DEPARTMENT OF ENVIRONMENT, TRANSPORT AND THE REGIONS 1

9 March 1999

BUDGET PLACES ENVIRONMENT AT HEART OF GOVERNMENT

"Gordon Brown's excellent Budget confirms the environment's place,
alongside economic growth and social justice, at the heart of
Government", Deputy Prime Minister John Prescott said today.

Mr Prescott said: "The Budget sends exactly the right signals:
emissions of greenhouse gases are discouraged, while job creation is
encouraged; waste is penalised and efficiency promoted; incentives to
drive extra miles in company cars give way to incentives to more fuel
efficient vehicles.

"These policies have already been successful. For example, most of
diesel sold in this country will shortly be clean 'ultra-low sulphur'
diesel as a result of the tax concession given in this and the last
Budget. The new climate change levy puts the UK at the forefront of
international progress, with all the proceeds ploughed back into
business, jobs and help with energy efficiency. The Chancellor is
showing that this is about changing behaviour, not raising cash. This
Budget gives the lie to those who think environmental taxes are only
about raising revenue."

The Deputy Prime Minister also praised the decision to use the
Capital Modernisation Fund to help with crime hot spots and with
rural transport (on which DETR is providing matching funding). He
announced that bus fuel duty rebate would be up-rated in line with
duty increases, and he singled out the commitment to joined up
housing, planning and benefit policies.

NOTES FOR EDITORS

The 1997 Budget stated that:

"The Government's key economic objective of high and stable levels of
growth and employment will be pursued in ways that are economically
stable. .... where it effective to do so, tax reform will be used to
achieve environmental objectives."

Details of the environmental, transport and housing measures can be
found in the Budget documentation and in detailed press notices from
Treasury and revenue departments. The DPM's comments  refer to the
following measures.

Reductions in greenhouse gases will be achieved through the new
climate change levy: (see press notice HMT 6), the road fuel duty
escalator and other transport measures.

Changes to the company car tax regime are set out in press notice IR
4. The existing regime gives an unwelcome incentive to drive more
miles on business. The new regime will remove this incentive, and
will offer lower tax rates where the company car is more fuel
efficient.

Changes to taxes on fuels and vehicles are set out in press notice
HMT 7, on vehicle excise duty,  press notice C&E 11, on fuel duties,
and press notice IR 5 on green transport incentives. Motorists will
benefit in particular from lower VED on smaller and, from next year,
more fuel efficient vehicles.

Other important and relevant announcements concern landfill tax (see
Press notice C&E 5), aggregates (press notice HMT 8, plus a DETR
technical note, issued today, outlining the results of a study on the
environmental costs of aggregates extraction) and pesticides (where
further information will be published shortly, alongside a research
report looking at the costs, benefits and design of a possible tax).

Ultra low sulphur diesel is a form of diesel which delivers reduced
emissions of particulates, an important local air pollutant. Since
the 1998 Budget  take-up has rapidly increased and, in February 1999,
this cleaner fuel accounted for 43 per cent of diesel sales. This
trend is set to continue and a  very high level of take up is
expected over the next year.

Proposals for spending through the Capital Modernisation Fund are set
out in press notice HMT 12. The rural transport fund, introduced in
the March 1998 Budget, will benefit by a further #20 million: #10
million from the Capital Modernisation Fund, matched by another #10
million from DETR.

The details on uprating of bus fuel duty rebate are set out in a DETR
press notice.


DETR PRESS OFFICE
Press Enquiries to: 0171 890 3337
Non-media enquiries to: 0171 890 3000

If you have access to the Internet you can find this news release at
http://www.hm-treasury.gov.uk. Other Treasury material can also be
found at this address.

# = pounds sterling