Whitehall’s most powerful ministry and its tax collectors have come in for stinging criticism from law-makers, over their ”poor” understanding on how taxpayers’ cash can be used to spark up Britain’s vital green revolution.
MPs on the influential public accounts committee lambasted HMRC and the Treasury in its latest report. Eight of the committee’s 15 current members are Conservatives.
Britain’s brainiest and most self-regarding civil servants steering the nation’s finances are ‘unable’, the committee found, to articulate how tax laws and incentives can be used to advance government goals such as Net Zero.
Bureaucrats under chancellor Rishi Sunak show ‘a limited understanding of the environmental impact’ of taxes, the PAC report asserts, having interviewed several for its report.
Citing the advent of electric motoring, chair Meg Hillier’s committee complains that “HM Treasury cannot explain how it will manage declining revenues from consumption of fossil fuels”. Fuel duties on hydrocarbons raised £28 billion for government in 2019-20.
Every tax should be assessed for the environmental knock-ons it stimulates, both good and bad, the committee recommends.
That would be a step up from Whitehall’s current laxity, where only four taxes are so recognised. Absent from the finance ministry’s consideration at present in terms of their uncounted environmental and economic benefits are tax reliefs to support clean technologies or energy saving, or those shaping the use of hydrocarbons.
No department has the all-powerful Treasury’s power to intervene in other ministries’ initiatives. Too often, says the committee, the finance function’s effects are only negative in environmental measures.
Now defunct, Britain’s shakily managed subsidy scheme for making home-scale clean power is a case in point. Launching the Feed-in Tariff in March 2010, Whitehall got its sums wrong, making the incentive too generous. Panicked into halving FiT rates within eighteen months of launch, the government alienated installers, confused customers and was forced into defending itself three times in court.
Net zero, first enunciated as a governmental goal under Theresa May’s premiership, presents an even bigger risk, according to the report. Reaching it, Hillier says, is “the greatest co-ordinated ask, of governments around the globe in history”.
“The UK government has been blithely issuing ever more ambitious climate targets for years now, with no sign of a roadmap to reach any of them. The departments in charge seem stuck in a bygone era, with little sign of the innovative thinking needed to achieve all this.”
The committee’s report on using taxes for a green economy is here