A powerful new Commons committee produced a scathing report on the green credentials of Chancellor Gordon Brown's all-important department.
It also suggests that every household should have a VAT-free fuel allowance for basic heating and lighting. That would help the poor, but to stop richer people wasting energy, there would be a higher tax rate on electricity and gas above this annual allowance.
Tory MP John Horam, chairman of the environmental audit committee, said: ''There's no reality to the Treasury's rhetoric. There's no evidence, either in the pre-budget report, or in what they said to this committee, that they have a strategy for sustainable develop- ment.'' The committee's Labour MPs were equally unimpressed. ''You can't just play lip service to the environment,'' said Helen Brinton, the Labour MP for Peterborough.
The committee's first task after being created late last year was to examine Mr Brown's November pre-Budget consultation report. Its MPs wanted to know how the Chancellor would fulfil his aim of raising taxes on pollution and other environmentally harmful activities - "bads" - while cutting taxation on "goods", such as employment.
Unlike ordinary Commons select committees, which scrutinise particular departments, this one can summon ministers and officials from any department. This is because its job is to consider how actions and policies across the whole of government are impacting on the environment over a time scale of decades.
But its first inquiry got off to a bad start when Dawn Primarolo, Treasury minister, turned down its request to give evidence, pleading the pre-Budget convention of silence.
It was only after pressure from the Department of the Environment, Transport and the Regions that she agreed to appear, and when she did she gave very little away.
In its first report, the committee complains that it could find no underlying Treasury strategy for judging how its own policies, taxation changes and overall economic growth helped or harmed the environment. Yet no other arm of government had more impact on natural resources, waste and pollution.
At a press conference yesterday, Cynog Dafis, a Plaid Cymru MP and committee member, said: ''Green taxes are not just an opportunity here and there to raise a bit of cash.'' He envisioned them being used to shift the economy into consuming less land, fossil fuels, water, minerals and other natural resources.
With just 10 short paragraphs devoted to the environment, the pre-budget report was a big disappointment to the MPs. They call on Mr Brown to set up a green tax commission to advise him on eco-taxation - something Ms Primarolo appeared to rule out. The committee recommends that with each passing year the Treasury should get a larger proportion of its revenues from taxing pollution and waste, and give regular reports on its progress.
The committee says the anomaly in which VAT is charged on homes being renovated or converted, but not on newly built property, must end. This would encourage urban regeneration and discourage greenfield development.