Red diesel rebate removal at worst possible time for construction industry – Lockhart

The DUP MP secured a Westminster Hall debate today (Wednesday) on the matter, and challenged the Exchequer Secretary to the Treasury, Helen Whately MP, to support the industry at this time, rather than add to current challenges.

Carla Lockhart said:

“The latest government insolvency data shows that between August and October 2021 797 construction firms across the UK went bust, up by more than a fifth compared to the previous three months.

Yet despite these businesses failures, the Government is intent on pushing the industry over the cliff edge on 1st April with the end of the rebate for red diesel and other biofuels.

For such a significant change in taxation, the economic climate and context within the industry is key. Yet this change is being pursued at a time when construction companies are under unprecedented pressures, with input cost rises across materials and energy that have not been seen before.

The cost to construction of this policy will be £20m to £25m and this will be passed on to private home builders, driving up house prices which are already beyond the means of many first-time buyers and families, and to public contracts meaning it is more expensive to build new hospitals, new schools, new roads, and new social housing. The Chancellor in his budget speech heralded the Government as the champions of infrastructure, yet this policy will directly impact the cost and delivery of infrastructure.

The Government argue that this move is to protect the environment and reduce carbon emissions. It is a flawed logic, as the technology and alternative fuel sources to power the construction industry is simply not available right now. Therefore, the switch will be from red to white diesel, and indeed because some biofuels are also having the rebate withdrawn, companies are telling me they will switch from biofuel to diesel.

This is a UK wide problem, but the industry in Northern Ireland faces the additional challenge of now being placed at a competitive disadvantage against industry in the Irish Republic, and the prospect of smuggling of diesel and mineral products is also increased. For local firms who have significant business in the Irish Republic, this is likely to cost them this trade. That is deeply unfair, and the Government must act to protect these businesses.

We need the Government to rethink this policy and step back from the 31st March cliff edge to the rebate. We need a transition period to allow the intense development of alternative fuels and machinery that can be used using such fuels. The Treasury still has time to act. I urge it to do so.”