Finance (No. 2) Bill

Steve Double Excerpts

2nd reading
Tuesday 13th April 2021 Commons Chamber

[Steve Double (St Austell and Newquay) (Con)]

It is a pleasure to follow the hon. Member for Richmond Park (Sarah Olney). I welcome the Bill, which delivers on the Budget. The Budget struck the right balance, providing the immediate support that businesses need to enable us to begin the economic recovery from the past year, paving the way for sustainable growth in the mid-term and laying the ground for some of the tough decisions and challenges that we are going to face in the years to come to balance the books.

I particularly welcome the measures to support the hospitality sector. I speak as the chair of the all-party parliamentary group for hospitality and tourism, a sector that has been among the hardest hit as a result of the lockdowns. All the measures that were in the Budget, including extending the VAT cut and the business rate holiday, the additional round of grants, the extension of the furlough scheme and the additional self-employment income support scheme, have been hugely welcomed by the many businesses in my constituency that rely so much on tourism and hospitality. I also very much welcome the extension of the universal credit uplift, which will be vital for many families to support them through the rest of the spring and summer.

There is lots in the Budget and the Bill to welcome and support, but I just want to raise one element that I have grave concerns about. It relates to clause 98—I know that the Minister will be aware of this as I have already raised it with her—and it is the removal of the red diesel entitlement. Let me make it clear that, in principle, I absolutely support this measure. We need to move people and businesses away from an over-reliance on diesel and towards a cleaner and greener form of fuel, but I am concerned about the impact that the speed with which this measure is being introduced will have on one particular sector. I welcome the fact that agriculture and fishing will be exempt from this change and will continue to be able to use red diesel. That is vital for constituencies such as mine that have many businesses in those sectors, but there is another sector that is very important to my local economy: the mining and quarrying sector.

I should place on record that I am the chair of the all-party parliamentary group for mining and quarrying. For more than 150 years, mid-Cornwall has been mining the highest-quality china clay in the world and exporting it around the world. This industry is still a vital local employer and a significant part of our local economy. The removal of the red diesel entitlement from businesses in this sector is going to cost businesses in my constituency alone more than £10 million a year. That is £10 million that is going to be taken directly out of our local economy.

I absolutely understand the Government’s rationale behind the decision to move people away from diesel towards alternative fuels to help to reduce their environmental impact and to help us as a country to move towards our net zero target, but the fact is that much of the heavy gear used in the mining and quarrying sector just does not have an alternative to diesel. The technology does not yet exist to provide an alternative form of cleaner energy. The sector will therefore bear the brunt of the Government’s decision to introduce this change from next April in the short term.

Let me also make it clear that the sector is not resistant to moving to clean power, and it has already done so where alternatives are available, but in many cases the technology is not yet available to replace some of its heaviest machinery with cleaner alternatives. It seems unfair to penalise businesses that are willing to move to cleaner fuels and sources of power but are unable to replace their diesel-powered equipment at this time. In the coming years, alternatives are likely to be developed, but I am told that we are probably at least five, and perhaps 10 years away from there being a viable commercial option. Imposing the change next year will mean that businesses face additional costs that they simply cannot avoid, which seems counterproductive.

As is often the case when decisions such as this are made, there are unintended consequences. The sector provides much of the raw material for our economy, particularly in manufacturing and construction, yet it will be unable to absorb the additional cost, which will result either in job losses or in rising costs. The Government’s ambition is to invest heavily in infrastructure and housebuilding. It seems strange, just at the time when we want to invest significant sums in building, to introduce a change that is likely to result in increased costs.

All this is unlikely to have any beneficial impact on the environment. There will be no reduction in emissions. Diesel will still be burned by these heavy-duty bits of kit because there is no alternative. It is not as though there will be a shift away from diesel to something else, because alternatives do not yet exist. If the aim of the measure is to reduce emissions, in the short term it is unlikely to achieve it. In fact, it could actually increase the environmental impact, because if it results in UK businesses becoming uncompetitive or, worse still, going out of business, we will end up importing these materials from countries that are burning diesel and increasing the carbon footprint.

I ask the Treasury team to look again at the speed at which the change is to be introduced. Let me be clear: I believe it is the right decision; I just question the timing of implementation. We need to give the quarrying and mining sector the time needed for new technologies to emerge, so that the sector can find alternative fuels before this significant additional cost is imposed.

I wholeheartedly support the Bill. It contains the right measures that our country needs now. I simply ask the Government to look at the speed of the removal of the red diesel exemption, particularly for the mining and quarrying sector, to give it time to adjust and the economy time to recover before the additional cost is imposed.