Red Diesel tax changes will “hammer” ports

The BPA has published a report on the impact of planned changes to red ‘diesel’ tax rebates on the ports industry which estimates that the changes will add additional costs amounting to 3.10% of port turnover when they come into effect in 2022.

“Ports will see costs soar from 2022 if Government does not change this policy,” said Phoebe Warneford-Thomson, Policy & Economic Analyst at the BPA and one of the report authors.

Hit hard

Ms Warneford-Thomson said that BPA modelling indicates that these extra costs will be worth 3.10% of each port’s turnover – leading to less room to investment in the green technologies and perversely increasing emissions through encouraging modal shift from coastal shipping to road transport.

BPA modelling suggests that an ‘average’ terminal will be hit with additional fuel costs of nearly £500,000 a year, with bigger operations’ costs running into millions.

The Government announced that they would be abolishing rate relief for non-road mobile machinery (NRMM) at the Budget in 2019, however three industries (heating, rail, and farming) would be exempt from the changes due to perceived high impacts from additional costs and impact on modal shift. The BPA hopes this new report will demonstrate similar reasoning applies to the ports sector.

“We are asking Government to postpone this decision to 2030, at which point they should review the maturity of alternatively powered NRMM markets and determine if viable alternatives are indeed available,” said Ms Warneford-Thomson.

“At the very least, a phased approach is needed to ensure that ports do not have to deal with cost increases of up to 130% on one of their biggest expenses.”