CAMPAIGN: Delay the red diesel rebate removal

From 1 April 2022, under current policy, the construction industry among others will be unable to use red diesel, a dyed fuel with lower taxation than regular diesel.

This decarbonisation strategy, which was outlined just before the COVID-19 pandemic, gave a two-year window for the biofuel industry to grow and for increased production and use of electrified plant machinery.

Unfortunately, the onset of the pandemic put a stop to growth in transition solutions and due to unprecedented rises in fuel prices due to global events such as the war in Ukraine, as well as surging inflation, a coalition of construction industry leaders have come together the ask the Chancellor, the Rt Hon Rishi Sunak MP to defer the red diesel entitlement removal for twelve months.

The development of alternative fuels such as Hydrotreated Vegetable Oil (HVO) was disrupted during the pandemic and coverage of supplies remain patchy in many parts of Scotland. The 200 per cent increase on pre-pandemic fuel prices for diesel makes it unbearable for many businesses.

Our member companies expect the costs of infrastructure projects for Scottish Water, Transport Scotland and local authorities to increase by around 25% as a result of the combined effect of the sharp rise in fuel prices and the UK Treasury’s imminent changes to duty.

Grahame Barn, Chief Executive of the Civil Engineering Contractors Association (CECA Scotland), said:

“As an industry, we have been working closely with the Scottish Government and local authorities to reduce the carbon emissions of all operations in the civil engineering sector and we remain fully committed to the transition to Net Zero. However, the sharp rise in fuel prices and the situation in Ukraine is a game-changer in terms of the immediate crisis facing Scotland’s construction industry.

“If the Chancellor fails to act now, the taxpayer would be hit with soaring costs for public infrastructure projects – making many of the Scottish Government-funded projects which are key to meeting our Net Zero objectives simply unaffordable. Many small and medium-sized firms, including family-owned regional contractors working across the length and breadth of Scotland, could go out of business resulting in mass job losses.

“We believe that a delay in the implementation of the red diesel rebate removal would give vital breathing space for industry while still maintaining momentum on efforts to eliminate diesel from sites in the longer term.”

The following industry leaders and their respective organisations have signed the letter, which was submitted to the Chancellor, requesting the twelve-month deferral to the removal of the red diesel entitlement for construction:

• Richard Beresford, Chief Executive of the National Federation of Builders (NFB)
• Brian Berry, Chief Executive of the Federation of Master Builders (FMB)
• Howard Button, Chief Executive Officer of the National Federation of Demolition Contractors (NFDC)
• Jane Buxey, Chief Executive of the Stone Federation of Great Britain
• Peter Douglas, CEO and Managing Director of the International Powered Access Federation (IPAF)
• Vaughan Hart, Managing Director of the Scottish Building Federation (SBF)
• David James, Director of the Right Fuelcard Company
• Neil Jefferson, Managing Director of the Home Builders Federation (HBF)
• Callum Mackintosh, President of the Scottish Plant Owners Association (SPOA)
• Kevin Minton, Chief Executive of the Construction Plant-hire Association (CPA)
• John Newcomb, Chief Executive of the Builders Merchants Federation (BMF)
• Suzannah Nichol MBE, Chief Executive of Build UK
• Ken Parkin, Chair of Construction Alliance Northeast (CAN)
• Alasdair Reisner, Chief Executive of the Civil Engineering Contractors Association (CECA)
• Mark Spence, Managing Director of the Construction Employers Federation (CEF)

You can download a copy of the letter to the Chancellor here.