Plans to extend the island fuel rebate scheme have been announced by chief secretary to the Treasury, Danny Alexander.
The move could see the fuel rebate of 5p/litre currently enjoyed by retailers of road fuel within the Inner and Outer Hebrides, the Northern Isles, the Islands of the Clyde and the Isle of Scilly extended to other remote areas of the UK where average pump prices tend to be high. Fuel retailers claiming under the scheme are obliged to pass on the savings to consumers within 60 days, helping to address the higher average fuel prices their customers would otherwise face in such areas.
Nearly 1,500 fuel retailers in 36 counties and districts in England, Wales, Scotland and Northern Ireland are being consulted about the extension. Any expansion of the scheme will require EC approval, which the government aims to start seeking this autumn.
The plans have been welcomed by the Petrol Retailers’ Association (PRA), which said an extension to the current scheme could provide “important financial relief to hard–pressed motorists in outlying areas” and also help “financially-stressed” fuel retailers. “This is a fantastic initiative which the PRA welcomes wholeheartedly,” commented its chairman Brian Madderson.
Campaign group FairFuelUK (FFUK) spokesman Quentin Willson, however, said it was “a tacit acknowledgement by the government that there’s an economic need to lower fuel duty”, adding that the EC’s agreement to the extension would provide a political precedent for a blanket duty cut across the UK.
If lowering fuel costs in remote communities does lead to a demonstrable improvement in local economies, said Willson, “we’ll have the proof we need and the government might find itself in a difficult position and unable to continue defending their current faulted fuel duty model”.
Willson’s comments were echoed by Geoff Dunning, chief executive of the RHA.
“In 2011/2012, the total tax take from UK road users amounted to £58bn. Of that, over £36bn is from fuel duty and VAT on fuel,” he said. “Surely, if these proposed rebates are to help boost the economy, there can be little excuse not to reduce fuel duty across the board.
“A 5p/litre cut in fuel duty would equate to a £2,000 per annum reduction for a road haulier operating a typical 44-tonne articulated truck. The long-term knock-on effects would far outweigh any temporary Treasury loss and ensure the financial stability the economy so desperately needs,” added Dunning.
The RHA also questioned the list of counties and districts under consideration for inclusion in the scheme. “We find it bizarre that, for instance, while Devon is considered to be remote, Cornwall is not. Similarly, while the Isle of Anglesey is considered remote, the Isle of Man is not,” said Dunning.
