Fuel Costs

– in the Northern Ireland Assembly at 11:45 am on 18th September 2000.

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Photo of Roy Beggs Roy Beggs UUP 11:45 am, 18th September 2000

I beg to move.

That this Assembly expresses its concern at the escalating price of fuel and calls on the Chancellor of the Exchequer to take measures to lessen the impact of high fuel costs on the economic well-being of Northern Ireland and its people, and to encourage other EU member states to bring their tax on fuel into line with that of neighbouring countries to allow fair competition and to discourage the illegal transportation of fuel across national boundaries.

I thank Nigel Dodds for agreeing to sponsor this motion along with me. I would also like to thank my Ulster Unionist Assembly Colleague Danny Kennedy, who worked with me on my original motion.

I first discussed the possibility of a debate two weeks ago. Since then the issue of high fuel taxes has been driven to the top of the United Kingdom’s national political agenda. I am pleased that fuel distribution has resumed in Great Britain and that the protestors have ended their campaign, retaining the moral high ground and with public opinion on their side. The Labour Government appears to be in listening mode now. Neither the Labour Government nor Labour MPs have the same susceptibility to pressure here in Northern Ireland. Disruption to the economy was estimated to be costing £250 million per day and would eventually have brought the country to its knees. Given this and our own economic background, it would be neither appropriate nor effective to replicate such action in Northern Ireland.

I welcome the work of the fuel crisis group, which was hastily formed last week. I see some of its members in the Gallery today. The group represents a wide spectrum of Northern Ireland industry, including CBI Northern Ireland, the Northern Ireland Chamber of Commerce and Industry, the Federation of Small Businesses, the Petrol Retailers Association, the Oil Promotion Federation, the Road Haulage Association, the Freight Transport Association, the Ulster Farmers’ Union, the Northern Ireland Fishermen’s Federation and fish producers’ organisations.

I hope that this debate, together with lobbying and the media event that I understand is being organised outside, will help focus our discontent about high fuel costs within Northern Ireland. I strongly support the view that there should be no traffic disruptions in Northern Ireland.

In the United Kingdom, petrol and diesel are supplied at competitive prices, before tax, compared to those in other European countries. Our Chancellor then applies the highest fuel taxes of any country in the European Union. We end up paying the highest fuel costs in the EU. Including VAT, tax accounts for some 75% of pump prices. Is it any wonder that the electorate does not believe Mr Blair when he tries to blame others for the high cost of fuel?

Some Members have pointed out that fuel tax is a reserved matter, but this debate provides a democratic outlet for discussion within Northern Ireland. Furthermore, we might be able to contribute to the change that is starting to happen in the rest of the United Kingdom. This same motion could very easily be put before the Welsh Assembly or the Scottish Parliament. That would build pressure on Labour Back-Benchers. I have received cross-party support in the Assembly. Should the motion be passed, I intend to seek support from other devolved bodies. This would undoubtedly have some effect.

The Chief Whip of the Ulster Unionist Party in Westminster, Roy Beggs MP, has confirmed that he will seek support for an early-day motion on this issue. The campaign may build from the regional Assemblies, gather cross-party support at Westminster and put pressure on the Government. It is important that we continue to add to this pressure to reduce the high fuel tax that distorts trade in Northern Ireland and encourages smuggling in this part of the United Kingdom. The Department of Environment may have some role to play. I have spoken to the Minister, Mr Foster, and some members of the departmental Committee.

I have been working on this issue for over a year. I highlighted the fact that the Department of Environment, which licenses road hauliers in Northern Ireland, had never revoked a licence as a result of smuggling.

We wish to ensure that there is fair competition in Northern Ireland, and I understand that the Department has the power to consider the standing and reputation of an operator when issuing a licence. It would be in order to reassess whether some operators who have been caught smuggling should be allowed to trade legitimately in Northern Ireland.

On a wider issue, linkage between the various Departments is necessary. At present, if a haulier is caught smuggling, no record is made of his company’s involvement and nothing appears on his licence, provided that the fine is quickly paid, and often it is paid in cash. The Departments need to liase with Customs and Excise, which should pass such information on. The Committee should also be dealing with this issue.

Driving around Northern Ireland, I occasionally notice signposts advertising diesel at exceptionally low prices, lower than our retailers can even buy it at. Is greater enforcement needed of the legislation on the licensing of retailers? There are safety and environmental issues involved as well as the problem of the illegal trading of fuel smuggled into Northern Ireland.

As fuel becomes prohibitively expensive, we all avoid unnecessary journeys, but protecting the environment is a Europe-wide — indeed, a global — issue. If fuel pricing is to be used to protect the environment, such a policy must also be adopted by our neighbouring European states, and this point is reflected in the motion.

However, pricing differentials which encourage drivers to travel considerable distances needlessly to buy cheaper fuel is wasting the Earth’s resources, unnecessarily damaging the environment and contributing to traffic congestion. Pricing differentials also encourage smugglers to transport fuel tanks outside our natural port hinterland, which wastes precious hydrocarbon fuel. It is very expensive to carry heavy goods any considerable distance by road, whether from Cork or from Dublin — other areas from which fuel is imported to Northern Ireland. It is a waste of resources for smugglers to use fuel to travel that extra distance. It is in the interests of the economy that fuel should be efficiently distributed from the port of Belfast to our natural hinterland.

Pricing differentials also encourage smuggling by unsafe home-made fuel transporters, which put both the public and the environment at risk. This was highlighted about a year ago when a container was found in the Banbridge area. It was a curtain-sided vehicle carrying a man-made steel tank which contained illegal fuel. The tank was badly constructed, the vehicle was overloaded, and the brakes went on fire.

I asked an environmentalist to examine the motion carefully, as it has the potential to be both environmentally neutral and beneficial. Pollution must be addressed evenly and at a European level; the burden must not simply be placed on British taxpayers here in Northern Ireland. There is no environmental benefit to be gained from the current situation in which vehicles on our roads are burning cheap diesel, sourced from other European countries, to the disadvantage of local hauliers.

The high cost of fuel, which is out of line with the cost to our European competitors, is having a detrimental effect on the Northern Ireland economy and the welfare of the citizens of this part of the United Kingdom. I will attempt to highlight some of the problems caused to our economy, to our manufacturers, retailers, hauliers, small businesses, farmers, rural communities and fishermen.

Over the past 10 years, the Chancellor of the Exchequer has increased duties on unleaded petrol by 150·5% from 19·49p per litre to 48·82p per litre. Diesel has been similarly affected.

However, in the Irish Republic — our immediate European neighbour — duty in March was only 29·45p per litre and 25·62p per litre respectively. High fuel costs add to distribution costs, which must be added to the price of products. This affects every business in Northern Ireland. Our products are becoming less competitive and jobs are being lost. As we are a peripheral part of the European Union and of the United Kingdom, the cost of haulage is more significant to the people of Northern Ireland than to those in many other parts of the European Union. We are doubly disadvantaged.

In Northern Ireland there is no real alternative to the road haulage industry. How else can a container be moved from the docks in Larne, Belfast, Warrenpoint or Londonderry to an industrial estate? Rail transport is more efficient for longer distances, but the relatively short distances from our ports make it impractical. Diesel accounts for 25% to 40% of hauliers’ operating costs and so can determine profitability. High fuel costs in Northern Ireland only encourage drivers and hauliers to obtain cheaper fuel.

Vehicle excise duty also discriminates against hauliers here. A 40-tonne articulated lorry is currently charged £3,950 per year for road tax, while hauliers from the Republic of Ireland — with whom our drivers must compete and who can travel on our roads freely as part of the European Union — are paying only £1,250 to their Government. This differential is forcing Northern Ireland hauliers out of business and causing others to register in the Republic of Ireland. This has no environmental gain and simply exports Northern Ireland jobs and businesses.

The Petrol Retailers Association has highlighted the difficulties being faced by its members. Deliveries of forecourt supplies have dramatically reduced over the past six years, down 52·79% in petrol deliveries and 41·56% in diesel deliveries. To appreciate the scale of the problem it must be remembered that since 1994 there has been a 21% increase in the number of registered vehicles in Northern Ireland. Where is all the extra fuel coming from?

The decline is worsening. According to the latest figures published by the Institute of Petroleum, in the first quarter of this year there was a 45·7% decline in deliveries of diesel into Northern Ireland compared to the first quarter of 1999, and an overall 33·9% decline in oil deliveries. Huge tonnages of fuel must be winding across border roads. Potentially a quarter of a million tonnes of oil products during the first quarter of this year, when compared to last year, have come by other means. With the approximate halving of turnover by volume, it is not surprising that many petrol stations in Northern Ireland have been closing. This loss of turnover is estimated to be costing the British taxpayer £310 million per annum as excise duty is not being paid to the British Exchequer.

(Mr Deputy Speaker [Sir John Gorman] in the Chair)

The rural community in Northern Ireland, along with farmers and fishermen, is already struggling with reductions in earnings. The additional fuel costs add to overheads and cause difficulties to the rural economy by adding further transportation costs.

What can the Government do? Following the increase in world oil prices, North Sea oil revenue has contributed billions of extra pounds to exchequer funds.

I recently received advice from a local member of the Federation of Small Businesses that economic research shows that a cut of up to 8p per litre would have no implication for the Exchequer because of the additional revenue.

I also draw attention to comments in paragraph 62 of the Northern Ireland Affairs Committee report published on 29 July 1999:

"There is no doubt that the differential in fuel prices, across the land border in the island of Ireland, has serious consequences for fuel supplies and road hauliers. It is a wide problem, in that, besides distorting trading patterns, it appears to have become a means of funding for paramilitaries and racketeers. It is therefore damaging the social fabric of Northern Ireland."

This issue goes much further than our retailers and road hauliers. It is one which the Assembly will have to address through its Committees, and I encourage Members to apply pressure to the Secretary of State and the British Cabinet.

I advise the Assembly of a comment in paragraph 57 of the report, under the heading "Recommendations":

"The Committee recommends that Government investigate further the experience of other EU members in dealing with the problems of price and duty differentials across national borders in relation to road fuels."

That concept is contained in the motion. The same paragraph states

"It may be that at a European level a consensus might emerge on measures to mitigate the impact of road fuel duty and the price differentials between Member States which are both effective and consistent with the principles of the Single Market."

We will be following the deliberations of the Northern Ireland Select Committee on this issue.

Our Department should also be examining operators’ licences if they are found to be smuggling. That is something our Minister can do. I urge the Department to investigate suggestions made by the Select Committee that we should be examining the viability of a licensing system for all fuel retailers in Northern Ireland.

I have spoken to the Minister, Mr Foster, and to some Ulster Unionist Colleagues on the Environment Committee, and I hope that they will pursue the matter. I intend to do so myself through questions.

The current high cost of fuel is out of line with those of our European competitors and is clearly affecting our economic well-being. I urge the Members to support the motion.

Photo of Nigel Dodds Nigel Dodds DUP 12:00 pm, 18th September 2000

I thank Mr Beggs for the way in which he moved this important motion. We both tabled motions on the issue of high fuel taxes and duty, and I was happy on this occasion to co-operate with the Member.

I do not intend to go over all the issues ably raised by him but want to highlight a number of them. Many Members will want to speak on these issues. First, this is not an issue for which this Assembly or any Member has any responsibility. That has not stopped politicians from Northern Ireland raising such issues in the past, and I am sure that it will not stop us in the future. Although responsibility lies with the Chancellor of the Exchequer and the Government at Westminster, it is extremely important that we should be having this debate and have this proposal passed this afternoon to give an outlet to the grievance felt by many sectors in our community.

This issue has touched virtually everyone, and there has been a great deal of support for the motivation of those who have taken action to highlight this issue on the mainland.

It is important that the Chancellor and the Prime Minister hear directly and clearly from the elected Members of this Assembly, on behalf of all the people in Northern Ireland, how strongly we feel about the situation regarding high duty and taxes on fuel and how that affects this part of the United Kingdom.

While, thankfully, we did not suffer from the protests that were held across the rest of the United Kingdom, that should not disguise the fact that in Northern Ireland we are worse off in terms of the impact of high fuel costs on our people and economy. As Mr Beggs mentioned, the fact that the Northern Ireland fuel crisis group has been set up quickly and has been very active indicates just how important this issue is for business, trade and other sectors of the economy in Northern Ireland. Representatives have been extensively lobbying the parties.

The situation is worse here because we have higher fuel prices than other parts of the United Kingdom. The United Kingdom as a whole has the highest fuel prices in the developed world. For petrol, it is 10p per litre more than in the next-highest country, which is France. We in Northern Ireland, as many of our newspapers have shown over the years, are in many cases paying higher prices than the average in many other parts of the United Kingdom.

The Chancellor explained that oil prices had gone up to $35 a barrel, and the blame was being put on the Organisation of Petroleum Exporting Countries (OPEC) and the oil producers. However, the real villain is the Chancellor. The real villain is the taxman. Three quarters of the price of a litre of fuel is being handed over to the Treasury.

Added to the fact that we have such a high rate of taxation in the UK, we have the scandal of double taxation. For each litre of fuel, 48·8p goes in excise duty. Value added tax (VAT) is added not only to the cost of the fuel but to the duty as well. VAT is being levied on the cost of the fuel and the excise duty. You do not have to be a mastermind to work out that that is adding between 7p and 8p per litre to the price of fuel. It is a tax on tax and it is something that I always understood was anathema as far as taxation policy is concerned. Clearly, the Chancellor should do something about that iniquity.

Perhaps I am a bit old-fashioned, but one problem is that for many of us, who are used to dealing in price per gallon, the price per litre actually disguises the real rise in price. We are almost at £4 per gallon. Some have said we are heading towards five pounds per gallon. When it is put in terms of price per litre it does not seem so bad — 2p on a litre of petrol. However, that translates into almost 10p per gallon. Every time prices go up, you see the real cost of fuel in Northern Ireland and the UK.

The other major problem already highlighted is that we have a land boundary with another member state of the European Union. Cheaper fuel is available in the Irish Republic because of lower tax and duty rates and also because of the differential in the currency valuations.

Photo of Derek Hussey Derek Hussey UUP 12:15 pm, 18th September 2000

I welcome the fact that the Member is highlighting the particular difficulties faced by our petrol retailers. More than 60 petrol stations have already closed and many are facing closure. Does he agree that unless Her Majesty’s Government address this issue properly they will be creating an exclusion zone for petrol stations within our own border?

Photo of Nigel Dodds Nigel Dodds DUP

The Member is absolutely right, and I am sure that this issue will be highlighted by other Members. I understand that the most recent figures show that petrol sales by Northern Ireland retailers are down 42% on last year. That is a staggering figure that illustrates the real problem for petrol retailers, particularly in border areas, where traders are finding it impossible to continue to trade.

The increases in duty and taxes over the last decade reinforce the point. Petrol duty in the Irish Republic increased by 6% over that period, whereas in Northern Ireland it rose by 150%. Between 1990 and 2000, diesel increased by 15% in the Irish Republic, but in Northern Ireland it rose by 157%, so diesel now costs 83% more in Northern Ireland than it does in the Republic. The result of this is that business people are going southwards to obtain cheaper fuel, jobs are being lost and revenue is being lost to the exchequer. We also have the very serious problem of the smuggling that is lining the pockets of paramilitary groups, criminal groups and others.

While many of us feel that more could and should be done to tackle the problem in terms of Customs and Excise and police resources, clearly we will always have the problem while we have this massive cost differential. Therefore the solution lies with the Chancellor, who should take steps to do something about these tax differentials.

The University of Ulster report of February 2000, which I have looked at, indicates that 3,000 to 6,000 jobs have already been lost in Northern Ireland because of this problem, with revenue of up to £100 million having gone southward. While we have a differential of 23p per litre on petrol and 29p per litre on diesel, there is no doubt that the problem is going to get worse.

Mr Beggs mentioned that we are a peripheral part of the United Kingdom and of Europe. We are therefore highly dependent on road transport and face higher transport costs. The announcement that a new working party is being set up in the Irish Republic by the Irish Prime Minister to look at the rates of excise duty in the South will send alarm bells ringing in Northern Ireland, because the problem that is bad now has the potential to get even worse.

When the Chancellor of the Exchequer is looking at the question of tax he will have to bear in mind the impact his tax policy will have on the regions. He cannot simply ignore the fact that we in Northern Ireland face the problem of sharing a land boundary — a problem which does not arise in England, Scotland or Wales. As a result of these problems, as has already been mentioned, our haulage industry also faces problems. Thirty-five per cent of its operating costs goes on fuel duty; it faces vehicle excise duties; it contributes in terms of operator licence fees, VAT, income tax and corporation tax; and, sooner or later — if we are to have a viable road haulage industry in Northern Ireland — the Chancellor will have to act. The question is whether we will have an industry left. Or will it be permitted to go to the wall?

We have already mentioned the position of petrol retailers, who face severe problems in Northern Ireland, particularly in border areas. When we talk about border areas we must consider the fact that business people in Northern Ireland are becoming prepared to travel further and further to get cheaper fuel. This is a creeping problem. I know from talking to some petrol retailers who are suffering, and who are located many miles from the border, that something has got to be done about that distortion of trade and competition issue.

Photo of Edwin Poots Edwin Poots DUP

Is the Member aware that about three quarters of a billion litres of the fuel used here is bought outside the Province, with a loss to the economy of about £460 million? The high-taxation policy is detrimental to jobs and reduces the amount of revenue that is raised in the Province.

Photo of Nigel Dodds Nigel Dodds DUP

I think that all Members would agree, and I thank the Member for drawing those points to our attention.

I also wish to speak on behalf of the hard-pressed motorist. It is sometimes unfashionable to point out the difficulties that motorists face. The reality is that for many people in Northern Ireland — the disabled, the elderly and people in rural areas — there is no viable alternative to using their private cars. The fact that only 15% of the tax on petrol and fuel goes into public transport infrastructure in Northern Ireland and across the United Kingdom brings home a point about which many motorists and other people who buy fuel feel very strongly — namely, that they do not believe they are getting a proper return in the shape of money being invested in the public transport and transport infrastructure of the Province.

Points have been highlighted about agriculture and the rural economy. Our fishing industry is no different, having seen a 155% increase in the cost of fuel for the fleet. That means that 30% of a vessel’s entire earnings are now taken up by fuel costs. There is another issue which we should not forget, that of the heating oil and kerosene used by home owners and tenants in Northern Ireland. Its price has escalated rapidly, on average going up 115% over the last two years, so that at the moment 900 litres costs £215. Only 5% of homes in the rest of the United Kingdom are centrally heated by oil, whereas here the figure is over 50%. Once again, one sees the massive impact in Northern Ireland.

What is to be done? It is essential that the Chancellor of the Exchequer act to bring down excise duty — and, by extension, VAT — on fuel. He says he needs money for health and schools and all the other major projects the Government have. We accept that there must be major investment in those areas as well as others. However, the reality is that he is reaping a windfall. The money he is getting now through excise duty and VAT is over and above that which he had already calculated and figured into his expenditure plans. He cannot therefore claim that cutting this tax will be detrimental to expenditure plans.

Photo of Robert McCartney Robert McCartney UKUP

I am sure the hon Member is aware that, at the time the Chancellor made those provisions, the price of a barrel of oil was $22. It is now $35. I think the Member will agree that the fact that Britain is also a net producer of oil, receiving additional revenue of between £4 billion and £8 billion, totally explodes the Chancellor’s figures.

Photo of Nigel Dodds Nigel Dodds DUP

That is absolutely right, and it is essential that it be pointed out. Not only is this a taxation windfall, but there are booming revenues from North Sea oil production. We have seen a massive influx into Government coffers from the mobile phone licence competition, and it is clear that the Chancellor has the room to act. There is a moral imperative for him to do so, and I hope now that instead of sympathy and nice words from the Government, action will be taken. I fear that if that is not the case the disruption we have seen across the United Kingdom will have been a picnic compared to what is to come. It is vital that the Chancellor and the Prime Minister, Tony Blair, start to listen, rather than offer sympathetic, sugar-coated words. They must take action to reduce tax on fuel, and they must do it as soon as possible.

Photo of Eddie McGrady Eddie McGrady Social Democratic and Labour Party 12:30 pm, 18th September 2000

It goes without saying that all parties in the Assembly welcome and support this motion. It has two basic parts, the first being to call upon the Chancellor of the Exchequer to reduce the burden of fuel duty. The second element is to encourage other EU member states to bring their taxes into line with those of neighbouring countries. I should like to deal with those two issues individually, for they are separate and distinct. We must be careful not to confuse one with the other.

The events of the last week have highlighted what was already known, but perhaps not realised — the enormous effect of higher fuel costs on our economy. By "economy" I mean all the strata of society in Northern Ireland — the hauliers, the manufacturers, the fishermen, the farmers, the home fuel distributors and the road users. We are only now beginning to realise just how enormous this tax is. However, it is not a new tax; it has been going on for a considerable time.

I observed with some amusement the hypocrisy of certain previous Government spokespersons who were castigating the current Government for their dereliction of duty in imposing additional taxes. The year-on-year, tax-on-tax approach of the previous Government increased this tax enormously. The irony is that it was the Conservative Party, when it was in power, which introduced the escalator tax, over and above the excise duty, thus adding to the cost of fuel. Indeed, the last budget was the first time in years that the escalator tax factor was not applied.

That does not in any way exonerate any Government of responsibility for the position we are in today. It is extraordinary how communities throughout Europe have spontaneously and suddenly realised the position that they have been brought to as a result of oil production prices from the OPEC countries and the internally imposed problems of the revenues which successive Governments in many countries have imposed.

In Northern Ireland we suffer a double jeopardy — excise duty on fuel and a peripherality that adds to transport costs. We also suffer from the fact that we have a land border with a country that has a much lower rate of fuel tax, and that is exacerbated by the exchange rates between the punt and sterling and between the euro and sterling — two entirely different economic systems.

Many statistics have been well presented by the joint proposers of the motion. All of us can rehearse these in our subsequent contributions, but it is sufficient to emphasise them. No matter what industry you look at, you will clearly see the effect that fuel prices have had on transport, production costs, home fuels, motor cars and everything else that modern society depends on.

Much has been said about the question of the escalator tax. It was a green tax, designed to somehow assist environmental protection by taxing the motorist. It is a fraction of the excise duty and, like the old road tax which was referred to, is not even given over to environmental protection matters. It is simply another revenue-producing mechanism that increases the general taxation.

The most dramatic statistic I saw was that over the last 10 years, fuel duties increased in the Republic of Ireland by 6% and in the UK by 242% — an enormous differential. We must be careful how we address that issue. It is not just as simple as some of the suggestions that have been made. Perhaps Mr Beggs overemphasised the differential between the North of Ireland and the Republic of Ireland as the main, or a substantial, cause of our problem. That is not necessarily correct. By the way, I welcome, and cannot help referring to, the fact that he is totally opposed to traffic disruption. Long may that continue in all its aspects.

Photo of Robert McCartney Robert McCartney UKUP

I thank the hon Member for permitting me to intervene.

Every citizen knows that the blockade will have an immediate and horrendous effect on our commercial base. But if nothing is done soon, those who are most grievously affected, who see their livelihoods and their businesses disappear, will come to the point where they have no alternative.

Photo of Robert McCartney Robert McCartney UKUP

It was not a question. The Member invited the intervention.

Photo of Eddie McGrady Eddie McGrady Social Democratic and Labour Party

I prefer to hear what a person has to say rather than let him go unheard in a sedentary position, but that is par for the course for the Member.

The target that we must concentrate on, as Mr Dodds said, is the exchequer in London. The tax burden we suffer in Northern Ireland is the result of successive Chancellors adding to and imposing taxes. As Mr Beggs said, three-quarters — actually, 71% — of our fuel expenditure goes to the general exchequer. That situation cannot be allowed to continue. It is difficult for Northern Ireland, susceptible as it is to the additional difficulties of peripherality and proximity to a cheaper fuel regime, to take direct action that will not be detrimental to our own economy, as well as the greater economy, including tourism.

This is not a new situation. Northern Ireland has had this problem for a very long time. I first took the issue up with the Minister responsible, Mr Adam Ingram, in March 1999. He told me that the Government was concerned about the problem and taking firm action to address it. Eighteen months later, no action whatsoever has been taken, never mind firm action.

The differential causes exceptional difficulties for trade in Northern Ireland. The oil industry itself has been decimated by these events. Here are some statistics on petrol station closures. One company has closed all 28 of its sites, another has been reduced from 28 sites to nine, another is selling three, and others are considering pulling out altogether. That is allied to the great difficulties retailers have across large areas of Northern Ireland. It is not just a border issue any longer. The differential is so great that traffic can travel a long distance and still make it profitable.

I have met Patricia Hewitt, who is the Minister responsible, and the previous Ministers, Lord Dubs and Adam Ingram. The issue has been raised in the Northern Ireland Affairs Select Committee as an urgent matter affecting the economy of Northern Ireland. I have taken party delegations to the Chancellor of the Exchequer. The tragedy of it all is that nothing has moved them, for one very simple reason: in spite of the loss of revenue through smuggling, paramilitary and other criminal activities, and the additional costs incurred by Customs and Excise in increasing their staff from 23 to 35 and appointing specialist officers, it is not a significant loss to the Exchequer. The loss of revenue in Northern Ireland is not a significant loss, and therefore it does not attract their attention.

It is not an argument that we are going to win. As the proposal suggested, we have to harness our arguments with those of Welsh Assembly, the Scottish Parliament, and Members at Westminster to lobby the Government, on a nationwide basis, to reduce fuel duties and road taxes to a reasonable and acceptable level.

Only through a united, concentrated effort will an impact be made on the Chancellor, the Prime Minister and the Government — who will ultimately make this decision. This will not be a short-term campaign. It will be a very difficult one. I hope that it is not a disruptive one, because by disruption we inflict wounds on ourselves that we cannot afford. This can be done without disruption, and without undue militancy, but it must be done on a consistent, cohesive and collective basis. My party supports the generality of the motion and we look forward to participating with other parties in the Assembly to form a joint presentation. I hope that it will be spearheaded by the appropriate departmental Ministers in the Assembly on a strong public and international basis. Given the experiences of the last 18 months, this is the only way to bring about change. The only effective change that we can make is to have an immediate reduction.

There has been talk of waiting for the autumn Budget. That may be possible if the autumn Budget is next month. However, if that does not make a substantial, meaningful contribution to our problem, then we will have to address it in a stronger and more virulent way.

The differential between fuel duties in both North and South has been exacerbated by the currency exchange. During the Finance Bill debate, in representations to the Chancellor and his Ministers of State I asked repeatedly for a special scheme for Northern Ireland to be implemented. A scheme has been implemented along the Dutch and German border, where differentials were considerable — though not nearly as considerable as the differentials we had. At that time there was a great reluctance among the Ministers at Westminster and the Ministers in Northern Ireland to alleviate the distress that had been caused — mostly in the border areas and affecting the smaller retailers, hauliers and transport companies.

The Dutch implemented a scheme. Part of the scheme was ruled out by the European Court, which is fair enough. However, part of that scheme is still in operation. There is no justification for the British Government not introducing that part, which was tolerated and allowed to continue by the European Commission, to the border areas of Northern Ireland. That is another practical avenue where a remedy can be achieved for the additional problem that we have. Even if the taxes are reduced, they will not be reduced sufficiently to address the problem of the differential between the two countries. We need a reduction in general taxation, combined with a scheme to alleviate the contrast in the border areas.

Photo of Esmond Birnie Esmond Birnie UUP

I agree with the Member’s comments regarding the international and the Northern Ireland/Republic of Ireland differential. Does he agree that there is scope to use the North/South Ministerial Council to put pressure on the Dublin Government to increase some of their duties towards the UK level?

Photo of Eddie McGrady Eddie McGrady Social Democratic and Labour Party

I am enthusiastic about the North/South Ministerial Council engaging on all problems affecting the whole of Ireland, North and South. I encourage it to take on as many of our problems as it can and to address them. However, to ask the Republic of Ireland Government to increase their taxes would be rather silly.

Why should we ask other Governments to impose a burden on people when we are trying to reduce the same burden for ourselves? That is the reality of the situation. You do not make a bad situation worse by creating another bad situation for your neighbour. Harmonisation on a European scale must come about, otherwise this problem will continue, not just between the North of Ireland and the Republic but also between many other countries. As has been said, difficulties already exist between Holland and Germany and several other nations.

Returning to the original point — which I must emphasise — the real problem is the 71% excise duty imposed by the Chancellor of the Exchequer. That is our first target. We must not be diverted into long-term projects concerning the differentials between North and South. The lack of an exchange mechanism is an obvious long-term project to pursue, but that is of such import that we know we will have little impact if we ask the British Government to enter into the European monetary union. In the meantime, our target, which must be focused and consistent, must be reduced taxes at Westminster. My party will support the motion in all its aspects and in the terms which I have suggested to the Assembly. I look forward to a joint exercise with all the other parties in this Chamber to further the cause of duty reduction.

Photo of Pat Doherty Pat Doherty Sinn Féin 12:45 pm, 18th September 2000

A LeasCheann Comhairle, I welcome and support this motion. There is great concern about the escalating cost of fuel and even greater concern about the British exchequer’s attitude — an attitude which reflects no consideration of the economic effects which partition and two tax regimes have created in our country. Indeed, the North of Ireland is only an afterthought when the British Government considers finances. I believe that both the proposers of this motion also recognise this in the second half of their motion, which I read as Unionist-speak for an all-Ireland fuel policy.

Owing to the underdevelopment of the rail network and the consequent over-dependence on roads, the price of fuel is crucial in Ireland. Fuel tax, unfortunately, is a reserved matter for the British Government, but as the Assembly evolves and develops, one option which could be examined is a mileage-based or gallon-based fuel rebate system. The administration of this could be minimised by allowing rebates to be deducted from VAT or other tax liabilities. However, as long as we have two tax systems on this island, we will always experience difficulties. The uncertainty created by fuel pricing underlines again the Sinn Féin argument that what we need is an all-Ireland economy. Only then will the days of being held to ransom at the petrol pumps by the British exchequer be over.

To address these problems in the long term, the British Minister and his counterpart in Dublin should explore ways and means of harmonising tax and duty rates. While there has understandably been a focus on fuel prices at petrol pumps, we also need to recognise — and this point was brought up earlier — that high tax and duty rates also adversely affect the price of home heating oil, and perhaps that pain is felt more intensely than that felt by motorists and road hauliers.

We support and welcome this motion, and we would like to see a speedy resolution of the problem.

Photo of Seamus Close Seamus Close Alliance

I applaud the initiative of Mr Beggs and Mr Dodds in bringing this very serious issue to the Floor of the House, where the elected representatives in Northern Ireland can add their voice to those demanding change. I also take the opportunity to publicly applaud the mature attitude that has been adopted by the Road Haulage Association, the Petrol Retailers Association, the Federation of Small Businesses, the Confederation of British Industry and the Ulster Farmers’ Union, which have all been involved in the fuel crisis group, the many other trade and voluntary organisations throughout Northern Ireland and the great Northern Ireland public.

In spite of the fact that we in Northern Ireland suffer more because of escalating fuel prices than those in the South of Ireland, Scotland, Wales or England, there have not been any organised road blockades in Northern Ireland. That has got to be applauded. Northern Ireland has not been brought to a standstill.

Our people, particularly the various organisations to which I have referred, have used the democratic process in a determined fashion and with great dignity in an effort to get their message across. For that reason above all, we, as their elected representatives, must support them and demonstrate that somebody is listening to their plight. We must ensure that their message is transmitted with the maximum democratic clout to the Prime Minister, the Chancellor, the Treasury and all those who hold and control the purse strings.

In some respects it could be said that the democratic process itself is on trial over this issue. If it is not seen to deliver, to listen and to deal with such causes as are currently facing it, then there are serious questions to be answered.

The Prime Minister and the Chancellor are on record as saying that they cannot and will not give in to blackmail, threats or blockades. As a democrat, I have sympathy with that view, but equally I firmly believe that the Government have a duty to listen to the people and to respond positively to a just cause that has the backing of the overwhelming majority of the people. This is such a cause. I challenge the Prime Minister to put our money where his mouth is and to recognise in a tangible fashion the mature attitude adopted by the people in Northern Ireland in the current crisis.

We live, as has already been said, in a peripheral society. Our fuel costs are higher than elsewhere in the United Kingdom. We share a land border with another EU country where fuel tax is considerably less; thus we suffer from unfair competition. Prime Minister, if you will not give in to blackmail, you will surely reward the long-suffering people of Northern Ireland whose voice and reason have been their only weapons. Cut our fuel taxes now, or give us in Northern Ireland some form of rebate.

I also urge the First Minister, the Deputy First Minister and the other Ministers to take this message to Downing Street as soon as possible. The people do not want just sympathy; they want action from their democratically elected leaders.

It must also be made clear that the oil companies are not to blame for the current crisis. Nor do I accept the line that is currently being peddled that a reduction in fuel taxes would inevitably have an adverse effect upon the Health Service, education, and so on.

Britain is unique among the other European countries in that it is a net exporter of oil. I have recently seen figures to suggest that in the first half of this year alone there was a surplus of £2·5 billion on the oil account.

Every time the price of crude oil rises there is a revenue bonus for the Chancellor. If he were a member of a caring Government he would have given some of this windfall back to the people and reduced the price of fuel. Why has this windfall been buried in a cloud of half-truths and presumably tucked away in some election war chest?

We have the highest petrol and diesel costs in Europe, if not the world, because we suffer from obscene taxation on fuel. As Mr Dodds pointed out, it is actually worse than that. We suffer from obscene double taxation on fuel. We are taxed on the tax that the Government levy on fuel. I was amazed to learn that the price of petrol in the United Kingdom is lower than in the USA. It is less than 18p per litre in the United Kingdom compared to over 19p in the USA, yet we pay almost £4 per gallon, whereas the price is less than £1 in the United States.

The difference is not in the profits of the oil companies or petrol retailers — they get about 1p per litre. The difference is in the tax taken by the Government — 70p to 75p. At least Dick Turpin had the decency to wear a mask. Gordon Brown and Tony Blair have the barefaced audacity to blame everybody but themselves, and to date they have even refused to listen to those who have pointed out the error of their ways.

However, I must be fair. The attempts by William Hague and his political cronies to capitalise on Labour’s difficulties is political opportunism at its worst. We all remember that it was the Tory Chancellor, Norman Lamont, who introduced the fuel duty escalator in 1993. This highway robbery was continued by Kenneth Clarke, resulting in fuel duty increasing by 5% more than inflation during the years 1993 to 1996. It was dressed up as a green tax, but I would prefer to call it a con tax.

However, the Labour Party, not to be outdone in exorbitant taxation, increased the escalator to 6% when it came to power, and the result was fuel duty going up by 10% in 1997, 10% in 1998 and another 10% in March 1999. While the Labour Government have dropped the fuel escalator, the damage has been done. I appeal for this highway robbery to stop. It is totally counter-productive, particularly in Northern Ireland, where it is killing businesses. It is killing the road haulage industry, and it is making all of us suffer unduly.

As duty is much less in the South of Ireland, there is a daily flow of vehicles travelling across the border to fill up with fuel, and, as has been mentioned, smuggling is rife. I understand that smugglers can gross as much as £35,000 per week through their illegal practices. How else can we explain that between 1994 and 1999 there was an increase of 124,694 in the number of vehicles registered in Northern Ireland, yet during the same period the amount of fuel delivered to Northern Ireland fell by 41·6%? The Treasury is losing money hand over fist through its blindness.

Photo of Mr John Kelly Mr John Kelly Sinn Féin

Does the Member agree that the Assembly initially should have sought the ability to raise taxes at a local level?

Photo of Seamus Close Seamus Close Alliance

As one who advocated throughout the entire talks process that we should have tax-varying powers I agree with the Member, but that is somewhat removed from the issue we are discussing. We are discussing the huge taxes being imposed on motorists and the fuel industry. Rather than seeking powers to further increase prices, we should be looking for a reduction in prices.

The Treasury is losing approximately £200 million because of the amount of fuel that could be sold here.

It is economic madness caused by a blind and arrogant Government. I direct my final comments to the Prime Minister: open your eyes and see the damage that your exorbitant taxes on fuel are causing; open your ears and listen to the hard-pressed people who are pleading for your help; open your mouth and tell us that you will act without further delay to deal with the crisis.

Photo of Mr Patrick Roche Mr Patrick Roche NIUP 1:00 pm, 18th September 2000

The events of the past week have been the most momentous in the life of the Labour Administration. The characteristic response of the Prime Minister has been to misrepresent the nature of the protests and blame high fuel prices on OPEC and the oil companies. Government by spin and mendacity may have reached the end of the road. The electorate simply does not believe the Prime Minister. The Sunday Times/NOP poll of 17 September showed that 71% of the electorate blames the Government for high fuel prices and 77% does not accept the Government’s claim that there is no scope for cutting tax on fuel.

The electorate is correct on both counts. First, there is scope for a reduction in fuel tax. The Institute of Directors and the Confederation of British Industry (CBI) have calculated that the Chancellor has scope to cut duty and VAT on unleaded petrol by up to 6p per litre because of the tax windfall from higher North Sea oil prices. That windfall is worth about £8 billion to the Treasury. Fuel taxes must be cut immediately. That would have the added advantage of constraining the Government in their waste of millions of pounds on stupid projects, such as Mr Mandelson’s brainchild, the Millennium Dome. Secondly, the Government have been literally ripping off the vast majority of people in the United Kingdom for whom the purchase of fuel is an entirely unavoidable necessity. At least two thirds of the rise in the price of petrol since May 1997 has been due to higher tax.

The mechanism employed by the Chancellor has been a form of stealth taxation based on a fuel duty escalator introduced by Norman Lamont in March 1993. The ostensible reason for this tax was to contribute to the prevention of ozone depletion, but the real reason had nothing to do with the environment. The real reason for the introduction of the fuel duty escalator was to reduce a £46 billion budget deficit that had resulted from the boom-and-bust policies of Nigel Lawson in the late 1980s. Chancellor Brown has used this stealth tax to its very limit. The CBI calculates that only 15% of revenue raised through fuel taxes is reinvested in transport infrastructure and public transport.

The result of Labour policy is that while the United Kingdom is a net exporter of oil, it pays higher fuel prices than any other western European country. The result is a massive distortion of competitiveness affecting major sectors of United Kingdom industry. The situation is exacerbated in Northern Ireland due to the weakness of the euro against sterling. Fuel costs for farmers and fishermen in Northern Ireland have increased by 110% in the past 12 months. Derv prices are 83% higher in Northern Ireland than in the Republic.

The combined result of tax differentials and exchange rate movements has put severe pressure on local business and caused a massive growth in criminality on the part of terrorist organisations left intact by the Belfast Agreement. CBI Northern Ireland calculates that individual fuel smugglers can gross up to £35,000 per week, thus undermining honest business.

High underlying fuel prices will continue. The western economies are currently facing historic oil shortages. At the same time, many OPEC members have little scope to pump out extra oil as they are already operating close to capacity. The crisis of unacceptably high fuel prices will not be resolved in the long term by a short-term manipulation of tax rates. The crisis is due to something deeper than an entirely legitimate concern about oil prices.

The crisis reflects a United Kingdom economy — indeed, an EU economy — that has reached the limit of taxable capacity. This is shown by the fact that 78% of the UK electorate supports the protests and blockages and 85% demands a cut in fuel taxation. This is very relevant to the dominant tax-raising mentality — which we have just heard about — in the Assembly. This mentality is out of touch with the requirement of economic success in a capitalist, competitive global economy. The current fuel tax crisis is indicative of the imperative to move towards a low-tax economy in the United Kingdom by a radical rolling-back of the frontiers of the state in the areas of social welfare, education and health and to substitute for state provision the development of private market-orientated provision in these areas. State provision in these areas is marked by inefficiencies that squander literally uncountable billions of taxpayers’ money.

This political crisis provides politicians and business leaders in Northern Ireland with the opportunity to put themselves in the vanguard of a new progressive thinking aimed at the creation in the United Kingdom of a minimalist state which is required to lay the basis of a low tax economy. That is what is required for economic prosperity in the context of permanent global capitalism. The Government could then concentrate on its primary function of effectively protecting the lives and property of law-abiding citizens. The NIUP supports the motion and demands an immediate cut in fuel taxation before further irreparable damage is done to major sectors of business in Northern Ireland.

Photo of Mr Boyd Douglas Mr Boyd Douglas UUAP

I support the motion. There are a number of issues in this debate. Foremost must be the rise in fuel costs attributable to the rise in the price of crude oil, and hence the rise imposed at the pumps by the oil companies. Second is the tax take of the Government through fuel duties and VAT. Thirdly, there is a disparity in fuel prices throughout Europe and the civilised world.

First, and most importantly, we must consider the impact of the exorbitant price of fuel on our economy and on the public, given the poor public transport links available in the Province. The oil companies are making disproportionate profits at the expense of the travelling public and British industry. Over the past week the oil companies have tried to raise prices by 2p per litre, only to back down due to public, and perhaps Government, pressure. Industry sources say that the rise was not wholly needed to cover crude oil prices but was an exercise in profiteering on the companies’ part. In fact, 1p would have covered the rise in the price of crude oil.

Secondly, we have the Government’s double whammy in taking both duty and VAT on the same product. It is well known that 75% of the price of a litre of fuel is made up of tax. That is totally unacceptable and must be addressed immediately. The Government is wrong to say that all this tax is needed for public services. It is a fact that for every $1 rise in oil prices, the Government gain £330 million per year.

Recent rises since the Government’s comprehensive spending review in July totalled $11 a barrel, so the Chancellor would bring in an extra £3·7 billion in tax revenue. Translating this into petrol duty would cut 7·5p a litre off the cost of fuel. I call on Gordon Brown to make these legitimate cuts immediately to allow our hard-pressed industrial base and the motoring public some breathing space.

It has also been suggested that we should have a VAT-lowering mechanism to be triggered when world oil prices rise above a certain level. I would welcome such a measure, as would the public, but I believe it should be set up so that the red tape would not outweigh the benefits, and that the cost would not be passed on to the public.

We must consider the disparity in fuel prices between here and the rest of Europe, our main trading partners. These disparities are belittled by the Government, and the public is fed untruths to keep the blame away from the national Government’s door. I will list four lies that were highlighted in the press over the last week.

First, "Motorists are no worse off than their European counterparts as, in Europe, motorists must pay tolls, even though taxes are much less in Europe."

The fact is we pay higher fuel duties than anywhere in Europe. We pay more to buy our cars. Motor tax is greater here than almost anywhere in Europe and, although some Europeans have road tolls, the income from them is spent almost wholly on transport issues.

Photo of Robert McCartney Robert McCartney UKUP

Is the Member aware that throughout France, which spends 80% of its tax revenue from motor fuel on roads, one can travel on the route nationale, which is better than most of our motorways, and whether one travels on a toll road is entirely optional?

Photo of Mr Boyd Douglas Mr Boyd Douglas UUAP

I was not aware of that.

The second point I would like to highlight, which was a mistruth on the part of the Government, is "Cuts in fuel tax will hit spending on health and education."

Since spending plans were revised in July, increased Government income would allow cuts in fuel duty of 8p a litre, with no resultant cuts in public services.

A third misleading statement was "Tax cannot be changed except during the March Budget".

The fact is that under the 1979 Excise Duties (Surcharges or Rebates) Act the Chancellor can raise and lower fuel duties by up to 10% at any time, without requiring legislation. This would allow petrol prices to be cut by 20p a gallon.

The fourth misleading point is "High fuel tax protects the environment by cutting pollution."

There is little evidence to support the assertion that raising fuel taxes cuts pollution. Even though the fuel tax has risen exorbitantly since 1993, the miles driven has also risen — by 12%. If the environment is so important to the Government, would it not make more sense for them to invest in clean technology and energy-efficient measures?

My final point, which is more important and nearer to home, is that more than any other part of the United Kingdom, Northern Ireland depends on oil for its energy. We have an agriculture industry, already crippled by bad prices, finding its fuel costs increased drastically throughout the last year. This adds to the costs of both farmers and agriculture contractors and, indirectly, as hauliers are affected, we find that input costs also rise. Our haulage businesses suffer, as they cannot pass on price rises to their customers and risk being replaced by hauliers from the South. Our rural areas depend on oil to carry out almost any function throughout the day, especially in the farming community. We are on the periphery of Europe, and, apart from oil, there is no type of fuel we can use.

Much of the Province also depends on oil for home heating. Therefore any price rise impacts on the most needy in society — namely, the young, the unemployed and the elderly. We also have a land border with another EU state. That gives rise to smuggling on a grand scale, creating great losses to our public funds.

In supporting this motion, I call on the Chancellor to cut fuel duties immediately and to cut or abolish VAT above a specified world oil price threshold. I also call on the Chancellor to cut the remaining VAT on home heating oil as this is not a luxury but a necessity. I support the motion.

Photo of Robert McCartney Robert McCartney UKUP 1:15 pm, 18th September 2000

At this stage of the debate it might be said that the field has not just been played upon but has been ploughed. Therefore I will endeavour to confine my remarks to some salient, and perhaps greener, parts of the pitch. There is no doubt that the situation threatening our agricultural and haulage base with extinction is caused by two main considerations: first, the absolutely punitive rates of excise duty and VAT on motor fuel; and secondly, but directly related to the first consideration, the softly, softly policy of the Government in relation to the commercial activities of paramilitaries.

Some of these figures lead to interesting conclusions. The number of vehicles in Northern Ireland has risen by 21% since 1995. There have been 125,000 additional vehicles registered in Northern Ireland in that period. The amount of legally imported fuel has dropped by over 50%, according to the figures of the Petrol Retailers Association. Even the Government say that it has dropped by 41%. If you have an increase in the number of users of motor fuel, and you have a fantastic reduction in the amount of fuel that is legally imported, then the only conclusion must be that a vast quantity of fuel is being illegally imported into Northern Ireland.

Of course, that is not the only reason. An increasing and significant number of owners of vehicles registered in Northern Ireland are going into the Republic to top up their tanks.

A Member:

Will the Member give way?

Photo of Robert McCartney Robert McCartney UKUP

Not just at the moment.

For some hauliers, proximity to the border makes it viable for them to go into the Republic. They are filling up their vehicles in the Republic as much as they can. Many major haulage contractors have also registered their vehicles in the Republic because the vehicle licensing excise duty fee there is about a third of what they pay in Northern Ireland. The effect of Northern Ireland-registered vehicles filling up in the Republic is to pour millions into the coffers of its Treasury.

Many informed sources believe that up to 30% of all motor fuel used in Northern Ireland is unlawfully imported from the Republic. It is imported through the border areas of south Armagh and, to a degree, Fermanagh. It is imported through areas controlled by paramilitary groups which, if not actually running these unlawful operations, are undoubtedly extracting licensing fees. Huge amounts of money are providing a financial base for terrorism that will threaten our entire society, North and South. The political representatives of some of those people are in this Assembly. They have the approach of whited sepulchres, and they make speeches in the Chamber attacking the British Treasury.

There is no doubt that the Chancellor is good measure for a significant degree of criticism, as many Members have already indicated. However, Mr McGrady, for the SDLP, was strangely silent on his partners in the pan-Nationalist front, who are undoubtedly delighted that the British Treasury is rightly getting stick. They, and the groups that they represent, are contributing in no small part to the difficulties experienced by honest and decent lawful traders in Northern Ireland.

It was mentioned that some 60 petrol retailers have gone out of business in the last year. I have information about a petrol retailer who puts up a notice on his station stating "The only fuel here is legally obtained". He does this in a psychological endeavour to compete with a petrol station some one hundred yards away that is grossly undercutting him by selling fuel at a price at which the lawful trader cannot even purchase it, let alone sell it.

In my constituency I have had other people with small businesses — running newspaper and tobacconist shops — who buy their cigarette and tobacco stock from a lawful source and who cannot compete with those around them who are flogging contraband goods brought in by paramilitaries. I have to say that the paramilitaries concerned are not of the green variety, though my oft-stated view in this Assembly is that I have absolutely nothing but loathing for paramilitaries, whether they be orange, green or polka-dotted. However, I loathe the hypocrisy of those, such as the representatives of Sinn Fein and, to a lesser degree, Mr McGrady, who have attempted to soft-pedal the fact that the corruption that is spreading from paramilitary activity is beginning to invade every stratum of society.

Many of those who can afford to drive expensive, powerful cars and provide a four-wheel-drive vehicle for the missis to pick up the kiddies, and even those who are driving a business car or a company vehicle where they can write-off the increased duties to their tax and reclaim the VAT, are prepared to admit that for them the increases in petrol fuel are relatively unimportant. However, for the haulier, the farmer, the fisherman, the small businessman, the manual worker who needs his vehicle to get to work, the retired resident in a rural area on a fixed income, a car and such transport is not a luxury. It is a fundamental and basic necessity.

Society is being corrupted because, for the sake of maintaining what passes for peace in the form of a terrorist-controlled ceasefire, there has been a marked reluctance by this Government to provide a strategy for the Customs and Excise to deal with a problem that will lead to grave difficulties, not just for those on the margin, but, ultimately, for some of the larger players.

A major company operating in the fuel business — a major employer with assets of over £100 million — has already indicated that such have been the cuts in its profit margins due to smuggling that withdrawal from the Province is increasingly becoming a viable consideration.

The Chancellor must act, and he must act soon. With everyone in the Assembly, and most law-abiding citizens, I endorse the view that at present we should be attempting to avoid blockades that would damage the foundations and base of our commercial and other businesses.

I sympathise with those industrialists and bigger players who feel that the blockade might do irreparable damage, but I issue this warning. A point will come when those who are against the wall will look after their interests and those of their families. It will be all very well for those at a higher level to say there must be no blockade. Some people will have no alternative. They are the small petrol retailers, who are going out of business, and the farmers.

Farmers have to pay for fertiliser, feed and stock to be hauled onto the farm and produce to be hauled out. They are faced with escalating transport charges and see profits from pork, beef or lamb production going down the Swanee.

(Mr Speaker in the Chair)

It is vitally important that we persuade the Chancellor to listen, for he has not listened. He has told us lies and he has fabricated untruths. He has designated what were largely peaceful blockades as peaceful — so peaceful that many Chief Constables could not arrest people because they were not committing any offence.

We saw macho-man Blair come on and say he was going to do X, Y and Z, and that everything would be rolling in 24 hours. In today’s ‘Daily Telegraph’, Siôn Simon — a Labour apologist — described these people as terrorists. Mr Blair was going to do the most dreadful things to them. Yet we are faced with his sickening, absurd surrender to paramilitarism and terrorism that is destroying the whole base of society, not just on the Shankill but now in North Down. All strata of society must get together. If we do not look after the small petrol retailer, and the farmers who are mortgaged up to the hilt and who have never drawn a penny of public welfare in generations, it will only be a matter of time before this poison spreads to higher levels in society.

We should remember these words of John Donne:

"And therefore never send to know for whom the bell tolls".

No man is an island. No stratum of this society is an island, because if something is not done to help those most grievously at risk at the present time, then for sure the bell will toll for all of us.

Photo of Lord John Alderdice Lord John Alderdice Speaker

A substantial number of Members wish to speak, reflecting the level of concern about this issue. I propose to continue through the lunch period. We must break at 2.30 pm through to 4.00 pm for Ministerial questions, but we will then resume the debate and take it through to 6.00 pm. Even with that substantial period, I have to ask that Members do not go beyond their 10 minutes. If the Members listed take 10 minutes each I will have to bring speeches to a close. This is an attempt to make sure that all Members get a chance to express themselves.

Photo of Danny Kennedy Danny Kennedy UUP 1:30 pm, 18th September 2000

I am grateful for the opportunity to participate in this important debate. I will restrict myself to the time you have mentioned, Mr Speaker. I am grateful to my Colleagues Mr Beggs and Mr Dodds. This is an extremely timely and important debate in the context of events outside this House, in other parts of the United Kingdom and in the Irish Republic.

I am also conscious that this is not a new crisis emerging only over recent days. It has existed for many months — since 1997 at least. It has already caused job losses and the closure of many small businesses, road haulage firms and petrol retailers and, in my constituency of Newry and Armagh all those businesses have been affected by the crisis.

I am also aware that the Assembly has no responsibility in this matter. It is a reserved matter. Nevertheless, I hope the Secretary of State will take the opportunity to listen to the views of this Assembly albeit via Hansard. It is crucial that the views of this House are reflected in the strongest possible terms to the Prime Minister, the Chancellor of the Exchequer and other members of the Cabinet.

I wish to concentrate on the plight of the petrol retailers, many of whom have made representations to me. It is very clear that successive Chancellors, irrespective of party, have used fuel excise duty as a way of generating Government money to put various schemes and policies in place.

The creation of the fuel escalator combined with the exchange rate difference, especially in relation to the Irish Republic, has created a lethal cocktail which many local operators have been unable to withstand. Approximately 90 legitimate retailers have gone out of business over recent months. Government statistics confirm that sales of legitimate fuel have effectively been halved since 1994. However, there has been a 20% increase in the number of vehicles on the roads in Northern Ireland.

It remains inexplicable how any Chancellor representing any Government can afford to lose in excess of £300 million in revenue. That is the conservative estimate available at this time. One wonders what this Assembly could achieve with that amount of money in spending priorities. Consequently, many long-standing legitimate petrol retailers have gone out of business. They have gone out of business only to be replaced by spivs and highly questionable opportunists, many of whom have links to the paramilitaries.

I take this opportunity to register my concerns, and those of many in the fuel industry, about the flagrant and open abuse of the sale and illegal transportation of fuel in border areas, organised and controlled by paramilitaries that are mostly, but not exclusively, Republican. Government failure to adequately resource a proper Customs and Excise response to this problem makes me extremely suspicious that there may be political reasons for not dealing with this issue properly. I sincerely hope that is not the case. As I travel the roads of south Armagh I see tankers and lorries travelling on minor roads, some of them on approved roads, bringing their cargo. The illegal operation is quite alarming and must be addressed urgently.

Urgent action is required if this important sector of our economy is to be rescued. The cost to the local economy and the environment has already been too high. At last, public opinion on this matter has been mobilised by the clever tactics of the various sectors to highlight and expose the greedy Treasury.

I pay tribute to those in the rest of the United Kingdom, and in Northern Ireland, who have organised and mobilised people on this issue. They have caught the spin doctors on the hop and the Government have been shaken to their very foundations. The Prime Minister has now been given an opportunity to address the situation. The petrol retailers and the people of Northern Ireland demand that he and his Government take urgent steps to reduce excise duties and deal with the widespread problem of fuel smuggling in Northern Ireland.

Photo of John Dallat John Dallat Social Democratic and Labour Party

It is essential that the Assembly present a united front on this very important issue.

It is with regret that I detect a further split in the United Kingdom Unionist Party, with Bob McCartney, the intellectual, now being voted out of the House.

We do not want to add to the hothouse gases; we want to present concrete proposals that will assist the haulage and farming industries and other elements of society that are suffering because of the high cost of fuel.

Mr McCartney’s attack on my Colleague Eddie McGrady was disgraceful. For many years he has stood up and spoken out against all forms of violence. He would in no way condone the continuing activities of any paramilitary group. I am sorry that Mr McCartney has not remained to hear my response.

I reiterate Mr McGrady’s very sensible suggestion that at least part of the answer to this problem can be found in the European Union. Through our involvement in the Assembly, we are constantly reminded that we cannot infringe European laws. This problem has a European dimension. As Mr McGrady has already pointed out, there are special arrangements in other parts of the European Union to take account of tax differentials which cause trading problems. I suggest that we take our case to Europe. Let us assume that our British friends will not stand in our way by saying that this is an internal, domestic problem. This is a serious crisis that is impacting on the lives of thousands of European citizens. The European Union has not only a right but a responsibility to be part of the solution to a problem that is caused directly by political land boundaries between member states.

The oil crisis did not start last week or last month. It has been developing since the 1970s because successive British Governments found it too easy to put tax on fuel as a convenient means of raising revenue. The difficulty with this particular fiscal policy is that it results in the highest rate of taxation on fuel in the developed world. This policy has already been described as a rip-off, and I agree with that. The term "Rip-off Britain" is commonly being applied to an economy where it is not just the cost of fuel that is crippling the lives of ordinary, decent people. There is a rip-off on many consumer goods as a direct result of unfair taxes. An internal report prepared for the Treasury shows that furniture and carpets are, on average, 56% more expensive than in other European countries. Sporting goods cost 31% more, while cars and motorbikes set the consumer back an extra 29%. Electrical goods are, on average, 22% more expensive.

Today’s debate is focused on fuel and tax and, therefore, on road hauliers in particular. That other industries are also facing serious problems because of the differential between the cost of goods here and in other European countries cannot be ignored.

I am pleased that some Members made reference to the farming industry. We all know that that economy has been decimated by a number of factors including a poor market, but now it is being crucified by the escalating price of oil. Farmers are a critical part of the rural community, and Ministers in the Assembly have an important role to play in highlighting the impossible position that they find themselves in.

The car industry is facing serious difficulties due to the price differential with imports not only from the Republic but also from mainland Europe. Tax is part of the problem, but there are other issues which the Government have failed to act upon. We are a part of a rip-off economy which needs to be resolved, but the Government are doing nothing about it. Fuel, as we have been told, is now twice as expensive as in the Republic and four times more expensive than in the United States of America. The high cost of fuel adds to the cost of all goods and services, and the people who suffer most are those on low incomes. While the Government might claim that taxation is needed to fund Government services, the people who are penalised most are those whom the Government would claim they are supporting, namely those in greatest need — and, again, I emphasise the farming and rural industries.

The question remains unanswered as to where taxation will come from to fund the Health Service and so on when oil runs out in 2030, or at best in 40 years’ time. How much of the present tax is spent on developing alternative forms of energy? I suspect very little. The environmental issue is often used to justify the high cost of fuel but this policy, as we have been told many times today, has failed miserably. Those who can afford it will go on paying higher prices for fuel, and the people who are again penalised are those at the margins of society who either cannot afford private transport or have to pay high costs for public transport.

Our public transport has suffered from underinvestment and does not meet the needs of the travelling public. In the North the problems are compounded because of the land border, and there is no easy solution other than to pay an oil rebate, as has already been mentioned. That, however, will not stop the huge number of private cars that fill up on the other side of the border on a daily basis, and it most certainly will offer no comfort to the filling stations in the North which are still open and struggling to survive.

There has to be an end to the see-saw of differentials in duty that has occurred over the years, sometimes in favour of the North and sometimes in favour of the South. The only way to do that is to harmonise taxes on both sides of the border. To do otherwise is to create a paradise for smugglers who, by the way, do not have to be terrorists plotting to overthrow the Government.

Photo of Danny Kennedy Danny Kennedy UUP

Does the Member accept that it is not harmonisation on this island that is required but, as he outlined in his earlier remarks, harmonisation of fuel prices throughout Europe?

Photo of John Dallat John Dallat Social Democratic and Labour Party

Absolutely. Indeed, Mr Kennedy has pre-empted something I will say later.

Much of the diesel on offer is not smuggled but is "manufactured" in the North using mixtures which I should perhaps not advertise. In other cases it is laundered with the aid of chemicals. Either way it eventually leads to expensive repairs for the unsuspecting motorists who buy it.

Now I come to Mr Kennedy’s well-made point. The only long-term solution is for taxes to be harmonised throughout Europe, but, in the short term, if Britain has any interest in aiding the economic recovery of the North, then its Government should act as a Government should and address the issues while we still have an economic infrastructure. This Assembly in its fledgling days deserves the full support of the British Government to deliver, and, at present, they are not giving that support. Tax on oil is one issue, but we must remember that it is only part of the solution. The cost of road tax is also a serious issue. It is often the difference between viability and bankruptcy.

As Eddie McGrady suggested at the beginning, this case must go to Europe. The Assembly must act — not next week or next month but today — to demonstrate that it has a useful function and is not simply a rubber stamp for implementing British policy, irrespective of the consequences. A series of suggestions has been made before the House. Let us include the European dimension, for it is here, I believe, that we will find not only a sympathetic ear, but a possible complete, or at least, partial solution to a very serious problem.

Photo of Paul Berry Paul Berry DUP 1:45 pm, 18th September 2000

The motion draws attention to three issues — taxation, competition, and smuggling. They have all been well covered already.

I shall deal first with taxation. We are not discussing a fuel crisis today, but a tax crisis. It was the extravagant vehicle excise duty which drove hauliers to re-register more than 3,500 lorries in the Irish Republic. It is the excessive taxation on fuel which encourages thousands of motorists to buy it across the border. Its impact is seen right across my constituency where, as has been pointed out already, scores of filling stations have closed because taxation has made it uneconomic to sell their fuel legally.

Photo of Derek Hussey Derek Hussey UUP

The point has already been made about the closure of filling stations, but it is exacerbated by the fact that for many of my constituents and, I am sure, for the Member’s, their nearest petrol station is now across the border since so many have closed along it.

Photo of Paul Berry Paul Berry DUP

I entirely agree with the Member. Indeed, motorists from my own town of Tandragee, which is 20 miles from the border, cross it to buy their fuel.

The cost of fuel is well known, and the question has been covered very well today. When petrol arrives at the filling station, it costs a mere 16p a litre. When the customer buys that petrol, the cost has risen dramatically to 80p or more a litre. The 60p increase goes directly to the Chancellor of the Exchequer. Some 72% of the cost of fuel is accounted for by pure taxation. In other words, even if the petrol companies gave petrol away for free, it would still cost us at least 60p a litre, a situation which is neither just nor fair. The basic cost of fuel is the same in the United Kingdom as anywhere else. Excessive taxation makes the difference. The United Kingdom has the highest tax rate in the whole of Europe. The Republic of Ireland, Luxembourg, Spain, Greece and Portugal all charge a mere 55p at the pump. The price doubles because of tax. In France, Belgium, Germany and Italy, the price trebles after tax. Out on its own is the United Kingdom, where the price quadruples after tax. While the rest of Europe can buy fuel from 55p to 70p a litre, we must pay at least 80p to 85p a litre at the pump.

My second point concerns competition. Excessive taxation has had a negative impact on competition. It has allowed our competitors to begin with every advantage. The French haulier, for example, begins with a 17% advantage. When the Labour Government came to power in May 1997, the difference in fuel costs was 4p a litre. Today, that figure has soared to well over 20p. This hinders fair competition, and a civil Government is to blame. Instead of helping firms, it is driving them out of business in Northern Ireland. The excise rate in the Republic is about £1,200, while we in Northern Ireland pay about three times that figure — hardly a vote of encouragement for our hauliers or farmers. We must look at the tax on heavy goods vehicles. In the United Kingdom, it is £3,800, in the Irish Republic £1,200 and in Holland £750.

The last issue I wish to raise, which has been covered very well today, is that of smuggling. Recently four laundering plants have been closed down, but when one considers that each of those was capable of laundering 750,000 litres a year, one realises that the sums involved are vast. Who is losing out? Legal petrol stations are — and to such an extent that many are closing. The Exchequer is losing at least £40,000 per week. One customs officer recently stated that this has become a large-scale business. Reference was also made to organised criminal gangs which are exploiting the current situation. Smuggling has penalised law-abiding people and rewarded the racketeers. We are dealing with a problem that has reached epidemic proportions. The Northern Ireland Select Committee’s report claimed that the Exchequer is losing out on at least £100 million per year.

In my constituency, and Mr Kennedy has already covered this, you can drive around the roads in south Armagh and see these lorries coming across the border. The police, the security forces and Customs and Excise have been working rigorously to track down these racketeers. It is difficult, but we do need more effort to try to track down these racketeers. They are mainly Republicans, especially in the area of south Armagh.

There is a clear focus to secure a reduction in fuel prices. If that is not done in Northern Ireland high fuel costs will equate to high haulage costs, resulting in high prices for consumer goods.

I support this motion and trust that action will be taken.

Photo of Gerry McHugh Gerry McHugh Sinn Féin

A Cheann Comhairle, I also support the motion and agree with most of what has been said today.

I would like to welcome the farmers and hauliers who have come to the Assembly to highlight their situation. They are at the coalface, and they incur the costs directly on their income every day in a big way. I welcome their having this opportunity to make their protest heard.

This is about taxation more so than fuel. I speak mostly about rural areas. Rural dwellers do not have a choice in getting from one place to another, unlike city dwellers. They have some form of public transport — we have no public transport west of the Bann. Therefore people do not have a choice — they have to have their own transport. This affects the local economy with regard to inward investment. Investors look at those areas as being on the periphery and far away from ports. They consider that a detriment and decide that they are better off basing their industries elsewhere, disadvantaging people who live in the west in the matter of equality of job opportunities.

The agriculture industry, which has had massive hikes in its fuel prices — they have more than doubled in the last year — is feeling the pinch very severely. It is quite noticeable at farm level. People are trying to pay bills from hire companies and contractors. These have to be dealt with every year, whether they can afford it or not. There is great anger in the rural communities. The elderly are facing heating-fuel bills of double the price this winter but have been given a measly 75p increase on their pensions by Tony Blair, payable next April. This shows a lack of commitment to all rural areas by the British Government in terms of their wish to see those areas survive economically.

How much of the road tax that the hauliers pay goes back into roads? The Department of the Environment has a budget of £150,000 per year to repair the roads in Fermanagh. A company such as the Sean Quinn Group probably pays several times that amount in tax on its lorries. Of course, that is questionable now that so many have registered their lorries in the South, but the money is being paid and has been paid. They are not getting equal road quality for their vehicles and the amount of money that they are paying. That goes for motor car owners as well. There is a massive inequality. People have paid vast sums of money over the years and had nothing in return.

I agree with some of the environmental reasons for spending money on the environment and reducing emissions. However, speeding vehicles use a lot more fuel. Vehicles use one third more fuel above 60 mph. Most of the heavy vehicles these days are doing 70 mph-plus. There is something that people could do themselves to help, without incurring a cost.

Waste management is another problem which councils have to face in a bigger way than they have done so far. They are only touching the tip of the iceberg in their commitment to proper waste management that would make major savings in fuel. The free market is another thing that is lauded around the world, but it has a great cost in terms of waste and wasteful use of fuel. We are allowed to trade our goods from Brazil to Fermanagh. Beef is produced in Brazil and carted at great cost across the seas and across the roads to our shop shelves. The amount of fuel that is used to bring it here is a great cost. Is it really cheaper? Add up all the costs that are never counted when one compares the price here to the price somewhere else.

For every vehicle that goes down the road with goods in it, there is another one full of packaging and nothing else. That is another cost of the free market. I do not know what to do about it. Running two vehicles to deliver the same goods and bring them back again so that people can have massive choice is very costly in terms of global fuel costs. That is something people will have to look at in years to come.

I support the motion. There is to ing and fro ing about whether we should be speaking on an all-Ireland basis, or aiming our protests at the British Government. We in Ireland can enact a lot as a unified country, and make great savings in many ways at local and national level, no matter what the British Government do. The British Government have no particular interest in us in any part of Ireland. They work to their own agenda — "at home", as they call it — and they will never do anything to make life more sustainable for us here.

Photo of Mrs Joan Carson Mrs Joan Carson UUP

Mr McCartney said that the field had been well and truly ploughed. I would like to harrow the field a little longer. I am concerned that the Labour Government’s policy of indirect, or stealth, taxation is contributing to a ridiculous situation where we pay 48·8p duty on a litre of petrol. It seems a lot. A litre is the size of a carton of fruit juice.

That is bad enough, but the Government then proceed to charge VAT on this part of the fuel costs. The taxation system is biased against motorists in many ways, but this double taxation is iniquitous.

The Conservative Government were originally to blame for introducing tax on fuel at 5% above the inflation rate. They thought that this would be played out after a number of years. Then the Labour Government discovered that this was an easy way of lining their coffers. They went one better and added 6% above inflation. These increases have been subject to double taxation by applying VAT in addition. If this double taxation were stopped, 8p per litre could be knocked off the price of fuel immediately.

I ask the Assembly to speak up for fuel consumers in farming, haulage and business, and I press the Westminster Government to address this issue in their November Budget review. I am deeply concerned about the plight of owners of filling stations. This has been mentioned in regard to border areas, but the problem has spread out from these areas as people increasingly realise that they can go across the border to fill up. The owners have seen their fuel sales drop because they have got dubious cheap fuels, and across the border fuel is cheaper again.

Our rural community comprises many facets, and the loss of locally based haulage to the Republic of Ireland is weakening our already precarious economy. I ask the Assembly to consider these issues in the wider context of maintaining our rural economy.

I have pleasure in supporting the motion.

Photo of Joe Byrne Joe Byrne Social Democratic and Labour Party 2:00 pm, 18th September 2000

I support the general sentiments expressed by all Members who have spoken in the debate and congratulate Mr Beggs and Mr Dodds on bringing forward this motion. Several people, including myself, have been lobbying on this issue for two years. We have focused in particular on the damage that the disparity in excise duty is causing to petrol retailers in the border area.

In my constituency of West Tyrone a number of filling stations have closed over the last two years, including five in Omagh, four in Strabane and at least 10 others throughout the rural area. Petrol retailers feel totally exasperated. They feel that they have been acting as tax collectors on the cheap. Currently a petrol retailer receives a margin of 2p per litre. The oil company gets 16p per litre and the Government gets 60p to 65p per litre. Therefore the petrol retailer has a legitimate case when he feels that he is only a tax collector.

The sad reality is that, in the border zone from Derry to Newry and 25 miles inside the Northern side, people are exercising their choice. They travel to the South in private motor cars to fill up. Many haulage companies also do this. I know one company with a fleet of lorries which saves £2,000 per week in fuel bills by purchasing its diesel south of the border. People are making an economic choice and, legitimately, they are purchasing much cheaper fuel.

The issue of smuggling has been emphasised. This is a problem, and no doubt there is a smugglers’ paradise for those who transport fuel deeper into Northern Ireland. This emphasises the gross disparity and the gross distortion to normal trade patterns which has greatly affected jobs in Northern Ireland. I cannot comprehend why the Treasury feels that it is marginal to sacrifice £200 million per year in loss of excise duty and VAT on fuel. Mr McGrady, Mr Gallagher and myself went over to meet a junior Treasury Minister last year. The Treasury officials seemed nonplussed that about £200 million on average was being lost. The reality is that in Northern Ireland this is not a marginal issue. It is a major issue which affects many filling stations and road haulage companies, as well as small manufacturing and distribution businesses that use their own vehicles for delivery.

Reference has been made to getting our neighbours in the Republic to increase their excise duties to make them in line with ours. I do not understand the economic logic of that, although there may be a political one. I have no doubt that now there is such a lobby in the Republic, there will be a further reduction in excise duties there over the next year. I think that the political pressure is such that the Government will reduce it. Consumers in Northern Ireland should not be the only ones to bear the burden and pain of high excise duties; our neighbours in the Republic should be asked to do likewise. The real issue here is that we need to get the Chancellor and the Treasury to recognise that the inelastic demand response to high excise duties for the last 26 years can no longer be tolerated.

In 1974, OPEC target oil prices quadrupled from $4 to $16 a barrel. In 1978, the target price increased to $28, and within the last 10 years the target price increased to $32. However, for the last 20 years the spot price of crude oil has averaged somewhere between $10 and $15 a barrel, which is not an exorbitant increase from the $4 a barrel in 1974.

In 1974 the average retail price of petrol and diesel was under 50p a gallon; it is currently almost £4 a gallon. It is not difficult to realise that it is not the oil companies that are ripping us off — unfortunately it is the Government.

I can understand the logic, in environmental terms, of having high excise duties and VAT on fuel if the revenue were being directed into public transport in order to provide an alternative mode of transport, but only 15 % of the total fuel tax revenue goes towards public transport. We have been fed an illusory argument for a long time.

In the meantime industry in Northern Ireland has suffered a major economic handicap. Because of our peripheral location it is virtually impossible for it to compete today while the high excise duties continue. I feel very sympathetic towards the road haulage companies. For many years Northern Ireland had a large road haulage industry, but it is shrinking, almost weekly, at the moment. We cannot compete.

I remember the time when Montgomery Transport Ltd, Woodside Haulage Ltd, Dukes Transport Ltd, Omagh Freight, Kelly Freight, Carna Transport Ltd and others had large fleets of lorries on the roads, but those fleets are getting smaller, because they cannot compete. As several Members said, many lorries are now being registered in the Republic, and that is disadvantaging our local regional economy.

I am extremely sorry for the legitimate road haulier or petrol retailer who feels unfairly treated as a result of Government policy. This Assembly does not have control over this issue; it is a reserved matter for Westminster.

I would like the Northern Ireland MPs to get together and make known the adverse impact high excise fuel duties are having on our industries.

Many parts of Northern Ireland are almost becoming an economic wasteland owing to this issue. The punt/pound differential is adding another 20% to 25% to our local industry costs. It is virtually impossible to compete when there is such a disparity in the exchange rate along the border zone. That begs the question of how long the situation can continue? Many in the manufacturing and retail sectors say it is impossible to see beyond the next six months. Action is needed urgently.

Earlier I referred to the five filling stations in Omagh and four in Strabane. They not only sold petrol and diesel, but they also had shops, and some of them sold tyres. That has all gone. I know family-owned businesses that want to remain in business, but which are being put in a terrible dilemma because of the product they are being offered for sale. The Assembly should not expect legitimate businesses such as these to suffer that dilemma any longer.

Photo of Ian Paisley Jnr Ian Paisley Jnr DUP

I welcome the debate, and I support the motion. Indeed, the motion deserves the support of us all. The debate has been interesting. I listened with incredulity, along with every other Member, to Mr Birnie’s gambit for Irish unity by suggesting that petrol prices should be inflated across the island. However, I do not know how that would be received in other parts of this island.

On the serious aspect of this debate, much energy and anger has been directed, rightly, at the Prime Minister and the Chancellor. They claimed that the protests will not make them change the level of fuel tax. They have treated those people who tried to indicate the level of public outrage and concern felt at the unjustifiably high level of duty on fuel with contempt. The Prime Minister said that it would be harmful to democracy and that he would not be bullied by the protestors.

Most people here believe that the Prime Minister has not been consistent on this issue of bullying. We have heard across this House that the Prime Minister is prepared to be bullied by other people in this Province — by the very people whose organisations are engaged in the illegal smuggling and trading of fuel. Yet he claims that he will not be bullied by the protestors.

The Prime Minister has called for proper and sensible debate. He says that there is a proper way to do things in the United Kingdom. Today, we are having a proper debate. We are telling the Prime Minister and the Chancellor that the rate of duty on fuel is excessive and it must come down. The reasons have been enunciated across the Floor — it is having a harmful impact on many industries, farmers, and ordinary householders who use fuel and who use petrol in their cars.

The Prime Minister asked for a proper debate, but is he listening? He asked for a debate on the issue and now one devolved region of the United Kingdom is having one. The Prime Minister should now respond positively to this debate. His failure to do so will only indicate that he is storing up more trouble ahead. I believe that a failure to respond will only force protestors back onto the streets in order to squeeze a response from him over the winter months.

The inconvenience that we witnessed across the United Kingdom last week was minor compared to what it could have been if this protest had taken place in the heart of winter and in the very cold of the Outer Hebrides or parts of Northern Ireland. People would then have realised that Mr Tony Blair could be building up his very own winter of discontent. If he is not prepared to listen or to respond positively at this time, he is making further protests inevitable.

Members have rightly said that Northern Ireland is doubly disadvantaged because of the land border with the Republic of Ireland and the difference in duty there. Across the entire European Union, even where prices are more than 30% lower than in the United Kingdom, people are outraged that the price paid to Government for this vital fuel and resource is so high. Government policy on fuel tax is daylight robbery.

Look at some of the facts produced by the cross-party group that met in Northern Ireland last week. Fuel accounts for 35% of hauliers’ operating costs. Fuel costs for farmers and fishermen have increased by 110% in the past 12 months. Derv prices are 83% higher in Northern Ireland than in the Republic of Ireland. That difference does not appear to be affected by the fact that the price of crude oil is the same in both countries. Official sales of fuel in Northern Ireland are down 42% in the last year.

It is not too strong to say that Government policy on this issue is daylight robbery. It is robbery that works against the robber. Across Northern Ireland, retailers tell me that there is a massive incentive to smuggle fuel because the price differential is so big. If the Government set a more modest level of duty, we would find that the risks and penalties associated with smuggling were not worth the while of the smuggler.

It is because of the price differential and the massive profits associated with this illegal trade that smuggling of petrol and, for that matter, cigarettes and tobacco is so common in Northern Ireland. The onus is on the Government to reduce excise duties so that it is not worthwhile for the smuggler to face those penalties because he cannot make the same profit and the same rich pickings that he is making now.

Across the United Kingdom the public do not feel guilty about purchasing smuggled fuel. We should face up to that. Most retailers will tell you that 73% of what is going into the car goes to the Government. Many people are of the view that the only person benefiting is a fat- cat Chancellor. It is not the ordinary retailer who is trying to make a living for himself and his family. There appears to be no tangible benefit to our roads from fuel tax.

There are those who argue that we will eventually see environmental improvements. The Road Haulage Association has produced statistics claiming that when a 40-tonne lorry delivers goods to a supermarket, it requires 500 cars to take that same amount of goods away. It goes on to say that whether we like it or not, even if rail freight grew by 300% over the next 10 years, more than 85% of goods would still have to be moved by road. Therefore, the environmental argument that this money will eventually see its way into better means of transport is complete and total nonsense.

The Government have a fundamental issue to deal with. Do they want to raise tax for its own sake or do these inflated tax demands have a purpose? Are the Government going to continue to insist on this high tax despite the fact that across the United Kingdom people are crying out against it? The European Union is mentioned in this motion. If the European Union means anything, then it could have bargained a deal with the oil-producing nations that would have resulted in lower fuel prices for all European citizens.

The failure of the Governments in the so-called partnership of Europe to bring about such a harmonised policy on fuel tax highlights the giant failure of the entire European experiment. It has failed its citizens on one of the most practical social and economic issues.

The United Kingdom Government must come up with a policy and a level of duty that ensures a vital resource is not priced at a luxury price but at a price that equates with its necessity.

Photo of Ms Jane Morrice Ms Jane Morrice NIWC 2:15 pm, 18th September 2000

The Member says that the European Union has failed the citizens of Europe. Does he agree that there is not the same sort of problem in continental Europe as in the United Kingdom?

Photo of Ian Paisley Jnr Ian Paisley Jnr DUP

I am amazed by that statement, considering the violent protests in France over the last few weeks and the outbreak in Belgium, where fuel duty is low at 19.2%. The whole of the European Parliament has been brought to a halt this very week.

The fuel duty which the United Kingdom Government and Governments across Europe impose on their citizens is unjustifiably high. It is unreasonable to ask people to pay that amount of duty. Wages do not inflate at the same rate. If the Government do not respond positively to the minimal protest that we have witnessed in the last few days, there will be a maximal protest that could cause widespread concern across the whole of Europe.

Photo of Mr John Kelly Mr John Kelly Sinn Féin

Go raibh maith agat, a LeasCheann Comhairle. I support the motion although, having listened to some UUP and DUP Members from across the Floor, I began to wonder if we were not rerunning the decommissioning argument because there was so much talk about paramilitarism and republicanism. It is worth remembering that to address the effect of the present crisis and not the cause is to devalue the crisis and to devalue the debate. We are talking about the iniquitous inequalities in fuel prices. So far as this part of the island is concerned, the only long-term way to address this problem, as with other problems, is to harmonise taxes across the island.

There is nothing new about smuggling, a Cheann Comhairle, and there is nothing new about poor men becoming rich through smuggling. Many of the poor men who became rich were not Republicans and did not belong to the Republican community. Since partition the border has generated an economy of its own, depending on whatever commodity was scarce. I remember when it was butter, then it was tea, then it was cattle and then it was pigs; other times it was alcohol. You cannot blame the effect without looking at the cause. It has been disappointing to listen to those who proposed the motion engaging in opportunistic party politics.

A Cheann Comhairle, we must address the fundamental issue that has bedevilled this island since partition. That is the lack of harmonisation of taxes and other tax-raising devices. Germany, France and Italy were able to harmonise and lessen the impact of the hardships caused by different prices, especially of fuel and related commodies.

It is also worth remembering, a Cheann Comhairle, that there is a global aspect to this. The British Government have, in their way, contributed to this crisis by acceding to OPEC demands to control the supply of crude oil. There is a global dimension as well as a local dimension.

To reiterate — and I am not just making a political point — it makes economic sense, if we co-exist on this island, to harmonise taxes if for whatever reasons we need that harmonisation.

Dr Birnie’s suggestion that one solution might be for the Southern Government to raise their taxes to harmonise with ours is almost too ludicrous for words. I would have thought that the all-Ireland Ministerial Council would be looking at, as we have said, the harmonising of the tax regime in the two parts of the island.

It is a problem that causes anomalies in the Province. In Donegal there were protests when retailers there increased the cost of petrol and diesel at the pumps — prices were higher than in the rest of the island. People in Donegal, within the Province, had to protest against that iniquitous rise in their fuel prices — so it causes problems right across the board.

We have talked about the agriculture and road haulage sectors, but another sector which is seriously disadvantaged by this crisis comprises those who use home heating oil — particularly the elderly and the unemployed. On 27 September 1999, 900 litres of home heating oil cost £127; on 18 September 2000, 900 litres of oil cost £230 — a price rise of £103. That is an increase of more than 100%.

In our attempts to alleviate the problems of the haulage industry and the agriculture sector, we should also look seriously and urgently at the way in which ordinary domestic consumers using home heating oil are possibly trebly disadvantaged. They may have a car, or the husband might have a van that he uses for his business on which he is paying extra fuel tax. Then, just to keep themselves warm, they are paying over 100% more than they did last year. This is particularly relevant for the older members of our community. A Cheann Comhairle, I want to conclude by saying that I am not just making a political point, but the only solution, not only to the fuel crisis but to other crises that will arise in the future, is to have a harmonisation of tax and duty taxes throughout the island of Ireland.

Photo of Ms Jane Morrice Ms Jane Morrice NIWC

I also support the motion. I intend to be brief, and I do not think I need dwell on the well- rehearsed issues that have been raised, both in the Chamber and outside, by the hauliers and farmers who have come here today. Their plight has been documented on our television screens over the last few days, and everyone is aware of the issues. We are well aware of the precarious position of our farmers, our fishermen, our road hauliers, our petrol retailers in the border areas, and of those mentioned by Mr John Kelly a moment ago, domestic consumers, particularly the elderly, who have to depend on this source of fuel.

We support the call on the Chancellor to

"lessen the impact of high fuel costs on the economic well-being of Northern Ireland and its people".

We want to look at what the last few weeks have shown us about our complete and utter dependence on this type of fuel. The fact that a well-known high street shop in Belfast ran out of sandwiches because of the fuel crisis on the mainland is shocking when sandwiches could be made just round the corner. What sort of society is this that we depend so much on fuel in this way?

Those taxes that are raised should be used for investment in alternative clean energy sources such as solar, wind and biomass et cetera to reduce our over- dependence on fossil fuels. Secondly, they should also be used to support strategies, initiatives and incentives to reduce CO2 emissions and encourage imaginative ideas such as car sharing and other ways of reducing the traffic on our roads. Finally, we desperately need investment in our public transport system, and particularly in the railways. Those are issues that the Government should look at.

Photo of Lord John Alderdice Lord John Alderdice Speaker 2:30 pm, 18th September 2000

We will now interrupt the debate on fuel costs and return to it at 4.00 pm.

The debate stood suspended.

Photo of Nigel Dodds Nigel Dodds DUP

On a point of order, Mr Speaker. Members have been informed, via the annunciator, that a statement expected from the First Minister and the Deputy First Minister on their visit to Washington has been cancelled. When are we likely to get this statement, and what reason has been given for the cancellation? Can you confirm that one of the reasons was that the First Minister and the Deputy First Minister could not heal their rift on policing?

Photo of Lord John Alderdice Lord John Alderdice Speaker

It is not infrequent for Ministers to explore the possibility of making a statement and then not make that statement, for all sorts of reasons — timetabling or whatever. Explanations are not normally given. My understanding is that the statement has not been cancelled. It is simply not being made today. It will be for the First Minister and the Deputy First Minister to decide whether to beg leave to make that statement at a later stage.