1. This clause deletes the ‘off-road tractor’ category from the list of vehicles legitimately able to use rebated heavy oil as fuel whilst travelling on the public road. This change will take effect from 1 May 2000.

2. Subsection (1) - provides that Schedule 1 to the Hydrocarbon Oil Duties Act 1979 shall be amended. This Schedule lists the categories of vehicles which are not considered to be ‘road vehicles’ under the legislation and which can, therefore, legitimately use rebated heavy oil as fuel when travelling on the public road.

3. Subsection (2) -omits sections 2(1)(b) and 2(4) of Schedule 1 to the Hydrocarbon Oil Duties Act 1979. Section 2(1)(b) includes ‘off-road tractors’ as ‘excepted vehicles’ and section 2(4) defines the meaning of an ‘off-road tractor’ for the purposes of the Schedule.

4. Subsection (3) - provides that the new clause shall have effect in relation to the use of rebated heavy oil as fuel on or after 1 May 2000.

5. The rates of duty on fuels for road vehicles are set to take account of the Government’s economic, social and environmental commitments. Any heavy oil delivered for use as fuel for road vehicles must pay the appropriate heavy oil rate, currently 48.82 pence per litre for ultra-low sulphur diesel. However rebates of duty are allowed on oils which are not used as fuel for road vehicles. Gas oil (red diesel) which is used as fuel for off-road vehicles and in some commercial central heating systems is charged with duty at 3.13 pence per litre and kerosene, when used as fuel for domestic central heating systems is charged at a nil rate and at 3.13 pence per litre if it is used in an engine or ‘excepted vehicle’. The Hydrocarbon Oil Duties Act 1979 states that rebated heavy oil may not be used as fuel for road vehicles.

6. Schedule 1 (Excepted Vehicles) to the Hydrocarbon Oil Duties Act 1979, introduced by the Finance Act 1995, categorises the types of vehicle which are not considered to be road vehicles and which can, therefore, use rebated heavy oil as fuel when travelling on the public road. The intention of Schedule 1 is to limit the use of rebated heavy oil to vehicles that only use the public roads on very rare occasions.

7. The High Court decision, in the case of Sidney Tempest t/as Cesspool Sid v the Commissioners (Reference CO/639/99), concluded that any tractor, which cannot travel at a speed greater than 25 miles per hour, falls within the definition contained in the Schedule. As a result of this owners of ‘off-road’ tractors can now use their vehicles to undercut legitimate haulage vehicles by using a tractor (running on rebated heavy oil) rather than a truck (running on road diesel) to carry out short haul operations.

8. This clause will effectively prevent such operations. Tractors running on rebated oil will only be permitted on the public roads to carry out agricultural, horticultural and forestry work. The farming industry will not be affected as it can still use rebated heavy oil for its agricultural tractors but the road haulage organisations will welcome the change as it is their industry which is currently affected by competition from tractor operators.

9. The use of rebated oil by what are essentially haulage companies also undermines the Government’s environmental policy of ‘making the polluter pay’. Rebated gas oil has a sulphur content of anything up to 2000 parts per million whereas ultra-low sulphur diesel (which accounts for 100 per cent of the road fuel market) only contains 50 parts per million.

10. The change is effective from 1 May 2000.