Rishi Sunak grilled by activist over climate change
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Rishi Sunak will be delivering his next Budget on October 27 and HM Treasury confirmed the Chancellor will be setting out “the plan for how public spending will deliver the people’s priorities over the next three years.” According to analysis from Charles Russell Speechlys, “green” announcements could be on the horizon as COP26 takes place mere days after the spending review.
While the Government has made no secret of the fact that it plans to tackle climate change over the coming years, many Britons may be surprised to find out further taxes could be levied to cover this.
Julia Cox, a Partner at Charles Russell Speechlys, explained: “It would not come as a surprise if the Chancellor made a ‘green’ announcement, with COP26 taking place just four days after the Budget, as this would illustrate the Government’s commitment to working towards making the UK carbon neutral by 2050.
“Potential measures include fuel duty increases, car scrappage schemes and a wider but ambitious ‘carbon tax’ itself.”
While the Chancellor has not confirmed what changes will be coming, he did comment on the Government’s overall goals for the Budget.
“Since the start of the pandemic, we’ve delivered on an unprecedented scale to protect people’s jobs and livelihoods,” he said.
“Despite the worst economic recession in 300 years, we have not only got people back into work through the Plan for Jobs but continued to deliver on the priorities of the British people.
“At the Spending Review later this year, I will set out how we will continue to invest in public services and drive growth while keeping the public finances on a sustainable path.”
The Government has also already put plans in place to address environmental concerns, the most recent example of which involves NS&I’s Green Savings Bonds. These bonds, which went on sale today, allow savers to invest their money in various green projects which includes making transport cleaner, preventing pollution and protecting natural resources.
Mr Sunak reiterated the importance of these causes as the bonds went live: “Our world-first Green Savings Bonds give savers across the UK the chance to back the Government’s green projects and put their money to work in the fight against climate change.
“The UK is already a world leader in green finance and these innovative new savings bonds will deliver both financial returns and environmental benefits, in a transparent and secure way.”
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All eyes will be on the UK in the coming days as the next UN Climate Change Conference will be held in Glasgow between October 31 and November 12. According to ukcop26.org, this conference “will bring parties together to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change.”
Ahead of this, the UK has committed (on several occasions) to work with all countries and join forces with civil society, companies and people to “inspire climate action ahead of COP26.”
This can be evidenced by the Government’s recent announcement of the Net Zero Strategy, which sets out how the UK will deliver on its commitment to reach net zero emissions by 2050.
The strategy, building on the Prime Minister’s 10 Point Plan, set out a “comprehensive economy-wide plan for how British businesses and consumers will be supported in making the transition to clean energy and green technology – lowering the Britain’s reliance on fossil fuels by investing in sustainable clean energy in the UK, reducing the risk of high and volatile prices in the future, and strengthening our energy security.”
Specifically, the commitments made will unlock up to £90billion of private investment by 2030, and support 440,000 well-paid jobs in green industries in 2030.
Boris Johnson welcomed the announcement: “The UK’s path to ending our contribution to climate change will be paved with well-paid jobs, billions in investment and thriving green industries – powering our green industrial revolution across the country.
“By moving first and taking bold action, we will build a defining competitive edge in electric vehicles, offshore wind, carbon capture technology and more, whilst supporting people and businesses along the way.
“With the major climate summit COP26 just around the corner, our strategy sets the example for other countries to build back greener too as we lead the charge towards global net zero.”
Similar sentiment was shared by Kwasi Kwarteng, the Business and Energy Secretary, who said: “There is a global race to develop new green technology, kick-start new industries and attract private investment. The countries that capture the benefits of this global green industrial revolution will enjoy unrivalled growth and prosperity for decades to come – and it’s our job to ensure the UK is fighting fit.
“Today’s plan will not only unlock billions of pounds of investment to boost the UK’s competitive advantage in green technologies, but will create thousands of jobs in new, future-proof industries – clearly demonstrating that going green and economic growth go hand in hand.”
While considered a crucial cause, these green commitments will likely put additional pressure on public finances. The latest UK Government debt and deficit report from the ONS showed the extra funding required to support coronavirus support schemes, combined with reduced cash receipts and a fall in gross domestic product (GDP), had all helped push general state gross debt as a ratio of GDP to more than 100 percent .
For comparison, this is around two and a half times higher than that at the end of the financial year ending March 2008, the year of the global financial crisis.
Government gross debt was £2,224.5billion at the end of the financial year ending March 2021.
The Government’s debt levels during this period was 13.1 percentage points above the average of the 27 European Union (EU) member states at the same point in time.
Additionally, the UK Government’s deficit (or net borrowing) was £304billion in the financial year ending March 2021, equivalent to 14.5 percent of GDP.
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