Am Bratach No. 244
February 2011

No fuel rebate for North West in sight
by Mandy Haggith

As fuel stations around the Scottish islands prepare to cut their prices for customers, there is growing resentment that remote areas of the mainland are being unfairly excluded from a European tax rebate scheme..

A lower rate of fuel tax will apply in the Scottish islands, thanks to a derogation, or exemption, from European legislation against differential tax rates. This means that fuel prices will be cut by 5 pence per litre in the Northern and Western Isles from March 1 this year.

Yet fuel prices in the islands are already in some cases far cheaper than in North West Sutherland. Unleaded petrol is selling in both Stornoway on Lewis at £1.449 per litre and Broadford on Skye (at the time of writing) at £1.409 per litre, yet in Scourie, Durness and Tongue it is up to 15 pence more expensive.

The tax rebate system will work by filling stations cutting their prices to customers by 5p per litre and then claiming the money back from the HM Revenue and Customs.

Higher fuel prices in North West Sutherland reflect both higher prices from Scottish Fuels (the only wholesaler who will supply such remote regions), and low through-put.

Vanessa Crowsley, who runs the filling station at Scourie, said: “It does seem unfair that the rebate scheme won’t apply to here, as from what we hear our wholesale prices are even higher than for some of the islands.

“We hope local people understand that the reason our prices are higher than in bigger places is because we pay higher wholesale prices and also because our turnover is low, and we have to cover our fixed costs like insurance, lighting, heating and staff. It’s a Catch-22 situation, because the fewer people buy fuel here because it’s more expensive, the more we have to add per litre to cover our costs.”

The lesson is that if we want lower fuel prices, we should buy more of it locally, rather than filling up in more built-up areas. We also need to encourage tourists to top up at remote local pumps as they travel around, and to counter advice to them to fill their tanks further south and avoid buying fuel here. Some urban supermarkets sell fuel at less than the wholesale price, in order to attract customers, yet choosing to fill up at these prices is a choice to give your money to a huge corporation rather than to support livelihoods in our local communities.

“We’re desperate to stay in business in order to keep other local businesses going,” Ms Crowsley said. “The implications of our closure would be widespread: local businesses like the fish farm would have to transport fuel long distances and the safety impacts could be devastating.”

One place where the filling station had to be rescued from closure is Armadale, on Skye, where the Sleat Community Trust now run a “community-owned” petrol pump. This small garage has similar small turnover and high prices to the pumps in North West Sutherland. When the rebate scheme was first mooted they were concerned that it would have severe cash flow implications for them, because they would have to reduce prices to customers and then claim the rebate in arrears. However, Archie MacCalmang, who mans the pump at Armadale, said: “They have designed the rural fuel rebate scheme with a 60-day grace period, so we can claim the rebate on fuel we buy from January 1 and make claims monthly. Hopefully that means we’ll have been reimbursed in time for March 1. It seems someone is actually listening!”

The credit for the new scheme is being claimed by the Liberal Democrats, particularly John Thurso MP, who said: “The idea of a derogation from EU legislation to get lower fuel prices was one I had in 2002 and put to the then government in a debate in Westminster Hall”.

Yet it is his colleague Alistair Carmichael, MP for Orkney and Shetland, who is able to claim victory to his constituents, arguing that he got the payments and claims system modified so as not to “trash” the cash flow situations of small filling station businesses.

Meanwhile, the mainland is yet to see any benefit. Furthermore, the Western Isles has been promised an investigation by the Office of Fair Trading into its fuel prices. The Western Isles MP, Angus MacNeil, has said: “I welcome this and I hope that they will look closely at the Western Isles’ situation in comparison to other areas of Scotland.” It is to be hoped that the OFT will notice the North West’s even higher prices, in the process of its inquiry.

A filling station worker who doesn’t want to be named, said: “It’s not really fair. The islands seem to get everything yet fuel’s already dearer here than there”.

Mr Thurso said: “The next step is to seek to extend the scheme to remote rural mainland areas. This will be more difficult to achieve as it will require the EU to accept it, and a sound definition of remote rural will need to be found. I have submitted that the official Scottish Government definition of areas of multiple deprivation could be used as a basis for a mapping exercise. I intend to keep campaigning”.

John Thurso describes the fuel rebate as “an interim measure”, as he believes the long term solution to excessive fuel prices in remote rural areas is to charge for road use, often known as “road pricing”. This would replace fuel duty with a charge per mile for drivers, with high prices in congested areas, and very low prices on empty roads.

Such a scheme would require all vehicle movements to be tracked by on-board satellite positioning devices and for this reason there was a vociferous campaign against the idea when it was proposed by the previous Labour government. However, road pricing is already in place, in the form of congestion charging, in several cities in the UK and it has been shown by several academic studies to be the fairest way to charge for pollution and carbon emissions without penalising people in remote rural areas who have no choice but to travel long distances.

* It should be noted that the Air Discount Scheme for the Highlands and Islands, which subsidises air travel for residents in disadvantaged areas, takes in the Western Isles, the isles of Colonsay, Islay and Jura, Orkney, Shetland — and two mainland districts — North West Sutherland and Caithness.

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