Archived press release

Brown Budget fails green test yet again

6 December 2006

Friends of the Earth criticised Chancellor Gordon Brown for failing to take tough action in his Pre Budget Report today to tackle climate change. The environmental campaign group said that 'green' measures announced today were just "tinkering in the margins."

"Instead of putting measures to tackle climate change at the heart of his Budget, Mr Brown continues to tinker in the margins. The Stern Review set out that urgent action is needed to tackle climate change. But the Chancellor's response has been feeble. Key green initiatives have been ignored, and those that he has introduced are inadequate.

"The Government admits that climate change is the biggest threat the planet faces. So why does Gordon Brown continually fail to show the political leadership required on this issue? And why has he done so little to help people who want to go green? Today's Pre Budget Report will have a minimal impact on UK carbon emissions, and do little to show that the Government is prepared to face up to the challenges of global climate change."

It had been hoped that the Chancellor would use today's Pre Budget Report to show that at long last he was taking environmental issues seriously. Earlier this year the Treasury-commissioned Stern Review, warned of the catastrophic economic consequences of failing to tackle climate change.

Friends of the Earth's critique of the Chancellor's Pre Budget measures:

TRANSPORT

Fuel Duty

The Chancellor announced an immediate rise in duty of 1.25p, in line with inflation, but ruled out a real terms increase and reinstating the fuel duty escalator.

The cost of motoring continues to fall, while the costs of alternatives like bus and rail continues to rise. The 1.25p rise - merely in line with inflation, ie real price staying still - will have almost no effect. A real terms increase would also have allowed investment of the funds raised into improving public transport, as promised in his 1999 report, but there are now no funds for this.

Vehicle Excise Duty

Nothing.

The Government accepts that varying the cost of the tax disc by pollution levels has great potential to shift buying habits towards greener cars. However the current £20 difference between F and G bands for example is no incentive at all.

Air Passenger Duty

Rates have doubled - from £5 to £10 for intra-EU flights, and £20 to £40 for longer flights. Business rates have also doubled from £10 to £20 (intra-EU), and £40 to £80 (rest of the world)

Air Passenger Duty has been frozen (and falling in real terms) since 2000. Today's announcement brings the £5 rate back to its 2000 level of £10. This increase is welcome in that the Government has recognised that interim measures are needed to tackle aviation's emissions while an international agreement is negotiated. It is also welcome that the Government accepts that APD rises will have an environmental effect, and that demand management is necessary. However, the increases are not sufficient to tackle aviation's emissions- larger increases are needed, and an commitment to year on year increases to prevent the continuing falls in the overall cost of flying. These falling costs are driving massive airport expansion programmes across the UK.

Biofuels

The Chancellor announced a number of policies designed to increase the support for and uptake of biofuels.

Biofuels could potentially have a part to play in tackling climate change, but it is essential that there are strong environmental and social criteria attached to new biofuels projects, otherwise biofuels could encourage deforestation (monoculture plantations replacing rainforests) threatening biodiversity and adding to climate change. The Government's current sustainability criteria are nowhere near strong enough, and it is a major concern that it is helping this technology expand before ensuring high quality standards are in place.

HOMES

Energy efficiency

No measures anything near the scale of the challenge in the domestic sector.

£7.5 million extra for better coordination of the Warm Front and Energy Efficiency Commitment.

Almost no new measures here, despite it being a huge source of emissions. Households need financial help with capital costs for installing energy efficiency measures and new technologies such as solar panels. This would save people money, create jobs and reduce emissions. An investment of billions is the order of change needed - to help millions of householders improve the efficiency of their homes. Tiny micro-measures are not what are required here.

Micro-generations

No increase in the Low Carbon Buildings Programme (LCBP).

No measures to ensure a fair price for power generated and sold to the grid.

The sale of power to the grid is now not subject to income tax.

The income tax measure is welcome but small. The overwhelming priority to get these technologies taken up is help for householders with capital costs. The existing LCBP needs to be massively boosted. Countries like Germany have a package of strong measures to support micro-generation, and it is taking off. The UK is already falling way behind in these future technologies.

New homes

All new homes to be zero-carbon by 2016.

This is welcome, but the date of 2016 is far too unambitious. Also, a far greater priority is the existing stock - each year new houses contribute just 1% to the overall stock. The overwhelming priority is measures for 99% of houses now, not 1% of houses in 10 years time.

Zero stamp duty on new zero-carbon homes

This is a useful but minor measure.

Landfill tax

A £3 a year increase, in line with existing policy of a £3 a year escalator.

David Miliband has said that a much higher escalator is needed to reduce landfill and its adverse environmental impacts. A commitment to "consider" steeper increases is not progress.

Climate Change Levy (CCL)

Nothing. Continuing with in-line with inflation rise announced in Budget 2006.

The CCL has been a success, but frozen in recent years. A real-terms increase would have helped businesses increase efficiency, cut emissions and boosted the further uptake of renewable energy.

Carbon capture and storage

The Government is going to subsidise a demonstration plant.

Emissions Trading

The Government continues to place great hope in the EUETS scheme and its potential future expansion. The "protecting the environment" chapter of the pre-budget report focuses heavily on it. However it is not a panacea, and is working very badly at the moment - for example the UK power generators made £800 million windfall profits in the first year of its operation. The Stern Report is clear that other mechanisms including taxes, spending and regulation are all essential. It is also clear that action at the UK level will be, with well designed packages of policies, good for the economy as well as the environment. There is not a penalty from unilateral action, and indeed we are not moving faster than many countries in any case.

Press release setting out Friends of the Earth's call for a Green Budget

Detailed briefing on Friends of the Earth's call for a green Pre-Budget Report (PDF)

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If you're a journalist looking for press information please contact the Friends of the Earth media team on 020 7566 1649.

Published by Friends of the Earth Trust