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More must be done to ease burden of fuel duty

The Coalition Government has made some progress on the cost of fuel.

George Osborne, the Chancellor of the Exchequer, announced last year, for example, that duty would be frozen for the remainder of this parliament. In 2012, the Liberal Democrats also delivered on one of their manifesto promises by driving through a 5p-per-litre rebate for Scotland's island communities and they deserve credit for doing so.

But should the Government go further? The campaigning group Fair Fuel UK believes so and has called for a 3p cut in duty on all vehicle fuels in the next Budget. The organisation points out that the UK has the highest duty for diesel in the EU and the second highest for petrol and calls this a cruel burden on those who have no option but to use a car. Fair Fuel UK also say a 3p cut would bring about economic benefits such as a small growth in GDP, lower inflation and many thousands of new jobs.

Such claims are impossible to substantiate but Fair Fuel UK is on firm ground when it says the benefits of a cut in duty could be especially felt by the poor. Although it is self-evident that the very poorest are not be able to afford a car, in remote areas the poor have no option but to drive. In such communities, high fuel costs also have a knock-on effect on the cost of public transport and the cost of transporting food and essentials, which is inevitably passed on to the customer.

The Government's rebate for the island communities was intended to address some of this problem and was well-intended, although its impact is uncertain. When The Herald checked yesterday, for example, a litre of petrol cost 130.9 in Edinburgh and 137.9p on Harris and the rebate would have to be considerably higher to fix that. The only truly fair position would be parity of price across the country.

The other unfairness at the heart of the rebate is it applies only to the islands and not remote communities on the mainland which face many of the same issues. The UK Government says it wants to address this inequality, although the implementation of an extended rebate is complicated by the fact it has to receive the permission of the EU.

So perhaps instead of extending the rebate, the Government should follow Fair Fuel UK's suggestion of a 3p cut in duty. Would that not be a fair way of helping the poorest rural communities in Scotland? It is true the cost of fuel has had a devastating impact on many family budgets but a blanket cut in duty should be approached with caution, not least because the Treasury still needs the money to tackle the UK's economic problems, but also because of the environmental concerns of cutting duty across the board to make driving cheaper.

A much better approach would be targeting those for whom the cost of fuel has the greatest impact - the poor - and extending, and possibly increasing, the island rebate would be one effective way of achieving this. It is the people of these communities who face the longest journeys to work, but also some of the lowest wages in the UK and the highest fuel prices. It is a real burden and more should be done to lift it.

Contextual targeting label: 
Automotive

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