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Budget Resolutions and Economic Situation

I know what the answer is. I happen to believe that the climate change levy has played a role. The Government are deluding themselves, however, if they think that that is the main piece on the chessboard and the bellwether with regard to climate change. In the context of real leadership and clear policy making, we need long-term signals. Instead, we get muddled reviews—the climate change review announced today, an energy review over the next few months and, perhaps most importantly, the Stern review on the economics of climate change at the end of the year. We get incompetent management of key processes such as the definition of the national allocation plan in the first phase of the European emissions trading system. We get tolerance of inefficient taxation such as air passenger duty and a drift from the impressive momentum that the Government showed in terms of developing environmental taxation in their first Parliament between 1997 and 2001. All that drift, muddle and incompetence has served to undermine the credibility of the Government, who are increasingly seen as being good at words but having real problems, and struggling, with delivery. The test is not words but action. To be fair, the test is not the Budget but the reaction of the Treasury to the Stern review later in the year, which will set out what is possible for a brave Government prepared to show real leadership. The second test is the inevitable row over the national allocation plan for the second phase of the EU emissions trading system and the age-old dialogue between the priority given to sustainability and the priority given to the arguments of competitiveness. That will tell us the reality of this Chancellor and his aspiration and commitment to preserving and enhancing our natural resources—the natural capital, which is an indispensable pillar of our global system of capitalism, and which we can no longer take for granted. Whether he passes that test or not, the Chancellor and I are at least agreed on one thing—we both hope that last week’s Budget was his last.