Labour election candidate dismisses idea of fuel price scheme

Labour’s general election candidate has defended the UK government’s stance on fuel duty as rival politicians queued up to condemn the high prices being paid by islanders, with the price of unleaded petrol rising well above £1.30 a litre in some areas following the latest rise in duty.

It has long been the case that motorists in Shetland have had to pay between 10-15 pence a litre more than people elsewhere in the country. Many have pointed the finger of blame at GB Oils, the company which has the monopoly on petrol and diesel supplies, rather than garage forecourts. But several political parties this week said the government’s imposition of a rise in fuel duty was only exacerbating the situation and called for a rethink.

Chancellor Alistair Darling had initially intended to impose a rise of three pence per litre this year before backtracking slightly by announcing that the increase would be staged so that the first 1p rise came into effect last week, with further 1p increases scheduled for October and then next January.

But SNP candidate John Mowat described the increase in duty as “unhelpful”, “unwelcome” and “a Poll Tax on wheels” and called for Labour to reverse it, also claiming fuel taxes should be subject to specific reductions in island areas – a case which Northern Isles MP Alistair Carmichael has been pressing in recent months.

Mr Mowat said: “On going round the doors in Orkney, the biggest gripe is the crippling cost of fuel, and it is three or four pence a litre dearer in Shetland. Labour recently decided to scrap the added tax on cider; why not on fuel? Labour’s added fuel tax is a Poll Tax on wheels and while they make us pay at the pumps, we should make them pay at the polls. Many people and businesses are trying to contain the rises in costs.”

Mr Carmichael, meanwhile, pointed to latest figures from the RAC showing that motorists in Shetland were paying £1.34 a litre “although in many areas it is even higher”. He also wants to see the government reverse the increase in fuel duty and the introduction of a derogation scheme that would see drivers in remote and rural areas pay less for their petrol.

“For people in the Northern Isles, transport by private car is a necessity not a luxury. The latest increases in fuel prices have added to household expenditure at a time when many are already struggling to make ends meet. It is absurd and wholly unfair that people in Orkney and Shetland should have to pay over 10 pence more than the UK average price for every litre of petrol they put into their cars.”

Treasury minister Sarah McCarthy-Fry told Mr Carmichael in March that she had instructed her officials to carry out a “proper examination” of how lower rates of duty for island communities, as operated in Corsica, some of the Greek islands and the Azores and Madeira, could be made to work in practice.

But Labour candidate Mark Cooper said he was sceptical about how easy such a scheme would be to administer, suggesting instead that “something alone the lines of a fuel co-operative” would be the best solution. He defended the imposition of fuel duty, pointing out the three pence a litre rise was being “staggered in” over the course of the financial year which was “making it easier for people and their families”.

“The price of fuel is outwith the control of the government because it is measured in dollars and, with the strength of the dollar, that affects the fuel price,” said Mr Cooper. “I understand people’s concerns about fuel because I have family up in Shetland – it has a direct impact on them as well.

“If there can be a scheme to make it cheaper in Shetland and across rural communities, what would other parties define as rural? It may be that centres of population such as Lerwick are not counted as rural because of the size of the population. That would be hard to administer because of all of the HMRC regulations.”

As well as repeating his criticism of Westminster for a lack of action, Mr Carmichael said he had obtained information showing the last action taken on the issue of rural fuel duty by the Scottish government was back in November 2008. “This is a critical issue for people across the Northern Isles and in many other areas of Scotland. It beggars belief that the SNP have done nothing to lighten the burden on drivers in more remote areas since 2008.”

Conservative candidate Frank Nairn highlighted the weakness of sterling on the currency markets, due in part to “uncertainty” over the future state of the British economy, as a key factor behind the spiralling cost of fuel. He suggested that the pound may see an upturn in fortunes in the event of a Tory government, which could help reduce fuel prices. His party’s manifesto includes a commitment to a “fair fuel regulator” whereby when fuel prices go up or down, the level of duty levied would go in the opposite direction.

“If fuel prices were to go up 10p a litre, the fuel tax would come down by about 5p a litre so the increase would be less, reducing the fluctuations,” said Mr Nairn. “Governments can do this because they get a windfall as fuel prices go up anyway. That is our proposal, we will have to discuss how to bring it in, but it is policy to do that. I’m happy to say I support the way the current MP is investigating how other countries with remote areas have variable rates of fuel duty and how it can be done. I don’t say that we accept that yet, but I would certainly support looking into it.”

UKIP candidate Robert Smith, who made clear last week his commitment to people using their cars by saying the only excuse for using public transport if you are older than 17 is “extreme drunkenness”, said he was “possibly” in favour of a derogation for remote areas. But, first and foremost, he wants to see an end to persecution of motorists and a cut in duty rates across the board: “Fuel taxes must be cut,” he said. “The government are creaming off massive amounts of money from fuel at every stage in its journey, from the oil well to the consumer.”