The Federation of Master Builders has joined other industry associations in issuing a letter to Chancellor of the Exchequer Rishi Sunak, calling for the deadline for red diesel use within the construction industry to be extended by 12 months.
The ban on red diesel on 1 April will result in a rise in construction materials passed onto the consumer, which comes as the cost of living rises along with oil/fuel prices thanks to sanctions being put on Russian oil.
| What is red diesel?
Red diesel is a cheaper alternative to standard diesel intended for use by construction, agricultural and other industries, acting as a subsidised fuel for these sectors. It is dyed red to show when the fuel is being used illegally in a non-industrial vehicle, which can result in the vehicle being seized, an unlimited fine or even a two year prison sentence. |
Letter to the government
The letter, signed by several major construction associations, details that while the industry commends the government’s efforts to decarbonise the country, it believes a 12-month extension on the removal of the red diesel rebate is necessary to offset the rising oil prices due to the crisis in Ukraine, coupled with rising inflation.
The letter argues that strategically, it is impossible for the government to ensure the extraction and production of energy is cheap and immediate but in the red diesel policy, it has a direct and immediate influence over the cost British business pays.
The industry continues to write: “In your February 2019, ‘Non-agricultural use of red diesel for non-road mobile machinery’ report, 64% of surveyed businesses said they would switch to cleaner alternatives ‘if the technology improves’, yet this report was before the COVID 19 pandemic and makes assumptions that this technology is on a growth trajectory. It therefore doesn’t account for COVID 19’s impacts on semiconductor shortages, which are expected to run until 2024, or the stagnation of global biofuel production, which is now at peak demand and sees HVO biodiesel priced above white diesel.
“Respondents in your report showed a clear desire to use non-red diesel machinery and vehicles but identified they were unable to. This has not changed, as despite global market share of e.g. electric excavators rising, the government noted the reality of innovation and production limitation in its December 2021 ‘special vehicle’ exemption policy for sectors still covered by the red diesel rebate which included digging machines, mobile cranes, mobile pumping vehicles, work trucks and road rollers.
“Your report also highlighted the median cost of fuel in a typical year was £30,000. In 2019, the shift to white diesel would see an additional £21,300 added to business fuel costs with a new median of £51,300. With diesel now at 179p a litre [correct of 10.3.22], the cost difference in just two years has spiraled to £57,000, with a new median of £87,000.”
Fuel theft
The letter further argues that rising fuel prices will result in fuel theft as it has done historically, such as in 2012, when the Northern Ireland Affairs Committee raised concerns about the higher incidence of fuel theft in Northern Ireland compared to the rest of the UK and the smuggling of fuel across the border due to prices differences between the Republic of Ireland and the Northern Ireland.
