Conclusions and recommendations
Green fiscal stimulus
1. The
fiscal stimulus measures intended to pull the economy out of recession
represent an invaluable opportunity decisively to transform the
UK into a low carbon economy. A programme of investments in low
carbon industries would help build a modern and sustainable economy,
securing Britain's competitiveness and future prosperity in the
new global economy that will emerge from this crisis. It is imperative
that the Government grasps this opportunity in the forthcoming
Budget. (Paragraph 8)
2. We 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. (Paragraph 17)
3. 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. (Paragraph 18)
4. 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. (Paragraph 19)
5. 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 fiscal stimulus. (Paragraph
21)
6. 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. (Paragraph
22)
7. We recommend that
the Government make clear what the £250m for low carbon cars
will be spent on, and when it will be spent. (Paragraph 24)
8. 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
emissions—such as 'Smarter Choices' measures, road maintenance,
and other projects that could be swiftly progressed. (Paragraph
25)
9. We recommend that
the Treasury provide details of the environmental conditions attaching
to the £2.3 billion loans package offered to car manufacturers.
(Paragraph 26)
10. We would like
to see a more strategic approach towards funding the transition
to a low carbon economy. The Budget in April 2009 will be the
ideal opportunity to set out such an approach alongside the carbon
budgets; and we look forward to a much bigger and coherent package
of green fiscal stimulus in the Budget, to be followed by consistently
higher spending in areas designed to accelerate rapidly the UK's
transition to a low carbon economy. (Paragraph 29)
11. We recommend that,
alongside the Budget, the Treasury publishes a comparison of UK
Government spending on a low carbon economy with that of other
G20 nations. (Paragraph 30)
12. The Government
now has a controlling interest in a number of banks. We recommend
that the Treasury examine and report on how some form of environmental
criteria for the investment strategies pursued by these banks
might be imposed, and what impacts this might have on UK sustainable
development objectives. (Paragraph 33)
13. We recommend the
Treasury, working together with the Department of Energy and Climate
Change, examine the risks to the UK's climate change and renewable
energy targets from the shortage of capital for investment in
low carbon infrastructure, and bring forward proposals for ensuring
that low carbon energy projects receive the finance they need.
(Paragraph 35)
14. We recommend
that the Government ensures that the clear evidence that investment
in low carbon industries will lead to net job creation is reflected
in UK industrial policy. (Paragraph 38)
15. We recommend
that when the SDC publishes its report 'Redefining Prosperity',
the Treasury should publish a detailed response to it. (Paragraph
39)
Green taxation
16. We
recommend that the Treasury publishes with the Budget its assessment
of how the tax changes announced in the Pre-Budget Report help
to shift the burden of taxation from 'goods' to 'bads'. This assessment
should quantify the expected changes to environmental tax receipts,
as defined by the Office of National Statistics, in terms of their
proportion both of total tax receipts and of GDP. (Paragraph
44)
17. We also recommend
that the Treasury confirm whether its definition of an environmental
tax is one in which the revenues are explicitly hypothecated to
environmental ends. (Paragraph 44)
18. We recommend
that the Treasury reinstates its plan to reform Air Passenger
Duty into a per plane tax. (Paragraph 49)
19. We welcome the
Treasury's introduction of the link in the Air Passenger Duty
regime between distance travelled and tax payable (Paragraph 50)
20. We recommend that
the Treasury publish an explanation of why it believes the APD
charges announced in the PBR will discourage unnecessary air travel.
(Paragraph 51)
21. We recommend that
the Government seek the support of the new US Administration in
promoting reform of the Chicago Convention to allow governments
to impose a tax on international aviation fuel. (Paragraph 52)
22. We recommend
that the Treasury introduces both fuel duty and VAT on domestic
flights, to encourage modal shift, especially to rail. (Paragraph
52)
23. We urge the Treasury
to stick to its plans to introduce first year rates of VED in
2010-11, even if the economy continues in recession, and recommend
that it should review the proposed increases in the standard rate
for 2010-11 to assess whether they are sufficient to encourage
people to purchase more fuel efficient vehicles. (Paragraph 55)
24. We recommend the
Treasury set out the calculations which lead to its conclusion
that under a 'car scrappage' scheme, the environmental costs of
buying a new car would outweigh the benefits of trading an old
vehicle for a more efficient model. (Paragraph 56)
25. We recommend that
the Treasury looks again at linking an element of fuel duty revenues
to increased funding for public transport and the development
of alternative technologies, such as electric cars, in order to
develop public support for more consistent use of fuel duty as
an environmental tax. (Paragraph 57)
26. The 2009 Budget
is a test of the Government's commitment, in difficult economic
times, to its climate change policy. It requires consistency and
boldness of purpose; the Pre-Budget Report 2008 does not reassure
us that this is in place. We hope the Budget itself will. (Paragraph
60)
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