Farmers will not see fuel costs rise after the chancellor revealed agriculture would be outside his sweeping reforms to red diesel duty rates.
Rishi Sunak revealed at the Budget on Wednesday (11 March) that he would be abolishing the lower 11p/litre duty rate on all sectors except agriculture, fishing, rail and domestic heating.
The move to pay the full 57.7p/litre rate will not come into place for two years in order to give the construction industry and others time to prepare, he said.
The retention of the red diesel duty rate leaves farmers able to benefit from the slump in oil prices this week, which saw the price of fuel drop to 48.5p/litre on Monday after turmoil on crude oil markets.
The chancellor also chose to retain the freeze on fuel duty rates at the pumps for another 12 months.
Treasury leaks in the weeks prior to the speech had fuelled speculation that reforms were coming to the lower duty rate, which Mr Sunak called a £2.4bn tax break for polluters.
However, he said he recognised that it would be too challenging for agricultural businesses, citing lobbying from farming unions and chief whip Mark Spencer, who is a former chairman of the National Federation of Young Farmers Clubs.
Tenant Farmers Association chief executive George Dunn said: “The chancellor’s announcement that agriculture will retain the relief on red diesel will be welcomed by farmers up and down the country and will prevent the need for food price inflation.
“We are grateful to the chancellor for responding positively to the representations that we have made on this issue.”
NFU President Minette Batters said: “We are pleased to see the Chancellor has acknowledged our concerns.
“Red diesel is the primary fuel to run the majority of agricultural machinery and it is incredibly important for the farm businesses that produce the nation’s high quality and affordable food.”
Source: Farmers Weekly