EBM looks at the environmental aspects of this year's Budget, and finds a lack of imagination or concrete action
Chancellor Gordon Brown can perhaps be excused the lack of focus on the environment in his seventh Budget, considering global economic and political conditions.
However, despite economic secretary John Healey’s claim that “this Budget underlines the government’s commitment to sustainable development”, the defining characteristic of chapter seven, Protecting the Environment, is its conservative nature.
Climate Change Levy
For once, even the CBI was happy. Director-general Digby Jones said: “The Chancellor has at last started to restore his business-friendly credentials”. The CBI – always critical of environmental taxation, welcomed the freeze on Levy rates. Jones was convinced business will be “relieved to see no increase” in what he said “ranks highly on the list of damaging business taxes”.
Damaging, but effective – the CBI cited DEFRA figures on the success of negotiated agreements to call for an extension of the discount scheme to further sectors.
Promoting energy efficiency is central to government policy for cutting CO2 emissions, but once again it seems to have fallen victim to government’s instinct that only size matters.
The Energy Saving Trust’s EST chief executive, Philip Sellwood, found the Budget disappointing for household energy efficiency. “Government has missed an opportunity to cut carbon emissions and bills for consumers through reducing VAT on energy-efficiency products,” he said.
For businesses, the news was a little better, with proposals to add eight further technologies to the Enhanced Capital Allowances scheme. Assuming State Aids approval, industry can expect automatic monitoring and targeting equipment; biomass boilers; refrigerant dryer controllers; ultrasonic leak detectors; free-cooling forced air pre-coolers; refrigerated commercial service cabinets; and cellar cooling and packaged chillers to join the list.
The transport sector saw a number of moves in the right direction, although for some the steps didn’t go far enough. Biofuel company Greenergy has been lobbying for a further fiscal incentive for biodiesel, which it didn’t get.
Tamara Earley, managing director of Greenergy Fuels, said: “We do not believe [the 20p/litre incentive on bioethanol] will be enough to stimulate large-scale production.”
There were however a number of minor duty rate changes and adjustment to the company car tax scheme.
While the expected rise in the Landfill Tax – to £15/t on 1 April 2004, and then by £3/year from 2005 to a long-term rate of £35/t was confirmed, perhaps the most important announcement is the planned reform of the Waste Minimisation and Recycling Fund.
The fund will become a local authority Waste Management Performance Fund, and will provide “non-ring-fenced incentives for local authorities to deliver a step-change in sustainable waste performance for all households.
However, detail of the start date, value of the fund, and operational issues have yet to be resolved and will follow further consultation with local government stakeholders.
Hopefully the next time the Budget comes around, UK business will be riding a wave of economic recovery in a more peaceful world, and the government will be less cautious of environmental taxation.
If so, it might be easier to judge whether Healey’s statement that “the government is committed to tackling environmental problems by ensuring the polluter pays and introducing new incentives for more environmentally-friendly” is more than simply rhetoric.