The government appears to have given a stay of execution to the issue of Red Diesel for private boat owners.

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The government appears to have given a stay of execution to the issue of Red Diesel for private boat owners. Tucked away in the detail of today’s pre-budget report Gordon Brown states that the Government is “minded to apply for an extension of the derogation for fuel used in private aircraft and pleasure craft navigation.”

The actual decision to apply for it won’t be taken until early next year but this is the clearest indication yet that it intends to support the continued use of rebated “red” diesel for all boat owners. Even if the government does apply to have the derogation renewed, it still has to convince the European Commission to approve it. If the EU refuses or the Government decides not to apply, the price of marine diesel will rocket from around 50p per litre to more than £1 per litre on 1 January 2007.

In the meantime, Gordon Brown has taken the opportunity to add another 1.22p to the base cost of all rebated fuels.

Full details of the statement are copied below.

“The UK has a number of exemptions from the Energy Products Directive that enable duty to be charged at a reduced rate on oils where they are put to certain uses. These exemptions are due to expire at the end of 2006. While more information will be required to inform the case the UK makes to the European Commission, the Government is minded to apply for an extension of the derogations for fuel used in private air and pleasure craft navigation, liquified petroleum gas (LPG) and natural gas (NG) used as motor fuel, and waste oils reused as fuel.The Government will issue an initial regulatory impact assessment on the effects of ending the derogation for private pleasure craft early next year. This document will then be used as the basis for further information gathering and discussions.”