RURAL communities are a step closer to benefitting from a fuel price cut after a government scheme cleared a major hurdle.

Prices at the pumps in Kirkby-in-Furness and Hawes in North Yorkshire could be slashed by up to 5p per litre after the government’s Rural Fuel Rebate scheme gained approval from the European Commission.

The decision has come as fuel prices in Westmorland continue to drop - with some garages charging as low as £1.03.9 per litre.

Ian Bown, who runs Dale Head Garage in Hawes, said the decision had saved his business and the jobs of his three employees.

"We are over the moon," he said. "Over the past six years we've seen a 35 per cent drop in sales and business dropped more drastically this winter than ever before.

"It means we will be able to compete with petrol stations in towns like Northallerton and Darlington and I'm expecting to attract new customers from this area who have been filling up elsewhere."

Hawes-based businessman, Cllr John Blackie said residents and traders would celebrate the decision.

"So many services are going further and further away, so anything we can do to keep down the cost of fuel to enable people to reach places is good," he said.

But South Lakes MP Tim Farron said he wanted to see cheaper fuel at pumps across rural areas in South Lakeland and Eden.

"I have told the Government that in rural areas like ours a car is not a luxury, it is a necessity and people need more help," he said.

Commission approval means that the issue is now awaiting agreement from other European nations.

Danny Alexander, Chief Secretary to the Treasury, said: “This is great news for motorists in these areas and brings a duty discount a step closer. Even though fuel prices are falling across the country, they are still higher in very rural areas.

“While we have one more stage to go, I want to make sure we are ready to implement this as a top priority so we will press for this to be heard as soon as possible.

Dorothy Fairburn, the Country Land and Business Association's North regional director, said: “For too long, businesses in rural areas have been faced with a double-whammy of having to travel further to the pump and then pay higher prices when they get there.

”This scheme will also go a long way towards helping struggling livestock and dairy farmers in the area, who are desperately trying to make ends-meet.”