Red diesel's days officially numbered
So there we have it. Red diesel’s days are now officially numbered. After the government’s lengthy application process to have the derogation renewed, the end was unexpectedly swift and brutal, amounting to little more than a two-fingered salute from the European Commission.
I can’t say I’m entirely surprised. The government’s case was built on the hardship which doubling the price of diesel would cause for private boat users and the British marine industry. However, as I pointed out last May, Brussels couldn’t give a flying fig about our domestic issues. They had already made it clear that unless we could prove the renewal was “in the interest of reducing distortion of competition and promoting the better operation of the single market”, they wouldn’t give us the time of day. They didn’t.
The frustrating thing is that we could have proved it. We currently pay around 20p per litre less for our red diesel in the UK than European boaters pay for their fully taxed white diesel. However, when we start using white diesel in the UK it is likely to cost around 40p per litre more than in Europe due to Britain’s punitive ‘road’ fuel taxes. Needless to say, the Government wasn’t too keen to point out that particular distortion.
All is not yet lost. Although the UK’s derogation officially ran out on New Year’s Eve, red diesel may be with us for some time to come. At the time of writing, we don’t know how or when red diesel for leisure boats will be phased out but we do know that it is likely to take months if not years to make the necessary changes to legislation and the fuelling infrastructure. There is even a chance, albeit a slim one, that the Government could introduce a separate rate of duty for leisure marine fuel, based on the European minimum. This would position it somewhere between the current cost of red diesel and road fuel. If the Treasury really is as upset at the EC’s decision as it claims to be, this would be the ideal way to demonstrate it. Don’t hold your breath.
To understand the full implications of the EC’s decision, read Rob Peake’s excellent analysis starting on p8, which we will be updating on our website www.mby.com as the situation develops.
The one good thing to come out of all this is that we now have an answer, even if it wasn’t the one we were hoping for. As one wise head on the MBY forum said: “I’ve worked too hard in order to realise my dreams to let this get to me.” Amen to that.