VAT reductions to encourage energy efficiency, the use of recycled materials, and repair services are among recommendations the Environmental Audit Committee (EAC) has made in its report on how to create a greener, healthier and more resilient economy after COVID-19 – ‘grow back better’.
The cross-party EAC warns that if the economic recovery from COVID-19 is not used as an opportunity to ‘grow back better’, there is a risk of an even greater crisis through climate change and biodiversity collapse.
The EAC has specific recommendations in the following areas:
Green transport, homes and energy efficiency, industry, investment in nature. In addition to promoting specific sectors, wider tax changes could offer a ‘reset’ to design an economy fit for net-zero Britain.
The EAC believes that this should include VAT reductions to repair services and items that have been recycled to encourage a circular economy. VAT reductions on energy efficiency upgrades in homes and tax incentives to encourage more take-up of ultra-low emission vehicles could make greener options more attractive to consumers. The Government should also look wider and consider applying carbon taxes in areas across the economy.
Environmental Audit Committee Chairman, Rt Hon Philip Dunne MP, said:
“The COVID-19 crisis must be treated as a wake-up call. It is a symptom of a growing ecological emergency. The economic recovery will shape our national economy for decades to come, and it is crucial that tackling climate change and restoring nature is at its core.
A tax system fit for net-zero Britain is key. It will encourage innovation, give confidence to the sector and support companies to make the low-carbon transition.
There are endless initiatives that can lead to a greener future and the Chancellor should use his upcoming Budget statement to start this process. Boosting energy efficiency of homes by reducing VAT on retrofits can spur growth in low-carbon manufacturing. The funding allocated to the Green Homes Grant should be rolled over to meet the target to issue 600,000 vouchers. The electric vehicle transition must be accelerated with further tax incentives to encourage take-up.
But a greener future hinges on the health of biodiversity and ecosystems. The economic recovery must not overlook nature recovery. Planning and infrastructure decisions must take into account the impact of nature, and piloting a new National Nature Service can protect wildlife while offering employment opportunities.
There will be no vaccine against runaway climate change, and it is our responsibility now, using the opportunity of the economic recovery, to set the UK on track for net-zero.”
To read more go to committees.parliament.uk/committee
