In a document produced by Chancellor Rishi Sunak, 41, Number 11 expects decarbonisation to create a £37billion-a-year black hole in public finances. According to the Times, the document said the Government could attempt to fill fiscal shortfalls through either “additional taxes” or cuts “to other areas of spending”.
“Depending on choices made by the Government the transition to net zero could have potentially significant implications for the UK’s fiscal position.
“If there is to be additional public investment to support decarbonisation, it may need to be funded through additional taxes or reprioritised from other areas of government spending.”
However, Number 11 has ruled out increases in borrowing to fund the hole in public finances.
“Seeking to pass the costs on to future taxpayers through borrowing would not be consistent with intergenerational fairness nor fiscal sustainability,” the document said.
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“This could also push up the economic cost of the transition.”
The Treasury’s announcement comes as the Prime Minister promises Brits will not have to “sacrifice the things we love” to reach our climate change commitments.
Boris Johnson, 57, instead claimed the “green industrial revolution” could deliver “sustained economic growth”.
The Government’s net zero plans unveiled yesterday include a pledge to invest a whopping £26 billion to decarbonise the economy.
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The Times reports an insider source as saying the document had been “heavily scrubbed” to remove even starker warnings about the economic consequences of the climate change agenda.
Labour’s Shadow Business, Energy and Industrial Strategy Secretary Ed Miliband, 51, has since said the Government’s net zero plan had been “torpedoed by the Treasury”.
The former Leader of the Opposition added: “It has failed to recognise that the prudent, responsible choice is to sufficiently invest in a green transition.”
Despite concerns on the other side of the House of Commons, a Treasury source has insisted the Chancellor believes unmitigated climate change outweighed the risks of “not taking action at all”.