Government agrees to investigate fuel rebate schemes abroad

12.00.00am GMT Wed 10th Feb 2010

Campaigners for a fuel rebate scheme in the Highlands and Islands had reason for optimism today as a Treasury Minister agreed to investigate similar schemes that are already in place abroad.

Local MP John Thuro spoke at length in the debate initiated by his Orkney and Shetland colleague Alastair Carmichael. While disappointed that the Treasury would not agree to a pilot project in the Islands, John was optimistic that upon closer investigation the Treasury would find the scheme both very viable and desirable.

John said: "After eight years in the dark with soaring petrol prices, this is now a chink of light.

"My colleagues and I have dealt with all the arguments against it from Ministers, including one who infamously compared the cost of vital fuel supplies with the cost of a pint of beer in London.

Read John's contribution to the debate below:

John Thurso (Caithness, Sutherland & Easter Ross, Liberal Democrat)

I can usually claim in debates to represent the constituency that is furthest away, but clearly my hon. Friend Mr. Carmichael has that honour today, and I congratulate him on securing the debate. I will first pick up on the question of opportunity raised by several hon. Members, particularly Mrs. McGuire. The OFT has conducted several inquiries on the matter in my part of the world, but the problem is that it has concentrated on whether there are anti-competitive practices between garages in one or two local towns and found, quite properly, that there are not.

The problem is that in large metropolitan centres, such as Edinburgh or Glasgow, a forecourt with eight to 12 pumps and a throughput of vehicles could have a cash profit per litre of as little as 1p or 0.5p, so there would be sufficient cash throughput to amortise across the fixed costs. A petrol station with two pumps in a remote village such as Durness, on the top west corner of Sutherland, however, will have one car stop every half hour and so will be forced to have a larger cash margin per litre to be able to survive. The right hon. Member for Stirling is right that there is something fishy going on further up the supply chain, and that is where the Competition Commission should be looking.

What is the problem? The problem is that my constituents regularly face a premium ranging between 9p and 14p over the national average, and I have looked at that several times over the past nine years. The scheme I proposed would have rebated around 3p-it might have been 2 points or 3 points, but of that order. Therefore, the idea that people would drive across a boundary 30 or 40 miles away to pay less for their petrol, which in the early years of my proposal is what the Treasury said would happen, as my hon. Friend Mr. Reid said, is ludicrous. In fact, a rebate scheme would counter that by enabling people to fill up nearer home, and reduce the incentive to go off to the supermarket in Inverness to fill up. It would therefore have the opposite effect, with regard to carbon, by reducing the amount of petrol or other fuel used and allowing people to fill up more cheaply.

The absolutely critical point is not just that there is a premium, but that there is no alternative, and there never will be on the north coast of Sutherland. There was a post bus, but it has been taken away. There is now no way one can get from the middle of the north coast to Thurso, which is an hour away, and back on the same day. It is simply not possible. Therefore, if one does not have a car, or some good friends to stay with overnight, one simply cannot go into Thurso to see a doctor or dentist, go to the shops or do all the things that are a requirement of ordinary life, and the key point is that there are no alternatives.

I support the call my hon. Friend the Member for Orkney and Shetland has made for a pilot scheme, because I really believe that that can work. It would be an easy and simple way of showing that the scheme can work, or showing that it will not work, if the Treasury are convinced that it will not, and that will help the argument for other areas. I support the concept of a pilot scheme, but I will continue to argue that it should come across to the mainland in due course.

I will not go into the details of the scheme I proposed, but if any Members have serious trouble sleeping, I can send them a copy of the lengthy document and allow them to study it. I have gone through it in detail in several Finance Bill debates over the years. Three years ago, the Financial Secretary at the time-John Healey, I think-infamously responded to the proposal by comparing what I was requesting with giving Londoners a rebate on duty on beer. That simply demonstrated a complete lack of understanding.

By contrast, we made progress with the Minister for Pensions and the Ageing Society, Angela Eagle, who was in the Treasury at the time and was extremely sympathetic. I met her, and she went through the detail and corresponded with me. I thought that we had nearly persuaded her but then she was promoted elsewhere, so we were back at the bottom again.

The scheme is entirely workable and is permitted under EU law. It will not give cheaper fuel in remote areas but will simply give a little bit of an alleviation to a massive disadvantage. Frankly, my constituents cannot understand why a Government who were elected on a promise of looking after those in need simply ignore this obvious and unfair situation.