprise and Lifelong Learning Committee's report. The solution that I feel might allow us to move forward is this: the Scottish Executive should examine, with the Petrol Retailers Association and the Scottish Motor Trade Association Ltd, what scope there might be for developing a rationalised network of supported stations. If we can support sub-post offices, why cannot we support sub-petrol stations? They, too, would provide an essential community service. That solution would involve a mixture of some Government subsidy, price controls and transparency so that, for every gallon or litre of fuel that was purchased, it would be clear what was going to the oil company, what was going to the distributor and retailer—who would be a sub-petrol station provider—and what was going to the Government. Currently, between 75 and 80 per cent goes to the Government.
Given the importance of the matter, I hope that the committee can invite the minister to address us on the Executive's plans, if there are any, to deal with this serious problem that affects rural Scotland—especially the Highlands and Islands.
I emphasise to members that the Executive will, as a matter of course, respond to the report. It is a matter of courtesy that we should allow that response to be made to the Enterprise and Lifelong Learning Committee and that that committee should, in the first instance, deal with that response. However, as I am well aware, there are a number of specifically rural issues that we will want to follow up.
I was one of the members of the small group that was nominated from the Enterprise and Lifelong Learning Committee to carry out the face-to-face discussions with the oil companies on the breakdown of prices, and to try to get to the bottom of why there is such a huge differential, especially between prices within the Highlands and Islands. In my constituency, a litre of petrol in Mull and Islay is about 12p to 14p dearer than it is at a major petrol station in Oban.
It was quite clear that, although transport played a part in the extra cost, it was by no means the single most important factor. Evidence from the oil companies and the Independent Retailers Association suggests that the main problem was the lack of throughput in many small rural petrol stations. For example, whereas one-man-operated petrol stations in the central belt sold more than 10 million litres a year, a similar one-man outfit in Mull sells 200,000 to 300,000 litres, but has the same wage costs and fixed costs. Because that is the root cause of the problem, small independent retailers in rural Scotland—particularly in the Highlands and Islands—have no choice but to put a bigger margin on the fuel price.
Other Enterprise and Lifelong Learning Committee colleagues and I feel that the way forward is to reduce vehicle excise duty for motorists in the Highlands and Islands and rural Scotland to compensate them for the extra cost of buying fuel in those areas. Cost consultants have already examined the specific Highlands and Islands situation and have worked out that the cost—which is the average mileage for motorists multiplied by the higher petrol price—could be offset if the Treasury reduced VED to zero for motorists in some remote communities in which the price of fuel is acknowledged to be very high. It would cost the Exchequer a total of £5 million to implement that scheme and to solve once and for all this desperate, lifelong problem of high fuel prices in the Highlands and Islands, as compared with prices in the central belt. Such a scheme already operates for hauliers in the islands. Indeed, on Bute, hauliers pay about £400, whereas hauliers on the mainland pay about £4,000 for their licence. As a result, the existing scheme will need only to be extended.
If there are no other comments, are members content to welcome the report and to await the Executive's response to it? We will be able to discuss it immediately after the Enterprise and Lifelong Learning Committee has done so.
When I was the reporter on the issue, the Enterprise and Lifelong Learning Committee allowed me to attend private meetings with oil companies—even though some of its members did not. We should note that such an unprecedented move was very helpful to the committee.