On 1st April 2022 – four weeks away – the price of diesel goes up by 58 pence per litre for the construction industry. This is an overnight 38% increase on top of all other recent increases.
Chancellor Rishi Sunak announced two years ago that the red diesel rebate would be scrapped, except for farmers, golf courses, marinas and circuses.
Yesterday we reported that the Scottish Plant Owners Association (SPOA) had written to the chancellor pressing for a delay. “I do think that the government should revise its plan based on the escalating situation in Ukraine,” said SPOA president Callum Mackintosh. [See report here.]
Today the National Federation of Builders (NFB) adds its voice to the campaign. 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 twenty nine percent and nineteen percent 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.”
Richard Beresford continued: “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.
“The Russian invasion of Ukraine has changed the landscape again, as countries who import from Russia, such as the US who pre-war doubled their Russian oil imports, are purchasing elsewhere, along with all other nations. This competition for fuel will also hit the already fluctuating biodiesel market, which at one point saw biodiesel cost 11% more than pumped diesel, with export and import levels jumping wildly every month.
“Given the huge 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 adjust, plan and adapt over the medium term, rather than forcing this drastic cliff-edge they currently face.”
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