Downing Street has refused to rule out a new carbon tax which could force up the price of staples like meat and cheese as well as gas heating.
Reports suggest that Boris Johnson and chancellor Rishi Sunak have asked Whitehall ministries to produce a “price” for carbon emissions across all areas of the economy, as part of a drive to achieve his net-zero pledge.
Proposals are being drawn up for a carbon reduction blueprint to be unveiled ahead of the UN COP26 climate change summit being hosted by the UK in Glasgow in November.
Last year’s Energy White Paper set out plans for a national carbon trading scheme which ministers describe as “the foundation on which the UK achieves net-zero emissions cost effectively”.
A cap on carbon emissions would initially continue to be applied only to energy-intensive industries such as electricity generation and aviation, but would then be then expanded across the economy to encourage reductions in greenhouse gas production, the paper says.
An official memo obtained by The Times suggested that this could include a direct carbon tax on the most carbon-intensive services, such as meat and cheese production, or a shift in climate change levies from electricity to gas.
“The chancellor and the prime minister want a sector-by-sector view on how we could implement some form of carbon pricing and an overall roadmap to deliver (it) in the next decade,” said the memo.
Asked about the prospect of a new carbon tax, prime minister Boris Johnson’s official spokesman said only that such matters were dealt with by the chancellor in a Budget, adding: “It’s a long-standing policy that we don’t discuss any speculation in advance of them.”
Labour’s shadow chancellor Anneliese Dodds said that any tax reform to help the government meet its commitment to zero carbon emissions by 2050 must be “fair”
“The UK is in the middle of the worst economic crisis of any major economy,” said Ms Dodds.
“Now is not the time to be hiking taxes on families across the country, yet Rishi Sunak is ploughing ahead with a triple hammer blow of council tax hikes, public sector pay freezes and cuts to Universal Credit.
“We will consider any longer-term changes to the tax system carefully, bearing in mind that the UK is way off meeting its carbon-cutting targets. Any change must be fair, and go hand-in-hand with action to shore up family finances and improve living standards after over a decade of irresponsible decisions by the Conservatives.”