Tories set to suspend plans for green taxation

Two weeks ago ConservativeHome exclusively revealed that the Conservatives were unlikely to renew the pledge to match Labour on spending.  A senior frontbencher has now told us that, as part of an ongoing review of economic policy, higher green taxation is very unlikely to feature in the next Conservative manifesto.

The Tory plan up had been to reduce taxation of families from the proceeds of higher green taxation.  Lower taxation of families is now expected to be financed by stricter control of spending.  The overall priority, however, will be a reduction in borrowing.

Speeches by David Cameron and George Osborne at the Birmingham Party Conference will warn of very difficult economic times ahead.  The Tory leadership believes that the deterioration in the economic situation has vindicated their opposition to calls for a lower overall burden of taxation but they also fear that any moves to increase green taxation (even if offset by lower taxes elsewhere) will worsen an already precarious landscape for British business.  There is a particular fear that green taxes will discourage urgently needed investment in new energy generating capacity.

The "Green Shift" (higher taxation of pollution and lower taxation of families) will nonetheless be restated as a medium term goal.  Canada's Conservatives have used opposition plans to raise green taxes to devastating electoral effect.

Tory economic traditionalists will be disappointed that George Osborne will continue to resist calls for a pro-growth package of tax reliefs.  They have taken heart, however, from this week's warnings from the party leadership against panic re-regulation of the financial sector and against protectionist sentiment.

Comments

[greg]

What is a "Tory economic traditionalist"?

[Victor, NW Kent]

We cannot afford any such taxes to indulge the new religion of the chatterati.

n actuality there are already far too many "green" taxes and initiatives, totally unaffordable in the economic climate we have.

[david1]

Has anyone told Zac?

[Conand]

Diversifying our energy requirements and increasing energy efficiency are good ideas in any economic climate. It could be argued that they are even more important in a downturn.

If this is indeed true I'm somewhat dismayed. I hasten to add that I'm by no means a member of the Khmer Vert.

[michael mcgough]

Another welcome U-TURN.

Perhaps the Conference will deliver the ultimate U-TURN where the party WILL ALLOW talk on the EU.You cannot defuse a time bomb by ignoring it.

Tick tock!

[Patsy Sergeant]

I agree with Victor,NW Kent, that I don't think that 'green issues' should be elevated to the 'highest priority' spot.

However, I see no reason to discourage sensible insulation of houses - which will after all help to save on fuel bills.

I also think that our housing industry should be pressured into building many more 'eco friendly' houses - when house-building picks up again; they are way ahead of us on the Continent in this area.

[R.Baker.]

Good news about Gree taxes.
A good point about "eco friendly housing"too,by Patsy Sergeant,this kind of new thinking will really put the pressure on them all and not only Brown and Labour.

[Richard North]

The biggest "green" tax of them all is already in place - the EU's Emission Trading Scheme (ETS). Phase II has been rolled out, with an increase to 10 percent of carbon allowances auctioned, yielding £500 million for the Treasury.

Phase III which is rolled out in 2012 - coming up to mid-term in the electoral cycle - potentially yields £8 billion in revenue annually (based on a median estimate for the price of carbon) which, on current plans, goes straight into the Treasury.

That is only one of a raft of hidden taxes in the system, to which you must add the EU-manadated levies such as the renewables obligation, all of which (with ETS) add potentially £15 - 20 billion a year to end user costs. This is without ETS applying to aviation and shipping (both of which are under consideration at an EU level).

Unless the Conservatives are prepared to address these costs - and in so doing confront existing and planned EU initiatives - a commitment to avoid further green taxes is of very little value. The damage is already done.

[Edward Huxley]

Richard North is right. Surely the Conservatives can come out with something better than higher "green" taxation under them being unlikely.

Mr. Cameron has not uttered a word against "advisor" Goldsmith`s appearance st the recent Greenpeace trial as an expert witness, so we can only assume he supports the jury`s verdict,opposes the building of coal fired or nuclear power stations and supports wind turbines and solar panels.

Goldsmith is, of course, Tory candidate for Richmond Park, a Libdem stronghold. Seems the voters there will have to choose which is the greener of the two.

[Bob Johnson]

Could we have a response from Zac Goldsmith? Everything Zac believes in is being ditched from a great height. Zac must be very annoyed with those people surrounding Cameron now. I wouldn't be suprised if we see him walk away from the Conservative party. The things they believe in are totally opposite to what Zac believes in.

[?]

Aren't people getting tired of their party being run by this clique, who do whatever they want?

[Edward Huxley]

Bob Johnson is obvously a Zac supporter. Nothing wrong with that, but as Mr.Goldsmith was selected as a Conservative candidate he presumably is there to support the party`s beliefs, not to impose his own.

On global warming/climate change, it does seem that he is completely in line with the Libdems. So perhaps he should transfer to that party. With his money as well.

[Mark Hudson]

Thank eff for that as Gideon would say.

[Patsy Sergeant]

? @ 12.52 - 'Aren't people getting tired of their party being run by this clique, who do whatever they want?'

You are of course talking about Brown and his Cabinet!!!

[Opinicus]

The supreme unimportance of being right (as opposed to Right) in modern politics.

Another of Hilton's winning strategies junked.

What's the difference between Cameron's policies and the right's disavowed, old fashioned "lunacies"?

About 8 months and shortening.

[?]

"You are of course talking about Brown and his Cabinet!!!"

No Cameron and Gideon Osborne, Steve Hilton and the other one.

Why do you see it as your role to obey their orders?

[Jack Bauer]

"higher green taxation is very unlikely to feature in the next Conservative manifesto."

This is why I now truly LOATHE the political classlesses in this country. And that includes conserfauxtives, like Dim Yeo.

UNFRACKINLIKELY???

What are they smoking over at Cameron Central. It sure ain't conservatism.

We are being run (into the ground) by the Green Shirts and their craven drooling lackeys currently masquerading as "conservatives."

[Roberts]

Who decides that "Tories make a U-turn on Green taxes" ? Surely they need a democratic decision at their party conference ? Who has the last word on Conservative policy ?

[Conand]

'Who has the last word on Conservative policy ?'

David Cameron, who us and our voters really like.

[Westminster Wolf]

I think this post is wrong.

I expect Osborne to hold firm on green taxes but for them to be phased in.

[Westminster Wolf]

Actually no, Conand. The shadow cabinet decides. Or have we given up on that idea?

[Conand]

Theoretically they do.

[Tanuki]

Ah, sense at last! The whole "green" thing is yesterday's news: truth is, the existing rates of taxation on fuels are well in excess of those needed to pay for their environmental impact. [Google on 'pigouvian' for confirmation of this].

Only way I'd be prepared to pay increased eco-taxes is if the funds raised were ring-fenced and used to build a whole raft of new nuclear stations.

[Matt Wright]

Sounds like a useful re-balancing of approach.

[Richard North]

Conservative policy – according to the interim statement - is to support "cap and trade". This means that the Party, as it stands, supports the incremental imposition of green taxes, as planned in the EU's ETS.

It might also be noted that this is a regressive tax, having a disproportionate effect on the lower paid. The ETS plan, therefore, completely contradicts the "families" policy.

Tanuki, the funds so derived – or from other taxes, green or otherwise - cannot be used to build nuclear power stations. That would be illegal state aid and would thus breach EU law. Only intermittents (like wind power) can receive state aid, as through the Renewables Obligation, there being a specific exemption for this.

[ashley rochdale]

Vote blue - go ... red in the face

[Ulster Tory]

"Who has the last word on Conservative policy?"

ABB

(Anyone But Boris)

[Richard North]

NBB

No-one But Brussels

[Londoner]

I share the concern about the total lack of transparency and democracy from consideration of these matters (and by extension most other matters) at the moment.

It may be that any changes are just of nuance and timing, but if this is instead a profound change away from the new-found "green" policies of this leadership then we have been marched in one direction (and expected to go along with it) and now are going to be marched in another (and expected to go along with it). But at least the first change was part of the platform on which Cameron was elected leader so he had a right to expect some support (not a right acknowledged by many here, admittedly). As someone who wasn't much attracted by his economic or health policies, that emphasis on treating climate change and the environment generally more seriously was a significant attraction in me voting for him.

I understand the tactics of when one type of policy is emphasised and when another, but if Cameron retreats entirely from these areas, surely the cynicism of the "Vote Blue, Go Green" slogan will present an open goal to our opponents?

I am attending part of the Party Conference this year for the first time in 10 years. The handbook does not show a party that is alive at the grass roots. In previous times there used to be motions, not just those selected for debate, which were often fairly vapid, but pages and pages of motions from constituency parties that gave a very good flavour of party opinion which the front bench could not totally ignore. The were the party equivalent of Early Day Motions. We are reaping the harvest of the damaging party "reforms" of the Hague era and this "we'll jump one way, now you jump too" mentality is a bit of a reflection of that.

Recent events surely show even less scope for overall tax cuts than we hoped for. So in my book that makes the case for taxing "bad" things all the greater if it provides some scope to cut taxes on the good things. So long as the knock-on effect on other aspects of the economy are not undue, then I rejoice in higher fuel costs as this is reducing consumption. If the housing market crash also makes it more affordable for more poeple to live closer to their work, to reduce all the absurd commuting, better still. Or do we just dance mindlessly to short term focus group politics? I thought, and still hope, that Cameron is a leader, not a follower, and that tackling climate change was one of the things he set out to lead on.

[Martin]

The problem is that Gordon Brown has not introduced any real green taxes.

He has introduced many taxes which he has claimed are green, but which are, in reality, merely ways of snatching money from people and businesses.

This can be identified thusly: Whilst Mr Brown has many green taxes he has a paucity of green policies.

Green transport? More spending on renewable energy? Clean burn power stations? Biofuels not made using food stuff? All noticeable by their absence from Gordon Brown's programme of policies.

[Malcolm Dunn]

I would agree with you precisely Londoner. This would be a foolish and in my opinion unnecessary U turn. What many on this board seem to forget is the taxes on pollution/polluters were meant to replace other taxes and not just add to them.

[GB£.com]

At last, common sense returns; vote blue go nuclear.

No need to rattle Zac's cage now. He is after all just a useful sucker to help the party get back into power, so best to keep quiet.

[passing leftie]

Once again, Cameron shows the amazing depths of his convictions. He's flip-floped more times than a stunned halibut. Remember him on the sledge, weeping at the melting glaciers? Riding his bike through red lights, pursued by his driver?

[Richard North]

Londoner - I think you have missed the point completely. This is not a question of "nuance and timing".

The assertion is made that higher "green" taxes will not be included in the manifesto. The fact is that the UK is already committed to higher green taxes, through the ETS mechanism.

This includes a built-in escalator, forcing year-on-year increases with no top limit or even any predictability. The nature of the tax is that no one actually knows what it is going to cost.

Thus, to assert one thing, when exactly the opposite is set to happen, is not leadership. It is dishonesty.

[Kev]

Hurray!

I am delighted that the Conservative Party is pulling back from so-called 'green taxes'.

The 'greens agenda' is about anti-capitalist big-government, and is supported by no more than a vociferous minority.

"GLOBAL WARMING: THE NEW SECULAR RELIGION OF THE POST-MATERIALIST MIDDLE-CLASSES"

[Londoner]

Richard North: I may not have addressed the point in your comment about mandatory EU taxes, but to say that the points I made about democracy and the risk to Cameron's credibility involved in a retreat on green policies "missed the point entirely" seems a little harsh.

I think your point is that green taxes will increase anyway. My point is that there was meant to be "clean green water" between us and the Government (why else "VOte Blue Go Green"?) and just silently going along with EU imposed taxes (even leaving aside whether they the right way to go about it), as the present Govt presumably also would, fails to do this.

I suppose what you may be saying is that this is not a real change of policy because the EU will do their taxation work for them. My greatest complaint is that we had the Goldsmith report last autumn and we have never, so far as I know, had any clear exposition of what the policy is in response to that. And now this "exclusive" that the only thing we did have - green taxes to fund family tax cuts - is to be dropped.

[Londoner]

As to Kev - there is nothing wrong with a religion if it happens to be right! Of course the analysis should not be religious and accepted as faith (it has been revealed by scientific analysis not divine revelation), but I agree that the response has something in common with religious observance. It's no worse for that.

Being responsible on global warming is a moral issue that, if the science is right, requires a degree of unselfish personal sacrifice for the atruistic benefit of future generations. For those who have no other religion, actions based on safeguarding the future of others, including the unborn, (even if there may be no direct benefit to, say, a present 50 year old) would seem to me to be better than no religion at all.

[Richard North]

Londoner - "harsh" is not a word I would have used. The point of the original post was an assertion that there was a retreat from green taxes - not green policy. But there is no retreat from green taxes ... these go on. Nor is there a retreat from green policy that I can discern - much as I would like to see it.

As to the "clear green water", the idea that there was any distinction between Labour, Lib-Dem and Conservative policies is and always was a myth.

Environmental policy is an exclusive competence of the EU and thus the "green" policies are, fundamentally, EU policies. Therefore, there is only one policy, to which all the three main parties subscribe.

Furthermore, the idea of using green taxes to fund family tax cuts was always flawed and entirely unrealistic. The main income stream comes from the ETS which, as pointed out earlier, is regressive - it hits lower income families harder. Thus, any support for families is merely a redistributive measure, redolent of big government.

But another major flaw is that the ETS is essentially an optional tax - emitters can either pay the government (through the EUA auctions) or they can invest in emission reduction. Either way, the consumer pays, but in only one of the options is there an income stream for government.

Given also that the carbon price is uncertain, the "tax" fails on two counts, delivering possibly a variable and unknown level of income, which is no basis for committing government funds to a families support programme.

You end up committing a known - and presumably large - amount of government (i.e., our) money underwritten by an unknown income stream which may or may not be able to fund it.

To cap it all, if the green taxes succeed in their aim - which is unlikely - the income stream dries up. That leaves the consumer footing the bill for the emission reductions through increased prices rather than through taxation, leaving them just as badly off - but with no funding coming through for the family support measures.

Thus, in your context, green taxes can only succeed if they don't succeed. A nice little paradox.

[Londoner]

Thanks for the further clarification, Richard, particularly re ETS.

I agree that if green taxes are successful in my terms the revenues would decline after a while. I had only ever thought that they might provide temporary increased revenues to bring forward the "family" tax cuts before growth catches up to fund them. In reality it may be that latter assumption that looks as flawed in present circumstances as anything else.

I am reassured that other green policies (such as they are) might not be being watered down.