Select Committee on Environmental Audit Minutes of Evidence

Examination of witnesses (Questions 80-99)



  80. But if they have not been built into the pilots, and we now have one fully fledged and it has not been built into that, how can we be sure that they will have an environmental and sustainability objective in their remit? It is ideal that it should be, certainly as far as this Committee has said we appear to agree with that, but when are we going to see it?
  (Mr Timms) I am very confident that they will but what I would advise the Committee to do is to take these matters up with the Ministers responsible for them.

Christine Russell

  81. Minister, we do welcome many of the measures that were contained in the Budget to encourage urban renewal and certainly measures like the capital allowances which will encourage more people to go and live over the shop. Having said that, I think there is great disappointment that the Budget did not address what was the central issue that was highlighted by the Rogers Report that at the moment there is not a level playing field between greenfield development and brownfield development, ie greenfield development is still zero rated and on brownfield development you still pay 17.5 per cent. I know that there were measures introduced in relation to contaminated land but in so many of our towns and cities it is just tracts of vacant spaces that have been previously used but they are not technically contaminated. What consideration have you given, are you giving, in the Treasury to getting rid of what is still a perverse incentive to build on greenfield sites?
  (Mr Timms) I think this Budget has constituted a substantial VAT reform package targeting resources where the market failures are the greatest and where they will do the most. It is an ambitious package and I think you made the point that the Committee welcomes it. I would not want the significance of it to be under-estimated. Having said that, it is the case that we do not plan currently to make big changes to the VAT base, that would require a lot of detailed research on the likely social, economic and environmental impacts of such a move. It would certainly be a very controversial thing to do and we do not have plans at present to do it.

  82. Can I just ask you if you are prepared to commission that research, because the reality is that it is still a cheaper option to pour concrete on greenfields than face the challenge of inner city regeneration? Are you at least prepared to consider all of those impacts you have just listed?
  (Mr Timms) I think the package that we have announced represents a significant tilting of the playing field in the interests of the objective that you described. I notice, for example, that Lord Rogers himself responded to what we said in the PBR by making the point that "one of the best new proposals we have seen in recent months is the reduction in Stamp Duty on properties in inner city areas". I think that is going to make a significant difference. What I would like to do is see the impact of these changes. I am not proposing to commission research at this stage but, of course, we will keep the matter under review.

Mr Chaytor

  83. Minister, could I take us back to the Climate Change Levy very briefly and just pick up on a couple of points that I think are quite important. First, I just want to endorse what Mrs Walley was saying about the importance of transparency on the energy efficiency and renewable technologies front, but whenever I have discussed the Climate Change Levy over the last 12 or 18 months with companies in my constituency I have always explained to them that to offset their liabilities there will be a fund into which they can bid to improve their energy efficiency or develop renewable technologies, although I was not aware of what the process was by which they would bid. Are you assuring us now categorically that all of the bids for new money for energy efficiency innovation and renewable technology innovation will be channelled through the Carbon Trust and as soon as the Carbon Trust is established companies can then submit their bids? From my experience there is zero understanding not only from small companies but medium sized and some large companies about how they can submit a bid to the various funds that you outlined earlier. I think it is important not only do we have a comprehensive list of all the budget streams that are now available but that companies across the country have that list as well.
  (Mr Timms) I think the answer is everything except renewables, but let me ask Mr Hall to give you a full answer to that question.
  (Mr Hall) The Carbon Trust itself will have three elements. First, it will take over the existing energy efficiency best practice programme and expand that quite dramatically. Secondly, it will promote research into the low carbon technologies. Thirdly, it will be in charge of the list of the products that are going to qualify for the enhanced capital allowances and we expect there are going to be more than 1,000 on that. In response to your direct question about how do firms actually do this, there is an Energy Efficiency Helpline, the number of which I do not have in my head but we will certainly be able to supply to you.

  84. One phone number?
  (Mr Hall) One phone number. You phone that number and you are given instant advice over the phone. If you wish to take the matter further then you can go into the form of an energy audit, which means people will come to your firm, have a look at the firm and give whatever advice is appropriate in terms of energy efficiency measures.

  85. Thank you very much. Is that Energy Efficiency Helpline up and running from 1 April 2001?
  (Mr Hall) It is up and running already.

Joan Walley

  86. Could we have the number?
  (Mr Hall) I am in a position to give the number: 0800 585794.
  (Mr Timms) And it is in the Budget documentation as well.

Mr Chaytor

  87. Could I just pick up a second point on the Climate Change Levy. You assured us that the £100 million that the Prime Minister announced at the Chatham House Conference a week last Tuesday was entirely new money—60 from the Capital Modernisation Fund, 20 from the Performance Innovation Fund and 20 reallocated from the DTI—but given the slippage on the predictions of the cost of the accelerated capital allowances there is presumably a net saving to the Treasury of 40 million there. So presumably the 100 million net growth that the Prime Minister announced has to be offset by the 40 million net saving and, therefore, the net increase to the Treasury as a whole is actually only 60 million.
  (Mr Timms) I do not think there is a saving to the Treasury. The profile of the cost has been put back a few months, that is all. So while in year one we would anticipate a lower take-up than would have been the case if the information had been available earlier, in a couple of years' time the cost to meet the profile will be greater.

  88. In two years' time the figure now is 130 million whereas originally it was 140 million.
  (Mr Timms) That is for next year.

  89. Even for the years ahead we are reducing the estimate of the cost of the capital allowances.
  (Mr Timms) I think I am right in saying the year after that we would expect a greater sum simply because the profile has gone back, that is all that has happened.

  90. Within the current three year spending period there is still a net saving of 40 million. In the next three year spending period there may be a net increase.
  (Mr Timms) No, I do not think there is.
  (Mr Hall) It may be worth clarifying exactly where the fall in the number for the first year has come from. There has been no change in the list of technologies qualifying or the number of products that expect to take up, what has happened is originally it was envisaged this list of products would be made available in around about December 2000 and although firms could not claim enhanced capital allowances on those in the last tax year they would be able to retrospectively submit claims in the coming tax year. Because of the delay in the publication of the list, as the Financial Secretary said, by four months then the figure for 2001-02 now covers 12 months of take up rather than the originally envisaged 16 months, so all that investment is just pushed back and the profile has not changed.

  91. So the profile has not changed and, therefore, in 2003-04 the estimated cost will be 40 million more than it would have been originally?
  (Mr Hall) I do not have the figures.

  Mr Chaytor: We need to know that to be absolutely clear.

Joan Walley

  92. You did promise that you would send a note setting out the details of that.
  (Mr Timms) We can certainly do that.

Mr Chaytor

  93. If I can just move along to some more general policy issues surrounding the Treasury as an institution. Minister, you will have detected in your visit to the Committee today, and I think in your previous visit, that we have a degree of scepticism about the extent to which the Treasury as an institution is committed to the values of sustainable development. What I want to ask you is do you think that is fair comment?
  (Mr Loughton) Yes.
  (Mr Timms) I do not think that your scepticism is justified, no. In fact, I was talking to a very senior official of Friends of the Earth on Budget Day and he volunteered the point to me that in his discussions with Treasury Ministers and officials he identified this as a very, very serious agenda for the Treasury, and I think he is right to do so.

Mr Chaytor

  94. If it is not fair comment, why is it that in the Treasury's published aims and objectives there is no reference to "sustainable development" or "environmental protection" or some such similar phrase?
  (Mr Timms) I think the objective of sustainable development is clearly implied in the aims that we have set out which are in front of me here but I cannot put my hand on them. We do use the term "sustainable growth" and that is why it is there, precisely to pick up the importance of this agenda.

  95. Nobody that I have come across ever used the term "sustainable growth" before the Treasury in recent years. I do not know quite what it means but if it means that we are against boom and bust then I am all in favour of it, and I suspect it does mean that. I think our suspicion is that sustainable growth is to do with evening out the ups and downs of the business cycle but still assumes a fairly traditional view of the models of economic growth and it does not really mean what we understand to be sustainable development with all the implications for market transformation and concern about the depletion of natural resources and concern about greater efficiency and use of natural resources. Is it not time to clarify this or somehow strengthen in the Treasury's aims and objectives the clear commitment to sustainable development, which appears everywhere else in Government policy statements?
  (Mr Timms) I think the key thing is the inclusion of the word "sustainable", which is there. No doubt you are right to indicate that one of the things we mean by that is that we do not want to return to boom and bust, that is true, we do not, but it also means that environmental sustainability needs to be achieved in the growth that we are working for as well. My perception is that the inclusion of the word "sustainable" there carries exactly the connotation that you are looking for.

  96. Can environmental sustainability be achieved if we have a commitment to year on year economic growth of 2.5 per cent or thereabouts ad infinitum? You are using the traditional models of what constitutes economic growth.
  (Mr Timms) We need between us to ensure that it can, that is the central challenge that we face, and that is what this chapter in the Budget documentation addresses, how can we ensure that safeguarding the environment is consistent with our objectives on economic growth. I think it is absolutely vital for the nation that we are able to deliver on both. Certainly we see that as an important concern for us and the Treasury.

  97. If I can just pursue this point in respect of the Treasury's relationship with other departments in the Public Service Agreements. Is there within the model Public Service Agreements for other departments any reference to the importance of environmental sustainability in their policies and practices?
  (Mr Timms) There certainly is, yes. The PSAs do contain a reference to most of the indicators of sustainable development. That was very clearly built into the Spending Review process and into the PSA process. I think we had a good deal of success in the Spending Review this time in building sustainable development into the process, it was an important part of the guidance at the outset. We discussed it at Green Ministers' meetings and I think the outcome has been quite widely welcomed as a successful exercise.

  98. In terms of your environmental targets it was the case, I think, until this year that shifting of the tax burden from the taxes on labour to taxes on pollution was a key target for the Treasury itself. Is it the case that the commitment has slightly been watered down? Does that now appear in the PSAs, that specific commitment to shifting the tax burden?
  (Mr Timms) I certainly do not think it has been watered down at all, no. We are taking forward the Climate Change Levy, which is being introduced next month, which is a very big step in this direction. A year later we will be introducing the Aggregates Levy, which is a further step in exactly the same direction. No, it has not been watered down at all.

  99. Does it still appear in the PSA documentation? Our understanding is that it has been dropped?
  (Mr Timms) The PSAs refer to the sustainable development indicators and I can provide a table for the Committee setting out exactly where they are.

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