Danny Alexander set to deliver island fuel discount

Drivers on all Scottish islands are set to receive a 5p a litre discount on their sky high petrol prices under a Treasury scheme.

Danny Alexander, the Lib Dem Treasury Minister, is "very confident" that his scheme will be approved by the European Commission and could be in place in a few months time.

With prices on filling up on the islands at least 10p a litre more expensive than in Scottish cities the discount will go some way to equalizing the cost of driving in remote areas.

In Glasgow yesterday unleaded petrol was available for an average of £1.295 a litre. In Stornoway, on the Isle of Lewis, the price was £1.429 a litre. On Colonsay,where Danny Alexander spent part of his childhood, the cost of diesel has now topped £1.63 a litre.

Inverness MP Alexander is to tell the Scottish Lib Dem conference in Perth today that the move will make a big difference for island communities that face the highest fuel prices in the country.

Alexander said: "I’m very proud that this is something as a government we’ve been able to take forward. I feel very confident that this is something we will be able to deliver."

All the Scottish islands will be included in the scheme - Orkney and Shetland in the Northern Isles, the Western Isles, the Inner Hebrides including Arran and the Clyde islands.

The Isle of Skye, which is connected to the mainland by a bridge is also included in the scheme, meaning that some mainland drivers will also benefit from the scheme. "In my opinion, Skye is an island," said Alexander.

The discount, which could cost the Exchequer an estimated £2m a year in lost revenue, is a personal victory for Alexander, and a rare example of the Chief Secretary to the Treasury spending money

He said: "This is something that I have campaigned on for many years. Everyone in the whole country is feeling the pressure of high fuel prices but it is also the case that in the remote islands the prices are the highest anywhere. It is right that the government shows that we are sensitive to this and take steps to help."

He added: "As a consequence of the informal discussions we’ve had with the EU Commission I think we can get approval for the scheme in the next few months."

After the Commission approves the scheme it will have to be agreed by all 27 EU member states, some of whom already operate island discount schemes in their own countries.

The Westminster government is under pressure to cancel the planned 1p fuel duty rise due to come into effect in April. Chancellor George Osborne is also considering a plan for a fuel duty stabiliser that would decrease the cost of petrol as the revenue income from the rising cost of a barrel of oil increased.

Any changes in fuel duty will be announced in the budget on March 23rd.