Scottish islands expected to get a reduction in fuel costs

Motorists on Scottish islands and the Isles of Scilly are expected to get a 5p a litre cut in their fuel costs as part of a pilot project to cushion the steep rise in petrol prices. Ministers are "very confident" that the European commission will agree to introduce a 5p discount on fuel duty for the islands to offset the record cost in petrol and diesel, which has hit islands and remote communities the hardest. The scheme, promised by the Liberal Democrats at the last election, was originally expected to cover the Western Isles, Shetland and Orkney. Hefty distribution costs and local monopolies leave islanders paying the highest fuel prices in the UK, with diesel costing at least £1.49 a litre in the Western Isles and Orkney. It has been expanded by UK ministers to cover all the Inner Hebrides islands, Arran in the Firth of Clyde, and the Isles of Scilly off Cornwall, where petrol currently costs around £1.62 a litre. Many of the areas return Lib Dem MPs. But Danny Alexander, the chief secretary to the Treasury, softened expectations that George Osborne, the chancellor, would freeze fuel duty in the next budget. That threatens to put Lib Dem ministers in conflict with their MSPs in Holyrood, who voted earlier this week with the Scottish National party and the Tories for a freeze in fuel duty to help fend off an issue that is likely to feature heavily in the Scottish election campaign. The government is also under intense pressure from hauliers, backbench MPs and motoring organisations to abandon the next fuel duty increase with pump prices continuing to rise. Petrol now costs an average of £1.30 a litre. Alexander told the Scottish Liberal Democrats' conference in Perth that the Treasury had a huge task cutting the £117bn deficit, and was looking at mechanisms to control prices such as a fuel duty stabiliser. "Clearly people across Scotland, across the UK, are facing serious financial pressure because of the high price of fuel," he said. But he added: "These things are complicated and are also expensive. [We] have very, very serious economic problems and we have the largest deficit in the G20. We have to sort that problem out." Alexander confirmed that the UK government would formally apply for the discount scheme to be approved by the commission in a few weeks' time, honouring a Lib Dem promise in the coalition agreement with the Tories. He was "very confident" that the measure, which is already in use in other parts of the EU, would be approved by the commission. "These are the communities where fuel prices are highest and where pressure is huge on families," he said. The Scottish National party accused Alexander of announcing an existing policy again and asked why the government had taken nearly a year since being elected to formally apply to Brussels. Angus MacNeil, the SNP transport spokesman at Westminster and MP for the Western Isles, said: "If Danny Alexander wants something new to say in his speech he should commit to cancelling the rise in fuel duty planned next month, and introduce a fuel duty regulator to bring fuel prices down for everyone." The party will hope the scheme will bolster their chances of holding on to Highlands and islands constituencies at the Scottish parliament elections in May, and offset the damage to their standing at UK level. Recent opinion polls – whose accuracy is disputed by the Lib Dems – put the party as low as 7% or 8% in Scotland, half their showing in the 2007 Holyrood elections. Many of the islands affected are in Lib Dem Westminster constituencies and Holyrood constituencies. The Orkney and Shetland MP is Alistair Carmichael, and both island groups return Lib Dem MSPs, including the current leader of the Scottish Lib Dems, Tavish Scott. The MP who covers Skye is the former Lib Dem leader Charles Kennedy, while the MSP for the island is the Lib Dem John Farquhar Munro. The Inner Hebrides islands of Mull and Islay are in the Westminster constituency of the Lib Dem MP Alan Reid. The Isles of Scilly, which have about 600 registered cars, are within the St Ives constituency of the Lib Dem MP Andrew George, who has a majority of 1,719. Nigel Bromham, a partner of one of the island's petrol stations, Nike Engineering, said a 5p a litre cut would make only a small difference given that local prices were at £1.62 a litre. "For the first week, everyone will say 'brilliant' but after that first week has gone people will still say 'it's still damned expensive'," he said.