The UK government has submitted an application to the European Commission (EC) to extend the rural fuel rebate scheme to 10 new towns.

Following a call for evidence from fuel retailers in July, three towns in England and seven in Scotland were judged to have met criteria such as exhibiting pricing characteristics similar to the islands eligible for the existing discount, which the EC has indicated will be critical in its assessment.

In line with European Union law, the UK now needs to secure approval for the expanded scheme from the EC. An application for the ten towns and the supporting evidence has been submitted to the EC. The UK is seeking up to a 5p per litre (ppl) cut in fuel duty for:

• Acharacle (Scotland – Lochaber), postcode: PH36;

• Achnasheen (Scotland – Ross & Cromarty), postcode: IV22;

• Appin (Scotland – Argyll and Bute) postcode: PA38;

• Carrbridge (Scotland - Badenoch and Strathspey), postcode: PH23;

• Dalwhinnie (Scotland - Badenoch and Strathspey), postcode: PH19;

• Gairloch (Scotland - Ross & Cromarty), postcode: IV21;

• Hawes (England – North Yorkshire), postcode: DL8 3;

• Kirkby-in-Furness (England – Cumbria), postcode: LA17;

• Lynton (England – Devon), postcode: EX35;

• Strathpeffer (Scotland - Ross & Cromarty), postcode: IV14.

A final decision on the areas in the scheme and the price discount is expected from the EC next year. If the extension is approved this will raise the number of people benefitting from the rural fuel scheme to nearly 120,000.

Chief secretary to the Treasury Danny Alexander said: “As a Highlander, I know all too well that fuel prices tend to be highest in areas where a car is needed the most. We’ve already delivered a tax cut for remote islands and now want to extend that to mainland rural areas that suffer from similarly high prices to the islands.

“We have put together the strongest possible evidence base to try and maximise the places that get it. As I’ve said before, it won’t be easy to get this agreed with the Commission, but I will do everything I can to make this happen."

These new areas have been identified in accordance with a number of criteria which the EC has indicated 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 – Towns 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 current rural fuel scheme came into effect in March 2012 and allows retailers of road fuel in 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 5ppl relief on unleaded petrol and diesel for retail sale within the eligible areas.

Analysis produced by HMRC, also published today, shows that the scheme has reduced prices on the islands relative to the UK mainland. The latest data shows that pump prices have consistently been 5ppl lower relative to the mainland.

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