Memorandum submitted by the Royal Society
for the Protection of Birds
SUMMARY
1. The publication of the Government's Pre-Budget
Report 2005 highlights the Government's lack of major plans to
address and resource its environmental priorities. In summary,
the RSPB:
— Believes that the Government should
build on existing green taxes by delivering more rapid and far-reaching
environmental tax reform.
— Is concerned by the Treasury's apparent
deprioritisation of environmental taxes during the electoral year.
— Recommends more open analysis of
the contribution of green taxes to objectives on diffuse pollution,
and the aggregate effects of Pre-Budget Reports and Budgets on
carbon emissions.
— Is dismayed by the abandonment of
environmental requirements for company reporting in the Operating
and Financial Review.
THE TREASURY'S
ENVIRONMENTAL FISCAL
STRATEGY
2. The RSPB has advocated that taxes should
be used to address environmental externalities. For example, we
argued for a carefully designed pesticides tax before the introduction
of the voluntary agreement in 2001, and supported the introduction
of the climate change levy and landfill tax. We also support the
concept of environmental tax reform; increasing taxes on things
that damage the environment, and reducing tax on good things such
as employment.
3. The RSPB is concerned at the lack of
overall progress on environmental tax reform. In proportion to
the current measured and predicted rates of environmental damage,
we consider the level of progress on environmental tax reform
inadequately slow, and too limited in the scope of their application.
In order to contribute to sustainable development, the Government's
environmental tax strategy must shift a greater proportion of
the burden of taxation to environmentally damaging goods and services.
Following the 2005 general election, the RSPB would hope and expect
to see the shift in environmental taxation occurring far and fast
enough to affect actual practice. The Treasury should support
work to "get the prices right" to incentivise sustainable
development.
4. The RSPB was extremely concerned that
Treasury limited analysis of certain environmental tax measures
during 2005. Assuming a political motivation for such reticence
in an election year, this reflects a lack of commitment to what
environmental taxes can achieve (thus concurring with Recommendation
1 of the Environmental Audit Committee's report on Pre-Budget
2004 and Budget 2005). The Treasury could instead begin to build
political support for environmental taxes, by promoting them as
a positive measure, that can reduce both environmental damage
and taxes on socially positive factors like employment.
5. The Treasury's work on environmental
taxes in agriculture could be progressed by integrated assessment
of policy instruments. For example, the indication in recent Pre-Budget
Reports and Budgets that economic instruments to deal with diffuse
pollution remain under review is welcome. However, Treasury's
analysis should include more thorough consideration of how policy
objectives will be delivered. Evaluation of economic instruments
must be in the context of the lack of resources for new spending
and reluctance to regulate in the current "better regulation"
environment. Without this integrated assessment, decisions not
to progress individual policy instruments will continue to add
up to a lack of progress overall on policy objectives.
PRE-BUDGET
REPORT 2005
6. While Pre-Budget Report 2005 contained
further measures on climate change and energy efficiency, we believe
the overall effect of its measures will be to increase UK Greenhouse
Gas emissions. To analyse this, the Treasury should publish a
Carbon Budget for the UK. As well as highlighting the effects
of selected individual policy instruments, the Treasury should
publish an overall assessment of the likely changes to the UK's
Carbon Budget at each Pre-Budget Report and Budget. This should
include updates on the current carbon emissions, and the expected
future effects of the policy measures in each Pre-Budget Report
and Budget.
7. Such an analysis for Pre-Budget Report
2005 would be instructive as to the combined effects of: changes
to the forecast growth of the UK economy; higher world oil prices;
and announced policy measures such as the continued freeze in
road fuel duties. It would also encourage discussion on the links
between oil and energy prices, UK economic performance and innovation,
and carbon emissions targets.
8. The RSPB was extremely disappointed by
the scrapping of the Operating and Financial Review requirements
for company reporting. The Government has ignored a fundamental
principle of economic theory, that markets work best when participants
are fully informed. If market mechanisms are generally to be preferred
over regulation for delivering environmental objectives, then
citizens and investors need to have access to company information
on environmental impacts in order to make rational decisions.
By choosing not to require companies to provide such information,
the Government has succumbed to a short-term view of environmental
management: that it is a burden on companies rather than a proactive
tool that can be used to drive innovation and identify risks,
for example in relation to climate change.
THE STERN
REVIEW
9. The RSPB warmly welcomes this timely
and important review and is pleased to see the terms of reference
cover both technical aspects and policy responses. It is particularly
encouraging to see the Government agree with the Environmental
Audit Committee that the guiding principle should be to use environmental
taxation to achieve scientifically mandated policy ends, and not
to use it to perpetuate the illusion that it is possible to calculate
precisely the associated cost externalities and levy a tax only
to that extent. The RSPB's view on climate change policy is that
the Government should set out to achieve its emissions reduction
targets adopting the least costly means of doing so. Targets,
both short and long term, should reflect the best available scientific
information.
10. Although we support a policy approach
based on science, the RSPB recognise the valuable and important
work the UK Government has sponsored in trying to establish a
Social Cost of Carbon. We believe this work should continue but
is, as yet, not sufficiently robust to be the principal basis
for climate change policy. A major weakness with this work to
date has been the lack of attention paid to monetising the damage
costs associated with the human consequences of the manifold changes
to biodiversity, and the ecosystem services dependent on it, rendered
by climate change. There has been a proliferation of scientific
studies revealing the impacts of climate change on biodiversity
and ecosystem functioning in recent years, which has yet to be
reflected meaningfully in the integrated modelling work. Understanding
the merits and shortcomings of the cost benefit approach in incorporating
the full range of impacts (and in dealing with uncertainty) will,
we hope, be a significant outcome of the Stern Review.
January 2006
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