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Red diesel fight goes on

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Trade bodies including the Scottish Plant Owners’ Association are stepping up their fight to save the red diesel rebate.

A group of associations has written to Chancellor Rishi Sunak to highlight the “continued concerns” over the Treasury’s plan to cut the relief for construction plant fuel.

The Chancellor confirmed in his March Budget the government’s proposal to abolish the rebate in two years, leading to widespread calls from the industry to review a move that would hit the “already fragile” finances of many construction businesses.

The associations have urged Sunak to consult further with industry and to extend the deadline by at least a year to allow for a sustained economic recovery to take hold.

“Since the March Budget, the ongoing impact of Covid-19 on our members has caused a sudden and continuous decline in their business outlook and future investment plans,” the letter says. “For many businesses, cash flow remains critical and capital expenditure has been frozen or cancelled.

“As the latest ONS figures show, in the three months to May, construction output fell by 40%. The Office of Budget Responsibility has estimated that construction output will fall by 70% in Qtr. 2 of 2020 relative to a decline of 35% in the whole economy because of Covid-19.

“Although our members have actively taken steps to adapt to remain in business, their future and investment intentions are being put on hold. The outlook is highly uncertain and will remain so for some time ahead.”

The Civil Engineering Contractors’ Association has predicted that scrapping the rebate will cost construction up to £490m. There are also fears that the cut would affect investment in greener technology, stifle innovation and the wider implications of passing on increasing costs to clients and users.

The letter points out that construction companies have no choice but to use diesel engines as electric vehicles over a certain weight are not currently a realistic option.

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©Scottish Plant.  Article posted 6/7/2020