Green, when there's money in it

"Is Brown really green?" you ask (Editorial, 15 November). From my experience, it depends on whether he thinks he can raise money for the exchequer, or whether he is likely to lose revenue. For years, the Association for the Conservation of Energy has campaigned to alter the VAT rate levied on energy conservation (currently 17.5 per cent) to the same rate as that charged on energy consumption (5 per cent). In its last year in opposition, the Labour Treasury team sought to amend the Finance Bill to remove this "absurd anomaly which makes a nonsense of any attempt to use the tax system to assist the environment" - a direct quote from the 1993 Budget speech. It lost by one vote, but maintained that it was possible under EU rules to reduce VAT rates on energy conservation.

However, in government, the party line has altered. We wish to lower the rates, the argument now goes, but those bureaucrats in Brussels are stopping us. It is strange how first Belgium, then France and now Italy are changing their VAT systems so that the rates charged on energy-saving investments are cut. But our Treasury keeps stating that "under current EC law the UK may not consider a reduced rate for the installation of energy-saving materials for all housing" (Paymaster General Dawn Primarolo, in umpteen letters on the topic).

Equalising the tax rates would mean a loss of VAT revenue for the Treasury. We estimate it at around £18 million per year. Surely that can't be the reason the Treasury so stubbornly refuses to remove this anomaly? Can it?

Andrew Warren
Director, Association for the Conservation of Energy, London N1