Environmentalists seethe over budget’s lowering of fuel duty

Gordon Brown announced 150% accelerated tax credits to help clear up contaminated land, 100% capital allowances for creating flats over shops, and a cut in VAT to 5% to encourage renovation and conversion of existing property, all of which should contribute to cutting back on green field development. Of further assistance to the countryside will be an increase in the landfill tax from £11 to £12 per tonne from 1 April 2001, combined with plans to consult on future reform of the landfill tax credit scheme while challenging industry to allocate more tax credits towards sustainable waste management.

With regard to tax on fuel, the Chancellor’s announcement includes a freeze on all road fuel and non-road fuel oil duties, a two pence per litre reduction in the duty on ultra-low sulphur petrol (ULSP), a three pence per litre reduction in duty on ultra-low sulphur diesel (ULSD), the abolition of the separate duty rate on lead replacement petrol and ‘super-unleaded’ petrol. It also includes and a freeze on all car, motorcycle and bus vehicle excise duty (VED) rates until Budget 2002. The threshold for small car VED rates has been raised from 1,200cc to 1,549cc and a major reform of lorry VED is to be introduced from 1 December 2001, bringing UK rates down to among the lowest in Europe.

“The duty cuts on bio-diesel and natural gas are far too small to allow large numbers of motorists to switch from oil-based fuels like petrol and diesel,” said Matthew Spencer, Greenpeace Climate Campaigner. “Brown has thrown away the opportunity to invest in the most promising green fuel of all – hydrogen. Hydrogen fuel cell technology offers the potential for truly pollution-free transport, but it needs Government investment to get off the ground.” (see this week’s Europe story on Iceland)

The effect of lowering vehicle costs will be to encourage more car use, increase congestion and pollution, lead to ever more damaging new road schemes, and make the problem of climate change even worse, according to Friends of the Earth. British motorists already pay less overall in tax than drivers in the Netherlands, France, Denmark, Italy and Ireland, says the group.

“Yesterday, the Prime Minister talked powerfully about the dangers of climate change, and the need for co-ordinated action across Government to protect our environment,” said Charles Secrett, Executive Director of Friends of the Earth. “Today, the Chancellor tried to grub up a few more votes with a quick cut in petrol taxes. New Labour goes on about joined-up Government, but it seems that Number 11 Downing Street can’t even hear a green message from Number 10 next door.”

Secrett admits that there are some positive measures elsewhere in the budget, but describes the cut in car taxation as a “disgraceful populist gesture” that badly undermines the Prime Minister’s bid for environmental credibility (see this week’s story on his speech). He points out, however, that grim as budget appears to be, the Conservative party is promising to do even worse.

Friends of the Earth also criticises measures for green agriculture and food production – for example a pesticide tax, and no windfall tax on oil company profits.

“Today’s Budget is good news for the environment and transport – good for motorists, good for road haulage and good for public transport,” said Deputy Prime Minister John Prescott. “It takes further steps towards achieving the Government’s environmental, social and economic objectives. We are ‘greening’ Britain’s road transport and mapping out a route for a more sustainable future, through the Green Fuels Challenge and other changes announced today.”