News story

Government submits expanded application to the European Commission to extend rural fuel rebate

Seven new areas meet criteria following supplementary call for information.

This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government


The government has submitted an application to the European Commission (EC) for seventeen of the most rural areas in mainland UK to receive an up to 5 pence per litre (ppl) fuel duty discount, Chief Secretary to the Treasury Danny Alexander has announced.

The addition of seven new areas follows the completion of a supplementary call for information and complements the ten areas originally identified in October 2013. The seven new postal areas which have met the strict qualification criteria are:

  • IV54 (Strathcarron, Highland – Scotland)
  • IV26 (Ullapool, Highland – Scotland)
  • IV27 (Lairg, Highland – Scotland )
  • NE48 (Hexham, Northumberland – England)
  • PH41 (Mallaig, Highland – Scotland)
  • KW12 (Hallkirk, Highland – Scotland)
  • PA80 (Oban, Argyll and Bute – Scotland)

The ten areas that were already identified and which remain part of the application are:

  • PH36 (Acharacle, Highland – Scotland)
  • IV22 (Achnasheen, Highland – Scotland)
  • PA38 (Appin, Argyll and Bute – Scotland)
  • PH23 (Carrbridge, Highland – Scotland)
  • PH19 (Dalwhinnie, Highland – Scotland)
  • IV21 (Gairloch, Highland – Scotland)
  • LA17 (Kirkby-in-Furness, Cumbria – England)
  • EX35 (Lynton and Lynmouth, Devon – England)
  • IV14 (Strathpeffer, Highland – Scotland)
  • Hawes (North Yorkshire – England)

In line with European Union law, the UK now needs to secure approval for the expanded scheme from the EC and an application has been submitted.

A final decision on the areas in the scheme and the price discount is expected from the EC later this year. If the extension is approved, this will raise the estimated number of people benefitting from the scheme to around 125,000.

Chief Secretary to the Treasury Danny Alexander said:

High fuel prices in areas where cars are a necessity, not a luxury, is a major issue in rural communities across the UK. So, following a supplementary call for information I’m pleased to announce that seven new areas will join the ten areas already part of our new application.

Reaching agreement with the Commission will not be easy, but we will now get on with making that case as strongly as we can.

These new areas have been identified in accordance with a number of strict criteria which the government considers will be critical to their assessment:

  • pump Price Threshold: Pump prices have to be consistently more expensive than the lowest pump price on the islands in the existing scheme, during the months examined

  • cost of Transporting Fuel: Areas have to be over 100 miles by road from the nearest refinery

  • population Density: The population density must be no higher than any area in the current scheme. The highest population density of the islands in the current scheme is 135 people per km2.

The government launched a call for information in July 2013 and received a number of submissions to inform the evidence it has submitted.

Given the strict nature of the EC criteria, towns that have not adequately fulfilled these criteria have not been shortlisted as they are extremely unlikely to receive approval from the EC.

The current rural fuel scheme came into effect in March 2012 and allows retailers of road fuel within the Inner and Outer Hebrides, the Northern Isles, the Islands of the Clyde and the Isles of Scilly to register with HM Revenue & Customs (HMRC) to claim back five ppl relief on unleaded petrol and diesel for retail sale within the eligible areas.

Published 24 January 2014