If we can’t legislate, at least derogate

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Cars are a necessity in remote rural areas, yet their residents pay a premium for petrol – and in the case of the Western Isles something must be done, says Angus MacNeil MP.

Before the election, the whole of the UK was gripped by the breaking news that the price of fuel in London was going to reach a record high of £1.20 a litre. I could not help but find this amusing, because to me this was not breaking news – it has been the case for some time.

That’s why I have been campaigning for a ‘rural fuel derogation’ so the tax per litre my constituents pay starts to approach parity with the rest of the UK. My constituents have been paying well over £1.20 a litre for many years. Some have blamed the fact that my constituency, Na h-Eileanan An Iar (Western Isles), is an archipelago and thus subject to higher prices from fuel providers, but high distribution costs originate in two high taxes on fuel – VAT and fuel duty – which cause my constituents to pay much more.

The price of fuel is only approximately one-third of what we and the rest of the UK pay at the pump. The other two-thirds are road fuel duty (now at 57p per litre, due to rise to 59p next year) and VAT, which is 17.5 per cent now but will soon rise to 20 per cent. Add all of that up, and nearly two-thirds of what we pay at the pump is tax In places like London, where people have access to regular public transportation and earn over £40,000 a year, on average, the price of fuel may not be the first concern. In my constituency, however, a car is not a luxury, it is a necessity.

What logic is there in charging people in rural areas (where the cost of living is higher and average wages are lower) the same, or a greater rate of taxation as in large cities? My constituents pay more tax per litre than anywhere in the UK. I have been campaigning on this subject since I became an MP in 2005. To me it seemed like common sense but, the former Labour government disagreed.

Ministers would always use the very weak argument that people would travel to the Outer Hebrides to partake of the lower-priced fuel. If this were to be so, then the entirety of the UK would drive their cars up to Ullapool take a ferry to Stornoway to get reduced-price petrol. Even with the lower ferry prices that the SNP Scottish government instituted, that was a mad and crazy argument that only Labour could make with a straight face.

The Conservative-Liberal Democrat coalition has announced that it is looking at areas for pilot rural fuel-derogation schemes and I welcome this. Na h-Eileanan An Iar is the perfect place for this kind of scheme because we are several hours’ sailing from the Scottish mainland, and have been suffering from intense overtaxation for years.

Any person who has spent time in the islands will know that paying nearly 60p on the pound plus 20 per cent VAT does not make much sense for any rural community, let alone an island community. If

Scotland had full fiscal responsibility we would have already been able to deal with this problem. However, until that day comes, it is my sincere hope that the coalition does the sensible and right thing by granting us this pilot scheme.