The coalition’s promise to be the “greenest government ever” is now rather under strain after environmental groups reacted with hostility to Wednesday’s Budget – given that it provided tax relief for motorists and air passengers.
I was surprised that George Osborne, the chancellor, repeated his regular claim that the government would raise the proportion of green taxes on individuals.
Yet this is still a realistic ambition, according to the Institute of Fiscal Studies in its Budget analysis yesterday.
Having said that, the IFS said that while the target was “still on course”, the Budget had put progress back by cutting fuel duty by the equivalent of £2bn a year.
Green groups, which welcomed the commitment of £3bn of capital towards the Green Investment Bank, were disappointed that the new entity would not have borrowing powers until 2015 at the earliest.
Ministers, who are focused on reducing the deficit and fulfilling their promise of “growth, growth, growth”, are losing interest in green measures that fall hard on consumers or could stand in the way of economic growth. Only those that promise jobs, such as the Green Investment Bank, are still being pursued enthusiastically.
Mr Osborne said he was thwarted by international law from fulfilling a coalition promise to shift aviation tax from a per passenger to a per aircraft levy. Yet no such excuse was offered for freezing air passenger duty. A cut in fuel duty by 1p, instead of an expected 5p rise, has confirmed the environmentalists’ fears that their priorities are being shelved.
Andy Atkins, director of Friends of the Earth, said the government was no closer to ending Britain’s dependence on fossil fuels. “In the face of a global oil crisis this Budget will increase the UK’s oil addiction,” he said.
Mr Osborne in October pledged £1bn for a pilot scheme for carbon capture and storage. The chancellor said on Wednesday he still planned to find another £3bn for three more such projects but ruled out the idea of a levy on consumers’ bills.
The government will also introduce a carbon floor price but not until 2013. The policy has divided environmentalists because it will provide a subsidy for nuclear power.
Proponents of renewable energy were already gloomy before the Budget, after cuts to solar subsidies via the feed-in tariff were announced last week.
A survey from Ernst & Young found that only 13 per cent of UK-based companies, financiers and clean technology companies believed that the coalition would create an environment for clean technology success in 2011. This was down from 38 per cent towards the end of last year.
John Sauven, executive director of Greenpeace, accused Mr Osborne of “sabotaging” the prime minister’s ambition to lead a truly green government.
Jim Pickard
Kiran Stacey