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Industry groups ask for one more year of red diesel

15 Mar 22 With just a week until the chancellor of the exchequer delivers his spring budget and two weeks before construction loses its red diesel tax rebate, construction lobby groups have joined forces in a last ditch plea for a temporary reprieve.

A coalition of 14 construction industry organisations have signed a letter to chancellor Rishi Sunak asking him to let the construction industry continue to use red diesel after 1st April, just for one more year.

Under long-standing  plans to phase out government subsidies to fossil fuels, only agriculture, circuses, golf courses and boatyards will be entitled to used the subsidised fuel after 1st April 2022.

The construction coalition uses everything from Covid to Ukraine to justify why the industry should continue to benefit from taxpayer subsidies to the value of 46.81 pence per litre of diesel burned. The pandemic slowed the development of other power solutions and the invasion of Ukraine (along with other events) has caused the price of diesel to spike recently. It reached 179 pence a litre at forecourts this week (which equates to about 132 pence per litre for rebated red diesel).

 At the beginning of February 2020, before the pandemic, it was 127 pence at the forecourt, according to RAC Fuel Watch (making red diesel around 80 pence per litre).

Other references suggest that the average price of red diesel has risen from about 58 pence two years ago to 150 pence last week, back down to 143 pence currently.

Chancellor Rishi Sunak is scheduled to deliver his spring budget on Wednesday 23rd March 2022.

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Richard Beresford, chief executive of the National Federation of Builders (NFB), said: “The development of electric plant machinery and alternative fuels was hit by Covid-19 lockdowns, so it was already tough to move from red diesel but a 190 percent increase on pre-pandemic fuel prices makes it unbearable for many businesses.

“Unlike the production of energy, the government has direct control over duties and can act immediately to save British businesses from this tax it is imposing on those who worked during lockdown and broadly did not use furlough. If it decides not to act, consumers must be ready for construction costs and house prices to rise, food to get more expensive, businesses to pass higher heating costs on to consumers and millions of jobs to be in the balance. “

Brian Berry, chief executive of the Federation of Master Builders (FMB), said: “Unprecedented global events, not least the consequences of the Russian invasion of Ukraine, make this the worse time to pile yet more financial pressure on small builders with the ending of the red diesel rebate. The FMB fully supports the shift to greener alternatives to diesel for use by the construction sector, but progress towards these has been too slow and ending the rebate now risks the viability of local, community-based builders already hit by 18 months of spiralling product prices.”

Alasdair Reisner, chief executive of the Civil Engineering Contractors Association (CECA), said: “As an industry it is essential that we play our part in removing carbon from our sector, and we support the government policies that have been put in place to achieve this. However, the situation in Ukraine is a game-changer in terms of immediate impacts on our sector. We are now seeing a significant risk to planned projects as rising fuel prices make them unaffordable. 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 signatories to the letter asking the chancellor for a 12-month deferral for the removal of the red diesel are:

  • 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 of the National Federation of Demolition Contractors (NFDC) 
  • Jane Buxey, chief executive of the Stone Federation of Great Britain
  • Peter Douglas, chief executive 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).

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