One thing that has become clear from the recent consultation exercise on red diesel is that farmers are confused about the legitimate use of red diesel on the road. The issue is muddied further by the complexity of other transport legislation.
Most agricultural vehicles are permitted to use red diesel on the road. This includes tractors, self-propelled agricultural engines, such as combines, road legal quad bikes and other vehicles that have been licensed in the limited use taxation class for the purposes of vehicle excise duty. However, when using these vehicles on the road with red diesel, they must be used solely for purposes relating to agriculture, horticulture or forestry.
That seems straightforward, but it is the second point that causes confusion among farmers and enforcement officers.
The best way to demonstrate how this might happen is through an example. A farmer goes to the local merchant in his tractor and picks up cement to be used for repairs on the farmyard. In this case use of red diesel is acceptable.
However, if the same farmer takes his tractor to pick up the same load of cement and uses it for repairs to holiday cottages situated on the farm then this is not allowed under the current rules. We need to remember that just because activities are taking place on the farm does not mean that they are agricultural. A good test to apply is to ask yourself is this activity intrinsic to the running of my agricultural/horticultural business?
This test on use also applies to the licensing of agricultural tractors. The DVLA definition for vehicles licensed in the agricultural tractor class also states that the tractor must be used solely for purposes relating to agriculture, horticulture or forestry. If at any time you use a tractor, licensed in the agricultural tractor class, on the road for purposes other than agriculture, horticulture or forestry you are committing an offence and in these circumstances you must licence the vehicle in the correct Heavy Goods Vehicle (HGV) class. You must also use white diesel. Additionally, the driver must have the correct HGV licensing category – a category F is no longer valid.
One of the other misconceptions about red diesel is the reason why it attracts a low rate of duty. This is not a discount or subsidy for fuel used in agriculture or horticulture. Red diesel is supplied at a lower duty rate because it is an off-road fuel. The reason it gets a reduced rate is because it is used off-road and, therefore, does not contribute to road damage or make use of road-related services. In 2001, the agricultural industry used less than 7% of the red diesel consumed in the UK, the majority of which was used for the heat and electricity generation.
Having said that the agricultural industry is one of the few industries that is allowed to use red diesel on the road. This is because it was recognised that farmers and growers may need to use the road to carry out their daily work activities. That was the original intention of the exemption from the regulations – that agricultural vehicles travelling between different parcels of land, operated by the same person, could use red diesel on the road. However, agricultural vehicles are being used on the road more and for many different reasons. Those factors include changes in the way farming is structured, the way labour and machinery is organised, advances in tractor and vehicle design, and changes to transport legislation.
This is a complex issue but I believe that we need to look at from a business perspective. Most of the farmers that I have talked to over recent months have not done a calculation of their transport costs. It is worth looking at the operations you carry out on farms and looking to see if the purchase of a small lorry or van would be a more cost-effective way to carry out off-farm work.
One thing is for certain, the use of red diesel on the road will continue to come under pressure particularly from sectors that are now paying over 47p per litre duty on road fuel. We need to ensure that we continue to use red diesel responsibly – if we can achieve that there”s no reason why red diesel should not be around for a long time.