Fuel to be cut by 5p a litre - but only for islanders

Published on Thursday 3 March 2011 16:57

THOUSANDS of motorists living on Scotland's islands look set to benefit from a new scheme which will take 5p off the price of a litre of fuel.

Treasury Chief Secretary Danny Alexander is set to announce today that the government will make a formal application to the European Union for permission to run a pilot scheme to provide relief for island motorists as costs soar.

The price of diesel has passed 163p a litre on one Scottish island - Colonsay - and even the lowest prices in the islands yesterday were between 6p and 14p above the UK average.

The government has come under increasing pressure to tackle the problem of rising fuel costs across the UK, and it is hoped today's announcement will allay some of the criticism it has received.

While there has been no repeat of the mass protests and blocked refineries seen in the fuel crisis of 2000 which rocked the Blair government, this week a 130,000-signature petition was presented at Downing Street calling for action on the issue. In a briefing ahead of the Scottish Liberal Democrat conference today, Mr Alexander said he was confident of success in getting the scheme through the EU, following extensive informal discussions with officials.

He will formally announce the application today at the conference, but he pointed out that similar discounts for islands in other EU states, including France and Greece, already existed.

He also revealed that he intended to expand the scheme from the original aim of helping people on the Northern Isles, Western Isles and Hebrides.

The scheme, which the Treasury estimates will cost it just 2 million, will now encompass the Clyde islands, including Arran, and will also cover Skye, which was excluded originally because of its link to the mainland by a road bridge.

He said the application would go to the commission in the next few weeks and would have to be agreed by all 27 member states.

Mr Alexander said: "It is something that will make a significant difference to island communities, who face the highest fuel prices in the whole country.

"I'm very proud that this is something as a government we've been able to take forward."

He went on: "As a consequence of the informal discussions we've had with the EU Commission, I'm very confident we can deliver.In the next few months we will be able to get the approval we need for the scheme."

However, he denied the announcement was motivated by the Holyrood elections, with his party struggling in the polls after joining the coalition with the Tories in May and introducing record cuts of 81 billion over the next four years and trebling tuition fees to 9,000.

Mocking his image as the minister for cuts, Mr Alexander joked: "This is a rare example of the Chief Secretary to the Treasury spending money."

The announcement is set to be over and above other measures the government is understood to be considering to bring wider relief to motorists across the whole of the UK.

Among these is a possible cancellation of the next planned fuel duty rise and, in the longer term, the introduction of a fuel regulator so that the government can help bear some of the costs of the rise in the price of oil.

It is expected that an announcement will be made by Tory Chancellor George Osborne in the Budget this month.

However, yesterday Mr Alexander said these issues were complicated, with the cancellation of the fuel duty rise costing the Treasury 250m alone.

Support for action on fuel prices has been strongest in Holyrood. In a debate this week, SNP transport minister Keith Brown told MSPs: "It is simply unacceptable that in an energy-rich country such as Scotland, motorists and businesses are facing some of the highest fuel prices in Europe.

"The Chancellor must use his Budget statement to cancel the rise in fuel duty planned for next month.

"It is vital that the UK government heeds this message and does not put further pressure on motorists at this time."

MSPs also endorsed calls for a regulator to be introduced by the UK government.