Remote areas in Scotland and England could benefit from a 5p per litre cut in fuel duty under plans put forward by the Government.

Fuel duty currently costs around 58p a litre for both petrol and diesel, according to petrol comparison site (see our Cheap Petrol & Diesel guide to save money when you fill up).

But the Government has asked the European Commission to vary the duty rates in 10 towns.

Discounts are already in place for the Scottish islands and the Isles of Scilly. They're also common in other island communities in Europe, but they've never been permitted in mainland Great Britain before.

In Scotland, these towns have been earmarked for a discount: Acharacle, Achnasheen, Appin, Carrbridge, Dalwhinnie, Gairloch and Strathpeffer.

The English towns selected are Hawes, North Yorkshire; Kirkby-in-Furness, Cumbria; and Lynton, Devon.

All 10 areas have consistently higher pump prices than are available in locations that already receive a discount. They are also more than 100 miles by road from the nearest refinery, and have a population density lower than 135 people per square kilometre.

The commission is expected to announce its decision next year.

Chancellor George Osborne announced plans last month to freeze fuel duty until 2015 (see the George Osborne plans fuel duty freeze extension MSE News story).

Petrol prices falling

Despite the high cost of petrol and diesel in remote areas, the AA says motorists are enjoying the biggest fall in pump prices since 2008.

Average petrol prices in the UK fell 5.49p a litre between mid-September and mid-October – the biggest monthly fall since the 11.5p petrol price collapse in November 2008.

Petrol is now averaging 132.16p a litre while diesel has dipped from 142.50p a litre to 139.12p.

The AA says the price falls have cut £2.74 off the cost of refuelling a small petrol car and £3.84 off the bill for a Ford Mondeo-sized petrol vehicle. A family with two petrol cars will have seen its monthly fuel bill fall by £10.

But the AA warns a further dip in prices is unlikely.