Speaking after the Chancellor of the Exchequer delivered the 2011 Budget statement in the House of Commons, Northern Isles MP Alistair Carmichael has argued that an immediate cut of 1p to fuel duty will provide drivers in Orkney and Shetland with important relief as formal discussions over a larger tax derogation get underway in Brussels.

The 1p cut was confirmed after the Chancellor announced that he was to abandon Labour plans for an escalation in fuel duty that could have seen the price of a tank of fuel increase by a further 5p per litre.

Other measures designed to support people on low and middle income include £250m to support first-time house buyers, which will be funded by the proceeds of the coalition government’s bank levy. In addition, the Chancellor set out plans to increase the income tax threshold to £8105 for all but the richest taxpayers.

Commenting, Mr Carmichael said:

‘In last year’s emergency Budget, the Chancellor announced a range of difficult but necessary measures to help stabilise the economy. Today’s statement was different. We always knew that getting public spending under control would only ever be half the battle – the measures announced today are designed to boost growth, encourage enterprise and help the many people that are still finding life difficult as a result of the downturn.

‘What this Budget is about is government being on the side of those families that are working hard but still struggling to make ends meet, hit by rising fuel prices and increases in other living costs. Despite the difficult economic circumstances, the Chancellor has again been able to bring forward a range of measures to support families on low and middle income. For the second Budget in a row, the government will increase the income tax threshold, to £8105. This step means that the coalition government will have taken 1.1 million people out of income tax altogether. New funding will also be made available to help first-time buyers get onto the property ladder. This will help put a floor back into the housing market that had been provided by first time buyers in the past, stimulating demand and providing our construction industry with an important boost.

‘The Chancellor also announced funding for 21 new enterprise zones, which will provide relief from business rates for companies and help stimulate the jobs we need to secure the recovery. This investment will have significant funding implications for Scotland and will allow the next Scottish Government to invest more in growth north of the border.

‘Crucially, we have seen action to help motorists that have been hit hard by recent increases in the price of petrol. The decision to scrap Labour’s above-inflation fuel duty increase is the right choice at a time when millions are struggling to afford a tank of petrol.

‘As people in Orkney and Shetland are well aware, the impact of another price increase would have been acute across the Highlands and Islands, hitting many people who have no alternative but to use their cars to get around. Cutting 1p from fuel duty will provide local drivers with immediate relief as plans for a larger tax derogation for the Northern Isles are discussed in Europe.

‘By trebling the resources available to the new Green Investment Bank, the government is also helping ensure that environmental sustainability is at the heart of the economic recovery. This new funding will allow the bank to begin operating a year earlier than was planned.

‘The announcement that air passenger duty is to be frozen for this year is also welcome. While media reports have focussed on the impact of this move on the price of foreign holidays, it will also help secure the future of vital lifeline services to and from the Northern Isles.

‘Penalising commuters and business travellers makes little economic sense at a time when all parties should be looking to encourage growth. While this duty freeze cannot make up the additional costs that business people are facing as a result of the SNP decision to scrap the air discount scheme for rural business travel, it will hopefully go a little way towards softening that blow.’