Keep the red flag flying

The Construction Plant-hire Association thinks the government could be opening a can of worms if some road-going plant equipment loses its right to use rebated red diesel.



TEXT: Following the Chancellor's Pre-Budget Statement on 2 December 2004, HM Revenue and Customs proposed changes to the list of excepted vehicles that are entitled to use red diesel on roads as defined by the Hydrocarbons Oils Duty Act 1979.
The proposals consider tightening up the definitions of some excepted vehicle classes and the removal of others. This will mean vehicles that no longer qualify for excepted status will have to use the more expensive white diesel.
In response to these proposals, the Construction Plant-hire Association (CPA) has subsequently surveyed its membership. After studying these responses, the CPA is now in the process of lobbying the government for
certain items of plant to be allowed to continue to use rebated diesel.
The CPA lists three main points as to why mobile cranes, mobile elevating work platforms, concrete pumps and certain other pieces of kit should retain excepted vehicle status. These points are: that the use of roads by mobile cranes, truck-mounted platforms, road construction equipment and concrete pumps is incidental; if the proposals are adopted and some categories of plant are forced into using white diesel, they will be put at a commercial disadvantage; and that Customs and Excise's argument that red diesel is a dirtier fuel isn't necessarily correct.
CPA director Colin Wood says the proposals are just another business tax and it has drawn the government's attention to what would happen in the future if red diesel was outlawed.
"The outcome will be totally detrimental to the plant hire industry, which runs most of the equipment that would be affected, and the construction sector in general," Wood says.
"For starters, the cost of hiring plant would increase by approximately 15% or more. This cost would have to be passed on to the hire companies' customers, with contractors picking up the bulk of the cost," he says.

Storage options
The majority of hire companies currently store red diesel at their depots, with only a few also keeping the white variant on site. These firms would have two alternatives: install white storage tanks; or fuel large items of equipment on the forecourts of garages with all the problems that this would entail, remembering that mobile cranes, for instance, can take up to an hour to fill up with fuel.
Another problem could arise from theft. White diesel has a much higher monetary value and equipment left on site overnight could fall easy prey to fuel thieves.
As far as the CPA is concerned, there are those that believe the government is determined to push through the proposals. But the CPA is equally determined to fight its corner and last met with HM Revenue and Customs officials in July. According to Wood, the CPA received a sympathetic hearing, and the concerns of mobile crane hire industry, in particular, was made very clear.
"At the last meeting, we were told that the government will not make a decision until shortly before the next Pre-Budget Statement in November," says Wood.
He adds that the CPA stressed that if changes were made, plant hire companies would need sufficient time to purchase storage and dispensing equipment, and for current contracts to run their course.
Wood finds the whole situation rather baffling and claims items of equipment that could lose their excepted status aren't using roads any more than before. In fact, they're using highways less, because there are more plant hire depots. "Which is why the situation should remain as it is," he says.
However, in the worst case scenario, Wood says price increases could not be introduced immediately due to the significant cost differential between white and red diesel.
At present, explains Wood, the CPA is continuing its discussions with the government. "It has become apparent that they are conducting further investigations on the unfair competition issue that we have raised and they want to get a clearer idea of what incidental use means.
"We are in the process of providing them with information as talks continue."