Spend pump 'windfall' on tackling climate change

Friends of the Earth Cymru say that the Government should invest the extra 'windfall' revenue received due to the oil price 'surge' (1) on transport investments to tackle dangerous climate change, and not to fund pump price cuts.

The windfall revenue has widely been proposed to fund pump price cuts but the environmentalists call on the public to consider the impacts of recent weather related disasters around the world before supporting such cuts. FOE Cymru also call on government to introduce a fair system of lorry taxation to help break the current fuel picket.

Neil Crumpton, transport spokesperson said:

"Even in the last year the frequency of major floods, droughts and new evidence of melting ice caps and receeding glaciers is causing serious human hardship in devastated regions around the world and increasing alarm in scientific circles. So rather than using the windfall oil revenue to fund lower pump prices we call on the Government to clearly invest that windfall in further transport investments to tackle climate change. And we call on the public to put investment against climate change before lower pump prices."

"As regards the hauliers situation, foreign lorries should be charged to run on UK roads so that British hauliers are not commercially disadvantaged. Such freight charges are being introduced in Germany, Austria and Switzerland with EC backing.

"Even with a fair taxation system some hauliers will still go out of business due to restructuring within the haulage industry including the introduction of heavier 44 tonne lorries, but there are increasing jobs in the rail-freight industry."

Notes

1) North Sea Oil Production revenues and extra VAT on higher oil prices

Media Briefing on Fuel Crisis

Here are Friends of the Earth Cymru's (FOE Cymru) views on the fuel crisis.

FOE Cymru are currently proposing that the escalator is halted certainly until the world oil price surge falls off and things have settled out again. However, FOE Cymru are saying that due to the seriousness of recent global warming indications including the lack of ice at the north pole this year, that rather than reducing pump prices using the 'oil price' windfall (from North Sea oil production royalties and extra VAT receipts) that these additional revenues should be CLEARLY spent on further public transport investments to tackle climate change.

As regards the British hauliers, their competitive disadvantage with foreign lorries is unfair and should be addressed. FOE Cymru call for foreign lorries to be taxed for operating on UK roads. A Eurovignette system is operated in some EU countries but the tonne kilo-metre tax that is being introduced into Germany, Austria and Switzerland would be better.

That said some hauliers would still go out of business due to restructuring of the haulage industry. Not only are there increasing jobs in rail-freight but the haulage industry itself has successfully lobbied for the introduction of heavier 44 tonne lorries which means less drivers for the same tonnage moved. Other efficiencies are also reducing mileage's.

Indeed, the majority of public have traditionally wanted less lorries on the road whether they currently have sympathy with their competitive disadvantage or not. Road freight adds disproportionately more road danger (long driving hours and many un-roadworthy vehicles) and also only pay about 70% of their true or external costs such as air pollution/road damage, crashes etc. So, as rail freight and coastal shipping increases and there is less inefficient running, for example less 'food miles'* then there will
be less road haulage jobs and more rail-freight jobs overall.

(*food miles - farm produce travelling tens or hundreds of miles from farm to processing and distribution depots then to a supermarket possibly a few miles from the farm !!)

The question of the extra oil price or 'surge' revenue generated due to North Sea production royalties and extra VAT is an interesting one. The deadlock might be broken if the government were to feed this 'surge' revenue back to the public while the surge drops off as oil production is stepped up.

However, even if the 'surge' revenue were put to reducing pump prices in the short term the price of fuel would probably still need to be escalated in the months and years to come if fuel inefficiency of new car sales and increases in traffic levels resulted in less than safe UK greenhouse gas reductions.

So, the escalator duties and oil price windfalls should CLEARLY be fed back into investment in public transport to tackle climate change by reducing car dependency and reducing traffic - eg rail/ bus services, making urban areas safer for non pedestrians, cyclists and children, and other vulnerable groups.

FOE has also proposed that the Government consider a 'rural Council Tax rebate' for the lower Council tax bands to address fuel poverty in the deeper rural areas. Other equity taxes should also be identified.

Carbon dioxide emissions from traffic is the fastest rising sectoral increase and currently accounts for over 20% of UK emissions. And emissions do not look like falling much because of forecast traffic growth. So one can imagine the response of people whose worldly possessions have been swept away in (yet another) flood, when they hear some motorists campaigning for cheaper fuel to support their fuel inefficient cars.

Climate change is the major reason for the fuel duty escalator but there are others. There are various external costs that motorists should pay, eg air pollution/ground pollution, congestion, cost of crashes and injury, policing, road lighting, noise etc. However, if motorists do increasingly purchase more fuel efficient vehicles then the cost of motoring could still reduce further below the levels of 'disposable income'.

In fact some of the taxes raised by fuel duty are and will be fed back to rural areas anyway through increased public transport and Local Transport Plan grants , even without FOE's suggested Rural Council Tax Rebate to lower council tax band households in the 'deeper' rural areas. Expanding complimentary policies such as reduced rates for post offices, shops, etc and investment in local community facilities, hospitals and schools would also reduce the need to travel. This means that non vehicle owners, the under 18's the old and the disabled, also have their transport needs addressed - transport is much about 'access to facilities'. Reducing car-dependency should be a major consideration in any policy formulation.

However, the context here is of melting icecaps and the increasing frequency of devastating storm events. Last week a group of international scientists aboard a Russian icebreaker arrived at the north Pole to find a stretch of open water. They were alarmed - this was the fist time in possibly 50 million years. FOE urge the public to consider the high number of major and deadly regional weather related floods and droughts over the last year or so, the receding ice caps and glaciers and the warnings coming from the world's scientific community before calling for a reduction in pump prices.

Neil Crumpton, transport spokesperson, FOE Cymru

Notes:

* a 'rural Council Tax rebate' was first proposed by FOE Cymru at Peter Hain's Welsh Transport Advisory Group in 1998 (now the Welsh Transport Forum). Other equity rebates could address fuel/transport poverty issues.

* the 'environmental' escalator tax is now caught up in an oil price surge, an industrial dispute and political dig-in that is ironically caused by rising world oil prices due to rising demand, especially in the US where taxes are low and per capita emissions are highly globally unsustainable. US emissions are likely to be a major issue at the next Climate Change conference (COP 6) at The Hague in November.

* one issue that is certainly giving rise to anger is that of the unfair competition on British hauliers by foreign hauliers fuelled on cheaper diesel (stored in large 'third tanks' in some cases). This should be addressed through European tax harmonisation. Foreign fuelled lorries operating on UK roads should be taxed, there is currently a Eurovignette tax system and a better tonne kilometre tax is being introduced across Switzerland and on German and Austrian motorways. The EC has proposed allowing such charges Europe-wide - it is a pity successive governments have not heeded precisely this long standing green taxation advice on freight taxation.

* no political party should call a duty escalator a 'stealth' tax, certainly not a party that introduced the fuel escalator. The whole point of any duty escalator is to widely and loudly publically advertise a progressive and predictable tax increase over time to enable timely public purchasing choices and lifestyle changes. The fuel duty escalator was introduced in 1993 by the Conservatives, was continued by the Labour government and was proposed to run to 2002.