Budget 2021: Planned rise in fuel duty cancelled and tax relief for domestic flights

In today’s budget announcement, Chancellor Rishi Sunak has announced that fuel tax will remain frozen and Air Passenger Duty will be cut for domestic flights,

The continued freeze of fuel tax will mean that fuel duty for petrol, diesel, biodiesel and bioethanol will remain at 57.95 p. This is the same rate it’s been since the March 2011 Budget. 

The government tweeted: ‘After 12 consecutive years of frozen fuel duty rates, the average car driver will save a total of £1,900.’ 

The reasoning behind the freeze was summed up by the Chancellor, who said: ‘Right now, to keep the cost of living low, I’m not prepared to increase the cost of a tank of fuel. So the planned increase in fuel duty is cancelled.’

FairFuel UK has ‘unashamedly’ taken some of the campaigning credit for this. 

Nick Bowes, Chief Executive at Centre for London said: ‘The Chancellor’s ‘new age of optimism’ needed a strong environmental focus given it’s just a matter of days before world leaders gather in Glasgow for COP26. We needed to hear much more from the government on how we are to successfully transition to a net-zero economy, but instead heard headline announcements of a cut to domestic flight duty and cancelled increases in fuel duty.’

The government has also announced new business rates relief to support green technologies. This will mean that until 2035, plant and machinery used onsite for renewable energy will be exempt from business rates altogether. 

Controversially, Sunak also announced that from April 2023 there will be a 50% cut in Air Passenger Duty for flights between airports in England, Scotland, Wales and Northern Ireland.

Caroline Lucas, Green MP for Brighton Pavillion has criticised this move, she tweeted: ‘Yes, you heard that right – Rishi Sunak is making flights cheaper. Good thing there’s no Climate Emergency.’

Under the government’s Transport Decarbonisation Plan, £6.1bn will be allocated to boost the number of zero-emission vehicles and help to develop greener planes and ships and £380m will be allocated to the offshore wind sector, including offshore wind ports in Teesside and the Humber

The Chancellor also confirmed an increase of £3.8bn in skills funding, which in part is targeted at developing the nation’s green jobs and skills. 

Sarah Mukherjee, CEO of IEMA, the professional body for people working in environmental management said that investment alone is not enough.

She said: ‘To create a truly green economy will require a more strategic approach to skills planning and provision.

‘IEMA is urging the Government to develop a National Green Skills and Jobs Strategy. As well as ensuring that there is a pipeline of talent coming through to propel growth in cleaner industries, the strategy should also focus on making all jobs ‘greener’ throughout the full range of economic sectors.’

£3.9bn will be allocated to decarbonise buildings, including £1.8bn to support low-income households to make the transition to net-zero while reducing their energy bills.

A further £625m  will be allocated to the Nature for Climate Fund and more than £250m will be spent on protecting and restoring nature in England in support of the UK’s target to halt biodiversity decline by 2030

Sam Alvis, head of green renewal at Green Alliance, commented on today’s announcements: ‘The chancellor’s approach to climate is increasingly difficult to understand. Just days away from a vital climate conference championed by the prime minister, Rishi Sunak barely mentions net-zero and encourages people to fly around the UK rather than take the train. The measure on air passenger duty will even cost the Treasury money rather than boost its revenue.

‘On green investment, tax and even rhetoric, Rishi Sunak failed on his promise for a stronger economy. He has left an annual shortfall of £21 billion in investment that could have driven local jobs and lower bills. There was little to help people make greener choices, whether through tax changes for home renovation or direct support for home insulation.

‘The chancellor is preaching fiscal responsibility when his own watchdog is urging him to decarbonise now to avoid economic pain later. Without more investment in climate, we’ll see jobs and skills and private sector innovation left by the wayside.’

Photo by Marcin Nowak