Treasury ministers face renewed pressure in the Commons to take action to cool soaring fuel prices.
Amendments proposing to slash 5p off pump prices for petrol and diesel in remote and island areas, and to use the “windfall” from higher VAT receipts due to higher prices, are due for debate tomorrow or Wednesday as MPs conclude debates on the Finance Bill, giving legal effect to the budget.
Caithness, Sutherland and Easter Ross Liberal Democrat MP John Thurso has sent Chancellor Alastair Darling a detailed paper on how a price-reduction scheme would work in areas where prices are currently 13p-14p above the national average.
Lord Thurso’s proposal would enable the Treasury to allow the Scottish government to designate the areas to benefit, with a mechanism enabling Revenue and Customs to use garages’ VAT returns to audit the rebate system and ensure tax cuts are passed on to customers.
Lord Thurso drafted the paper in response to exchanges in the Commons treasury committee, of which he is a senior member, after Mr Darling expressed sympathy over the premium charged at garages in remote areas.
However, Mr Darling said the Treasury was concerned at possible fraud and “leakage”, with motorists driving in from outside to take unfair advantage.
It his paper, Lord Thurso urged a 5p tax rebate on both petrol and diesel. He said: “Such an amount would make a significant difference to remote rural car users but would leave the premium at a rate which leaves no incentive for cross-border price exploitation.”
The MP said his paper showed it is possible to devise a scheme that is simple, workable and has reasonable provision for audit to prevent fraud. He announced an amendment to the Finance Bill to implement the plan.
Lord Thurso said: “The chancellor had expressed his sympathy – and I believe this is an opportunity for positive action to support hard-pressed, remote rural communities.”
The proposals have the support of other Highland Lib Dem MPs, among them Argyll and Bute’s Alan Reid. He said: “The cost of this to the Treasury would be minimal – but the help for families, businesses and farmers would be substantial.”
SNP Treasury spokesman Stuart Hosie made it clear he will press for his amendment demanding a “regulator” to reduce fuel-price increases overall. Mr Hosie said the party had secured backing from the Road Haulage Association, National Farmers’ Union Scotland, Scottish Taxi Federation, Scottish Fishermen’s Federation, and Federation of Small Businesses.
He said: “It is ridiculous that – in an oil-rich country like Scotland – key sectors are struggling to fill their tanks.”
About 300 motorcyclists staged a protest against rising fuel costs by travelling in convoy from Kinross to Edinburgh on Saturday. Led by a police escort, they crossed the Forth Road Bridge before congregating in the centre of the Scottish capital.
The protest was organised by motorcycle club Fife Bikers. Groups from Aberdeen, Dundee and Edinburgh joined the demo.