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Extension to rural fuel rebate scheme greenlit by European Commission

Date: 15 January 2015   |   Author: Daniel Puddicombe

Motorists and business drivers in rural areas could be seeing the price of fuel reduce by 5p a litre, thanks to plans for a rural fuel rebate scheme.

Under the scheme, devised in 2013 by Danny Alexander, chief secretary to the treasury, 17 rural areas would benefit from reduced prices at the pumps, similar to the scheme already used in Scottish islands to prevent motorists overpaying for fuel because they live in a remote area.

At the time Alexander said for those in remote areas "driving is not a choice but a necessity".

Ministers had to ask  fuel retailers and customers in 35 counties to provide details of fuel prices before they applied to the European Commission for permission to extend the scheme.

Areas for consideration had to have higher fuel prices than the lowest price on the islands in the current scheme, had to be over 100 miles by road from the nearest refinery and with a population density lower than that of any area in the existing scheme. A shortlist of 17 postcode areas was compiled and sent to the EC for examination.

The current rural fuel rebate scheme came into effect in March 2012 and allows retailers of road fuel within the Inner and Outer Hebrides, the Northern Isles, the Islands of the Clyde and the Isles of Scilly to register with HM Revenue & Customs (HMRC) to claim back a 5.0 pence per litre relief on unleaded petrol and diesel for retail sale within the eligible areas.

The Tory MP confirmed on Twitter this morning the European Commission had approved his plans for the scheme. "Just [the] European Council to go", he added.

The cut in fuel duty is regarded as a state aid under European law and must therefore be approved in Brussels. If it goes ahead, the cost is likely to go into millions of pounds as fuel retailers will be able to claim back lost revenue from HMRC.

Motoring organision RAC supported the move, calling it a "landmark moment for rural communities."

"Filling stations provide a crucial public service in more remote areas, and the plans to widen the Rural Fuel Rebate Scheme will help reduce prices closer to those enjoyed in other parts of the UK," said Simon Williams, RAC fuel spokesman. 

?"People living and running businesses in rural communities by their nature rely most heavily on their vehicle, so it's right that they should not have to pay significantly more for fuel," said Williams.

The 17 postcode areas included in the Government's application are:

  •  IV54 (Highland - Scotland)
  • IV26 (Highland - Scotland)
  • IV27 (Highland - Scotland)
  • NE48 (Northumberland - England)
  • PH41 (Highland - Scotland)
  • KW12 (Highland - Scotland)
  • PA80 (Argyll and Bute - Scotland)
  • PH36 (Highland - Scotland)
  • IV22 (Highland - Scotland)
  • PA38 (Argyll and Bute - Scotland)
  • PH23 (Highland - Scotland)
  • PH19 (Highland - Scotland)
  • IV21 (Highland - Scotland)
  • LA17 (Cumbria - England)
  • EX35 (Devon - England)
  • IV14 (Highland - Scotland)
  • Hawes (North Yorkshire - England)


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