CPA appeals against plan to abolish red diesel

Most UK companies will be aware - from last weekend’s newspapers - that the UK government is reportedly considering removing the lower taxed rebated red diesel that is used in all off road vehicles, agricultural equipment and some specialist road going equipment such as cranes and large truck mounted lifts. The announcement - if true - is expected to be included in the budget next week.

The UK’s Construction Plant-Hire Association - the CPA - has written to the chancellor urging him to rethink any plans he might have to do so. It has issued a statement pointing out the impact that such a move will have on the rental industry, not to mention construction.

The full statement is below:

“Reports have suggested that Chancellor Rishi Sunak is set to announce that the subsidy on red diesel will be abolished. The BBC and Financial Times have both reported that Rishi Sunak is expected to announce in next week’s budget that the tax benefit of red diesel given to users of plant machinery and off-road vehicles will be scrapped.

“It is believed this forms part of a bid to encourage a switch to greener alternative fuel vehicles and help the UK meet its climate change targets. Scrapping the red diesel rebate will have significant financial implications for the construction sector as it will mean that users of diesel powered construction plant machinery will pay an extra 47 pence on every litre of diesel used.”

“The Construction Plant-hire Association (CPA), which represents 1,700 companies who are owners of 85 percent of the construction machinery used in the UK, has been quick to react to the reports.”

“Yesterday (04.03.20) CPA Chief Executive Kevin Minton wrote directly to Chancellor Rishi Sunak: “As a key sector within the wider construction industry, we are concerned about reported proposals in the forthcoming budget, to place restrictions on the use of red diesel in construction machines. The CPA set out our concerns in the government’s call for evidence on the use of red diesel back in 2018. It is disappointing to see such measures being discussed again.”

“Restrictions on the use of red diesel in the construction sector would, unfortunately, have a profound impact for our members and the wider construction industry by raising costs and squeezing already tight profit margins. This in turn will limit scope for investment in new skills and new cleaner, greener technology - something the government is encouraging our members to do.”

“Such proposals will only undermine this progress, adding greater uncertainty at a time when construction remains fragile, despite government plans to increase spending on infrastructure.

“We urge you to delay any consideration of this issue until a proper consultation can be carried out, and suitable amelioration measures identified. I look forward to discussing this issue further.”

Red diesel currently accounts for about 15 percent of total diesel sales in the UK and costs the Treasury about £2.4 billion a year in revenue. Red diesel is essentially the same as regular diesel, but it has a dye in it to indicate that it is largely tax exempt.

Vertikal Comment

We totally concur with this message when it comes to off road equipment, although there may be a case for road going equipment - such as cranes - to lose the right to use red diesel, as it in can be argued that higher fuel costs for the crane carrier engine might just stop 'rate cutters' sending cranes, both large and small, a couple of hundred miles or so across country to do a short job that could have been done by a local crane company if it had only slashed its rate to the same non commercial levels. In other words it will penalise those who by doing this cause more traffic congestion and pollution. It would also make it more expensive to run very old cranes with less efficient power trains.

Perhaps a better policy would be to encourage equipment companies to use a red bio/renewable diesel?


Malcolm Bowers
Hi Eric
Good point and I think you are more than likely correct. We used top grade performance diesel compared with ‘run of the mill’ red. We had an order for 6 big scissor lifts on a long hire and we were trying to find a cleaner and more economical solution to scrubbers at £900 each as well at £70 per week per unit for filters. As it happened the customer bought a bunch of Genie LPG GS5390s so nothing came of our research.

Mar 10, 2020

Hi Malcom,
I can't speak for England, but in Europe it's the same fuel. We went through the process (as a manufacturer) when we switched to high pressure common rail Tier 4F/Stage 5 motors, that require high quality fuels.
Red diesel was the same product, just perfumed and coloured to identify it. That's what the fuel manufacturer told us.

Mar 10, 2020

We at the Showmen's Guild of Great Britain are in the same boat, so to speak, only worse - it could be Curtains for many of our Members' shows...

The news on this appears to have gone very quiet though?

We have got many of our Members emailing their MPs and our All Party Group in Westminster on Fairs & Showgrounds have used the details below to lobby the Chancellor; just as you have.
We have also briefed the national media including broadcasters...

As with the main Construction industry, this could not come at a worse time for us in the Outdoor Event industry.

Where do we go from here?


Desmond FitzGerald LLB
Public Affairs Manager
The Showmen's Guild of Great Britain.
Tel: 01784-461805 -
Mobile: 07971-690375
Email: dfitzgerald@showmensguild.co.uk

May 6th 2020

We understand that in the forthcoming Budget Chancellor Rishi Sunak plans to deliver next Wednesday, there is a proposal, among other provisions, to remove the Tax Rebate on Non-Road Machinery (NRM) ‘Red’ Diesel fuel.

The Showmen’s Guild, the trade association for the Fairground industry, representing over 2100 operating Show people and 24,000 family members overall, fears any changes to ‘Red’ Diesel duty could see the Show Community face increases of nearly 50p per litre. ‘Red’ diesel currently has a duty of 11.1p per litre compared with 57.7p for standard diesel.

‘Red’ Diesel is the lifeblood of the Fairground & Show industry, as its alone powers all operations of the entertainment as well as the domestic power whilst the Showmen are on site at fairs.

Its use is thus far at reduced taxation exists because it is specifically not used on the road (where the tax that would otherwise be paid supports road building and maintenance).

· Showmen use regular diesel (‘White’ Diesel) on the road, like anyone else

· and not only is it illegal to use ‘Red’ Diesel on the road,

· but the Showmen’s Guild Rules specifically forbid abuse of the fuel-rebate-concession; with heavy financial sanctions within the Guild’s judicial process for such an infringement.

· There are other businesses who legitimately also use ‘Red’ Diesel, including our colleagues who organise Outdoor Festivals;

· However, it is larger industries such as the Construction; Rail; Airport (ground operations) and Marine operations industries make up the bulk of the 15% of diesel-use overall that ‘Red Diesel’ represents and their ability to swallow the loss of the tax concession is far greater than that of the Fairground, Show and Event industry.

For Fairgrounds, Circuses and Shows, more so than many others, there is no alternative power source and

· cleaner versions of the fuel are still at experimental stage, although being trailed;

· but alternative fuel-development is out of the industry’s hands.

The Fairground, Circus and Show industry is just surviving with increased costs overall:

· including land-rental from local councils and other landowners;

· possible increases in wage bills following changes to Immigration Policy and the shortage of skilled and semi-skilled labour;

· as well as the uncertain outlook for outdoor events this season overall with the onset of the Coronavirus outbreak.

The Showmen need the fuel rebate for ‘Red’ Diesel to continue in order to survive economically.
· It would be no exaggeration to state that without it, the operation of the Showmen’s events would be unsustainable altogether

· and the entertainment on offer would be unaffordable, especially competing with other (static) public entertainment that does not have these costs.

Following the responses to the consultation, from many industries, including The Showmen’s Guild for the Fairground Industry, no action was taken or discussed – until now when what appears to be a decision has been made with revenue-raising, ahead of environmental gains and which ignores the responses to the 2017-18 consultation.

We are requesting that consideration be given by Treasury; Defra and Parliamentary colleagues to the concerns that Showmen across the country have, with such a drastic change to the taxation, that could effectively end their businesses.

To this end, the All-Party Parliamentary Group on Fairs and Showgrounds members have written to the Chancellor expressing the industry’s concerns, ahead of next Wednesday’s Budget.

Mar 8, 2020

Malcolm Bowers
To my knowledge red diesel is not quite as refined as white. (At least our tests proved that to be the case.)
We did some emissions tests on the use of diesel on scissor lifts in an effort to make a point. We engaged a consultant with professional testing gear and the results were very interesting. The cleanest results were obviously biodiesel but not all engines can run on 100% bio. The next was a mixture of bio and white road diesel. The next was simply white road diesel. Red was the dirtiest. The readings on good quality road diesel were better than using red with scrubbers and filters. Red diesel and filters at £70 a throw made this solution costlier and dirtier than paying more to use white.
We are moving towards battery solutions but our 110v site restriction prevents the use of bigger platforms as we simply cannot charge them on this voltage and current. Holland lifts in Europe have used 3 phase chargers for a long time which is unthinkable on a uk construction site.

Mar 8, 2020

Oops I should have said HMC&E not HMRC

Mar 6, 2020

This goes back a very long way
I believe as far back as 2000 for truck mounts when a joint Nationwide/ PTP appeal was successful
In January 2006, IPAF and CPA met HMRC to plead our case for the retention of red diesel as there were proposals being muted at that time that changes in the next budget would remove the concession from cranes and truck mounts

In regards to larger truck mounts I was a representative for IPAF , with John Jennings of EPL, Colin Wood was supporting us via CPA

The outcome was positive but it was a hard fought battle and the HMRC staff were very professional and extremely well informed

We were delighted to succeed all those years ago but knew that this was one battle in a longer war
Best of luck this time guys
Mike Evans

Mar 6, 2020
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