Green taxes: Now old boilers are given the scrappage treatment

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The Independent Online

If the boiler in your home is old and inefficient, you will be able to claim £400 from the Government off the cost of buying a new one – which could then shave as much as £230 a year off your heating bills, as well as pumping less carbon into the atmosphere.

The scrappage scheme, which applies to about 150,000 households using G-rated boilers, is part of Alistair Darling's strategy for using the tax system to get people to alter their behaviour in ways that help combat global warming.

He also announced that householders with wind turbines or solar panels on their homes who feed excess power back into the grid would receive an average of £900 a year under the "feed-in tariff" scheme which starts in April – a payment which would be tax-free.

And an extra £200m would go to helping people make their homes more energy-efficient through measures such as insulation, supporting an additional 75,000 households.

There will also be new careers to be made from designing and building offshore turbines that can generate electricity from wind power, with the promise yesterday that the government will invest an extra £50m in the industry.

And firms can benefit from Mr Darling's announcement; by getting rid of any company cars or vans that are powered by petrol and diesel and buying electric vehicles instead.

"Tackling climate change will bring new opportunities for low carbon industries. This will create the high-skilled, high-paid jobs crucial to our future prosperity," he told MPs.

All electric cars will be exempt from company car tax for five years, and all electric vans will be exempt from van benefit charge for five years. Any firm considering buying an electric van will be eligible for a 100 per cent allowance, provided it does not clash with EU rules on state aid.

But there was a stick to go with the carrot. A year ago, when Mr Darling dropped VAT to 15 per cent, motorists were targeted with a 2p per litre rise in fuel duty to counter the reduction. VAT will go back up to 17.5 per cent in January, but Mr Darling said nothing about removing that 2p extra duty.

He also had nothing to say about air passenger duty, which many people in the travel industry would like to see scrapped or at least held at its present level instead of going up, as planned. The Government defends the tax as a way of discouraging people from flying, which is a major contributor to climate change.

Adrian Tank, motoring strategist for the RAC, welcomed the incentives to own electric cars, but objected to the fuel tax. "Once again the motorist is seen as an easy target by the Chancellor," he said. "This rise will add around £30 to the average annual cost of filling a tank and will be the fourth tax increase in last 13 months. Motorists need to keep a close eye on rising petrol prices as this increase will take average prices to around £1.12 a litre."

Ian Parrett, analyst with independent energy consultants Inenco, said the boiler scrappage scheme did not offer a big incentive to get people to invest in a new boiler.

"It is the last thing many people want to spend money on, especially in the current economic climate," he said.

Other "green" measures announced by Mr Darling included an extra £40m for low carbon industries, £30m for the chemical industries on Teesside to demonstrate ways to decarbonise the process industry, and £30m towards green transport projects. The rail electrification between Liverpool, Manchester and Preston is to go ahead as already planned.

Mr Darling also promised to double the Government's contribution to projects to capture and store carbon that would otherwise be released into the atmosphere, and to invest £90m to the 2020 European Fund for Energy, Climate Change and Infrastructure.

The measures were not enough to satisfy environmental pressure groups.

"With the future of the planet hanging in the balance in Copenhagen, the pre-Budget report was a golden opportunity for the Chancellor to demonstrate global leadership in developing a low-carbon future – but he has chosen to be timid," Friends of the Earth's economics campaigner Ed Matthew said.

The view from the marginals: 'New businesses need more tax breaks'

Patrick Lehane, 39, and his wife Emma own the Richmond Hair Company in Richmond, Surrey

"The VAT drop hasn't made a big difference to our business overall. It wasn't a vast amount and it was only temporary, so people did not really change their habits. Everything is costing more; our overheads are up but customers don't want price increases, so our profits have dropped. We are also in an area where many people have lost their jobs and moved. But I'm hopeful that the only way is up.

"Delaying an increase in corporation tax is not impressive; it should not have been raised in the last Budget. It is only a matter of time before it rises again, so we are not counting our chickens. Similarly, tax breaks for business properties aren't a benefit because London prices are generally above the £18,000 threshold.

"I'm also worried about how the new £500m small business fund will filter down to us. The biggest help would be a cut in business rates and giving businesses in their infancy more tax breaks. I am not sure how I will vote, but I will not be voting Labour."

Constituency: Richmond Park; Labour Majority in 2005: 3,731