Thursday, August 1, 2013

Quentin with Danny Alexander, Treasury SecretaryThe SunThe Treasury's announcement that the Island Fuel Rebate will be extended to remote areas of the UK is at least a tacit acknowledgement by the Government that there's an economic need to lower fuel duty. The first, perhaps, of a serious of steps that may eventually lead to the moment when every business and family in this country sees a reduction in their fuel bills. The cynic in me could say this is an easy (and inexpensive) political gesture to show that Westminster is indeed doing something to reduce fuel costs and that the PM can claim in the Commons that 'We are the party that lowers fuel duty'. A blanket reduction across the UK would cost many billions, but with this announcement there are political points to be scored that only cost millions. What will be interesting though is the unravelling of the costs of the fuel supply chain to remote communities. The Treasury will ask retailers to tell us how much they charge for fuel and why the much vaunted 'transport costs' keep prices so high. I for one will be interested to know if these extra charges are real, justified and welcome a new transparency from petrol and diesel retailers.

There's bound to be some shouting too about why some remote communities are included on the list and some aren't. Fuel suppliers may get cross too that they're not chosen to take part and many will ask what defines a 'remote community' or 'desolate area'. And what about petrol retailers on the wrong side of a border between a qualifying county and one that's not on the list? The fine print may be very difficult to appear fair and there are bound to be places in the UK that feel they're being marginalised and forgotten. In fact the whole idea could generate lots of resentment from 'forgotten counties' and demonstrate just how strongly people across the UK feel about their daily fuel costs. A full-on argument from dozens of counties that aren't included might be very interesting indeed and give weight to an eventual blanket reduction across the entire country.

And once the EU agrees an extension to the Island Fuel Rebate (sadly, they have to be involved) we'll have a political precedent that could eventually allow the Government to do what FairFuelUK have been asking for the last three years - that a duty cut across the UK is essential to stimulate economic growth. So see this as a small but significant step towards the hugely desirable goal of reducing pump prices by a significant amount. If lowering fuel costs in remote communities does demonstrate a demonstrable improvement in the micro economies of those local economies then we'll have the proof we need and the Government might find itself in a difficult position and unable to continue defending their current faulted fuel duty model. One thing's for sure though - the architect of all this, the Chief Secretary to the Treasury, Danny Alexander MP, is trying very hard to push the thorny issue of fuel duty into the mainstream and doing everything he can to reduce it where possible. As far as I'm concerned he's the only politician who really understands how important all this is to the economy and is clearly battling against the Treasury status quo. For that alone, we should be grateful that out there is a senior politician who genuinely is listening.

See the full announcement on the Treasury's website

Press coverage.

Daily Telegraph

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[ posted by Andrew Bartlett, 01.08.13 10:54 ]

I completely agree. We desperately need a cut. But the government is ignorant of this. I can barely afford to juice up, and days out are few and far between.


[ posted by derek, 01.08.13 16:59 ]

I live on an Island with no petrol pumps, and is accessible only by ferry there is no fixed link. The nearest petrol station is 18 miles away and in an area which is not designated as rural. If I had a concession for being in a rural area, how would that work. If I was given a concession on fuel duty, could I then use that fuel to drive further afield, I think not.
A blanket reduction on fuel is they only answer, or give me free ferry travel.
P.S. It costs me in excess of £9 to cross 300 yards. Oh and by the way, in Scotland we get free prescriptions, but it costs £9 to go and get them.
The Isle of Luing.


[ posted by Jeremy Clarkson, 01.08.13 17:43 ]

You can say that again Andrew.


[ posted by Christian Barnes, 01.08.13 21:58 ]

The issue here is the level of duty and tax. The conditions vary enormously for commercial vehicles where fuel costs can be the subject of vat recovery and be set before taxable profits. For the private motorist/standard rate tax payer the tax take is too high. Gross earnings of 180 pence are needed to buy 60 pence worth of petrol because for the private motorist petrol is purchased from income taxed earnings (either 20% or 40%). Duty is at 60 pence per litre and VAT is charged on the value of the product AND the value of the duty at 20%. Meaning the cost of the duty to the retail customer with value added tax is actually 80 pence a litre.

Tax on Tax on Tax.

I wrote to my Tory MP on the need to reduce the burden of tax in relation to transport. I got a standard reply a few days ago - 5 months later. I have noticed that the roads around here are quieter but then I live in the apparently 'desolate' North West. I had American relatives staying recently. They hired a car in Manchester and drove to Glasgow where they had to be revived with smelling salts after learning what it would cost to brim the tank!


[ posted by paul w, 01.08.13 22:14 ]

So I live on the isle of thanet will we get 5p reduction.


[ posted by paul gadilhe, 13.08.13 12:14 ]

I would buy some merchandise to help the cause, but the colours chosen, in my opinion,suggest Lib Dem influence at the least and from a distance looks like a Lib Dem sticker. Change the colour scheme and I will buy some. Am I alone in this?


[ posted by Nick Ellis, 13.08.13 17:10 ]

It is not going to work because people from more affluent areas will travel to the cheaper pumps and undermine the system. Fuel needs to be taxed less in total, and particularly Diesel needs to be taxed the same level as on the rest of the continent. Did not Eddie Stobart move his fleet to Belgium because of high diesel taxes? What a farce!


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