GOVERNMENT ministers are considering the case for a fuel duty discount in remote rural areas.

The move is in line with a coalition commitment to investigate measures to help with rural residents cope with high fuel costs.

It was confirmed by Chancellor George Osborne in his Budget speech to the House of Commons on Tuesday (22 June).

“We are examining the impact of sharp fluctuations in the price of oil on the public finances, to see if pump prices can be stabilised,” he said.

“We will also look at whether a rebate for remote rural areas could work.”

The discount would apply in areas with a lack of public transport.

But it remains to be seen how many rural residents would qualify for a fuel duty discount in England.

Ministers are currently considering a possible pilot scheme in Scotland, which includes more remote communities.

Fuel prices are still set to rise significantly even though the Chancellor has not announced any increases in duty in the Budget.

This is because the hikes planned by the previous Labour government will still come into force. An increase in VAT will also raise forecourt costs.

Fuel duty is due to rise by 1p per litre on 1 October and by 0.76p on 1 January 2011. VAT will rise from 17.5% to 20% on 4 January.

The Chancellor has asked the Office for Budget Responsibility to assess over the summer the effect of oil price fluctuations on the public finances.

Based on this the government will then look at options for a fuel stabiliser.

Stephen Glaister, director of the RAC Foundation, said: “The emphasis is on fair and talk of a fuel stabiliser is to be welcomed.

There would be some relief that the Budget had not hiked fuel prices even further, said Professor Glaister.

“Existing planned rises, plus the increase in VAT, means the cost of a tank of fuel for a car like a Ford Mondeo will have risen by about £3 by early next year – and that’s assuming the price of oil goes no higher.”

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