Road Fuel Taxation

Oral Answers to Questions — Scotland – in the House of Commons at 11:30 am on 29th June 2004.

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Photo of Alistair Darling Alistair Darling The Secretary of State for Scotland, The Secretary of State for Transport

I have regular discussions with my right hon. Friend on a wide range of issues.

Photo of Andrew Selous Andrew Selous PPS To Shadow Foreign Secretary, International Affairs, Opposition Whip (Commons)

The respective pre-pump prices, excluding taxes and duties, of unleaded petrol and ultra-low sulphur diesel are 20p and 21p. Last year, the Chancellor said that he would not proceed with fuel duty rate increases if the international oil situation remained volatile. What hope can the Secretary of State give to hauliers and motorists in Scotland and throughout the UK that the Chancellor will keep his word?

Photo of Alistair Darling Alistair Darling The Secretary of State for Scotland, The Secretary of State for Transport

The hon. Gentleman has picked his day carefully—today, oil prices have fallen to a two-month low following the handover of sovereignty in Iraq. Oil prices are currently volatile and high because of a combination of factors, including not only uncertainty in Iraq and the middle east, but increased demand from the United States, China and other countries. The Chancellor has said that he will examine oil prices and review the situation in August.

Conservative Members should concentrate on why petrol prices have increased, which is because of oil prices rather than sudden increases in duty. We must wait and see what happens in the summer, but the Government's action in encouraging the Organisation of Petroleum Exporting Countries to increase production, coupled with the progress that we have made in Iraq, is helping to exert downward pressure on oil prices, which in turn will help pump prices.

Photo of John McFall John McFall Chair, Treasury Committee, Chair, Treasury Committee

The Government have cut the fuel tax escalator that the previous Government imposed. Does the Secretary of State accept that environmental issues such as climate change are important and that a sensitive balance must be reached? Those who fought against protestors in the late 1980s are now inciting people needlessly to riot, which is a sorry sight.

Photo of Alistair Darling Alistair Darling The Secretary of State for Scotland, The Secretary of State for Transport

My hon. Friend is right that one must take a wide range of issues into account in considering the taxation of fuel. A few weeks ago, the Conservative party showed its opportunism at its worst: instead of joining others in encouraging OPEC to increase oil production, it made opportunistic demands, but Conservative Members know that they would take a completely different view if they were in government.

Photo of Mr Peter Duncan Mr Peter Duncan Shadow Secretary of State for Scotland, Local and Devolved Government Affairs

The Prime Minister has indicated that the Government will review September's proposed 2p rise in fuel tax in August. Just so that ordinary Scots know how strong their voice is in Cabinet, are there any circumstances in which the Secretary of State would intervene and advocate abandoning that tax hike? Today's press says that desks are being thumped throughout Downing street; are there any circumstances in which the Secretary of State would thump his desk?

Photo of Alistair Darling Alistair Darling The Secretary of State for Scotland, The Secretary of State for Transport

In our Department, desks are not thumped—they are too valuable. Just as I am determined to bear down on the Scotland Office's hospitality budget, I will not rack up bills by damaging my desk. People, whether they are hauliers or motorists, are, of course, concerned about fuel prices, but it is important to concentrate on the causes of the oil price increase, which, as I said, are increased demand from certain parts of the world and events in Iraq and the middle east. I recognise that we have a long way to go, but the recent fall in oil prices is welcome. Brent crude is currently trading at just more than $33 a barrel, which is much better than a few weeks ago. The Chancellor has said that he will keep the situation under review and, as he indicated earlier this year, he will make a decision in August.

Photo of Jim Sheridan Jim Sheridan Labour, West Renfrewshire

My right hon. Friend will be aware of the threatened protests throughout Scotland should fuel tax increase. Will he assure the House that those protestors will face the same level of law enforcement that trade unionists faced when they defended their communities in the 1980s?

Photo of Alistair Darling Alistair Darling The Secretary of State for Scotland, The Secretary of State for Transport

It is important that anyone who demonstrates abides by the law and does what they are asked to do by the police and other authorities. Of course people have a right to object, but they must do so within the framework of the law.

Photo of John Thurso John Thurso Shadow Secretary of State for Transport, Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Scotland), Liberal Democrat Spokesperson (Transport), Liberal Democrat Spokesperson (Culture, Media and Sport), Liberal Democrat Spokesperson (Scotland)

In my constituency and in many other remote rural areas where road transport is a necessity, fuel costs, on average, 10p more than it does in urban areas such as Inverness and Edinburgh. Is the Secretary of State aware that EC directives 92/81 and 92/82 contain derogations to allow for lower tax to cover precisely that situation? Why do not the Government act to end that penalty in remote areas, and what is his Department doing to persuade the Treasury to that end?

Photo of Alistair Darling Alistair Darling The Secretary of State for Scotland, The Secretary of State for Transport

The Liberals always give the impression that they want fuel prices to go up for environmental reasons—except, of course, in their own constituencies. As for the hon. Gentleman's proposal, it would give rise to difficulties were the Government to decide that fuel tax should be lower in one area than another. There will always be an argument about where the line is drawn. The hon. Gentleman's proposition is not practical, and were we to act on it I suspect that he would be the first to complain about where the line was drawn.

Photo of Pete Wishart Pete Wishart Opposition Whip (Commons), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Transport)

Despite today's welcome news about oil prices, 77 per cent. of the price of a litre of fuel is still taken up by taxes and duties. Does the Secretary of State think that that figure is too high or too low, and does he think that there could still be a case for a further 2p hike in fuel prices for Scottish motorists?

Photo of Alistair Darling Alistair Darling The Secretary of State for Scotland, The Secretary of State for Transport

As I said, the Government's position is that we are keeping the situation under review and the Chancellor will make his decision in August. That seems to me to be the right way to approach these matters.