06.12.2005

Red diesel duty jumps by 23%

The UK chancellor in his pre budget speech yesterday announced that any increase in the duty on white diesel will be postponed, at least until the 2006 budget. The duty on rebated red diesel however was increased from midnight from 5.22p a litre to 6.44p an increase of 23.4 percent. To put this in perspective though, the duty on white diesel is 47.1p.

The budget statement also opened a chink of hope to the crane fraternity, that the use of red diesel might be allowed to continue after the 2006 budget. However the statement appears to clearly end the right for truck mounted aerial lifts to continue to use rebated fuel.

The government has invited further views on the subject for discussion prior to the 2006 budget when it will announce its final decision. The treasury has said that it will at the very least amend the mobile crane category, if only to exclude MEWPS, as it has been convinced that they rack up greater annual mileage than cranes and that they rarely leave the road.

However it is not yet fully convinced by the crane lobby’s argument that cranes spend very little time on the road and wishes to hold further consultation with the industry before the budget in the spring.

The possible chink of light for crane operators comes from the following statement:

“The Government believe that mobile crane category needs to be amended, at the very least to exclude MEWPs, and to close potential loopholes. HMRC will consult the industry further to see if it is possible to arrive at a definition of mobile cranes which would still permit vehicles with a genuine case based on incidental road use to retain excepted vehicle status. Schedule 2 of the STGO is recognised as being a potential model”.

The argument that ending the use of rebated fuel for cranes would create unfair competition seems to have backfired, in that the treasury statement points out that telehandlers and crawler cranes are transported to site by low loaders or commercial vehicles and therefore incur a higher fuel cost compared to mobile cranes.

Vertikal Comment

It seems that there is a real chance now that most cranes will continue to be allowed to use red diesel, however the singling out of aerial lifts is completely ridiculous and at best suggests that the treasury does not yet understand the facts.

At worst it looks like petty revenge after it was defeated in 2002 by Nationwide and PTP with the support of IPAF. If it follows this line through to a conclusion at the budget, it lays itself open once again for a future defeat in the courts.

It will of course aim to redraft the mobile crane rules around STGO to ensure that MEWPs have no recourse to law. However such a change is likely to make the crane situation very confusing and open to interpretation.

The treasury needs to make a clear decision on this issue, either there is a case for cranes (and aerial lifts) to continue to use red diesel or there is not.