Fears of a clampdown on red diesel use have eased after the government confirmed its commitment to providing the lower tax rate fuel to farmers.
The fears that rules may be tightened were prompted by a Treasury announcement of a consultation on red diesel use that was buried within the Spring Budget.
The consultation document, launched on 20 March, stated that red diesel attracted about 40% less duty at 11.14p/litre than white or road diesel, which is taxed at 57.95p/litre.
With rebated fuel making up more than 15% of total diesel use, that represents a £2.4bn annual loss in potential revenue to the Treasury, the consultation stated.
See also: Government to scrutinise red diesel use
The document added that the government aimed to explore the quantities used across different sectors and the value of the rebate to industries so it could form future policies on sound evidence.
Have your say
- The HM Treasury Red diesel: call for evidence consultation closes on 30 June 2017.
- Responses can be sent by email to ETTanswers@HMTreasury.gsi.gov.uk
- To read the consultation in full, visit the HM Treasury website.
Jill Hewitt, technical consultant to the National Association of Agricultural Contractors (NAAC), confirmed that the investigation had prompted initial concern.
“Alarm bells rang when we first saw the investigation announcement following previous reviews that have looked at tightening rules on who could use red diesel.
“Since the release of the consultation document we are less concerned as, although the government has called for evidence across all sectors, it now appears the main scope of the review is into non-agricultural use,” said Ms Hewitt.
She said fears were allayed further by statements in the document that said the investigation did not imply a change in the government’s view on eligibility criteria for red diesel. And it added that the “government recognised the continued importance of red diesel to the agricultural sector”.
“We will, however, be keeping a watching brief and pressing for the continued use of red diesel in modern farming and horticulture.
“In fact we will fight tooth and nail for the continuation of red diesel use under the present conditions,” Ms Hewitt insisted.
“Any change in red diesel use or increase in tax would mean a rise in price rates to our customers.
“An estimated 91.5% of farmers use contractors so the needs for red diesel in agriculture have not changed. They are as vital as ever to keep the costs of food production down,” she said.