Agree on the tax front - marginal costs for individuals doing limited annual mileage is likely to be very small and logic will almost certainly be if you can afford to run a classic car you can afford the extra few pennies on fuel costs.
I think though it is very remiss of the government (Ministers and department staff) not to highlight the risk of fire as well as engine damage that arises from using E5 in vehicles that are not suitable for it. I also wonder if this risk has ever been adequately explained to Ministers. If it had we might well have seen a different decision.