Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make an assessment of the potential economic merits of permitting the use of red diesel in the (a) construction industry and (b) timber industry in response to rising oil prices.

At Budget 2020, the Chancellor announced that he would remove the entitlement to use red diesel from most sectors from April 2022.

The Government recognised that this would be a significant change and ran a consultation to gather information from affected users on the expected impact of these tax changes and make sure it had not overlooked any exceptional reasons why other sectors should be allowed to continue to use red diesel beyond April 2022.

Following the consultation, the Chancellor announced at Spring Budget 2021 that the Government would grant further entitlements to use red diesel after April 2022 for a limited number of users. However, having assessed the cases made by other sectors to retain their red diesel entitlement, including the construction sector, the Government did not believe that they were compelling enough to outweigh the need to ensure fairness between the different users of diesel fuels, the Government's long-term environmental objectives and the need for the tax system to incentivise the development of greener alternatives to polluting fuels.

Rebated fuel can be used in permitted vehicles and machines for accepted purposes relating to forestry, but not for the further processing or use of timber. Further guidance is available at: www.gov.uk/guidance/using-rebated-fuels-in-vehicles-and-machines-excise-notice-75-from-1-april-2022