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Green stimulus

£535 million of capital spending will go towards energy efficiency, rail transport, and adaptation measures to support low-carbon growth and jobs. This will include:

• £100 million of new funding for Warm Front on top of £50 million spending on the programme brought forward now to support the economy. This stimulus will help around 60,000 households in total cut their energy bills through insulation and improved heating systems
• £60 million to provide 16,000 social houses with energy efficiency and heating measures as part of an accelerated Decent Homes programme
• £300 million to accelerate the delivery of up to 200 new carriages to expand capacity on the rail network
• £20 million of spending on flood defences
• £5 million of spending on British Waterways network infrastructure
  

Renewable technology

The Pre-Budget report announces plans to retain the Renewables Obligation to provide financial support for large-scale renewable electricity and to extend it by at least ten years - ensuring investors can plan with confidence for the future.

Fuel duty

Following a fall in pump prices by over 20 pence per litre from their summer peaks, the postponed two pence per litre fuel increase will go ahead on 1 December 2008.

However, as a result of the 2.5 per cent cut in VAT this December, the cost of petrol and diesel will fall for private motorists who should see no increase in the price they pay at the pump this year from this measure.

The Pre-Budget report also confirms that, as pre-announced in Budget 2008, main fuel duties will further increase by 1.84 pence per litre on 1 April 2009; and 0.5 pence per litre above indexation on 1 April 2010.

Home Energy Saving Programme

The Chancellor announced plans to install 600,000 insulation measures this winter, up to 70 per cent on last winter, through the £6.8bn Home Energy Saving Programme, half of which is funded by energy companies.

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Vehicle Excise Duty

There will be reform of vehicle excise duty, although no driver in any given band will pay more than £5 extra in 2009 or £30 extra in 2010.

• from 1 May 2009, six new bands of VED will be introduced, taking the total to 13. However, VED rates will not increase by more than £5 for any car in this year
• from April 2010, in order for the new bands to create an environmental incentive, the government will start to separate out the 13 differential rates
• from April 2010, a differential First-Year Rate for new vehicles will be introduced as announced in Budget 2008, in order to provide a stronger signal to consumers at the point of purchase
• cars that emit over 225 g/km, but were registered between 1 March 2001 and 23 March 2006, will be moved into new band K in 2009 and stay there in 2010. This will mean that they maintain their exemption from the top rate of VED

Cars registered before 2001 – which account for around a third of the fleet – are not subject to these reforms, because comprehensive data on their CO2 emissions is not available. Instead, pre-2001 cars are subject to a separate VED regime, based on engine size.

Aviation

The report sets the goal of successfully securing inclusion of aviation in the EU Emissions Trading Scheme from 2012 and holding Europe’s first Phase II carbon auction.

Air passenger duty (APD)

From 1 November 2009, APD will be structured around four distance bands, set at intervals of 2000 miles from London. This reform will ensure that those flying farther, and therefore contributing more to emissions from aviation, will pay more.

The government has succeeded in its aim of obtaining unanimous agreement to include aviation in the EU ETS from 2012 at a cap of 97 per cent of 2004-06 emissions.

• Environment and greener living