The Committee reports on the progress made by the Treasury in placing environmental objectives at the heart of its fiscal policies. This year's pre-Budget report (Cm. 6701, December 2005, ISBN 0101670125) is found to be inadequate, especially in the context of UK CO2 emissions actually increasing once more. No significant new measures were announced, and the Committee sees a continued slowing down of the Treasury's momentum in turning rhetoric into action. It believes the Treasury should redefine Air Passenger Duty (APD) as an environmental tax and that APD rates should more accurately reflect the carbon emissions of the flights to which they apply. Charging APD on flights rather than passengers could also act as an incentive to more efficient use of aviation fuel. The Committee also recommends action on aviation fuel duty, biofuels, car energy efficiency, steps to wean the economy off over-reliance on oil, stamp duty and council tax reductions for homes built or refurbished to high environmental standards. Each pre-Budget report should include figures on total revenue from the climate change levy, aggregates levy, and landfill tax. Although the Treasury accepts the principle of increasing taxes on "bads" rather than "goods" its reluctance for bold reform of the tax system mystifies the Committee. A Green tax Commission should be reconsidered, to develop a proper communications strategy to sell the environmental programme to the public. The Committee exhorts the Government to make moves on the climate change problem, as waiting for universal agreement is a recipe for stasis. Finally, the Committee regrets the Treasury's decision to abolish the Operating and Financial Review required from large companies, in that it appears to view sustainable reporting as an optional extra. It hopes that the proposed new business reviews will continue to require some form of social and environmental disclosure from companies.

The Committee's report examines the Government's Pre-Budget Report 2005 (Cm. 6701, ISBN 0101670125) published in December 2005. Issues discussed include: the state of the economy (including the UK Presidency of the G8, UK economic growth estimates for 2006 and beyond, and consumer spending) and public finance matters; as well as issues relating to taxation and pensions. Recommendations made include that the Treasury should give at least four weeks notice of the date of the Pre-Budget Report in order to enable sufficient parliamentary scrutiny, and if this target is not met, the Treasury should give an account of the reasons why.

The Budget presents an updated assessment of the economy and public finances and reports on Government policies. It: shows that the economy is growing strongly and the Government is meeting its fiscal rules; announces a long-term investment programme for schools and sets out further measures to help young people develop skills; sets out reform to reduce the regulatory burden on business; announces free local travel for people over 60 and provide £200 towards the council tax bill for those over 65; makes a commitment to increase Child Tax Credit in line with earnings; doubles the threshold for stamp duty; increases the special reserve for military operations; announces a better targeted Local Enterprise Growth Initiative; introduces measures to modernise the tax system; defers any increase in fuel duty until September 2005.

The Barnett Formula is the mechanism used by the United Kingdom Government to allocate more than half of total public expenditure in Scotland, Wales and Northern Ireland. The Formula has been used for the last thirty years to determine the annual increase in allocation (the increment). Each year these increments are added on to the previous year's allocation (the baseline) to create what is now a significant block grant of funds. The Formula accounted for almost £49 billion of public spending in 2007-08. Despite the political changes within the United Kingdom the Formula has continued to be used and has never been reviewed or revised. The Formula was only intended to be a short term measure and should no longer be. A UK Funding Commission should be established to assess relative need in the UK's regions and advise on a new method of distributing funding to reflect those needs. The baseline has never been reviewed to take account of changing population patterns; this means that the grant provides funds without reference to the needs of each of the countries and regions of the UK. There should be a link between the grant of funds made to each of the administrations and their actual per capita funding needs. The Committee's research suggests that England and Scotland have markedly lower overall needs per head of population than Wales and Northern Ireland. The Committee suggest that the UK Funding Commission undertake an assessment of relative need now and in the future and that they undertake periodic reviews as well as publish annual data about the allocation of funding between the devolved administrations.

The Budget sets out the Government's plans for taxation, public spending and economic growth for the coming year. Details announced include: an annual growth rate of 2.5 per cent for 2006-07 with a forecast of 2.75 to 3.25 per cent for 2007-08; an inflation rate of two per cent this year; and public sector borrowing on course for a £16bn surplus over the economic cycle ending in 2010-11, with net borrowing set at £37 billion for this year and £36 billion next year, falling to £23 billion in the year to 2010-11. Measures announced in the 2006 Budget include: i) the climate change levy to be indexed in line with inflation from 2007, a new vehicle excise duty rate of £210 for the least fuel efficient cars (4x4 cars or SUVs) and the establishment of a new £1bn energy and environmental research institute funded by government and private industry; ii) measures to help to single parents into work and tackle child poverty including an increase in child benefit, child tax credit and childcare vouchers and a top-up to child trust fund accounts at the age of seven; iii) an increase in duty of nine pence on cigarettes and one pence on beer, with a freeze in duty on whisky and other spirits; iv) the exemption on stamp duty raised to £125,000 and a rise in the level of inheritance tax from £275,000 to £325,000; v) the level of investment in schools to rise from £5.6 billion to £8 billion a year; vi) free off peak national bus travel for pensioners in every part of the country; and vii) funding, in partnership with commercial sponsorship, to support top athletes to prepare for the 2012 Olympics.

This report by the National Audit Office, made under sections 156 and 157 of the Finance Act 1998, examines the conventions and assumptions underlying the Treasury's fiscal projections within the 2006 Budget (HCP 968, session 2005-06; ISBN 0102937311).

This report from the Treasury Committee examines the recent economic analysis and assessment of the UK economy as outlined in the 2006 pre-budget report, and sets out a number of conclusions and recommendations, including: the Committee welcomes the recent rise in the growth rate of business investment, but with the caveat that the downside risk as highlighted in a previous weakness for business investment, remains unexplained; that several risks exist around the consumption growth forecast, including the potential of house prices to fall, and the increase of personal insolvency; the employment rate rise is commended, but a lack of migration statistics in relation to the labour market, means an overall assessment is not possible; although an improved forecast for economic growth in 2006, the Treasury has not forecast an improvement in the fiscal position; the Government appears to be on track to meet the golden rule in the current economic cycle, but will start the next economic cycle with its current budget in deficit; the Committee recommends also that the Treasury, in future Budgets and Pre-Budget reports provide a fuller explanation of its current forecast of the start and end dates of the current economic cycle; also, future Budget and Pre-Budget reports should provide a breakdown of reported efficiency gains by department, and further to enhance transparency and enable effective scrutiny, the Treasury should require departments in their departmental annual reports and Autumn Performance reports in 2007 and in later years to provide consistent and comprehensive information on progress against efficiency targets; the Committee expressed dissatisfaction at the lateness and vagueness of information in relation to expenditure on education, but approved the early announcement of capital spending plans for education up to 2010-11; the Committee though does welcome the Government's decision to commission and publish a range of reviews informing future economic policy, including tax policy; the Pre-Budget report is seen as an effective instrument of fiscal consultation, but this could be enhanced if Parliament and the public were given greater notice of the date of the report, perhaps 4 weeks before the statement is due to be made; where tax changes carry significant risk of forestalling activity or distorting market behaviour, such as the unusual timing and implementation of the increases in Air Passenger Duty, the Committee feels, as a general rule, that those increases should not come into force until the House of Commons has had an opportunity to come to a formal decision on such an increase.

The Committee's report examines key measures contained in the 2006 Budget (HCP 968, session 2005-06; ISBN 0102937311), as well as the discussing the general state of the UK economy and specific public finance issues. Amongst the Committee's conclusions: rising gas and oil prices are key features of the overall economic outlook and the Committee recommends the Government should make a report to Parliament on progress to secure independent investigation of European gas markets; and it questions the Government's use of taxation instruments as a mechanism to achieve its environmental objectives, for example its decision to freeze the rate of air passenger duty (APD) for a fifth year running.

This report is in four main sections: the first looks at the state of the economy, the second examines public finances, the third covers tax measure s, and the fourth miscellaneous issues such as the Girshon programme of efficiency savings and the Comprehensive Spending Review. It is based on evidence sessions: from outside experts, Treasury officials, and the Chancellor as well as written submissions and is published before the Second Reading of the Finance Bill..

As part of the Committee's annual inquiry into the Treasury's Pre-Budget Report (PBR) and the progress made towards achieving environmental objectives with regards to its tax and spending policies, this publication examines the PBR's fiscal policy announcements in relation to the aviation, motoring, waste and energy sectors, focusing on the findings of the Stern Review of the economics of climate change (ISBN 9780102944204) published in October 2006. Amongst the 40 conclusions and recommendations made, the Committee notes that the Stern Review highlights the central problem involved in efforts to address the effects of global warning, that is the need to take action now before the more serious effects have begun to be felt in order to benefit future generations, a problem that will be both practically and politically challenging. The Committee urges the Government to use the Stern Report in order to promote a better informed public discussion of the science of climate change, so that we can use the limited window of opportunity presently available to prevent greenhouse gases growing to dangerous levels beyond which there are risks of major irreversible impacts, and recognising the Stern Review's accompanying argument that the sooner the world begins to cut its emissions, the easier and less costly mitigation will become.