EC backing for planned island fuel duty rebate

The UK Government’s planned 5p a litre fuel duty rebate for the Scottish islands has cleared a major hurdle after the European Commission approved a pilot in principle.

It is understood UK ministers hope the scheme will now be introduced by the turn of the year, but it still needs the backing of EU finance ministers.

Hauliers and islanders welcomed the breakthrough, but fuel retailers described the measure as a “lose-lose” scheme for filling stations.

The scheme, championed by the Liberal Democrats and part of the coalition agreement, would cover the Western and Northern isles, and islands in the Firth of Clyde such as Arran.

Diesel was 152.9p a litre at Lerwick in Shetland on Monday – nearly 13p above the UK average, according to the petrolprices.com comparison website

A Treasury spokesman said: “The European Commission decision is a positive step towards delivering cheaper fuel to remote island communities. The UK Government is working to secure the final agreement of member states and get savings at the pump as quickly as possible.”

Ministers will try to allay fears struggling filling stations could be forced out of business because of delays in being refunded for the discount.

They propose refunds be paid two months before the scheme starts.

However, RMI Petrol chairman Brian Madderson, which represents the 62 filling stations on the Scottish islands, said: “Retailers will not benefit from any increase in fuel sold, and just be landed with extra paperwork.”

Road Haulage Association Scotland director Phil Flanders welcomed the scheme as an “acknowledgment there is a problem” and said it should be extended across rural Scotland.

Western Isles Council said: “Whilst any discount would be welcome, we have to be realistic about the amount this would reduce fuel prices.”