Carmichael highlights local challenges with red diesel change for construction

Orkney and Shetland MP, Alistair Carmichael, has spoken out in a parliamentary debate on the impact of changes to rebated fuel rules on the construction industry, highlighting the risk to the wider economy given the lack of existing alternatives to diesel for businesses. In the session, led by Carla Lockhart MP, Mr Carmichael cited businesses in both Orkney and Shetland which were affected by the removal of the entitlement to use red diesel in construction, which comes into force in April, and warned that the unintended consequences could be both economic harm and heightened emissions due to the need for more freight to the isles.

Speaking during the debate, Mr Carmichael said:

“The crossover between construction and agriculture is a feature in my constituency and, I am sure, in many other rural parts of the country. That there are no good answers to her questions illustrates the lack of forethought and planning on the part of the Government.

“I have been in correspondence with Government Ministers on this issue. The Minister who is here today wrote to me herself on 3 November, saying that the purpose of the changes was:

“’Incentivising developers to bring forward alternatives to market sooner than if these tax changes were not made as affected businesses look to alternatives. In the short-term, and as the market for alternatives develops, the Government’s view is that taxing pollution and dangerous greenhouse gas emissions the same, regardless of whether the fuel is burnt on or off road, is fairer than allowing wide distortions to continue.’”

“What that essentially means is that the Government hope that this change will produce new technology. If the Government were consistent—I hesitate to say this, because I absolutely do not want this ever to happen—they would have looked at the position with regard to agriculture as well. They did not do so because they knew that the political consequences of that would have been too drastic and too dramatic.

“What the Government are going at here is the easy target—the low-hanging fruit—at a time when the construction industry is facing a perfect storm, with all the consequences for the wider economy. The extra cost of paying for the fuel duty will mean that many projects do not go ahead, because the already tight margin that many builders are operating on will simply not be viable any more. In that way, we see the consequences of this change moving down throughout the economy and becoming a vicious circle.

“What assistance will be given to companies such as the small plant hire operator in Orkney I spoke to last week? He says that this measure will put his business under, because he operates something like four diggers and two dumper-trucks—that is the scale of his operation. By the time we get to April, what alternatives will there be for him? What will be the capital consequences for him if he invests in this new and apparently untried technology?

“On the subject of emissions reduction, there is a possibility that in fact we will see an increase in emissions. I have one company in Shetland that manufactures polystyrene boxes for use in aquaculture and fishing. It can manufacture their boxes in Shetland at the moment and sell them economically, but its competition on the Scottish mainland do so with mains gas. That company will lose its competitive advantage and polystyrene boxes will then have to be transported from the mainland to Shetland. The carbon consequences of that are just lunatic.”

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