Gordon Brown wants more zero carbon properties like this block of flats in east London. Photograph: Steve Parsons/PA
Gordon Brown attempted today to seize the environmental high ground from David Cameron’s Conservatives with a series of tax incentives to encourage more energy-efficient cars and houses.
The chancellor said he wanted Britain to have cars with the lowest carbon rating using the least polluting fuels. Measures included a near doubling of road tax on the most polluting cars within two years.
The current top rate of road tax of £210, which applies to just over 200,000 gas-guzzlers, will increase to £300 in October and to £400 by 2008. At the same time, duty on fuel-efficient cars in band B, will be cut from £50 to £35, alongside a zero rate for the most fuel-efficient cars.
Mr Brown also took a swipe at a Tory proposal to impose VAT on airline tickets. “This measure has not been properly thought through,” he said, pointing out that frequent business flyers would claim back the VAT.
He said the idea would save less carbon emissions in a year than the climate change levy would save in a week.
“I have rejected this proposal in favour of the 6m tonnes of carbon saving achieved by the fairer and more environmentally efficient measures I have outlined in the budget today,” he said.
These measures included a review on how to “decarbonise the road” within 25 years through technical improvements to cars and fuel. It will be headed by Professor Julia King, a former engineer at Rolls Royce and Sir Nicholas Stern, author of an influential Treasury review on the cost of climate change.
On biofuels, Mr Brown said: “I am extending to 2010 the biofuels duty differential worth 20p per litre, a fuel duty discount of 40%, and I am also extending to 2012 the biogas incentive worth 40p per litre, a discount on fuel duty of over 80%.”
The chancellor also announced that every household will be offered the means to improve the energy efficiency of their home by 2017.
Based on consultations with banks and building societies, he said measures to lower a household’s carbon footprint had the potential to create a market for a range of new “green” economy products.
Pensioners will also be given £300 – £4,000 grants to insulate their homes. There is also a 50% increase in grants for households that install microgeneration devices such as wind turbines and solar panels.
Later this year, energy performance certificates will be introduced, giving all homes at the point of sale an efficiency rating and providing householders with clear information and advice on how to improve it.
In addition, the forthcoming energy white paper will set out plans to improve information on energy bills and roll out “smart metering” to enhance performance.
Such measures will lay the foundations for a range of “green” financial products such as mortgages and loans designed to help people invest in such things as loft installations and solar panels.
The financial services industry reacted warmly to the chancellor’s comments. A statement from Halifax and Bank of Scotland (HBOS), read: “Green finance is clearly an area where lenders can play an important part. We plan to launch a green mortgage next year.”
However, the green lobby said the budget did not go far enough to protect the environment.
Friends of the Earth director Tony Juniper said: “The Chancellor should have done more to make it easier and cheaper for people to go green. UK carbon dioxide emissions have risen under Labour, now is the time for bold leadership, not half measures in the face of overwhelming threat.”
Paul King, the director of campaigns for WWF-UK said: “It’s a good start, and is further evidence that the chancellor is getting to grips with the green agenda, but these are very cautious steps.
If Mr Brown becomes prime minister, he needs to be much bolder on environment issues to ensure that the UK leads the way.