[Un-allotted Half Day] — Fuel Costs

Part of Opposition Day – in the House of Commons at 4:31 pm on 7th February 2011.

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Photo of Stewart Hosie Stewart Hosie SNP Chief Whip, SNP Deputy Leader, Shadow SNP Spokesperson (Treasury) 4:31 pm, 7th February 2011

I am always surprised when otherwise articulate, able and intelligent Members do not see the whole picture. When one looks at total tax and total income, rather than the mere, modest fragment of net identifiable expenditure, one sees a rather different story. Prior to the recession-independent figures stand this up-Scotland was about £50 billion in, £50 billion out. As the hon. Gentleman will recall, the UK ran a £0.5 trillion debt before the recession, so his argument is not particularly helpful, and nor does it really pertain to today's motion.

Of course, some business sectors are hit rather harder than others. Some businesses have a little leeway in their pricing policy, but some have none. I was struck by the comments of Bill McIntosh, the general secretary of the Scottish Taxi Federation, who said:

"Taxi drivers"- it is an important trade-

"are affected more than most by increases in fuel. Unlike other transport operators, taxi drivers can't just raise their prices as fares are set by local authorities...The Scottish Taxi Federation welcomes and supports the proposal for a fuel stabiliser."

That is important. The sector has a fixed pricing structure that it cannot adjust and rising input costs.

Many haulage firms-this is an extreme example-have already agreed long-term future contracts with a fixed price. There might be some variation, depending on the uplift in fuel, but it is unlikely, under the contractual arrangements, that they could be compensated for the very quickly and steeply rising input prices. In my view, the haulage sector suffers the largest single impact. According to the Road Haulage Association, operating costs have risen by 3.3% since last October. It tells me that fuel accounts for more than a third of the sector's business costs, and that, in cash terms, an average rise is expected this year of £4,206 on the basis of increases over the past three months alone. That is quite extraordinary-an increase of £4,206 in the running costs per truck.

I suspect that that is why Phil Flanders, the Scottish and Northern Ireland director of the RHA, has said:

"The RHA...supports the SNP/Plaid Cymru motion to urge the Government to take immediate action to resolve the increasingly difficult situation that hauliers-and motorists-find themselves in due to the cost of fuel."

He went on to say that it has always supported these

"proposals for a fuel duty regulator in order to bring stability to the costs of a haulage business where fuel" in some places

"can account for around 40% of running costs...Whatever it is called-a stabiliser or a regulator"- or a modulator-

"help is urgently needed for all hauliers and particularly those further from their market such as those in Scotland, Wales and Northern Ireland. Remote rural communities also deserve special help given the exorbitant price they have to pay."

I will say more about that later. He continued:

"It cannot be stressed strongly enough that in the past year fuel prices have gone up by at least 14% and in the last 28 months there have been 8 fuel duty hikes amounting to a 25% increase. This is just simply unacceptable for the economy."

I share that view entirely.

The Freight Transport Association has followed up that support and welcomes the effort

"to develop the fuel duty debate further. Lives and livelihoods up and down the country are suffering in the face of unsustainable and crippling fuel costs. For businesses still in the grip of tough trading conditions these costs severely restrict cash flow and a company's ability to do business; sadly this can translate to job losses and the difference between solvency and insolvency."

It says that when the price of fuel

"rises steeply it has an immediate impact on a company's cash flow."

Given how the banks are behaving, with credit tight and squeezed, cash flow is vital.

The FTA also says:

"As part of the Fair Fuel UK Campaign, the Freight Transport Association and the Road Haulage Association, along with backing from the RAC, are asking government principally to scrap the fuel duty rise planned in April and introduce a methodology for stabilising fuel prices."

Indeed, Fair Fuel UK, which is supported by 20,000 road freight companies, the Royal Automobile Club, dozens of trade associations, other groups and tens of thousands of individual motorists, has said that it supports today's attempt to raise this issue and its impact on the economy on the Floor of the House. It said that this motion and debate will...add pressure to the Government to act", and act quickly, on what it calls a "fuel crisis". There is no doubt that this is a crisis. It is also clear that there is not only an assessment of a real, immediate and serious problem, but a clear coalescing of those at the front line about the introduction of a stabiliser as the primary solution.

This is about not simply a fuel duty regulator or stabiliser, however, but the specific problems in remote areas.