Food Distributors Warn of £100 Million Red Diesel Shock to Supply Chain

30/08/2018

Increased food prices and a slowdown in investment in innovative technologies will be the result if Government presses ahead with proposals to remove food distributors’ prerogative to use red diesel to power refrigeration on vehicles.

That is the warning of the Food Storage and Distribution Federation, which has written to Environment Secretary Michael Gove. The proposals, which are subject to consultation by the Treasury, form part of the Clean Air Strategy that sets objectives for reducing levels of air pollution.

In the letter the FSDF explains the misunderstandings propagated about how many diesel-powered fridge units are used on vehicles on UK roads and the contribution they make to air pollution. The Federation shares its estimate that the removal of the rebate would add at least £100 million a year to the operating costs of food distributors.

FSDF Chief Executive Shane Brennan said: “We are fully committed to our responsibilities to find ways to reduce emissions and to playing our part in meeting the ambitions of the Clean Air Strategy. We understand why Government is considering removing the red diesel rebate for equipment like refrigerated units on delivery vehicles, but we urge Ministers not to do it.

“This policy would not achieve the stated ambition, which is to encourage businesses to switch to new ‘cleaner’ technologies. On the contrary, removing the red diesel rebate would impose unavoidable direct costs on the industry. This would not only prevent food distributors from being able to invest adequately in innovation, or even upgrade their equipment, but it would also drive up food prices on the shelves.

The letter from FSDF to the Environment Secretary can be viewed here – Gove_Letter Headed 28 Aug 2018