Select Committee on Environmental Audit Written Evidence


Memorandum from Gatwick Area Conservation Campaign (GACC)

  1.  We are writing to support and wholeheartedly endorse the submission made to you by the Stop Stansted Expansion group.

  2.  Like Stansted we face proposals for new runways which would make Gatwick the biggest airport in the world. As at Stansted this would cause devastation to the local community and environment. As at Stansted we have overwhelming local support in opposing the proposals.

  3.  Like Stansted we believe that the rapid growth in air travel is in large measure due to its favourable tax treatment. On national issues such as taxation and climate change we have worked though national organisations such as CPRE and the Aviation Environment Federation.

  4.  Indeed in my personal capacity I wrote a booklet for AEF recently called "The Hidden Cost of Flying", and I believe copies have been made available to the Committee[21] I am enclosing a copy of the supplement which comments on the new Treasury document "Aviation and the Environment: Using Economic Instruments" (see Annex).

  5.  My conclusion is that the true external costs of aviation are around £5 billion rather than the £1.4 billion indicated in the Treasury document.

May 2003


The Hidden Cost of Flying-Supplement: April 2003

  Aviation and the Environment; Using Economic Instruments was issued by the Treasury and the Department for Transport in March 2003. It is a welcome step in the right direction. At last the Treasury is turning its alpha mind to the issue of how much tax the airlines should pay. So far as it goes, which is not far, the new document confirms the calculations in the Hidden Cost of Flying.

  The Treasury calculate the external costs of climate change caused by aviation as £1.4 billion in 2000, rising to £4.8 billion in 2030. The increase is mainly due to the fact that air travel is forecast to treble, and partly due to the fact that the cost of climate change is assumed to rise over time. Other external costs such as noise, local pollution and damage to countryside and heritage are said to be small by comparison.

  The hidden costs included in this calculation are the impacts of global warming on agriculture, increased mortality, sea level rise, species loss, and health effects such as increased likelihood of malaria. Details are given in Estimating the Social Cost of Carbon Emissions by Richard Clarkson and Kathryn Deyes (DEFRA January 2002).

  Clarkson and Deyes point out, however, that these figures are only sufficient to meet the UK's international obligations under Kyoto to reduce emissions by 5.2% (paragraph 9.13). If the Treasury wishes to meet the more ambitious target of a 20% reduction (let alone the IPPC target of a 60% reduction) a higher price needs to be put on carbon. One study suggests it would need to be £100/tC instead of £70/tC, ie 43% higher.

  Taking into account also the annual increase since 2000, this would suggest that the figure of £1.4 billion should be increased to £2.5 billion in 2003.


  The Treasury admit that the calculation "takes no account of uncertainties including the probability of: so-called `climate catastrophe' (eg melting of the West Atlantic ice sheet, Gulf Stream suppression etc)". Nor does it include "the `socially contingent impacts' of climate change (eg famine, mass migration etc)."

  According to Tony Blair we should take these dangers seriously: "There are alarming changes in our atmosphere, in global temperatures, in weather patterns, in sea levels and in the protective ozone level. As a result, across the world millions face drought, flooding, disease." (Speech to the CBI. 24 October 2000).

  These hidden costs are left out because the Treasury cannot measure them. Crossing a railway line in front of an oncoming train because you cannot exactly measure its speed may appeal to alpha minds but is generally not to be recommended. If the danger is probable or even possible, then according to the precautionary principle, we should take action to prevent it.

  DEFRA suggest doubling the figure to provide a sensitivity range but admits that even this "does not cover the full uncertainty." They point out that "Existing studies (of climate change costs) give little consideration to the possibility of climate catastrophes." Also that, because some climate change events tend to become self re-inforcing, some studies show a "higher possibility of an extremely disastrous outcome than of a much more minor one."

  Therefore it would seem fair to suggest that the figure of £2.5 billion should at least be doubled. This would suggest for the year 2003 a cost of climate change damage due to aviation of around £5.0 billion. This does not take into account other external costs such as noise or local pollution.

  When fiscal equity is taken into account that would seem fully to justify taxing aviation fuel at the same rate as motor vehicle fuel (tax yield £5.7 billion).


  In the Hidden Cost of Flying it was argued that there is a need to ensure that aviation pays the same rate of tax as other industries (fiscal equity) as well as covering its external costs. But the new Treasury document makes no reference to fiscal equity.

  The case for imposing tax on aviation fuel at the same rate as on petrol for cars depends partly on external costs and partly on fiscal equity. The case for applying VAT to air travel depends entirely on fiscal equity.

  The Treasury document is full of invitations to suggest "instruments" to reduce aircraft emissions. The alpha mind seems reluctant to recognise that the Treasury has the best instrument to hand: to remove the tax concessions which are fuelling the artificial growth in air travel. When a market is distorted, it is normally best to remove distortions rather than to try to control the results by regulation.

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