23 June 2010: UK Budget – hardly the “greenest ever”

The UK coalition government has said that it will be the greenest ever UK government. Despite the UK’s high profile on climate on the world stage, that would not actually be very difficult. To take just one example, all other EU countries, apart from Malta, get a higher percentage of energy from renewables than the UK.

So, being the greenest ever UK government, in terms of delivery rather than promises and targets, is certainly possible. However, yesterday’s budget was not a good start. Chancellor, George Osborne, rarely talks about climate – he leaves that to David Cameron – so few were expecting headlines. There was mention of creating a Green Investment Bank, although there were no more details of where the money will come from. And there will be consultations on:

  • Changing Air Passenger Duty into a per plane tax, so that airlines have an incentive to fill planes up.
  • Turning the Climate Change Levy into a carbon tax.

So, yet more consultations about what to do about the climate crisis. Consultations have their place, but must not be used as a delaying tactic. There is no consultation on VAT going up to 20% – Osborne has simply said that that is “unavoidable”. No it isn’t. Some taxes going up is unavoidable, but the government has many choices about which taxes to increase. It would be much more progressive – a term this government lays claim to – to raise the money by increasing taxes on flying, which rich people do very often and poor people hardly ever. This would also help protect the climate. This budget was called an “Emergency Budget”, but it appears that the government sees only a financial emergency, not a climate one.

Some taxes will increase, but most of the deficit reduction will come through cuts in spending. All departments, apart from health and overseas development, have been told to expect around 25% cuts, though where the axe will fall will only be decided in the autumn. The government should be commended for protecting health and development. However, there will almost certainly be serious cuts in spending on low-carbon energy and climate protection. Therefore, the government must think creatively and quickly about different ways to provide finance, such as the approach suggested by Prashant Vaze and Ed Mayo (see Financing and delivering a new energy infrastructure).

Both Conservatives and Liberal Democrats say that they are in favour of localism – allowing local governments to decide what is best for their area. It is somewhat ironic, then, that their first budget includes a promise to freeze Council Tax for two years. The Council Tax is not an ideal tax (though it is much better than the poll tax which it replaced), but it should be up to local democracy to decide what level of Council Tax is best for a particular place. The coalition has already said that it will prevent the EU from introducing a carbon tax, and anything on tax requires unanimity among the 27 member states, so the UK has a veto. Therefore, it appears that the coalition’s commitment to taking decisions at the lowest appropriate tier means not allowing the EU to do more, and requiring local government to do less.

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