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Red diesel: ‘Two years not enough time’

11 March 2020

Industry bodies have expressed concern there is not enough time for industry to adapt to red diesel entitlement being dropped by the Government in the Budget.

The government announced the tax rate will increase on rebated (‘red’) diesel in two years' time, except for certain niche applications excluding road transport.

The Chancellor said: "This measure will incentivise businesses to improve the energy efficiency of their vehicles and machinery or look for greener alternatives. To support the development of alternatives that these businesses can switch to, the Budget has also committed to at least doubling the size of the energy innovation programme, accelerating the design and production of innovative clean energy technologies.”

Cold Chain Federation chief executive Shane Brennan said: “Removing access to red diesel for cold chain hauliers adds £150 million of costs to the businesses we rely on to keep our food safe. Two years is not enough time for businesses to make the necessary changes to their fleet. Far from supporting businesses to make investments in greener alternative technologies, this tax change will force businesses to batten down the hatches and use existing equipment for longer.

“Raising taxes in this way will generally undermine the confidence across the food supply chain and we now seek urgent talks with Ministers to understand if they are serious about helping food chain businesses to adapt to this change.”

Christopher Snelling, head of UK Policy at FTA said: “We are currently working with governmental departments to assess how to accelerate progression to cleaner units, but instead of waiting for this solution, we believe the government is taking this blunt, ineffective and costly action to give the appearance of progress, without regard to the realities of the use of these units.”