Fuel Duty (Rural Areas) Debate

David Gauke winds up the debate on behalf of the Conservatives which seeks to address the problems of high fuel costs in rural areas.

Mr. David Gauke (South-West Hertfordshire) (Con): It is an enormous pleasure to serve under your chairmanship once again, Sir Nicholas. I congratulate the hon. Member for Orkney and Shetland (Mr. Carmichael) on securing this debate and on speaking with such passion and eloquence on a matter that is dear to his heart and which he has pursued over a number of years.

Several hon. Members have made it clear that there is significant concern in remote areas that fuel there is much more expensive than in most of the country. During this useful and informative debate, we have heard a number of explanations for why that is so, and concerns have been expressed about a lack of competition, principally in the supply chain. The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) made a point about the lack of customers for remote petrol stations and their need to deal with fixed costs with fewer customers. The lower density of population in remote areas means that petrol stations are some distance apart and might not necessarily experience some of the competitive pressures that would exist in urban areas, although a number of hon. Members said that that was not really the fault of individual petrol stations, as they were just placed in a difficult position.

One argument dismissed by the hon. Member for Taunton (Mr. Browne)-a number of hon. Members have expressed the same view today and in the past-is that higher petrol and fuel prices are essentially caused by the inherently more expensive transport costs in remote areas. Hon. Members argued strongly against that point.

A number of hon. Members have stressed that fuel costs are particularly important in rural areas because public transport is not available-and not practical in many cases-and it is necessary to travel further and longer distances to reach amenities and facilities. Consequently, car travel is much more of a necessity than a luxury in such areas, yet it is more expensive to travel by car. The hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander), among others, made the point that such areas are often poor, so higher fuel costs have a disproportionate effect on those living in them.

At the risk of upsetting the blood pressure of the hon. Member for Orkney and Shetland, I shall cite some of the arguments that could be made against his suggestions, although many are weak and have rightly been pilloried during the debate. The argument that people will travel longer distances to fill up their car is particularly absurd in respect of islands, and even in certain mainland areas, so we can safely dismiss it. Any environmental arguments have been rightly dealt with. In remote areas, there is no choice regarding public transport, although higher fuel duty is often used as a means of persuading people to get off the roads and to use public transport. That is not a reasonable case in such circumstances, so the environmental argument is not particularly strong.

I shall touch on an argument regarding price variations throughout the country, although I will tread carefully in this area because if it is expressed in a particular way, it can cause concern. Clearly, fuel is more expensive in remote areas, but one could look at housing costs, which also vary throughout the country, as an example of something that is a necessity and not a luxury. Some areas are much more expensive than others. One counter-argument-

Mr. Carmichael: Will the hon. Gentleman give way?

Mr. Gauke: May I just finish this point, because I want to set it out fairly?

An important distinction that could be made between housing costs and fuel costs is that tax makes up a large part of fuel costs-I do not know if the hon. Gentleman was going to make that point in his intervention. However, it is also fair to say that stamp duty land tax tends to exacerbate the cost for someone wanting to buy a house in a more expensive area. For example, in my county of Hertfordshire, the last time I looked, the stamp duty payable in respect of the average house price was £2,300. In some areas, however, the average house price is below the stamp duty threshold. Stamp duty therefore exacerbates the situation. There are limited things that we can do in the tax system to address this inequity, if one sees it in those terms-one could do something to help first-time buyers, for example-but there is more scope for doing something with fuel duty.

Mr. Carmichael: The hon. Gentleman makes a legitimate point. I commend him for approaching the argument with seriousness and respect, which I hope will be emulated by the Minister. We accept that there are issues to do with housing, including its availability, so we provide support for the housing sector through councils and housing associations. Surely the same principle should apply to transport where there is no other choice.

Mr. Gauke rose-

Sir Nicholas Winterton (in the Chair): Order. Mr. Gauke, you have three minutes.

Mr. Gauke: I will move quickly on, Sir Nicholas. I take the hon. Gentleman's point; the issue is whether we can do something about it.

The evidence that was presented on European Union restrictions was interesting.

Regarding whether cuts in prices would be passed on to consumers, the hon. Member for Caithness, Sutherland and Easter Ross has suggested an audit procedure, although that would involve a significant administrative burden. It would be interesting to hear what the Government have to say about that, although I sound a note of caution. More widely, the Government have mentioned the administrative difficulty, but I hope that the Minister will elaborate particularly on moving the duty point from petrol distribution networks and oil companies to individual petrol stations.

In conclusion, hon. Members have raised a legitimate problem and, in principle, we have no objection to using fuel duty as a way of addressing it. There are various points that we need to understand. There needs to be an assessment of how much such a measure would cost and precise understanding of exactly why there is such a disparity. We also need clarity about applicability. We have heard various views about whether a reduction in fuel duty should apply to islands or more widely. There are questions to consider, such as what we mean by remote and peripheral, and hon. Members have done some work on these points.

We need to ensure that the fuel duty reduction is passed on to motorists and we need to understand the full administrative impact of any such proposals. Those are reasonable, practical points that need to be addressed. They might have been addressed in the past, but we hope that the Minister will respond to them and say whether there is a practical way of addressing the concerns that have been so eloquently set out this morning.

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