Memorandum from the RSPB
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
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.
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
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 fuelswhich will both represent the bulk of their respective
markets by Budget 2000will 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.
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
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 cutworking in tandem with the VED measures for new cars
announced in Budget 2000would 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
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.
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
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.
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