NFU Scotland President John Kinnaird has described today’s Budget as another mixed bag for farmers and rural communities. The headlines are:

• A welcome for the freeze in fuel duties until 1 September 2006, although concern that the rise in duty on rebated fuel is way above inflation.
• Disappointment at the increase in the rate of road tax for 4x4 vehicles
• A welcome extension of the duty rebate on biofuels until 2009

NFUS President John Kinnaird said:

“High fuel prices are hitting all rural businesses. Whilst a freeze until Autumn is welcome, there is still a fundamental problem with our fuel taxation system, which has a disproportionate effect on rural areas because families and businesses are further from essential services and public transport provision is still woeful in many areas.

“Whilst the fuel duty rises for ordinary road fuel have been linked to inflation, the Chancellor has once again hit legitimate users of rebated fuel with a big percentage rise. The red diesel rebate remains extremely important and justifiable for agriculture and I haven’t seen any justification for this latest 16% rise. It certainly won’t address the criminal element misusing rebated fuel; only tighter policing will do that. And with the next rise coming in September, many farmers in Scotland will be hit with higher fuel bills just as they are trying to finish harvesting.

“On top of that is the increase in road tax for larger vehicles, such as four-wheel drive landrovers, which will add to transport costs. It is not a major rise, around £25-45, but it seems that Government is hitting the wrong target by penalising individuals that genuinely need these vehicles for business reasons; a point acknowledged by environmental groups.

“The extension of the rebate on biofuels is good news and something NFUS has pressed for. Farmers have huge potential to contribute to the fight against climate change by growing energy crops such as oilseed rape which can be processed in green road fuels like biodiesel. The duty rebate and the 5% renewable transport target both play a major role and the Government’s support for them is important and welcome.”

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