27
Recommendation
Forty-First Report - Achieving Net Zero…
Rejected
In its 2020 report Achieving net zero, the NAO stated that neither the Department nor HM Treasury collated information on the total costs and benefits of government policies that contribute to achieving net zero.96 HM Treasury told us that costs associated with achieving the Nationally Determined Contribution (which commits the …
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In its 2020 report Achieving net zero, the NAO stated that neither the Department nor HM Treasury collated information on the total costs and benefits of government policies that contribute to achieving net zero.96 HM Treasury told us that costs associated with achieving the Nationally Determined Contribution (which commits the UK to reducing economy-wide greenhouse gas emissions by at least 68% by 2030 compared to 1990 levels), achieving the Sixth Carbon Budget, contributing to international climate finance, and any UK commitments made at COP26 are already covered either in the current Spending Review settlement, or will be covered by future spending reviews.97 HM Treasury also told us that the Climate Change Committee produces cost estimates over much longer periods, for example 30 years, and the Office for Budgetary Responsibility produces an official estimate of the future costs of climate adaptation and mitigation in its fiscal risks report over an even longer time horizon of 50 years.98 However, HM Treasury cautioned that such estimates contain ‘heroic assumptions’ with errors compounding over potentially very long periods.99 It concluded in its Net Zero Review that costs and benefits will not fall 88 HM Treasury, Net Zero Review Final Report, October 2021, para 2.33 89 IFRS, IFRS Foundation announces International Sustainability Standards Board, consolidation with CDSB and VRF, and publication of prototype disclosure requirements 90 Qq 109–110 91 Net Zero Strategy, page 254, para 30 92 Q 62 93 Q 63 94 Q 64–65 95 Net Zero Strategy, page 254, para 30 96 Q 70; C&AG’s Report, para 17 97 Qq 87–92; UK Government, United Kingdom of Great Britain and Northern Ireland’s Nationally Determined Contribution, 2020 98 Qq 95–96, 105–107 99 Q 95, 97 18 Achieving Net Zero: Follow up evenly, but that it was impossible to forecast how individual households would be affected over the thirty-year transition given consumer costs would be driven by factors including incomes, prefer
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Government response AI summary
The government disagrees with the recommendation, but will write to the Committee by Autumn 2022 setting out the processes for reporting the implementation of net zero policies, including a summary of internal reporting governance.
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HM Treasury
29
Recommendation
Forty-First Report - Achieving Net Zero…
Rejected
In addition to direct costs to the Exchequer of achieving net zero, HM Treasury also recognises the impact of behaviour change reducing tax revenues. Revenues from Fuel Duty and Vehicle Excise Duty amounted to £37 billion in 2019–20, and if the current tax system were to remain unchanged receipts from …
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In addition to direct costs to the Exchequer of achieving net zero, HM Treasury also recognises the impact of behaviour change reducing tax revenues. Revenues from Fuel Duty and Vehicle Excise Duty amounted to £37 billion in 2019–20, and if the current tax system were to remain unchanged receipts from these taxes will decline towards zero over the next 20 years.104 We previously reported in 2021 that HM Treasury cannot explain how it will manage declining revenues from consumption of fossil fuels and that it should set out a timetable for how it will consult on options for replacing these. Despite committing to write to the Committee in November 2021 with such a roadmap, HM Treasury’s response did not provide one.105 HM Treasury told us that where possible, the government holds consultations on major tax reforms to support understanding of these measures. However, “…there is a great deal of uncertainty inherent in any modelling as far into the future as 2050, which is highly sensitive to economic, societal and technological developments. Given this, a tax roadmap could ultimately give a false sense of certainty.106 100 HM Treasury, Net Zero Review Final Report, October 2021. Executive summary; para 3.7 101 Q 70; Impact Assessment for the Sixth Carbon Budget; Department for Business, Energy & Industrial Strategy, Outcome Delivery Plan: 2021 to 2022, July 2021 102 Q 70 103 Q 71–72; Q 56–58 (Oral evidence: Covid-19: Cost tracker update, HC 173, 17 November 2021) 104 Q 106; HM Treasury, Net Zero Review Final Report, October 2021, para 6.4 105 Letter from Exchequer Secretary to the Treasury to PAC Chair dated 30 November 2021 106 Q 98, 106; Committee of Public Accounts, Environmental tax measures, Forty-Fifth Report of Session 2019–21, HC 937, 28 April 2021 Achieving Net Zero: Follow up 19
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Government response AI summary
The government disagrees with the Committee’s recommendation but will write to the Committee by Autumn 2022 setting out the processes for reporting the implementation of the government’s net zero policies, including to Parliament.
Read full response →
HM Treasury