Friday, December 08, 2006

Red diesel: my two penn'orth

And so it has come to pass that the derogation for the use of red diesel in pleasure craft has been withdrawn, and there has been much weeping and wailing and gnashing of teeth ...

There's no denying that this is Bad News, and particularly irritating as it isn't going to make a blind bit of difference to anyone except boaters; one suspects it to be a bit of bureaucratic obsessive-compulsive tidying up rather than genuine playing field levelling or revenue raising (though I dare say the government won't say no to the extra dosh). Of course there is nothing to be done about it now; if it's hard to reverse a domestic government decision like the DEFRA cuts, then turning around the juggernaut that is the EU is impossible; what's more, there's little sign that the political will is there in the British government.

But is it really the end of the world as we know it? Isn't the cost of fuel actually a fairly small proportion of the cost of running a narrowboat (as opposed to a big yacht or a lairy Thames gin palace, and the thought of them paying more, frankly, warms the cockles of my heart). Or is there an argument to be made that this could be the last straw, coming as it does on top of above-inflation rises in the price of licences, moorings, and peripherals like electricity and pumpouts? And what would the last straw mean? People who have grimly hung on through everything else finally forced into hanging up their windlasses and selling their boats? And would this in turn lead to a drop in the price of second hand, and as a knock-on, new, boats? Conventional market wisdom says that it would, but I wonder whether market forces operate in a conventional way here. Some smokers give up each time there's a hike in tobacco duty. But do alcoholics give up drinking when the Chancellor sticks another 10p on a bottle of White Lightening? Do heroin addicts go cold turkey when the street price goes up? Will I stop boating? Will you?

One further thought: everyone is assuming that this means that excise duty will have to be levied on marine diesel at the same rate as on road diesel. But is this necessarily the case? When the EU forced the British government to impose VAT on domestic fuel a few years back, the minimum rate they stipulated was 5%, this being the minimum for the EU as a whole. The British government (because there was such an outcry) duly set the VAT rate for domestic fuel at 5% rather than the standard 17.5%. Now, I'm no expert on pan-EU excise duty rates, but I wouldn't mind betting that they're a lot lower than in Britain (they certainly are for drink, witness the phenomenon of the booze cruise). So does the ending of the derogation really mean we'll be forced by the EU to pay the same per litre as road users, or are the government just going to make it the same and conveniently let the EU take the blame? Do they have the leeway to levy a lower rate? Is there perhaps scope here for a(nother) campaign, aimed at Westminster, about just how this will be implemented?

3 comments:

medwaycaptain said...

I own and live aboard my Princess cruiser, I do take her out from time to time, the comment "gin palace" is used quite often and maybe true in some cases but i am sure plenty of owners like me can only just about afford to live as we do, the fuel costs.. twin 250hp turbo diesels 12 gallons per hour at cruising speed, well work it out yourself, Ok, put some tax on, but 100% ??

Nev's Blog said...

Seems the boaters are getting hit with a double whammy, the DEFRA cuts meaning hikes in all things BW related, then the adding of tax to the red stuff.

Will it stop people boating - not if they have a boat, but it may stop people taking the plunge and getting a boat (like me) I think the balance will be restored by a drop in the price of second hand boats (I hope so, sorry to all those selling but I do think they are well over priced) The costs of getting afloat dropping will make the cost of ownership a little more acceptable?

Nev

Dave T. said...

This could be a blessing in disguise! If they can lobby the Treasury to part with this extra (and unexpected) income, BW and EA will have a source of income which is directly related to waterways use. This is something that BW have said that they wanted, but could not find (despite the fact that I suggested it in 2005!) If we boaters are paying for waterways usage via fuel duty, there is a sensible case for our annual licences to be reduced to a nominal flat fee. Certainly fairer!