CPA Bulletin

42 CPA Bulletin > August 2018 www.cpa.uk.net HEALTH & SAFETY: 2 The Treasury has also announced it will review howalternative fuel rates of taxation line up with rates of petrol and diesel ahead of the budget in 2018, so changes to the rebate can already be forecast. The call for evidence asked about the power source ofmachinery, its age and replacement programmes, andwhat consideration has been given to alternative technologies. CPA surveyed itsMembers in order tomake our position known toDEFRA and the Treasury when the consultation closed in July. Responses showed that buying decisions are influenced primarily by availability, total cost of ownership and return on equipment. The actual fuel use has little or no impact on owners’ or contractors’ preferences. CPA subsequently submitted Member’s responses in a collated format based on the Government’s questions by the required deadline. CPAResponse to theCall of Evidence forRedDiesel The following is an abridged version of the CPA response to the call for evidence as follows: We the CPA contacted ourmembership to request participation on the RedDiesel Call for Evidence programme and further placed a news itemon our website inviting participation fromawider base and that they could either submit a response via a CPA-devised form- replicating the questions in the survey, or were directed to theDEFRA online survey. Where supplied directly back to us, responseswere collated into a single document. CPAmembers hire plant and equipment under a set of terms and conditions and the type of hire in principle falls into two core generic streams: a. Non-operated hire - where the user of the machine (the organisationwho requested the hire) would be predominately responsible for the supply of themachine operator and also for the requisite fuel used for the duration of the hire. In this instance, the owner (ourmember) would be unaware of the volume of fuel used and therefore unable to respond to this survey. b. Operated hire - where the owner of the machinemay be responsible for the supply of the operator and (depending on contractual requirements) for the requisite fuel used for the duration of the contractedwork; for example, the hiring of a crane. In this instance, the owner would have records of the volume of fuel used. There are other variations of who takes responsibility for the supply of the fuel used by the itemof plant. A number of owners contacted the CPA stating that they would not be in a position to respond tomany of the questions as they predominately hire plant on a non-operated basis. Furthermore, a number of owners hire out either awide range of plant types and/or specialist plant that is not listed in theDEFRA NRMM table. To reduce the burden on our respondents to cover all their plant types, they were invited to restrict their replies to the six commonestmachines in their fleet. There are a number of key points that we need to convey, based on ourmembers responses and other conversations that have occurred on the subject: 1. The availability of rebated fuel does not affect the decision-making process of construction plant purchasing - either additional to a fleet or fleet replacement. This is coupledwith… 2. That very fewalternative-energy construction plant products exist. Thismarket is fledging (compared for example to the automotive world) and although products such as hybrid and pure-electric products are beginning to filter through, they have higher purchasing costs (for which no known subsidies exist), increasedmaintenance costs, and do not have (formost plant types) sufficient full-day working capacity needed for high utilisation requirements, and further requires… 3. A separate supply and charging infrastructure that would be required to ensure maximumutilisation and reliable availability for hybrid or pure-electric driven products. There are potentially other negative influences for removing or reducing any fuel rebate based on ourMember’s responses. For example, hire costswould significantly increase for the user - e.g. the principal contractor, who would ultimately pass on the increase to their customer/client. Thismay create a downward pressure on hire rates causing an opposing situation inwhich additional hire costsmay need to be absorbed by the plant owner. With lessmarginsmeans less finance and therefore less incentive for owners to replace existing products. Ownerswould therefore keep old technologies for longer, or replacewhen requiredwith low-specificationmachines, negating an appetite to seek higher-cost, low emission/alternative-fuel units. Furthermore, aUK-widemove away fromolder or diesel- powered plant would reduce their value at disposal, further increasing the total cost of ownership and disincentivising immediate replacement. As reported back by ourMembers, they already tackle carbon emissions throughmeasures such asmodifying their operating procedures to reduce fuel use e.g. on-demand systems for pumps and generators, reducing idle time between liftswithmobile cranes, routing cranes to reduce distance travelled. IS RED DIESEL TO BLAME? In addition to the widespread consultation on the Clean Air Strategy, DEFRA and the Treasury are seeking evidence on the uses of red diesel mainly in urban areas, considering the air quality impacts and the potential for market distortion. The question that the survey ostensibly asks is whether the current rebate scheme for red diesel is affecting owners’ decisions about equipment and technology replacement.