Question to the HM Treasury:

To ask the Chancellor of the Exchequer, with reference to paragraph 1.247 on page 63 of the Budget 2020 Red Book, what assessment his Department has made of potential effect of the removal of the entitlement to use red diesel from April 2022 on local government.

At Budget 2020, the Chancellor announced that the Government will remove the entitlement to use red diesel from April 2022, except in agriculture, fish farming, rail and non-commercial heating (including domestic heating).

These changes to the tax treatment of red diesel may affect some public sector bodies, such as local government. While the Government expects them to reduce diesel consumption, it will discuss pressures that arise with affected departments as part of the Comprehensive Spending Review scheduled for later this year.

As set out in the policy costings document published alongside Budget 2020, the red diesel costing accounts for an increase in the overall resource spending envelope of £150 million per annum departmental spending to account for the fact that part of the costs of the policy will fall upon the public sector.