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Red Diesel Fuel: Planned Tax Changes

Volume 705: debated on Tuesday 7 December 2021

5. What recent assessment he has made of the potential effect of the planned tax changes to red diesel fuel on (a) employment and (b) profitability within the UK construction industry. (904601)

To help ourselves achieve net zero and improve UK air quality, we are reducing the entitlement to use red diesel, which currently enjoys a duty discount, from next April. The full duty rate more fairly reflects the damaging impact of diesel emissions, and will incentivise the development of greener alternatives.

In my constituency and across Northern Ireland, small family-run construction companies and those operating on a larger scale are telling me that this move will cripple their profitability, and that alongside the significant increase in the cost of materials in the last year, it will make their operation even more challenging. Will the Chancellor and the Minister agree to meet industry representatives to hear about the real-life impact, and to explore how it can be addressed and how jobs and profitability in Northern Ireland can be protected?

We recognise that this is a significant change for some businesses, but we have consulted on it since it was first announced in 2020. Those whom we have consulted include representatives of the construction sector and representatives from Northern Ireland, and the case simply is not compelling in comparison with the importance of reducing our harmful emissions. Red diesel leads to 14 million tonnes of carbon dioxide emissions each year, and we need to incentivise greener alternatives as part of our transition to net zero.

I fully support the Government’s push towards net zero. Drainage boards do vital work to protect people, businesses and livelihoods from flood risk. Does the Minister agree that as they come to set their budgets it is vital that the Government provide assurance that their work will not be affected by changes to red diesel duty?

My hon. Friend is right to say that drainage boards do really important work. The fact is that the public sector, as well as the private sector, needs to decarbonise. In fact, in a low-lying constituency where there is a great awareness of flooding and climate change it is probably even more important, and I am sure his constituents appreciate the importance of reducing our carbon dioxide emissions. I know that the Department for Environment, Food and Rural Affairs is working with the Association of Drainage Authorities on the point that he makes.