Fuel Duty

– in the Scottish Parliament at on 2 March 2011.

Alert me about debates like this

Photo of Trish Godman Trish Godman Labour

The next item of business is a debate on motion S3M-8032, in the name of Keith Brown, on fuel duty.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

Even before the events of the past couple of weeks in the middle east and north Africa, recent months have seen a sharp increase in fuel prices. The Automobile Association’s latest fuel price report shows that diesel prices in Scotland now average £1.34 a litre, which is an increase of 20p over the past year. Petrol prices have increased by a similar magnitude.

The price increases in our rural and island communities have been even more pronounced. For example, petrol prices in some parts of Orkney now exceed £1.50 per litre, which is higher than almost anywhere else in Europe. Rising fuel costs impose hardship on all households and businesses at a time when budgets are already tight. That is all the more worrying given the fragility of the economic recovery. Many members’ local newspapers are running campaigns on the issue, and my area is no different. A headline in the Alloa and Hillfoots Advertiser states that “Fuel price hikes will damage the recovery”. That is because fuel costs affect not just what we pay at the pumps, but the prices that we pay for day-to-day goods in the supermarket and on the high street, as higher distribution costs push up retail prices.

The road haulage industry has been particularly hard hit. After a challenging winter, operators now have to absorb significant cost increases. For an operator with 10 heavy goods vehicles, every 1p rise in fuel prices adds £7,000 to annual costs. I can attest to that from the experience in my constituency, where Graham’s Dairies, which is a large producer and distributor of milk, pays about £47,000 extra per month since the prices have increased.

It is simply unacceptable that in an energy-rich country such as Scotland, motorists and businesses face some of the highest fuel prices in Europe. Although some of the recent price increases reflect rising oil prices, the situation has been exacerbated by the numerous tax increases that have been initiated by the current United Kingdom Government and its predecessor. Scottish motorists now pay more than £2 billion a year in fuel duty. In the past 18 months, the tax burden on petrol and diesel has increased five times. That is worth repeating: in the past 18 months, the tax burden on petrol and diesel has increased five times. All those increases were planned by the previous UK Government, although many are now being implemented by the coalition. As a result, the UK Exchequer now receives 16 per cent more per litre in tax revenue than it did in 2009. On the UK Government’s current plans, the tax burden will increase by a further 4p a litre from next month.

For our part, the Scottish Government has taken a range of measures to try to support Scottish motorists. The first bill that this Government introduced provided for the abolition of the tolls on the Forth and Tay road bridges. In the face of unprecedented cuts to our capital budget, we are continuing to progress the replacement Forth crossing, the M74 completion and the Edinburgh to Glasgow rail improvements programme. However, with VAT and fuel duty accounting for more than 60 per cent of the retail price of petrol and diesel, the key levers to mitigate the effects of rising fuel prices lie with the UK Government.

We should be clear that it is not only the Scottish Government that is concerned about the issue; there is support on the issue across these islands. Just last month, the Scottish Government issued with the Northern Ireland Executive and the Welsh Assembly Government a joint declaration that calls on the UK Government to take a range of measures to support the economy, including action on fuel duty.

The Cabinet Secretary for Finance and Sustainable Growth and I have been pleased to support The Courier’s fairer fuel campaign, which is one of many campaigns by newspapers, including The Sun, that have provided a welcome contribution to our efforts to encourage the UK Government to take action. At the very minimum, the Chancellor of the Exchequer must use his budget statement to cancel the rise in fuel duty that is planned for next month. It is vital that the UK Government heeds that message and does not put further pressure on motorists at this time.

Although scrapping the rise in duty that is planned for April would be most welcome, it would not address the core problem for motorists and businesses who are exposed to high and volatile fuel costs. The Scottish Government is clear that more fundamental reform of the fuel duty system is required. Prior to the general election, the current Prime Minister and Chancellor of the Exchequer advocated the introduction of a fuel duty regulator to protect motorists from temporary and unexpected increases in oil prices. Last month, the Prime Minister reaffirmed his belief that action had to be taken to “share the pain” of rising oil prices. However, despite those fine words, the UK Government has yet to take action to address the situation.

The Scottish Government has long supported the introduction of a fuel duty regulator. The concept is simple and transparent and would bring much-needed fairness to fuel taxation.

Photo of Liam McArthur Liam McArthur Liberal Democrat

I might be anticipating what the minister is going to say but, given that he suggests that the Scottish Government has supported a fuel duty regulator for some time, has he thrashed out any of the detail of that, including the level at which the regulator would be pegged and, if so, has he communicated that to the UK Government to help its deliberations?

Photo of Keith Brown Keith Brown Scottish National Party

Those are detailed issues on which the UK Government will have access to information and will be able to take a decision.

However, we have said that as a windfall accrues to the Treasury when prices go up, we believe that that additional revenue should be shared so that although the Treasury may well get a windfall, it would share the benefit with the public by reducing costs. Of course, the reverse would be true when the oil price reduces.

Photo of Keith Brown Keith Brown Scottish National Party

I will make some progress just now, and come back to the member later, if I can.

With the North Sea expected to raise an additional £2 billion this year as a result of higher oil prices—what was expected to be around £10 billion in oil revenues is around £12 billion this year—we believe that such a scheme would be affordable and would provide much-needed relief for motorists.

The scheme that we propose would offer some protection for motorists and businesses by offsetting any short-term price increases. It makes perfect sense to me that if we want to have some control over our economy rather than to be driven completely by international events and to compound those increases with automatic increases in fuel duty, such a scheme would be a way to get some of that control back.

I acknowledge Liam McArthur’s point, and it is clear that careful consideration would be required to ensure that any reductions in duty, for example, were passed on to consumers. It would take some work to do that, but schemes have been implemented in other countries, and I am convinced that a workable solution can be found.

The Cabinet Secretary for Finance and Sustainable Growth wrote to the Chancellor of the Exchequer in January to set out the Scottish Government’s proposals, and urged him to give the issue serious consideration. The chancellor has repeatedly stated that he is considering the issue, but has yet to take any action. It is vital that he provide further details of his plans in the budget.

Photo of Gavin Brown Gavin Brown Conservative

To pick up on Liam McArthur’s question, I think that the parties in this chamber agree on the principle. However, to put the question again, has the Scottish Government ever put forward in detail, rather than just in principle, how it believes the fuel duty regulator should work?

Photo of Keith Brown Keith Brown Scottish National Party

I have just given some more of the detail. The principle that we would apply would be taken further, so that the windfall revenues for fuel duty could be the basis on which a rebate—or a reduction in the costs as applied to motorists—could be given. Obviously more detailed work can be done on that, but it would be done by the Treasury, which is responsible for collecting those revenues.

High fuel costs are a particular concern in our remote and island communities. In some rural areas, petrol and diesel prices are up to 25p a litre higher than the national average. With fewer opportunities to use public transport, that imposes a significant cost on residents and businesses. As has been said in previous debates, the car is very often an absolute necessity and not a luxury in such communities.

The Scottish Government has introduced a range of measures specifically to help rural communities. In particular, we are investing record amounts to support ferry services, which allows operators to keep prices at half the levels that they would be in the absence of subsidies. Highlands and Islands Enterprise and Scottish Enterprise continue to provide assistance to proprietors of rural filling stations with the capital costs of upgrading their facilities.

However, the disparity in fuel prices between Scotland’s remote and island communities and the rest of the country remains a key concern. The Scottish Government is clear that that issue can best be addressed through a rural fuel derogation, which would reduce the rate of duty on fuel that is sold in certain rural communities in order to offset the higher distribution costs in those areas. Similar proposals have previously received cross-party support in this Parliament, and have been successfully implemented in France, Portugal and Greece.

The Scottish Government made numerous representations to the previous UK Government to introduce such a scheme, but unfortunately those were all rejected. The current UK Government has been more receptive to the proposals—indeed, introducing a rural fuel derogation was a key element of its programme for Government, which is to be welcomed.

However, rural fuel prices have continued to rise since last summer, but the UK Government has as yet taken no action. I understand that it has yet to even apply to the European Commission for the necessary derogation to implement the scheme, although I am happy to be corrected by other members if that is not an accurate description of the position.

The UK Government’s lack of action so far reinforces my belief that it has yet to grasp the impact that rising fuel prices are having on Scotland’s economy. There is a need for immediate action. I have, for my part, outlined a raft of policy interventions that could help households throughout Scotland right now if this Government had the power to implement them. We would start, of course, by scrapping the increase in fuel duty that is planned for next month.

It is worth pointing out that next month’s increase—or rather, later this month’s increase, if it is agreed at the budget and implemented in April—is not the last: further increases were planned under the previous Government for 2012 and 2013. If the chancellor can cancel those increases, it would undoubtedly benefit households and businesses throughout Scotland.

I hope that Parliament will unite in calling on the UK Government to take immediate action to tackle that issue—indeed, I plead for unanimity on the matter.

If we can, I believe that the Parliament talking with a united voice, in concert with the Welsh Assembly Government and the Northern Ireland Assembly, will be a powerful advocate for making the changes that we seek from the UK Government. I ask that no one tries to seek splendid isolation on this and that we work together—we have tried to compromise on what we have put forward to see whether we can reach a common position.

This issue clearly highlights the urgent need for Scotland to be granted full financial responsibility and control of our fuel duty and oil revenues, so that we can take the right decisions for the people and businesses of Scotland. In the meantime, we can take this action if we are all united.

I move,

That the Parliament notes that petrol and diesel prices in Scotland are among the highest in Europe and have reached record levels and that the planned rise in fuel duty by the UK Government in April 2011 could increase prices by a further 4p per litre; recognises that such increases impose an additional burden on households and businesses at a time of rising living costs and could undermine the economic recovery; notes the UK Government’s proposal to introduce a 5p-per-litre fuel discount scheme for island communities, and calls on the UK Government to cancel the rise in fuel duty planned for April and implement a fuel duty regulator that would ensure that some of the additional revenue that the UK Government will receive from increased revenues due to recent increases in oil prices is used to reduce fuel duty to help support Scottish households and businesses.

Photo of Charlie Gordon Charlie Gordon Labour

I was talking to the minister on the telephone the other day and I mentioned that I saw some snowdrops in Glasgow last weekend, but I said, “Keith, before you rush off to the control room, they were the flower snowdrops, which are a sure harbinger of spring.” This is the fourth spring in a row that we have had a debate here at Holyrood on fuel duty and we are in by far the most severe circumstances of those four years. Families out there are hurting from rises in the cost of living generally, and everyone in the UK—directly or indirectly and to a greater or lesser extent—is adversely affected by high fuel prices.

Labour has consistently opposed the increase in VAT to 20 per cent, which has helped to push up fuel prices to their current record levels at a time when world oil prices are high for reasons that we do not need to go into. With the economic recovery of the UK not yet secured, this VAT on fuel is the wrong tax at the wrong time and it is hitting families and businesses hard.

Labour is calling for the UK chancellor, George Osborne, to take immediate action on fuel prices to ease the pressure on families who are already facing a tough year, with their incomes squeezed. George Osborne should not just forget about the next increase in fuel prices, which is scheduled for April; he should reverse the VAT increase on fuel, which has added nearly 3p to the cost of a litre of petrol at a time when world oil prices are rising.

We know that, according to the House of Commons library, the VAT rise will generate around an extra £700 million of revenue for the UK Treasury this year. Perhaps it is less well-known—this was also identified by the House of Commons library—that the Treasury is also to have another windfall of some £800 million in additional tax income from the banks.

Let us be absolutely clear: in the budget, George Osborne should forget about any planned increase in fuel duty, which could be in the range of 1p to 4p on a litre of fuel. We say that he should also reverse the VAT increase on fuel using the bank levy and cut the cost of a litre of fuel by some 3 per cent.

Photo of Gavin Brown Gavin Brown Conservative

Does the member acknowledge that the planned increase was originally planned by Alistair Darling when he was chancellor?

Photo of Charlie Gordon Charlie Gordon Labour

Every UK Government makes provision for an increase in fuel annually, but it is a matter of fact that the previous Labour Government often postponed planned duty increases when world oil prices were on the up, as they are now.

What about the fuel duty stabiliser that George Osborne and David Cameron promised before the election? According to the Scottish Parliament information centre, the Conservative party’s 2010 general election manifesto said:

“We will consult on the introduction of a ‘Fair Fuel Stabiliser’. This would cut fuel duty when oil prices rise, and vice versa.”

Also according to SPICe, the manifesto of the Liberal Democrats, who helped to give David Cameron the keys to number 10, said:

“a rural fuel discount scheme ... would allow a reduced rate of fuel duty to be paid in remote rural areas, as is allowed under EU law.”

It came to light recently that Liberal ministers had been rather tardy in even corresponding with the European Union to progress that idea.

Photo of Liam McArthur Liam McArthur Liberal Democrat

The process of negotiations with the European Commission can take far longer than any of us is comfortable with, but does Charlie Gordon accept that, whatever glacial pace the negotiations are proceeding at, they are at least taking place? That did not happen under the previous UK Labour Government.

Photo of Charlie Gordon Charlie Gordon Labour

It is true that the Labour-led Executive did not initiate discussions with the European Union about a rural derogation; it introduced practical grant aid to rural petrol stations, to which the minister referred. That is practical help.

It is easy to talk, to be a “gaunae” and to break promises, but it is much harder to deliver for people in situations that I admit are complex.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

Does Charlie Gordon recall that, in our previous debate on fuel prices on 15 April 2010, the Labour Party alone voted against the motion to

“reduce the price of fuel in specified remote ... and island areas of Scotland”?

Is the Labour Party making a U-turn? Will it join other parties in supporting the motion tonight?

Photo of Charlie Gordon Charlie Gordon Labour

We are not making a U-turn, because a derogation for rural areas is not in the Government’s motion. That does not mean that the Labour Party is not still very interested in the idea, but it is—unfortunately—for another day.

In September 2010, the Office for Budget Responsibility—which Tory Prime Minister David Cameron established—reported on the idea that is in the motion, which is a fuel duty regulator. It argued that a permanent increase in oil prices would have a negative impact on public finances after a year and said that, because of other complex mechanics in the UK’s finances, a fuel duty regulator would to all intents and purposes not work. That is why we are reluctant to endorse the proposal. The UK Government’s new advisory body says that it would not work and would not deliver what the Conservatives in the UK Government said in their manifestos they wanted to do.

We focus on practical assistance to the families who are hurting today. I began—as we in this country often do in many circumstances—by talking about the weather. An old joke is that everybody talks about the weather but nobody does anything about it. The families out there who are hurting because of high fuel prices want more than talk, broken manifesto promises and the impotent politics of grievance. They want lower fuel prices now. That is what Labour is fighting for from the Tory Government.

I move amendment S3M-8032.1, to leave out from “and implement” to end and insert:

“and to reverse the recent VAT increase on fuel”.

Photo of Jackson Carlaw Jackson Carlaw Conservative

It was sweet of the minister to give the Parliament the opportunity to discuss fuel duty. I am sure that the debate was well intentioned. I had expected www.rentarammy.com to be behind him to support him in force and I am not disappointed. However, I will put the minister’s fevered brow at rest by telling him that we will support the motion.

Annabel Goldie raised the matter directly with the Prime Minister last month. It might have taken 11 years, but the new politics has finally arrived under devolution. The Scottish Conservatives welcome a Conservative-led Administration at Westminster, but we will not feel slavishly bound to endorse everything that it says or unable to stand up in Scotland’s interests when the circumstances dictate it. We believe that the high price of fuel is prejudicial to the Scottish economy and we will support the Government motion at decision time this afternoon.

Scottish Conservatives have always supported car users. We opposed those who wished to introduce road tolls and we will oppose those who want to introduce a 50mph speed limit. Although we accept that the minister is supporting the motorist this afternoon, we have reservations about some of the actions to tackle climate change emissions that may be prejudicial to motorists. However, that is for another day.

Let us look at the history. As many members know, my background is in the motor industry. For 25 years, I watched changes in access to the motor car. I saw car ownership change from being something that was only for rich people to something to which many people were introduced when company car schemes became widespread. The car then became something that many families could afford and went on to become an essential item for many families.

The key thing is that, as well as having an effect on the rural economy, the rise in fuel duty is potentially regressive, as it could force many people on marginal incomes out of their vehicles. In future, only the rich will be able to afford to drive while people on marginal incomes and those who work in the rural economy will not. People in the rural economy do not have the same public transport alternatives as others do, so car usage is vital for rural families and businesses.

Why are we where we are today? Mr Gordon referred to the Labour Government at Westminster cutting fuel duty, but Labour increased it. Labour increased fuel duty in July 1997, March 1998, March 1999, March 2000, June 2001, October 2003, December 2006, October 2007, December 2008, April 2009, September 2009—

Photo of Jackson Carlaw Jackson Carlaw Conservative

In a moment, once I have got to the end of the list.

There were also to be increases in October 2010, January 2011—the one that we are talking about—April 2011, April 2012, April 2013 and April 2014. Under Labour, fuel duty has increased from 36.86p per litre to 57.19p per litre.

Photo of Charlie Gordon Charlie Gordon Labour

First, I want to make it clear that I did not refer to Labour cuts in fuel duty. I referred to the deferment and cancellation of planned increases under the previous UK Labour Government. While I am on my feet, in light of the Office for Budget Responsibility report, will the member tell the chamber exactly how a fuel duty regulator will work?

Photo of Jackson Carlaw Jackson Carlaw Conservative

I am happy to talk to that in just a moment.

Labour has called for X, Y and Z this afternoon, including the reversal of the VAT increase. That is extraordinary. We went into the UK election last year with Labour promising to reduce public expenditure by £14 billion, just £2 billion less than Conservative-Liberal coalition plans. Yet, here we are, almost at the end of the financial year, and we know which reductions the Labour Party opposes—all of them—but we are unsure about which reductions it supports; indeed, we know nothing about that. In fact, what Mr Gordon proposed this afternoon would add further to the public deficit.

The coalition Government was elected on the policy of introducing a fuel stabiliser. Mr Gordon asks me to detail what that will involve, but that is a matter for the chancellor. We are asking him to come forward with the detail of that at the appropriate time, which is the budget on 23 March.

The minister was generous enough to refer to the reduction in fuel duty for the isles. It is difficult to define the rural economy in our approaches to the European Union, which is why those discussions are slow, but we have made the first step in so doing. However, the chancellor should know the will of the chamber; Annabel Goldie has made that clear to the Prime Minister. Scottish Conservatives are happy to support the Government motion. We are in the position that we are in today because of a fuel price hike that is a legacy of the previous Labour Administration. We are happy to stand by Scotland’s families and businesses. We will support the Government motion at decision time.

Photo of Alison McInnes Alison McInnes Liberal Democrat

As we heard yesterday, average prices at the pumps have reached a new high of 131p a litre for unleaded petrol. In my home town of Ellon, north of Aberdeen, a litre of unleaded is 133p and a litre of diesel is 138.9p. Further north, in Banff, diesel is selling at 141.9p a litre.

It is difficult for people to budget for the kind of rises that we have had over the past year. The soaring prices are causing a headache for households and businesses right across my region. The cost of fuel is a particularly heavy burden for those in rural Scotland. We have further to travel, further to go to take goods to market, fewer options to use public transport and higher pump prices. Many people have long commutes of around 40 miles and nurses working in Aberdeen royal infirmary, for example, have no option but to use a car because the bus services stop running before their shift ends. Everyone is feeling the squeeze. Local community transport schemes tell me that they are facing problems with cash flow. Small businesses flinch at the £100 a time that it costs to fill up their vans. The Community Transport Association reports that the effect of the rise in costs is particularly acute for schemes that rely on volunteer drivers.

Haulage companies are hit very hard. ARR Craib Transport Ltd is the largest transport company in the north of Scotland, providing road and rail transport services throughout the UK and worldwide. It is a major employer, employing more than 330 people throughout the UK, and it provides transport services to a diverse range of industries including oil and gas, food and drink, paper and construction. It has had to cope with the bulk price of diesel increasing by 17 per cent in the past 12 months and a staggering 10 per cent in the past three months alone.

Photo of Alison McInnes Alison McInnes Liberal Democrat

Not at the moment.

The company explained to me that, although it can pass on a proportion of fuel price increases to its customers through contractual fuel adjustment mechanisms, there is only ever a partial recovery as the company is under continuing pressure from its customers to reduce costs in what are still extremely difficult trading conditions. Increased fuel prices place cost pressures on the transport company, its customers and the future viability of both. What must not be forgotten is that in Scotland, and in the north of Scotland in particular, manufacturers and producers are a long way from their markets in the midlands and south of England. Consequently, transport costs make up a higher proportion of Scottish manufacturers’ and producers’ cost bases.

Some things can be done in some circumstances to mitigate fuel costs, such as car sharing and eco-driving, and switching to public transport where possible. However, there is now a pressing need for some respite from the inexorable rise in prices. That is why I support the call to drop the planned rise in fuel duty in April. That would give a breathing space while the Government develops proposals for a fuel duty stabiliser.

Photo of Karen Gillon Karen Gillon Labour

In the current climate, would it not be really useful to reverse the VAT rise on fuel in order to give the families and businesses that the member speaks about a chance? There is cash available in the bankers’ bonuses to do exactly that.

Photo of Alison McInnes Alison McInnes Liberal Democrat

I cannot possibly suggest that as the way forward. The member’s party made a mess and left us with 13 years’ worth of debt, and we have to pick up the pieces of that. Labour also had a proposal for VAT rises.

Photo of Karen Gillon Karen Gillon Labour

No, we never did. On a point of order, Presiding Officer.

Photo of Alison McInnes Alison McInnes Liberal Democrat

As I said, I support the call to drop the planned rise in fuel duty in April.

Photo of Trish Godman Trish Godman Labour

Sorry, Ms McInnes, but there is a point of order from Karen Gillon.

Photo of Karen Gillon Karen Gillon Labour

Presiding Officer, the standing orders are clear that members should not knowingly mislead Parliament. However, the member has done so, because we had no proposals to raise VAT and she knows that.

Photo of Trish Godman Trish Godman Labour

That is not a procedural point.

Photo of Alison McInnes Alison McInnes Liberal Democrat

I support the call to drop the planned rise in fuel duty in April, which would give us a breathing space while the Government develops the proposals for a fuel duty stabiliser. Liberal Democrats support the idea of a regulator or stabiliser, a mechanism that would be able to cut the duty on petrol when oil prices rise so that the price for consumers remains the same. Duty would then rise again once prices drop. The Courier has had a massive response to its fight for fairer fuel campaign—I understand that it has already amassed more than 6,000 signatures.

Labour cannot rewrite history. It did nothing to tackle rising fuel prices in 13 years. In contrast, UK ministers are now working towards a fuel stabiliser that could support motorists and businesses when oil prices are high, and they are taking specific action to support those in island communities.

The Liberal Democrats have been at the forefront of campaigning for fairer fuel costs for many years. We wrote our rural fuel discount policy into our election manifesto. Danny Alexander then won support for it in the coalition agreement and he has announced that the UK Government is taking it forward. It has to persuade the European Commission that the proposals are justified on the basis of evidence and then secure the approval of every one of the 27 member states. The plan will deliver up to a 5p duty discount on a litre of fuel. The pilot will start in the Inner and Outer Hebrides and the northern isles. It will take time to deliver, but it will make a real difference to people in remote island communities. That is quite a contrast to Labour’s record.

On the fuel duty stabiliser, it is estimated that every $1 rise in the price of a barrel of oil earns the UK Government an additional £150 million in revenue each year. In November, the UK Government projected the cost of a barrel of oil at $85, but the current price is $112. It is calculated that that brings in additional revenue of approximately £11 million per day.

I acknowledge that the OBR said that other balancing elements come into play, such as reduced demand at the pump and temporarily higher inflation. Nevertheless, the net effect is still positive and should be harnessed, to smooth out the ups and downs in the market.

I urge Westminster to ca’ canny, to listen to what people are saying about the problems that a further rise in duty would cause and to take positive action in the forthcoming budget to help our hard-pressed businesses and households.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

Scotland is facing a fuel price crisis. We are reaching a point at which Scots motorists, businesses and families will no longer be able to sustain the spiralling costs of petrol and diesel. It is no exaggeration to say that serious action must be taken to avert a crisis in which people will lose their jobs and established and budding businesses will fold.

Much has been made of how the crisis in the middle east is affecting oil prices and driving up the cost of fuel to intolerable levels, but that is a fallacy. In July 2008, the price of oil reached $142 per barrel; today, the price is $114, but fuel is much more expensive now than it was then. It is the policies that successive UK Governments have pursued that have dramatically increased the cost of fuel. The fuel duty escalator, which Labour and Tory Governments pursued, with a penny increase in one budget and a penny increase in the next, soon added up, as Mr Carlaw said. The approach has pushed the cost of fuel through the roof and left many people struggling to cope.

In the heady days of 2008, fuel duty stood at 50.35p per litre and the VAT rate was 17.5 per cent. Next month’s proposed increase will bring duty up to 58.95p per litre, at a time when VAT is 20 per cent. That will stuff Treasury coffers with £34.6 billion this year.

UK motorists are the most highly taxed in the European Union. Some 62 per cent of the average price of a litre of diesel consists of tax. The current formula for fuel duty increases is inflation plus 1p each April until April 2013. If we consider that fuel price rises increase inflation and inflation increases fuel prices, it is clear that the situation is unsustainable.

To add insult to injury, although most EU oil comes from Scotland, not only do we pay more at the pumps than anyone else does but, this year, we will send £12 billion in oil revenues to the UK Treasury.

Photo of Rob Gibson Rob Gibson Scottish National Party

My constituent Alasdair Nicolson, who owns a garage at Rogart in Sutherland, says that people cannot afford to buy petrol for essential users and, if the fuel duty goes ahead, there will be no petrol stations left in Sutherland. Does the member agree that that will be one of the consequences of the increase in taxes by the London Government?

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

During the past decade, a third of petrol stations have closed and rural Scotland has been hit harder than most areas. People who live in rural communities have to travel ever further to fill their tanks.

During tough financial times, it is the duty of Government to boost the economy, secure employment and protect businesses and services. Many people could learn from the Scottish Government’s small business bonus scheme, for example, which has meant the difference between sinking and swimming for one in eight Scottish small businesses. However, far from attempting to help businesses through these difficult times, the UK Government is placing more obstacles in businesses’ way.

Information that the Federation of Small Businesses provided set out the devastating effects that increasing fuel duty has had and will continue to have on businesses unless drastic action is taken. The figures on the increased costs of road haulage are particularly eye watering, as we heard. The FSB’s national chairman, John Walker, summed up the situation when he said:

“small businesses want to grow, innovate and create employment but the cost of fuel puts the brakes on their ability to drive the recovery ... Every extra penny spent at the pumps is a penny not being spent elsewhere in the economy and our members are finding it hard to plan for the future, as well as survive the present, due to the spiralling cost of fuel.”

We cannot allow work to stabilise and grow our economy to be undone by short-sighted and unjustifiable increases in fuel duty.

However, it is not just the business sector that is feeling the squeeze; ordinary Scots families, motorists and people who travel on public transport are finding that their budgets are seriously stretched. They are paying hundreds of pounds more every year to get to work, which pushes already-tight budgets even further. During better times, a fuel price increase could be offset by a rise in wages, but employees are currently experiencing the largest real-terms cut in their wages since the 1920s. The higher costs of goods and services add further pressure to household budgets.

The coalition Government is often heard to talk of fairness, but what is fair about all that? I welcome the comments of Liberal Democrat and Conservative members who do not support the increase in fuel duty. I hope that the message gets through to their chancellor down south.

For more than a decade, the Scottish National Party has campaigned for lower fuel prices. We are therefore aware of the options that are available to give motorists and businesses a better deal. A fuel duty stabiliser would ensure a freeze on fuel duty increases and a reduction in duty to match any increase in VAT revenues from higher pump prices. That would provide greater certainty for businesses and families.

In rural and island communities, the burden of fuel costs is even greater. The people on Arran in my constituency, for example, do not have to deal with high levels of duty and taxation alone; isolation and low sales volume add approximately 15p to the price of a litre of fuel. A constituent informed me that in Brodick in Arran today diesel was 149.6p per litre and unleaded was 142.2p per litre. That is surely the highest in the country.

Photo of Charlie Gordon Charlie Gordon Labour

Will the member give way on that point?

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

I must apologise to Charlie Gordon, because I would like to take his intervention, but I am running short of time and am speaking about my constituency.

Since 1999, the SNP has pursued the idea of a derogation on fuel duty for rural and island communities to ensure that fuel duty in such communities would be less than on the mainland in order to make up for the price differential. Bizarrely, the previous UK Labour Government supported that measure in EU countries such as Portugal, Greece and even prosperous Luxembourg—which has the lowest fuel duty and VAT rates in Europe—but not in Scotland, even when the MP who was in charge of the policy represented the island of Arran.

The new coalition Government is more sympathetic to the idea. On 9 October 2010, Danny Alexander MP, Chief Secretary to the Treasury, announced that a pilot scheme with a 5p duty derogation—not a particularly great sum, but at least something—would be introduced for islands from the Scillies to the Shetlands. However, Mr Alexander omitted the Clyde islands. Unfortunately, having challenged him on the issue—I have the correspondence here—I discovered that that was not merely an oversight and that the UK Government does not intend to extend the derogation to the Clyde islands.

Unless we have some kind of level playing field, high fuel prices will impact on households, businesses and public services on Arran, and islanders will be adversely affected. That will ultimately cost jobs and reduce disposable income.

Throughout Scotland, we are talking about not a mere 1p rise in fuel duty, but thousands of jobs. The chuntering Lord Foulkes does not seem to care much about that, because all he does is chunter and chunter without anything positive to say.

Photo of Kenneth Gibson Kenneth Gibson Scottish National Party

We are talking about business survival, about the delivery of public services and about daily household budgets being stretched to breaking point. I know that, with his income, Lord Foulkes will not be affected.

The UK Government will raise £1 billion in extra revenue if it follows through with its proposal in Scotland. The consequences of that will, in the long run, cost it and the Parliament far more.

Photo of Cathy Peattie Cathy Peattie Labour

Behind the doors in any street down which members walk, families are anxious about how they will get by over the next few years.

We find ourselves in a difficult international situation and a difficult economic situation. Neither is of our making or under our control, but both have an impact on our lives. One impact is the recent large rise in fuel prices, on which we have to move forward, because the impact on Scottish people’s lives will be devastating. That will be the case not only for drivers. Costs will also rise for public transport and distribution, which will push up inflation and increase food prices and other costs, not just fuel costs. The bad news will mean problems for everyone but, for those on low and fixed incomes, it will be a crushing blow.

On top of that, we are due to have a further increase in fuel duty. That is more bad news. We face a huge increase in fuel costs, which threatens our recovery.

However, members should note that the increases in fuel costs are not entirely bad news for the UK Government: it will, after all, get increased income as a direct result of increased prices.

We could reverse the VAT increase on fuel. Government revenue from fuel would still be greater than was expected before prices started to rise so sharply. The impact from removing the VAT increase could be offset by a bank levy.

In the current economic situation, when fuel prices are rising so quickly without any assistance from the Scottish Government, we should not add to people’s burden with a further fuel duty increase. Without fuel duty rises and before the most recent international oil price rises, fuel prices were already moving higher.

In a survey that the Automobile Association conducted, 49 per cent of respondents said that they would drive more economically as a result of higher prices. We should build on that by publicising eco-driving techniques that could save families hundreds of pounds. Local and national campaigns on that issue would also contribute to our climate change targets.

Photo of Keith Brown Keith Brown Scottish National Party

Does Cathy Peattie agree that it is profoundly ironic that, in Grangemouth in her constituency, where up to £12 billion of revenue is generated for the UK Exchequer, we have been paying—I have used the filling stations in that constituency often—far more than in the rest of Europe although we are an energy-rich country?

Photo of Cathy Peattie Cathy Peattie Labour

I will speak about Grangemouth shortly.

Scottish fuel duty is, of course, a UK issue, and we should not linger over aspects that are reserved, but I agree that there is a Scottish dimension that we should focus on in this debate. The Scottish dimension is not just about islands and rural areas. The impact on people in those areas is not simply in how much they pay at their local pump; they are also affected by the higher prices that are being paid in the rest of Scotland. High fuel costs in my constituency affect everyone in Scotland, as they have a direct impact on the cost of distribution. I never tire of reminding people that Grangemouth and the surrounding area have the busiest Scottish port and a major refinery, and they are a significant location for road and rail hauliers and supermarket distribution. Fuel costs that affect my constituency affect everyone. Let us not forget what happened a few years ago, when fuel cost protesters blockaded Grangemouth refinery, despite fuel costs being much lower then. I do not want to see people being driven to such measures again.

At first glance, the idea of a fuel price stabiliser is attractive as an answer to the problem of fuel price volatility, but it would not address the causes of that volatility, and the system would be complicated to operate. Government studies suggest that it would lead to instability and perverse outcomes, which make the proposition flawed. The system could also cost a lot to operate, which would undermine the whole point of having it. Even many of its supporters admit that the concept needs further study and refinement, and that it is unlikely to be workable in the near future. Danny Alexander has said:

“It’s a complicated idea and it’s difficult to see precisely how we achieve it, but it’s something that we are looking at very carefully to see if we can reduce the burden of fuel duty”.

The VAT route would be quick, simple and easy to implement, and it would be easier to forecast the benefits and costs of it.

This debate is about sending a message to Westminster, which should be that this is not just about one part of Scotland; rather, it is about interdependency. The Labour amendment proposes action that would help everyone in Scotland.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

It is a great pleasure to speak on the subject of fuel duty. In my first contribution in the Parliament in 2001, I spoke about fishing, which is a vital interest for my constituents. Therefore, it is a great pleasure as I make my 400th speech today to speak about something of equal importance. [Applause.] I thank members for that kind applause. It is richly deserved—for those who have had to listen to my 400 speeches.

I will be serious. The fair fuel price campaign featured in the middle of the newsletter that I distributed in 2001 for my first election to the Parliament. Fair fuel prices were an issue then, and they remain an issue today for rural constituencies such as mine. In 1997, the price of a litre of petrol was 61p. Alison McInnes referred to the price of diesel in Banff. I understand that the price of petrol in Banff today is 134.9p a litre. When I had my first car, I could fill up its tank, take the four people in the car for a fish supper, go to the cinema, and get change from a pound.

The world has changed, but the Labour Party’s inability to engage on the subject has not. When it debated it in April last year, parties were able to coalesce around a shared belief that we had to take action, but the Labour Party—the 36 members of it who turned up to vote, that is; 10 were missing—was on the wrong side of the argument, and the indications are that it will be on the wrong side of the argument today.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

I will do so later.

Charlie Gordon said in that debate that he remembered lager being half a crown a pint, so I know that he is of a similar age to me.

Those staggering increases in the cost of fuel affect everyone, not simply motorists. If businesses face higher fuel costs, those costs are in turn passed on to consumers and we all pay more for the things that we buy. The case for a fuel duty regulator to halt the constant fuel price increases that people face has never been more urgent.

I do not have an intrinsic difficulty with the idea of reversing the recent VAT increase on fuel that the Labour Party proposes in its amendment; my fundamental difficulty is that although that would give some relief, it would be a one-time hit, whereas what the Labour Party seeks to delete from the motion is a proposal that would provide a long-term, permanent solution to smooth out the price of fuel. The one thing that really affects business and individuals is erratic changes in prices. A study of the graph that the House of Commons has provided in its research shows that pricing has become much more erratic in nature.

Photo of Patrick Harvie Patrick Harvie Green

The member describes a fuel duty regulator as a permanent solution to the problem of volatility. Surely he accepts that it is not a permanent solution to fuel price rises, which, at present, are not being driven by taxation.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

I absolutely accept that if the intrinsic price of the underlying raw material is to change over a long period of time—I think we all accept that it is—we cannot beat the system, but we must give business the certainty of understanding what its costs will be.

Charlie Gordon rose—

I am coming to Charlie Gordon in a minute.

We must also give rural constituents such as mine the opportunity to do their budgeting, as well as giving them some relief in the meantime.

Photo of Charlie Gordon Charlie Gordon Labour

As an aside, can I say that I yearn for the days when I was younger and better looking than the former transport minister?

I have explained that the Government’s own advisory body says that a regulator would not work. I have made it clear that we are being practical: cutting back the VAT on fuel is a practical measure that can be taken this month. If the member checks the Official Report of the debate that we had a year ago, he will see that I left the door open, as I did earlier this evening, on the concept of some limited derogation for very remote rural parts of Scotland.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

If the door is capable of being opened, the three parties who are on the other side of the argument in the debate are handing the Labour Party the key. It should take it, turn the key and go through the door. A fuel duty regulator is a process by which we can give certainty and use the huge sums that the Treasury has—it has £1 billion in tax more than it anticipated having—to fund relief for people in rural areas who simply do not have alternative means of transport and who have to use their cars to go to work or to the shops, and to undertake social, educational or medical journeys. It is extremely important that we focus on that.

I welcome the fact that it appears that our island communities are to receive some relief, but many mainland communities are equally remote and equally affected by fuel prices. A fuel duty regulator would be a way of controlling price, and I hope that members will coalesce behind the Government’s motion and unite in sending a message to the Government at Westminster.

Photo of Jim Hume Jim Hume Liberal Democrat

The high price of fuel always hits hardest those in remote and rural communities, where ownership of a car is a necessity and bus stops are often non-existent. Public finances are tight, which has resulted in many local authorities having to withdraw subsidies for some loss-making bus routes in rural areas.

Members will recall that the Liberal Democrats detailed plans for a fair deal for motorists in our manifesto, which included a rural fuel discount scheme. We fought successfully for that to be included in the UK Government’s coalition agreement, and it is worth noting that it took just five months for the Westminster Government to announce its intention to introduce a pilot scheme that will deliver fuel duty discounts to many of our island communities.

Of course, dramatic increases in fuel are not exclusive to the past few months; they were endemic throughout Labour’s 13 years in power, so people will rightly ask Labour what was keeping it from introducing a similar scheme. That is further evidence that Labour does not really get the rural issues.

The price of unleaded and diesel fuels in areas such as Lerwick and Kirkwall is certainly eye-watering and I imagine that few members will argue with such communities receiving support in the form that was announced in October. However, not all Scotland’s remote communities are located to the north. From speaking to many of my constituents throughout the south of Scotland, I know that families and businesses are feeling the pinch. It is a fact that, just as in many Highland communities car ownership is necessary, the same is true in the south.

For example, in Dumfries and Galloway and the Borders, approximately 250,000 inhabitants live in about 11,000 sq km. That gives a population density of just 24 people per square kilometre, which is in stark contrast to a city such as Glasgow, which has a population density of 3,338 people per square kilometre. As we would expect, two such vast areas as the Borders and Dumfries and Galloway are also experiencing high fuel prices. In Selkirk today, diesel costs 137p per litre. In Eyemouth, it is 140p, and in Annan, it is 142p. All those prices are above the UK average. Many people who reside there are forced to commute to their work and are only too well aware that trips to filling stations are becoming more frequent.

We have also had two hard winters, which have hit rural businesses’ fuel costs high and hard. I therefore sympathise with and support calls to defer the fuel duty increase that is planned for April.

Photo of Lord George Foulkes Lord George Foulkes Labour

I wonder whether Jim Hume can help me. Does he believe that keeping us all here for an extra two hours to debate an issue that is reserved to Westminster is worth while? Would he not be better going down to Westminster, grabbing hold of Danny Alexander by the collar and making sure that he does what Jim Hume is asking him to do?

Photo of Jim Hume Jim Hume Liberal Democrat

I do not agree with that. I would not sympathise with anyone who wanted to grab anyone of any particular persuasion. I assure George Foulkes that the Liberal Democrats have pushed forward the coalition’s schemes.

I mentioned that we are seeing the tightening of public spending, and the continued increase in fuel prices presents budget pressures for local authorities and health boards that have sizeable vehicle fleets. Indeed, last month it was revealed that Dumfries and Galloway’s bill for running its vehicle fleet increased by 60 per cent in just 12 months. Clearly, it would be desirable for our efforts to decarbonise the economy and for economic reasons if the public sector were to move away from using petrol and diesel in its vehicles.

The SNP appeared to recognise that by stating in its 2007 manifesto that it was committed to ensuring that the entire public sector fleet would be running on alternative fuels by 2020. Unfortunately, I regret to inform members that the Government’s record on that target is appalling. Responses to freedom of information requests that I received a few weeks ago reveal that, in the 30 local authorities that responded, just 4.5 per cent of their vehicles are using alternative fuels. Thirteen health boards responded, and 1.1 per cent of their vehicles are using alternative fuels, while 0.7 per cent of the fleets of the police boards that responded are using alternative fuels. That is nowhere near 100 per cent. In all the public bodies that I surveyed—a combined fleet of 21,203 vehicles—only 3.25 per cent of vehicles use any type of alternative fuel. There is therefore little cause for optimism that we will see an improvement in that situation under the SNP Government.

Many of the public bodies that I surveyed had never purchased a vehicle that uses alternative fuel, and in the few that had, 45 per cent fewer such vehicles will be purchased during the current financial year than were purchased in 2007. Of course, the First Minister announced a low-carbon vehicle procurement scheme but, at best, that will give money towards only 104 vehicles, which is 0.005 per cent of the fleet that I have just mentioned.

The failure to take adequate steps towards decarbonising the public sector’s fleet of vehicles simply ensures that public bodies will continue to experience a tightening of their budgets as their fuel costs rise. That is because of a lack of competitive fuel alternatives and investment.

People throughout my region and the rest of Scotland are concerned about the rising cost of fuel, and we should be concerned, too. That is why I welcome the UK Government’s exploration of how it can assist remote communities, and why I support the deferral of the fuel duty increase in April.

Photo of David Stewart David Stewart Labour

As we have heard, this evening’s debate is on an issue with widespread implications for rural development, climate change and, of course, integrated transport. Indeed, as Cathy Peattie and others have pointed out, high fuel prices affect all of Scotland, but the effects are much more acute in our super-rural and peripheral areas, particularly our island communities. In that respect, I recall Donald Dewar’s story of his visit to Brian Wilson’s mother-in-law in the Western Isles. When he remarked that her house was extremely remote, she replied, “Yes, Donald, but remote from where?” There is an issue about where our rural areas are in connection with the rest of Scotland.

High and unstable fuel costs are a very real problem not only for business, as the National Farmers Union Scotland made clear to us in this afternoon’s briefing, but for local families and tourism in Scotland. At 12 o’clock today, I took a snapshot of petrol prices around Scotland. In Skye, diesel was 143.9p; in Lewis, 149.9p; and in Galashiels, 136.9p. Of course, when we talk about high fuel prices, we need to consider the combination of factors that make up the fuel price itself.

Photo of Rhoda Grant Rhoda Grant Labour

As the member is aware, many small rural filling stations have told us about the high cost of wholesale fuel, which puts pressure on their businesses and, indeed, can make them unsustainable. How could we help those filling stations to stay in business? After all, the further that people have to travel to access fuel, the higher the cost they will have to pay.

Photo of David Stewart David Stewart Labour

The member makes a very strong point. In fact, when it was in power in the Scottish Parliament, Labour introduced a series of measures to support rural petrol stations, including rates relief and vapour removal and recovery tanks, which, although they sound techie, are extremely important to those businesses. We need to borrow some examples from countries such as Scandinavia, which has unmanned petrol stations with closed-circuit television. The resulting cut in labour costs has ensured the survival of supply, which is also crucial.

The fuel price is made up of the spot crude oil price, distribution and marketing costs, VAT, refining costs and fuel duty. Fuel duty and VAT are reserved and, of course, the spot crude oil price is set by the markets. This whole debate could have focused on the role of the Organisation of Petroleum Exporting Countries and cartels and how the spot price is arrived at, but the relevant concern is, as other members have mentioned, the current problems in Libya and Iraq, which are reducing the available supply of fuel. Under the simple laws of supply and demand, those issues will play a role in increasing the fuel price in the short term. That is very worrying and there is frustration at the amount of control that individual Governments have over the spot price of fuel.

What can be done about price? In Europe, as we know, harmonisation policies have been introduced in an attempt to achieve common tax rates and environmental necessity has led to a general trend, which most of us with our environmental views would support, towards increasing tax on road use. As other members have pointed out, there is no simple one-size-fits-all solution to this problem. Like my colleagues Charlie Gordon and Cathy Peattie, I support reducing VAT to 17.5 per cent—but more of that later, perhaps.

Photo of Keith Brown Keith Brown Scottish National Party

How would the proposed VAT reduction, which I support and for which my party voted in the House of Commons, help not only the instability of fuel prices but businesses themselves? After all, because businesses will by and large reclaim that money, such a reduction will have a neutral effect on them.

Photo of David Stewart David Stewart Labour

As I said, there is no one-size-fits-all solution, but I think that that straightforward, practical step could help.

I point out to the minister an example of where it has helped. When Labour was in opposition and John Major was the Prime Minister, we defeated the Tory Government at that time and reduced VAT on heating oil to 5 per cent. If my memory serves me correctly, it is still at that rate. It is important that we see VAT as a useful vehicle in reducing cost.

As I mentioned earlier, one of the biggest factors in the price of oil is the role of the cartel, of OPEC, and political instability. It is hard to control the overall price of fuel because of that factor.

Another issue that members have not raised but which I think is important in the Highlands and Islands, as well as in other rural areas, is the suggestion that competition might not be as good as it could be in the wholesale market and within distribution. In the past, the Office of Fair Trading has pursued inquiries into that and, if the evidence supports it, I would support further inquiries by the OFT into petrol pricing in rural areas. In the past, some anomalies have been raised, especially in the Western IslesAlasdair Allan will be familiar with them—through the OFT inquiry.

I support the view of the ex-Minister of State for Industry and Energy, Brian Wilson, that oil companies should have regard to a whole series of factors when it comes to determining the price of fuel. He has argued that oil companies should build ultra-peripherality into their pricing—in other words, the oil companies themselves should have a role in addressing the supply of fuel to marginal rural areas. I am not suggesting that that is the whole solution; I merely think that it is a reasonable way forward in trying to get an individual solution.

Photo of Alex Fergusson Alex Fergusson None

I must hurry you to close, Mr Stewart.

Photo of David Stewart David Stewart Labour

I will go straight to my conclusion, Presiding Officer.

There are some things to be welcomed in derogation and I support the current pilot in our island communities. It is not easy to deal with derogation in the European Union, as members know. There must be a unanimous decision by EU finance ministers. The key is to have a reduction in VAT, to have an inquiry by the OFT and to build up alternatives in rural transport to provide solutions for rural consumers.

Photo of Alex Fergusson Alex Fergusson None

I advise members that there is absolutely no extra time available, so speeches must be dead on the time limits that have been given.

Photo of Gavin Brown Gavin Brown Conservative

This is a vital issue for us to discuss this evening. People across Scotland are hurting at the moment. They are really feeling the pinch and businesses are feeling the pinch, too—some of them are in jeopardy. Any member who is out on the street, knocking on doors or getting letters and e-mails from their constituents knows that this is right at the top of the pile of issues in the minds of constituents, whether they live in a rural or an urban area. I am sorry if it inconveniences George Foulkes to have to stay behind for two hours to discuss the issue, but so be it. It is critical that the Parliament discusses it and sends out a message on it. The situation could get worse. It is bad at the moment and we are suffering record high prices, but if we see an increase in taxation and the globally traded oil price, it will get worse. That is why it is important to send a message.

I will focus on three areas: the planned rise in taxation; the fair fuel stabiliser; and the derogation pilot for certain rural areas in Scotland and the rest of the UK. We made it clear in our election manifesto that we will consult on the introduction of a fair fuel stabiliser, which would cut fuel prices when oil prices rise and vice versa. It would ensure that families, businesses and the whole British economy would be less exposed to volatile oil markets and would ensure a more stable environment for low-carbon investment. Where we part company with the Scottish Government is on the pace of change. The proposal is far more complex than the minister gave credit for in his opening speech. He criticised the UK Government for things not having moved faster than they have, but I do not think that anybody in the world expected a fair fuel stabiliser to be in place so soon after the general election. Very early on, the UK Government tasked the Office for Budget Responsibility with exploring how oil prices would affect the economy and, as we speak, the Treasury is considering in detail the OBR’s assessment of that.

Photo of Keith Brown Keith Brown Scottish National Party

I accept the member’s point about the time that it can take to do these things, but does he not think that, given the case that he has just made, the extreme situation that businesses and individuals face and the extent to which that has been compounded by the increase in VAT, there should have been some alacrity on the part of the UK Government and that it should have dealt with the matter a bit more quickly? We have not heard anything from it on the issue.

Photo of Gavin Brown Gavin Brown Conservative

I do not think that it is fair to say that we have not heard anything from the UK Government. We have heard far more about the issue in 10 months than we heard about it in the previous 10 years.

The important point is that this is not a temporary fix. It is far more important that we get this right to protect our businesses in the medium and the longer term. If that means taking a bit longer, it should take a bit longer. For example, how do we set the base price for oil, petrol and diesel? That involves brains far wiser and more able than mine. However, it is more important to get it right than to get it done quickly.

The thing that I want to get done quickly is to abandon the tax rise of 1p above inflation that is planned for April. There is unanimity across the chamber on that point, I think.

Photo of Gavin Brown Gavin Brown Conservative

I accept Mr Harvie’s point, but there is near total unanimity.

As Jackson Carlaw said in his opening remarks, Annabel Goldie has raised the matter directly with the Prime Minister. This is an issue on which quicker action can be taken.

On the derogation, rural areas are hit even more badly than our cities at the moment. In most cases, the pump price is higher and, in other cases, there is a lack of alternative transport. In many parts of the country, the car is vital. In some of our rural areas, there is simply no other option.

The UK Government has announced its intention to introduce a rural fuel duty pilot, with a discount of up to 5p a litre on all petrol and diesel. The areas that the pilot would cover have been outlined. Scottish National Party members have criticised the speed at which that has taken place. Again, however, getting that scheme in place is far more complex than it would first appear. As Alison McInnes said in her speech, not only is clearance required from the EU as a whole, but each individual member state in the EU has to agree to the derogation that the UK Government wants to put in place. As other members have said, the system works in other parts of the EU, such as the Greek islands, the Azores and parts of France. However, the process for some of those areas was long-running—derogation did not happen overnight—and, in the case of Greece, I understand that the derogation was allowed as part of its accession to the EU.

I think that the UK Government is doing all that it can to put the case for a derogation, with an aim to having it as soon as possible.

The situation is deeply worrying for the country, which is why we are getting behind the motion. Everyone is feeling the pinch. We have been clear about our desire for the planned rise in April to be cancelled and for there to be faster movement on derogation and on the fair fuel stabiliser. However, we are realistic about the possible rates of progress in that regard.

Photo of Alasdair Allan Alasdair Allan Scottish National Party

“Why,” the weary listener might ask, “do island MSPs keep going on about this subject?” If they tried buying petrol in the Western Isles, they might understand.

As others have said, fuel prices are reaching concerning levels throughout Scotland. However, in Scotland’s islands, they are now at astronomical levels. I have yet to hear of people anywhere in the world who pay more to fill up their car. Therefore, I make no apology for concentrating on the effects of high petrol prices in Scotland’s island communities, and I welcome the fact that, contrary to what Mr Gordon said earlier, the Government motion refers to a fuel duty derogation in the islands.

I have heard that in some places in the Western Isles petrol has reached 148p per litre, and I know that, in Benbecula, petrol is one tenth of a penny away from crossing the more than psychologically important £1.50 mark. I note the minister’s report that, in Shetland, that barrier has already been crossed.

Photo of Jamie McGrigor Jamie McGrigor Conservative

Just for information, the cost of diesel on Tiree is 155p per litre and, on Islay, it is 148p.

Photo of Alasdair Allan Alasdair Allan Scottish National Party

I agree that this is a problem that afflicts all the islands and many other areas of rural Scotland.

Despite the Western Isles being nowhere near the top of the league for household income in Scotland, we have a higher than average rate of car ownership. That tells its own story. As others have pointed out, in the islands a car is essential for practically anyone in employment and anyone with a young family. In many cases, it is even essential for pensioners who just want to get to the nearest shop. People who would not consider owning a car in the cities realise that they have to have one in the Western Isles, or in other island communities.

Public transport does exist there, and it is certainly used. However, with most villages having typically half a dozen buses going through them each way a day—if that—trying to fit the needs of a job or a family around bus services is no simple matter. To ask people in the Western Isles to do without cars entirely would, if I may put it as dramatically as this, be to ask them, essentially, to accept the travel patterns of their grandparents’ generation—three or four trips a year to Stornoway, followed by one permanent journey to Canada.

I say these things not as a petrolhead by any means—lest I be called that. I do not drive a car on the mainland, which is possibly just as well for people there. I did once drive a car from Inverness to Ullapool, I concede, but I have no immediate plans to repeat anything of the kind again. I fully and enthusiastically accept the need to reduce our car use. However, we must also accept that, in some parts of Scotland—not the bits that are responsible for the vast bulk of our carbon emissions—if there is an alternative to the car, it has not yet made itself known.

For that reason, people in the Western Isles have not been slow to record their views about fuel prices. I wrote to my constituents on the issue some time ago and got almost 5,000 replies on the subject. A petition was raised locally and was taken to the Parliament’s Public Petitions Committee. It was signed by something like a quarter of adults in the islands. It resulted in correspondence between the Scottish and UK Governments, in which, somewhat laughably, the then Chancellor of the Exchequer, Alistair Darling, argued against a cut in fuel duty in island areas, claiming that it would create what he called “perverse incentives”—presumably for people in Glasgow to drive to the Western Isles to fill up their car.

We are still waiting for the present UK Government to make good on its promise—which is very welcome, I must say—made many months ago now, of a 5p cut in island petrol duty. Notwithstanding the complications that have been described, I counsel the UK Government that a hope long deferred maketh the heart sick.

As everyone knows, the price of petrol has gone up through the VAT rise, ensuring that those who already pay most for their fuel now pay most tax, too. There is as yet no sign of a fuel tax regulator and it is disappointing—indeed, somewhat incredible—that the Labour amendment seeks to remove all reference to that regulator from our motion. I hope that Labour candidates in the Highlands and Islands are well briefed on how to explain that one away.

I accept that tax is not the only factor in the price of island petrol. The lack of competition among the companies that deliver and supply fuel to island petrol stations—I am not thinking internationally, but locally—is not healthy. Indeed, as other members have mentioned, the Office of Fair Trading has taken some interest in the matter.

However, tax is an important factor and, regrettably, the UK Government still determines the tax on fuel and receives that tax, just as it receives tax on the companies that operate in the North Sea. My colleagues in the House of Commons are busy today tabling amendments to the Scotland Bill to put that situation right but until it is, this Parliament still has an opportunity to argue for a fairer deal for those who really do rely on the car. That means arguing that the UK Government should cut the rate of island fuel duty, abandon its planned duty increase and introduce a fuel duty regulator. Any party that does not argue for those things tonight will rightly be strongly criticised in the communities that I represent.

For all those reasons, I urge members to support the Government motion and to vote against the Labour amendment.

Photo of Patrick Harvie Patrick Harvie Green

Time for a key change, I think. It should not come as any surprise to people in any of the political parties that are represented here that the Greens will be voting against both the motion and the amendment. We will be doing so on a day when the chief economist of the International Energy Agency stated:

“Expensive oil is here to stay”.

That recognises that, as oil reserves decline in both output and quality—North Sea oil having been in decline for many years—we will experience continual increases in oil prices.

My problem is that the proposals that have been outlined by all the other sides in the debate are a short-term fix for a long-term problem. As research published by the policy studies institute suggests, recent fuel prices have been driven by an underlying trend of rising international oil prices, rather than by increases in the fuel duty rate. Therefore, the proposals are the wrong response to the problem. They are also an expensive response, because fuel duty revenues allow other taxes to be kept lower. As someone who is sometimes willing to talk about tax increase, I challenge any member who wants lower fuel duty to say which taxes they would increase to compensate.

Transform Scotland, Friends of the Earth, Sustrans and WWF have circulated to all members a briefing that outlines the reasons why the fuel price stabiliser would not work in the long term, even though it might smooth out volatility.

Photo of Stewart Stevenson Stewart Stevenson Scottish National Party

Does the member accept that the UK Government is on target to take £1 billion more in tax from fuel than was provided for in the budget that it produced last year? The money is there—the proposal is to return the excess tax that is being collected.

Photo of Patrick Harvie Patrick Harvie Green

Our requirement for capital investment in a low-carbon society and economy should be our priority for that money.

As Transform Scotland has argued, cutting fuel duty would be using taxpayers’ money

“to fix a problem that is beyond our control.”

I am used to hearing doublespeak and denial on oil issues, but for the transport minister to open a debate on fuel prices by complaining about prices and at the same time boasting about a road-building programme, which is locking in oil dependence at ever-higher levels, surprised even me. He said that we must not be controlled by international events and that we need to get some control back. Every country in the world is facing peak oil. Peak oil used to be dismissed by the oil industry as a fringe theory or even as ideology, but not any longer. The industry’s deceit and dishonesty about reserves over the decades is now well known.

Photo of Jackson Carlaw Jackson Carlaw Conservative

Does Mr Harvie believe that the fuel duty escalator is in fact high enough?

Photo of Patrick Harvie Patrick Harvie Green

I could have a long discussion with the member about what I would do if I were running the UK Government, but I am not.

On peak oil, we no longer have denial and dishonesty. The chief engineer of Arup said recently:

“Within five years we think peak oil is going to affect every aspect of our daily lives”.

Richard Branson has said:

“The onset of peak oil and therefore the end of the era of cheap oil will have a very, very wide impact.”

Ian Marchant of Scottish and Southern Energy has said:

“My sense is that peak oil is a clear risk. If you do not think about that risk it will become a ... problem.”

However, some people still seem to be unwilling to think about that risk. We have heard speeches from the front benches of all the other parties and from back-bench members without a single reference to the real underlying cause of the problem, which is not taxation, economics or ideology, but geology. As you were burning all the cheap stuff, you were building an economy that could not function without it.

Photo of Keith Brown Keith Brown Scottish National Party

I seek further clarity on the Green Party’s position. Is it true that it seeks an 8p per year increase in fuel duty, year on year, into the future?

Photo of Patrick Harvie Patrick Harvie Green

The member is talking about the Green Party of England and Wales. He can look forward to reading our manifesto when we publish it.

The peak oil task force states:

“The next five years will see us face another crunch”— beyond the credit crunch, the oil crunch. It continues:

“This time, we have the chance to prepare. The challenge is to use that time well ... As we reach maximum oil extraction rates, the era of cheap oil is well behind us.”

We are told:

“We must plan for a world in which oil prices are likely to be both higher and more volatile and where ... price shocks have the potential to destabilise” the economy.

Rather than address that long-term problem—the real problem with oil—what is the response of all the other parties in the Parliament? Drill, baby, drill. Every single one of them supports proposals for irresponsible deepwater oil drilling off Shetland.

Photo of Patrick Harvie Patrick Harvie Green

No, thank you.

There is a real and serious case around the cost of living. On food, growing and trading locally and cooking with real ingredients can bring down people’s prices. On housing, our proposals on a land value tax can bring down prices. On energy, using less and using it more efficiently will bring down prices. On transport, public transport and demand reduction will mean using less oil. Ultimately, we need to be prepared for peak oil and climate change. The rest of the parties seem prepared for nothing but party politics.

Photo of Dave Thompson Dave Thompson Scottish National Party

Over the years, many studies have been carried out on the supply and price of fuel in the Highlands and Islands, some of which I was involved in as director of protective services for Highland Council. The Highlands and Islands action group on hydrocarbon fuel prices also did some good work in pressing the Office of Fair Trading to investigate the matter, but no evidence was found of profiteering by retailers. That is not where the problem lies.

The main problem is with the duty and VAT that is levied by Government. On a litre of fuel, the duty and VAT account for more than 60 per cent of the cost, with the retailer getting less than 4 per cent. It is Government that must take action, which is what this debate is about.

Of course, the debate would be totally unnecessary if the Lib Dems in Westminster had kept their promises to reduce fuel prices. Many suspected that their oft-repeated claims that they would champion lower fuel prices for the Highlands and Islands would evaporate if they ever got into power. How right they were.

That is why, back in May last year, I lodged a motion that called on Danny Alexander, the new Secretary of State for Scotland—and now Chief Secretary to the Treasury—to use his position to deliver on his party’s repeated calls for a meaningful reduction in fuel taxation. However, almost a year after his election, he is now saying that the fuel stabiliser is

“a complicated idea and it’s difficult to see precisely how we achieve it”, and he has come out with the highly technical monetary sentence:

“We can’t sacrifice income willy nilly.”

Is a fuel stabiliser too complicated? The FSB does not think so. It says that the stabiliser is a commonsense and relatively simple measure to introduce. It explains that the concept is straightforward: when oil prices rise, the stabiliser allows Government to reduce duty to a lower limit, and when oil prices fall, the Government can raise duty to a higher limit.

Photo of Liam McArthur Liam McArthur Liberal Democrat

Mr Thompson has clearly set out the broad principle, which a number of members have enunciated in this debate. Would he care to have a stab at where he would pitch the base rate for fuel in the stabiliser that he would like to see?

Photo of Dave Thompson Dave Thompson Scottish National Party

I am amazed that Liam McArthur thinks that the great brains in London and Westminster will not be able to work that out for themselves.

The great thing about the stabiliser is that it would ensure that the cost of fuel stayed relatively stable so that businesses and householders could budget with some degree of certainty. That is what the Lib Dems promised, but when they got a chance to vote for it at Westminster last month, they joined the Tories to oppose it, while Labour was nowhere to be seen.

Of course, a stabiliser would not help with the even higher prices in rural and remote areas. Today, for instance, a litre of diesel is 131.9p in Inverness, 137.9p in Aviemore, 142.9p in Kyle of Lochalsh and a whopping 147.5p in Armadale on Skye.

The Liberals made great play in opposition of their campaign to reduce fuel prices in remote and rural areas, but where has that promise got to? It seems to have been watered down to cover only the Hebrides, Orkney and Shetland, with no mention of the remote and rural mainland. Danny Alexander’s rural constituents in Badenoch and Strathspey and around Loch Ness will not be too happy about that, and neither will consumers in places such as Wester Ross and Lochaber.

Meanwhile, Highlanders can see the lights of the rigs in Europe’s largest oil field from their kitchen windows, yet they still face Europe’s highest fuel prices at the pump. The Highlands and Islands is an area in which average wages are well below the Scottish average and living costs are well above it; in which people have to travel much greater distances on poorer roads; and in which the Lib Dems have won election after election by promising to do something about high fuel costs. Now is the time for them to deliver, and I hope that they will.

The Road Haulage Association has been very active in the campaign—

Photo of Dave Thompson Dave Thompson Scottish National Party

Maybe in a minute.

The RHA has been active in the campaign for fair fuel prices. Haulage firms in the Highlands and Islands are particularly badly hit by high fuel prices. Only today, Duncan Boyd, a director of the Lochaber firm Boyd Brothers timber and haulage of Corpach, told me:

“All hauliers are seriously struggling with fuel prices this high. They are lucky if they are able to break even and some have already fallen by the wayside or had to put some of their drivers on the dole. You have to put money out for fuel and you can’t go running to your customers every time it goes up or you will lose business.”

The firm also ships cargo by sea, and Duncan Boyd told me that that part of his business is affected in exactly the same way by high fuel prices and that the Government—the UK Government—needs to give industry a break.

I give way to Jim Hume.

Photo of Alex Fergusson Alex Fergusson None

This should be very quick, because the member is in his last minute.

Photo of Jim Hume Jim Hume Liberal Democrat

I was not asking to get in, but thank you very much.

Dave Thompson has gone on about people breaking their promises and so on. When will the SNP reverse the alternative fuel situation? It promised that 100 per cent of public vehicles would be using alternative fuel—

Photo of Jim Hume Jim Hume Liberal Democrat

Correct. In the past few years, we have had half the alternative-fuel vehicles that we had four years ago. We are going the wrong way.

Photo of Dave Thompson Dave Thompson Scottish National Party

Mr Hume’s smokescreen will not work. The public out there know what the Liberal Democrats promised in the past. The people of the Highlands and Islands have read their election leaflets year after year. The Lib Dems will not get away with it.

The evidence is overwhelming. The Highlands and Islands—

Photo of Alex Fergusson Alex Fergusson None

I am sorry, Mr Thompson, but you are out of time. I must move on—

Photo of Liam McArthur Liam McArthur Liberal Democrat

I note that, as a reward for having spent the entire day dealing with the Wildlife and Natural Environment (Scotland) Bill, I had the privilege of being invited to bear witness to Stewart Stevenson’s 400th oration, while George Foulkes clearly had somewhere else he would rather be—and, indeed, he has gone there.

Gavin Brown quite rightly set out the reasons why we are here. The purpose of the debate and the motion is to recognise the difficulties created by high fuel prices. Everybody has had an opportunity to state the impact on their constituencies and regions. High fuel prices affect all parts of the country. However, as a number of members have said, the effects are particularly acute in rural areas. As Dave Thompson said, the high cost of supplying and distributing fuel to our island communities has a major impact on families and businesses in those areas. There is a triple whammy there: long distances, high costs and little or no alternative transport. In addition, incomes in those parts of the country are often well below the national average.

I was pleased to note the minister’s rather generous reference to my constituency. I am not sure that his generosity would extend to buying me a couple of litres of fuel in Eday or North Ronaldsay. Alasdair Allan said that he, I, Tavish Scott and others are engaged almost in a Dutch auction to see whose constituency has the highest fuel prices at any given time.

The other purpose of the debate is to provide the opportunity for the Scottish Parliament as a whole to send a clear message. The minister referred to the notion of speaking with one voice. That is still achievable, save for the discordant noises coming from the Labour Party. Stewart Stevenson mentioned Mr Gordon’s earlier reference to times when a pint cost half a crown, which put me in mind of statements by previous UK Labour ministers who likened the high fuel prices in rural areas to the high price of beer in pubs in central London.

Photo of Charlie Gordon Charlie Gordon Labour

I would be rather distressed if the member was suggesting that I made such a frivolous analogy, because Mr Stevenson’s quote was from a quite different context.

Photo of Liam McArthur Liam McArthur Liberal Democrat

I am more than happy to put the record straight. I was referring to John Healey, a previous Treasury minister.

Complaints about the VAT increase ring rather hollow. Jackson Carlaw said that we know that £14 billion of cuts were planned, but we also know that Labour has opposed every single cut that has been put forward. There is no detail at all. It would not take the activities of WikiLeaks to divulge the fact that Alistair Darling was well intent on and committed to a VAT increase of a similar level and magnitude.

Photo of Keith Brown Keith Brown Scottish National Party

A more authoritative source than the House of Commons library, which Charlie Gordon mentioned—Peter Mandelson’s “The Third Man”—confirms that two further VAT increases were planned under the Labour Party. Alistair Darling has never denied that fact.

Photo of Liam McArthur Liam McArthur Liberal Democrat

I am always wary of praying in aid Peter Mandelson, but I will take the minister’s assurance on that point. That reflects the rather consensual approach taken by the minister in his opening remarks. However, I noted that, although he was happy to talk about the principle of a fuel duty stabiliser, he was—like his party colleagues—less eager to talk about the detail.

The suggestion from several SNP members of a lack of progress in delivering the rural fuel duty reduction is somewhat harsh. A number of members have explained the intricacies of negotiations with the EU and the length of time that they can and will take—even David Stewart acknowledged that.

Photo of Liam McArthur Liam McArthur Liberal Democrat

I am sorry, but I have taken a couple of interventions and I need to get through my speech.

Photo of Ross Finnie Ross Finnie Liberal Democrat

It would have been Stewart Stevenson’s 401st contribution.

Photo of Liam McArthur Liam McArthur Liberal Democrat

He will have to wait a little longer for that.

The minister referred to support for a reduction in ferry fares. It would be remiss of me not to note that the road equivalent tariff ferry pilot scheme does not extend to my constituency or to that of Mr Gibson, who treated us to his less than consensual stump speech. He listed countries and the prices that are paid in them, but he seemed to exclude Norway, which I understand is the only place that has higher oil prices than us.

As for stump speeches, we heard a fairly familiar contribution from Patrick Harvie. He was right to make the point that expensive oil is here to stay—it is part of a longer-term problem. We have all—even Jackson Carlaw—signed up to the Climate Change (Scotland) Act 2009. We must reduce our dependency on oil and decarbonise our economy, so the points that Jim Hume made about alternatives such as hybrid and electric vehicles and about the infrastructure to support them are valid.

Liberal Democrats have delivered on our specific commitments. My colleagues tabled amendments to finance bills to propose a fuel duty rebate for rural areas; now, in coalition government, they are delivering it. The negotiation process is too slow, but it is taking place. The principle of the fuel duty stabiliser is well established, but we all accept that the detail is difficult—the OBR has highlighted several ways in which that is the case. However, those ideas are being progressed. Further action needs to happen, which is why we will support the motion. It is not too late for the Labour Party to come on board, and I hope that it will do so.

Photo of Jackson Carlaw Jackson Carlaw Conservative

I will focus on two or three speeches that were made. I will start with the most outstanding speech in the debate, which was from the former minister Stewart Stevenson. It takes a politician with a target-culture mentality that brooks no peer to tell us that his speech was his 400th performance in the chamber. Of course, we all know that every one of those contributions demonstrated a different expertise that arises from his many and varied careers.

Stewart Stevenson summed up matters well. He talked about the history of the motor car. When he bought his first car, it was probably cheaper than a tank of fuel today. My father said that the windscreen and the seat were optional—he used to bring back cars from the factory and sit on a box. However, the fuel was never optional—a car always needed fuel.

Stewart Stevenson made a key point on an argument that Mr Gordon must address in summing up. If the Labour amendment is not agreed to, will Labour support the motion? As we go towards the budget, will the Parliament speak with one voice on cancelling the fuel levy and introducing a fair fuel stabiliser? It will be shameful if we are not united when we leave the chamber tonight and if the Labour Party does not support the motion, which addresses directly the concerns of people across Scotland.

The second speech that I need to discuss is that from Mr Harvie. Sometimes, I do not have time but, tonight, I have a bit of time, because I have spoken twice. Here we go—we have the highest fuel prices in Europe and Mr Harvie does not feel that they are high enough. He wants people in this country to be uniquely prejudiced. He wants us uniquely to tackle the whole international oil situation and does not want it to be tackled by the wider community. He was reluctant to confirm whether he would support the 8p increase in the fuel duty escalator of his colleagues down south. I conclude from that only that he will have a much higher figure in his manifesto when he presents himself to the Scottish electorate.

Mr Harvie referred to the Office for Budget Responsibility, as did Mr Gordon several times. That body raised issues with the fair fuel stabiliser. One, of course, is in looking at the effects of higher energy prices. It is not the case that higher energy prices automatically generate endless additional income for the revenue. The cost of additional fuel means that other receipts from taxation go down and some benefit payments go up. It is not the case, as Mr Harvie said, that if things are made more efficient, we use less of them. Over the past 25 years we have made the motor car more efficient and a vehicle now travels far further on a tank of fuel. The effect of that has not been that people use their motor vehicles less; they use them more. Similarly, if we make homes more efficient, it does not mean that people necessarily use less energy; they may use more. In bringing people out of fuel poverty, we encourage them to heat their homes more than they did previously. It does not always follow that if things are made more efficient, people use them less. We cannot support Mr Harvie’s prejudiced attitude to the cost of fuel.

Cathy Peattie’s speech was typical of the speeches of a number of members. Over the years, I have come to the point where I never discard the genuine sincerity of her contributions, but when she said that the financial situation was not of Labour’s making and that it was not in its control, I had to take a deep breath. The financial situation with which we are faced is entirely of Labour’s making. The situation was completely out of control when her party was responsible for it. Instead of crying crocodile tears tonight, Labour members should be hammering their discredited big chum in Fife. He was responsible for the shambles that we find ourselves in.

David Stewart was quick, as other members were, to say that the coalition Government was a little slow in coming forward with the fuel duty escalator. However, when Mr McArthur intervened on him with the most basic question about the level at which he would pitch the duty, he was unable to answer. Therein lies the inherent difficulty that the coalition Government is seeking to deal with. Mr Stewart—[Interruption.]

Photo of Jackson Carlaw Jackson Carlaw Conservative

I am sorry, I called the member Mr Stewart, I should have said Mr Thompson. If he can confirm the level, it will be a helpful enlightenment in the debate.

Photo of Dave Thompson Dave Thompson Scottish National Party

The answer is simple: we will discuss the matter at the time. The level that is set will be appropriate to the economic circumstances of the day. That is how you do it. It is not a complicated thing, which is why it should be able to be done very quickly.

Photo of Jackson Carlaw Jackson Carlaw Conservative

I am less enlightened and further befuddled.

I say to Alasdair Allan that his concerns about the isles are the reason why we have acted as we have. I said earlier that we intend to represent the best interests of Scotland and I apply that also to the coastguard centre cuts motion that he brought before the Parliament in a recent members’ business debate. Next week, I will meet UK ministers to represent the views that he expressed.

There is no doubt but that the issue is a serious one for people across Scotland. As I said in my opening speech, the Scottish Conservatives will support the motion tonight, and we will do so willingly.

Photo of Charlie Gordon Charlie Gordon Labour

I thought that the minister was emollient in his opening speech. If he does not mind, I prefer my source to be the House of Commons library, not Peter Mandelson.

The minister spoke about fuel duty derogation for rural areas, which Alasdair Allan mentioned in his speech. The Government motion notes

“the UK Government’s proposal to introduce a 5p-per-litre fuel discount scheme for island communities”.

I am open to correction on what I said—I will have to check the Official Report—but I think that it was that there are no proposals in the Government motion. I stick to that. The motion simply notes the Tory Government proposal. The more that we have heard from the Tories tonight, the more it sounds as though the proposal is unlikely to see the light of day. Surely the SNP wants its own policy on fuel duty derogation for rural areas.

I asked Jackson Carlaw to say exactly how the Tory Government fuel duty stabiliser will work. He referred me to the budget of 23 March. I predict that we will not see the finished article that day.

Alison McInnes had a right go at Labour. To illustrate her point, she mentioned nurses who are dependent on their cars. I accept that for many people in rural areas the car will always be the primary means of transport. She mentioned that nurses had to use cars because bus services finished early. What a pity that she did not support my bus bill proposal, which might have helped in those situations.

I want to make a point to Kenny Gibson as the member who represents the Isle of Arran. He is perfectly entitled to give high priority to the fuel duty issue, but I found it strange that he did not press his own Government to include the Isle of Arran in something that is within its gift—the road equivalent tariff pilot. I look forward to the day, in the not-too-distant future, when it is included.

Cathy Gibson made a couple of arresting points that were perhaps not mentioned by any of the rest of us—

Members: Cathy Gibson?

Sorry, Cathy Peattie. As Stewart Stevenson pointed out, I am not getting any younger—but I am younger than he is. [Laughter.]

Cathy Peattie made a couple of extremely important points about the effect of high fuel prices on people on fixed incomes, which includes people in urban constituencies such as my own. She made an important climate change point, too, about the opportunity to remind people about eco-driving, which not only is part of our response to high fuel prices, but helps us with our national climate change objectives.

It was good to debate with Stewart Stevenson again. I congratulate him on his 400th speech, presumably not counting interventions. Once again, I found him to be a conscientious adversary.

Jim Hume told us that Danny Alexander, no less, is exploring derogation. Unfortunately, Scottish history shows that a lot of explorers get lost and are never seen again.

Dave Stewart made a number of important and in some respects novel and practical suggestions about other things that we can do in a devolved setting about mitigating the effects of high fuel prices in rural areas.

Gavin Brown told us that this could all get worse. On the stabiliser, he said, “Well, we’re consulting, but there’s a problem about the pace of change” and, “This is all very complex.” At least he was clear when he said that he thought that the rise in fuel duty scheduled for April should be scrubbed, but when it came to rural derogation and the proposed rural fuel pilot—

Photo of Gavin Brown Gavin Brown Conservative

The member talked about things that we can do here in this Parliament. If Labour’s amendment is defeated this evening, will the Labour Party allow this Parliament to speak with one voice and support the main motion?

Photo of Charlie Gordon Charlie Gordon Labour

The member will find out shortly. Given that the people who are hurting out there are watching us, the other MSPs in this Parliament must have regard to the fact that we are the only party that is proposing a 3 per cent cut in fuel duty and we have explained precisely how that can be funded. No one else has addressed that.

Photo of Keith Brown Keith Brown Scottish National Party

Achieving the cut through the reversal of the VAT increase does not address the points made by Labour members. It does not address instability, which was raised, or the business issue, as most businesses can reclaim the money. Surely we can do more than the one measure that Labour has identified in its amendment.

Photo of Charlie Gordon Charlie Gordon Labour

According to Dave Thompson, the SNP’s proposed regulator would be set in a short-term way, so it does not sound like a long-term solution to me. What we know is that people are hurting to an exceptional degree, and we must move quickly with practical responses.

Liam McArthur said that Labour is sounding a discordant note tonight. I do not think that a practical, costed proposal to reduce fuel duty by 3p a litre can fairly be called discordant.

Labour will continue its fight not only to cancel the fuel duty rise scheduled for April, but to use the bankers tax—the £800 million windfall that the Tory Government has received—to cut fuel duty by 3p a litre. That is worthy of the support of the rest of the Parliament.

Photo of Alex Fergusson Alex Fergusson None

In that case, I call Keith Brown to wind up the debate on behalf of the Government.

Photo of Keith Brown Keith Brown Scottish National Party

I thank the Presiding Officer and Mr Gibson.

The debate has been useful and, in general, consensual; there is at least consensus that fuel duty is a vital issue that affects individuals, families and businesses. We should not lose sight of the impact on businesses, because the longer we allow very high prices to go on without taking action, the greater the brake that is put on the economy. The consensus is important, as Gavin Brown and other members said. If the Parliament can unite with one voice tonight, we will send a powerful message and our voice will be added to the voices of the Northern Ireland Assembly and the National Assembly for Wales as we try to get the point across to the Westminster Government.

We will not support the Labour amendment, mainly because it seeks to get us to agree to rule out the regulator. I think that I explained why the regulator is extremely important. The measure that is proposed in the amendment would not address instability, which has been said to be a concern, and would not address the issue to do with businesses, because by and large most businesses are able to reclaim the VAT.

Photo of Charlie Gordon Charlie Gordon Labour

What is the minister’s view of the report of the Office for Budget Responsibility, whose analysis apparently shows that a fuel duty regulator or stabiliser would not work and that compensatory problems would make it unworkable?

Photo of Keith Brown Keith Brown Scottish National Party

I think that the member probably misrepresented the OBR’s position. I am stunned by the respect that Charlie Gordon seems to give to the Conservative and Liberal Democrat Government’s Office for Budget Responsibility. It is perfectly legitimate for elected Governments to take their own advice and follow their own initiatives. The same issue would have arisen if we had taken heed of some of the siren voices that told us that a council tax freeze was not possible—but we achieved a council tax freeze in the first year of government.

I said that we support VAT reversal—we voted against the VAT increase. VAT is a regressive tax. Of course there is merit in the argument that in essence the Labour Party flushed the economy down the toilet and dramatic things must be done to remedy the situation—[Interruption.] I remind Labour members of Liam Byrne’s note, which said that there is no money left. After 13 years in government, the Labour Party left the country with no money, and action must be taken.

It is perfectly legitimate to argue for a derogation—the motion does not use the word, but the policy that is mentioned in the motion could not be achieved without a derogation. That brings me to the issue that has proved difficult for some members who support the motion. Jim Hume and Dave Thompson in particular found it difficult to get away from their long-standing concerns and campaigns—quite rightly, too. There was a bit of friction on how long it has taken the UK Government to act.

As many members said, the issue is very real and immediate for people. Perhaps Gavin Brown said that most forcefully. People are thinking twice about whether to make a journey—even an essential journey—in the car because of the cost of fuel. The cost of fuel is hammering families and certain individuals.

Since the UK Government came in it has committed to the policies that are mentioned in the motion. It has increased VAT and it has not yet completely ruled out the increase that is due in April. I accept that the issues are complicated, but I would have thought that it was possible to work around the clock on an issue that is as urgent as the one we are considering. Perhaps that has not happened because of the cost of the midnight oil, but it should happen. There should be urgency on the issue. As I said, the Scottish Government had to act quickly on the council tax and we worked hard to achieve the freeze.

The expertise on fuel duty rests at Westminster, with the Treasury, which collects taxes. It is right that we say what we think the general principles are and it is right that the Treasury should work out the detail.

Photo of Liam McArthur Liam McArthur Liberal Democrat

Does the minister accept that although the expertise is at Westminster and the final decision will be taken there, it would aid and perhaps accelerate the process if he and his officials engaged not just on the principles, which have been well and truly established, but on the detail?

Photo of Keith Brown Keith Brown Scottish National Party

I am more than happy to engage. I cannot say that there has been huge enthusiasm on the part of HM Treasury to ask our opinion on such matters, especially in relation to reserved areas, but we are happy to engage on the issue. Of course, it takes two partners to engage in that way.

We have taken a range of measures to support people in these difficult times. The on-going council tax freeze has been mentioned, but the abolition of prescription charges is also important. The small business bonus is also important to people. It eliminated the business rate burden on 74,000 properties. Those measures make a real difference to Scottish households and businesses.

We would be delighted if we had the tax levers to address the high fuel prices directly but, sadly for us, that remains the responsibility of the UK Government. Perhaps the Scotland Bill Committee might consider that in greater detail in its deliberations.

Ministers have repeatedly called on the UK Government to take immediate action to address the high petrol and diesel prices that motorists face. We have put forward genuinely constructive and workable solutions, which have been described in the chamber today. I am pleased that it seems like our calls for action are about to be addressed. The chancellor has committed to addressing the issue in this month’s budget. It is now vital that he follows through on the assurance that he provided and delivers real support for Scottish motorists. The most crucial part of that is the postponement of the rise in duty that is planned for April, which would have a better effect than Labour’s proposed VAT reversal. It would have a bigger effect because of the size of the increase. When the UK Government considers that, it is extremely important that it also takes into account the representations that are made by the Welsh Assembly Government and the Northern Ireland Executive. The UK Government can take that step immediately, but it would be useful if it could also make a statement on future rises that Labour scheduled in previous years. That would not alleviate the difficulties that current pump prices cause motorists, but it would ensure that the UK Government does not make matters worse with further tax rises.

The VAT reversal for which the Labour Party argues does not prevent massively increased tax revenues from fuel. That is one of the main reasons why it would not have the same effect as the measures that we propose.

Some people have argued that cutting fuel duty is unaffordable when Government borrowing is so high. The deterioration of the UK public finances under the previous Government must be taken into account, but the simple fact is that the regulator is a hugely beneficial measure for the entire economy. If we can take off the brake of people not being able to distribute, deliver and receive goods in the most cost-efficient way, we can help the economy.

As my colleague Stewart Stevenson mentioned, there is a massive windfall to the UK Treasury through fuel duty. It is currently around £2 billion; it is receiving £12 billion as opposed to £10 billion. The potential exists to make a real difference.

Fuel duty is an extremely important matter for the people of Scotland. It is extremely important that the Parliament discusses it. Lord George Foulkes thought that the debate was a waste of time and that his time could be better spent elsewhere.

Photo of Keith Brown Keith Brown Scottish National Party

Apparently, he is on the phone just now.

Photo of Alex Fergusson Alex Fergusson None

I remind members that telephones should not be used in the chamber.

Photo of Keith Brown Keith Brown Scottish National Party

That confirms that Lord George Foulkes thinks that there are far more important things for him to do than address the issue, which is vital to the people of Scotland. He may want to find a red bounce to go elsewhere, but that is up to him. It will be salutary for the Labour Party if it is seen to treat the issue as superficially as George Foulkes has treated it.

The issue is extremely important. I am delighted that the SNP Government has chosen to use its time to show some leadership to the Parliament in the debate and has managed to work with partners in the Parliament to try to create a united voice.

The challenge now rests with the Labour Party. Does it want to stand to one side and be the one group that is in favour of increased prices for the people of Scotland—increased punishment for Scotland’s motorists—as would be the case under its proposals, or does it want to work with the Parliament and the people of Scotland, Wales and Northern Ireland to try to get the best possible deal for motorists in hard times? [Interruption.]

Photo of Alex Fergusson Alex Fergusson None

Order. There is too much noise.

Photo of Keith Brown Keith Brown Scottish National Party

I am pleased to commend the motion.

Photo of Alex Fergusson Alex Fergusson None

That concludes the debate on fuel duty.