COVID-19, the energy crisis and the ongoing conflict in Ukraine have meant energy and fuel price s are rising at an unsustainable rate. The removal of the Red Diesel Rebate comes at the worst possible time for the construction industry.
Construction Alliance North East, in conjunction with the Civil Engineering Contractors Association (CECA) are requesting that the Chancellor considers deferring this legislative change for at least 12 months as a matter of urgency.
Stuart Miller, CAN board member and North East regional director for CECA said: "CECA recognise the need to reduce carbon emissions to meet net zero goals, but we are disappointed that genuinely lower carbon fuels have been included in this legislative change.
"We are working with HMRC and the wider industry to manage the impact of the forthcoming legislation. Our engagement is now focused on how the rules will be enforced, helping industry comply and addressing increased security challenges."
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Miller explained the key concerns centre around the UK a heightened risk of theft from April 2022, with the removal of the tax rebate for onsite red diesel use. He added: "We believe that to substantially reduce this risk, Government must support the introduction of a blue dye solely for construction fuel used onsite. This fuel would only be used in the construction industry where appropriate (full) duty has been paid.
"Dyeing fuel stains the interior of machinery that uses it, so any illegal activity can be easily identified. Construction Blue will reduce the risk of onsite theft. Such an approach will help manage public resources and support construction firms as they continue to build and maintain the infrastructure, homes, and buildings we so desperately need."
There are three options to address the challenges of the removal of the rebate.
1: Do nothing - For the reasons indicated above, this would negatively impact upon the construction industry and public resource.
2: Continue to allow for rebated fuel for onsite use - While this option is preferable to CECA members, it does not support the Government’s intention to reduce carbon emissions. However, this could be mitigated, if the Government maintained the rebate for greener fuels such as Hydrogenated Vegetable Oils.
3: Introduce ‘Construction Blue’ - CECA believes that introducing a series of fuels which have been dyed blue for exclusive use within the construction industry and upon which the correct duty is paid is the best solution to addressing the challenges of the upcoming legislative change.
