UK Budget 2005 Gordon Brown's newfound enthusiasm for the environment led to a small package of measures in today's Budget intended to help combat climate change, but did not go far enough for environmental campaigning groups.
The Chancellor steered clear of angering the road lobby by raising fuel taxes immediately, as campaigning groups had called for.
However, Mr Brown has made a strong bid to be seen as a champion of the environment. On Wednesday, he urged a meeting in London of finance, energy and environment ministers from 20 countries to make environmental considerations - chiefly climate change - the third foundation of economic policy, after high and stable growth and full employment.
He warned: “If our economies are to flourish, if global poverty is to be banished, and if the well-being of the world's people enhanced - not just in this generation but in succeeding generations - we must make sure we take care of the natural environment and resources on which our economic activity depends.”
Simon Reddy, policy director of Greenpeace, said: “We were encouraged by what Gordon Brown said, which shows he understands the scale of the challenge of climate change, but we are disappointed that there is nothing in this Budget that comes near to meeting that challenge.”
But he acknowledged the pressure on Mr Brown of the forthcoming election: “Tough decisions have to be made [to combat climate change]. But this is an election Budget, and if the Chancellor had raised taxes [for environmental reasons], that would have been seized on by the opposition.”
New measures on climate change in the Budget included two reduced rates of VAT for the installation of certain low carbon domestic appliances such as heat and air pumps, and an extension of the Landlord's Energy Savings Allowance to cover solid wall insulation.
Mr Brown also emphasised energy efficiency, which some expect to deliver much of the reduction in carbon dioxide emissions necessary to meet the UK's obligations under the Kyoto protocol on climate change, and the government's own tougher targets on carbon dioxide emissions. The Treasury will hold an energy services summit later this year.
Though Mr Brown refused to raise road fuel taxes immediately, he confirmed that the main road fuel and rebated oils duties would be increased from September 1 2005 in line with inflation. The deferment reflected continued concern over the volatility in oil price, government officials said.
The most polluting vehicles will also be subject to a £5 increase in Vehicle Excise Duty. This was dismissed as inadequate by green campaigners, however.
Mr Brown also expressed his support for plans to extend the EU's greenhouse gas emissions trading scheme scheme to cover aviation.
The 20p per litre duty differential for both biodiesel and bioethanol will continue for the next three years to 2007-8.
The government also said work was ongoing to encourage the development and use of biofuels, including input taxation and the feasibility of a renewable transport fuel obligation.
Mr Brown pointed to the success of existing environmental taxes, including the Climate Change levy, landfill tax, Aggregate Tax and transport taxation.
A Cambridge Econometrics study of the climate change levy commissioned by Treasury concluded that this measure would deliver annual savings of over 3.5m tonnes of carbon in 2010, which would be more than the originally forecast savings.
Some of the government bodies concerned with the environment will be amalgamated. However, a consultation process would be undertaken before a final decision was made, government officials said yesterday.
