Select Committee on Environmental Audit Appendices to the Minutes of Evidence


APPENDIX 7

Memorandum from the RSPB

INTRODUCTION

  The RSPB is the largest wildlife conservation charity in Europe, with over one million members. Our work to protect birds and other wildlife ranges from managing nature reserves and carrying out ecological research, to trying to ensure that government policies, including tax policies, help to protect the environment.

  The RSPB believes that green taxes and charges have a key role in protecting biodiversity and the environment. They can give consumers and businesses strong financial incentives to reduce environmental impacts. They can ensure that prices reflect environmental costs and implement the polluter pays principle. They can generate revenue which can be used to fund environmental programmes or reduce other taxes. However, economic instruments must be used in conjunction with other measures, including regulations, recognising that regulations can ensure minimum standards and reflect local conditions. In the main, the RSPB endorses the Government's positive approach towards environmental tax reform.

  The RSPB particularly welcomes this opportunity to submit its thinking on the November 2000 Pre-Budget Report (PBR) to the Environmental Audit Committee. The Committee has indicated that it will confine its review of the PBR primarily to the issues surrounding road fuel taxation. Our submission consequently does likewise, but also includes a brief review of our thinking on other environmental aspects of the PBR.

1.  FUEL TAXATION

  The RSPB remains very concerned by the continuing growth in greenhouse gas emissions from the UK's transport sector. All governments need to play their part in reducing the future effects of climate change. The RSPB strongly supports packages of measures which reduce Carbon Dioxide emissions from vehicles. In the short term, we believe that this should, at least, include maintaining levels of duty on road fuel. The recent fuel protests have brought the issue of fuel taxation to the political and environmental fore once again. Along with a number of other NGOs, the RSPB publicly supported the Government's decision not to buckle to the demands of the fuel protesters.

  The RSPB also welcomes the clear intent shown by the Government to improve local air quality, demonstrated by the price differential it has maintained on ultra-low sulphur diesel (ULSD) since 1997 and which it now plans to extend to ultra-low sulphur petrol (ULSP) from Budget 2001. Improvements in local air quality are beneficial to people and wildlife alike. We hope that the introduction of ULSD and ULSP will markedly accelerate the proliferation of more fuel-efficient ("lean burn") engine technologies, lowering CO2 emissions per vehicle in the longer term.

  However, the creation and maintenance of this duty differential exposes clear environmental inconsistencies between the Government's stated objectives on climate change mitigation and local air quality improvement. Our view of these is drawn out below:

    —  The Government appears unclear whether its key transport emission priority is that of climate change or local air quality. The reduction of fuel duties on low-sulphur road fuels—which will both represent the bulk of their respective markets by Budget 2000—will increase road traffic and, consequently, emissions of CO2 in the short and medium term. In this Pre-Budget Report, the Government appears markedly more concerned over local air quality than it does over climate change.

  We recognise that the current high price of crude oil has elevated road fuel prices to levels above those which would have been achieved by the maintenance of the road fuel duty escalator (RFDE), had it not been scrapped in Budget 2000. However, much as we acknowledge that the overall price level is the key determinant of demand, we believe that it is essential that the Government sends clear signals of its concerns over climate change to promote further behavioural change by consumers. The signal from this PBR is that the Government's previously strong stance on climate change has weakened.

    —  Perhaps most concerning of all is the environmental impact assessment of the road fuel duty differentials (shown in the PBR in Table 6.2, p 139). The PBR makes no assessment of the negative impacts of the new fuel duty differentials on ULSD and ULSP. Table 6.2 makes mention only of the reductions of NOx, CO and VOCs arising from the fuel duty reductions. It makes no mention whatsoever of the consequent increases in CO2 emissions. Indeed, when one looks more widely at this table, this is true of all of the environmental Budget measures listed, with the one (rather spurious) exception of 1997's reductions in VAT on domestic fuel and power. Given the Government's stated strong intent to make better environmental appraisal of its Budget measures, these widespread omissions are both surprising and disappointing.

    —  There is no environmental case for a reduction in the duty on ULSD. Since ULSD already accounts for virtually 100 per cent of UK diesel use there is no further air quality benefit to be gained from reducing its price. Indeed, reducing the ULSD price cut will increase its use, and, to the extent that ULSD still creates local air pollution, a reduction in its duty will actually increase local air pollution. The RSPB appreciates that the reduction in ULSD duty is "to maintain the existing balance between the duty rates" of diesel and petrol. However, this is a further clear indication that the Government is unsure of the priority of its objectives on local air quality (for which petrol is a better fuel) or climate change (for which diesel has marked benefits), and wishes not to skew the current market position in favour of either fuel in its period of indecision.

    —  There is some evidence to suggest that the refining of oil to produce ULSP is more energy-intensive than for conventional petrol, representing another environmental cost which will not be borne by the consumer. This could further jeopardise the Government's climate change targets.

    —  The cutting of fuel taxation in the face of high oil prices sends a similarly weak message to OPEC, and, in turn, leads to further environmental damage. Over-use of natural resources should, in the normal run of events, result in reduced resource demand via the price mechanism. By reducing duties, the Government has prevented this from taking full effect. Moreover, OPEC will receive the message that it can hike prices, yet still see demand for and revenues from its oil reduced to a lesser extent than its own action would dictate.

2.  OTHER MEASURES

  Vehicle excise duty (VED)

  The RSPB remains strongly in favour both of:

    (a)  shifting the burden of transport taxation from ownership to use;

    (b)  graduating VED further on the basis of polluting emissions.

  Consequently, we welcome the further graduation and simplification of VED for freight vehicles, but have a less positive view of the proposed widening of the cheapest (£100) VED band for existing cars to include vehicles up to 1500cc. This measure could be particularly effective if supported by a further cut in VED for the smallest cars (engines below 1200cc), as we advocated in our submission to HM Treasury prior to the PBR. Such a cut—working in tandem with the VED measures for new cars announced in Budget 2000—would create a more graduated, or "banded" structure to VED. This would give a stronger incentive for drivers to move towards less-polluting vehicles. As it stands, the PBR removes any incentive for drivers of middle-sized cars (between 1200cc and 1500cc) to make such a transition.

  Company car taxation

  We also welcome the environmental progress made by the Government in company car taxation over the past two Budgets. This is the one area in which taxation is very closely linked to CO2 emissions, and the measures in the PBR will reinforce this. We also welcome the reduced rates of tax for electric, hybrid and gas-fuelled vehicles. However, although we accept that the tax rates for these vehicles are probably an accurate reflection of their CO2 emission levels, we believe that there is a strong case for the company car taxation mechanism to offer greater reductions which would genuinely promote "greening" of company vehicle fleets (an idea typified already by the low rate of fuel duty on LPG).

  Other transport measures

  The RSPB welcomes the introduction of the Green Fuel Challenge, and sincerely hopes that this measure is more than an eye-catching initiative. In particular, we expect the Chancellor to offer "major reductions in duty rates for the most promising environmentally-friendly alternative fuels" to a large tranche of "green" fuel producers and not merely a few token fuels which few consumers will have the opportunity to purchase.

  The PBR was, however, disappointing in its extension of green travel measures. Along with many others, including Transport 2000, the IPPR and Fabian Society, we endorsed a package of green travel measures to the Government in the run-up to the PBR, including the granting of "green commuting" travel vouchers, rebates on bus fuel and a Rural Services Fund. We were disappointed to see no mention of these initiatives in the PBR.

  Pesticides

  The RSPB is extremely concerned about the impacts of pesticides on the environment, in particular their proven effect of disrupting food webs. We therefore welcome the Government's stated objective of reducing the environmental impacts of pesticide use. The RSPB was dismayed by the announcement in February 2000 that the pesticide tax was to be dropped from this year's budget. This view was reinforced by the Environmental Audit Committee's Report which was strongly in favour of the development of a banded pesticide tax.

  We understand the political reluctance to impose a new tax on the agriculture sector given the current farming crisis. However, this approach is out of step with the Government's message that the agricultural sector must reform, and that environmental issues will be central to agricultural production in future. It also conflicts with the Government's adherence to the "polluter-pays" principle since the costs of removing agricultural pesticides from water fall on the water consumer rather than on the farming industry. The RSPB remains of the opinion that the most effective approach is through a well-designed, banded pesticide tax, with hypothecated revenue to fund measures and incentives which reduce farmer dependence on pesticides. However, we are willing to support an alternative strategy provided that it will achieve equally effective pesticide impact reductions.

  The package of voluntary measures proposed by the Crop Protection Association (CPA) is widely considered to be wholly inadequate to address the environmental impacts of pesticides. In the PBR, the Government registered its clear acknowledgement of these failings. While voluntary contributions from the agrochemical industry certainly have a place in any pesticide impact reduction strategy, the industry has failed to come up with a coherent workable package of measures. The CPA proposals are not adequate to address the widespread environmental impacts, nor do they internalise the costs of pesticide pollution.

  Pesticide reduction must be considered in the context of the wider agricultural system, including production subsidies, agri-environment schemes, the pesticides registration system, and the demands of assured produce schemes. The CPA simply cannot deliver measures on these fronts. Along with most other environmental NGOs, much of the water industry and food retailers, the RSPB is keen to see tangible, material progress in the reduction of pesticide impacts in the immediate future.

  Climate Change Levy (CCL)

  After many months of difficulty in completing the "negotiated agreements", the Government used the PBR to confirm that the CCL will be introduced in April 2001. The RSPB warmly welcomes this progress, and looks forward to further strengthening of the Levy (eg increased levy rates) to reinforce its value in securing the UK's climate change obligations.

  Aggregates levy Sustainability Fund

  The RSPB also welcomes the Government's swift analysis of the consultation exercise designed to determine the objectives of the Aggregates Levy Sustainability Fund. We were delighted to see that there will be a guaranteed allocation of £35 million to the Fund in its first year.

3.  WIDER CONCERNS

  The Government has increasingly stated its intention to "put the environment at the heart of government" by making a fuller environmental appraisal, not only of its directed environmental Budget measures, but also of its more general Budget measures. Whilst we appreciate that this is an inexact science and difficult to achieve for many policy initiatives, the PBR, once again, contains an environmental impact assessment only for Chapter 6 and its environmental measures. If the Government is to make a greater integration of economy and environment, we would strongly advocate a greater degree of environmental appraisal in all future Budget decisions, and a greater transparency of this process

November 2000


 
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