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Brown's last budget moves in right direction - but not far enough

Welcome green actions in the budget - but much more needed, says Friends of the Earth

More info: Dave Timms, 020 7566 1615/ 07701 047 880 Press Office, 020 7566 1649
 
The welcome green measures included in today's Budget are still insufficient to deal with environmental challenges, Friends of the Earth said today following Gordon Brown's eleventh and probably last Budget.

The environmental campaign group acknowledged that the Budget had produced a number of positive intiatives, but set against the urgency and scale of what is required to substantially reduce UK carbon dioxide emissions, these fell a long way short of what is required.

Friends of the Earth director Tony Juniper said:
"Today's Budget contains some welcome steps toward a greener economy, but falls short of the measures required to tackle climate change. The Chancellor should have done more to make it easier and cheaper for people to go green. UK carbon dioxide emissions have risen under Labour, now is the time for bold leadership, not half measures in the face of overwhelming threat."

Summary of Budget measures

There are some welcome measures in Today's budget. The rise in fuel duty is a strong step in the right direction, but set against the urgency and scale of the task the budget overall falls a long way short of what is needed. However, it is a marked improvement on previous years. If it were to be built on year after year then it would be a step in the right direction. But if it comes to represent the high water mark of green budget measures then it is nowhere near adequate.

It does not represent a comprehensive package of budget measures to make it cheaper and easier for households to go green. The rises in taxes on polluting activities are welcome but there are not enough tax breaks or spending help for people. Overall the budget is not a coherent package, nor up to the scale of the challenge, particularly with respect to climate change. Gordon Brown still needs to set out an overall strategy for cutting carbon across all sectors of the economy.

Last week the Chancellor made the case for help people to take green choices yet the budget contains almost nothing which will immediately help householders with the cost of energy efficiency measures such as home insulation. The £6m extra grants for householder to install small scale renewable generation is a joke.

The increases in car tax will not provide a consistent incentive for the majority people to buy less polluting cars. It should have been cut to zero for more of the least polluting cars and set much higher for new gas guzzlers.

Overall this is an improvement on recent years but it falls a long way short of a strong green budget.


IN DETAIL

Road Fuel Duty

Raised by 2 p per litre, deferred to October, with 2p and 1.84 rises in subsequent years.

The decision to raise road fuel duty above inflation is welcome. This will help reverse the trend of the cost of motoring falling in real terms over the last ten years. We note the Chancellor's commitment in 1999 to use any future above inflation rises in fuel duty to improve the transport system - this measure will raise £2 billion over 3 years. "The Chancellor has decided that the revenues from any real terms increases in fuel duties will, in future, go straight in to a ring-fenced fund for improving public transport and modernising the road network."  (Pre budget Report 1999, section 6.62). We expect to see this announced in the Comprehensive Spending Review later this year.

VED

The Chancellor has announced an increase to £400, over 2 years, for the most polluting band G. There are much smaller rises for bands C-F, and cut of £5 for band B. Petrol and Diesel rates will become the same.

These changes are not enough to give people a strong incentive to purchase a greener car. In three years time the differential between a band E and band D car will still only be £25. The Government's own research suggests a £150 differential would persuade 55% of people to change. The Chancellor should have introduced far higher differentials for new cars, with differentials for existing cars brought in over a longer period.  The changes announced today are slight, and a major opportunity missed. There is a larger differential now between Band F and Band G - it will be £150 in two years time, which will create a greater incentive, reducing the proportion of Band G cars sold down from 7.5%. But moving purchases from F to E and E to D etc is just as important.

Waste

Landfill tax escalator raised from £3 to £8 a year from April 2008.

Although we welcome the increase in landfill tax, which has broad support even from the waste industry, we are disappointed that there is not a lower rate of landfill tax for waste that has been biologically treated before landfill. This treatment option is an environmentally sound way to deal with waste that cannot be recycled and composted and it should be an affordable option for local authorities. We are also disappointed that there was no announcement on an incineration tax, which we consider is necessary as incinerators also damage the environment, releasing climate change gases.

Households energy efficiency

Nothing.

There is no help for people wanting to take energy efficiency measures in their homes, Friends of the Earth called for £1.4bn to fund a national scheme of Council Tax rebates for Cavity Wall or Loft insulation, OR A CUT IN VAT FOR HIGH QUALITY REFURBISHMENTS. Action is LEFT to THE NEXT PHASE OF THE Energy Efficiency Commitment (EEC). Energy efficiency measures offer the biggest, quickest, cheapest carbon cuts.


New Homes

Zero stamp duty for new homes costing less than £500,000 meeting the zero-carbon standard. £15,000 stamp duty for zero-carbon homes costing more than that.

The Budget Sets out the detail for the announcement at the Pre-budget.


Micro-generation

Announced £6 million extra for grants for small scale renewable energy technologies in the Low Carbon Buildings Programme (LCBP).

This is peanuts in the context of the Stern Review's call for a five-fold increase in deployment incentives for renewables. There is massive public enthusiasm for these technologies and the UK's industry is under-developed compared with other countries. high-demand for solar water heaters and other micro-generation technologies, but people are deterred by high capital costs. These technologies need to be taken up by millions of people. £1bn is needed for an economy wide roll out programme

Biofuels

The 20p duty differential is maintained.

We remain concerned that Government is promoting biofuels before robust sustainability criteria are agreed for the sourcing of biofuels.

Climate Change Levy

An inflation-based rise, keeping it constant in real terms. The CCL is the green tax success story of the Chancellor but was frozen for several years so an above inflation rise was needed.

Aggregates Levy

The Levy is increased from £1.60 per tonne to £1.95.

We welcome this. The aggregates levy has been frozen, ie falling in real terms, since its introduction in 2002.

Aviation

Nothing announced.

Despite aviation's spiralling emissions, no further measures to prevent this. Welcome recognition that APD can deliver climate change benefits.

Deforestation

We would welcome the announcement of £800 million overseas development assistance to support poverty reduction through environmental protection. However, this needs to be new money, and seems it is simply a transfer from other parts of the ODA budget. This should be extra money, not squirreled from other essential causes. The 0.7% of GDP target for aid spending was announced before climate change was a priority for Governments - climate change requires extra spending, not shifted spending.

Water efficiency

Announced three water saving technologies now eligible for Enhanced Capital Allowances.


Earlier this week the environmental campaign group published a report highlighting Gordon Brown's poor environmental record to date:
http://www.foe.co.uk/resource/press_releases/browns_budgets_fail_green
_19032007.html

More information on Friends of the Earth's call for a Green Budget call can be found at:
http://www.foe.co.uk/resource/briefings/cleaner_cars_greener_homes.pdf

Friends of the Earth is calling on the Chancellor to support calls for the Climate Change Bill to be strengthened so that the UK will become a world leader in developing the solutions to climate change. The campaign for a climate change law has been led by Friends of the Earth through the Big Ask Climate campaign (www.thebigask.com)

http://www.foe.co.uk/resource/press_releases/draft_climate_bill_publish
_13032007.html