Orders of the Day — Petrol (Price)

– in the House of Commons at 12:00 am on 15th January 1975.

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11.10 p.m.

Photo of Mr David Steel Mr David Steel , Roxburgh Selkirk and Peebles

I am glad to have the opportunity to raise the question of the cost of petrol as it affects rural communities. This has been a matter of concern for many years and I do not pretend that it is a new issue, but it has become a greater issue in recent weeks with the successive increases in petrol prices.

One of the difficulties of in dealing with the subject is that no one Department is responsible, and I am grateful to the hon. Gentleman and Financial Secretary for undertaking to reply in so far as he is able to do so and in so far as the Treasury is responsible for some aspects of policy. But the Department of the Environment, the Scottish Office, the Welsh Office and the Department of Energy—all are involved. I regard that situation as one of the great difficulties —namely, that a series of independent departmental policies have been pursued over the years by successive Governments which have had the effect of causing real hardship in rural communities. I appeal to the Government to give some recognition to that fact and to pay some attention to the situation so that it may be put right for the future.

Ever since the policy was pursued of giving grants to railway lines running at a loss, there has never been any policy of transferring savings from the closure of railway lines to support other forms of transport in areas affected. I am the only Member of this House who represents three counties, but in the days before I was a Member of Parliament the three counties had a network of railway lines. Today there is not a single railway line or railway station in the three counties.

When the last major rail closure took place, the Government of the day said that it would save £750,000 a year. If only one-tenth of that sum had been allocated for alternative transport, the position today would have been easier than it is. Therefore, if the Government are to continue their policy of rail closures, to save money, I appeal to them to ensure that some of the money so saved should be allocated to support transport in other ways. Instead the only form of support we have directly from the Treasury is support through the rate support grant to local authorities to subsidise bus services.

Already in England and Wales—and, I suspect, shortly in Scotland—a circular has been issued pointing out that this element of rate support grant will have to be cut by 50 per cent. by 1979. At a time of inflation, a cut of that magnitude means that we can look forward in a few years ahead to severe cutbacks in capacity of local authorities to subsidise the continued operation of bus services in these same areas. Therefore, it is relevant to ask: what alternative policy can the Government pursue?

The Conservative Government toyed with the idea of introducing new regulations governing the use of mini-buses and enabling them to be more widely used. Unfortunately, this never saw the light of day. I have given notice of this question. Is it any part of the Government's intention to pursue this idea to see whether there is any possibility of enabling the vehicle, commonly known as the mini-bus, to be more widely used, with fewer regulations and less control than those that apply to the large bus?

I put this question because of an example in my constituency to which I shall specifically refer, which took place during the recent bus strike in Scotland. In my area—and, I suspect in the constituencies of many hon. Members who are attending the debate—people travel quite long distances to work. I am referring not to round trips of 20 to 30 miles, which are commonplace, but to trips of 60 to 70 miles a day.

In one village in my constituency—a village that is only about 12 miles from the nearest town—during the bus strike a group of 15 workers got together to hire a mini-bus at a cost, per head, of £1·50 per week. They operated that mini-bus quite successfully. One person collected the fares and paid for the hiring of the vehicle for the period of the strike. When the strike was over they found that this operation, which had cost the individual worker £1·50 per week, was replaced by the service bus at £2·50 a head per week. The bus company complains that this service is losing money. However, the traffic commissioners prevent the continuation of this initiative which is to the benefit of the local community.

Photo of Mr George Younger Mr George Younger , Ayr

I agree with the hon. Gentleman in what he is saying, but he is not quite right about the rate support grant position. Half the cost of the support given to a rural bus service is a direct grant covered in full. The other half is eligible for rate support grant. Therefore, there is a little more assistance than he made out.

Photo of Mr David Steel Mr David Steel , Roxburgh Selkirk and Peebles

That is correct. I was not going into the detail. I am aware of the 50–50 split on the finance.

I move to discuss the rôle of the traffic commissioners because I am puzzled about it. In circumstances like these they have not only prevented the services taking place, but in other cases—for example, the Post Office has introduced in my area and in many parts of Scotland, I think even faster than in England or Wales, excellent mini-bus postal deliveries combined with the carrying of passengers—insisted that they charge fares comparable with the old, out-of-date bus services. The Post Office hase often been required to charge higher fares in rural areas than it would recommend in its own commercial judgment. That cannot be right. I should like some explanation from the Government why that should be so.

Having referred to the possible use of mini-buses and the loss of public transport from rural communities—I live in a village which used to have a twice-weekly bus service, but now has none, so I have a personal interest—I come back to the point that in many rural areas the private car is now, of necessity, the only form of public transport. Therefore, when the Government, in pursuit of their energy policy, decide—properly, in my view—to increase the tax on petrol directly to discourage the use of the private car, they do so in a wholly indiscriminate way, and the result is a severe increase in the basic cost of living of people who have no alternative form of transport.

It is not a question of persuading people to use the Underground, the bus service or the commuter train, because they are not available. Moreover, these areas coincide with areas of relatively low wage earning. The cost of travel to work for the parish minister, the village schoolteacher, the farm worker and others forms a high percentage of their weekly income. This is clear from the correspondence which I, and no doubt other hon. Members, have been receiving from constituents since the VAT increases on petrol imposed by the Government in pursuit of their energy policies.

I suggest that this is where the direct responsibility of the Treasury comes in. It is up to the Treasury to consider ways of giving direct relief to areas most severely affected by these recent changes.

I should like to suggest three possible remedies for the Government's consideration. I am not pretending that any one of them is perfect, but I think that in different ways they would help.

First, in areas such as this, and possibly in the country as a whole—I know that this has been considered by the Inland Revenue on many occasions—there may be a case for allowing the cost of travelling to work as a necessary expense against income tax. Such a scheme would be administratively relatively simple to operate.

Secondly, the very fact that there is local authority registration of both private and commercial vehicles means that it would be administratively possible to introduce a system, even with the computerised centre, of a regionally-varied vehicle excise duty. I know that such a scheme could be evaded, and there might be loopholes, but the idea is worth considering. If the Government are serious about stopping the use of the private car in London, instead of talking about imposing a £1 per day parking charge they should consider a steep increase—possibly fourfold—in the £25 excise duty, while making a reduction in the rate in parts of the country where the private motor car cannot be regarded as a luxury.

Thirdly, some countries operate a two-tier price system for petrol. There is no reason why—given that the Government have prepared a system for universal petrol rationing—certain areas could not be designated as lacking in sufficient public transport to merit the issue of coupons which would entitle the recipient to purchase petrol minus a substantial element of the tax up to a certain quantity per motor vehicle. This would be more cumbersome administratively, but it would be fair and be seen as a method of helping the areas of the country most affected.

I recognise that this is not a matter for one Government Department, and I am glad to see Ministers from three Departments here tonight, but this is a feature of our economy that has been ignored for many years. The problem has become acute because of recent Government policy, and I hope that the Financial Secretary will be able to give us some assurance that the Government are taking seriously the effect on rural communities.

11.22 p.m.

Photo of Mr Geraint Howells Mr Geraint Howells , Cardigan

It gives me great pleasure to support what was said by my colleague and friend the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) in raising the important issue of high petrol costs in rural areas. I endorse everything that he has said, and I shall not cover the same ground, because he has outlined the hardship experienced by families in rural areas of Scotland.

It is also true to say that high petrol prices will have a disastrous effect on the cost of living in the rural and urban areas in Wales. Many settlements and villages—I am sure the Minister is aware of this—have no public transport. Certainly, many villages in my constituency have no public transport of any kind.

Local authorities are doing their utmost to try to solve the transport problem, but I believe—and I have tabled a Question to the Minister for reply tomorrow—that there should be a comprehensive policy to help the local authorities and families living in the rural areas.

I am convinced that if the Government do not introduce a comprehensive policy on rural transport and on the price of petrol, depopulation will accelerate and families will move from the countryside to the towns—a trend that we must avoid at all costs. We have been fortunate in Wales over the past few years, in that people have tended to move from the towns to the countryside and have helped to strengthen communities and hamlets. Unless there is a comprehensive policy—and the matter is urgent—the village structure will become unbalanced.

I feel sorry for the elderly. If they go to the local post office for a stamp—the price of which will be increasing from 5p to 7½p—or to the store for their bread or sugar, they will have to pay a few more pence in petrol for the car. I feel sorry for those between 14 and 17, who are full of life. In an area like Cardiganshire, where there is no rural transport, they become isolated and over a period move away from the villages we are so proud of.

I am also sorry for the workers. The average earnings in rural areas, including many parts of Wales, are much lower than the national average. Help is needed to retain a strong labour force in rural areas. I urge the Minister to give this help before it is too late.

11.27 p.m.

Photo of Mr Hector Monro Mr Hector Monro , Dumfries

As the Member for the neighbouring constituency, I support what the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) has said, particularly about the penal petrol situation. He was right to emphasise the difficulties about buses and the traffic commissioners, but what concerns the countryside most is the steep rise in petrol prices, which is handicapping employment and devastating social life.

Cars are essential; there is no alternative to them. I hope that the Government will consider some way of alleviating the impact of the price of petrol in rural areas, in England and Wales as well as Scotland. The large attendance at this debate has shown the strength of the complaints in rural areas at present.

11.28 p.m.

Photo of Dr John Gilbert Dr John Gilbert , Dudley East

I congratulate the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) on having secured this debate, on the eloquence with which he stated his case, and on the almost unprecedented attendance for an Adjournment debate of hon. Members wishing to contribute as well as listen. I was grateful that he recognised that the Government are conscious of the problems. This is evidenced by the presence tonight of two of my colleagues, from the Department of the Environment and the Scottish Office.

If these problems were easy to solve we should not be discussing them tonight. I am probably the least competent of the three Ministers present tonight to discuss many of these matters, but I shall do my best.

The subject of mini-buses is probably the one on which I can give the hon. Gentleman least information, but the Under-Secretary of State for the Environment has initiated a thoroughgoing review of rural transport. Discussions are already going on with local authorities. This is not a short-term study and we do not expect immediate results. I accept that the recent increase in petrol prices exacerbated the matter, but we are talking about seminal trends, which have grown up over several years.

I am glad I carry the hon. Gentleman with me in terms of the complexity of the matter. No solution for the rural transport problem is excluded from the remit of the committee. I hope that it will not be too long before some of its work sees the light of day.

We accept that in many cases the increase in petrol price does not mean that people use their disposable income in a different direction because there is just no other way for them to travel. We accept that it simply means a reduction in their net disposable income. But where there are no bus services there are, for example, developments like the use of car pools, whereby people can integrate their social and economic life and share their transport with neighbours.

I agree that that is not an adequate solution in the long run, although the growing use of car pools is to be encouraged in urban as well as rural areas. I have just returned from the United States, where I saw for the first time on freeways into Los Angeles a special lane reserved for buses and car pools. If one is carrying more than three people in one's car, one can use a special fast lane. We might consider such a system in this country. I am not taking that suggestion from my hon. Friend's departmental brief, and I am not, of course, committing him in any way. Our freeways are not as wide as those in some parts of North America, and we might find ourselves in difficulty, but I cite this example to show that there is a whole range of possible solutions which my hon. Friend might be prepared to consider.

The hon. Gentleman referred to bus service subsidies and was supported by the hon. Member for Cardigan (Mr. Howells). In 1974–75, the amount of support to buses will be about four times as great as in the previous year, and that is a step in the right direction. I understand that this very high level of subsidy has been accepted in England and Wales but has not yet been settled in Scotland, although a settlement may be expected there shortly.

At the same time, the Government have been discussing with local authorities areas in which rapid growth in their rate fund expenditure could be pruned and held in check. Transport subsidies have been covered in this guidance. The Government's aim—this is a platitude but nevertheless a statement of fact—is that bus operations in general over the next four years should become more viable.

One of the consequences of the increase in petrol prices—not one envisaged or desired—is that bus services are likely to become more commercially viable because a greater pool of customers is prepared to make use of them if they are provided—which is a very big "if" in questions of this kind. However, it does make the viability of bus services a more likely prospect, so there is in that factor certain cold comfort.

The hon. Gentleman asked me about savings from railway lines, and whether such savings could be transferred towards transport in rural areas. Few savings can now be made in this direction, because so many lines have already been closed in the rural areas. I cannot, therefore, hold out any hope that much progress can be expected in that direction.

The hon. Gentleman also asked questions on which I am on rather firmer ground, as a Treasury Minister, although I am still not, perhaps, in a position to give more welcome answers. First, he asked about the possibility of having travel-to-work expenses deductible for income tax purposes. This suggestion is often advanced, but it presents many difficulties.

There is such an element of personal choice, in so many cases, as to where a person lives and where he works. I know that in many cases a man has no option but to travel to work, but for the main body of taxpayers there is a considerable element of choice as to where they work and, far more important, where they live. It would be exceedingly difficult to produce an equitable arrangement for deducting travel expenses to work for everyone. For example, some people with heavy travelling expenses are enabled, as a result of those heavy expenses, to live in an area of low housing costs, while others not so benefiting would say that such a person was getting an advantage which they did not have because, by incurring higher housing costs, they did not have the same level of travelling costs. There would be an element of inequity there.

Furthermore, not all those who live in the countryside suffer from the low incomes so graphically described by the hon. Gentleman and his hon. Friend the Member for Cardigan. For instance, there are those who live in Sussex—in the stockbroker belt—who deliberately incur high travelling costs because they want the pleasure of living in a nice part of the country. I do not imagine that it would be part of the hon. Gentleman's case that they should have assistance in the way he suggests, having their expenses subsidised at quite high marginal rates of income.

Photo of Mr Hector Monro Mr Hector Monro , Dumfries

But the stockbroker belt has a commuter railway service, and—

Photo of Dr John Gilbert Dr John Gilbert , Dudley East

I would rather not give way. I am trying to answer the points raised by the hon. Member for Roxburgh, Selkirk and Peebles, whose Adjournment debate this is. I note what the hon. Gentleman says, but season tickets to the constituencies represented by some of his hon. Friends at first-class rates are quite expensive, and it would be very difficult to identify for that purpose taxpayers travelling from a rural area to an urban area, and so on. Moreover, many of my constituents living in an urban area have high travelling expenses from one part of the conurbation to another. The problem of heavy travelling expenses is not confined to the rural areas. There is also the problem of defining a rural area. This is not nearly so simple as might appear in an exchange across the Floor.

The hon. Gentleman asked me also about the possibility of a two-tier pricing system for petrol. As he knows, just before Christmas, the Prime Minister indicated that we are thinking about the possibility of introducing a system of that sort. I cannot usefully say more at this stage. The hon. Gentleman knows what the Prime Minister said. Studies are going forward, and I hope that some news will come from them before long. I cannot give a date, but the matter is being seriously studied at a high level.

Next, the hon. Gentleman asked about the possibility of a regionally-varied vehicle excise duty. There are considerable technical difficulties here. A vehicle licence is issued with respect to the type of vehicle and not with respect to the driver of it. The person in whose name a vehicle is registered is not necessarily the owner, which fact presents a further difficulty. Under the existing law, therefore, if people living in certain areas could, according to the hon. Gentleman's proposal, be permitted to register cars on payment of a lower rate of vehicle excise duty, it could open the way to evasion on a large scale by people not actually living there and not using their vehicles in that area. It would be a difficult matter to police. Even if there were different coloured licence discs, one could never say where, exactly, the home of the car was, or whether the person who should be entitled to the preferential rate of duty was the person in fact benefiting from it. I do not think, therefore, that schemes of that sort offer a way forward, and I feel that I should mislead the hon. Gentleman if I suggested that I saw a great deal of practical value in them.

I think that I have touched on all the points which the hon. Member raised, though I recognise that I shall not have succeeded in satisfying him. I am grateful to him for giving me notice of the questions which he wished to put. I am sure that the House will return to this matter on many occasions in the future. The importance of it is obvious from the fact that after a tiring day there are so many of us here tonight. I have no doubt that the hon. Gentleman's constituents will be grateful to him for the force with which he has put their problems to the Government, and I assure him that the Government are fully seized of them. We certainly intend to do what we can as soon as possible.

Question put and agreed to.

Adjourned accordingly at twenty minutes to Twelve o'clock