Remote areas could get fuel discount but Treasury stalls on duty stabiliser

A Treasury minister has suggested that drivers in remote areas may benefit in from discounted fuel in a new pilot scheme, but conceded that the government's proposed fuel stabiliser was fraught with difficulties.

Danny Alexander, the Treasury chief secretary, dismissed the idea of scrapping the April fuel duty rise as his department were not prepared to 'sacrifice income willy nilly' to protect the nation's motorists.

Speaking on the BBC Politics show, Mr Alexander indicated that a fuel duty stabiliser (intended to cut the level of tax during times of high oil prices) remained a possibility, but warned: 'It's a complicated idea and it's difficult to see precisely how we achieve it.'

While that proposal – championed by the Conservatives before the election – already seems like it might be dead in the water, Mr Alexander was quick to champion a government plan which would offer cheaper fuel to those in rural areas.

Ongoing discussions with the European Commission could eventually see those living in the Inner and Outer Hebrides, the Northern Isles and the Isles of Scilly benefit from a discount of up to 5p per litre on petrol and diesel.

The European Commission are yet to approve such a measure, but smaller islands belonging to Portugal, Greece and France already enjoy Brussels-approved savings at the pumps.

News of the scheme came as the Retail Motor Industry Federation suggested that up to 500 petrol stations, the majority of which would be in rural areas, are likely to go out of business in the next 12 months.

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