After watching the chancellor’s autumn spending review, you’d be forgiven for thinking that the UK public was more concerned by the price of a pint than by the looming threat of climate change. Changes to alcohol duties dominated the tail end of Sunak’s speech in which he mentioned wine twelve times, cider ten, and alcohol nine. The words “net zero”, on the other hand, were only mentioned three times, while he did not utter the phrase “climate change” once – and the only mention of “environment” came in relation to the pub.
No one is going to complain about good prices at the local but this hardly figures as the public’s primary concern. Climate change is the second biggest issue on the agenda, while the majority of us fear the cost of inaction more than that of green policies.
The budget revealed that the chancellor has a different set of priorities which match neither public concern regarding the environment, nor the scale of political ambition required to decarbonise the economy. But if he is genuinely serious about delivering a “new age of optimism” he must recognise that the most viable strategy to reduce the cost of living and deliver economic security lies in sustained commitment to the net zero transition.
The budget didn’t match the scale or ambition needed
Net zero by 2050 has become established a long term strategic goal for the UK economy over the past two years, but there still hasn’t been enough commitment from the Treasury to secure the path to meet it.
For a start, the budget didn’t deliver as much green public investment as it claimed to. The document declares that the chancellor has committed £30 billion since March, but analysis indicates that only £25.5 billion has been pledged between 2021-22 and 2024-25. What’s more, spending over the three years covered by the spending review will be just £20.9 billion, and only £7.8 billion of that is new money.
That leaves an investment hole of £55.1 billion according to our assessment of what is needed to tackle the climate and nature crises.
Green policies will help to lower the cost of living for many
Rishi Sunak used this budget to promise that the government would “help working families with the cost of living”. Politically, his announcements on alcohol, fuel and domestic air travel were designed to address rises in food, fuel and electricity prices, but these policies won’t sustain reductions to costs over the long term.
In cutting air passenger duty for domestic flights and upholding the freeze on fuel duty the chancellor slashed revenues from the UK’s two most significant green taxes. Freezing fuel duty has already caused an estimated five per cent rise in UK emissions since 2010 and plane journeys on popular UK routes are five times as polluting as taking the train.
Rather than pledging to tackle the rising cost of living through high carbon, short term policies, the government should be investing in green infrastructure that delivers cheaper transport for all over the long term. Freezing fuel duty for the eleventh consecutive year could cost the Treasury £7.85 billion per year. For a smaller price tag he could have, instead, invested £7.6 billion per year in electric bus routes, low emission railways and better walking and cycling routes, to create a clean, green transport system that reduces carbon emissions, improves air quality and cuts congestion, while giving everyone cheaper travel.
Remedial action is needed fast
Thanks to positive economic forecasts, the chancellor was able to paint an optimistic picture of the recovery and economy. However, the very public body which issued those forecasts warned earlier this year that late action on climate investment risks economic and fiscal catastrophe. The OBR anticipated that delayed public investment in a net zero transition would be worse for the public finances, resulting in higher public spending, more borrowing and significantly higher public debt. Is it fiscally responsible to ignore this warning?
The Treasury’s net zero review earlier this month acknowledged that policy would need to lead the transition but tangible commitments are now essential. This spending review was a missed opportunity to double down on the UK’s climate commitments. We now need to see either imminent remedial action, or significantly heightened ambition in the new spending review, or Rishi Sunak will be remembered as the chancellor who squandered a golden moment to ensure the security of future generations.