A freeze on fuel duty and a continued lack of clarity on red diesel have seen the budget labelled a ‘missed opportunity’ in supporting efforts to improve air quality.
The Chancellor, Philip Hammond, unveiled his autumn budget in Parliament yesterday (29 October), which promised action to encourage plastic recycling through a tax on new packaging products, as well as a funding package for road repairs, and money aimed at boosting new home building.
Local authorities have also been offered an additional pot of around £20 million in funding to bring forward measures to meet air quality targets, which comes on top of previous funding commitments set out by the government.
However, the Chancellor’s commitment to keep fuel duty frozen for the ninth consecutive year has drawn criticism from sustainable transport campaigners, who have claimed that the move will lead to ‘further congestion, air pollution and poor health’.
Fuel duty has not risen since January 2011, when it was increased from 58.19p per litre to 58.95p. It was cut by 1p per litre in the Budget two months later, and has remained at the same rate since.
The tax freeze is believed cost the Treasury approximately £7 billion in lost tax revenue, and critics claim that it has acted as a barrier to increased uptake in public transport and other alternatives to car travel by keeping prices at the petrol pump low.
Steve Brooks, Policy Director at Sustrans, the cycling and walking charity said: “When it comes to spending on transport, prevention is always cheaper than the cure. But sadly this budget continues to lock Britain into a polluted, congested future which in the long-run will cost the country billions.
“With the Prime Minister’s earlier announcement of a continued freeze in fuel duty, coupled with today’s announcement of over £25bn for the next Road Investment Strategy, this budget will only lead to further congestion, air pollution and poor health.”
Mr Brooks said the government’s pledge to increase spending on roads comes at a time when ‘experts call for a drastic reduction in global greenhouse gas emissions’.
He added: “The Chancellor has missed an opportunity to help towns and cities thrive and relieve some of long-term pressures on the NHS.”
Criticism was echoed by Darren Shirley, the chief executive of the Campaign for Better Transport, who commented that the freeze in fuel duty ‘undermines public transport’.
He said: “Rail passengers have suffered appalling service this year and deserve a fares freeze, so we are disappointed that the government only chose to freeze fuel duty, which undermines public transport and will do nothing to tackle the air pollution crisis.”
Elsewhere, the Treasury has drawn criticism for a lack of clarity over the future treatment of red diesel – which it was hoped could feature in yesterday’s budget, following a series of consultations on the issue by the Department.
“Red diesel” is the fuel used in non-road vehicles such as agriculture and construction machinery, and is believed to account for around 15% of the total diesel usage within the UK.
The fuel currently benefits from a tax rebate of 46.81ppl giving an effective rate of 11.14ppl, which currently costs the Treasury around £2.4 billion per year in revenue, compared to diesel charged at the main rate.
Critics argue that by incentivising the use of red diesel through favourable taxation rates, and relatively lower emissions standards for secondary engines on vehicles, efforts to address air quality in urban areas are being undermined.
“The environmental content of the Budget was focused on plastics – it’s important that this issue does not suck up all the political airtime available for green issues,” Matthew Farrow, executive director of the Environmental Industries Commission commented.
“There was also a lack of action on air quality – the apparent lack of any announcement on ‘red diesel’ is a real missed opportunity, we urgently need to end the practice of construction machinery and transport refrigeration units being able to use untaxed diesel when low pollution alternatives are available.”
‘Clean cold’ specialist Dearman, a Croydon-based company which has developed a zero-emission transport refrigeration system, replacing diesel with liquid nitrogen in refrigeration trailers and trucks, as well as other potential power and cooling applications – has also expressed disappointment on a lack of clarity on red diesel within the budget.
Commenting, Dearman chief executive Scott Mac Meekin, said: “We are naturally disappointed not to see the Chancellor make an announcement on scaling back red diesel, particularly for transport refrigeration. We know ministers recognise the urgency of improving Britain’s air quality, so although the Budget was a missed opportunity, we will continue to engage with ministers and civil servants to make the case for scaling back red diesel.
“Clean technologies will continue to be undercut as long as the price of diesel is artificially lowered.”