THE PUSH to hit Net Zero will cost a staggering £803 billion by 2050 – as experts revealed the lights are flashing red on the UK economy.
The cost of the transition to meet green targets over the next two decades will hit taxpayers for an average of £30 billion a year, Ministers have been warned.
Rachel Reeves warned by independent watchdog that public finances are in a vulnerable positionPA
The independent Office for Budget Responsibility say that two-thirds of this sum will be due to lost tax receipts mainly from the loss of fuel duty income.
They said that climate change “poses significant risks to economic and fiscal outcomes in the UK”.
The body says the impact will be split between investment costs of around £9.9 billion a year and the extent of revenue losses from declining fuel taxes as petrol-driven cars are replaced by electric vehicles.
But the watchdog says there is considerable uncertainty over the costs which could be lower if there is a replacement for the loss of fuel duty.
They GDP could fall by 3.3% by 2060 in the event of 2C warming and 7.8% by 2060 in the 3C scenario, the report said.
They add that the figure could be even higher if governments fund more of the transition path and “rely less” on regulation or taxation to fund it.
Shadow Energy Secretary Claire Coutinho hit out at Cabinet Minister Ed Miliband who vowed to bring energy prices down. It comes after Tory leader Kemi Badenoch said hitting Net Zero targets by 2050 was impossible.
Ms Coutinho said: “Ed Miliband is not being honest about the true cost of his mad Net Zero targets. He promised to cut everyone’s bills by £300 but this is yet more evidence that his plans mean higher bills, jobs lost, and more imports from China.
“Kemi and I have been clear – Net Zero by 2050 is impossible without bankrupting the country. Cheap energy and people’s living standards have to come first.”
The move comes as Chancellor Rachel Reeves is already grappling with the public finances in the short-term ahead of the Budget in the autumn.
The warning on climate change costs comes as the OBR says the UK’s public finances are in a “relatively vulnerable position”.
They say there is limited success in recent years to put them on a sustainable footing.
The reversal of planned tax increases and spending such as recent welfare reforms and winter fuel cuts has added to government debt.
The OBR said its annual fiscal risks and sustainability report that debt is projected to be “above 270% of GDP by the early 2070s”.
The forecaster added that recent rises in debts have led to “a substantial erosion of the UK’s capacity to respond to future shocks and growing pressures on the public finances”.
The watchdog also says that the triple lock which helps boost pensioners’ state pension has cost three times what it was initially assumed to cost when it was brought in back in 2012.
It was meant to cost around £5 billion a year but is currently hitting the public purse for £15 billion.
Andrew Griffith, shadow business secretary said: “The OBR are saying what every business is thinking: that the economy has sailed into iceberg alley with a novice Chancellor at the helm and the ships crew revolting.
“This is a great country but is being horribly let down by Labour.”
A Treasury spokesperson: “We recognise the long-standing economic realities the OBR sets out in its report.
“This is why we are committed to ensuring stability in the economy through our non-negotiable fiscal rules which have allowed us to invest in the UK to drive a decade of renewal and put more money in people’s pockets.”
A Government spokesperson said: “Net zero is the economic opportunity of the twenty-first century, and will deliver good jobs, economic growth and energy security.
“Only by investing in the transition now can we reduce costs in future. The OBR assess that acting early could halve the cost of getting to net zero by 2050 compared to acting late.”
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