The Treasury needs to do far more to ensure its green fiscal stimulus measures are sufficient to help transform the UK into a low carbon economy, MPs have argued.
A new report by the Environmental Audit Committee called Pre-Budget report 2008: Green fiscal policy in a recessionargues that the Budget in 2009 should contain a much bigger and more coherent package of green fiscal stimulus.
This years Pre-Budget report announced a £535 million package of green fiscal stimulus measures designed to tackle economic and environmental problems. The report explained that the investment is welcome, but the scale too small especially given that most of this funding was already committed, and will be offset by reduced spending in 2010-11.
MPs also warned that they would like to see a more strategic approach towards funding the transition to a low carbon economy. They also recommend that the Treasury should work together with the Department of Energy and Climate Change to examine the risks to the UKs climate change and renewable energy targets from the shortage of capital for investment in low carbon infrastructure, and bring forward proposals for ensuring that low carbon energy projects receive the finance they need.
Commenting on the report, Committee chairman Tim Yeo said: Measures designed to pull the economy out of recession provide an invaluable opportunity for the Treasury to drive the kind of change required to build a sustainable modern economy. The upcoming Budget is a real test of the Governments commitment to its own climate change policies. Yet the measures in the Pre-Budget Report show the Treasury lacks the consistency and boldness of purpose required.
The Treasury has announced very little new money for green investments. Yet meeting our climate change targets will require a step-change in funding for the low carbon energy sector, especially when the financial crisis has led to a shortage of capital.
The Aldersgate Group, a coalition of businesses, environmental groups and MPs, submitted evidence to the Environmental Audit Committee report. The Group has written a letter to the Chancellor, Alistair Darling, recommending that the green component of the economic stimulus package should be at least 20 per cent and £14.2 billion in size if it is to match the ambition of the US and other international competitors. It claims that this package would create UK jobs.
Aldersgate Group chairman Peter Young said: The Governments aspirations for a low carbon industrial strategy will only be credible if they are matched with genuine ambition in the upcoming Budget. We have heard the rhetoric, we now need to see the action. If not, the UK will fall further behind in the race to establish jobs, expertise and growth in the industries of the future.
The letter stated: The 2009 Budget is a unique opportunity to instantly stimulate the economy with green jobs and finance that will help safeguard the UKs competitiveness now and in the years to come.
The Environmental Audit Committee report concluded that the 2009 Budget requires consistency and boldness of purpose. It continued: The Pre-Budget Report 2008 does not reassure us that this is in place. We hope the Budget itself will.