Tuesday, 18 January 2011

Slowly, slowly on Island fuel duty discount

Lots of synthetic anger from the SNP this afternoon over Danny Alexander's apparent "betrayal" of Highland motorists on the grounds that his proposed fuel duty derogation for remote areas will not be in the budget.

Here's the news - he never said it was going to be in the budget in the first place.

When Alexander announced in a conference speech his intention to introduce a pilot scheme to discount duty on fuel by up to 5p a litre it was recognised that he was kicking the issue into the long grass.

Here's what the Treasury said at the time: "The Treasury will now take forward informal talks with the European Commission on implementation and design of the scheme with a view to submitting a formal application in due course."

But with fuel prices rising to over £1.40 a litre on the Scottish islands the SNP's Angus MacNeil yesterday capitalised on the fact that the fuel derogation plan has not been formally submitted to the EU.

He called it "a despicable betrayal" (a bit strong that) and stunted a point of order in the Commons on the issue.

But the Treasury has insisted that the scheme, which needs EU permission to charge different fuel duty rates around the country, will go ahead and was never tied to the budget.

A Treasury insider explained it to me for those who are hard of policy understanding: “It is complete nonsense that it is not going ahead, though there has not been a formal application.

"When you enter this process there has to be informal talks first. These were completed last week, they were constructive and positive and will inform the formal application.

“When we apply - not if - it will be a full process and it would need to be agreed and approved by all 27 EU members. An application will be made but it is a process that won’t happen overnight."

There is huge frustration in the islands, and everywhere else, over the rising cost of fuel but it looks like there's going to have to be some patience before the Chief Secretary to the Treasury delivers any kind of discount.

There is, however, a rising expectation that the Chancellor will come across with some kind of concession on fuel prices in the budget.

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