Fuel rebate extension planned as oil prices fluctuate

The government has called for fuel retailers in remote parts of the UK to provide details of how much they are charging for petrol and diesel, as it prepares to seek European permission to extend the island fuel rebate scheme to remote inland areas.

The current scheme, which was introduced in March 2012, allows retailers to claim back five pence per litre relief on road fuel. It applies to the Inner and Outer Hebrides, the Northern Isles, the Islands of the Clyde and the Isles of Scilly.

But now nearly 1,500 retailers in 36 local authority areas across all four nations of the UK are being consulted on plans to extend the scheme, and being invited to submit pump price data along with verifiable records for the fourth quarter of 2012.

The relevant areas are, in England: Cornwall, Cumbria, Devon, Herefordshire, North Yorkshire and Northumberland; in Scotland: Aberdeenshire, Angus, Argyll & Bute, Dumfries & Galloway, Highland, Moray, Perth & Kinross, Scottish Borders and South Ayrshire; in Wales, Gwynedd, Isle of Anglesey, Monmouthshire and Powys; and in Northern Ireland, Antrim, Armagh, Ballymena, Ballymoney, Banbridge, Coleraine, Cookstown, Down, Dungannon & South Tyrone, Fermanagh, Larne, Limavady, Magherafelt, Moyle, Newry & Mourne, Omagh and Strabane.

Chief secretary to the Treasury Danny Alexander said: “The island fuel rebate provides much needed help to keep down fuel prices in areas where costs of transporting fuel mean prices are much higher. I know that there are other remote rural areas of the UK with similarly high fuel costs.

“So we are today starting to gather further evidence that will form part of an application to the Commission to extend the island fuel duty discount scheme to very remote rural areas.

“We will need to prove that there are areas which are similar to the islands in terms of pump prices and distribution costs, so I would urge local areas that may qualify to provide the information we need to make the case as robust as possible… While it won’t be easy to get this agreed with the Commission, I want to do everything I can to make this happen.”

But the Freight Transport Association (FTA) was quick to respond to the move, saying that the 5p duty rebate should apply across the whole of the UK.

FTA director of policy and communications James Hookham said the Treasury’s plans represented a “clear recognition that the government accepts the need for a cut in fuel duty” and said the plans would “obviously help the UK’s rural economy.”

He added, however, that “FTA strongly believes that this should not be introduced purely in rural areas but insists it should be applied across the country. If 5p a litre cut will stimulate the growth in rural areas, just think what it could do if applied across the country.

“FTA has long campaigned for a cut in fuel duty as a way help encourage growth in the economy. We know from our members that spiralling fuel costs are bad for businesses, hauliers and road users, and can have a devastating impact on haulage businesses, their customers and ultimately everyone through the prices on the shelves.”

Meanwhile, the Road Haulage Association has expressed fears over the threat of higher fuel prices posed by ongoing unrest in the Middle East.

While Syria is not a major oil producer, the RHA has highlighted commentators’ concerns, exacerbated by continuing conflict in the country, that the Brent price of oil could rise as high as $150 per barrel.

At the end of August, chief executive Geoff Dunning said: “The Brent oil price has already gained ground over the past couple of days. If it continues to rise at its current rate, it will only be a matter of weeks before we see this reflected at the pump. For the majority of haulage operators who buy their fuel in bulk, this price increase has been immediate and with the industry operating on very tight margins the effect on costs has to be passed on to customers.

“As manufacturing regains strength, UK hauliers are playing a vital part in getting the economy moving again and the recent fuel price stability has provided many companies with a real shot in the arm as far as haulage rates are concerned.”

He continued: “This uncertainty serves to confirm that the issue of fuel duty must now be addressed as a matter of extreme urgency. Of course we welcome the succession of rise freezes and postponements we have seen over the past few years but the time has now come to finally end all speculation and come up with solution that will benefit Britain’s vital haulage industry while not putting the Treasury at a financial disadvantage.

“To once again be faced with soaring prices will put many operators right back to square one.”