Recall the government’s “dodgy dossier” on Iraq? Now it’s issued another scare story. Am I the only businessman who is just a little bit dubious about economist Sir Nicholas Stern’s findings?
Like all chief executives, I find budgeting very hard, especially making forecasts for more than a year ahead. Yet here is a report that predicts with breathtaking confi dence what the world will look like in 2050 – that’s in 44 years’ time. Just think back – in 1962 man had not landed on the moon, in the 1970s there were no PCs or cell phones, while in the 1980s there was no internet, let alone any MP3 players.
That is one major problem with Stern’s report – it simply does not take account of human ingenuity and invention to solve the problem of climate change, the science of which is, of course, highly uncertain.
SCARE TACTICS
The additional problem is the politics of it. The British government is in a bit of a hole. ‘Dave’ Cameron has captured the environmental agenda, while government spending is out of control. Is it too cynical to suggest that Stern’s dossier is just what the Chancellor wanted all along – something to put the frighteners on people and give ‘our Gordon’ yet more cause to increase his stealth taxes still further?
Take aviation UK air passengers already pay £1bn a year to Brown in Air Passen- ger Duty. That is about 1.5 times the cost of CO2 emissions from all fl ights departing from the UK. So aviation is paying for its polllution. But what does the government do? It talks up aviation as a “major cause” of global warming (actually it accounts for a mere 3%) and says that “cheap fl ights” should be taxed still further.
Business in the UK is groan- ing under the growing tax burden levied to pay for the government’s profl igate public spending programme – last year, we British suffered the biggest rise in taxes of any nation in the Organisation for Economic Cooperation and Development. Now the Stern Review offers the government open season to levy still more.
No one is safe. In September 2000, we witnessed just how unpopular ‘green’ taxes can be, with fuel protests that brought parts of the UK to a standstill, resulting in a two year freeze on fuel duty. So just how will the country react when further taxes are imposed to save the planet?
The answer to global warming, of course, lies in technology and international co-oper- ation. What would be useful is to offer tax incentives to householders to improve their insulation, to aircraft manufacturers to build yet more fuel-effi cient aeroplanes, and to accelerate the use of nuclear power.
Yet more important (and this is uncontested by Stern) is to get a global accord, from the USA, India and China to clean up.
The UK only accounts for 2% of all global warming, a portion which is decreasing as India’s and China’s impact grows. Within a decade, China will emit more greenhouse gases than any other country. So everyone in Britain could dwell in caves, wear grass skirts and munch on berries and it really would make no difference.
A LICENCE TO TAX
By all means, don’t leave the mobile charger on, cut down on heating, use energy-saving light bulbs, but do not think for a moment that British green taxes will save the world. The Stern Report is not so much a problem for what it says, but for what it might allow this government to get away with.
One final thought: 364 of Britain’s most eminent economists told Mrs Thatcher in 1981 that her economic policies would wreck Britain. These policies turned out to be Britain’s economic sal- vation. Some of us did not believe the 364 economists then. Should we believe one economist now?
David Soskin is chief executive of leading online travel business Cheapflights.co.uk – www.cheapfl ights.co.uk
