Climate change not high enough on the chancellor's agenda
Green measures played a fairly prominent role in the chancellor’s Budget today, in terms of transport, housing, and proposals to eliminate the use of plastic bags.
Alistair Darling told the Chamber “we need to do more and we need to do it now” to tackle climate change. He revealed he has asked the Committee on Climate Change to review whether the current UK target – to cut carbon emissions by 60% by 2020 – should be increased to 80%.
However, environmental groups say the Budget fell a long way short of what is required to encourage people to go green.
Tony Juniper, director of Friends of the Earth, said: “The chancellor promised to put sustainability at the heart of today’s announcement, but he has merely tinkered in the margins. Darling should have used this Budget to tackle climate change - the biggest challenge the world faces - by making it cheaper and easier for people to go green, including tax breaks for greening the home, and grants for renewable energy.
“He did announce a number of welcome green initiatives, such as a car purchase tax and an increase in air passenger duty, but the overall package falls a long way short of what is required. We urgently need real political leadership on this issue.”
The chancellor said transport is the second largest source of carbon dioxide emissions in the UK accounting for 28% of CO2 emissions.
To incentivise drivers to opt for cleaner cars, Darling announced the reform of vehicle excise tax by introducing six new tax bands from 2009/2010.
The reforms will include tax-relief for the first-year on all new cars that emit between 131 and 160g CO2 per km, and a first-year tax rate of £950 for the most polluting cars.
The current target for all new vehicles to produce less than 130g of CO2 per km by 2012 is to be extended. The government will ask the EU to set a longer-term target to reduce the average new car carbon dioxide emissions to 100g per km by 2020.
Mark Dransfield, spokesperson for insurance comparison site Tescocompare, said: "We fully support today's announcement to encourage consumers to be more environmentally conscious when buying a car. However, we are disappointed that the Chancellor did not look wider to the cost barriers for purchasing green cars and consider cutting Insurance Premium Tax for these cars as an added incentive to go green.
"On average, consumers can pay £50 more to insure a 'green' car, such as the Toyota Prius, than a 'non-green' car of similar size and features due to the higher costs of repairing these cars. With the average car insurance premium being £400 - the removal of the 5% insurance premium tax on 'green' cars would make the cost of insuring one equivalent to a similar standard car."
Fuel duty will rise, but the 2p a litre increase planned for April will now take place on 1 October 2008. Fuel duty will then rise by a further 1.84p per litre in 2009, and 0.5p a litre above inflation in 2010.
With aviation duty the chancellor said new per-plane tax, to come into effect in November 2009, will increase by 10% in the second year of operation.
Greenpeace executive director John Sauven, said: "Increasing the revenue from flight taxes is hypocritical posturing from a chancellor who wants to see Heathrow and Stansted almost double in size.
“The modest carbon savings that might be achieved by bumping up fares by a few pounds will be wiped out in no time by a third runway at Heathrow.
"A truly green chancellor would have told the aviation industry their tax subsidies worth billions are being cancelled and the money is being channelled into the railways.”
The Chancellor said he is encouraged by the fact that the use of public transport is at 25-year high.
Darling also reaffirmed announcements in the 2006 pre-budget report that all new homes are to be zero-carbon by 2016, and that zero-carbon homes remain except from stamp duty.
Darling said homeowners need to do their bit to cut individual CO2 emissions by improving insulation in their homes, to make them more affordable to heat and reduce energy waste.
He said £26 million will be allocated to the Green Homes Service, which was announced by the Prime Minister in November 2007, and will be launched next month. It will help people improve the energy efficiency of their homes, choose lower emissions transport, reduce waste and conserve water.
The Carbon Emissions Reduction Targets introduced next month will require energy companies to spend £2.8 billion on improving efficiency in their customers' properties, with cavity wall insulation for nearly three million homes along with loft insulation, energy efficient appliances and light bulbs. Priority will be given to people on low incomes and the over 70s.
The Chancellor announced that more guidance is needed about green energy tariffs. Ofgem will be publishing a set of guidelines in the summer to customers greater confidence on the environmental benefits of these tariffs.
Charge on plastic bags
Darling said he is committed to taking strong action on the use of single-use plastic bags, following the government’s call on retailers to take voluntary action.
He announced that under the Climate Change Bill, if there is not sufficient progress on a voluntary basis by the end of the year, the Government will impose a charge on these bags.
Any money raised from the charges will go to environmental charities.
That's not all! For the rest of our Budget 2008 coverage, click here
A hugely unpopular tax paid on property and share purchases. Stamp duty on property is levied at 1% for purchases over £125,000 (£250,000 for first-time buyers) which then moves up at a tiered rate. For property between £125k and £250k you pay 1%, then 3% from £250k up to £500k and then 4% from £500k to £1m and then 5% for properties over £1m. But unlike income tax, which is “tiered” and different rates kick in at different levels, stamp duty is a “slab” tax where you pay the rate on the whole purchase price of the property. On shares, stamp duty is charged at a flat rate of 0.5% on all share purchases. Figures correct as of May 2011.
An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).