The OBR have revised their net zero and climate change cost forecasts. They now see the UK needs to invest £720 bn up to 2050 of which 36% will be public sector. This entails a £10 bn a year cost in the public sector up to 2050. The first ten years sees the highest spend,…
The OBR have revised their net zero and climate change cost forecasts. They now see the UK needs to invest £720 bn up to 2050 of which 36% will be public sector. This entails a £10 bn a year cost in the public sector up to 2050. The first ten years sees the highest spend, with annual amounts reaching a peak of £16 bn before subsiding. The costs include subsidy for new power generation, investment in public sector buildings and the cost of carbon capture and related technologies.
There will also be large revenue losses. Most of the petrol and diesel tax disappears as new petrol and diesel vehicles are banned and replaced by battery ones. The double corporation tax and windfall tax on domestic oil and gas production will shrink as the industry is run down. There will be the loss of employment taxes, business tax and VAT on industrial activity as the government advances its de industrialisation policy through dear energy.
All this points to net zero policies adding large sums to the deficits and forcing government to look for new sources of revenue.
The government will probably shift car and motor fuel taxes onto users of battery cars. It will need to find new household taxes when people discontinue gas heating and so cease to contribute to the big fossil fuel tax take.
How will it replace lost industrial tax revenue?
