FUEL prices in the Northern and Western Isles will be reduced by 5p a litre from March, the UK Government confirmed yesterday.
Chief Secretary to the Treasury Danny Alexander made the announcement after the European Union approved a rural fuel rebate pilot scheme to provide “much-needed relief” to hard-pressed motorists in the Western Isles, Orkney and Shetland.
The Highland MP said measures would be put in place to resolve potential cash-flow problems for the owners of filling stations from January 1.
This is to allay fears some businesses would struggle to meet upfront costs as they will have to wait up to two months to see the 5p-a-litre discount refunded by the UK Treasury. Petrol prices on Unst in Shetland recently hit 156.5p a litre and 159.2p for diesel.
The gulf in price between the Hebrides and the mainland is now nearly 18p.
Mr Alexander said: “This is terrific news for island communities, which have long suffered the effects of high fuel costs.
“Pump prices in these areas are particularly high due to the high costs of transporting and distributing fuel.”
Mr Alexander said Revenue and Customs would provide an upfront rebate to help retailers cover the initial costs of the scheme
“From January 1, retailers will be allowed to claim a 5p refund on fuel purchased in each of their first two months of the scheme without having to pass on the discount to customers,” he said.
“This design will ensure that there are no adverse cash-flow problems for the retailers.”
He said remote parts of the Highlands also faced high fuel prices and, if a case was made for a similar scheme in those areas, he would “champion” it.
He added: “The first we have to do is see how the pilot scheme works to make sure it’s effective and people see the benefit to it.” He said Skye in particular would provide an interesting test case for expanding the scheme to the mainland, since it is connected by a bridge.
Shetland MSP Tavish Scott was pleased the UK Government had listened to concerns about administration of the scheme.
Western Isles SNP MSP Angus MacNeil was pleased a date had been set but lamented it had taken so long to be introduced because he had been campaigning for cheaper fuel for five years.
“This scheme will go some way to helping motorists and I would hope that the Chancellor, George Osborne, will also scrap the proposed 3p-a-litre fuel-duty increase that is being proposed in January,” he added.
“With record North Sea oil and gas revenues flowing to the Treasury this year, we need to see some of that money being used to bring fuel prices down through a fuel-duty regulator.
Highland Labour MSP Rhoda Grant said: “While this announcement is welcome news for island communities, it does nothing to help those living in remote rural mainland areas where fuel prices are just as high.”
Ross Montague, of the Scottish Countryside Alliance, said: “The announcement will come as a welcome relief for islanders but we believe this must only be a first step. We would like to see a rural fuel discount for motorists.”