Hansard

I feel a bit like the filling in a sandwich—I apologise if some members find it rather unsavoury.

The Scottish Government introduced a road equivalent tariff pilot in the Western Isles, Coll and Tiree in October 2008. In 2010, the pilot was extended until April this year. The Government also commissioned Halcrow to undertake an evaluation of the pilot, which was published in July last year. Halcrow found that around 30,000 additional visits were made by ferry to the pilot area in each year of the pilot and that three quarters of the accommodation providers had experienced increased levels of occupancy. The decision to continue the RET scheme—indeed, to extend it to other islands over time—will be welcomed by tourism businesses in the islands that are to be included in the scheme. Some are to be included from October this year, Arran is to be included two years later and others have a more distant promise.

Halcrow also concluded that the RET scheme had made a positive impact on haulage businesses by lowering their total costs by around 10 per cent. Although Halcrow could not identify the total savings that were being passed on to the supply chain, in the document that it published in July it deduced that those savings may have offset other cost increases and enabled prices to be kept down. In addition, Halcrow found evidence suggesting that the difference in the price of fuel between the Western Isles and the central belt had reduced subsequent to the introduction of the RET scheme. Indeed, the Western Isles was no longer the most expensive place in Scotland to buy diesel, as it had been when the RET scheme was introduced in 2008.

Transport Scotland’s draft ferries plan, which was published in December last year, proposed replacing RET for commercial vehicles with an enhanced version of the discount scheme that had been in operation prior to the introduction of RET. It argued:

“In 93 per cent of cases, the reduction in ferry fares arising through the RET Pilot have been wholly or partially absorbed at some stage in the supply chain”.

Basically, it wanted the savings to be passed on in total. Of course, that means that the ferry savings may have helped to offset price rises in other parts of the supply chain—for example, in fuel costs. In October 2008, when the RET pilot was introduced, the average price of a litre of petrol was 117.1p. By March 2011, when the original pilot would have ceased, the price was 139p per litre, reflecting a rise of almost 19 per cent, and by November last year the price had increased by a further 2p per litre. The RET savings may indeed have been partially or even wholly absorbed by increasing fuel prices but, overall, they helped to keep prices lower than they would otherwise have been.

Those of us who represent rural areas know well that the prices of many items, including fuel, are higher in more remote towns and villages than they are in the central belt. We are told that transportation costs contribute to those higher prices. Therefore, it must be perfectly feasible that anything that reduces the cost of transportation will help to reduce prices. The reduction in the difference in fuel prices between the Western Isles and the central belt is very likely to be a case in point.

The draft plan argues that the increase in freight traffic in the first two years of the Western Isles pilot was only 8 per cent—the Government’s amendment says that it was 7 per cent—whereas the increase in car traffic was around 30 per cent. However, the figures varied greatly between routes. Freight traffic on the Ullapool to Stornoway route, which accounts for 57 per cent of all commercial traffic, increased by 7 per cent whereas on the Oban-Castlebay-Lochboisdale route it increased by 30 per cent.

The draft plan refers to the fares discount scheme of up to 15 per cent dependent on volume of business—which existed prior to the introduction of RET—and proposes that, for the Western Isles, Coll and Tiree, the maximum discount would be increased to 25 per cent.

Those proposals provoked consternation and even dismay among many businesses on the Western Isles and, indeed, even among their political representatives. The Scottish National Party MP for the Western Isles, Angus MacNeil, is reported in Hebrides News Today of 29 November as saying:

“I believe it is a major mistake to remove RET from the haulage industry … The whole point of RET is to help the economy of the islands, increasing transport costs for the haulage industry at a time of crippling fuel costs is disappointing. As recessions go, the Hebrides have fared reasonably well, this was I am sure helped by RET.”

On 6 December, Mr MacNeil declared himself to be

“fully supportive of the hauliers in the Outer Hebrides”

and stated that:

“The removal of RET will ultimately lead to an increase in prices for customers in our islands … If this is not sorted freight costs and prices will go up which could ultimately impact on jobs.”

Donald Joseph Maclean of Barratlantic Ltd joined him in that press release, stating:

“Since RET came into effect four years ago, we have been on the same working level as our mainland competitors and our turnover has increased by 20%, which made us competitive. The removal of RET is unimaginable.”