Skip to main content

Highlands and Islands (Economy)

Volume 532: debated on Wednesday 14 September 2011

4. What recent assessment he has made of the prospects for the economy of the highlands and islands; and if he will make a statement. (70963)

Despite challenging international circumstances, the UK and Scottish economies are growing, rebalancing and creating jobs. The Government are creating a new model of economic growth that is more evenly balanced across the UK.

I thank the Secretary of State for that reply. He has welcomed, as have we all across Scotland, the formal confirmation of university status for the University of the Highlands and Islands. As he knows, the university has put in an application to the Scottish Government for an additional £3 million in view of the extra demands now being placed upon it. Is that something to which my right hon. Friend can give his discreet support?

I am always happy to look at these cases and provide support as necessary. My right hon. Friend is absolutely right to say that this is an important step forward for the highlands and islands. I hope that the Scottish Government will reflect carefully on what he and others have been saying.

Yesterday I had an Adjournment debate in Westminster Hall on fuel duty. Is the Secretary of State aware that the duty is then subject to tax by VAT?

I think that everybody in the House is aware of the realities of fuel taxation. I am therefore sure that the hon. Gentleman was welcoming the fact that in our Budget earlier this year we reduced fuel duty rather than increasing it in the way the previous Government had planned. This question gives me the opportunity to remind the House that we have made further progress in the derogation for highlands and islands fuel prices, which is very welcome news indeed, so that we can get a reduction in fuel duty in the islands.

The highlands and islands economy is being held back by the high price of fuel. I warmly welcome the Government’s progress on the island fuel discount and on the cut in fuel duty in this year’s Budget. However, a further increase in fuel duty is planned for January; if the price of fuel remains high, I hope that that will not go ahead. Will the Secretary of State make representations to the Chancellor?

I am very aware from my own travels around Scotland, particularly to my hon. Friend’s constituency, of the extremely challenging circumstances for users of cars and vehicles across rural areas and, indeed, all of Scotland. I therefore particularly welcome, to repeat my earlier point, the Budget reduction and the European Commission's announcement about its support for our derogation. We want to keep all these things in balance. My hon. Friend’s comments will have been heard by the Chancellor, but he alone is responsible for taxation matters.

It is to be welcomed that unemployment is down in Scotland and that employment is up, but challenges remain, not least in the north of Scotland where, because of defence cuts, £30 million will be lost every year due to the closure of RAF Kinloss as an airbase. Will the Secretary of State confirm that no specific financial support has been provided by the UK Government to help deal with that economic shock?

I hope that the hon. Gentleman will recognise that, in reaching some difficult and complex decisions over the future not only of RAF basing but of that of the Army and Navy, too, we will see an increased footprint in Scotland as a whole. In the hon. Gentleman’s own area, we will see additional Army resources going into Kinloss in particular. The hon. Gentleman will be aware that discussions on how to support the communities through the next few years are at an early stage, but I am looking forward to them continuing in the constructive manner in which they have started.

Everyone will have noted that the Secretary of State was not able to confirm that there has been any specific financial support—because there has not been. It has been nearly a year since the announcement of RAF Kinloss’s closure as an airbase and more than two months since confirmation about the Army deployment. Agencies supported by the Scottish Government have been active in support of economic diversification. In contrast, the UK Government have provided little or no details to these local agencies to assist in the transition. Why is that?

I have discussed the matter with the Scottish Finance Secretary on a couple of occasions. The Scotland Office continues to be engaged with the taskforces, both in the hon. Gentleman’s part of the world and in Fife. We are working hard to ensure that the detail and all the other aspects of the plan are in place, and I am sure that the hon. Gentleman will welcome the announcements when they are made.

Order. Far too many noisy private conversations are taking place in the Chamber. I want to hear Fiona Bruce.