UK economic rescue plans 'must be greener', MPs say

Environmental Audit Committee report says £535m green stimulus package must include more money for measures to slash industrial, domestic and aviation emissions


David Adam, environment correspondent
guardian.co.uk, Monday 16 March 2009 16.16 GMT

The UK government's proposed financial rescue package must have a stronger environmental focus, MPs said today.
The Environmental Audit Committee said more money should be found for green measures such as insulation to make houses more energy efficient. It called for increased taxes on domestic flights, and it says ministers should exploit the new public ownership of high-street banks to impose environmental restrictions on their investments.
Tim Yeo, the chairman of the committee, said the government's £535m green stimulus package unveiled in the pre-budget report is too small - especially as much of the money is not new.
He said: "The upcoming budget is a real test of the government's commitment to its own climate change policies. Yet the measures in the pre-budget report show the Treasury lacks the consistency and boldness of purpose required."
Yeo added: "The Treasury has announced very little money for green investments. Yet meeting our climate change targets will require a step change in funding for the low-carbon energy sector." There is "clear evidence," he said, that investment in low-carbon industries would create jobs.
A report published by the committee today said much of the announced stimulus package has been brought forward from 2010-2011 budget allocations, and will be offset by spending cuts in future years. It said the Treasury should adopt the recent suggestion by Lord Stern that 0.8% of GDP should be spent on green stimulus measures, or £11bn in the next year.
The committee looked at green announcements in the pre-budget report, such as new money for a scheme to provide free central heating and energy efficiency measures. It welcomed the extra £100m for the programme, but said the scale and speed of energy efficiency measures were "far too modest".
Improving energy efficiency in housing should be accelerated and made the UK's "number one priority for green stimulus".
The MPs also called on the government to reinstate plans to replace air passenger duty with a per-plane tax to make airlines fill flights more efficiently. And they urged the Treasury to introduce fuel duty and VAT on domestic flights to make people switch to rail, and to begin unpicking the international rules that prevent governments taxing international aviation fuel.
The report also called on the Treasury to publish the net impacts on carbon emissions of the whole £3bn fiscal stimulus package, which includes proposals to build and widen roads.
Danny Stevens, policy director of the Environmental Industries Commission, said: "Earlier this month the prime minister launched the government's vision for creating a low-carbon economy in the UK. However, securing the huge economic benefits of a low-carbon economy will not be achieved through vision alone. April's budget is the first opportunity for the government to act decisively and start turning its vision into reality."
Peter Young, chair of the Aldersgate Group a coalition of companies and environment campaigners, said: "We have heard the rhetoric, we now need to see action." The group has called for 20% of the UK economic stimulus package to be spent on green measures.