Petrol Pricing
The final item on the agenda relates to our discussion of 31 January on rural fuel prices. I should make it clear that, as with our discussion on 31 January, Nick Johnston has told me that he feels that it would be inappropriate for him to take part because of his registered interests. We note his discretion on that point.
The clerks have provided one committee paper on fuel prices in remoter rural areas. They also e-mailed us a note from Shell UK, offering the committee further information and a discussion on what it describes as a confidential basis about some of the issues we dealt with in our earlier discussion.
We have been joined by Rhoda Grant of the Rural Affairs Committee, which has a shared interest in this area of policy. We welcome Rhoda's participation in today's discussion.
After the meeting on 31 January, we asked the clerks simply to set down the issues that had been raised in the discussion. Members then had the opportunity to reflect on the Official Report of the meeting and to see which other issues struck them as relevant. At this meeting, we will discuss what further steps to take, having had time to reflect on the evidence.
I do not want to repeat what is in the clerks' paper, which summarises the issues very well, so I open the matter up for discussion.
I seek clarification from the clerk, convener. Among the potential solutions, variable rates of VAT are mentioned. It is quite correct that there are examples of variable rates of VAT elsewhere in the European Union.
Am I correct in assuming that there is no variable treatment of the excise duty element—that it is fixed—and that if any attempt were made to meddle with that, it would be seen as contravening the parity of treatment throughout the UK?
Simon Watkins (Clerk Team Leader):
I have no idea what the situation is in Greece. I was trying to summarise the evidence that was given on the day.
I have some information on that. The harmonisation of fuel duty across the European Union is set by directive 92/82/EEC. I am reliably informed that the price for the European Community agreeing that directive at the time was the granting of two derogations, whereby some regions of Portugal and Greece were allowed to have fuel duty rates set at a different level from their respective national rates. The Commission has since made it clear that in no instances will a further such arrangement be allowed, because it compromises the single market.
An attempt by the Dutch Government to seek similar derogation for its stations on the Dutch-German border was recently rejected because that would have constituted state aid. The only means of seeking derogation on fuel duty levels is through an intergovernmental conference, which, arguably, is not an option that is open to this committee.
I suspect that that is a matter of opinion.
I thought the debate last Monday was very useful. From what I gathered in the Highlands at the weekend, the fact that the committee took up the issue was much appreciated.
I want to make four points. First, the debate took place only last week. It would be useful to have more time for responses. A number of those who gave evidence indicated that they might want to take advantage of more time.
Secondly, Mr Holloway's evidence, in particular, indicated a series of other avenues of inquiry, which we should pursue. What was missing was evidence from people who run garages in the Highlands, whether as dealers, agencies or on some other basis.
Thirdly, one of the potential solutions was to support strategic networks. The idea was to have essential petrol stations, which would operate rather like sub-post offices, with the garage owners operating on a salaried basis. We heard that schemes of that nature operate in Finland and the Netherlands. It would be extremely useful to get some detailed information about how those schemes operate, to see whether something similar could be operated for the benefit of the Highlands.
Finally, the Office of Fair Trading inquiry is expected to report reasonably soon. We may want to take further evidence, having had the benefit of reading the report. I am not certain and the timing would be a matter for the committee.
We need more information about which tools are available to us before we can even consider some of the solutions. Allan Wilson has reported on the various things that the European Union may or may not say on the issue. We need to explore that a little further. My understanding is that some of the alpine regions of Austria and France have derogations on fuel duty.
I support Fergus's point. It is well worth seriously examining the nature of the schemes in Finland.
Although the investigation went quite well, numbers were bandied about all over the place. I am as confused as ever about who gets what, what the rebates are, how they are decided and who is and is not free to set prices. The various companies gave us all sorts of conflicting evidence. We need to revisit the issue with them, the independent retailers and the retailers that are tied as franchisees to the majors. We must start to explore the numbers behind the rhetoric. What is the real situation?
I agree with much of what has been said. It became quite obvious that prices change depending on where you live. If you live in an urban area, you get a rebate. That is not a level playing field. We must examine the situation further.
We need to consider all the options, such as setting up a different system of supplying petrol in rural areas or having local authority-run garages. We should not be too narrow at the moment. We should do a bit more questioning and examine further possible solutions. I also think that we should not let the oil companies off the hook for now.
It would be extremely useful to examine in more depth how some of the wholesale pricing is arrived at, because the evidence was very confusing. Shell UK has offered to speak to the committee in confidence to explain its pricing structure, and it would be useful if other companies did the same. Perhaps we could also take some more evidence from individual garage owners, just to make sure that we have explored all the possibilities.
I would be interested to receive some more information on the relative distribution of the ownership of garages throughout Scotland and whether they are owned by the petrol companies, franchisees or independent retailers, to find out whether there is any correlation between ownership and the way price structures vary.
We should take advantage of any further opportunity to discuss the fuel duty issue with the petrol retailers and oil companies. Elaine's point about garage ownership and its effect on squeezing margins was effectively made by the representative from the Petrol Retailers Association. We could develop discussions on that matter with both parties.
I will draw this discussion to a conclusion. Like Fergus Ewing, I found last week's discussion very interesting. It did not close off the issue in my mind, and if I judge the committee's mood correctly, there is an enthusiasm to examine the matter further. However, that enthusiasm is conditional on what the OFT does. I do not want to prejudge its inquiry; it would be prudent to wait for the outcome of that before we take any further public stages in our inquiry.
Notwithstanding those slightly reserved comments, I am keen to pursue this issue in the light of the OFT inquiry, if it does not deliver the desired results for organisations such as the Arran Council for Voluntary Service or the Highlands and Islands representatives who visited us. The presumption is that, if the OFT inquiry does not deliver, the committee will take further steps.
It would therefore be prudent to take some early steps to ask the Scottish Parliament information centre to provide some comparative information on essential petrol station schemes in Finland and the Netherlands and to investigate the issue of derogations that have been given to other parts of the EU.
Finally, I seek the committee's agreement to have private meetings with the petrol companies to investigate pricing issues. As the only offer on the table is meetings in private, we have to do things in a more limited way than we would like. We should sensibly take up their offer regardless of the OFT inquiry. I propose that we take up the offers to meet the petrol companies in private either as a full committee or as a delegation that would be representative of all political parties on the committee. Those meetings would be outwith our normal meeting programme so that it is not interrupted by this line of inquiry. Obviously, we will make it quite clear that, once we hear the outcome of the OFT inquiry and have had private discussions with the petrol companies, we will decide whether to have a fuller inquiry into the report. Is that agreed?
I agree with everything you have recommended, apart from one point that makes me slightly uneasy, which is the issue of whether we take evidence in public or in private. Such is the public concern in the Highlands and Islands about the level of fuel tax and fuel cost that there might be a certain unease about taking evidence in private.
If we go along that route, what do we do with the information that has been given to us in confidence? If we say that we will treat things in confidence, we all agree that we have to abide by that. I am not sure how we would use the information.
That is a difficulty, Fergus. We have a choice. If we go through the motions of having a debate in public with petrol companies who hide behind commercial confidentially in response to every question, none of us will be any the wiser. If we take up the offer of hearing evidence in private, we are faced with the difficulty of what to do with that information, but we might be encouraged to take a more public stance in scrutinising the petrol companies further to try to bring information that we learned about in private into the public domain.
None of us wants to have any more discussions in private than we need to, but we will not advance the debate by allowing petrol companies a platform on which they can hide behind commercial confidentiality.
I support your view, convener. We have a clear choice between no information or clarity. Those of us who are involved in business are aware that there are commercial considerations in making public exactly what is going on. We should take up the petrol companies' offer, even though we will have to meet behind closed doors.
This is a case in which ignorance is not bliss. I would rather get the information, although we will have to hear it in private. It will allow us to focus our work better and will let us know the extent to which we might be able to arrive at solutions.
I agree with what George Lyon, Annabel Goldie and you are saying, convener. I suspect that Fergus Ewing does, too. The situation is not ideal and it remains to be seen whether we will get information that we want and which we can use to the consumer's advantage, but we will never know unless we meet the oil companies.
I understand the reservations about taking evidence in private, but Shell said that it would be happy to involve a representative of the Highlands and Islands Hydrocarbon Action Group. That would assist in some ways.
That is a helpful point.
Does the committee agree to have a subgroup of this committee meet representatives of the petrol companies in private and to invite a representative of the Highlands and Islands Hydrocarbon Action Group, which has a vast amount of information on the subject? I will report back in as much detail as I am able. Does the committee agree to work on the assumption that, if the OFT inquiry does not produce the sort of response that is being sought by the Highlands and Islands Hydrocarbon Action Group and other witnesses, we will return to this issue at a later stage in the session?
Can we have clarification as to what responsibility would be placed on us by our hearing commercially confidential information?
I will ask the clerks to make that information available to anyone who participates in those discussions.
Does the committee agree to the suggestions that I made?
Members indicated agreement.
I will close the meeting. Thank you for your attendance.
Meeting closed at 12:39.