Source · Select Committees · Public Accounts Committee
Recommendation 29
29
In addition to direct costs to the Exchequer of achieving net zero, HM Treasury also...
Recommendation
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
Government Response
Not Addressed
HM Government
Not Addressed
1.1 The government disagrees with the Committee’s recommendation. 1.2 The Department for Business, Energy & Industrial Strategy (the department) and HM Treasury 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. This will include reiterating the clear performance metrics we have already committed to report against publicly, and a summary of the internal reporting governance in place to ensure net zero by 2050 remains on track. 1.3 The Net Zero Strategy sets out policies and proposals for decarbonising all sectors of the UK economy to meet our net zero target by 2050. As set out in the Strategy, the government has committed to providing a public update on our implementation progress every year beginning from 2022, which will include: • Progress against a set of at least 24 clear ambitions and targets across different sectors of the economy – a list that will build over time to incorporate additional Government targets and wider non-government indicators of progress. • Commentary on contextual changes that might affect the exact pathway to meeting the government’s decarbonisation commitments. • A summary of key areas of progress made against the policies and proposals in this Strategy. 1.4 The annual public report on implementation progress is a new commitment, which lays the groundwork for future reporting, and one which the government is focused on getting right. The government does not think that it is appropriate to commit to publishing additional specific performance metrics now but, in future, the government will consider what additional metrics and reporting might be needed. The government is grateful to the Committee for its continued input as these take shape. 1.5 The government has set out how tax relates to environmental goals in the Net Zero Review and the Prime Minister’s 10 Point Plan for a Green Industrial Revolution.