Red diesel rebate pleas
3 March 2022
With the removal of the red diesel rebate for construction less than a month away, there have been more eleventh-hour calls for the implementation to be postponed.
As reported on the blog yesterday, the Scottish Plant Owners Association (SPOA) has written to the Chancellor of the Exchequer calling for a delay. It has also made a similar request to HMRC and is urging members to write to their own MPs about the issue.
Now the National Federation of Builders is calling on the Government to recognise the cost pressures that several industries would face if the move goes ahead as planned on 1 April.
The organisation states that three unprecedented events in Covid-19, the energy crisis and the conflict in Ukraine have made all energy increasingly unaffordable and that even the tiniest shifts in prices can put businesses in jeopardy.
NFB chief executive Richard Beresford said: “The Government has limited control over the annual price increases of gas and electricity, which in the last year have gone up by 29% and 19% respectively, but in the red diesel rebate, it has the power of deferral, so that industry pays a 47% increase on pre-pandemic fuel costs, rather than 191%.
“These are unprecedented times and after rejecting industry pleas on minimal exemptions for plant vehicles that could not be electrified, such as mobile cranes, this policy change arrives in the middle of a perfect storm on British energy costs and so a 12-month deferral on removing the red diesel rebate is pragmatic.”
Beresford points out that because of global market pressures, fuel and vehicle decarbonisation is a complex challenge, currently at the mercy of computer chip shortages, stifled production of biodiesel, and international competition for fuel.
“The perfect storm isn’t just the price of UK energy. Due to Covid-19, the worldwide shortage of semi-conductors that electrified plant machinery requires won’t start improving until 2023 and biodiesel production is still below pre-pandemic levels which, with a 16.5% lower wholesale price than at-the-pump diesel, was expected to help absorb price rises."
He believes that, given the uncertainties, the government could still make progress on its intention to remove the rebate by doing so gradually over a period of five years and allowing companies to adapt over the medium term.
A similar request was made by the Road Haulage Association in the run-up to the Spring Statement on 23 March. It is urging the chancellor to delay the red diesel rebate changes by 12 months, as well as freezing fuel duty for diesel for a further two years.
Also, the HAE (Hire Association Europe) tells me it will be holding an online briefing for members, together with HMRC officials, on 10 March. The association is also revising its model terms and conditions to reflect the change in fuel entitlement.
Importantly, says HAE, hire businesses need to have comprehensive records to show they are running down stocks of existing red diesel and, going forward, how they manage white diesel, HVO and other supplies.
