End tax breaks for polluters to cut budget deficit, thinktank urges

Green Alliance says £12bn could be saved by ending support for high-carbon industries such as aviation and building fewer roads
Juliette Jowit, Environment editor
guardian.co.uk, Sunday 7 February 2010 15.44 GMT
Ministers could save £12bn of public spending over four years by clamping down on tax breaks and support for polluting oil exploration, cement, aluminium and transport, according to a report from green campaigners this week.
With all three major parties committed to cutting the projected £178bn budget deficit, and to a low-carbon economy, a report by the high-level Green Alliance thinktank argues that many spending cuts could achieve both ends. Perhaps the most controversial suggestion is to halve the £10bn national and regional roads spending budget.
Other proposals include ending the zero value-added tax (VAT) rate for aviation and shipping, and reducing tax breaks on oil and gas exploration and the Climate Change Levy for big energy users such as cement and aluminium companies, saving more than £5bn.
The report also says government departments should step up energy-efficiency improvements for buildings and vehicles to save £1.5bn over the four years, about one eighth of what they spend on fuel.
Chris Hewett, a Green Alliance associate and author of the report, said that apart from pledges to increase energy savings, none of these policies had been explicitly outlined by either the Labour government or the Conservatives, who under David Cameron's leadership have worked hard to position themselves as a much greener party.
However, Hewett dismissed suggestions that the recommendations would be too politically controversial, with the risk of upsetting powerful industries and prompting a public backlash if they led to more expensive travel or fuel, or more traffic on the roads.
"It's dependent on comparisons to the other options that will be on the table," said Hewett. "Particularly after the [general] election, we're going to have to take difficult decisions, and we're looking at areas of expenditure that haven't been looked at before, whether it's Trident [nuclear missiles for submarines] or public-sector pensions.
"We're saying, let's look at expenditure which goes to support a high-carbon economy – often a lot of the expenditure is not consistent with a low-carbon economy."
The challenge of meeting government efficiency savings was also revealed last week by the latest figures from the Department for Energy and Climate Change showing that public-sector emissions rose 6.5% in 2008, despite a 2% fall nationally.
The three major environment and conservation charities that commissioned the report – WWF, the The Royal Society for the Protection of Birds and Greenpeace – argue that it would be "reckless" to ignore the report.
Doug Parr, Greenpeace's chief scientist, said: "Britain can be a world leader in renewable technologies and low-carbon transport but only if we stop bailing out the dirty industries of the 20th century."
David Norman, WWF's head of campaigns, said: "The hole in the country's finances means, inevitably, that measures to support the environment and tackle climate change will come under pressure. This report is a grown-up response to this dilemma, and demonstrates that with a clear vision and sense of purpose the UK and move toward a low-carbon economy without profligate spending. Not to do so would cost us too much in the long run."