RESPONSE TO THE GOVERNMENT'S GREEN
12. For several years we have made recommendations
on the need for sharply increased investment in low carbon programmes.
Many environmentalists have welcomed the green stimulus measures
announced in the Pre-Budget Report, but criticised them for being
far too small, given the urgent need to cut greenhouse gas emissions
and connected need for investment in low carbon policies and technology.
13. Tim Jackson, Professor of Sustainable Development
at Surrey University and a Sustainable Development Commissioner,
in a report published on the Sustainable Development Commission
(SDC) website, described the green stimulus in the PBR as "a
welcome package", but went on to say:
] at £535 million, this represents much
too small a slice of the overall stimulus package. This was a
unique opportunity to re-structure investment towards a more sustainable
] The PBR package could have included much stronger
signals that the UK government is serious about renewable energy,
home energy efficiency, energy efficient transportation, clean
technologies, and green businesses. [
] The government must
rethink its commitment to a 'green stimulus' package worthy of
14. Andrew Simms, of the New Economics Foundation
and Green New Deal Group, pointed out to us that, of the £535m
package, only £100m (to improve home insulation and heating
systems under the Warm Front programme) was new money; the rest
was funding already announced in the 2007 Comprehensive Spending
Review (CSR) and brought forward from 2010-11, to be fully offset
by reduced spending in that year. He felt that it "barely
scratched the surface."
Paul Ekins, Professor of Energy and Environment Policy at King's
College, London, described the PBR as "a massive missed opportunity",
while Ian Christie of Green Alliance believed the Government's
plans lacked environmental ambition and coherence.
15. We put these criticisms to the Exchequer Secretary
to the Treasury, Angela Eagle MP. She confirmed that only the
£100m Warm Front funding was new money, saying of the rest
of the £535m package: "By definition, that has to be
investment that was planned for in the CSR period, brought forward
in order to be part of a fiscal stimulus, not extra investment
then made clear that: "money that is brought forward will
not add, except at the margins, to carbon savings because it will
just mean that homes are insulated a year or two earlier than
they would have been without the extra money, and so that will
be quite minor."
However, she drew our attention to: "the new legal structures
that we have put in place, the carbon budgets, with the renewable
strategies", as well as "the extra money that has been
announced for ultra low carbon vehicles and the extra £1
billion of loans to the automotive industry".
16. The recent report on green stimulus by Lord Stern
and others suggests that the world should spend around 0.8% of
global GDP in the next year on green stimulus measures, yielding
a global 'ball-park' figure of around $400 billion.
For the UK 0.8% of its GDP would translate into around £11
billion in the next year.
The Exchequer Secretary would not be drawn on what proportion
of its GDP the UK should be devoting to environmental stimulus
measures, but stated:
The more we spend now, the cheaper it will be in
terms of GDP allocated [
] Since we are such a small
percentage of current world carbon emissions, we also have to
remember that we have to get agreement and use credits elsewhere
to try and help other countries also to reduce their emissions.
In the end, it is overall global carbon emissions that matter.
The ones we produce are important but that is not the only solution
to the problem.
welcome the £535m green fiscal stimulus announced in the
Pre-Budget Report but are concerned that while it may assist economic
recovery in the short term, in the longer term it will have very
little additional impact on carbon budgets as little of the spending
is new. The new money which is being applied as part of the overall
fiscal stimulus could have been much better targeted at bringing
environmental gains that would not otherwise have been made, especially
by cutting emissions of greenhouse gases.
18. We welcome the Exchequer Secretary's agreement
that the earlier and more aggressively we cut carbon emissions,
the cheaper action to tackle climate change will be. We are perplexed,
therefore, by the Treasury's reluctance to direct more of the
additional funds to climate change mitigation now.
We recommend that the Treasury should adopt a target on the
proportion of the UK's GDP which should be spent on green stimulus
in this and future spending rounds. The
target of 0.8% of GDP suggested by Lord Stern should be the starting
19. Looking at the content of the £535m package,
we note that the majority (some £300m) is to be spent on
up to 200 new rail carriages. Rail's greatest environmental benefit
comes when it displaces plane and car travel; in order to qualify
as green stimulus this spending needs to encourage modal shift
rather than dealing with overcrowding or stimulating new demand
for travel. Given that the larger part of the PBR's green stimulus
package is to be spent on new train carriages, the Treasury should
provide more information on how this funding will contribute to
environmental objectives. We
recommend that the Treasury set out how the investment in new
railway rolling stock will encourage modal shift away from journeys
by car and plane and what impact it is expected to have. The Treasury
should also explain how far environmental considerations will
influence this procurement, given that some designs might be more
energy efficient than others.
20. The green stimulus package includes £100m
of new money (plus £50m of existing funding brought forward)
for the Warm Front scheme. The scheme provides free central heating
and energy efficiency measures to vulnerable low income households.
The Pre-Budget Report put this funding in the context of an overall
£6.8 billion (half to come from private energy companies)
to be spent through the Home Energy Saving Programme, which:
will substantially increase the number of
homes receiving subsidised insulation and other energy saving
measures. The programme was substantially enhanced in September
to support higher take-up of energy efficiency measures. This
winter, this will lead to the installation of 600,000 insulation
measures, up 70 per cent on last winter.
We further note that the PBR stated that: "The
Government will shortly bring forward proposals to support householders
and businesses further in improving the energy efficiency of their
properties, and installing low carbon heating in existing buildings."
On 12 February 2009 the Department of Energy and Climate Change
(DECC) invited comments on three consultation papers on:
- the Heat and Energy Saving
Strategy (HES), setting out the Government's longer-term
ambitions for how we use energy in our homes and businesses;
- the design of the Community Energy Saving Programme
(CESP), which aims to deliver significant packages of energy efficiency
measures to households in low-income communities;
- a 20% increase to the Carbon Emission Reduction
Target (CERT) on major energy suppliers, driving significant investment
in GB household energy and carbon saving by March 2011.
21. Lord Smith, Chairman of the Environment Agency,
in a speech to the Royal Society of Arts, cited analysis by HSBC
which suggested that of the UK's entire economic stimulus package,
only 7% represented green investments. This compared to 10% green
content in the Spanish stimulus package, 16% in the USA Administration's
proposals, 19% in the case of Germany, 34% for China, and 69%
for South Korea.
While we welcome the extra funding announced for the Warm Front
programme, and the Government's wider programme of policies aimed
at reducing energy and emissions from new and existing buildings,
the scale and speed of Government action is far too modest. The
DECC's recent announcements are only for another series of consultations.
Retrofitting existing buildings with energy efficiency and renewable
generation measures would be labour-intensive and fast to implement.
They could sustain employment in local communities throughout
the country, and could develop skills and supply chains required
in what will be a long-term growth sector. Such action would cut
emissions, reduce fuel poverty, and enhance the UK's energy security.
We recommend that the Government increase the scale and speed
of its programmes to improve the energy efficiency of existing
buildings, and make this the UK's number one priority for green
22. It is not only better targeting of fiscal stimulus
measures on environmentally beneficial programmes that matters.
It is also important that the spending is not running counter
to such ambitions. Lord Stern and others said in their recent
report: "It is important that fiscal measures that are not
explicitly 'green' do not make achieving climate change goals
more difficult by subsidising greenhouse gas emissions or locking
in high-carbon infrastructure for decades to come."
The wider fiscal stimulus package includes infrastructure
projects notably hundreds of millions of pounds on road
building and wideningthat may increase carbon emissions.
We recommend that the Treasury
publish an assessment of the net impact of its fiscal stimulus
package (to date, and continuing as further measures are announced)
on the environment, in particular carbon emissions, so that it
is possible to see not only the net overall impact but whether
each element is making a positive or negative contribution. The
Treasury must make clear what percentage of the entire stimulus
package in the PBR is directed towards green objectives.
23. The transport measures in the fiscal stimulus
are directed overwhelmingly towards road building and widening
projects. According to Richard George of the Campaign for Better
Transport (CfBT), of the £1 billion announced for transport
infrastructure only £54 million was new money that "was
going to something other than road building, and that is a small
amount of tinkering in North London in regard to rail freight."
Stephen Joseph, CfBT's executive director, described the overall
package of transport measures as:
] a ragbag list of schemes [
the rail upgrades are encouraging, some of the road schemes will
worsen rather than solve local traffic problems and are not in
fact the region's priority. For example, £500m to be spent
on the A46 Nottinghamshire upgrade could pay for upgrades of parallel
rail lines and safe routes to school for much of the region. By
avoiding putting any money into local transport, the Government
is avoiding tackling where most of the problemsand the
opportunities for solving themreally are.
Mr George suggested there were alternative candidates
for investment which would both cut emissions and generate more
There are jobs out therethe Department for
Transport's 'Smarter Choices' transport package [
] is a
very good example of this. We know that if you pay people to engage
the public in discussion around transport, targeting their local
area, they will make a shift10% car use, for example, as
a result in the sustainable demonstration towns. Also road maintenance
is a massive issue all around the country. Motorists, cyclists,
pedestrians, are very happy to see that go on, and at the moment
the amount of money paid out in compensation for people injured
or vehicles damaged by collisions as a result of holes in the
road is as high as local authorities' maintenance budgets. If
we had invested in that, that can provide people with jobs tomorrow
because there is always a need to fill in the road and get them
to a decent standard, and it is the kind of work that could then
feed into construction jobs or those sort of jobs that can then
feed into thesebe it road-building, light rail, train,
or whatever construction schemes, when they become ready in a
year or two. But none of the measures that were promoted in this
£1 billion can be done now; they all have a couple of years'
lead-in. These are conservative estimatesbut that is roughly
when we might be coming out of the recession, but none of these
measures tackle the problem now.
24. The Exchequer Secretary directed our attention
to "the £250 million package for ultra low carbon
vehicles, which the Department for Transport announced as part
ofwhat I know is controversial, and perhaps more so in
this Committeethe Heathrow expansion."
While we welcome the funding for low carbon cars, this measure
cannot be used as justification for the decision to build another
runway at Heathrow. Decarbonising road transport should move ahead
regardless of what happens in other sectors, such as aviation.
We recommend that the Government make clear what the £250m
for low carbon cars will be spent on, and when it will be spent.
25. The evidence we have received makes clear that
the transport element of the stimulus package represents another
serious missed opportunity for developing the green economy.
We recommend that the Treasury increase funding to transport
measures that might be labour-intensive, relatively fast to implement,
lighter in use of raw materials and fossil fuels, and effective
in cutting emissionssuch as 'Smarter Choices' measures,
road maintenance, and other projects that could be swiftly progressed.
26. The Government has also provided support to car
manufacturers in the UK, but there is no evidence that this has
been used to promote the greening of that industry.
We recommend that the Treasury provide details of the environmental
conditions attaching to the £2.3 billion loans package offered
to car manufacturers.
27. Overall, the Exchequer Secretary responded to
criticisms as to the size of the green stimulus in the PBR by
referring us to larger streams of Government spending on the environment:
T]he green fiscal stimulus part of the Pre-Budget
Report is only a very small part of the overall plan and approach
that the Government is taking in this whole area, so it would
be wrong to mix up the £535 million of green stimulus that
was in the Pre-Budget Report with the £50 billion that we
think is a conservative estimate of future investment we
are putting into greening our economy as a whole.
28. This comment reflected the statement in the PBR
that, "Government policies are driving £50 billion of
investment in the low-carbon sector over the three years to 2011".
No further breakdown was given of what this £50 billion was
being spent on. This was given in a written answer to a parliamentary
question on 21 January (see Box 2).
Box 2: Breakdown of the £50 billion figure for environmental spending in the PBR