The European Commission has rejected the Government's application to renew the UK's derogation on red diesel for recreational sailors.
This means that in future we will almost certainly be paying road prices for diesel: the duty will rise from the current 7.69p per litre to 48.35p per litre.
“This decision is naturally very disappointing, Despite the best efforts of the campaign leaders, RYA and British Marine Federation (BMF), and the efforts of the UK Government, it appears that the Commission was intent on removing the derogation at any cost and has dismissed the consequences to the UK marine industry and the private recreational boater” says Neil Northmore, the RYA's government affairs advisor.
Howard Pridding BMF executive director, warned that the expected “substantial increase” in the price of marine diesel “will have a huge adverse impact on the UK marine industry. It is profoundly disappointing that the EU has not listened to the UK Government”.
The RYA and BMF welcomed the acknowledgement of John Healey, financial secretary to the Treasury, of the problems that would result from this decision. The Minister confirmed that the Government will consult with boating organisations to develop and implement “a sensible timetable for transitional measures” to alleviate the effects of the change.
The RYA and BMF say they will continue to work closely with Government and members to ensure that key issues of cost, availability and safety are addressed by the transitional measures.
The non-renewal of the derogation means that diesel for private boating use will become more expensive from January 1st 2007.
The EC only specifies a minimum rate of tax, which is considerably lower than the rate charged on petrol and diesel in the UK. However, it seems unlikely that a new tax band will be created specifically for marine users, owing to the practical difficulties of policing, paperwork and so on.
So most commentators believe the duty will rise to the “road price,” currently 48.35p per litre. Most European countries already charge road prices for marine diesel, although of course many have lower levels of duty on road fuel than the UK.
However, there is no cause for panic buying. Despite the ruling, the price will not jump overnight on New Year's Day.
Communicating its decision, the EC said: "The applicant Member States may adopt measures aimed at alleviating or mitigating problems of transition to the regime of standard taxation."
In the House of Commons, John Healey expanded on this saying there would be a consultation and then a transitional period.
Britain's marine industry fears that the boatbuilding industry, and the re-sale market for diesel powerboats in particular will be badly hit. But the Government has been made aware of the potential for lost revenue, and the hope is that they will not be in a hurry to react.
It is possible that there could be a compromise solution - for example the continued use of red diesel by all UK boats, but with leisure users paying a slightly higher rate at the pumps - perhaps the EU minimum duty of 21 p per litre - while commercial boats would be entitled to continue to buy red diesel at the current price. But this seems unlikely, as it would be complicated and expensive to implement, and wide open to abuse.
The fact is that for the majority of sailing boat owners the impact of the change will be relatively small, as they do not buy diesel in massive quantities. (Some will welcome the prospect of buying “clean” white diesel from the local fuel jetty, avoiding the hassle of collecting it by the can from roadside filling stations, as many already do.)
The added costs will really hit those running motor cruisers. A leading power boat magazine has estimated that the cost of the increased duty will average between £90 a year for a displacement motorboat with a 50hp engine, up to £4,050 a year for a twin-screw planing boat with a pair of 480hp Caterpillar diesels.
But the fact is that in these environmentally sensitive times, when we are all being urged to reduce our “carbon footprint” it is difficult to make a case for cheap fuel for leisure use. Many yachtsmen will secretly welcome a change that may discourage more people from buying noisy, wake creating gas guzzlers.
Opponents of the diesel price hike point out that the quantities burned by the marine industry as a whole are a mere drop in the ocean compared with the pollution caused by road traffic and air traffic. But two wrongs don't make a right.
Pollution from leisure craft goes straight into some of the most environmentally sensitive areas there are. Perhaps it will do no harm if the increase in duty causes us all to think more carefully about how much of the stuff we are burning.
We still have the option of cutting our carbon footprint by running a smaller car, say, which will save far more money (and pollution) over the course of a year than the extra duty on the much smaller quantities of marine diesel we buy.
For more information visit www.rya.org.uk
