The Conservative policy record on environmental issues:
Following the election of the Conservative government in June 2015 the Business Secretary, Sajid Javid, announced the privatisation of the Green Investment Bank (launched in 2012). Javid claimed that privatisation would give the GIB better access to capital and more freedom to operate. However, its more obvious spur was to ensure that debt held by the Bank would not contribute to the public sector net debt: the abiding preoccupation of Chancellor George Osborne under his policy of austerity. A primary function of a state-owned investment bank is that it signals long term policy commitment to private investors to create certainty and hence lower the risk premium on private capital. The sale of GIB signalled the opposite. The National Audit Office report concluded that the price of sale was too low and that while officials had secured some commitments from the buyer to continue its green goals these were not legally binding.
In the 2015 summer Budget Osborne removed Climate Change Levy Exemptions from renewable electricity with less than a month’s notice. This decision ended the de facto tax exemption for organisations that turned to renewables and left few tax incentives for industry to make a forward-looking choice of supplier. The shift was straightforwardly damaging to the renewables sector. In the 2016 Budget, Climate Change Levy rates were raised but this now meant a higher carbon tax on renewable energy while the discount rates available to carbon intensive industries were increased, protecting them from the higher rates. Osborne had ‘levelled the playing field’ in narrow competitiveness terms that contradicted the whole point of the original policy, which was to increase the deployment of renewable energy.
The Carbon Price Floor, supposed to set a minimum price for carbon, was meant to rise every year until 2020. This commitment lasted one year. In his last, 2016 Budget, Chancellor Osborne froze fuel duty for the seventh year in a row despite a steep decrease in oil prices, so the average motorist spent £450 less on fuel in 2016 than they did in 2011. This freeze was extended under the autumn 2017 Budget of Philip Hammond. In spring 2017 Hammond announced a five year freeze on the Duty and Road Use Levy for heavy vehicles while promising for a ‘call for evidence’ on updating the latter.
Recent Conservative Chancellors have increased financial support for North Sea Oil and Gas. The 2016 Budget halved the Supplementary Charge (a top up tax) on the industry from 20% to 10 % and announced £20m in funding for a second round of seismic surveys in 2016-17, to encourage exploration for new sources of oil. This budget also abolished the 35% tax collected from the profits of oil and gas production by reducing the rate to 0% and backdating this to 1 January 2016. As for the 2017 Autumn Budget, Hammond announced an effective moratorium on new support for low-carbon electricity. The Carbon Price Floor was not extended beyond 2025 and no commitments were made to adjust it if the EU emissions trading system price changed.