Archived press release

Climate change must be at heart of pre-budget statement

19 November 2004

Increasing tax on gas-guzzling vehicles, including 4x4s, giving cash incentives for motorists to buy greener cars, and helping householders to be more energy efficient, are just some of the measures Friends of the Earth is urging Chancellor Gordon Brown to adopt in his forthcoming pre-Budget statement (2 December) as part of the Government's pledge to tackle climate change.

Friends of the Earth's Blueprint for a Green Budget[1], details measures the Chancellor needs to adopt if the Government is serious about combating global warming. The Prime Minister recently described climate change as "the world's greatest environmental challenge" [2].

SUVs and 4x4s are amongst the most environmentally damaging, biggest gas guzzlers on Britain's roads. Despite this a Vauxhall Astra Estate pays the same VED as a 4.0 litre Land Rover Discovery, even though the Discovery churns out over twice as much carbon dioxide, the main gas causing climate change. Currently, there are not enough incentives to buy greener cars.

Friends of the Earth is calling on the Chancellor to introduce four new road tax bands - with £50 between each band - to encourage people to buy less-polluting cars. VED for the most polluting cars should be raised to £500 per year (within 5 years), with the cleanest, most fuel-efficient cars charged no VED (starting now) [3].

According to the Department of Transport "a differential between bands of £50, would be enough for 33 per cent [of people about to buy a car] to choose a different car" [4].Making these VED changes would lead to over 9 million motorists paying lower road tax, and would result in cuts in carbon dioxide (the main greenhouse gas) of around four million tonnes by 2010.

Friends of the Earth is also calling on the Chancellor to adopt a range of other measures in his pre-Budget statement to combat climate change [1]. These include:

• 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;
• 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 spiraling environmental damage from aviation.

Friends of the Earth's director, Tony Juniper said:

"The Chancellor must announce action against gas-guzzling cars in his Budget statement next month to show that the Government is serious about tackling climate change. Vehicle Excise Duty must be overhauled to encourage motorists to choose fuel efficient vehicles."

"The fight against global warming must be at the heart of Gordon Brown's pre-Budget statement. There are lots of things the Chancellor can do to encourage people to cut their global warming emissions. But will he rise to the challenge, and show that the UK really is genuine about leading the world in dealing with this catastrophic threat?"

Carbon dioxide, the main greenhouse gas contributing to climate change, is emitted as a result of burning fossil fuels such as coal, oil and gas. Although the Government has promised to take action against global warming, UK emissions have actually risen since Labour came to power in 1997.

Notes

1. Friends of the Earth's Blueprint for a Green Budget

2. Tony Blair`s climate change speech was on 14 September 2004

3. Reforming Vehicle Excise Duty (VED)

Although the Chancellor has made some moves to reform VED, by introducing cheaper VED bands for more fuel efficient vehicles, the incentive to buy greener cars is too small. There is little to discourage motorists from choosing the most gas-guzzling vehicles - VED is the same for an average family car as it is for the most fuel inefficient vehicle. Currently 60 per cent of the vehicles on sale in the UK are in the top £165 road tax band.

Research by the Department of Transport, shows that wider VED differentials would persuade people to buy greener cars. It said that "the current graduated scheme does not offer a large enough incentive to encourage behavioural change."However, "a differential between bands of £50, would be enough for 33 per cent [of people about to buy a car] to choose a different car" A differential of £150, would influence 55 per cent to choose a greener car.

What the Chancellor must do

Friends of the Earth is calling on the Chancellor to introduce more VED bands for the least efficient vehicles, and widen the difference between bands. This should lead to the biggest gas-guzzlers being charged £500 VED, and the most fuel efficient charged nothing. The increases in VED could be introduced over five years, but the VED reductions should be introduced immediately.

Table showing the current and proposed VED levels

Making these VED changes would be revenue neutral, would lead to over 9 million motorists paying lower road tax, and would result in carbon dioxide (the main greenhouse gas) of around four million tonnes by 2010.

4. Department for Transport - Assessing the Impact of Graduated Vehicle Excise Duty - Quantitative Research

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Published by Friends of the Earth Trust