Chancellor Snubs Far North Motorists

12.00.00am BST (GMT +0100) Fri 20th Apr 2007

Local MP John Thurso has accused Gordon Brown of "ignorance of the realities of rural life". Challenged by the MP during a session of the influential Treasury Select Committee recently, the Chancellor of the Exchequer refused to acknowledge the high cost of motoring in the Far North and denied that such cost was a factor for the Government to consider.

John Thurso said:

"I gave the Chancellor a specific example of a crofter in Sutherland, pointing out the lack of public transport alternatives, the need to use one vehicle as both family car and farm workhorse, and the fact that fuel is sometimes at a premium of up to 12p more expensive than in urban areas, and asked him why the Government would not use its powers to alleviate the problem with lower fuel rates in remote areas."

Responding Mr Brown said: "I do not think a differential tax rate in different parts of the country would do anything other than distort things, rather than improve things."

John Thurso commented: "I cannot say I was surprised by his answer. It is clear from the Chancellor's comments that he has even less understanding of the necessities of life in the Far North or the difficulties faced in everyday transport than I had thought, and the fact that he prayed in aid smuggling in Northern Ireland and the single tariff applied by the Royal Mail shows that this government neither understands nor cares about them. However, I shall continue to press the case and I hope a change at No 11 will see a change of heart."

Ends

Attached is a copy of the full text

Q361 John Thurso: It is the other end of the scale. In Chapter 7, Protecting the Environment, there is a statement that the Budget responds to the Stern Review, it sets out the next stage in the Government's strategy and then lists a series of bullet points. The second bullet point is the increase in fuel duty and where that is going. I do not want to challenge for a moment the concept of taxation of use as a way of mitigating behaviour of vehicles but what I wanted to ask you, Chancellor, is if it is to be a major plank of the Government's strategy to use fuel duty to combat emissions do you recognise that there are very uneven impacts? If I can give you a specific example, it would be a crofter in Sutherland, for example, where there is very little, if any, public transport, there is frequently a premium of 12p over what you pay for petrol in Edinburgh or London, and probably they are making do with one vehicle covering both farm use and family use. Do you accept there is a strong case for mitigating the impact in those areas and would you consider any action?

Mr Brown: Obviously what you are referring to by using 12p as the differential between, if you like, prices in urban areas and prices in rural areas shows that this is the biggest problem that ---

Q362 John Thurso: That is the specific problem I am aiming at.

Mr Brown: We have tried over a period of time to talk to the distributors about how we can even out these prices between rural areas and urban areas. I appreciate the difficulties that people face as a result of that. I would say as far as policies for dealing with emissions from cars that it is a combination of measures. We have just set up, as you probably saw, a review that Nick Stern and others are involved in, the Vice-Principal of Aston University in Birmingham as well, to look at how we can have a low carbon car, both engine and fuel. We are looking long-term at how scientific change could reduce emissions. We are trying to do quite a lot with incentives. The incentive of being able to get a low carbon car with the VED changes is now there. When we came into power there was only one VED rate and there is now a number as an incentive for people to do certain things. As far as fuel is concerned, the incentives for Bioethanol and for other fuels, biogas and all that, are there and we hope to stimulate an industry in this by, if you like, tax reductions, by incentives. It is not anything other than a combination of scientific advance, individual responsibility, incentives that we create for people to move to more bio-friendly fuel and usage. At the same time it is not just the duty on fuel, it is the licence fee, and there is a debate about how you cover the costs of transport generally.

Q363 John Thurso: Given the high premium, and there have been several inquiries by the Competition Commission all of which have basically found that it is just a fact of living in a far part of the world and there is nothing much that can be done, a number of EU countries get round this by using a derogation to have lower fuel duties in remote or island communities. Would the Government not consider that?

Mr Brown: No. Our experience in Northern Ireland is that where there is a differential between the south and the north it leads to smuggling.

Q364 John Thurso: I do not think you would get much smuggling between Orkney and Caithness, for example.

Mr Brown: Fuel bought in one area and used in another area is what really happens, so you have got to be very careful about some of the proposals that have been put forward. As I say, it is a combination of measures that are going to make for a less carbon unfriendly environment when it comes to cars and vehicles in the future.

Q365 John Thurso: Would the Government specifically look at dealing with where a good impact that we both would happily support in 90% of the country has an exponentially negative impact in very small areas of the country?

Mr Brown: The Royal Mail has a standard charge for every part of the country for sending a letter.

Q366 John Thurso: That is precisely my point, there is not a standard charge.

Mr Brown: As far as fuel is concerned, this is a marketplace, and that is why the Competition Commission look at how the marketplace is working and whether it is working effectively. As you said, there have been numerous inquiries but I do not think a differential tax rate in different parts of the country would do anything other than distort things rather than improve things.