Treating Townmate Rust

My Townmate has surface rust on back mudguard by the tail light/numberplate. It is not deep yet but I want to get it fixed before it does.

What coatings/materials would you use to do the job?

Wheels also have surface rust; can this be polished out or treated some way?

Thanks.

Ideally needs shot blasting then any holes welding (yes there will be holes) before priming/repainting, wire brushing wont stem off rust for long & it will be back, there is a rust trap on underside of mudguard. Again surface rust on wheels can be polished to a certain degree but needs to be kept oiled especially in winter. Really depends what you want to do with bike, if its just as a daily rider its not worth spending big money, just rub down rust & repaint with Smoothrite paint to keep it at bay. If you are doing a show bike then a full strip, send frame to proffessional for rust teatment/painting, new rims etc etc.