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Orders of the Day — Finance Bill

Part of the debate – in the House of Commons at 5:24 pm on 20th April 2004.

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Photo of Mr Calum MacDonald Mr Calum MacDonald Labour, Na h-Eileanan an Iar 5:24 pm, 20th April 2004

The hon. Gentleman is right that that industry is not to be found in my constituency, so I do not have any specialist expertise. I shall therefore listen with interest to subsequent debates when he discusses the matter with the relevant Minister.

I turn to another couple of items of particular relevance to my constituency. Clauses 5 and 14 deal with fuel duty, which is of particular concern to my constituents. About four years ago, I had an Adjournment debate about the regressive impact of fuel duty on remote and rural locations such as the Western Isles. Since that time, the Government have dropped the automatic escalator and the duty has basically gone up in line with inflation. As a result, we can see from the Red Book that the revenue raised from fuel duty has hardly risen from the time of my Adjournment debate about four years ago and is still around £23 billion.

I am glad, of course, that the Government dropped the escalator, and I accept that there are strong environmental arguments and reasons for the level of fuel duty, but I still maintain that it is a regressive form of taxation. Only three other taxes raise sums similar to or greater than fuel duty—income tax, VAT and corporation tax. Yet whereas each of those three big taxes has exemptions, bandings or some other device built in to make it more progressive, fuel duty is still a flat-rate, one-size-fits-all tax across the whole United Kingdom. There are exemptions to and variations in it, but they are designed to make it more efficiently green and environmental, not more progressive.

Fuel duty is regressive because remote rural areas tend to have lower incomes than the national average, but much higher car ownership and a much greater need to use cars than the rest of the country. For example, car ownership is 70 per cent. in the highlands and islands, compared with about 50 per cent. in urban areas, but incomes in the highlands and islands are only 70 per cent. of the national average. Those figures make it clear that car transport in remote areas is essential, not an optional extra, and essential, moreover, for people on low incomes. That should be recognised in the way that fuel duty is levied in the United Kingdom to allow for the difference between remote rural areas and the rest of the country.

The arguments with regard to air passenger duty are similar. My constituency and Orkney and Shetland are the only ones in Britain where the health service routinely uses air transport to carry patients and staff. Air transport therefore represents a lifeline service. It is not a luxury travel option. The Government are to be congratulated on having recognised that to a significant extent by exempting flights originating within the highlands and islands from the air passenger duty, but flights coming into the islands from the mainland still have to pay tax.

Although air passenger duty is not mentioned in this year's Finance Bill, I am well aware that the green lobby is constantly agitating and arguing for higher taxes on air transport, so I take the opportunity to make the point to Ministers that, if they are minded to take on those representations from the green lobby, they must first tackle the issue of air transport in the highlands and islands.

The final matter that I want to raise has already been mentioned—the excellent Lyons report on dispersing civil service jobs, which was published with the Budget last month. I recall writing a few years ago to the then Minister for the Civil Service suggesting that the performance and innovation unit should be asked to look into the case for relocation. To my disappointment, little interest was shown in that suggestion, but I am delighted that the Chancellor is now pursuing jobs dispersal with such vigour. My constituency has managed to attract more than 100 new civil service jobs in the past year, principally from the Department of Trade and Industry and the Department for Work and Pensions. Recruitment for those jobs is happening now, and the reports from those Departments suggest that individuals with higher educational attainments than those who would have been recruited in London or the south-east are applying.

The Lyons report says that the public sector could gain £2 billion over 15 years from the job dispersal policy, but it is important to recognise that the biggest benefits are more immediate than that time scale suggests. The public sector will gain immediately by recruiting higher-quality staff and by increasing staff retention, and the communities that receive those jobs will experience a much needed, direct boost to their local economies.

The civil service will, of course, resist the Lyons proposals. Some hon. Members know that that point was highlighted in Scotland, where it took a great deal of effort by the Scottish Executive to get a reluctant Scottish National Heritage to move from Edinburgh to Inverness. However, the wider public interest is undoubtedly paramount, and it is best served by a determined, extensive and sustained policy of civil service job relocation. I urge the Government to make that policy one of their most important priorities.