Construction sector faces crippling increase in fuel costs as situation escalates in Ukraine

SPOA president Callum Mackintosh

THE Scottish Plant Owners Association (SPOA) has written to the Chancellor of the Exchequer calling for a delay to the implementation of new legislation which will remove the construction sector’s entitlement to use red diesel and rebated biodiesel. The legislation, due to be implemented April 1st, would likely have resulted in a fivefold increase in fuel duty. Now, with the escalating situation in Ukraine, the cost of white diesel has reached an all-time high and many in the construction industry are fearful for the future.

Speaking about the crippling financial situation the construction sector is facing, Callum Mackintosh, President of The Scottish Plant Owners Association, said: “Fuel prices have shot up in the last few days to as much as £1.50+VAT (£1.80) per litre for white diesel in some parts of the UK. This is another hammer blow to the plant industry. We simply cannot sustain this gross inflation of fuel price. The industry urgently needs a delay on the implementation date of 1st April. The SPOA has, therefore, written to the Chancellor of the Exchequer calling for a delay.”

Currently, users of red diesel, a fuel that is used in off-road vehicles and machinery in most industries including construction, demolition, quarrying, mining and agriculture, are entitled to a rebate on the tax or duty paid on the fuel. However, from April 1st, it will be illegal for the construction sector to use red diesel. Instead, the industry must use either white diesel, which will incur a fivefold increase in fuel duty, or so called ‘alternative fuels’ such as HVO Green D+ which can be made from animal fat from food industry waste or fish fat from processing waste or used cooking oil.

Speaking about the new legislation, President of SPOA, Callum Mackintosh, explained: “The removal of the construction sector’s entitlement to use red diesel and rebated biodiesel is, I believe, the first in a series of major changes that will affect our industry and environment forever. It will have a significant impact on costs as well as cash flow for many businesses.”

“At the same time, the plant industry must also contend with other challenges including one-off costs in order to stay compliant. These may include the costs of removing or running down red diesel, purchasing additional tanks, vehicles or equipment and sourcing alternatives before the April deadline. Furthermore, as both red and white diesel become yet more attractive targets for theft, the high number of vehicles and large stores of fuel at construction sites are at risk.”

“Whilst we are doing everything we can to support members to prepare for this major change, I do think that the Government should revise its plan based on the escalating situation in Ukraine.”

The latest stories