Boris Johnson yesterday unveiled his plan for turning Britain green by 2050 – but was warned by the Treasury that taxes and consumer costs could rise to cover the estimated £1trillion bill.
The PM has published the most detailed proposals yet for how the country will achieve the Net Zero ambition and contribute to the fight against climate change, Kombi Servisi rejecting alarm at the potential costs to families and businesses hit hard by the Covid pandemic.
But the Treasury is already warning that the sprint to go green has a hefty price tag – and could lead to inflation and higher taxes.
It estimates that carbon reduction targets will cost £60billion a year in capital costs alone.
Heating bills are likely to rise – possibly by more than 50 per cent – as households are forced to ditch gas boilers. If you liked this information and you would like to get even more details regarding kombi servisi kindly browse through our webpage.
The Treasury also warned that, with fuel duty alone raising more than £30 billion a year, new taxes such as road pricing would soon have to replace existing levies on carbon – a move currently being resisted by the PM.
Meanwhile, first-time buyers of poorly-insulated homes may struggle to get a mortgage under government proposals to make the housing stock greener, as mortgage lenders would have to disclose the energy performance of properties in their portfolio – and set themselves voluntary targets to improve the insulation of their houses.
And official plans to replace traditional gas boilers with heat pumps came under fire as critics said a £5,000 grant for homeowners to install air or ground heat pumps are little more than a ‘middle-class bung’ for people who were going to switch to the technology anyway.
Rishi Sunak’s department delivered a stark warning about the burden, saying the transition will have ‘material fiscal consequences’.
It acknowledged that the costs of global inaction on climate were greater than those of action, but the assessment said that the government must take into account ‘wider long-run pressures to the public finances’.
The analysis pointed out that government subsidies such as those for electric cars tend to favour the wealthy, while piling on costs for poorer families.
They said the bill for improving insulation varies massively between properties, from a few hundred pounds to nearly £8,500 for ‘non-standard dwellings’.
One chart flagged the huge range of possible outcomes from the Net Zero process – suggesting that heating, power and transport costs could rise from around £2,400 a year now to around £2,600 in 2050.
However, they could also fall to £1,800 at the optimistic end of the spectrum.
Insisting it is impossible to put a price on the overhaul, the Treasury said: ‘There will be demands on public spending, but the biggest impact comes from the erosion of tax revenues from fossil fuel-related activity,’ the paper said.
‘Any temporary revenues from expanded carbon pricing are unlikely to be sufficient to offset the structural decline in tax revenues, but will be important in supporting the transition and can help manage any demands for public spending to support the transition.
‘If there is to be additional public spending, the government may need to consider changes to existing taxes and new sources of revenue throughout the transition in order to deliver net zero sustainably, and consistently with the government’s fiscal principles.’
In what appeared to be a barb at Mr Johnson’s free-spending habits, the Treasury said: ‘Seeking to pass the costs onto future taxpayers through borrowing would deviate from the polluter pays principle, would not be consistent with intergenerational fairness nor fiscal sustainability, and could blunt incentives.This could also push up the economic cost of the transition.’
The Treasury did not attempt to calculate the total cost of the PM’s Net Zero plans. But Paul Johnson, director of the Institute for kombi Servisi Fiscal Studies, said the final bill would be ‘well over £1 trillion’, spread over the next 30 years.
He told BBC Radio 4’s PM programme: ‘What is interesting is that the Treasury’s view is that most of that won’t come from us the taxpayer, it will come via us as consumers or kombi servisi from industry though private investment. But this is a manageable cost because £1trillion is a lot, but over 30 years, and given the amount we invest in all sorts of things in any case, it is manageable.But it is a pretty substantial sum over that period.’
Mr Sunak hopes that most of the cost of turning Britain’s economy green will be funded by the private sector. But the Treasury said ‘additional taxes’ would be needed if the Government is required to directly fund the transition to a greener economy.
The new strategy aims to turn Britain carbon neutral by 2050, making this country a world leader in the fight against climate change.It will involve massive investment in technologies like wind and nuclear to replace existing fossil fuel power stations.
But families will also have to pay to switch to greener fuels at home. The Government wants traditional gas boilers to be phased out from 2035.Petrol and diesel cars will be phased out from 2030.
In other developments:
- New guidance for banks could make it harder for people with poorly insulated homes to get a mortgage;
- Ministers ducked a decision on whether to press ahead with a major new nuclear power station at Sizewell C in Suffolk;
- The Government announced an extra £620million to drive sales of electric vehicles, despite Treasury warnings the subsidies were likely to disproportionately benefit the well-off;
- A further £625million has been set aside for Kombi Servisi planting trees and restoring peat bogs to soak up carbon;
- Ministers confirmed plans to put new ‘green levies’ on gas bills ‘when the current gas spike subsides’;
- Cyclists will get a boost, with thousands of miles of new bike lanes and plans for more ‘low-traffic neighbourhoods’ where cars are excluded;
- Ministers want Britain to become a world leader in developing ‘alternative proteins’ to encourage people to eat less meat;
- China gave a boost to the PM’s hopes for a successful Cop26 climate summit in Glasgow next month, saying it viewed the event as ‘deeply significant’;
- Critics warned that new £5,000 grants to encourage people to install heat pumps would only cover the installation of around 30,000 a year.
Unveiling a new ‘Net Zero’ strategy, Boris Johnson said Britain would ‘lead the charge’ against climate change.And he said that leading the world in cutting emissions could create hundreds of thousands of jobs. But Chancellor Rishi Sunak is already warning that the sprint to go green has a hefty price tag – and could lead to inflation and higher taxes
The Net Zero plan sets out a pathway for how various elements need to reduce their carbon emissions over the coming years
Boris Johnson wants to push Britain towards new sources of energy for homes, including hydrogen, left, and ground source heat pumps, right
<div class="art-ins mol-factbox news halfRHS" data-version="2" id="mol-5ba4c2d0-314d-11ec-a98a-ed2708f48e1b" website Boris's £1TRILLION green dream could hit YOU