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Budget 2007: Lukewarm response to 'green' measures. By Lucie Benson

21st Mar 2007
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Gordon Brown’s budget announcement of a series of 'green' measures aimed at protecting the environment both at home and abroad has been deemed a “failure” and a “faint-hearted affair” by environmental groups.

The chancellor said that the government is committed to playing a leading role in tackling the global challenges of climate change, whilst promoting an environmentally sustainable transport system and improving local environment.

But Green Party principal speaker Dr Derek Wall said the budget failed to tackle climate change: "It is not prudent to gamble with the climate - Brown's failure to act now on tackling climate change means we will pay later - as the Stern review has shown.”

Measures announced in the budget include:

  • an increase in fuel duty rates of 2 pence per litre from 1 October 2007 and a pre-announcement of rates for the following two years
  • increases in car vehicle excise duty rates including raising rates for the most polluting cars and reducing rates for the cleanest cars
  • measures that allow purchasers of new zero-carbon homes costing up to £500,000 to pay no stamp duty from 1 October 2007
  • measures to help householders take cost-effective action to improve the energy efficiency performance of their homes
  • an increase in the standard rate of landfill tax by £8 per tonne per year from 1 April 2008
  • an inflation only increase in the climate change levy from April 2008, to encourage energy efficiency in the business sector
  • increased funds available through the Low Carbon Buildings Programme to a total of over £18 million
  • £800 million allocated to the environmental transformation fund to finance overseas development projects.

“These measures, our membership of the European emissions trading scheme and an inflation increase from next April in the climate change levy, will together each year contribute 16 million tonnes of carbon reductions,” said Brown.

Also included in the speech was the expansion of the capital allowance reforms. Enhanced capital allowances of 100% will remain as they are for energy- and water-saving equipment, and low carbon emmission cars.

But Wall criticised Brown on virtually every point: “After six months of rhetoric on climate change, there is a shocking absence of substance in this budget. Brown is being complacent in a moment of crisis.”

Friends of the Earth (FoE) acknowledged that the budget had produced a number of positive initiatives but added that the urgency and scale of what is required to substantially reduce UK carbon dioxide emissions fell a long way short of what is required.

FoE director Tony Juniper said: “The chancellor should have done more to make it easier and cheaper for people to go green. UK carbon dioxide emissions have risen under Labour; now is the time for bold leadership, not half measures in the face of overwhelming threat.”

Greenpeace director John Sauven was also unimpressed: “The reintroduction of the fuel escalator was the main saving grace in an otherwise faint-hearted affair. The urgency of climate change requires bold measures and not timidity on cars and planes.”

However, British Retail Consortium director general Kevin Hawkins said that the anticipated “green” measures seem very sensible: “We called on the chancellor to cut VAT on energy efficient products to 5%. He could have done that in the UK immediately but his pledge to push for Europe-wide agreement is welcome. If the EU is serious about reducing carbon emissions it will back this initiative.”

The government intends that, within a decade, all new homes in England and Wales will be zero carbon and that there will be an exemption from stamp duty for the vast majority of these homes. The exemption will come into effect from 1 October 2007 and will be time limited to 30 September 2012.

Yet Kevin Griffin, director Stamp Tax Group at Ernst & Young said: “Reducing tax and encouraging environment-friendly building are both laudable objectives – but will this attempt to combine the two work? It may be that the £15,000 tax saving on a new £500,000 home is sufficient to pay for marking it ‘carbon neutral’; it is far less clear that the £2,500 saving on a more average £250,000 home will make any difference.”

The Green Party’s Wall added: "Exempting zero carbon homes from stamp duty sounds good but means little - it will not incentivise installation of micro generation and insulation measures. If he had raised fuel duty by 19p that would have cut carbon more than the rest of this budget put together - some 19 million tonnes over the next year.”

The increases in fuel duty and car vehicle excise rates has also been criticised by the Retail Motor Industry Federation (RMIF) who have said that the chancellor has “attacked” the motorist but failed to invest in transport. “There are more effective ways to influence the buying habits of motorists than the ‘blunt instrument’ approach of a road tax increase. Instead of punishing motorists for choosing what is available, the government should be doing much more to encourage vehicle manufacturers to develop hybrid vehicles,” said Sue Robinson, director of the RMI National Franchised Dealers Association.

In addition, Gordon Brown criticised the Tories on the proposal of VAT on airline tickets and rejected the idea. He said in his speech: “I have had representations to put VAT on airline tickets, a 17.5 per cent rise in airline ticket prices. I have investigated the detail of this proposal. It gives me no pleasure to tell the House that the substance of this measure has not been properly thought through. It would apply only to domestic flights, business would be able to claim back VAT, and even by 2020 it would save just 50,000 tonnes of carbon - less savings in one year than achieved by the climate change levy in just one week.”

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