Select Committee on Environmental Audit Appendices to the Minutes of Evidence


Memorandum from Green Alliance

  1.  The Pre-Budget Report (PBR) could be seen to represent a missed opportunity for the Treasury to take forward the environmental agenda. A considerable proportion of the PBR is allocated to a section on Protecting the Environment. Previous Budgets and Pre-Budget Reports have also introduced significant new packages of environmental taxes and other polices. These are, of course, to be welcomed, but it is the failure to cross reference the content of Protecting the Environment to other sections of the PBR that concerns us. Environmental measures are presented in this and previous reports mainly as a means of mitigating the negative environmental impacts of economic activity, restricting things people would otherwise do, and imposing costs for businesses and society.


  2.  Raising the cost of "bads" is only one aspect of environmental taxation. The other, more positive aspect is stimulating "goods" and creating opportunities for entirely new ways of doing things—things that protect the environment and cost less. Given the emphasis placed on improving resource productivity in recent speeches by the Prime Minster and the Trade and Industry Secretary, Stephen Byers, and in the DTI Sustainable Development Strategy launched in October, it might have been expected that the positive, opportunity-creating aspects of the environment would have been a major focus for the Pre-Budget Report: stimulating progress towards a modern competitive and resource-efficient economy.

  3.  Most disappointing is that there is, in fact, already a section of the PBR devoted to productivity: Meeting the Productivity Challenge. This discusses the factors conventionally considered to affect productivity, namely competition, enterprise, investment and skills. Implicit in these factors and the discussion of them is the role that improved resource productivity could play in reducing costs and stimulating new processes and technologies, which would improve the competitiveness of the UK economy. However, no explicit reference is made to this opportunity. If it were made explicit, it would have significant implications for the introduction of a new wave of environmental taxation and other measures to stimulate resource productivity.

  4.  The accompanying document to the PBR, Productivity in the UK: The Evidence and the Government's Approach reinforces the view that that the role that environmental productivity and taxation could play in a modern competitive economy has been overlooked by the Treasury.


  5.  Certain sections of the PBR suggest that the Treasury has not yet fully accepted, or perhaps been introduced to the concept of the environment as an integral part of a modern economy—a means of reducing costs, compatible with both increased economic growth and reduced environmental impact. However, the Climate Change Levy and associated negotiated agreements indicate a more sophisticated understanding of the potential of policy packages to improve the environmental productivity which combine an environmental tax, a means to reduce the tax liability through commitments to increased efficiency and other measures such as capital allowances on environmental investment.

  6.  We believe that stimulating resource productivity is a challenge that the Treasury must now address. The importance of resource productivity must be put at the heart of Treasury thinking. We hope the Environmental Audit Committee in their questioning of Stephen Timms MP will probe his Department's understanding of the potential for a resource efficient and competitive economy.


  7.  Presenting environmental taxation as a positive tool to increase productivity, competitiveness and create opportunities and jobs is likely to be easier to present to the public than environmental taxes, like the fuel duty, that discourage motor transport without actively stimulating alternatives. On this issue Treasury must provide leadership and justification of the need for environmental taxation. This needs to be applied to both new opportunities and existing measures if the need for them is to be understood and accepted by the public. In other policy areas such as education and health, Government will justify policy and the hard choices that have to be made and this now needs to be done for environment policy.


  8.  Finally, in respect to assessing the environmental impact of the proposals in the PBR a qualitative assessment is given of environmental measures proposed and the means by which emissions levels are derived are referred to in section 6.99-6.101. However, no quantitative assessment of the implications of the proposals in the PBR is given, for example, the environmental implications of the changes to fuel duty arrangements. It would be hoped that these figures would be calculated during the development of the PBR to assess the environmental impact of changes and new policy and could therefore easily be incorporated into the PBR.

November 2000

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