Memorandum submitted by the Green Alliance
The following gives Green Alliance's brief analysis
and response to the Pre-Budget Report 2005. It begins with a general
overview and then looks at specific items in more detail.
OVERVIEW
Environment once again appears to be way down
the list of priorities, more of an add-on than a crosscutting
theme. The tone of the environmental chapter (Chapter 7) is very
much that environmental measures are a drag on the economy and
a cost to those that are required to act on them. There is no
conception that stimulating better environmental performance could
have a positive effect or improve the UK's or companies' competitiveness.
The environmental challenges laid out in Chapter
7 are about mitigating the impacts of growth rather than thinking
about how growth and environment might be made compatible. It
focuses on the negatives rather than the positives. Framing the
challenges in a different way would result in a different set
of instruments. For example, tackling climate change could be
re-focused as "making the UK a leader on climate change technologies
and carbon reduction". Similarly, improving waste management
could become "transforming the way the UK uses resources".
The negative conception of the problem results in a focus on mitigation
rather than transformation.
Whilst we understand that a number of areas
of policy including waste, energy and climate change are currently
under review we are disappointed that the Chancellor did not take
the opportunity to open up broader discussion on these areas.
ENTERPRISE (CHAPTER
3)
The Operating and Financial Review
We are deeply concerned about the Chancellor's
decision to abolish the statutory requirement for quoted companies
to produce an Operating and Financial Review. Not only does the
decision appear to have been made without consultation across
government or externally, it has been met with criticism across
the environment and business sectors including from the Association
of British Insurers, the Institute of Directors and Friends of
the Earth. It would seem to us to be a political move to please
certain members of the business community and does nothing to
shore up his environmental credentials.
ENVIRONMENTAL STRATEGY
(CHAPTER 7)
Principles of environmental policy making (Box
7.1)
This seems to take us further away from the
"Statement of Intent on Environmental Taxation" of 1997.
Action to protect the environment must take place
at the appropriate level
This paragraph appears to view environmental
action as a cost and drag on growth and the delivery of other
objectives.
Action on the environment must be as part of a long-term
strategy
This could be read as implying that we should
hold back from action in some areas as in the future more innovative
solutions will become available.
Tackling the global threat of climate change
Although we were led to believe that climate
change would be a strong theme throughout the Pre-Budget Report
this turned out not to be the case and we are disappointed that
the Chancellor did not use this opportunity to outline more definitely
the Treasury's views on the need to tackle climate change.
We are particularly concerned that the statements
on energy efficiency do not seem to reflect the reality that a
radical shift in policy is needed if we are to deliver the government's
ambitions. In addition, the Chancellor's commitment to hold a
high-level energy efficiency summit, announced in March this year,
has now been downgraded to a much smaller less ambitious seminar.
The announcements on housing, and in particular
the Code for Sustainable Homes are a lot weaker than we would
have liked—see analysis below.
Improving Waste Management
We do not believe that raising the landfill
tax by £3 a year (para 7.75) will be enough of an incentive
to drive the move away from landfill. The importance of the tax
is in changing the relative economics of different waste management
options. The tax needs to be set at a level that makes landfill
more expensive than the next cheapest option—approximately
£50 or higher per tonne gate fee.
We do not consider a 25% recycling target to
be tough (para 7.74). A tough, but achievable target would be
around 60%—as suggested in Defra press release 391/05: www.defra.gov.uk/news/2005/050914a.htm.
Improving Water Efficiency
Whilst welcoming the proposal to introduce Enhanced
Capital Allowances for water efficiency measures we would like
to see the Treasury go further by implementing measures designed
to curb demand as well as maximise water efficiency across all
sectors.
The forthcoming PSI report, A green living
initiative, which was commissioned by Green Alliance, recommends
local-level action on water, with universal metering in areas
of unsustainable water demand, with a view to 100% metering in
the medium to longer term. All water companies that predominantly
cover areas classified by the Environment Agency as being beyond
sustainable use of water resources should be granted immediate
water scarcity status. Tariffs should be linked to Council Tax
Bands to ensure low-income households are not penalised.
We also recommend that the government do for
water what it did for energy, and set up a Water Saving Trust
at a national level (similar to the Energy Saving Trust) that
would provide centralised advice and information to household
customers on how to conserve water.
We also support the IPPR's ongoing work into
the feasibility of a Water Efficiency Commitment, which would
set suppliers water saving targets achievable through encouraging
customers to improve the water efficiency of their homes.
HOUSING (CHAPTER
3)
The government has embarked on the largest house-building
programme for decades. The package of measures announced does
not go far enough towards safeguarding against the environmental
impacts of the new build and delivering the improvements in future
building stock that are needed.
The Code for Sustainable Homes (para 3.134)
This has been put forward as one of the main
measures to curb the environmental impacts of the new homes programme.
We are concerned that the proposed Code is not going to guarantee
the standards that are needed. With nearly a third of emissions
coming from energy consumption in the home, domestic energy use
needs to be a high priority in the drive to tackle climate change.
Unfortunately, on energy the draft Code is weak: the minimum standard
is not above building regulations; and tradeability between the
different elements of the Code leaves open the risk that it might
be possible to reach level three of the Code (the proposed level
for the publicly procured new homes) without any additional energy
measures to building regulation requirements.
We are also disappointed that no new measures
were announced to stimulate uptake of the Code in the private
sector. As the Code is a voluntary measure we feel that fiscal
and other incentives are needed for the Code to be widely adopted.
Fiscal Incentives for Sustainable Homes
We are disappointed that nothing was proposed
on fiscal incentives for sustainable homes. There is a clear need
for government action to engage households in achieving environmental
goals, including reduction in energy and water use and waste generation.
Policy needs to move beyond the efficiency of houses and towards
engaging individuals in demand reduction. Tax incentives linked
to information and advice aimed at changing behaviour need to
be a stronger part of the policy mix.
DESIGN (CHAPTER
3)
The Pre-Budget Report announced reforms to the
Research & Development tax credit and a number of other measures
to support the development of design and creativity (paras 3.64-3.67).
This would appear to have the potential to support
the development of leading edge, competitive green products, yet
the opportunities and need for environmental innovation are hardly
mentioned. We would like to see this potential recognised in the
rollout of this programme by it being directed at sustainable
innovation and design initiatives.
January 2006
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