The United Resource Operators Consortium (UROC) has written to Mr Sunak calling for a phased approach to the removal of the entitlement to use rebated red diesel in mobile, static and process plant and equipment.

Due to come into effect in April, the removal of the entitlement will impact waste management, construction and mining. Agriculture, horticulture, fish farming and forestry sector operators will be exempt.

UROC argues that the landscape is now ‘incredibly different’ to when the policy change was first proposed. The waste sector has suffered from volatile price pressures, a consumer energy and cost of living crisis, disruption to supply chains and shortages resulting in bottlenecks.

The removal of the entitlement would have a negative impact on the finances of waste operators and their customers. UROC has calculated that paying the cost differential between red and white diesel would represent a ‘staggering’ 55% increase, a cost increase that would be passed on to local authorities.

‘Local authorities will bear the brunt of this at a time when they are still adjusting to increased prices due to the pandemic response, and when Government is looking for local authorities to invest in new services to support the consistent collections agenda,’ the letter said.

The ban on the use of red diesel would also lead to increased environmental crime and would undermine the Government’s wider waste strategy, according to UROC.

‘The Government’s transition to a circular economy, as embraced by the ambitious Resources and Waste Strategy, is an acknowledgement of the net environmental benefits the waste sector delivers. The Government’s introduction of a ban on using red diesel on environmental grounds is therefore counter intuitive and presents a tangible threat to the delivery of the Strategy,’ the letter said.

‘All the positives achieved from past fiscal instruments will be undone and aspirations set out in the 25 Year Environment Plan for moving towards a circular economy, better air quality and decarbonisation will not be achieved.’

Labour has also called for a rethink of the red diesel ban.

Shadow exchequer secretary to the treasury Abena Oppong-Asare MP has written to the Chancellor urging him to review the policy’s impact assessment to ensure that it meets its environmental objectives while at the same time protecting small and medium businesses.

‘Labour support efforts to encourage the transition away from diesel and towards cleaner fuels and electric vehicles & machinery in industry. We recognise that changing the entitlement to use red diesel is an important part of that,’ Ms Oppong-Asare MP wrote.

‘However, as I am sure you are aware, businesses in a number of sectors – including construction, manufacturing, recycling, and waste management – have raised concerns about the impact of removing these entitlements at this time. In particular, there are concerns that small and medium businesses will find this upcoming tax increase especially difficult.’

To read more about the ban on red diesel check out our feature, ‘Government must think again about red diesel ban’.