IPAF joins calls for extension to UK’s red diesel tax rebate

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The International Powered Access Federation (IPAF) has joined in calls for Rishi Sunak, the Chancellor, to postpone plans set out in his budget statement of March this year to end tax relief on red diesel for construction plant machinery in the UK by 2022, to take into account the ongoing uncertainty caused by the Covid-19 pandemic. 

IPAF has joined the likes of the Hire Association Europe, the Construction Plant-hire Association, Scottish Plant Owners Association, National Federation of Demolition Contractors and the Scottish Building Federation to urge the Chancellor to consult with industry and extend the deadline to better allow economic recovery within the sector following the impact of the Covid-19 pandemic before the relief is abolished.  

A consultation on withdrawing the rebate closed last week, and IPAF was among leading construction bodies in the UK to voice concerns about the unintended consequences of ending the rebate. These include the increased costs and regulatory burden linked to withdrawing the rebate, with added costs likely to impact on research and development budgets, fleet renewal or being passed on to the end user.  

While there are already advanced machines on the market using battery or hybrid technology, and these are increasingly sought after by customers looking to work at height indoors, or to comply with existing low and ultra-low emissions zones, such as in London, there remains a requirement for high-capability or extended outreach machines for certain tasks to be carried out safely, for instance removing cladding from tall buildings.  

Where the end user is in the public sector, for instance in road or rail infrastructure, any added cost through increased taxation will end up being reflected in overall project costs, so negating any positive increase in revenue to the Treasury. 

Battery technology is struggling to keep pace with market demand, and the infrastructure to dispose of older, obsolete or depleted batteries does not yet exist in the UK to support the wholesale switch to battery/electric powered machines, which anyway usually need to be plugged into diesel-powered generators to recharge. There is very little or no resale market of powered access equipment in the UK, so older machines rendered economically unviable or technologically obsolete will most likely be sold and shipped overseas, to the Middle East, Africa or Eurasia, so the carbon footprint is merely being moved, as opposed to reduced or eradicated through the natural renewal of machines at the end of their lifecycle, as is currently typical. 

Extended exemptions for some applications, such as agriculture, could also mean confusion for rental companies and their customers, and would be very difficult to administer and enforce. IPAF also voiced concerns that the black market in white diesel could be worth more than £100 million per year if the rebate is ended too soon.  

Peter Douglas, CEO & MD of IPAF, comments: “We welcome the use of cleaner technologies in construction, but in some circumstances there is no choice but to use diesel-powered machines as the equivalent electric-powered specialised equipment is either not yet available, or isn’t a realistic option on grounds of safety and efficiency.  

“The powered access industry is already widely pivoting towards much greener, low-emissions technology; we believe that an extension to this exemption for red diesel machines would reflect the disruption caused by Covid-19 and allow additional time for the industry to address this issue through technological innovation and the renewal of existing fleets. We hope the Chancellor will be sympathetic to our request for more time to plan for this change.” 

More information about the planned end of the red diesel rebate in the UK can be found in the Government’s white paper, which can be viewed here. IPAF was also a joint signatory to the CECA response to the consultation, details of which can be found here

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