Back in January 2007, I attended one of the first large-scale consultation workshops run by Defra on the proposed Carbon Reduction Commitment, then over three years away.
Representatives from large energy users in retail, industry, healthcare and other sectors heard how the scheme would work, including the important feature that it would be “revenue neutral”. All the income from selling carbon allowances would be ‘recycled’ back to participants according to a performance “league table”.
BIFM’s CEO and I heard more about the CRC in mid-April that year in a meeting with the team at Defra working on the detail.
In the intervening period, before the start of the introductory phase this April, the finer workings of the CRC have been adjusted but revenue neutrality remained a core principle.
This was clearly not to be a new tax. That changed last week with the coalition government’s comprehensive spending review. Tucked away in paragraph 2.108 is this statement: “Revenues from allowance sales totalling £1 billion a year by 2014-15 will be used to support the public finances, including spending on the environment, rather than recycled to participants.”
At a stroke of the Chancellor’s pen a core principle of the CRC scheme has been removed.
Now, there has been a change of government and debate rages over the state of the public finances and the speed with which they need to be repaired, but governments should be careful about moving the goalposts like this. Businesses bought into the idea of the CRC as an environmental measure. They expended time during the consultation phase and since – contributing their experience and preparing their organisations.
This decision, like that on Home Information Packs before it, will make business and professionals wary of government consultations.