Fuel Costs
The final item of business today is a members' business debate on motion S3M-1705, in the name of Alasdair Allan, on fuel costs. The debate will be concluded without any question being put.
Motion debated,
That the Parliament notes that the price of diesel is now over £1.30 in the Western Isles and across Scotland's island and remote communities, making it probably the most expensive diesel in the western world; further notes that fuel costs now represent an ever increasing burden in the Western and Northern Isles, not least for businesses and fishermen, some of whom report 80% increases in diesel costs in the last two years; notes that the main company delivering fuel to the islands deposits fuel at differing costs at different ports on the west coast despite the fact that the same vessel is used; notes the irony of an oil-producing nation putting its motorists, businesses, fishermen and rural businesses in this impossible position, and finally notes the various measures that exist in parts of France, which make cuts in fuel duty in the remotest areas.
I thank all members from across the parties who have signed my motion and who will speak tonight. Although the stories that I have to tell about fuel prices relate mainly to the Western Isles, the problem affects all our island communities. It is an issue that my colleague, Angus MacNeil, has also pursued at Westminster.
The vast majority of the cost of petrol to the consumer is the tax that must be paid to the United Kingdom Government—a policy that has been pursued, at least in part, for the environmental reason of discouraging people from driving unless it is necessary. Without straying too far into another debate, I hope that we can all agree that, as a country, we should aim to reduce the use of the car and promote public transport alternatives.
I hope equally that we can agree that public transport is not a realistic option for many islanders. That contention is supported by analysis by the Institute for Fiscal Studies, which concluded that the impact of increases in fuel duty falls hardest on poorer households and especially on people who live in the most rural areas. When fuel prices go up, people in urban areas tend to reduce the number of miles they travel—something that is just not feasible in the islands. Last week, I made a journey from my home on Lewis to make two school visits and to attend a couple of other events, all of which were on Harris. I clocked up 170 miles in that one day without setting foot on any of the numerous other islands in my constituency.
It is important to stress what this evening's debate is not: it is not the fevered debate that is taking place in the United States, where fuel prices are a fraction of ours; it is not part of some anti-environmentalist agenda; and it is not about well-off people whining about the cost of running a Chelsea tractor. This debate is about constituents who have contacted me—as constituents have, I am sure, contacted other members—to tell me that they cannot afford to travel to work. It is about fishermen telling me that they fear for their livelihoods because of an 80 per cent rise, in some cases, in their fuel costs over the past two years and it is about pensioners saying that they do not know how they will get to the shop because it is some miles away and they can no longer afford to drive there.
I am pleased to see that hydrogen technology is being pursued vigorously by both Lews Castle College in Stornoway, and by Comhairle nan Eilean Siar, which has applied it in some of its vehicles. However, until such technologies become more widely available, people in the islands have no choice but to put petrol in their cars and diesel in their fishing boats. The cost of those fuels has now reached astronomical levels, far exceeding the relatively modest figures that I quoted when I lodged my original motion. The price of a litre of petrol in Edinburgh is now around 117p. In Benbecula, it is 126.8p, and in North Uist the price of diesel has just reached 145p.
The Western Isles compete with Shetland for the distinction of being the most expensive place to fill up a car in the whole world, although I await a call from the Falkland Islands or Tristan da Cunha to contradict me.
Orkney!
Or from Orkney.
I accept that many things are beyond the control of politicians—the price of oil reaching more than $130 a barrel is one of them. We are expected to strive to not be partisan in a member's business debate, so I will observe without comment the fact that the United Kingdom Treasury will make more than £4 billion in additional revenues from Scotland's North Sea gas and oil this year alone as a result of that high price. Enough said. It is not beyond our wit to find a way of using such vast wealth to make life more passable in our most economically fragile communities.
For the time being the power over fuel taxes is reserved to Westminster, so the purpose of tonight's debate must be to present Scotland's concerns to the UK Government. When the Chancellor of the Exchequer was on holiday in Lewis several weeks and several pence per litre ago, he remarked that he was shocked at the prices that islanders were paying. I welcome his alarm, but I ask him whether he will therefore now follow the French Government's example when it comes to fuel tax. France has varied the rate of fuel duty in la France profonde. The UK Government supported that measure for rural France, so why does it not do the same for the most remote parts of Scotland?
European directive 92/82/EEC requires mandatory minimum rates of excise duty to be set in member states. It states:
"it is possible to permit certain Member States to apply reduced rates to products consumed within particular regions of their territories".
In Greece, the Government may also apply rates of excise duty up to ECU22 lower than the minimum rates that are laid down in their directive on gas, oil and petrol that are consumed on certain Greek islands.
I thank the member for giving way and congratulate him on securing the debate.
Does Alasdair Allan recognise that the issue also applies to the mainland and the Borders, an area that he and I know very well? It is not just about island communities but about sparsely populated mainland communities.
As a borderer, I am happy to acknowledge the problems of mainland rural Scotland. I made tonight's debate specifically about the islands because even comparing prices between Ullapool and Stornoway shows that there is a clear premium for buying fuel on an island.
We know that measures can be taken and that the Westminster Government supported France's fuel derogations. It should also be said that those derogations came on top of a recent £88 million aid package from the French Government to ease the financial burden of French fishermen as a result of high fuel costs. If a derogation is granted, people in Glasgow are not going to drop in to Ardhasaig or Castlebay for cheap fuel. In fact, fuel in the islands will be slightly more expensive than fuel on the mainland, but it might just help to balance the books for pensioners, fishermen and families in our island communities.
If the chancellor is willing to listen to islanders, as I hope he is, we can begin to address some of the economic and social injustice that they currently face. I do not have a car in Edinburgh, partly because, as the First Minister once remarked from my passenger seat as I drove round the hairpin bends of Harris, my driving licence should be endorsed in some way to limit its validity to the Western Isles. The other reason is that I do not need one. I am signed up to that agenda, but those who have the fewest available alternatives to the car should not have to pay most dearly for that agenda.
So—and not without support from other members here tonight, I hope—I call on the chancellor to apply for a fuel duty derogation for all Scotland's islands. The present situation cannot go on.
I congratulate Alasdair Allan on securing this extremely important debate. He mentioned in his motion and speech the high costs that drivers on the islands and, indeed, in remote parts of mainland Scotland are paying, and the more important point that they face a particular challenge because they rely on the car far more than do people in other parts of Scotland.
Alasdair Allan quoted a figure—it was probably correct when the motion was lodged—of £1.30 per litre for diesel in the Western Isles. I suspect that it might well be different now. That compares with an average in Edinburgh of £1.24 per litre for diesel, which is the same as the average for Scotland, which was £1.17 only a month ago.
The motion also refers to the fact that we have
"probably the most expensive diesel in the western world".
I looked desperately on a number of websites to try to prove that wrong, but of the 30 countries that were given only one—Norway—had a higher price, which was 1p higher, with a cost of £1.31 per litre as against £1.30 per litre in the Western Isles. Therefore, Alasdair Allan is absolutely right to make that point about the high prices that people pay.
On solutions, I received a good review of the report that was produced seven years ago by the then Enterprise and Lifelong Learning Committee. Although that cross-party committee, which then had 11 members, did not hold a full inquiry into rural fuel prices, it held a fairly good evidence session on the issue after which it produced a 13-page or 14-page summary.
I am glad that Mr Brown and his party are interested in solutions. Why did his party vote against the amendments that my colleagues moved at Westminster that would have introduced the very derogations that Alasdair Allan has rightly proposed this evening?
As ever, Mr Scott is finding problems instead of solutions. Yes, the derogation works for the Greek islands, but it is important to remember that such a derogation was part of the deal for Greece's accession to the European Union. However, the derogation also works for the Azores, which belong to Portugal. I think that the issue could be looked at in a bit more detail, although some complicated EU rules apply. Without coming up with a soundbite, I think that the issue is worthy of examination if the derogation works for France, the Azores and the Greek islands.
The solutions that the committee's report mentioned as being worthy of further inquiry include a change to vehicle excise duty, although that is a reserved issue. The committee considered that some form of postcode analysis could be used to reduce vehicle excise duty in certain parts of Scotland so that, despite the more expensive petrol prices, the costs of motoring might be made more equal across the country. That is probably worthy of further examination.
Another idea that the committee considered, which would not necessarily be reserved, was the proposal that there should be some form of strategic network or co-operative for petrol stations and retailers in certain areas. Such a network could be set up without Government legislation at Westminster. Having worked with and spoken to several petrol companies, the committee felt that strategic networks could be formed to achieve bulk-buying discounts. Although tax forms an enormous part of the petrol price, the committee discovered that the turnover or throughput in individual petrol stations is also a key element.
Three potential solutions were suggested in that committee report, so I recommend that members dust down their copy of it and review it. Perhaps another committee could reconsider the issue in a bit more depth by looking at it through the lens of 2008.
I commend my colleague Alasdair Allan on securing tonight's important and timely debate. Of course, in the weeks since the motion was lodged, the figures in it have rapidly become out of date. On the isle of Arran in my constituency, unleaded petrol now sells at 123.3p per litre and—as of this morning—diesel is now selling at 140.6p per litre.
An issue that should be taken into account is that, in island communities such as in those in my constituency and in Alasdair Allan's constituency, average incomes are significantly less than those on the mainland. People have further to travel, are on lower incomes and face higher fuel costs.
According to figures that were provided by the Scottish Parliament information centre this afternoon, the percentage of the petrol pump price—of both diesel and petrol—that is taken in tax in the UK is higher than in all other European Union countries. Diesel is a full 24.8 per cent cheaper in Cyprus, followed by Luxembourg, Greece and Spain. For petrol, we have a 22.2 per cent differential with Cyprus, which is followed by Malta and the Baltic states. Of course, none of those countries produces oil.
To add insult to injury, on top of duty at 50.35p per litre, some 8.81p is added in VAT, so we pay tax on tax. Indeed, the Chancellor of the Exchequer is laughing all the way to the bank given that, through VAT, he rakes in roughly 15 per cent of every extra penny of price increase. The price of diesel is some 17p higher in Arran than on the mainland, which means that, through VAT, my island constituents pay more in tax than their mainland compatriots. Can that be right? I think not.
The duty that road hauliers here pay is often twice that which is paid by some of their continental competitors, with the result that some of them are being forced out of business or are considering desperate measures.
As the cost of fuel increases, the price of food and other goods rockets, creating inflationary pressures and making Scottish products and produce less competitive. Simultaneously, the spiralling fuel costs mean a decrease in the amount of money that our councils and the national health service have available to spend on delivering vital public services.
Westminster would not give the police in England their full pay award—0.6 per cent was retained because of what were called "inflationary pressures". However, it is happy to put 2p on fuel this autumn, even though that will cause considerable additional pain for people who already have mounting concerns. Of course, it is appalling not only that Scotland has its vast oil wealth taken by the United Kingdom but that it has the most expensive fuel in the UK. That is a double whammy. I am sure that the chancellor will see sense and that the extra 2p will not be imposed this autumn.
On our islands, however, greater measures are needed. Under European Council directive 2003/96/EC, from 2004 until 2010 the minimum level of taxation that should be imposed on unleaded petrol is €359 per 1,000 litres. Despite that requirement, derogations were granted to new member states and to Spain, Austria, Belgium, Luxembourg, Portugal, Greece, Ireland, France, Italy, Germany and the Netherlands. Some of those countries are completely landlocked. As Gavin Brown and Jeremy Purvis pointed out, the issue does not affect only island communities; the position of other remote and fragile rural communities should be considered.
Our European neighbours want less tax to be imposed on fuel, but the UK has not yet applied for a derogation, even for Scotland's 100,000 or so hard-pressed islanders. The Scottish National Party first called for such an application to be made in 1999, when it was turned down by Brian Wilson MP, the former Labour representative for my constituency, who was then a minister. It is not too late. I hope that the UK Government will give the matter serious consideration and will pursue the derogation that our island communities so desperately need.
A week ago, The Shetland Times reported that the cost of diesel was £6.40 a gallon. Today, the cost of diesel in one garage in central Lerwick is 0.5p short of £6.50 a gallon. That is how quickly prices continue to go up in constituencies such as mine, Mr McArthur's and Alasdair Allan's.
I agreed with pretty well everything that Alasdair Allan said. He made a well-argued case for the derogation that should be granted to our parts of Scotland and to wider Scotland. The UK Government must address those extremely serious issues.
I will concentrate on a number of points that local people have made to me over the past few days. A lady who lives in Brae in Shetland wrote:
"despite the fact that I car share I made a decision that I could no longer justify working in Lerwick because the price of owning and running a car to work steadily rises all the time. I worked out that I spent more than £4,500 on my car last year … I do hope that something can be done to bring the cost of our fuel down to similar price that everyone else is paying on the mainland".
I fully agree with Alasdair Allan on that point. The real scandal is the differential between the price that people pay in Stornoway, Lerwick or Kirkwall and the price that is paid in Ullapool, Aberdeen or down the road in Inverness. Someone is making money out of that—let me put it no stronger than that. I hope that, as well as listening to the argument that Alasdair Allan rightly made for a derogation, Michael Russell will support the case that the Office of Fair Trading should investigate the distribution system.
Another constituent wrote that fuel costs were the biggest concern, as they affected everybody and everything, and commented that it was ironic that, although there was oil and gas in the Sullom Voe oil terminal, fuel in Shetland was the most expensive in the country. Alasdair Allan, Liam McArthur and I could probably have a competition over whose constituency has the most expensive fuel, but the present state of affairs is no great tribute to us or to any of the people we represent; it is an unfortunate fact of island life at this time.
Yet another constituent made the wider point that has already been made in the debate, which is that fuel costs affect all aspects of island life. They wrote:
"We know of one couple with a young family, who were planning to build a house here in this village"—
which is on the west side of Shetland—
"and have now changed their minds because of the punishing costs of commuting to Lerwick to work. Another young family is seriously considering moving nearer Lerwick for the same reason."
I am sure that my colleagues who represent the other islands will have similar examples regarding the change to the structure of island life that is caused by significantly high fuel costs.
As Alasdair Allan also rightly said, the issue is not just the impact on family life and individuals, but the impact on businesses. I met representatives of the fishing industry at home in Shetland on Monday along with Vince Cable and Alistair Carmichael, who are my colleagues from London. The fishermen's point was that they are price takers rather than price setters, so passing on the cost of fuel increases to the customer just does not happen in that system. Mr Russell and Mr Lochhead will meet the task force on Friday—I understand that that will be its first meeting—so they need to move that issue forward. As Bertie Armstrong said to me today, we need immediate assistance. I hope that Mr Russell will respond positively to that message in his winding-up speech.
The same issue affects agriculture because crofters and farmers face the same increases. For someone buying 500 litres of red diesel, the price this week is 67.4p a litre, compared with 34p a litre six months ago. I will finish on this couple of points, Presiding Officer.
Just finish on the one point, please, as many other members wish to speak.
There is no better illustration of the impact of such increases than the fact that a steer worth £500 at market would have been worth £480 12 years ago. That is the reality for our island lives and our constituencies. We certainly need action, but we need it here in Edinburgh as well as in London.
Like other members, I congratulate Alasdair Allan on securing the debate. The ideas that he has presented deserve serious consideration and should be explored fully. The issue that we are focusing on is fuel duty, but levels of fuel duty have not changed significantly. Fuel is more expensive in the constituencies of Alasdair Allan and Tavish Scott than it is in my constituency because of the transport costs of getting fuel to those areas and associated issues, and because of the way in which the market works. The fuel is not more expensive because fuel duty is higher in Shetland, Orkney or the Western Isles than it is anywhere else.
It seems to me that there is an issue here for the Scottish Government and the UK Government to explore together. From what Alasdair Allan and others have said, it is clear that people in Orkney, Shetland and the Western Isles face additional problems because their fuel is already higher in price than fuel in other parts of Scotland or the UK, so the general increases have made their fuel prices significantly higher again.
There is a variety of ways of addressing that issue. The options to consider include having an offsetting arrangement, reducing fuel duty and looking at how the industry conducts its business. For example, Alasdair Allan pointed out in his motion that prices are different in different ports in the Western Isles. It seems to me that a variety of issues must be explored.
It is not an easy set of issues. The motion refers to the Western Isles and the northern isles, but it does not refer to Arran, which is in Kenny Gibson's constituency. Perhaps the issue for islands is different from that for Highland areas. However, I am sure that Rob Gibson would resist island communities being given special treatment at the expense of rural and remote areas in the Highlands. Where do we draw the boundaries for any proposed scheme? It seems to me that the Scottish Government and the UK Government must explore the issue together to ascertain what can be taken forward and whether the best approach is a territorial one, or whether we need to focus on the effects on particular industries. That is a significant issue.
I refer to Tavish Scott's point about the fishing industry. Unlike many other industries, the fishing industry is unable to pass on increased fuel costs. The industry has made significant attempts to improve fuel efficiency, for example through reduced engine power and careful selection of operating pattern. The fishing industry has received concessions on prices, for example in relation to vessel monitoring systems maintenance, from the Scottish Government and the UK Government. However, we might need to look at the impact of increased fuel prices on the industry and consider how to support it. Whether we address the immediate situation by dampening the effects of rising fuel prices or examine longer-term solutions is a question that should be explored.
The issues are complex. We need more in-depth exploration to determine whether we should take an industry-based approach or a regional approach and whether we should confine support to the islands or widen our approach to include other rural communities.
I congratulate Alasdair Allan on securing this timely debate.
I am sure that all members have experienced the effects of rising fuel prices. It is becoming increasingly expensive to get anywhere in Scotland and to go about our daily lives. No one has felt that burden more keenly than rural island and mainland communities. Borders farmers and Berwickshire fishermen, and hauliers and many other sectors in rural areas have found it increasingly difficult to maintain the viability of their businesses.
It is becoming clear that public transportation, on which rural areas depend heavily, has been hit hard by rising fuel prices. It has been widely reported, even in the national newspapers, that the bus company Munro's of Jedburgh, in my constituency, has terminated a number of local bus routes. Munro's hopes to be successful when it retenders, but the company's drastic action is a reflection of the difficult times that it faces. I am most worried about what will happen if the company is not successful or if the uncertainty about fuel prices becomes so great that some routes become unviable and are simply dropped, which would have huge implications for people in the area. Since fuel prices skyrocketed, it has become difficult for local bus companies and other transport providers to stay in the black. Munro's of Jedburgh is the latest victim of rising fuel prices, but more bus companies will be forced to take difficult decisions and more routes will be put under pressure.
Pressure on bus routes is not the only problem caused by rising fuel prices. The transportation of fuel has become increasingly expensive and has led to the closure of petrol stations. Newcastleton in my constituency recently lost its last and only petrol station because it had become too expensive to transport fuel to it. The closure has forced residents to drive many miles to fill up their cars and has put pressure on industry as well as on everyday life. I am working to establish a community-based service, but the current state of affairs is doing nothing to promote the area's attempt to become a centre for tourism. The community's problem is not just high fuel prices but access to fuel at all.
The examples that I have given are not the only negative effects of rising fuel prices. It is important that we look beyond the obvious effects—the difficulties of getting around and the inconvenience of having to travel to fill up our cars—and consider the strain on the wider community. The termination of bus routes and the closure of petrol stations could lead to significant job losses and have a devastating effect on local employment, with the loss of drivers, engineers and support staff. That is another reason why it is imperative that we help rural communities to fight the effects of rising fuel prices.
I have raised the issue with the Westminster Government, but I have yet to receive a constructive response. We all know that, in effect, the Westminster Government is profit sharing from rising fuel prices, because of the fuel tax that it has imposed. It is more important than ever that the Government acts to help our rural communities. Without help from Government in Scotland and at Westminster, bus routes will continue to be terminated, petrol stations will continue to close and farmers and fishermen will continue to go out of business. Our rural communities are suffering because of rising fuel prices, and it is imperative that the Parliament finds a way to help them to deal with the crisis.
Here we are, debating rising fuel prices again. As many members know, we have raised the issue in many similar debates in the Parliament—indeed, such debates are almost a regular feature. That said, I congratulate Alasdair Allan on bringing the subject to the chamber. I hope that the debate does not develop into an interisland competition. If it does, being on the mainland, I will be the pig in the middle, although the most important island, the Isle of Skye, is in my constituency. Rising fuel costs are a problem there, too.
This Parliament and the Government's inability to address the plight of the Scottish people makes waiting for the Calman commission's report pointless. Furthermore, unless Gordon Brown acts now for his own country, he will make Alex Salmond's case for him. There is no doubt about that.
We have heard quite a bit about prices at the pumps. Across my constituency, prices have already increased by between 15p and 20p, even since the Grangemouth dispute, which was not so terribly long ago. This morning, someone in Gairloch telephoned to say that the price of diesel there is now £1.40 per litre. The most worrying thing is that we do not know and have no indication when prices will stop increasing, let alone come down. We all share the aspiration of achieving a reduction in fuel costs.
The high cost of fuel is affecting everybody, including our fishermen, farmers, crofters and domestic householders. We often forget the domestic householder, yet the price of oil for domestic central and other heating systems has increased to something like 60 pence a litre. With prices like that, I doubt whether pensioners with a single source of heating will keep their houses warm during the winter.
Our Highland haulage companies are on their knees. Also, a well-known local fisherman in Avoch told me that it cost him £22,000 to fill his boat for the trip to sea last week, but this week it cost £25,000. An increase of £3,000 in one week is significant. I am sure that Alasdair Allan knows the fisherman to whom I refer.
As we have heard, people cannot understand why countries such as France, Spain and Portugal seem perfectly able to apply for and get a derogation on fuel and yet, because of unwillingness down south at Westminster, we cannot do so. Across the Highlands, many tourism-based industries will be hit hard this summer. Why would a domestic tourist come to the Highlands when the price of discounted airline tickets to overseas holiday destinations can cost less than a full tank of fuel?
The Treasury is profiteering from the situation. I have no sympathy with the Prime Minister's unwillingness to reduce tax, never mind his willingness to levy the 2p tax hike that is planned for the autumn. Our national Government at Westminster has the power to address rising fuel costs—if only it had the will. The Government is adding to the cost of fuel by levying tax on it, after which the overall price is hit by VAT. If VAT was charged only on the fuel cost, the result would be an immediate and substantial decrease in fuel costs for the benefit of all concerned.
I congratulate Alasdair Allan on securing the debate and colleagues who have contributed to the debate.
Petrol and diesel prices from Gala to Eyemouth and Jedburgh to Earlston are coming in at 116p and 131.9p per litre respectively. One needs only to compare that with the price of diesel in Edinburgh, which is 112.9p. The figures speak for themselves. The impact across the domestic, business and public sectors is grave indeed. As members know, for those who live in rural areas, owning a car is not a luxury. Anyone who tries to make a regular, return bus journey from Ettrick village to Galashiels, let alone Selkirk, will find it impossible to do that.
As John Lamont said, Munro's of Jedburgh has given Scottish Borders Council three months' notice of its decision to terminate its contract with the council to deliver services, including the service from Galashiels to Berwick. In doing that, the company cited rising fuel costs. The irony is that we are telling people to move away from private transport and on to public transport.
Today, Borders taxi drivers won an appeal against Scottish Borders Council's limitation on tariffs. In making that decision, the commissioner cited increased fuel costs. The fact is that taxi drivers have to take account of what they call dead mileage. If a taxi driver is taking somebody 10 miles, they cannot charge for the 10 miles back again. In rural areas, taxi drivers have varied jobs and they perform many services that are performed by the public sector elsewhere. The situation varies very much from that in urban communities.
Members have mentioned fishing. I am advised that it costs £4,500 to £5,000 to fill a typical Eyemouth vessel, and they are not large vessels. The fishermen have to pay that whether or not they land catch. We all know what has happened to the Eyemouth fishing fleet over the years, for reasons that do not have to be reprised.
One issue that has not been addressed is the public sector. Scottish Borders Council and NHS Borders must pay the costs of the fuel that they use in their facilities. NHS Borders has said that energy costs are one of its biggest burdens in trying to manage its budget. It is as plain as a pikestaff that if a health board, in heating buildings and running hospital equipment, including life-saving equipment, is coping with 40 per cent increases in fuel bills, which must be paid, the money has to be found somewhere. The same must be true of councils, which run social and other services. Today, I have asked both those organisations to provide me with details of their increasing costs in the past three years. We have perhaps failed to note that.
Gavin Brown mentioned the 2001 report by the Enterprise and Lifelong Learning Committee. That was one of those great reports that, I am afraid, gathers dust like many others in the Parliament. Gavin Brown went through many of the issues that were raised in it. One of the recommendations, with which I concur, was to consider basing vehicle excise duty on postcodes. We already have variations in vehicle excise duty, based on the size of our cars and their emissions, so it is possible for duty to be varied. The duty could be based on where the registered owner lives, which might be better than a scheme under which fuel was cheaper in Benbecula than in Glasgow, as people might make long journeys to access the cheaper fuel. We can deal with the issue in a range of ways, but it is time that it was addressed.
We cannot tell committees what to do—heaven forfend—but the Economy, Energy and Tourism Committee might want to consider the matter. However, I would like the Government to have a debate in the Parliament on the impact of rising fuel costs, so that we could have a vote and find out whether members would put their money where their mouth is to help rural communities.
Because of the number of members who still wish to speak, I am inclined to accept a motion without notice to extend the debate by about half an hour.
Motion moved,
That, under Rule 8.14.3, the debate be extended until 6.07 pm.—[Alasdair Allan.]
Motion agreed to.
I, too, congratulate Alasdair Allan on securing the debate and on his speech. As has been suggested, like all of us, Mr Allan's motion is, sadly, starting to show its age. I was contacted at the end of last week by a constituent in Stronsay, who informed me that diesel on the island had now reached £1.50 a litre. Eday and North Ronaldsay have traditionally enjoyed the dubious honour of having the highest fuel costs in the country, yet I was struck by the fate of my Stronsay constituent who is trying to hold down three part-time jobs, for which his vehicle is absolutely essential. Unlike in other parts of the country, on Stronsay and in Orkney as a whole, a vehicle is rarely a luxury; it is a necessity—for work, for getting to the shops, for accessing services or simply for playing an active role in community life. Overall, transport contributes significantly to the costs of living in my constituency.
In that context, it is deeply worrying that Orkney Islands Council has been forced to raise internal ferry fares to meet part of the cost of a further £300,000 overspend arising from fuel cost increases. The minister is aware of the extent to which running Orkney Ferries already eats deep into OIC's resources. The council convener, Stephen Hagan, has written to the Cabinet Secretary for Finance and Sustainable Growth to highlight the on-going financial difficulties. Ministers must respond urgently and positively. In his wisdom, the Minister for Transport, Infrastructure and Climate Change has chosen to spend £22 million on a cheap ferry fare scheme for the Western Isles. I urge him to commit to using a fraction of that amount to ensuring that people who live in the north and south isles in my constituency are not disadvantaged further. I remind him that those are lifeline services.
The persistent and growing discrepancy between fuel costs in my constituency and those on the Scottish mainland penalises most unfairly those who live in remote and island communities. Petrol and diesel in Orkney are routinely 15p to 20p per litre more expensive than they are on the mainland, which is unjustified, unacceptable and unsustainable. Of course, fuel duty is a reserved matter. Liberal Democrat Highlands and Islands members of Parliament have led the fight on the issue at Westminster in recent years. During the passage of successive Finance Bills, Alistair Carmichael and Danny Alexander have argued for a rural fuel discount scheme. They have tabled amendments to apply the European Union derogation that allows member states to charge differential rates of fuel duty in rural areas. As Alasdair Allan suggested, countries such as France, Greece and Portugal apply such differential rates. The UK Government even voted in favour of the French scheme, yet the Labour and Tory parties have united to frustrate the introduction of such a scheme in the UK.
The grotesque disparity in Scotland between fuel prices in urban areas and fuel prices in island and remoter communities requires urgent investigation. Again, Liberal Democrats have taken a lead. When Alistair Carmichael leads a delegation to meet UK Treasury ministers next week, he will again make the case for an urgent investigation into the huge difference in prices across the country. I was pleased that the First Minister offered his Government's support for such an investigation, when I raised the issue with him at First Minister's questions earlier this month. Perhaps when the minister winds up this debate, he will update the chamber on what action has been taken since that commitment was made.
Part of the delegation to the Treasury will include representatives of the National Farmers Union Scotland. The impact of higher fuel costs is being felt across the board in my constituency, but the farming and fishing industries, both of which are critical to sustaining the local economy in Orkney, are suffering particularly badly.
Tavish Scott highlighted the problems that are faced by the fishing sector. The fuel cost alone of a 10-day trip to Rockall for an Orkney trawler is around £28,000. Such costs are impossible to pass on, and there is a risk that pressure will be put on more vulnerable fishing grounds closer to land.
In the farming sector, increased fuel costs are compounding other serious cost increases for feed, fertiliser and haulage. Although an immediate change in behaviour may not take place, serious thought is being given to rationalisation in the future. The consequences for Orkney, where farming accounts for more than 30 per cent of the local economy, cannot be overstated.
I congratulate Alasdair Allan on securing this important and timely debate. I urge the Scottish ministers not only to maintain pressure on the UK Government, but to face up to their own responsibilities and to consider the options that they have at their disposal.
I congratulate Alasdair Allan on once again pointing out to us that we are at the wrong end of the highest increases in fuel taxes that there have been. Fuel taxes are at the root of this problem, as are the transport costs to islands and remote areas.
I remind Des McNulty that the motion talks about the costs in
"Scotland's island and remote communities".
I would like to focus on a number of national points before homing in on a local one.
We can learn lessons from the way in which other countries deal with such problems. Alasdair Allan mentioned the derogations that allow certain parts of la France profonde to have lower duties. How do they do it? How do the French avoid petrol tourism? We should find out. It would be useful to know how they do it and it is about time that we found out. That would not require a question at Westminster.
We also need to know whether, as on the motion at Westminster, it is possible for this Parliament to have a united voice on the need for a fuel regulator. We should be able to say that everyone in this chamber believes in that, but I have yet to hear the unanimity that there should be to deal with the extra revenue that the chancellor is getting from every fuel increase.
Norway has a national policy to moderate the price of fuel in each part of the country, seeking equivalence. In addition, during the general election, a journalist from Slovakia said that prices across the country were the same. Slovakia does not have the same problems as we do in our islands and remote parts of the Highlands, but it is in the European Union and it is making sure that no part of the country is disadvantaged. Why can we not do the same? We should find out, in detail, the measures that those other countries are taking.
Much has been said about fishermen, and I have heard appalling tales about the costs that they must bear to go out to sea. To make their living nowadays, they must often go further than they would have had to go before.
We must also consider the ferries—not just the ferries that sail among the islands, which Liam McArthur mentioned, but the ferries that sail to the islands. Private ferry operators are in a worse situation than CalMac and NorthLink. CalMac and NorthLink have built in the ability to pay for fuel for their services. In a hidden way, the taxpayer is paying for the vast fuel increases.
Having learned that many people share such concerns, could the Parliament come up with a series of actions that we would like to take forward in a united way at a local level? We could put it to the Government in London that not only do we in Scotland speak with a united voice, but we respect the fact that remote communities often bear the brunt of fuel price increases more than other parts of the country. I echo the calls for an OFT inquiry into fuel transport. It costs £60 to take bales of hay across the Minch. Should a lifeline national ferry service, CalMac, be charging for fuel in such a way?
As an MSP for the Highlands and Islands, I agree with the points that Alasdair Allan raised on behalf of people in the Western Isles and the Hebridean islands. I commend the letter on the subject written by Argyll and Bute councillor Duncan MacIntyre on behalf of Highlands and Islands transport partnership.
I want to highlight the plight of the fishermen, hauliers, farmers and businessmen, from Oban to Campbeltown in Argyll and Bute, who face bankruptcy due to increasing fuel costs. The cost of red diesel, used by farmers and fishermen, has risen to more than 70p a litre. In January 2007, the cost was 33p a litre; in October 2007, it was 44p a litre; and now it is a massive 71p a litre—a rise of more than 100 per cent. Many fishing boats are not going out because to do so loses money. Fishermen are making jokes about going back to sails and oars, but the livelihoods of fishermen and their families are no laughing matter.
How has such a serious situation developed in such a short time? I hate to bring politics into a members' business debate, but I am forced to do so. This disastrous scenario has developed because the present Labour Government is prepared to profiteer and is standing on thin ice as long as it can to refuel its own empty financial tanks. It could not care less about how the fishing and farming communities of rural Scotland cope with the fuel price tsunami, and it has not bothered to check.
In the middle of March, I asked the Scottish Government about the fuel prices for the fishing industry. Its answer was that a task force was being set up. What has it done? That was more than two months ago and, unless I am mistaken, the task force is having its first meeting on Friday. It is hardly a fast reaction task force, although I will be happy if the minister tells me I am wrong.
I congratulate Tavish Scott on his contribution. The price of diesel in Colonsay is £7.50 a gallon. I say to the so-called environmentalists and members of the Green party who seem to revel in rocketing fuel prices that that pressure is forcing the prawn trawlers and scallop dredgers of the west coast to put more effort into areas closer to home. That is contrary to what they should be doing if they want to conserve stocks. The fishermen know that it is not good for fish stocks, but what can they do? I have been told that French fishermen are being heavily subsidised, but I have yet to ascertain the truth of that. At least fishermen get between 9p and 10p back on fuel duty. That does not apply to farmers and crofters who, as well as the fuel price increase, have had to face a 200 per cent increase in fertiliser prices and a 100 per cent increase in animal feed prices within a year.
Everybody knows that primary producers cannot raise their prices to cope with sudden fuel increases. It is scandalous for the Government to ignore that, although it may not be able to ignore the consequences of those increases. Many rural industries depend on a good haulage service. Forestry, agriculture, fish farming and the food and construction industries—which deliver basic requirements—all depend on haulage, yet hauliers in Campbeltown are laying off drivers and selling their lorries. Who will carry the freight and, for that matter, who will carry the can? The Prime Minister fiddles; on fuel he is fiddling us all. I have it on good authority that while the price of crude is the same worldwide, as we speak the price of petrol at the pumps in Abu Dhabi is 20p a litre. In Campbeltown, it is 130p a litre—650 per cent more. No wonder people are screaming with rage. Something must happen, minister.
I also congratulate Alasdair Allan on securing the debate. He represents a constituency that I know well. Indeed, many of his constituents are members of my extended family, and therefore I am well aware of the importance of many of the issues that he has highlighted. The issues around fuel costs apply to island communities in general and to many remote rural communities; they also apply to various sectors of the economy that are important to us in urban and rural environments. The Scottish Fishermen's Federation has highlighted its concerns about its sector, but fuel costs can have significant impacts for the wider economy through the impacts on road haulage and road passenger transport, as Stewart Stevenson highlighted earlier this afternoon.
Ministers in the UK Government and the Scottish Government must consider what they can do to address the causes of the problem and develop solutions to it. I was interested to read in The Press and Journal this morning what Gordon Brown had to say about the international supply issues—in which the UK Government has a particular locus—and demand-reduction policy, which this Parliament debated only an hour ago in the context of climate change.
I am glad to say that, this afternoon, the Prime Minister and the chancellor went to the north-east of Scotland to meet members of the board of Oil and Gas UK to consider supply and demand issues in the context of the UK continental shelf. I understand that that meeting, which was attended by a wide range of representatives from the UK production sector, was constructive and considered not only introducing new developments but maximising recovery from existing fields. The UK Government has today approved new developments with the potential to produce an additional 50,000 barrels of oil at peak. I also understand that the industry expects that recent changes to the petroleum revenue tax will stimulate investment in up to 30 existing fields in UK waters.
Of course, the supply of fuel is not only a matter of how much oil is extracted from reservoirs; it is also about how that oil is refined and marketed. The UK Petroleum Industry Association has highlighted the challenges that face the downstream sector of the industry in rebalancing the output of refineries throughout the UK. Not so long ago, the development of unleaded petrol as a cleaner alternative fuel appeared to suggest to the industry—and, I think, to other stakeholders—that future demand for diesel was likely to decline, but that has proved not to be the case.
Is Lewis Macdonald in favour of a derogation for Scotland's island and remote rural communities?
That is one of the proposals that is made possible by the support that the UK Government has given it in the European context, which creates the opportunity for a case to be made. It is certainly one to which I would listen with great interest.
We must consider the balance between refining petrol and refining diesel, because it is fundamentally an issue of supply and demand. To achieve that rebalancing will require substantial capital investment. As in the upstream oil industry, the economies of scale to be gained from addressing that issue on a UK basis are highly attractive, but it is important that we know whether the Scottish ministers, through their membership of PILOT, will support the exploration and production initiatives that the UK ministers have taken forward today. It is also important that we hear what role the Scottish ministers will play in supporting the refinery sector in rebalancing what it produces to address the issues for our island communities and Scotland more generally.
This important issue has been around for a long time—I remember delivering a petition on the subject to the Treasury along with Tavish Scott in 1999, and one could argue that the issue cost Hamish Gray his seat as long ago as 1983—but it has never been more important than today.
I will take the minister to an area that he knows extremely well: the village of Durness in north-west Sutherland. I spoke to Robbie Mackay today, who told me that the price of petrol in Durness is £1.29 and that diesel costs £1.43; he also told me that, alas, on Friday diesel will go up to £1.45.
Another person well known to the minister is Iris Mackay of Mather's shop in Sangomore, who has a school transport contract. Earlier in the year, she received an inflationary increase in what the council pays her to provide that transport, but the fuel price increases have robbed her of all that and may well make the whole business—that precious little business in Durness—all the more vulnerable.
John Farquhar Munro referred to the cost of filling a fishing boat, but I will give a smaller-scale example. I spoke to a friend of mine in Tain High Street earlier this week—William Ross, of Arabella, by Tain. He said that the cost of filling his big mower has gone up from £6 in the back end of the year, when the grass stopped growing, to no less than £13.95 today. If that had happened with any other commodity—be it food or anything else—we would be astonished.
On a larger scale, I give members the example of Mr Calum Goskirk in Sutherland, who works with the Government-sponsored care and repair scheme. Given the definition of his job, he covers many miles indeed. Under the tax situation—I am moving on to an issue that has not yet been raised—the first 10,000 miles at up to 40p per mile are tax free under Treasury rules. After that, one may not go over 25p per mile. Those rules have not been revisited since 2002, so he is losing out. Even if he were reimbursed at a higher rate, the Treasury would whip that off him double quick. That issue needs to be remembered.
A third example, and one that is very sad indeed, is that of a small livestock haulier in Caithness. Until just days ago, he ran three livestock lorries, but he has had to get rid of one driver and go down to two lorries.
Will the member give way?
No, I will not give way at this stage.
That means that 33 per cent of the haulier's turnover has been removed. That one job might not sound like much in the scheme of things, but given the decommissioning of Dounreay and the economic threats that Caithness faces, it is extremely bad news.
There are several things to consider. First, the whole notion—if we consider it from a Highland perspective—of taxing with the consent of the tax-paying general public is actually in some danger. I have never heard such a heavy spate of criticism than what I am hearing right now from ordinary people, who are deeply worried about the situation. Remote and economically fragile areas, such as the islands and parts of the Highlands, should be on the conscience of Holyrood and Westminster—they must not be forgotten. The 2p escalator should not be put on in the back end of this year. This is about tax—it is not about talking about turning the tap on—which must be addressed, because nothing else will do.
With regard to domestic heating oil, the increase is hitting our families as much as it is hitting anything else. That is another source of letters and emails to all members. If the national Government does not come forward with something—I hope that it does—and if it still talks about turning on taps, it behoves the Parliament, as Rob Gibson said, and the Scottish Government to work up a scheme and place it before the national Government with the insistence that it be acted on.
I congratulate Alasdair Allan on bringing this debate to the chamber. There has seldom been a debate of more importance to my constituency in recent times.
I congratulate Dr Allan on securing the debate. From the passion that has imbued every speech, it is clear that everybody knows how important the issue is. Jamie Stone was absolutely right to focus on the effect of fuel costs on individuals, as well as on the economy throughout Scotland and not just in the island communities.
I will mention two individuals. I know very well the people about whom Jamie Stone spoke. This debate is about Iris Mackay and the services that she provides to the community in which she lives. Providing those services is becoming more difficult and supplying goods to that community in a very remote part of Scotland is becoming ever more expensive.
It is a debate about Hector Stewart, who was quoted today in the fishermen's press release to which Lewis Macdonald referred. He is a fish processor in Uist—I have known him well for years—and he said:
"We receive the same price for top quality lobster and scallops as we did 15 years ago but our operating costs have nearly doubled in the last 6 months."
I accept—the Government accepts—the reality of that situation. It is about the expectations, the hopes, the lifestyles and the survival of the people we are talking about and of the work that they do. I could quote many more examples. I had an e-mail this morning from David Sulman, who is well known to many people in the forestry sector. He pointed out that, in the forestry sector, costs are rising again and again and there are real questions in what was, and still should be, a good time for forestry in Scotland.
I will focus on one or two specific sectors, but first I will say this. In conversation with Hector Stewart, Iris Mackay and David Sulman, I would have to make a key point. I make it without political prejudice, but I still make it. The simplest solution is often the best: Occam's razor applies in this situation as in any other. Clarity in the decision-making process would come about if this Parliament had the powers to make the full difference. It is frustrating to me, as a Scottish Government minister, to have to stand here and talk about a balance of powers—to have to say that, although this Government will be doing everything that it can, it has limited powers in this area and must look to a United Kingdom Government that, so far, has done nothing.
Will the minister give way?
I am sorry, but I want to make some progress.
My honest response to Iris Mackay and Hector Stewart is that this Government will do everything that it can do—within its powers—to make a difference.
Let me start with fishing. The Cabinet Secretary for Rural Affairs and the Environment and I have been in close touch with the fishing industry in recent weeks. I met representatives from the Mallaig and North-West Fishermen's Association in Oban on 5 May, and Richard Lochhead met representatives on 18 April and 12 May. What Mr McGrigor said in that regard is wrong—the decisions that were made at that meeting on 12 May, the ground for which was prepared by my meeting on 5 May, were acted on very quickly. The fuel task force will meet later this week to undertake its urgent task. Its membership is wide-ranging and represents all parts of the industry. Whatever we can do with that task force, we will do.
Our first step was to commission a report on the trends in fuel prices and the implications that that has for our fleets. The fuel task force is looking at short, medium and long-term measures and at the provision of short-term assistance with non-fuel costs—which is something that is within our powers—such as the cost of the vessel monitoring systems warranty and the annual maintenance of life rafts. That might sound small, but we will try to make every contribution that we can.
We have raised with the UK Government the wider issue of the steps that can be taken to reduce the cost of fuel to the fishing sector as a whole, and we are continuing to press the European Commission on the need for a level playing field on subsidies. We are moving ahead in every way.
On 19 May, Richard Lochhead spoke to Hilary Benn in Brussels and he also spoke to the commissioner. We will continue to press the UK Government about the seriousness of the issue.
Will the minister suggest to the UK Government that a joint commission between the Scottish Government and the UK Government on fishery fuel issues would be useful?
We will make such representations and have often done so. We need the UK Government to show the same sense of urgency that the Scottish Government has shown—then we will get progress, I am sure.
Our fuel task force will report for the first time at the end of August. That is the first action that will be taken in the medium term, following on from the short-term measures that I have described. We also have a long-term plan. We are trying to do as much as we can. We have already committed £300,000 to extend payment of the VMS warranty and we will provide a further £400,000 for the annual maintenance of life rafts.
I am clear that there must be a level playing field across Europe and we have been pressing hard on that. We have been monitoring the development of the French and Spanish schemes to support their industries and we have made it plain to the European Commission that we expect it to ensure that everyone abides by the same EU rules.
There is no easy solution to the problems of the fishing industry, but this Government will continue to do all that it can do to help.
Among the issues for which the minister and his Government have responsibility is the funding of local government. A number of members have illustrated the problems that local government budgets are facing because of unprecedented rises in costs. Will the minister undertake to discuss the matter with his colleagues and face up to the reality of the pressure on local government finances?
I will certainly undertake to have those conversations, and I know that my colleagues are already having them. Of course, the context in which such discussions take place involves the pressure that we are under due to the UK settlement. However, there is no doubt that we recognise the pressure on local authorities—no one is denying that pressure; to assert that we are denying it is wrong. I notice, for example, that Highland Council today pointed out that its costs have risen by £725,000. A proportion of that is taxation to the Treasury, so there is a solution available that the UK Treasury should volunteer.
I was going to make this point later, but I may be running out of time already. The UK Treasury is receiving £4 billion more in revenue than it expected. Where is that money going? Is it being ploughed back into Scotland's rural communities or given to petrol consumers? It is not. Gordon Brown had a brass neck to come today to Aberdeen—the oil capital of Europe—carrying not a rebate cheque but some vague promises. We need action from the UK Government.
Will the minister give way?
No, I will not.
We need action for the haulage industry, which is immensely dependent on fuel. Fuel prices for hauliers have risen by 32.5 per cent in the past year, which represents a 14 per cent increase in haulage costs. Ministers have met the haulage sector and Mr Swinney has written to the Chancellor of the Exchequer on several occasions. In December, he wrote seeking a differentiated scheme of taxes for rural areas; the Treasury rejected it.
The First Minister wrote to the chancellor in March asking him not to implement the planned 2p increase in fuel duty, and seeking the introduction of a fuel duty regulator to stabilise prices and a study comparing UK haulage prices with those in other EU countries. The chancellor's decision to postpone the proposed 2p per litre increase was welcome, although it is only a postponement. We still await a reply to the other points raised.
Mr Swinney has just written in response to the UK budget, highlighting once again the impact that high fuel costs are having on our rural communities and businesses. I long for the day that we can act rather than write, and I hope that that day will come soon.
I will finish by talking about the huge issue of fuel poverty. In fact, we could spend all evening discussing the variety of pressures on life in Scotland from higher fuel prices, but I will make one final point.
The cost of domestic heating oil, which has often to be used when there are no alternatives, has risen from 16p to 61p a litre. There are fears that the price may top £1 by next year. That affects 113,000 Scots households—I declare an interest in that one of them is mine. To put those figures into perspective, we are talking about 25 per cent of households in Highlands, 30 per cent in Shetland, 33 per cent in Orkney and 46 per cent in the Western Isles. They are often the households of those who are most vulnerable. It is their only possible heating source, and some people face bills of up to £3,000 this year. A single fill of a tank of 1,000 litres has risen from £180 two and a half years ago to £550 now.
That is a very difficult situation, and we must have a regime in Scotland that can deal with that and help to defer some of the global impacts, as well as those from domestic policy decisions.
This Government will do everything that it can within its present powers, but the situation is a clear illustration that we need real powers to make a difference.
Meeting closed at 18:07.