Earlier this month, the FUW, along with other industry representatives, raised huge concerns following Chancellor Rishi Sunak’s speech regarding the UK 2020 Budget.
It was reported that the Chancellor had plans to abolish the 11.1 pence per litre duty rate for red diesel which is used to fuel off-road vehicles, agricultural machinery and some industrial equipment. Such a move would mean those whose businesses rely on the reduced duty would be charged the full tax rate of 57.7 pence per litre. For dairy producers this could represent 0.5 pence per litre of their milk production costs during times of already tight profit margins.
The agricultural industry urged the Chancellor to recognise the importance of red diesel to farm viability and the FUW remained firmly opposed to the removal of the red diesel entitlement from the agricultural sector. The FUW believed that a continuation of the subsidy was imperative at a time when certainty is lacking over the future of farm payments and the future trade environment. Indeed, the FUW is aware that farmer competitors in both the EU and US would have had a lower fuel tax on red diesel maintained. The Chancellor had also been urged to take steps towards improving farm productivity and business resilience prior to announcing the 2020 Budget.
Given the importance of the current level of red diesel duty to farming families, the Farmers’ Union of Wales was pleased to see that the UK Government’s 2020 First Budget, which was released on 11 March, would not remove the entitlement to the use of red diesel from the agricultural sector.