Archived press release

Brown to abandon fuel duty rise?

29 November 2004

The Government's commitment to tackling climate change will be under considerable doubt if Gordon Brown scraps this year's planned increase in fuel duty, Friends of the Earth said today. The environmental campaign group is calling for the fight against global warming to be at the heart of this week's pre-Budget statement (Thursday).

Media reports suggest that the Chancellor will abandon this year's annual rise, even though the cost of motoring has fallen since Labour came to power in 1997, and traffic levels have risen by more than 10 per cent. Labour is also struggling to meet its promise to cut carbon dioxide levels by 20 per cent (based on 1990 levels) by 2010. Earlier this year it was revealed that carbon dioxide levels have actually risen since 1997.

Despite Government promises to tackle global warming the Treasury appears to be consistently undermining that aim. Taxes on fossil fuels have fallen as a percentage of total taxes under Labour. New Government statistical data, published last week, reveals that as a percentage of total taxes, taxes on fossil fuels have fallen to a ten year low (8.3 %), and are now lower than when Labour came to power in 1997 (9.4 %) [1].

The tax reduction flies in the face of stated Government intentions. Following Labour's electoral victory in 1997, it issued a statement committing itself to shift the burden of taxation off "goods", such as employment, and onto "bads", such as pollution [2]. Furthermore, the Government transport white paper [3] said:

"Current evidence suggests that the most cost effective ways of reducing total CO₂ emissions from the transport sector are measures affecting the cost of fuel, the cost of energy inefficient vehicles, or the efficiency of road haulage."

Friends of the Earth's economics coordinator, Simon Bullock, said:

"Scrapping this year's planned rise in fuel duty would seriously undermine the Government's commitment to tackle climate change. Motoring is already cheaper now than when Labour came to power, and more cars are clogging up our roads and polluting the atmosphere. Tony Blair says we must act now, to prevent a climate catastrophe. The tax system has a vital role to play - Gordon Brown must put action on climate change at the heart of his pre-budget statement next week."

"The Chancellor should stand by his commitment to increase road fuel duty, spending the money on public transport, and making streets safe for children to walk and cycle. He must also reform Vehicle Excise Duty - making it cheaper for people who buy green cars, and more expensive for gas guzzlers. Increases in Air Passenger Duty would also start to tackle the massive environmental damage caused by flying."

Friends of the Earth has published its Blueprint for a Green Budget [4] calling on the Chancellor to adopt a number of measures including:

• Increasing fuel duty in line with inflation - at the very least - each year; with the money raised used to promote real alternatives - better public transport and streets safe for walking and cycling, particularly for children.
• Increase air passenger duty, to start tackling the spiralling environmental damage from aviation.
• Encouraging householders to go green. This should include financial incentives for installing renewable energy - such as solar panels - in the home; stamp duty reductions for energy-efficient homes and VAT reductions on energy efficient products;
• Changing Vehicle Excise Duty to encourage people to buy more fuel-efficient vehicles, and penalising motorists who choose gas-guzzlers;
• Implement a renewable transport fuel obligation to encourage the use of bio-fuels.

Notes

1. Data from:
www.statistics.gov.uk/downloads/theme_environment/EANov04.pdf (PDF format)
Fossil fuels are all environmental taxes minus landfill and aggregates taxes.

2. Government’s statement of intent on environmental taxation, 2nd July 1997

“Over time, the Government will aim to reform the tax system to increase incentives to reduce environmental damage. That will shift the burden of tax from “goods” to “bads”; encourage innovation in meeting higher environmental standards; and deliver a more dynamic economy and a cleaner environment, to the benefit of everyone.”

3. 'The Future of Transport: a network for 2030' para 10.18

4. Friends of the Earth Budget

Friends of the Earth’s Blueprint for a Green Budget

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Published by Friends of the Earth Trust