Question to the HM Treasury:

To ask the Chancellor of the Exchequer, pursuant to the Answer of 17 March 2020 to Question 28573 on Red Diesel, what discussions he has had with representatives of the Local Government Association on the potential effect of changes to the tax treatment of red diesel on local government.

To help the Government tackle climate change and improve the UK’s air quality, the Chancellor announced at Budget 2020 that the Government will remove the entitlement to use red diesel from April 2022, except in agriculture, fish farming, rail and non-commercial heating (including domestic heating). This change is designed to incentivise users of polluting fuels in both the public and private sector to improve the energy efficiency of their vehicles and machinery or look for greener alternatives.

The Government recognises that these changes to the tax treatment of red diesel may affect some public sector bodies, such as local government, and will therefore engage with them closely later this year as part of its consultation on these changes. While the Government expects them to reduce diesel consumption, the Treasury will discuss pressures that arise with affected departments as part of the Comprehensive Spending Review scheduled for later this year.

As set out in the policy costings document published alongside Budget 2020, the red diesel costing accounts for an increase in the overall resource spending envelope of £150 million per annum departmental spending to account for the fact that part of the costs of the policy will fall upon the public sector.