Clause 10
Finance Bill
1:45 pm
Julia Goldsworthy (Shadow Chief Secretary To the Treasury, Treasury; Falmouth and Camborne, Liberal Democrat)
I beg to move amendment No. 1, in clause 10, page 6, line 23, at end insert—
‘(2A) After section 6(1A) there is inserted—
“(1AA) The Treasury may, by order made by statutory instrument, specify lower rates of duty under subsection (1A) in respect of hydrocarbon oil products sold in remote areas.
(1AB) For the purposes of this section ‘remote areas’ shall be defined in regulations made by the Treasury by statutory instrument.
(1AC) Orders or regulations made under this section shall not come into force unless approved by a resolution of the House of Commons.”.’.
I should point out that we are now in the environmental section of part 1 of the Bill, which deals with charges, rates and thresholds. I am reminded of comments that the hon. Member for Wolverhampton, South-West made in the Committee of the whole House, where he spoke, with regard to environmental measures, about the need for carrots and sticks to try to change behaviour. Since we are dealing with duty rates, the clause is obviously intended to be a stick to encourage changes in behaviour.
Of course, we welcome the changes outlined in the clause, which are proposed to take place in October 2007. Those changes represent indexation, following a freeze of these duties since 2003. What it will mean is that there will be some movement on the take of environmental taxes as a proportion of the total tax take. Therefore, it is an important step in the right direction, and one that we support.
However, what the amendment tries to highlight is the principle that, for some people, even if there is a very big stick they will still not have the opportunity to change their behaviour. The amendment would add a new subsection to clause 10, which would enable the Treasury to specify lower rates of duty on fuel in remote rural areas. It would go on to allow the Treasury to specify what it considers to be remote rural areas by statutory instrument.
The amendment relates to a principle that is allowed by article 19 of the EU energy products directive, which allows member states to apply for a derogation to reduce duty rates in specific areas. That measure was adopted in 2004 by the French Government, with the support of UK Ministers and other EU member states in the Council of Europe; Portugal and Greece have also adopted it. I am sure that this measure will be familiar to some members of the Committee, because it is identical to an amendment tabled by my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) on Report for the Finance Bill last year. It is because we have changes in fuel duty in the Bill this year that it is even more relevant to raise the issue now.
In future clauses, we will deal with greater differential rates for vehicle excise duty, so it is clear that there will be action to encourage people not to use their cars so much. It is very important at this stage that we consider those people in very remote rural areas—I am not talking about ordinary rural areas, but incredibly remote rural areas—who are hit not by a double whammy but a triple whammy. Very often, they have lower incomes than people in other parts of the country. In the highlands, including in the constituency that my hon. Friend the Member for Inverness, Nairn, Badenoch and Strathspey represents, average incomes are 85 per cent. of the national average. Across the whole of Cornwall, they are about 20 per cent. lower.
Therefore, in the first place, people’s incomes in remote rural areas are lower. Also, their costs of travel are higher, because they have further to travel and there is often no public transport at all. On top of all that, they then face higher fuel prices. It is the duty that forms a very large proportion of those prices. In some very, very remote rural areas, we are talking about differentials of 10p to 20p to the litre.
That is the issue that the amendment seeks to raise in order to highlight a principle. We welcome the action that the Government are taking, but do they recognise the impact that it will have in very remote areas? People in such areas have lower incomes, so their fuel costs will represent a much higher proportion of their outgoings. The measure will not only have an impact on the personal finances of individuals living in those rural areas, but undermine the economic viability of many of those rural communities, because if people travel further away to buy petrol, thereby emitting more carbon, they will probably consume services and buy goods in that community as well, which will mean that their own local community, where fuel prices are higher, is undermined more widely than simply at the petrol pump. Goods that could be purchased in that local economic community will instead be purchased elsewhere. It will be undermined in that way as well.