Red Diesel Rebate

Oral Answers to Questions — Economy – in the Northern Ireland Assembly at 2:00 pm on 6 December 2021.

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Photo of William Irwin William Irwin DUP 2:00, 6 December 2021

3. Mr Irwin asked the Minister for the Economy for his assessment of the impact on businesses of the proposed removal of the red diesel rebate in April 2022. (AQO 2839/17-22)

Photo of Gordon Lyons Gordon Lyons DUP

The change to the red diesel rebate is being progressed by HM Treasury; it is not a taxation issue within the scope of devolution. I have had limited correspondence in relation to this change, but, as Economy Minister, I am aware of the impact that it will have on the construction industry in particular and the cost that it will add to consumers. There will be an impact here on mining, quarrying, waste management and commercial heating, and that will most likely be passed to consumers.

Photo of William Irwin William Irwin DUP

I thank the Minister for his response. Does he accept that there will be huge implications? For instance, there are people who drive a mechanical digger all day. They work for farmers in the morning and, in the evening, they are on a building site doing excavation work for a bungalow. How can they change from one fuel to another in a few hours? It is nearly impossible. It would be very difficult to work in that way.

Photo of Gordon Lyons Gordon Lyons DUP

The Member is absolutely right. Changes to various industries will take place. For someone who works in farming and construction, and who uses the same piece of machinery in both, it will cause difficulties. I am not sure whether the Government have thought all of that through. I have already raised the issue, in part, with the Finance Minister, who will take the lead on it with the Government at Westminster. That is another example of the difficulties that it may cause. It will create a difficulty for people in those businesses in particular.

Photo of Mike Nesbitt Mike Nesbitt UUP

The Minister will be aware that some key installations, not least power stations, have reserves of red diesel in case of emergency. Has the Minister secured an exemption for those installations?

Photo of Gordon Lyons Gordon Lyons DUP

The UK Finance Bill will require Northern Ireland electricity generators to replace the rebated fuel with white diesel prior to 1 April 2022. That will result in Ballylumford and Kilroot burning existing stocks of red diesel in advance of the deadline to completely purge and clean storage tanks so that they can accept white diesel. Of course, there are significant additional costs to replace red diesel. I have been in correspondence on that, but no exemptions have been secured for Northern Ireland at this point.

Photo of Maolíosa McHugh Maolíosa McHugh Sinn Féin

Minister, have you had any engagement with Ministers in the Republic of Ireland, given the possible impact that the removal of the red diesel rebate will have on businesses operating in border regions? I think of my region in particular, in which people will potentially be faced with two different sets of regulations.

Photo of Gordon Lyons Gordon Lyons DUP

No. I have not had those conversations with any Ministers in the Republic of Ireland.

Photo of Chris Lyttle Chris Lyttle Alliance

Is the Economy Department on schedule to meet the targeted removal of red diesel from our roads?

Photo of Gordon Lyons Gordon Lyons DUP

I do not think that that policy is an area of responsibility for my Department.

Photo of Patsy McGlone Patsy McGlone Social Democratic and Labour Party

I thank the Minister for his engagement on the issue. What measures is his Department attempting to take to mitigate the worst impacts of the restricted use of red diesel? We have heard about the technical aspects, but there is one very practical aspect, and that is the potential 12-week wait to get the redemption on the duty paid. Have representations been made to Westminster on that matter?

Photo of Gordon Lyons Gordon Lyons DUP

Certainly, it is the case that that is a taxation issue. As a result, it is the Department of Finance that primarily engages with the Treasury on those issues. I have previously expressed some of my concerns about that. I have since picked up more, so I will correspond further with the Government to ensure that they recognise the implications of the actions that they are taking and to see what mitigations can be put in place to protect us from the worst of those.