Chancellor’s pre-budget statement supports ‘green’ technology

The Government is to provide further tax incentives for low-carbon fuels, and will assist ‘green’ technologies, the Chancellor Gordon Brown announced on 27 November in his pre-budget statement to the House of Commons.

Announcing that the Government will be boosting innovation in general by the use of tax incentives, the Chancellor stating that there would be particular assistance to companies investing in ‘green’ technologies, and included tax incentives for low-carbon vehicles and fuels, such as hydrogen fuel cells. However, there will also be penalties imposed on environmentally damaging practices, in the form of extra tax for foreign lorries on British roads, bringing them in line with UK hauliers who are already subject to such costs. A Government consultation was also launched on 27 November to investigate the measure further.

“The cause of the environment … reminds us of how closely our lives are bound up with what happens in the world,” said Brown. “In the 21st century, as we now know, the global environment is the local environment.” Such issues are central to the Budget and spending review, he stated, and because of this, the Government is consulting on 10 new environmental measures. “They include additional tax relief for businesses investing in environmentally friendly technologies, and new tax incentives to encourage the fuels and the vehicles of the future – all the measures reflecting Britain’s commitment to energy efficiency, innovation and conservation and to playing our part in safeguarding the environment.”

According to the Treasury’s Pre-Budget report, as part of the Government’s Green Technology Challenge, investments by business in environmentally-friendly technology will receive tax incentives in the form of enhanced capital allowances during 2002-3 for selected technologies in three new key areas: energy saving, cleaner fuels and vehicles, and improvements in water use and quality.

The Government also announced that it will be considering measures, such as changes to vehicle excise duty, that will encourage van users to adopt new cleaner technologies, and also launched a consultation on modernising motorcycle excise duty on 27 November. There will also shortly be a consultation on new fuel scale charges, a Treasury spokesperson told edie, including the option for the tax regime on free fuel provided to company car users to reflect carbon dioxide emissions.

“Sustainable development means a better quality of life for everyone,” said Financial Secretary Paul Boateng, following the Chancellor’s speech. “We must consider global issues such as climate change, and the issues directly affecting our local environment, the neighbourhoods where we live and our day-to-day quality of life.”

The new announcements demonstrate a strategic approach, “ensuring that sustainable development informs our approach to taxation and underpins all of our priorities for public spending”, continued Boateng. “As part of this we are taking forward new policies to encourage the early development and take-up of products that offer real environmental benefits – such as the Green Fuel and Green Technology Challenges.”

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