The Environment in Autumn Statement 2012 (subsuming Budget 2013 inquiry)

Our aim in undertaking this short inquiry was to explore some of the issues we expect the Chancellor of the Exchequer and the Treasury to address as part of Autumn Statement 2012 and future Budgets. We had previously raised concerns after Budget 2011 that the Treasury viewed protecting the environment as a block or cost to the economy. More recent comments by the Chancellor intensify our concerns. These, along with mixed messages emerging from Government on energy policy, are undermining investor confidence and are damaging growth and investment.

Autumn Statement 2012 must therefore provide a clear message that the Treasury supports the transition to a green economy. We have identified a number of practical ways in which the Treasury can achieve this, including:

• explaining how any new incentives for gas-powered energy generation are consistent with legally binding carbon targets; • identifying how the environmental impacts of tax measures will be better reflected in future Autumn Statements and Budgets; • following the recently published Energy Efficiency Strategy, identifying ways that the Treasury can support the measures detailed in the Strategy, and analysing possible additional incentives to further boost take-up of energy efficiency measures and reduce demand for energy (such as variable council tax and Stamp Duty Land Tax rates, or energy efficiency feed-in tariffs); • reporting the proportion of tax revenue accounted for by environmental taxes in accordance with the definition used by the Office for National Statistics (as well as the Treasury’s definition); and • setting out its longer term ambitions for Fuel Duty and Vehicle Excise Duty, as well as longer term plans for the future of motoring taxes.