Pre-Budget Report green investment 'too small'

The fiscal stimulus measures intended to pull the economy out of recession represent an invaluable opportunity to transform the UK into a low-carbon economy. But meeting climate change and renewable energy targets will require a step-change in environmental investment.

The 2008 Pre-Budget Report announced a £535m package of green fiscal stimulus measures designed to tackle economic and environmental problems simultaneously. This investment is welcome but the scale too small. Most of this funding was already committed and will be offset by reduced spending in 2010-11.

The Environmental Audit Committee sets out a number of conclusions and recommendations, which include:

• Extra funding announced for the Warm Front programme will not deliver the scale and speed of change that is needed.
• Programmes aimed at improving the energy efficiency of existing buildings should be the number one priority for green fiscal stimulus.
• It is disappointing that the wider fiscal stimulus package contains hundreds of millions of pounds for road building and widening.
• The Treasury should publish an assessment of the net impacts of its fiscal stimulus package on the environment.

On green taxation, the Committee finds that, in real terms, revenue from green taxes has gone down slightly since 1998, while revenue from all taxation has increased by around 30%.

On aviation taxes, the Committee criticise the Treasury's backtracking on replacing Air Passenger Duty with a 'per plane' charge and exhorts the Government to seek reform of the Chicago Convention so as to allow taxation of international aviation fuel.

On motoring taxes, it calls for re-examination of the merits and practicalities of a 'car scrappage' scheme to pay people to trade in their existing, older cars for newer, more efficient models.

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