Friday 12 March 2010

Carrots and sticks

In a recent debate about how to change lifestyles in order to reduce the dangers of climate change, a point came up about giving people incentives to do the right thing. I wonder whether we don't need to turn that round, and start talking about increasing the cost of doing the wrong thing.

It's quite a tough call for a politician to make, and I can easily see why so many avoid the question, and keep harping on about incentives. Making some things cheaper, rather than making others more expensive, is always likely to be the most popular option.

But making some things cheaper always involves an element of cost to taxpayers – either through direct subsidy or else through some sort of tax break. The first increases the expenditure; the second decreases the income – both will only add to government deficit. At a time of healthy government finances, it's possible to do more on the incentive side of the equation. At a time of rather poorly government finances, we may be unable to provide all the incentives that we might want to provide.

That can leave us with a pretty stark choice – either do nothing, or else deliberatly increase the cost of those things which we need to stop doing or reduce the frequency of doing.

As an example, I believe that we should make more use of rail travel for many journeys, and less use of air travel. Increased public investment in rail, and subsidies to keep train fares low are both things that I support. But I also support ending the anomaly under which petrol and diesel are subject to fuel duty, but aviation fuel is not.

The first is likely to be popular; the second rather less so. I really do think though that the days of considering only the carrot are inevitably going to be constrained by the financial crisis, and we should not be afraid to say that.


Anonymous said...

I don't know how practical a tax on aviation fuel is, but the current restrictions on what goods can be flown by air should and could be easily extended. I can't help noticing fresh grapes from Chile and flowers from Africa on the shelves of Tesco in Carmarthen. They must have been flown in. The local carrots from Pembrokeshire are transported to the store, presumably in a the van, paying fuel duty. I decided to put carrots in my lunch box instead of grapes, and give the better half some local daffs. Cost was not the deciding factor. I'm not convinced that taxation or subsidy is the main way of changing peoples behaviour.

John Dixon said...


I suspect that you'll find that the carrots travelled from Pembrokeshire to Carmarthen via Bristol...