Rural Fuel Duty Relief

Wednesday 7th January 2026 Westminster Hall

16:39

[Ian Roome (North Devon) (LD)]

I beg to move,

That this House has considered the Rural Fuel Duty Relief scheme.

It is a pleasure to serve under your chairship, Ms Furniss. I am pleased to have the opportunity to introduce this debate, especially in the new year at a time when many people across the country will be watching the pennies closely.

As hon. Members representing rural constituencies will be aware, the rural fuel duty relief scheme was announced more than 15 years ago and supports people living in some of the most remote rural communities in Britain. Under the scheme, a 5p per litre tax relief on unleaded petrol or diesel is granted to specific filling stations in a small number of rural postcode sectors. That relief must be passed on to rural motorists, helping many with their commute, school run or weekly shopping. The scheme benefits around 125,000 local residents and many visitors across the United Kingdom.

[David Chadwick (Brecon, Radnor and Cwm Tawe) (LD)]

Not a single part of Wales benefits from the rural fuel duty relief scheme, while rural areas in England and Scotland do, simply because of how the previous Conservative Government designed it. Does my hon. Friend agree that that unfair anomaly should be corrected and that the scheme should be extended to places such as Powys?

[Ian Roome]

I agree with my hon. Friend that more people could benefit from the scheme. I am sure the Minister will take note of that in his response. As I said, the scheme benefits around 125,000 local residents and many visitors across the UK, including the remote parts of the Scottish islands, Cumbria, Northumberland, North Yorkshire, the Isles of Scilly and Exmoor. That includes residents in my constituency of North Devon, who live in areas around Lynton and Lynmouth, Parracombe and Brendon, including many living in upland areas within the boundaries of Exmoor national park.

The tax relief is targeted at highly rural areas. A brief glance at a map shows that these are some of the most isolated and indispensable filling stations across the country. If someone forgets to fill up at Barbrook filling station in my constituency, while heading out over Exmoor, it is nearly 20 miles to the next fuel stop at Wheddon Cross or Minehead. When the rural fuel duty relief scheme was introduced under the coalition, and approval under EU state aid rules was granted in 2012, the relief was set by the Government at 5p per litre. That 5p per litre remains unchanged today in 2026, despite more than 30% of its purchasing power being eroded over that time because of inflation. An update to the scheme is now long overdue.

According to research by the Rural Services Network in 2023, transport difficulties in highly rural areas force households into paying high costs for motoring, which contribute significantly to rural poverty. A car is needed for daily life and for someone who earns a modest wage that is expensive. The research estimates that for every 10% decrease in public transport speed relative to motoring in any area, the average household pays more than £400 more for transport each year.

[Martin Wrigley (Newton Abbot) (LD)]

Does my hon. Friend agree that the relief scheme could be complemented by a pumpwatch scheme, whereby the petrol price comparison platform has rapid publication of all fuel costs for forecourt prices? That is approved by the Competition and Markets Authority and the RAC estimates it could take up to 3p off a litre, in addition to the specific rural relief scheme that he mentions.

[Ian Roome]

I know there are various apps that do that. There should be more awareness of them among members of the public.

Fuel duty is only part of the expense of running a vehicle, but many who fill up in areas impacted by the scheme have simply no transport alternatives. In my constituency, the households that benefit are 20 miles from their nearest train station, and bus passengers receive only the most limited bus service. Every January, those passengers are also hit by annual price increases from bus companies, which put extra strain on the cost of living.

The scheme is not particularly expensive. In the published list of non-structural tax reliefs, the Treasury estimates that the rural fuel duty relief scheme costs only around £5 million per year, and its uncertainty rating is considered low, yet during the past decade the scheme has been a roaring success. Barbrook filling station in my constituency tells me that this tax relief has made a massive difference to the viability of its business, keeping open an essential local service for many rural residents, local farmers and tourists.

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

In my constituency, the price per litre of unleaded is 160p. When I was in Northern Ireland over Christmas, places were selling at 125p. We have a 35% premium on the cost of living where I live, and fuel is major part of it. In my constituency, there is a big question as to whether the 5p is actually getting to the customer or being kept, and I hope that the Minister will address that.

[Ian Roome]

Fifteen years ago, Barbrook in my constituency was officially one of the most expensive places to fill up in England, but thanks to the scheme it has stayed competitive on price, as a small business that employs four people all year round, in an area where employment can be highly seasonal. During the summer, Barbrook’s fuel deliveries increase to several tankers per week because of extra demand, driven mainly by tourists visiting Exmoor national park and the famous North Devon coast on holiday.

I am also told that Barbrook filling station rescues many of those visitors—people who do not understand the extra challenge of driving long distances on small rural roads, or who do not plan for the extra fuel consumption of their journey. Many rural communities already suffer from very sparse public services, and fuel for transport is an important part of anyone reaching essential healthcare, such as their local hospital or dentist. As I know from speaking to chemotherapy patients at North Devon district hospital, where I worked before I was elected to this House, access itself is half the battle.

My Liberal Democrat colleagues and I—including my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael), my hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) and others—champion the real needs of rural communities, as do colleagues who are here today. We have argued for the rural fuel duty relief scheme’s importance and for extending it to many more rural parts of the country.

However, support for the scheme should really be cross-party. By my count, at least 11 directly impacted rural constituencies are represented by MPs from Labour, the Conservatives, the Liberal Democrats and the Scottish National party. There are also many neighbouring rural constituencies with villages that rely on a filling station just over the border that is supported by this tax relief.

Since 2011, it has become a feature of Budgets under successive Governments that fuel duty will be frozen. That has benefited motorists across Britain, yet in March 2022, a further 5p cut in fuel duty was introduced and then held in place, even as the value of the rural fuel duty relief scheme continued falling in real terms. That means that in recent years we have gone backwards: many of our most rural taxpayers have effectively increased their support to motorists in some of the best connected parts of the country. Motorists in urban communities not only benefit from having more public transport alternatives but often have numerous filling stations to choose from—all competing on price, to the benefit of local people. By contrast, many of my constituents count themselves lucky to have even one filling station in their area.

The Government have stated that economic growth across the country is their top priority for this Parliament. In parts of the country that are distant from major infrastructure projects, such schemes are an important measure, supporting small businesses, farming and tourism, helping young people to access opportunities, and helping patients to access essential healthcare. At a time when the Government are increasingly under fire for their policies towards rural and farming communities, updating the rural fuel duty relief scheme would be one way for them to demonstrate their concern about those families who live in rural areas and the problems they face in their daily lives.

[Brendan O’Hara (Argyll, Bute and South Lochaber) (SNP)]

I sincerely thank the hon. Member for securing this debate. My constituency of Argyll, Bute and South Lochaber is 10,500 sq km in size, with 23 inhabited islands; it is absolutely vast. Life is difficult for people living in rural areas and anything that we can do to make life a bit easier for them should be considered. Does he agree that the scheme should not only be further extended to cover more people in rural areas, in order to stop the scourge of depopulation, but that the value of the scheme, which has declined by 35% since 2012, should be restored by this Government as soon as possible?

[Ian Roome]

I agree with the hon. Gentleman and thank him for that input.

When so many people are struggling with the cost of living, schemes like this one are a concrete example of how tax relief can have an out-sized impact. A relief of 5p per litre would be welcome anywhere, but it is particularly valuable to those constituents of mine who have no choice but to drive, in an area where gross median wages are £84 a week less than the national average.

Just last week, the Prime Minister stated that the Government would spend this new year proving to people that they can support them with energy costs, warm homes and the cost of living. My constituents see their fuel costs displayed digitally on a sign by the side of the road every single day. The rural fuel duty relief scheme makes a material difference to many of my constituents and to tens of thousands of people in rural communities across the United Kingdom.

I will close by asking the Minister some questions. Does the Treasury recognise that time and inflation have effectively bled the funding of the scheme by around 30% since it was introduced? Will the Government consider updating the value of the scheme in the coming year to rectify that gap, at least in part? Just a few weeks ago, it was highlighted in the Treasury Committee that the Treasury lacks a suitable review process for existing tax reliefs. What more can be done to ensure that in the future small but important schemes such as this one, which are a lifeline in rural areas like mine, do not get left behind again?

16:49

[Jim Shannon (Strangford) (DUP)]

Thank you very much, Ms Furniss, for again inviting me to speak early. It is a real pleasure to serve under your chairship. I also thank the hon. Member for North Devon (Ian Roome) for securing this debate on a very important issue.

When we look at the price of petrol at the pumps and consider that the price per barrel has dropped significantly, the question we all ask is when the dividend will come down to those who drive on the roads of the United Kingdom. Perhaps the Minister can put that question directly to the firms responsible.

This is an important issue, and it is clear that there are stipulations within the current legislation that do not extend to other rural parts of the United Kingdom. Nevertheless, I am here today to support the hon. Member for North Devon, who is renowned for being assiduous and committed on behalf of his constituents—well done to him.

There is a strong case for extending the provision of the rural fuel duty relief scheme to some rural parts of Northern Ireland that have similar problems to those referenced by the hon. Member for Argyll, Bute and South Lochaber (Brendan O’Hara). Just as in North Devon, a considerable number of areas of counties such as Fermanagh, Armagh and Down are sparsely populated. Furthermore, residents in these areas rely heavily on private vehicles because public transport is extremely limited. I am contacted weekly by constituents regarding rural bus services, so this issue is real and is felt throughout many areas in Northern Ireland.

Historically, we have witnessed a significant fuel price difference between Northern Ireland and the Republic of Ireland, sometimes as much as 15p to 25p per litre. There are times when rural Northern Ireland has significantly higher fuel prices, and families who live close to the border travel into the Republic of Ireland to get fuel as it saves them so much money. People in rural areas that do not have such access cannot do that.

I support local, and I always have. I live in a rural section of my constituency, too. I choose to support local businesses when buying fuel, rather than going to the likes of Asda where the fuel might be cheaper. Independent rural businesses have no choice but to charge more, given that they are in less populated areas. I believe there is a duty on those who can to support their local independents.

Fuel is a huge expense that many families and individuals are not able to avoid. The hon. Member for North Devon made a point about the 5p a litre rebate simply not stretching as it needs to. He clearly outlined that case, and the Minister will perhaps listen. It has not increased in line with inflation since 2010, losing around 35% of its actual value. There is no doubt that a review is needed to ensure that rural drivers across the United Kingdom of Great Britain and Northern Ireland can benefit.

I am conscious that other hon. Members wish to speak, so I will not go on too long. Lower fuel costs can achieve better access to education, healthcare and services for rural residents who should not be left behind. At a time when money is tight and so many feel the stretch, there is more to be talked about and more that we can do. Again, I urge the Minister to engage with his counterparts to protect rural drivers in Northern Ireland as well as on mainland UK. The same benefits should apply to all rural areas of this great United Kingdom of Great Britain and Northern Ireland.

16:56

[Torcuil Crichton (Na h-Eileanan an Iar) (Lab)]

It is an honour to serve under your chairship, Ms Furniss—apologies for not informing you of my intention to speak. I congratulate the hon. Member for North Devon (Ian Roome) on securing this important debate on an issue that affects lots of rural seats, including my own in Na h-Eileanan an Iar.

The 5p a litre discount—“Danny’s discount”, as we called it on its introduction in 2012 when he was Chief Secretary to the Treasury, shamelessly promoting his own constituency and other rural areas—was widely welcomed in the Scottish islands, and it has been adjudged a success, although forgotten by many. If I had been a Lib Dem, I would have taken out posters at every rural fuel station affected to tell people that they were getting 5p off every litre.

Since then, duty seems to have been mostly frozen in Budgets, which means that the rural fuel duty discount has been frozen as well. As the hon. Member for North Devon correctly pointed out, had it gone up by inflation the discount would have gone up as well. I had the Library do some research, and it estimated that in 2021 the scheme cost the Treasury only £5 million. Had it been increased by the consumer prices index, it would have gone up by 2p—£2 million—to 7p a litre. It was extended by the Conservative-Lib Dem coalition in 2015 and now affects 12 seats. The hon. Member estimates 11, but I estimate 12: four Labour, five Lib Dem, two SNP and one Conservative. The Conservative one is the seat of the former Prime Minister, the right hon. Member for Richmond and Northallerton (Rishi Sunak).

There should be wide cross-party support for a review of the rural fuel duty discount, as my colleagues in Scotland have attested. I checked today, and the cheapest fuel I could get in Stornoway, the main town in my constituency, came in at £1.34 per litre. In Glasgow it is £1.28. Far from being a rural fuel discount, there seems to be an urban fuel discount in Scotland, and I am sure that is true of other parts of the UK. So I join colleagues from across the House in calling for a review of the scheme, and perhaps some gifts in forthcoming Budgets, or a signal from the Minister that such a review will be carried out.

16:59

[Ben Maguire (North Cornwall) (LD)]

I congratulate my hon. Friend the Member for North Devon (Ian Roome) on securing this important debate. Constituencies like mine, which borders my hon. Friend’s constituency, are among the most rural in this country.

My constituents rely on their cars to cover vast areas to get to work, to take their children to school and to attend vital healthcare appointments, and they quite literally pay the price when it comes to the cost of fuel. People living in rural areas such as North Cornwall spend, on average, £800 a year more in fuel costs than those living in urban centres. These people make about 75% of their journeys by car. In Cornwall, about four times fewer people than in the rest of England are able to travel to work via public transport. Fuel can in some cases be 10% to 15% more expensive at the pump in Cornwall, compared with other areas. If we extrapolate that across a full year or several years, adding in our increased reliance on our cars, my North Cornwall constituents end up facing astronomical costs, at a time when money is extremely tight.

Under Liberal Democrat proposals, we would double the number of areas covered by the rural fuel duty relief scheme to include places, such as Cornwall, that are in dire need of respite in the face of these extremely high fuel prices. The Government, in the recent Bus Services Act 2025, missed a clear opportunity to ensure that vital healthcare routes have statutory protection, as schools and other education routes do, to ensure proper access to healthcare in Cornwall’s hospitals and GP surgeries.

I have just got off the phone to Go Cornwall Bus, which explained to me once again that this Government are not providing enough bus funding. The logical conclusion is that we have to use our cars for essential trips such as for healthcare. These are not leisure trips; they are essential. My constituents have no other options. They are forced to drive for hours to access hospital and GP appointments in north Devon, Truro, Derriford and elsewhere.

Additionally, we would introduce an official, Government-funded pumpwatch scheme, which my hon. Friend the Member for Newton Abbot (Martin Wrigley) mentioned. That would allow Cornwall’s commuters to compare fuel prices at nearby petrol stations to prevent them from being ripped off. As we have heard from so many Members, prices vary across the country and sometimes within the same region. Northern Ireland already has a comparison scheme in place and, as a result, benefits from some of the lowest fuel prices in the country, as my hon. Friend the Member for Inverness, Skye and West Ross-shire (Mr MacDonald) said.

Will the Minister kindly confirm whether he and the Government will adopt our proposals to double the number of areas included in the rural fuel duty relief scheme and launch an official pumpwatch programme? Please, Minister, give those proposals the consideration they deserve.

17:02

[Richard Foord (Honiton and Sidmouth) (LD)]

It is a pleasure to serve with you in the Chair, Ms Furniss. My constituency of Honiton and Sidmouth is predominantly rural. Residents live in villages, small towns and hamlets, rather than urban centres. It is classified as such by the Office for National Statistics—that is, as a rural or rural town constituency. Of course, the people I represent do not need to consult the Office for National Statistics to know that, because they need only look in their wallet.

A Department for Transport survey found that people living in rural villages and hamlets travel about 2.5 miles for every mile travelled by residents of an urban area. Put simply, rural life is more expensive. People pay more for journeys to school, work, the shops and essential services.

Fuel costs more in rural areas. A UK Government road fuel review found that rural motorists typically pay between 1p and 2p more per litre because there are fewer filling stations and less competition. The Countryside Alliance estimates that rural households spend between £700 and £800 more each year on fuel than their urban counterparts. And of course there are alternatives in urban settings as public transport is much more readily available. In many parts of Devon, public transport simply is not an option.

Let me take, for example, the West of England rail line in east Devon. Its services were reduced by 50% for months across the autumn, and it desperately needs investment—a passing loop—to enable services to run on time. Regular public transport on trains and buses is not an option. Many villages have no bus service at all.

The rural fuel duty relief scheme currently applies to just 21 areas across the UK. The Liberal Democrats propose that it should be expanded to 20 new areas to support motorists in rural communities. A Government assessment in 2013 concluded that the original scheme was successful in keeping pump prices down in, for example, North Devon, as my hon. Friend the Member for North Devon (Ian Roome) identified.

For isolated and rural communities across the UK it is imperative that the Government act on their past advice and extend the scheme to tackle the systemic disadvantages faced by rural residents.

17:05

[Andrew George (St Ives) (LD)]

It is a pleasure to serve under you, Ms Furniss. I congratulate my hon. Friend the Member for North Devon (Ian Roome) on securing this debate and making a very strong case, of which I hope the Minister will take heed.

I will return to some of the prehistory, because I have campaigned on this issue for so long. I congratulate my hon. Friends the Members for North Cornwall (Ben Maguire) and for Honiton and Sidmouth (Richard Foord), and the hon. Members for Strangford (Jim Shannon) and for Na h-Eileanan an Iar (Torcuil Crichton), for reinforcing the very strong points advanced by my hon. Friend the Member for North Devon in his opening remarks.

My hon. Friend the Member for Newton Abbot (Martin Wrigley) made an interesting intervention about useful pump comparison apps and sites. One of the places that was originally designated to receive rural fuel duty relief was the Isles of Scilly in my constituency, and I campaigned for it at the time. When the relief was announced in March 2012, it was very welcome. However, I am afraid that having comparison apps on the Isles of Scilly is pretty meaningless because there is only one pump and no competition. I do not think it can be argued that the monopoly supplier is taking advantage of that monopoly, because it is very much keyed into the community and has been running it as a public service.

When the relief scheme was originally established, I asked the supplier, Ian Sibley of Sibley’s, which provides fuel for road use as well as for marine use on the Isles of Scilly, how he obtained his fuel. He basically takes tanks over to the supermarket in Penzance and has them ferried back, so he is buying fuel at retail prices and selling it on. We can see that it is and has been impossible for him and his business to be in any way competitive in those circumstances, and he has had to transfer the fuel to local people on the islands without taking much of a cut to cover the costs of freight and providing the service. We can see how difficult it is to provide this service in such locations.

It is also worth reflecting on the justification for the relief, because it is all about equity and fairness. I know that some people will say, “Hang on, are you not campaigning to combat climate change?” Indeed I am, as are others present here today. Those same people may ask if it does not contradict everything we are campaigning for when we say that we want to reduce fuel costs. It is not.

This is about geographic equity across the country. It is about wanting to make sure that in addressing the cost of living crisis, which has been going on for many years, we also address the geographic inequity in the prices that end up being charged in such remote and rural locations. It is not relevant to undermine the case in any way by comparing it with the vital campaign to combat climate change.

To go into the prehistory of it, on 8 January 2002 and 15 January 2003, I brought debates to the Westminster Hall Chamber on the issue of rural and island transport. Indeed, my right hon. Friend the Member for Orkney and Shetland (Mr Carmichael) and Alan Reid from the Scottish islands made a very strong case for the importance of seeking equity in this regard, not only in terms of fuel duty but in relation to private car users and to community bus users and projects.

After that campaigning, I was pleased that the coalition Government agreed with the Liberal Democrat policy of investigating, as they put it, measures to help with fuel costs in remote rural areas, starting with pilot schemes. Indeed, in October 2010, they announced a 5p fuel duty discount for Scottish islands and the Isles of Scilly. In those days, that of course required EU approval—even post Brexit, any kind of parafiscal support or state-aid issue still requires some consideration and regulation, because it needs to meet competition rules.

Obviously, the case for the discount was made—the unfairness was acknowledged—and in March 2012, it was brought in. The pilot schemes were established, including on the Isles of Scilly as I mentioned. In October 2013, the project was, as promised, reviewed and it was identified to be working well, so the Government announced that they were going to expand the schemes to 17 additional rural areas in May 2015. I raised a petition to make west Cornwall one of those areas. It got 2,500 signatures, and I presented it to Parliament in December 2013, but unfortunately the Government did not agree to do that in August 2014, which was a pity. I do hope the Government will look at an extension.

There is still a cost difference between the Isles of Scilly and the mainland in excess of 30p per litre. It is a very difficult administrative scheme to follow through. It does create some administrative pressures on the small businesses that operate it, but I hope the Minister will accept the request to review both the amount of the discount and the geography on the basis of evidence of need.

17:13

[Charlie Maynard (Witney) (LD)]

It is a pleasure to serve under your chairship, Ms Furniss. I thank my hon. Friend the Member for North Devon (Ian Roome) for securing this important debate and everybody who has spoken in it. There is a very strong message coming through about how much rural communities need this relief and how much they suffer.

As my hon. Friend the Member for Honiton and Sidmouth (Richard Foord) mentioned, rural life is more expensive, and that is because of the friction of distance and the scale of distance. This relief goes a long way to offsetting that expense, and it has been a huge help to communities, but it is becoming less and less of a help because it has not gone up with inflation or anything else, and that sits on top of all the additional pressures that our communities are under that are really stretching household budgets and causing a lot of trouble. That is the root cause, so we ask the Minister, in responding to this debate, to address whether the Government will consider uprating the scheme in line with inflation.

Secondly, if we look at the state of public transport infrastructure in this country after years of under-investment by the last Conservative Government, it is quite clear that there are many more areas, as many of my colleagues have pointed out, where people have no real alternative but to use cars for day-to-day journeys. That is far more widespread than just the 21 areas that currently benefit from the scheme.

Research published by the County Councils Network in 2024 found that the frequency of rural bus services in England had reached a historic low, with more than a quarter of rural routes having been lost in the preceding decade. In remote areas of Scotland, some of which benefit from the rural fuel duty relief scheme, low connectivity is having a clear negative impact on the population, as my hon. Friend the Member for Inverness, Skye and West Ross-shire (Mr MacDonald) mentioned earlier today in this debate and in the Chamber.

National Records of Scotland’s “Population estimates by urban rural classification”, which covered 2001 to 2021, showed a population decrease by 1% between 2011 and 2020, compared with increases of 3.1% nationwide and 8.4% in accessible rural areas. The population of rural small towns decreased by 3.6% over the same period. The implication is that the lack of connectivity and affordable transport is hollowing out those communities, and the reduction in real-terms value of the relief scheme is playing a part in that.

The Government’s Bus Services Act 2025 will make some positive change, and I support the aim of revitalising rural bus services, but with the best will in the world we cannot turn this situation around overnight. New transport infrastructure takes months and years to create—my colleagues and I are trying to bring back a rail link in west Oxfordshire—and rural drivers up and down the country are struggling with this problem now.

To address the problem, the Liberal Democrats have called for the number of areas covered by the scheme to be doubled, so an additional 21 areas across the UK would benefit from the relief. That expansion should be supported by a clear consultation and evidence base to determine the areas that could receive the new relief: perhaps Devon, Cornwall, Cumbria, East Anglia, Yorkshire and Shropshire could benefit, alongside rural Wales, more of rural Scotland and, of course, Northern Ireland.

17:15

[James Wild (North West Norfolk) (Con)]

I congratulate the hon. Member for North Devon (Ian Roome) on securing this debate, and I thank all hon. Members for the contributions that we have heard. It was a Conservative Government that introduced the rural fuel duty relief scheme in 2019, and that was in recognition of the fact that remote communities face higher pump prices due to the high cost of transporting and distributing fuel.

The scheme was subsequently extended again in 2015 to include more areas across England and Scotland, providing a welcome 5p per litre reduction in prices to help families and businesses in those areas, particularly where they might have only one filling station to choose from. The scheme recognised that rural communities, especially isolated ones, face challenges that justify targeted support. As we have heard from hon. Members, it has proved effective and needed.

In the main Chamber, my right hon. Friend the Member for Louth and Horncastle (Victoria Atkins), the shadow Environment Secretary, has been setting out the support that the Conservatives have consistently provided for people in rural Britain; many of my colleagues are speaking in that debate. In government, we demonstrated our commitment to those who live and work in the countryside, including my North West Norfolk constituents.

Our fuel duty record underlined that. As well as the rural fuel duty relief, we froze fuel duty every year from 2011. In March 2022, we went further and introduced a 5p cut to fuel duty across the board. That was not merely about tax policy; it was about recognising that, for rural communities, a car or a van is a lifeline, not a luxury. It connects farmers to markets, helps children get to school, helps people get to work or health appointments and keeps rural enterprises in business. Every penny added to the cost of fuel has a multiplied effect in areas where public transport is limited and journeys are longer.

Our support for rural communities extended far beyond fuel duty to infrastructure and supporting agricultural businesses, recognising their vital contribution to our country and to the social fabric—what a contrast to what we have seen under this Government. The Government say that the cost of living is their priority, but they are adding to the costs for families and businesses. Inflation was at 2% when the Government came in, and they have nearly doubled it. The much-vaunted promise of £300 off energy bills is nowhere to be seen.

In her Budget, the Chancellor announced that Labour would end the 5p fuel duty cut that we introduced. That measure will take effect from September this year, and will see the average family pay £100 a year more. The Road Haulage Association estimates that it will add more than £2,000 a year to the operating costs of a heavy goods vehicle. From April next year, the Government will scrap the 16-year fuel duty freeze that we introduced, and inflation-linked rises will follow. That marks the end of the support offered to motorists through the freeze since 2010, which has saved them £120 billion. That puts in context the modest £5 million or so cost of the rural fuel duty relief.

In November, the Chancellor also announced her pay-per-mile tax on electric vehicles, which is set to cost drivers an extra £255 a year. It is little wonder that the RAC has said that simply keeping vehicles on the road has become a significant financial challenge. The Prime Minister has been boasting about the £3 bus cap—a cap that he increased by 50%. Whether it is fuel duty or public transport, the Government are making things harder and more expensive for rural communities.

Rural communities are not only being punished at the pump. In the debate, we have heard reference to the family farm tax, which breaks up the farms that form the backbone of our rural communities. The modest change that the Minister has announced is welcome as far as it goes, but given the damage that the tax will do, the Conservatives are committed to reversing it entirely.

As well as the increases to fuel duty, business rates will increase, hitting rural pubs and businesses. UKHospitality estimates that an average pub will pay an extra £12,900 over the next three years. The Minister was sent out to defend the farm tax, and he said there would not be changes, but then there were. At Treasury questions, I called on the Chancellor to look again at business rates increases, and the Minister ruled that out then, but we read today that there may be changes. Apparently the Business Secretary has even noticed the damage that the increases will do—presumably not after discussing them in a pub, given that many Labour MPs have been barred. Will the Minister therefore confirm whether the Government are considering making those changes, as the sector and many across the House have called for?

The rural fuel duty relief scheme reflects an approach to governing that recognises the distinct challenges and vital importance of our rural communities. We introduced the scheme and extended it, and throughout our time in government we demonstrated that we understand and support those who live and work in the countryside. Given that it is now more than a decade since the scheme was last expanded, and given its modest cost, I fully support a review of the relief. The Treasury often says that it keeps taxes under review, but this measure deserves a proactive review, and I hope that the Minister will commit to one.

By contrast, this Government’s tax rise after tax rise make life harder for rural businesses and rural people. Against a backdrop of weak growth and rising unemployment, Labour’s approach sadly threatens the fabric of our rural communities. Those rural communities deserve much better.

17:23

[The Exchequer Secretary to the Treasury (Dan Tomlinson)]

It is a pleasure to speak under your chairship, Ms Furniss. I am grateful to the hon. Member for North Devon (Ian Roome) for securing this debate and speaking so passionately in support of rural communities and the people in his constituency, who I know he has much honour in representing. I thank him for securing the debate and giving Members on both sides of the House the chance to contribute on this very important topic.

This Government recognise the importance of rural areas for the UK economy, and will continue to consider how they can best support those who live and work rurally. Although my Barnet constituency, which is in the very north of London, lacks the beaches and moors of the hon. Gentleman’s, it does contain 14 farms and have some rural areas, because of the large bit of green belt that extends into north London. Like all Ministers, I am fully committed to ensuring that the tax system works for everyone, whether they are in rural or more urban parts of the country.

Fuel duty is an important source of Government revenue and provides vital funding for public services and infrastructure. It raised £24.4 billion in 2024-25; as has been mentioned, fuel duty rates have been frozen since 2011, with a further, temporary 5p cut introduced in 2022. Fuel duty rates are therefore now, in real terms, about 40% lower than they were in 2011. Pump prices are at their lowest level since 2021, before Russia’s illegal invasion of Ukraine led to soaring prices and the introduction of the temporary 5p cut.

At the Budget, therefore, the Chancellor announced that the 5p cut would first be extended until the end of August, with rates then rising gradually, returning to March 2022 levels by March 2027. As well as that extension to the freeze, the planned increase in line with inflation for the coming financial year will not take place. Those decisions on fuel duty will save the average car driver across the country £49 in the coming financial year, compared with previous plans.

The Government also recognise the importance of competition between retailers in the road fuels market. Liberal Democrat Members, including the hon. Members for North Cornwall (Ben Maguire) and for Newton Abbot (Martin Wrigley) and others, mentioned a pumpwatch scheme. Sadly, that reveals that we need to communicate even better about some of the ideas put forward by Government: at the Budget, the Chancellor confirmed that from spring 2026, UK consumers will be able to compare prices more easily through the Government’s new open-data fuel finder scheme, which I believe will achieve aims similar to those of the pumpwatch proposal. It will help to encourage competitive pricing among retailers and is expected to result in further savings for drivers of potentially up to £40 a year.

The Government, however, are well aware that fuel costs can be higher in certain more remote areas, so the rural fuel duty relief scheme provides a 5p per litre reduction to benefit motorists buying fuel in those areas. The areas included in the scheme demonstrate certain characteristics, such as pump prices being much higher than the UK average, remoteness leading to high fuel transport costs from refinery to filling station, and relatively low sales meaning that retailers cannot benefit from bulk discounts.

As mentioned by many Members, the scheme provides about £5 million in support per year, with about 165 fuel retailers registered with His Majesty’s Revenue and Customs to claim the relief. The hon. Member for St Ives (Andrew George) mentioned the administrative costs, and I am interested to hear more from him and from any businesses that have ideas about how I, as Minister with responsibility for HMRC, can seek to reduce any of the administrative burdens that those 165 retailers may face.

One area included in the scheme is the EX35 postcode, which is part of Exmoor national park and in the constituency of the hon. Member for North Devon, who secured the debate. I confirm that the scheme in fact covers not just 11 or 12 constituencies, but 16—some of the postcodes sneakily cross over constituency boundaries, so that 16 Members of the House of Commons represent constituencies of which at least some elements are covered by the relief.

[Andrew George]

The Minister raised the issue of the administrative burden. I was referring to an occasion when an operator of the scheme was late in his submission to HMRC, in which case he was refused the rebate, which he had been taking. In such circumstances, he had to appeal. I was simply demonstrating the rigidity and lack of humour, as it were, in the system. We are talking about extremely small businesses that find the additional administrative burden quite onerous.

[Dan Tomlinson]

I note, as I am sure others in the Chamber will, just how forensic is the hon. Member’s understanding of some of the small businesses in his constituency. That is to be very much commended. If he would like to write to me on that point, I would certainly like to raise it with HMRC. Of course, it is not appropriate for me as a tax Minister to get involved in individual tax affairs. That said, the general point is about administration, and the extent to which we are getting the balance right between ensuring that we stick to the rules as set out, and having an appropriate level of flexibility. That is something that I would happily raise with the Department, if he were willing to write to me.

The hon. Member for North Devon and many others have suggested that the Government should increase the rural fuel duty relief in line with inflation. As I set out earlier, since the relief’s introduction, it has remained at 5p, but the main fuel duty rate has also remained at the same level—or, more recently, has fallen. I am aware that there are differences across the country, and there may have been differentials in the increase in fuel prices in some areas. However, the fuel costs are broadly the same as they were in 2011, if not slightly higher; it was roughly 130p for a litre then, compared with around 135p now.

[Brendan O’Hara]

The hon. Member for Na h-Eileanan an Iar (Torcuil Crichton) made the point that getting this rebate was one of the few successes of the coalition Government. The reason there was no political reward for it was that, at £1.60 a litre in rural Argyll, Bute and South Lochaber, it does not feel like a benefit. If the Minister will not make it index-linked, can he tell us what mechanism the Government have put in place to check that this rebate—albeit scant—is actually reaching the consumer? It does not feel as though it is for people living in rural communities.

[Dan Tomlinson]

Other Members, including the hon. Member for Strangford (Jim Shannon), have asked the same question; I was going to come on to it, but I will happily do so now. As a Department, HMRC requires retailers to keep records evidencing that the 5p saving is being passed on to customers, but I would be happy to look in more detail at how that is done. Maybe we can catch a word in the Tea Room to discuss it in more detail, because the Government want to make sure that that is happening and that the 5p cut—although we can debate whether it should be higher—is passed on to consumers in full.

The Members who spoke in the debate have deep knowledge of their constituencies and have often talked about their trust in their small local businesses, many of which will be running the garages or forecourts in the more rural areas, such as the middle of the moors. I must say that the hon. Member for Strangford is doing a very honourable thing in going to more expensive garages to support the local businesses. That is a very commendable act; I must say that it is not one I always engage in, as I like to find a good price, but I commend him on it.

While fuel duty costs are broadly the same, I admit that they are slightly higher than they were in 2011. However, as foreshadowed by the Opposition spokesperson, the hon. Member for North West Norfolk (James Wild), the Chancellor keeps all taxes under review; decisions on future fuel duty rates and rural fuel duty reliefs will always be made in the round and in the context of the public finances. That said, I have noted with interest all the points made today and again thank the hon. Member for North Devon for securing this debate and giving me the chance, as the Minister with responsibility, to reflect on these important issues.

A number of Members have also suggested that the Government should increase the number of areas in scope of a rural fuel duty relief—I can sense a potential Liberal Democrat local election campaign, although I would not possibly want to comment. I was going to say that neither I nor my predecessor, my right hon. Friend the Member for Ealing North (James Murray)—I checked—had received any formal representations to expand the coverage of the relief since the start of this Parliament, but of course I have received some comments on that during the debate. There are no current plans to amend the list of eligible locations but, if Members strongly feel that their constituencies fall into the categories in the scheme’s rules, I will always welcome representations, and they should feel free to write to me.

[Richard Foord]

If the Minister will not consider the geographical expansion of the rural fuel duty relief scheme, with a view to the Government’s introduction of the electric vehicle excise duty in April 2018, might he consider a duty relief for the existing areas, but applying to the electric fuel duty?

[Dan Tomlinson]

That is not something that we are actively considering. That said, the details of the eVED scheme are to be consulted on in detail. We are still a number of years from its introduction, and there will be many fine decisions that need to be made in the coming months ahead of its implementation, and I note the representation that the hon. Gentleman has made today.

[Andrew George]

Will the Minister give way one more time?

[Dan Tomlinson]

I will happily do so, although I am sure that hon. Members would like me to make some progress, too.

[Andrew George]

On the question of geographical coverage, and given the Minister’s comment that he has not received representations about further areas for inclusion, I urge the Government to review the scheme and to take an objective measure themselves of where else it might extend to, rather than inviting us to form an orderly queue in pleading for our own areas, which could result in a system based not on need, but on political advantage.

[Dan Tomlinson]

I am always glad to take interventions. The hon. Member’s point is noted and I acknowledge his request. I ask Members to get in touch if they believe that an area meets the criteria. As the hon. Member has noted, there are not hard and fast rules here—there are not specific criteria within each of the categories that are considered in the round—and the Government do not intend to change to having hard and fast rules. I would be worried that that might lead to more complexity and change within the system, meaning that if one area’s prices tipped slightly above or below, we might get into contestation of whether the additional costs of transporting fuel to certain places tips over or above the threshold. I hope that Members who have views on where relief should be extended to will bear with the current, less-rigid process.

I was going to say, in a slightly light-hearted way, that the hon. Member for Witney (Charlie Maynard) suffers somewhat in tax policy debates, in that I know his constituency well, having been born and brought up in west Oxfordshire. As part of my joyful travelling to and from seeing my family there, I often fill up in his constituency, which is often cheaper than doing so in north London. I noted that the hon. Member was magnanimous in calling for the scheme to be extended not to west Oxfordshire, but instead to other areas represented by his Liberal Democrat colleagues.

I should mention the important speech made by my hon. Friend the Member for Na h-Eileanan an Iar (Torcuil Crichton)—he will have to teach me how to pronounce his constituency, as that was the first time I have said it. His is one of the constituencies that does benefit from the relief. I am glad to hear Labour Members talking clearly about the benefits that the relief provides for constituents in some of the most rural parts of the whole country.

Again, I commend the hon. Member for St Ives for his engagement with businesses. We heard about the garage on the Isles of Scilly and how it gets petrol to and from. I think I have covered most of the points raised. If Members have a burning desire to ask me to clarify something, I will, but I am sure we all want to make some progress.

Let me make a couple of further points before I conclude. The fuel duty system supports rural areas in other ways as well. Households and non-commercial premises are entitled to use red diesel for heating and electricity generation, which includes off-grid homes in remote and rural locations that have limited alternatives. Red diesel is subject to fuel duty, which is 10.18p per litre compared with the 52.95p for diesel used on roads. Farmers also retain the entitlement to use red diesel in machinery and vehicles used for agricultural purposes after that was withdrawn from most sectors under the previous Government in 2022.

Several Members discussed the need to ensure that public transport maintains a level of affordability. At the end of the last year, the Government confirmed a long-term investment of over £3 billion over the next three years to support local leaders and bus operators across the country to improve bus services for millions of passengers. That includes multi-year allocations for local authorities under the local authority bus grant. From 2026-27, we have revised the formula to include a rurality element for the first time to ensure that the additional challenges of running bus services in rural areas are taken into account.

I was surprised that there was no mention of potholes in a debate about transport, but I know that they are of particular concern to those in rural areas that are more prone to frost, meaning that ice gets inside the tarmac and the road breaks up. By 2029-30, the Government will have committed more than £2 billion annually for local authorities to repair, renew and fix potholes on their roads. That doubling of funding since we took office will mean that we can exceed our manifesto commitment to fix an additional 1 million potholes a year by the end of this Parliament.

The Opposition spokesperson mentioned the electric vehicle decision that the Government announced at the Budget. We remain fully committed to the electric vehicle transition, which will drive growth and help the country to meet its climate change objectives. Our public charging network is growing rapidly. We had more than 87,000 public charge points as of December last year, and, in the year ending 1 October 2025, the number of charging devices in rural areas had increased by 26%. In addition, the Government announced at Budget 2025 the immediate roll-out of a package of support worth £3.6 billion to help motorists to switch to cleaner and greener cars, to support the automotive sector through the transition to EVs, and to bolster British industry.

The Government are dedicated to supporting and promoting rural areas, particularly by providing support for transport costs, such as through the rural fuel duty relief scheme. I very much look forward to further discussions—perhaps even further correspondence—over the course of the Parliament about how we can continue to do that. I thank the hon. Member for North Devon for securing the debate and all Members in the Chamber for their contributions.

17:41

[Ian Roome]

I will be brief, Ms Furniss, because I know we are almost out of time.

I thank the Minister for his response and I appreciate his taking the time to engage with me and others on this issue. While we do not expect the Government to commit themselves ahead of a future Budget, I know that my constituents value the support that the scheme provides to very rural areas, and it would be good to see progress towards restoring the funding to its former level.

I also thank all Members for their contributions—what a debate! We have covered from the top of Scotland down to the Isles of Scilly and Land’s End, which is absolutely fantastic. We have heard representations from Wales, Northern Ireland and England, obviously, so what a great and inclusive debate it has been, from across the whole of the United Kingdom and all our rural constituencies.

Fuel is very much part of my constituents’ daily lives. It is an unavoidable cost; personal transport is much needed, because there is no regular public transport in any of the EX35 area, and people cannot walk to bus stops because of the terrain and the rurality.

Many accusations have been thrown at the Government over the past year to claim that they do not care about rural areas. When the next fiscal event arrives later this year, updating the scheme for 2026 will be a chance to counter those claims, at very little cost compared with other schemes. I therefore hope that the Government will take that opportunity, on behalf of communities that are often forgotten, to deliver good news at the pumps for rural people.

Question put and agreed to.

Resolved,

That this House has considered the Rural Fuel Duty Relief scheme.

17:44

Sitting adjourned.