Greens fear climbdown

By Jo Dillon

By Jo Dillon

07 November 1999

Chancellor Gordon Brown's so-called Green Budget next week is widely seen as make or break time for the Government's environmentally friendly credibility.

Unlike last year, his pre-Budget report to be unveiled on Tuesday includes a separate chapter devoted to "protecting the environment".

But the green lobby still fears a climbdown from the heady days of the spring Budget, when Mr Brown proposed 22 new environmental taxes to meet Britain's legally binding agreements to cut emissions of greenhouse gases by 12.5 per cent by 2010, and Labour's own manifesto commitment to an even greater 20 per cent cut.

Since then, business leaders have mobilised a vigorous campaign against what they perceive as unwarranted and counter-productive fiscal burdens.

Prime Minister Tony Blair and Trade and Industry Secretary Stephen Byers have also been silent, even hostile, about some of the proposed green taxes, leaving Mr Brown and John Prescott, the Deputy Prime Minister who is also responsible for the environment and transport, increasingly isolated.

The green lobby fears that Number 10 has forced the Chancellor to weaken his radical fiscal programme to appease the captains of industry, who have so far been positive towards New Labour but are beginning to grumble about their growing tax burden.

The road fuel escalator has become a political hot potato after the haulage industry successfully highlighted the crippling effect on its costs. White- hall sources have, however, been playing down reports of an imminent cut, not least because of the £8bn a year it raises for the Treasury coffers.

Ministers have also been talking up significant exemptions from the climate change levy for energy-intensive industries such as steel. Due to come in next year, the levy has been branded a "blunt instrument" by the influential Hose of Commons Select Committee on Trade and Industry, and even environmentalists concede that in its present form it is undesirable.

Possible changes include the introduction of a sliding scale, which would tax electricity produced from heavily polluting sources such as coal more than power from nuclear and solar sources.

One tax has already almost certainly been dropped. Faced with a surge of support for Britain's beleaguered farmers, the proposed tax on pesticides designed to transform the countryside into a chemical-free paradise is believed to have been abandoned to avoid making food exports even more uncompetitive abroad.