March 2006
The Budget 2006 – What The Chancellor Did And Didn’t Do For The Environment
We take a look at the green aspects of Chancellor Gordon Brown’s 10th Budget in terms of what he did and didn’t do for the environment.
What he did do:
- Public-private institute to introduce greener energy
- Climate change levy linked to inflation
- Increased vehicle excise duty for "gas guzzlers"
- New zero-rated category of vehicle excise duty for vehicles with no emissions (though currently no cars for sale in the UK meet this criteria)
- New measures to make British homes more energy efficient
- Expansion of investment in renewable energy sources
A new public-private partnership, the National Institute for Energy Technologies, was announced by the chancellor. The aim of the Institute is to raise £1bn to introduce technology such as cleaner coal-fired power stations and ways to dump carbon dioxide under the seabed.
Requests from business to scrap the climate change levy have been ignored. Instead, the levy will be indexed in line with inflation from April 2007. According to the government, this is necessary to ensure the country continues to make progress tackling climate change.
Drivers of gas-guzzling 4x4’s and other such polluting vehicles will have to pay a higher rate of vehicle excise duty. This will be £210, an increase of £45 on the previous top band. Critics say that £45 will hardly be a deterrent for the affluent buyers of large vehicles.
At the other end of the vehicle excise duty scale, drivers of a small number of hybrid vehicles with virtually no emissions will be exempt from the duty through a zero-rated car tax.
The chancellor has committed £75m to make British homes more energy efficient through a range of measures. Although energy companies already offer cavity wall and other insulating measures for those on low incomes, the chancellor Brown announced new measures to encourage them to offer an extra 250,000 subsidised home insulation packages over the next two years.
£50m will be added to the government's Low Carbon Buildings programme in an attempt to kickstart a small number of micro-generation projects such as solar heating, heat capture and small wind turbines.
£5m is also going to co-finance a long-term pilot project to test smart meters. These show householders exactly how much energy is being used at any one time to try and encourage them to reduce energy usage. The chancellor also wants consumer electronics to be energy-rated in the same way that white goods are, and has asked the Energy Savings Trust to work with retailers and manufacturers on a voluntary scheme. Finally, private landlords installing draught proofing and hot water tank insulation would be able to claim the cost against income tax.
What he didn’t do:
- No increase in fuel duties
- No increase in airport taxes
The chancellor did not increase airport passenger taxes despite the fact that emissions from air travel are rising faster than those from any other sector of the economy. Recent price rises and price instability in jet fuel were cited as the reasons for leaving duty unchanged.
The chancellor also deferred any fuel duty increase until September because of volatile petrol prices.
For more details of the 2006 budget, visit HM Treasury website.
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