The MPs warn the move will drive up the cost of house prices and infrastructure projects such as roads, schools and hospitals, and could even lead to more expensive food. Red diesel is used to power bulldozers and cranes and accounts for around 15 percent of all the diesel consumed in the UK. The Government says it is responsible for nearly 14million tonnes of carbon dioxide a year and it hopes the change in the rules will encourage people to use cleaner alternatives or “just use less fuel”.
DUP MP Carla Lockhart, together with colleagues including former Conservative industry minister Sir Greg Knight and ex-Scottish Secretary Alistair Carmichael, warn Mr Sunak in a joint letter of “severe and very damaging consequences for our construction industry”.
They say the red diesel ban could cost the sector between £280million and £490million a year and warn that more environmentally friendly fuel sources “with the required torque and duration to power construction machinery” are not yet available.
“This policy will drive construction inflation forcing up the cost of investing in public services, such as new schools, hospitals, roads and public housing,” they warn. “Private house prices will increase, making it more difficult to step onto the property ladder.
“The cost of refrigerated haulage will increase, resulting in an increase in food prices at a time when inflation is already adding pressure to household budgets.”
A further concern is that it will lead to more fuel smuggling from the Republic of Ireland.
They suggest a “transitional period” would allow businesses to adapt as “greener products” come onto the market. In a further plea, they ask that the use of red diesel will be allowed for charitable purposes, saying that the ban would mean “charity tractor runs” would not go ahead and charities would miss out on “hundreds of thousands of pounds”.
A Treasury spokesman said: “Red diesel accounts for nearly 14million tonnes of carbon dioxide emissions every year, so it is right that it is taxed more fairly as the UK moves to net-zero by 2050.
To support firms transitioning away from red diesel, there is £40 million of support available via our red diesel replacement competition [to find lower carbon, lower cost alternatives to red diesel for the construction, and mining and quarrying, sectors].
“We’re backing the construction industry more broadly through tax incentives like the annual investment allowance and the super-deduction [which will allow companies to cut their tax bill by up to 25p for every pound they invest], the biggest business tax cut in modern British history.”