Pre-budget Statement Fuels Mixed Response From NFU - UK - The Chancellor’s Pre Budget Statement has been described as “mixed” by NFU President Tim Bennett, who welcomed the Government’s commitment to promote biofuels but expressed frustration at a further increase in the duty on red diesel.

The Chancellor announced a freeze on road transport fuel duty, which was welcomed by the NFU, but the Government’s failure to extend that freeze to include rebated fuel was met with frustration. An increase of 1.22 pence-per-litre on red diesel duty was announced which Mr Bennett criticised as poorly timed. He said: “This new hike in red diesel fuel duty could not have come at a worse time for farmers. High world oil prices, increasing input costs and shrinking returns have already seen margins squeezed considerably. This will have a significant impact on many farm businesses and should have been avoided. Surely if high oil prices are justification enough for a freeze on regular transport fuel duty then the same is true of red diesel which plays such a vital role in the day to day operation of our industry?”

Mr Bennett cautiously welcomed the Chancellor’s commitment to enhanced capital allowances for the most environmentally friendly biofuels. He said: “Encouraging investment in, and support of, a thriving domestic biofuels industry is vitally important following the announcement of the 5 percent Renewable Transport Fuel Obligation last month. We do not want a situation where our obligation is met through the use of unsustainable foreign imports. This is a pleasing commitment but we will be taking a closer look at the detail of the proposal before offering our full support.”

The NFU also criticised the proposed ‘Local Planning Gains Supplement’, which places a tax on capital gains on land once planning permission has been granted. The NFU believes such a measure is counterproductive for the farming industry as it will actively discourage farm diversification at a time when farmers should be encouraged to explore all options.

Source: National Farmers Union - 6th December 2005