Call to delay ending red diesel rebate

Reading, UK: The Cold Chain Federation, British Frozen Food Federation, and Federation of Wholesale Distributors have called for a delay until 2025 before ending the red diesel rebate for food delivery vehicles.
In its March 2020 budget, the government announced that from April 2022 it will remove the entitlement to use red diesel. The move affects over 40,000 UK refrigerated vehicles transporting chilled and frozen food.
The proposed change would impose at least £100 million of unavoidable costs on to the bottom-line of logistics, retail, and food manufacturing businesses, a tax hike that will cause further economic distress to a Covid weakened supply chain, the associations said in their letter to the chancellor of the exchequer.
They argue that, whilst progress is being made in rolling out alternative technologies, there is still no viable alternative to diesel-powered refrigeration for most vehicles.

A later implementation date, coupled with a roadmap that directs funding for green innovations into supporting businesses to fast track the testing and adoption of new technologies would achieve the environmental objectives and support industry at a critical time, the associations say.
Shane Brennan, chief executive, Cold Chain Federation said: “We support the ambition for a diesel-free future for all road transportation, and cold chain hauliers have shown their willingness to move away from diesel especially in smaller vehicle categories. However, there are not yet robust alternatives to diesel power for all types of food transport, and so imposing this tax change too early will have a punitive economic impact on low margin businesses that are reeling from the effects of Covid 19.”
Richard Harrow, chief executive, British Frozen Food Federation said: “The frozen food industry has stepped up to keep the nation fed through Covid-19. For many parts of the industry this has been done despite major losses of revenue arising from the closure of food service outlets across the UK. Given that Ministers have been persuaded to exempt farmers from these diesel tax hikes we cannot accept their justification to impose the burden on the businesses that move food from farm to fork.”
James Bielby, chief executive, Federation of Wholesale Distributors said: “Businesses that are struggling to stay alive through the worst economic crisis in their history, need support to invest and change their fleet, not punitive taxes. We believe that a longer transition to the new tax supported by investment incentives presents a real opportunity to turn another nightmare into a major opportunity.”


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