The Budget: Cautious green welcome: Environment

BRITAIN'S 'greenest' budget ever was given a cautious welcome by environmentalists yesterday.

Norman Lamont said putting 17.5 per cent VAT on domestic gas and electricity and raising motor fuel duty by at least 3 per cent a year for an indefinite period would help Britain meet its international commitment to freeze emissions of carbon dioxide (CO2 ) at 1990 levels by the year 2000.

That commitment was made by the Prime Minister at last year's Earth Summit in Rio de Janeiro. The burning of coal, oil and gas in cars, power stations and homes accounts for most of Britain's emissions of CO2 , the most important global warming pollutant.

'Together with measures which have already been announced, these tax proposals should take Britain two thirds of the way to meeting the Rio target,' he said. 'They will do so in a way that does the least possible damage to the competitiveness of British industry.'

Groups such as Friends of the Earth felt Mr Lamont's new- found environmentalism, which went far beyond the modest green measures in his two previous budgets, stemmed from the huge extra revenue that his measures would generate. Chris Smith, Labour's environment spokesman, said the Chancellor's green claims were bogus because he had provided no positive incentives to encourage energy saving, only negative ones.

The Association for the Conservation of Energy said the widening of VAT would cut household fuel consumption by less than 2 per cent and the nation's CO2 emissions by less than half a per cent.

It comes at a time when, in real terms, gas and electricity prices are stable or falling.'