Lack of electrically powered machinery, biofuel and a shift in prices due to sanctions against Russia will mean huge cost increases when the rebate is removed on 1 April, the National Federation of Builders (NFB) warned.
The NFB’s concern over the end of the tax rebate on red diesel is also shared by many in the waste and recycling sector.
Contractors have said they may have to increase their hourly rates for activities such as excavation by up to £5 per hour.
The 47 pence per litre rebate for red diesel, dyed so enforcement agencies can spot it, will continue for agriculture, horticulture, fish farming and forestry.
NFB chief executive Richard Beresford said: ‘These are unprecedented times and after rejecting industry pleas on minimal exemptions for plant vehicles that could not be electrified, such as mobile cranes, this policy change arrives in the middle of a perfect storm on British energy costs and so a 12-month deferral on removing the red diesel rebate is pragmatic.’
The Resource Management Association Scotland (RMAS), the organisation representing Scotland’s SME resource and waste management sector, has also warned that scrapping the tax rebate is ‘ill-conceived’ because the fuel price increases that will follow will drive up costs for its members and consumers.
To read more on the ending of the red diesel tax break check out, ‘Government must think again about red diesel ban’.