Steve Richards: Only big sticks make a difference (and they must be accompanied by lots of juicy carrots)

Both parties dance together in agreeing where green taxes should not be imposed
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After the party comes the hangover. Less than two weeks ago, pivotal political figures were dancing away as the Stern report on climate change was published. Even if they were not holding hands, the normally combative figures danced in harmony, rocking away to the prospect of green taxes and other environmental measures. Green was the new rock'n'roll. There is no harmonious dancing now. Even within the same parties they dance tentatively to different tunes, and some are not sure whether to dance at all. All of them have headaches.

Yesterday's Queen's Speech is part of the hangover. It was a potentially historic moment with the introduction of a Climate Change Bill. The main parties should have been holding hands excitedly. Instead the proposals are vague and the differences are exaggerated for political effect. On Tuesday I argued that Labour is overstating how soft the Conservatives will be on crime. On the environment, it is the other parties who distort the differences, by emphasising their support for annual targets for carbon emissions.

The Conservatives advocate annual targets, but have recently made clear there will be flexibility as to whether they are met. As The Independent's Political Editor, Andrew Grice, revealed yesterday, the Environment Secretary, David Miliband, is proposing five-year targets, almost the equivalent of flexible annual limits but with the flexibility built in.

There is no great difference. What matters more is the level of the target, the measures that would be introduced to bring them about and the degree to which an independent body reviewing carbon emissions would have the authority to impose policy changes. On the thorny, difficult specifics, the tensions are visible within parties as well as between them.

In the Commons yesterday, Tony Blair exposed with forensic and witty force the conflicting statements of various Shadow Cabinet members on targets and other matters. On several fronts, David Cameron was also witty, but not forensic. Mr Cameron deployed the same superficial approach when he responded to the Budget in the spring. He is an incomparably more formidable leader than William Hague, but he needs to watch it. Mr Hague was finished off when Mr Blair taunted him for being good at telling jokes and not much more. Mr Blair almost did the same yesterday with Mr Cameron.

But away from the theatrical setting of the Commons yesterday, the Government is also bemused after the dizzying excitement of the Stern report. The weekend before the launch of the report, the normally cautious and restrained David Miliband was rocking with an uncharacteristic intensity. His ideas for the introduction of sweeping green taxes, from fuel duties to air fares, were leaked to a Sunday newspaper. They have not got much further.

Consider the views of another Cabinet minister and candidate for the deputy leadership, Peter Hain. In a recent interview, Mr Hain told me that he had his concerns about the current fashion for green taxes. He was worried that they would hit those on lower incomes, stating he wanted to be "red as well as green". He spoke of the need for progressive green taxes.

Let us now return to Mr Miliband. He has argued since the launch of the Stern report that the debate over who would pay more was something of a red herring. He pointed out that the objective of green taxes was to help the environment by deterring harmful activities. They should not be regarded primarily as revenue-raising measures.

Meanwhile, as far the Treasury is concerned, I am told authoritatively that Mr Brown regards green taxes as largely irrelevant to this debate. From what I can tell, Mr Brown will not be spending the run-up to the next general election by placing a special focus on tax rises of any variety, especially if he is met with opposition from the Conservatives.

He should not bank on their support. The shadow Chancellor, George Osborne, has said that his green tax rises would be accompanied by tax cuts elsewhere, mischievously suggesting that he doesn't expect Mr Brown to be so generous. Recently I interviewed the Conservatives' politically astute transport spokesman, Chris Grayling. He predicted that there would be no pre-Budget consensus with the Chancellor over green taxes unless there was a clear link with tax cuts. Mr Grayling also expressed doubts about the Government's plans for road pricing, raising concerns about the technology, a neat way of avoiding support for what is already a too cautious and long-term strategy. The Government moves at crawling speed on road pricing, but at least it is moving. Apparently it will do so without the support of the Conservatives.

What about higher air fares? Here is Mr Grayling again: Aviation is an international business; if you take a step nationally then you can have an adverse effect on your own industry without changing the nature of the industry in terms of the environment worldwide. There's no earthly point in us taxing British aviation out of existence only for it all to move across the Channel to France. Probably Mr Brown and Mr Hain would agree with him. Both sides dance together in agreeing where green taxes should not be imposed.

The Liberal Democrats have been braver in giving more details of green taxes, although they promise big tax cuts too. Their treasury spokesman, Vince Cable, insists that as a result of green taxes, there would be a gradual reduction in environmentally damaging behaviour. But for all the noisy debate, as far as I understand, the end result would be a relatively small reduction in the use of planes and cars.

Of all the muddled and contradictory statements that have surfaced since the launch of the Stern report, Mr Miliband's is the clearest and most stark. The objective of green taxes must be to help the environment. Debates about progressive redistribution, other tax cuts, stealthy revenue-raising measures and the technology of road pricing are convenient diversions. Not for the first time, the Mayor of London, Ken Livingstone, points the way, proposing a congestion charge of £25 for gas-guzzling cars. I have seen the 4x4 in my road almost collapse in front of my eyes. It won't be there much longer. It knows it.

At the same time, Mr Livingstone offers green cars the chance of paying no charge at all. That is the way to do it. Only big sticks will make a difference, and they must be accompanied by plenty of juicy carrots.

What will be the target limit on carbon emissions? What will be the measures to achieve it? How big will the sticks be in order to deter behaviour rather than provide revenue? Party leaders nurse hangovers when they should be dancing wildly still.