Chancellor squeezes fridges with red diesel

London, UK: The industry has hit out the chancellor of the exchequer’s decision to remove the red diesel subsidy from refrigerated vehicles, arguing that it will impose “devastating costs on to hard-pressed hauliers”.

The Chancellor Rishi Sunak made the announcement in the March Budget, choosing to maintain the freeze for fuel duty paid by motorists but remove the red diesel for certain sectors, including refrigerated transport.

According to the government’s own calculations, farming makes up around a quarter of red diesel use, but is exempt from the decision. Construction and refrigerated transport will bear the brunt instead. The red diesel subsidy will be removed from April 2022. Shane Brennan, chief executive, Cold Chain Federation, who made the comment about hauliers facing devastating costs, said: “Two years is better than nothing but a realistic time frame for companies to adjust to this new £150m tax would be at least five years.

“By imposing this sudden shock to operating costs the government’s action would have exactly the opposite effect, making it even harder for businesses to afford new, cleaner vehicles and equipment and keeping older ‘dirtier’ equipment on the road for longer.

Christopher Snelling, head of UK policy at FTA, agrees: “This move will not incentivise companies to transition to newer, cleaner diesel units, because they are no more fuel efficient; if anything, it will slow progress as companies will balance the increased running costs by keeping their current equipment longer,” said Snelling.

The Road Haulage Association joined the throng unimpressed by the move. RHA chief executive Richard Burnett said: “The announcement that the tax relief on red diesel will be abolished in 2022 will come as a blow to the operators of refrigerated trailers.

“They’re the ones responsible for the movement of millions of tonnes of foodstuffs each year – both within the UK and to and from the European mainland.

“The Chancellor’s claim that this will not take effect for two years ‘giving businesses time to prepare’ is helpful, but does not take account of the possibilities to use low emission or low carbon fuels.
“We shall be working with the Government and the sector to explore alternatives that support environmental objectives and the supply chain.”

Last year various organisations, including the Campaign for Better Transport and WWF-UK urged the Government to end its subsidy of red diesel.
They see this subsidy as a tax loophole, and one which has negative environmental and economic consequences. One of their areas of focus has been on removing refrigeration vehicles from the tax rebate.

Dearman has long argued that red diesel subsidies disincentivise the uptake of affordable clean technologies that are available on the market, including for transport refrigeration units.

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