Budget 2020 : Red diesel subsidy frozen for UK agriculture

Following chancellor Rishi Sunak’s announcement that the government will provide a £30bn package to help the economy get through the coronavirus outbreak, it was declared that the red diesel subsidy

Following chancellor Rishi Sunak’s announcement that the government will provide a £30bn package to help the economy get through the coronavirus outbreak, it was declared that the red diesel subsidy will not change for UK farmers.

The chancellor spoke at length on the environmental impact of businesses using the fuel and his consequent decision to abolish the ‘tax relief’ for some industries.

“The sectors using red diesel are some of the biggest contributors to our air quality problem – emitting nearly 10 per cent of the noxious gasses polluting the air of our cities like London,” he said. “This is a tax relief on nearly 14m tonnes of carbon dioxide every year, the same as the entire population of London and greater Manchester taking a return flight to New York. It’s been a £2.4bn tax break for pollution that’s also hindered the development of cleaner alternatives.”

Sunak went on to recognise that the red diesel subsidy abolishment will be a big change for most sectors and so will keep the scheme frozen for the next two years, to allow businesses time to prepare.

There was a resounding cheer from parliament when the chancellor announced his decision to keep the red diesel subsidy frozen for the UK agricultural sector, following strong concerns from the NFU, his rural colleagues and the MP for Sherwood, Mark Spencer.

As well as the farming sector, rail, domestic heating and fishing companies will also not be affected by the subsidy abolishment, the chancellor announced. He will consult with other sectors over the summer.

Sunak went on to explain how they will be increasing spend “to help develop cleaner alternatives for red diesel and other fossil fuels”. The government has agreed to more than double the research and development investment in the Energy Innovation programme to £1bn.

Winter flooding aid

Following a declaration of further investment into greener transport, the flooding that occurred nationally over the past few months was the next topic for the chancellor. “Many members around this house will have seen the devastating impact of the recent floods on the homes and businesses in their own constituencies. So I can announce today that I am making £120m available immediately to repair all damages, all defences damaged in the winter floods. To support those areas that have been repeatedly flooded I am also providing £200m of funding directly to local communities to build their flood resilience.”

Sunak announced that overall, the government would be doubling their investment into flood defences over next six years to £5.2bn.

Protecting and restoring natural UK habitats

Supporting natural habitats like woodlands and peatland was a high priority as the chancellor pledged to protect, restore and expand these “wonderful habitats”, as well as capture carbon, by providing £640m for a new ‘Nature for Climate’ fund. “Over the next five years we will plant around 30,000ha of trees, a forest larger than Birmingham and restore 35,000ha of peatland. This government intends to be the first in history to leave our natural environment in a better state than we found it,” he went on to declare.

Supporting our “largest food and drink exports”

Another “crucial industry” in need of aid from the government, according to the chancellor, is the Scotch whisky sector. As “one of our largest food and drink exports”, Sunak vowed to lobby the US government to remove the recent and harmful tariffs they have placed on Scotch Whisky imports. In the meantime, he will provide £1m of support to promote Scottish food and drink overseas, as well as £10m of new research and development funding to help distilleries go green.

To further support the industry, the planned increase in alcohol duty will be scrapped, including spirits, beer, wine and cider.

Photo : The Yorkshire Post