Motorists hit by green Budget measures

Changes to fuel and vehicle taxes, an increase in aviation tax and a possible plastic bag levy were among the green headlines in Alistair Darling's first Budget.

Announcing the measures on Wednesday, the Chancellor said the Budget will “secure stability in these times of global economic uncertainty”.

However, as predicted earlier in the week by environmentalists, he shied away from far-reaching environmental measures in favour of protecting the economy following the credit crunch.

A rise in fuel duty of 0.5 pence per litre that campaigners said would help to discourage motorists and cut transport emissions has been put back from April to October.

Mr Darling said: “Because I want to support the economy now and help business and families, I will postpone that increase until October.”

From April 2009 Vehicle Excise Duty will be restructured to reward drivers of the cleanest cars, with a higher first-year rate from 2010 to encourage people to buy greener cars, nicknamed a “showroom tax”.

Revenues from plane duty, which is due to start in November 2009, will be increased by 10% in the second year, but Mr Darling said Government still supports the expansion of Stansted and Heathrow because of the airports’ contribution to the UK economy.

If retailers do not make sufficient progress to reduce plastic bag use by the end of the year, Government could impose a charge on carrier bags from next year, with profits likely to go to charity.

All new non-domestic buildings will have to be zero carbon from 2019, alongside the existing policy to make domestic buildings zero carbon by 2016.

The biofuel duty differential will be replaced by the Renewable Transport Fuel Obligation, and the Climate Change Levy will increase in line with inflation from April.

Mr Darling also repeated commitments made in the Climate Change Bill, including reducing carbon emissions by at least 60% by 2050, and establishing the Climate Change Committee to advise whether the figure should be raised to 80%.

You can find out more about the budget and how it will affect you here.

Budget annoucements likely to impact on the environmental industries include:

  • Phasing out of the landfill tax exemption from 2012

  • Extension of land remediation relief to derelict land and Japanese knotweed

  • Withdrawal of fuel duty incentive for bioethanol and biodiesel from 2010/11

  • Doubling of Buyout Price in Year 3 of the Renewable Transport Fuels Obligation

  • Road tax discount for vans that meet Euro V emissions standards

  • New technology category for Enhanced Capital Allowances for both energy saving and water-efficient technologies

  • A target for all new non-domestic buildings to be zero carbon from 2019

  • 100% auctioning for large electricity producers’ in Phase III of the EU Emissions Trading Scheme

    How they reacted:

    David Cameron, leader of the Conservatives, said: “It was, on the whole, a dire list of reviews and re-announcements delivered with all the excitement of someone reading out a telephone directory.”

    Nick Clegg, leader of the Liberal Democrats, said: “This Budget was widely trailed by the Treasury as the greenest ever, but at the first sign of political difficulty the Government have run away, by postponing the petrol duty increase until October.”

    Caroline Lucas, Green Party principal speaker, said: “This Budget isn’t Green, it’s Brown. After spinning extensively that we were going to see the most environmental budget ever, the government have given us more of the same.”

    John Sauven, executive director of Greenpeace, said: “Darling’s safe pair of hands have dropped the ball on climate change. The Chancellor should have channeled cash into clean technologies, energy efficiency projects and support for the renewables industry.”

    Duncan McLaren, chief executive of Friends of the Earth Scotland, said: “While we welcome showroom taxes, without fuel duty rises, the budget package of transport measures is all icing, and no cake.”

    Neil Pakey, chairman of the Airport Operators Association, said: “This rise [in aviation duty] risks damaging the UK’s economic competitiveness, and does little to encourage a reduction in aviation emissions.”

    Richard Lambert, director-general of the Confederation of British Industry, said: “While we welcome the broad approach, the pace and scale of the proposed new car taxes will present a sting in the tale for some manufacturers.”

    Graham Hilton, chair of the Environmental Industries Commission’s Renewable Transport Fuels Working Group, said: “To deliver carbon savings the UK biofuels sector needs a clear support package to stimulate investment tied to world leading standards on carbon savings and sustainability. The Chancellor’s announcement today provides neither of these elements.”

    Philip Wolfe, executive director of the Renewable Energy Association, said: “We can only envy the Chancellor, who must be living on a planet not threatened by climate change.”

    Kate Martin

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