WEDNESDAY 14 MARCH 2001
  
                               _________
  
                           Members present:
              Mr John Horam, in the Chair
              Mr David Chaytor
              Mr Neil Gerrard
              Mr Tim Loughton
              Christine Russell
              Mr Simon Thomas
              Joan Walley
  
                               _________
  
  
                 MR STEPHEN TIMMS MP, (Financial Secretary), MR CLIVE MAXWELL, Head of
           the Environment Tax Team, and MR JOHN HALL, Environment Tax Team, HM
           Treasury, examined.
  
                               Chairman
        1.    Good afternoon, Minister, and thank you for coming to see us so
  quickly after the Budget.  We appreciate that.  Perhaps it is a little less
  hectic a time than it was before the Budget from your point of view.  Is there
  anything you would like to say by way of a short introductory statement before
  we begin asking questions?
        (Mr Timms)  Thank you, Chairman, for your invitation.  I would like to
  say a few words at the outset.  First of all I would like to introduce the two
  officials who are with me.  Clive Maxwell on my right is the Head of the
  Environment and Transport Tax Team in the Treasury and has appeared before the
  Committee before, and on my left is John Hall who is an economist in that
  team.  Sustainable development continues of course to be a Government
  priority.  The view that economic development needs to be consistent with
  safeguarding the environment is a major concern for us and we have continued
  to deliver on that priority throughout the Budget of last week.  I just wanted
  to draw attention to two or three of the elements that were in the Budget
  which may be of particular interest to the Committee.  We have moved further
  in using the tax system to stimulate the development of innovative
  environmental technologies on 1 April as part of the Climate Change Levy
  package.  We will be publishing a list of over a thousand energy saving
  products that qualify for enhanced capital allowances.  Secondly, through the
  Green Field Challenge, the outcome of which we announced in the Budget, there
  will be tax incentives to encourage rose field gases, bio-diesel for the first
  time, pilot projects on bio-ethanol, bio-gas, methanol and, I think perhaps
  most significantly for the long term, hydrogen as well as those incentives
  available during the course of this year.  Thirdly, as the next step in
  encouraging greater investment in environmental technologies, and I hope the
  Committee will feel able to welcome the Green Technology Challenge that was
  announced in the Budget, both the Green Fuel Challenge and the Green
  Technology Challenge provide significant new opportunities to encourage the
  most innovative and environmentally beneficial technologies.  It is worth
  reminding the Committee that the other parts of the Climate Change Levy
  package, including the levy itself, will be coming into force as planned on
  1 April and will deliver really significant CO2 emissions savings.  We
  estimate now that the whole package plus the Emissions Trading Programme will
  realise a saving of at least seven million tonnes of CO2 emissions in a year
  by 2010, so that is a very big contribution to meeting our objectives.  The
  Carbon Trust, with its remit to support energy efficiency, to support the
  development of carbon technologies, will start up its work, providing a big
  incentive to business to make energy efficient investments.  There are a
  number of other elements.  The package on pesticides, the package on urban
  regeneration, our challenge to the waste industry to meet demanding targets
  for allocating a bigger share of landfill tax credits to sustainable waste
  management projects - all of those are in the Budget and you may want to raise
  some of them with me.  I suppose the point I want to emphasise in concluding
  this brief introduction is that the Budget has notched up a number of
  significant milestones in our pursuit of sustainable development and I will
  be delighted to discuss any aspects of that or any of the other policy
  initiatives we have in hand that the Committee would wish to raise with me.
        2.    Thank you very much for being brief, if fairly comprehensive. 
  Just to be absolutely clear, you were drawing our attention to things which
  were in the Budget?
        (Mr Timms)  Yes.
        3.    There was nothing absolutely new there?
        (Mr Timms)  No.
        Chairman:   It is simply drawing out things which were already announced. 
  Thank you very much indeed.  We would like to start off with the happy chance
  of the Prime Minister talking about the environment the day before the Budget
  and I know Ms Russell would like to come in on that.
  
                           Christine Russell
        4.    The Prime Minister last Tuesday in his speech on the environment
  concentrated on the grim scenarios facing us in Britain and the world and yet
  only a day later the Chancellor in his Budget was making available œ1.7
  billion to motorists and hauliers.  I just would like to know how you can say
  on the one hand that we are putting sustainable development at the centre of
  our policies and the Treasury is committed to green policies and yet the
  following day we get this announcement of œ1.7 billion to motorists and
  hauliers.
        (Mr Timms)  I think I can make that claim on a pretty sound basis, on the
  basis of the full programme of the measures that were in the Budget.  Of
  course we announced in November a number of proposals for consultation on the
  transport front and we confirmed those in the Budget last week.  It is worth
  making the point of course that there were within the œ1.7 billion package
  some very advantageous measures from an environmental point of view.  The
  incentive for ultra low sulphur petrol was clearly environmentally
  advantageous.  The œ100 million fund for modernisation in road haulage
  contains a number of very significant elements which will be environmentally
  beneficial, including œ30 million in support of environmental adaptations for
  lorries, so I would not accept for a moment that there is any contradiction
  between that package and the environmentally sustainable development
  commitments that we have been developing and progressing in the Treasury over
  the last four years.
        5.    Minister, you particularly mentioned transport and I would like
  to focus on two aspects of transport policy.  The first is that you mentioned
  the large increase in public money going into transport, but quite a large
  amount, I think œ60 billion, is actually going into road schemes.  Is that
  really sustainable development?  For instance, have you done an assessment of
  whether or not that œ60 billion could result in even more traffic on our
  roads?  Have you done those assessments?
        (Mr Timms)  From memory, and I have not got these figures in front of me,
  I think you are right, that the œ180 billion package over the next ten years
  for major investment in transport, which I think is going to be a very
  important programme of investment that we need to ensure takes place, divides
  roughly a third/a third/a third between road, rail and local transport
  improvements.  Clearly the other two-thirds I guess are of fairly obvious and
  direct environmental benefit but I would hope that the programme of investment
  in roads would have significant environmental benefits as well.  Certainly,
  if we can be successful in reducing congestion, there are significant
  environmental benefits.  There are obvious benefits from the construction of
  by-passes in particular locations that people feel very strongly about.  I
  think that that element of the œ180 billion package is going to be good news
  from an environmental perspective as well.  We are expecting growth in road
  transport to continue over the coming years.  The figure I have in mind for
  between now and 2010 is about 17 per cent increase that we are expecting in
  road transport, so of course it is very important that we continue to see
  improvements in vehicle engine technology so that the engines that are
  powering all these vehicles are doing less environmental damage than has been
  the case in the past.  That is one of the reasons why the Green Field
  Challenge has been so important and some of the ideas that have emerged from
  that.  There are other things that we need to do as well to make sure that the
  growth in transport that we expect to see does not have the damaging
  environmental impact that it could have if we did not make sure that that was
  not the case.
        6.    In that response you have conceded that mileage is likely to
  increase, but the question I was trying to ask was, has the Treasury actually
  done an environmental appraisal of the likely impact of that œ1.7 billion tax
  give-away to motorists and hauliers that was announced in the Budget?  Has
  there actually been an environmental appraisal of that amount, like, for
  instance, how much will the carbon emissions go up?
        (Mr Timms)  So we are going back to the discussion we were having a
  moment ago about the Budget package rather than the œ180 billion package?
        7.    Yes.
        (Mr Timms)  Indeed we have.  In table 6.2 in the Budget Red Book, which
  no doubt we will make a number of references to this afternoon, there is data
  addressing that directly.  For example, the entry under road fuel duty
  differentials sets out what we expect from the differential for ULSP, the
  increase - and this catches the point that you are particularly raising with
  me - in carbon dioxide emissions arising from the real reductions in duty on
  ultra low sulphur diesel and ultra low sulphur petrol, the impact of the
  temporary cut in unleaded petrol duty as well, so we have and it has been
  published, as I know the Committee would wish us to, in the Budget Red Book.
  
                              Mr Gerrard
        8.    In the evidence that we took on the pre-Budget report we got a
  number of comments from several different organisations who said that they
  really did not think that the Treasury had any overall strategy for
  environmental tax policy, that it was all a bit piecemeal with ad hoc
  decisions on individual cases.  Do you think that is fair comment?
        (Mr Timms)  No, I do not.  We set out the principles that we felt should
  be applied to environmental taxation right at the start of this Government. 
  The statement of principles published in July 1997 referred in particular to
  the benefits of shifting the burden of taxation from good things like
  employment to bad things like pollution, and having set out that statement of
  our vision I think we have been pretty effective in pursuing that vision into
  practical application in a large number of areas.  I think that has been a
  pretty effective vision translated into action.  I think it has been the right
  direction to move in as well.
        9.    An issue we have discussed before is that, when the Treasury is
  looking at the environmental impacts of taxation, really you ought to be
  looking across the board, not simply at taxation which has got a specific or
  explicit environmental intent.  Looking at table 6.2 again, all it seems to
  cover again this year is the taxes which are explicitly environmental rather
  than looking broadly across the board, which is surely what a strategic
  approach ought to do?
        (Mr Timms)  What we have aimed to include in that table is not only
  things that have an environmental purpose, although certainly all of those are
  there, but also anything that will have a significant environmental impact. 
  Both categories of those are covered in the table.  I would want to pursue the
  discussion with the Committee about all this because each time I come we do
  have a discussion about appraisal and the way we present this information. 
  What I want to affirm is my view that we have made a great deal of progress,
  analysing and presenting the environmental impact of Budget measures.  We do
  have after all a chapter dedicated now to that in the Budget documentation
  each time.  I think it is worth reminding the Committee that there was nothing
  even resembling that in the documentation before the election.  I hope the
  Committee would accept as well that having started to present this information
  in the Budget documentation we have improved it as we have gone along, not
  least in response to requests that this Committee has made.  There is much
  more quantification of environmental impacts now.  There is more detail on the
  methodology, on the sources that we have drawn on, and so I think I would want
  to defend the approach that we have taken.  I would not have thought it would
  be helpful to seek to include in that table 6.2, for example, the widening of
  the 10p tax band, just to pluck out one other element of the Budget.  I do not
  know how one would meaningfully attach an environmental impact to a measure
  of that kind.  The last thing I would want to see is the documentation
  cluttered up with a great long list of measures alongside each one of which
  it said, "No noticeable impact".  By restricting that table to things that do
  have a significant impact and things that have an environmental motivation we
  are presenting the information in the most effective possible way, but if
  there are further changes that the Committee would like to see then I would
  be very happy to discuss those.
        10.      I think it is more that we would like to feel confident that
  where something is not included in that table there has been some assessment
  and some objective measure to say yes, this is not simply a minor impact,
  rather than just being asked to take that for granted.  It is perhaps
  something we can come back to later on.  I would like to ask about one or two
  specifics.  The Climate Change Levy and Aggregates tax are examples of
  environmental taxes that have been introduced on the basis of being revenue
  neutral.  Is that an approach that is going to be maintained in the future? 
  Is there an overall policy, say, that environmental taxes should be revenue
  neutral rather than being seen as a source of raising revenue?
        (Mr Timms)  That approach certainly is consistent with the statement of
  principles of July 1997, that what we wanted to do was not to change the
  amount with these measures but to shift the burden of taxation towards
  pollution.  The fact that in both the cases you have identified we have been
  able to introduce the measures in a revenue neutral way from the Treasury's
  point of view helps to establish the credibility of those measures as
  environmental measures.
        11.      On this question of shifting the burden, again an issue we have
  discussed before is measurement appraisal both of ONS and environmental
  economists have talked about sustainability gaps, and we ought to be looking
  for some objective way of trying to measure progress.  Has anything more been
  done in conjunction with ONS to try and develop measures?
        (Mr Timms)  I notice that ONS figures do show that environmental taxes as
  a proportion of the total have risen from 8.2 per cent in 1990 to 9.8 per cent
  in 1999, and from 2.9 per cent of GDP to 3.7 per cent.  As I have said before
  to the Committee, I would not want to set too much store on those figures
  because one would hope that the revenue from a successful environmental tax
  would be a diminishing revenue.  We have not done further work with ONS on
  that specifically.  Just as a matter of note, however, the proportion has
  risen appreciably.
        12.      Has anything further been done with ONS in terms of trying to get
  some measures of progress towards sustainability rather than just proportions
  of taxation?
        (Mr Timms)  I am not sure specifically about ONS.  We have, as you know,
  published the indicators on sustainable development, 15 of them, a number of
  which featured in the public service agreements that were published with the
  spending revenue last summer, so there has been quite a lot of detailed work
  carried out on assessing sustainability.  How much of that has been carried
  out by ONS I am not sure.  I am sure you are familiar with the documentation
  that has been published on that.
        13.      You obviously think that we have got to treat these with a bit
  of care and that there is no simple indicator there which is saying, "This is
  the direction in which environmental taxes ought to go".  It is not that
  difficult to measure.  Presumably you would agree that things like the Climate
  Change Levy are shifting the burden of taxation.  Is it really so difficult
  to find any measure as to whether the environmental taxes are going in the
  right direction or not?
        (Mr Timms)  I am wondering what sort of measure you have in mind.  There
  is a problem, as I said, about looking at the proportion of taxes coming from
  environmental measures, although one would prefer that to be dwindling rather
  than rising, or at least a bit of both, I suppose.  If there are any ideas
  that the Committee has on how one might do that I would be interested to have
  a look at them.
        (Mr Hall)   Some of the specific concerns you may be worrying about with
  that would be on such things as, within an overall take of fuel duties, if you
  create fuel duty differentials which incentivise the take-up of cleaner fuels,
  then they are clearly environmentally beneficial, but it simply would not be
  reflected in the measure.  Some of our other concerns would be things like the
  enhanced capital allowances for energy saving materials, which again are a way
  of greening the corporation tax system, although there is no way we could call
  corporation tax itself a green tax.  That applies to a number of measures such
  as reduced VAT rates for energy saving materials etc.
        14.      But we want to know that they are actually doing what they are
  designed to do.  We want to measure the effects.
        (Mr Hall)   Indeed.  If you look at the environmental tax take-out as a
  proportion of revenue it is very difficult to reflect the majority of tax
  changes within that scenario.
        (Mr Timms)  One point which is very important that you have raised is the
  question of monitoring after implementation what the impact of these measures
  has been.  I think that is going to be an increasing focus of our attention
  and it is in a number of areas something that we have given a good deal of
  thought to.  For example, the changes on company car tax which we have
  introduced will shortly be taking effect.  The Inland Revenue has done a lot
  of work on how one can measure what the actual impact of those changes proves
  to be on the kinds of vehicles being used and the amount that they are driven
  and so on.  With a lot of environmental tax measures like the Climate Change
  Levy about to take effect, I think this whole area of evaluating the
  effectiveness of the measures that we have taken is going to be an area of a
  lot of work and it needs to be so.
        15.      So that is something we can expect to see some development on?
        (Mr Timms)  Indeed.
        16.      You have talked about shifting the burden of taxation from goods
  to bads and we have just had a Budget that cut the tax on fuel and froze the
  duties on alcohol and tobacco.  Can we assume that that is temporary?  I would
  not for one moment suggest that it is anything to do with an election.
        (Mr Timms)  The position on fuel duty was set out in the pre-Budget
  report of 1999 when the Chancellor cancelled the escalator and said that in
  future he would make decisions about fuel duties on the basis of the economic,
  social and environmental considerations at the time.  Of course, since then
  we have had a very big rise in the price of crude oil.  Clearly the Chancellor
  will want to keep these matters under review.  On this occasion, what was pre-
  figured in the pre-Budget report last November was a careful balance of all
  those factors influencing the decision.
        Chairman:   You mentioned that the Climate Change Levy is coming in next
  month.  We do want to ask you a bit about that.
  
                              Mr Loughton
        17.      I want to ask about the Energy Tax.  You have now signed section
  11 agreements for 29 sectors.
        (Mr Timms)  Forty now.  The number is rising rapidly.
        18.      I am delighted to hear it.  The Committee is concerned, having
  looked at this before because, out of the 29 of which I was aware (and it may
  be the 40), all but the steel sector have opted for relative efficiency
  targets.  It is therefore unclear as to whether they will result in an overall
  reduction in energy use and carbon emissions.  Nine of the 13 efficiency
  targets show reductions of less than 10 per cent which means that on the face
  of it what you are trying to achieve appears slightly disappointing, that is,
  ten per cent for the period 2002-2010.  What are we actually getting in return
  for the 80 per cent rebates that are on offer?
        (Mr Timms)  We are getting savings in CO2 emissions that we estimate to
  be at least two and a half million tonnes compared with "business as usual"
  by 2010.  I think that is a very significant contribution to meeting our Kyoto
  and wider national objectives.  I was present at a reception for the Chemical
  Industries Association recently and I was pleased to note that the Association
  was taking some pride in the fact that the agreement that it has signed up to
  will on its own account for almost a million of the two and a half million
  tonnes.  In terms of the scale of the CO2 emissions that we have in the United
  Kingdom the impact at the margin of the two and a half million tonnes from
  these agreements is a very significant one.  Certainly this whole process has
  sparked off an enormous amount of very hard work, very careful planning and
  analysis.  I want to put on record my appreciation of the efforts not only by
  civil servants in the DETR but on the part of all of those in the industry
  associations who have worked hard on this and in individual companies as well.
        19.      But would not many of these agreements have resulted from the
  IPPC anyway?  On your "business as usual" scenario does it include or exclude
  the impact of IPPC?  What are the figures for the IPPC emission savings?
        (Mr Timms)  We reckon that IPPC on its own would probably have
  contributed about 0.5 million, so there is a gain of a full two million tonnes
  at least from the negotiated agreements.
        20.      Are you going to produce for each sector base line environmental
  appraisals showing the absolute emissions and the Government's current
  estimates of future emission trends to 2010 with and without the energy tax? 
  Presumably you must have carried out the base line assessments to have arrived
  at the two and a half million figure in the first place?
        (Mr Timms)  Let me ask Clive Maxwell to comment, but let me first make
  the point that in terms of information that we are publishing I understand
  that as of today 27 of the 40 sector agreements are on the Web and can be seen
  there with all the information about those.  That number is rising rapidly;
  it is just slightly behind the signing process but not far behind.
        (Mr Maxwell)   On the specific question about the absolute emissions one
  has to go back to DETR and ask them what the numbers look like.  I would point
  out that all of these negotiations have been performed by the Energy
  Technology Support Unit in the DETR which includes experts from the sectors
  who know how the sectors work, know what is realistic to achieve and they have
  been in negotiations.  I do not think there is any doubt that the negotiation
  has been properly performed and is realistic in that sense, and that their
  analysis is available in the House library.
        21.      I want to come back to that but what mechanism has the Government
  put in place to encourage businesses to transfer to absolute targets in the
  future?  Will the Government consider, for example, reducing the size of the
  rebate over a period of time?
        (Mr Timms)  The way we approach this is to leave it up to the sectors
  which of the approaches they wish to pursue, which was the most appropriate
  for their business conditions.  I think that has worked well.  We certainly
  do not have any plans to change the level of the rebate.  As you know, the
  state aids negotiations with the European Commission have been focusing on a
  ten-year period, so we want to have a period of stability for these agreements
  so that they can deliver the very substantial carbon dioxide emission
  reductions that we are all very anxious to see.
        22.      You pay tribute to all the hard work that has gone on to produce
  this and is still going on.  What actual man hours other than in the DETR have
  been applied to this?  I am just thinking in comparison with some of the
  regulators which have fairly large budgets.  These are very complex and
  serious calculations you are trying to make for the first time.  What
  investment has been put in, what sort of technical experts have been deployed
  to do that, the base line point being are you happy that what you are trying
  to achieve is effective and fair and sustainable and that you have not got a
  lot more work still to do?
        (Mr Timms)  I am very confident that it is going to be effective, that it
  has been fair, that it will be sustainable.  In terms of man hours in DETR,
  that is not a question for me to answer.  I do not imagine we have got that
  information here.  I am sure Michael Meacher will be very happy to provide
  information about that.  I think it has been a good process.  It has been very
  hard work for everybody involved.  I would not want to minimise the scale of
  the exercise that has been undertaken by everybody but I think we are going
  to see that it has been a successful exercise and a very important one,
  dealing with a very big issue that faces us all.
        23.      Do you envisage changing the targets?
        (Mr Timms)  Which targets?  The targets within negotiated agreements?
        24.      Yes.
        (Mr Timms)  As I have said, what we have sought from the European
  Commission is agreement that these agreements can be in place for ten years. 
  Clearly at the end of that period one would need to review the whole process
  but I think it is important that we have agreements that everybody understands
  and are in place for a long period like that so that people can work towards
  the targets that have been set.
        25.      If, after a few years, it becomes apparent that for what you want
  to do businesses are getting off lightly, that because of the advances in
  technology, for example, the actual savings which they have signed up to for
  those targets are fairly negligible, as some people may say now, is there any
  scope for you to revisit those targets prior to the 2010 target date line?
        (Mr Timms)  I do not anticipate that the targets are going to be light. 
  Indeed, if you compare the objectives that have been set up within those
  agreements with the ETSU view for each sector of what can be achieved on a
  cost effective basis, then I think you will see that the targets all go a very
  long way towards the feasible reductions.  There will though be reviews of
  what is happening in each sector in 2004 and 2008, so there is a mechanism
  there, but I see these as demanding agreements and I think that view will be
  borne out by experience.
        26.      In 2004 a review, as you term it, could mean that actually you
  are going to double the target?
        (Mr Timms)  I would be extremely surprised if any change of that order
  were required.
        27.      All right, 50 per cent.
        (Mr Timms)  These are demanding targets and I think people are going to
  have to go some to achieve them and I believe that they will, but there is a
  mechanism in place to review those.
        28.      So theoretically you do not rule out a shift in the goalposts
  within three years?
        (Mr Timms)  I think it is unlikely that that will be necessary.
        29.      But you do not rule it out?
        (Mr Timms)  I think I would go no further than saying it is unlikely that
  it will be necessary.
        30.      Can I finally touch on emissions trading?  You have just
  completed a consultation on the subject which was slightly hurried, I think
  most people would admit.  Can you just comment on how things are going and
  whether you are going to produce your proposals within the next month or so?
        (Mr Timms)  They are going well.  I am surprised that you describe it as
  a hurried consultation.  I think it has been a very thorough piece of work
  that has been carried out on emissions trading.  Certainly we see a key role
  for emissions trading as part of the long term solution to cutting greenhouse
  gas emissions.  We have been working very closely with the Emissions Trading
  Group, which as you know is business led, to develop the scheme.  We announced
  in the spending review last summer a financial incentive worth œ30 million
  from 2003/2004 to help stimulate an early start to maximise the environmental
  benefit of the Emissions Trading Scheme.  We announced in the Budget last
  week, by the way, that we will ensure that that incentive is worth the
  equivalent of œ30 million after corporation tax.  The responses to the
  consultation in November 2000 on the rules of the scheme are being considered. 
  We will be publishing the framework for United Kingdom Emissions Trading
  Scheme shortly so that we will be on track for firms to take targets from next
  year.  I made the point at the beginning, although I did not do so explicitly,
  that we believe that the Emissions Trading Scheme could contribute, on top of
  the five million tonnes of emission savings from the Climate Change Levy, a
  further two million.  Again that is a very significant contribution to meeting
  the objectives that we have.
        31.      The reason we describe it as hasty is that I think the
  consultation document, after a lot of work, as you say, did not go out until
  the end of November with a target date for the Government to produce its
  response before the end of this month, which on a very complicated subject
  does seem a short space of time.  Can you just comment on the Emissions
  Trading Authority which I gather you are not proposing to set up on a
  statutory basis?  Surely without that statutory basis it will rather lack the
  teeth to enforce penalties?
        (Mr Timms)  I am not entirely certain what basis DETR proposes for the
  Authority.  If that is something you would like some further information I
  will send you a note on that.
        32.      How many companies do you expect to join it?
        (Mr Timms)  In due course a lot.
        33.      Can you be a little more precise?
        (Mr Timms)  To begin with I would expect a fairly modest take-up.  Once
  the incentive comes into effect that number will certainly rise.  We
  recognise, as did Lord Marshall in his report on this, that emissions trading
  is most appropriate for larger firms and that for smaller firms the mechanism
  available in the Levy is likely to be the more effective one.  Mr Maxwell was
  just reminding me that of course there will be a particular incentive to
  participate in the scheme for firms who are party to negotiated agreements,
  so I guess those will be the immediate group of companies who are likely to
  enter the scheme but once the incentive is in place and once trading becomes
  a familiar part of commercial life then we would expect it to become much more
  widely taken up.
        34.      So you are not putting any targets down on which to judge the
  success of the scheme in terms of how many companies have joined up in the
  first three or four years, even those companies who are privy to these sector
  agreements?
        (Mr Timms)  I think the key thing is going to be the achievement of the
  reduction of two million tonnes - I hope more - of carbon dioxide emissions
  a year by 2010.  That is the real target that we have got in our sights.
  
                              Joan Walley
        35.      Minister, we welcome all the progress that has been made in the
  Budget, but we always want to go further.  Given that we had the Prime
  Minister's speech the very day before the Budget where he announced the very
  welcome news about extra money for renewables, I wonder if you could tell the
  Committee whether or not that money is new or whether or not it is recycled
  old money in any way?
        (Mr Timms)  I can tell you where that has come from.  The œ100 million
  comprises œ60 million from the Capital Modernisation Fund, œ20 million from
  the Performance Innovation Fund, and the final œ20 million is being re-
  allocated from within the DTI's own allocation, so there are three different
  sources for it.
        36.      Are those three different sources which together make up the new
  œ100 million all new sources of money?
        (Mr Timms)  New in their application to this purpose, yes.
        37.      But were they previously existing for renewable energy?
        (Mr Timms)  No.
        38.      So they are absolutely new?
        (Mr Timms)  Yes.
        39.      In that case could you confirm for me, if you look at the 1999
  figures for the Energy Efficiency Fund, that the œ50 million which was
  allocated over three years on a year by year basis continues to be allocated
  and is still available for energy efficiency purposes, that it is not part of
  this new money that was announced the day before?
        (Mr Timms)  That is correct.  This is the œ50 million fund being created
  from the proceeds of the Climate Change Levy?
        40.      Yes.
        (Mr Timms)  The point you have made is correct.  There is, as you say, an
  element of that which is being dedicated to the development of renewable
  energy sources and that is outside the œ100 million that the Prime Minister
  announced last week.
        41.      So this will be œ50 million that was going to be 1999, œ50
  million 2000, and œ50 million 2001, each of those three years, plus the extra
  money that was allocated from the Climate Change Levy for renewables?
        (Mr Timms)  Let me ask Mr Hall to comment on that.
        (Mr Hall)   The existing Energy Efficiency Best Practice Programme is
  being transferred into the Carbon Trust and that money has been ring fenced. 
  In terms of the base line that is not changing.  That goes into the Carbon
  Trust.  On top of that the Carbon Trust has an additional amount of resources
  of œ100 million over three years which will fund additional energy efficiency
  advice and will fund research into low carbon technologies.  On top of that,
  again from the revenues from the CCL, there is œ50 million over three years
  to promote renewables technology.  None of that includes the stuff that the
  Prime Minister mentioned in his speech.
        42.      It would be enormously helpful, Minister, to have a note setting
  it out.  One of the difficulties that we have is that there are so many
  initiatives and there are so many new initiatives and there are so many
  existing initiatives that it is really difficult to keep track of them all and
  to see how they are progressing through.
        (Mr Timms)  I sympathise with the Committee's difficulty.  I will be glad
  to provide a note.
        43.      Can you also confirm to me - and you have probably covered this
  already but just for the record - what has happened to the extra œ40 million
  from the reduction in enhanced capital allowances in 2001/2002 and 2002/2003?
        (Mr Timms)  No, I have not covered that.  All that has happened there is
  that the announcement of the details of the qualifying technologies was
  delayed somewhat from what we originally intended, so things have gone
  backwards a little.  That is why we now expect - and this is conjecture of
  course - a rather lower take-up of those in this first year because the
  information has been provided a bit later than we originally thought.  We
  originally expected that we would be able to publish the details of that in
  December.  We are now expecting to do so as soon as state aids clearance has
  come through at the beginning of April.  Because the information is available
  a little later than we had expected we anticipate that the take-up will be a
  little lower in the first year than otherwise it would have been.  That is all
  that has happened there.
        44.      Do you know why this is?  Is this a failure in communications or
  not getting the message across?  Why is there this failure to have the take-up
  that you had anticipated in the first year?
        (Mr Timms)  Only that the information has not been available to people up
  till now.  In fact, just yesterday the Commission did confirm its go-ahead for
  the enhanced capital allowances arrangements that we had proposed.  When we
  put those figures together initially we expected to have that by December, but
  there has been a delay at the Commission's end; that is all.
  
                               Chairman
        45.      There is a problem here which we touched on in your exchange with
  Mr Gerrard about transparency, about that information being followed through
  in a clear way year after year.  Our suspicion was, having looked at your
  figures and having no help as it were other than our own resources, that the
  œ100 million fund which the Prime Minister announced was not new money. 
  Indeed, only œ10 million of that appeared to be new money because œ50 million
  had disappeared from the accounts into the Energy Trust and œ40 million had
  gone from reduced estimates for enhanced capital allowances.  We may be wrong,
  but without a clear explanation, running through the figures and making proper
  comparisons form one year to another, even we, who are looking at these things
  closely, do not know what is going on, and certainly the general public do not
  know what is going on.  You can understand why there is a certain amount of
  suspicion: is this really new money or not?
        (Mr Timms)  I guess that is why I am here, so that I can provide the
  explanation.  As I say, I entirely sympathise with the Committee's difficulty
  on this.  I can give a complete reassurance on that.  All that has happened
  is that the information has been provided a little bit later than we
  originally expected, which means that the benefits have been put back three
  or four months, but there will be more later on.
        46.      Could we have a clear note on all this which would set the whole
  thing out?
        (Mr Timms)  Yes, certainly, a note covering all the funding sources for
  renewable energy first of all, addressing Ms Walley's point, and explaining
  what has happened on enhanced capital allowances.
  
                              Joan Walley
        47.      And to add to that, it further compounds the difficulty we have
  in understanding what has happened because we have got the press release which
  came out from the DTI on the occasion of the boost for green energy and in a
  way, if I can put this to you, perhaps through your work on the Green Minister
  Committee which I know will come up later, we are looking for some kind of an
  audit trail to be able to monitor what there is, how it has been spent, what
  there is from one year to the next and whether or not old money gets
  translated into new money.  In a way, when we are looking at renewables, for
  example, I would suggest to you that that needs to be done in a holistic way
  in conjunction with the DTI.  Here we have got from the DTI a list of
  different initiatives from the National Lottery and here, there and
  everywhere.  Unless we can follow it all through we are left completely in the
  dark.  Is that part of extra money?  It needs to be done in a joined-up way
  with other government departments as well.  When you give the Committee a note
  would you perhaps look at not just what is coming through from the Treasury
  but how it relates to other spending departments as well?
        (Mr Timms)  That will certainly be the case.
        48.      One final question if I may.  Some time back we did recommend
  that the Energy Saving Trust should administer the fund for sustainable energy
  from the Climate Change Levy.  That was one of the recommendations from this
  Committee that was not taken on board.  We now note that we are going to have
  this further body that is going to be created, the Carbon Trust.  Could you
  tell the Committee what that is going to do that is going to be additional to
  what the Energy Saving Trust is already doing and why it was necessary to have
  a separate body and why our recommendation was not something which the
  Treasury felt it could agree to?
        (Mr Timms)  The Carbon Trust has a very clear role in taking forward work
  which has been carried out in the past but in a more effective way, not least
  because it will have significant extra resources available from the proceeds
  of the Climate Change Levy.  The very important part of what is going to
  happen over the next few months is that a lot of companies will want to get
  advice about how they can reduce their energy bills.  They will see from next
  month entries appearing on their energy bills for the Climate Change Levy. 
  They will want to know how they can reduce those payments, quite rightly, and
  it is very important that they have access to good quality readily accessible
  information and the provision of that will be a very important role for the
  Carbon Trust.
        49.      How is that going to take advantage of the expertise that is
  already there inside the Energy Saving Trust and other organisations such as
  the Energy Technology and Efficiency Best Practice Programmes?  Have you
  thought through how you are going to get the best advantage from the expertise
  that is already there relating to these issues arising from the Climate Change
  Levy?
        (Mr Timms)  Certainly the Carbon Trust will want to draw on expertise
  that is available from those organisations and others.  Of course it is a
  matter for the DETR directly.
        50.      You are not afraid there is going to be more confusion from all
  these different quangos being set up between yourselves, the quangos, DETR and
  DTI?
        (Mr Timms)  I hope there will be less confusion because I think the
  Carbon Trust will be seen as the place to go for good quality readily
  available information on this topic.  I am delighted that Ian McAllister,
  Chairman and Chief Executive of Ford Europe, has taken the Chair of the Trust. 
  I think it is going to be a high profile, readily accessible body.  It is a
  different body in that sense and I am very optimistic about the effectiveness
  of its operations.
  
                              Mr Gerrard
        51.      Can I ask you about two specific taxes?  The first one is the
  Aggregates Levy.  When this Committee looked at the question of the Aggregates
  Levy last year we came to the conclusion that there ought to be a levy but
  that there also ought to be rebates, a little bit like the Climate Change
  Levy, that you ought to be giving rebates to quarries that were being operated
  in an environmentally friendly manner.  It appears from the Budget that you
  are proposing to move in that direction.  Can you tell me: how is that going
  to operate?  How far will that rebate operate?  Is it going to be a question
  of making assessments of individual quarries?  Are you going to make judgments
  about types of operation?  How is it going to operate?
        (Mr Timms)  That is an extremely good question.  I do not yet know the
  answer and I think it will take some time to come up with good answers to the
  questions that you are raising which are extremely pertinent questions. 
  Indeed, I think it will take beyond the implementation of the Levy, which will
  take place as you know in a year's time, April next year, until we have a good
  framework in place for having differential rates of levy for green quarries.
  As the Committee has rightly pointed out, and we have accepted, there are
  attractions for doing that, for rewarding environmental good practice, but
  quite how that is going to be done we do not know.  Officials are in
  discussion with the Quarry Products Association, which is the quarries
  industry body, that is very keen on making this change, and I think we will
  find a way to do it but I think it is going to take quite a lot of work.
        52.      If there is that incentive how confident are you that it is
  actually going to be revenue neutral because the intention, as I understand
  it, was that the costs of the Levy would be equivalent to cutting national
  insurance contributions plus the Sustainability Fund.  You have already
  suggested a figure of œ35 million for the Sustainability Fund.  Do you have
  estimates for the other two of what is actually going to be raised from the
  Levy (œ1.60 per tonne) is going to bring in and whether that equation is
  really going to balance, particularly if there are uncertainties about where
  is a rebate?
        (Mr Timms)  It will be revenue neutral when it is introduced next April
  on the basis that we have announced.  Clearly what happens beyond that we do
  not know yet.  If there were to be a lower rate announced for certain kinds
  of quarries, then that would no doubt have an impact on the overall take from
  the Levy.  That would depend on what the lower rate is and who qualifies and
  so on, and those are decisions we have not yet made and so we have not yet
  done the calculations.  Certainly when it is introduced next April it will be
  revenue neutral.
        53.      Does that mean that you might end up with the position of
  subsidising the Sustainability Fund?  Is that money guaranteed that it will
  stay at œ35 if the take-up is not as you predict?
        (Mr Timms)  I certainly would not want an outcome which led to a sudden
  fall in the Sustainability Fund.  I do not think that would be in anybody's
  interests.  Clearly it might well be the case, and indeed it very likely would
  be that, if we went ahead (as I anticipate we will and certainly I hope we
  will) with a differential rate for green quarries, there would be an impact
  on the overall tax take-up.  That is inevitably going to be the case.
        54.      Is it possible to give us an estimate of what you anticipate the
  take being from the levy?
        (Mr Timms)  When it is introduced next April?
        55.      Yes.
        (Mr Timms)  I am sure we have got that figure.
        (Mr Hall)   The costing which informed the decision in Budget 2000 was
  that the levy would raise 385 million on a full year basis and the costs of
  the reduction in employer NICs at 0.1 percentage points would be 350 million. 
  That left 35 million.  At the time that the Chancellor made the announcement
  in PBR 2000 on the Sustainability Fund additional funds for the levy were
  secured by a claim on the reserve for the two remaining years of the spending
  period and obviously the next spending period will take that forward.
        56.      One other factor that is going to affect how much you take in the
  levy is going to be secondary materials because, again, this was an issue that
  we discussed last year and the figures there are in defining exactly what
  secondary materials should be subject to the tax.  What progress have you made
  on that in deciding what secondary materials ought to be taxed?
        (Mr Timms)  I do not think that we have announced any changes on that
  front since I last talked to the Committee.  As you know, there are some
  materials that are going to be exempted from the levy, for example china clay
  waste.  We have had discussions with people who have suggested to us that
  other quarrying waste materials ought also to be treated in a more
  concessionary way but, as you have also said, there are some very serious
  difficulties about definition in doing anything along those lines.  We have
  not announced any changes on that and are not proposing any at this stage. 
  It is an issue that we will keep under review.
        57.      That was an area that the Committee had some concerns about.  So
  we can assume at the moment that it will be the range of materials that was
  originally identified that will be subject in the first place?
        (Mr Timms)  Yes.
        58.      But that you will review?
        (Mr Timms)  We will certainly keep the matter under review but we are not
  proposing any changes to that at this stage.
        59.      Can I just turn to the pesticides tax.
        (Mr Timms)  Yes.
        60.      Do you think now you are in a position where you are happy with
  the package that has been put forward by the Crop Protection Association? 
  There have been some criticisms that it really is not very firm, it does not
  have clear targets, it does not have clear indicators.  Are you happy that it
  is workable?  How are you going to judge whether it has been successful or
  not?
        (Mr Timms)  Let me just quote to you the comments that were made by
  English Nature, Pesticides Action, Network UK, RSPB, that has had a very close
  involvement in this, and the Environment Agency.  They have written in making
  the point that they "welcome and support these measures which, if fully and
  satisfactorily implemented, should provide measurable environmental and
  biodiversity benefits".  Effectively we have accepted the view that those
  organisations have taken.  Of course, that statement does contain a caveat
  about "if fully and satisfactorily implemented".  We, therefore, set out a
  timetable for starting that implementation process with a number of milestones
  between now and next February and we will then review progress in delivering
  the package in the run up to the Budget next year.  Given that caveat about
  full and satisfactory implementation we can be very optimistic about the
  benefits that this package can bring forward.  Again, it has involved a lot
  of work on the part of the industry, on the part of the farming industry and
  on the part of the NGOs who have taken part in this as well.  I think it has
  been an interesting initiative and I very much hope it is going to prove to
  be successful.
        61.      Do you see any prospects in the longer term for change as we get
  nearer to the principle of polluter pays, particularly in relation to the
  costs of cleaning up water which now fall on consumers?
        (Mr Timms)  I think the package will help.  There will be a number of
  costs associated with implementing the package.  I think we will need to see
  how much progress is made between now and next February and review things at
  that stage.  We reckon that the cost to the industry of this package is going
  to be around about œ13.5 million per annum, so it is a significant cost.
        62.      But longer term you would not rule out changes, especially in
  relation to water?
        (Mr Timms)  Rule out changes to what?
        63.      The fact that at the moment the cleaning up of pollution in the
  water is paid for by the water consumer, not by the person responsible for the
  pollution.  Is that not something that long-term we ought to try to address?
        (Mr Timms)  I want to focus for now on this package being successful.  I
  hope that will have a significant impact on reducing the environmental costs
  of pesticide use but at some point clearly we will need to review after a
  period of years, if it is successful, what the impact on reducing costs has
  been and we will need to have another look at it at that time.  We are not
  doing any work at the moment looking beyond the period over which this package
  will operate.
  
                              Joan Walley
        64.      Just to turn a little bit to energy efficiency and the issue of
  VAT as well.  Certainly we feel that there is a great range of products which
  are eligible under the Government's own Home Energy Efficiency Scheme and yet
  there is a much more limited range of goods which are eligible for reduced
  rates of VAT.  I am just wondering, given what you were saying about the
  importance of clarity and getting the message across so that it is clearly
  understood, is it not confusing the picture to have so many different lists,
  some of which apply to VAT, some of which apply to VAT on energy saving
  materials, and you have got a separate list of, if you like, initiatives which
  can be taken under the Government's own HEES Scheme but there is not any
  clarity about what is eligible for energy efficiency support of one kind or
  another?  Would it not be better just to have a clear list of initiatives that
  would perhaps be of advantage to go ahead with?
        (Mr Timms)  I hope that it is not too complicated.  As you know, we have
  announced we will cut to five per cent VAT on services of renovating houses
  and flats that have been empty for three years or more, converting a property
  into a different number of dwellings, for example a house into flats,
  converting a non-residential property into a dwelling, converting a dwelling
  into a care home or vice versa and converting bedsits into dwellings or vice
  versa.  We are adjusting the zero rate of VAT to provide relief for the sale
  of renovated houses that have been empty for ten years or more.  I do not
  think it is too complicated, at least I hope not.
        65.      You do not think there is any inconsistency there when you look
  at that and compare that to what is eligible in terms of reduced VAT and what
  is eligible under the HEES Scheme?  You do not think it is sending out a
  confusing message as to what is eligible for what, you think there is a
  consistency that goes through it?
        (Mr Timms)  No, I do not think it is too confusing.  Perhaps I am missing
  something.  You can point it out to me if you think I am.
        66.      No, it just seems there is a lot of inconsistency when it comes
  to energy efficiency.  There is also a further complication in that the
  Government is now introducing yet another list of qualifying technologies,
  albeit ones which are geared towards industry, under the proposals for
  enhanced capital allowances.  Would you like to comment on that as well in
  terms of consistency?
        (Mr Timms)  I do not see a consistency problem there at all.  The
  enhanced capital allowances I see as a very important step forward in
  encouraging energy saving investments by commercial energy users.  I think we
  are anticipating when that list is published on 1 April that around about
  1,000 products will appear on it, if I remember rightly.  We have also
  announced in the Budget a Green Technology Challenge where we are asking
  people to come forward perhaps with additional ideas for technologies that
  ought to have that opportunity available to them in the future.  I do not see
  a problem of consistency there at all, this is something that is completely
  new which I think will be widely welcomed and will be a further encouragement
  to business users to invest to reduce their energy consumption.
        67.      If I can just move briefly to the Landfill Tax Credit Scheme. 
  There has been a lot of concern about this and perhaps the way in which some
  companies are thought to take advantage of it while at the same time having
  some beneficial interests themselves as well.  We are very keen to see the new
  proposed demanding targets for tax credits for, if you like, sustainable
  management projects coming in as quickly as possible.  Do you have a date for
  that?  Do you know when that is likely to be introduced?  When can we expect
  details of the new proposals that the Government is intending to go ahead
  with?
        (Mr Timms)  As you have said, there has been a lot of interest in this.
  The new targets that we are proposing to set for the industry to meet to be
  demanding for raising the percentage of tax credits going to sustainable waste
  management projects, I would expect those targets to be published within a
  month.  As you know, there have been, and you have made the point, a number
  of concerns expressed about the operation of the Landfill Tax Credit Scheme. 
  We take all those allegations very, very seriously and they have been
  thoroughly investigated.  There are a couple of cases being investigated, I
  think, by Hertfordshire Police currently arising from allegations of that
  kind.  On the whole we are satisfied that the scheme has operated
  satisfactorily in terms of propriety.  I think the bigger concern I have is
  whether the resources coming through the Landfill Tax Credit Scheme have been
  deployed on projects which correspond as well as they should do to the
  Government's highest priorities.  What has particularly been of concern is the
  proportion of the funds going to sustainable waste management projects has
  been falling of late.  That was why we wanted to set these demanding targets
  and also why we are attracted in due course to the idea of replacing the
  credit scheme, either in whole or in part, with a targeted public spending
  programme where clearly we could ensure that the funds were being used on the
  highest priorities that we are facing.
        68.      Just to press you on that a little bit more.  When you say that,
  does that mean that you have actually completed a review of the current
  Entrust scheme?  About a year or so ago you were saying there would be a
  review of that.  You mentioned matters relating to police investigations which
  I see as being separate from the review of the scheme as a whole.  Have you
  actually carried out and undertaken a review of the current Entrust Scheme and
  have you reached a conclusion on the way forward, or is it nothing as specific
  as a review as such?
        (Mr Timms)  I would not describe it as a review of Entrust.  We have
  carried out a consultation process which has led us to the conclusion that we
  would wish in due course to replace the Landfill Tax Credit Scheme, either in
  whole or in part, with a public spending programme but there is a good deal
  more work to be done, not least in discussion with the environmental bodies
  and the others who have been the vehicles for the Landfill Tax Credit Scheme
  funds about how we take that forward, whether it should be in whole or in
  part, and if it is in part in what proportion and so on.  There is lots of
  detailed work still to be done and that certainly is not complete.
        69.      Does that mean that there will be a consultation process on that
  with an opportunity to comment or is it a discussion that you will be having
  at the next stage?
        (Mr Timms)  I would expect to be in discussion with a number of
  interested bodies as we take that process forward over the coming months.
  
                              Mr Loughton
        70.      Minister, can we talk about the urban regeneration measures in
  the Budget, which we did discuss when you came to see us before in the Pre-
  Budget Report, and specifically on the Stamp Duty exemptions for the most
  deprived areas.  When we discussed this before there seemed to be some
  confusion as to whether you thought this was a primarily business oriented
  incentive whereas the DETR Ministers were taking the line that this was a
  residential property oriented incentive.  Has that apparent contradiction now
  been resolved between your two departments?
        (Mr Timms)  I do not recall any confusion at all.
        71.      I do, very clearly.
        (Mr Timms)  The proposal is that there will be no Stamp Duty charged on
  property transactions in the wards that are selected and that applies equally
  to residential and to business properties.
        72.      Indeed.  When we asked you what was the purpose of it and what
  it was supposedly to achieve you very clearly took the line, and the record
  will show, that this was to encourage businesses to come into areas of
  deprivation, whereas in strict contrast in other meetings, and in fact in
  announcements in the House, the Environment Ministers have very much taken the
  line that it was a residential scheme, and in fact the split on Stamp Duty
  between residential and business is roughly 50/50 at the moment.  The one
  thing that has not been elaborated on any further, which again we pressed you
  on at the time, is the definition of these deprived areas to which the Stamp
  Duty exemptions will apply.  How much longer are we going to have to wait
  because you know the Committee did express reservations as to whether it was
  really going to target those people most in need of help as opposed to owners
  of expensive properties in deprived wards in Islington, for example?
        (Mr Timms)  First of all, I think the real attraction, and in a sense you
  are quoting me correctly, of this measure from my point of view is in
  stimulating urban renewal by attracting businesses to locate in disadvantaged
  areas and also encouraging a mix of housing types.  I think there are benefits
  on both sides.  In terms of when we will announce the list of wards which will
  benefit, what we are aiming for is to identify the most disadvantaged wards
  on a basis which is fair and transparent across the UK, not least withstanding
  the scrutiny of this Committee which I know will be a close scrutiny.  We want
  to make sure we get this right.  We have been working with the devolved
  administrations to identify those wards that should qualify.  A new ward based
  index of deprivation for Northern Ireland is going to be published in June and
  we need to take account of that in finalising the list.  What I can say with
  some confidence is that we would expect the list of qualifying wards to be
  published very soon after Finance Bill Royal Assent with the exemption taking
  immediate effect.
        73.      On the basis of the various potential anomalies that we have
  raised before and on the continued lack of clarity on whether you are
  promoting it for business, although the DETR are still promoting it for
  residential, have you ----
        (Mr Timms)  I just make the point that I think there are benefits for
  both properties.
        74.      Absolutely, I have no disagreement with that.  What I am trying
  to see is what is the rationale behind it, primarily to promote business or
  residential areas.  Despite what you say, you are very clear what you think
  it is there for, the trouble is your colleagues do not agree with that.  On
  the basis of the points we have raised, have you made any further progress
  towards having a capping limit, say, on the value of residential properties
  or, if what you say is really the case, purely limiting it either across the
  board or in certain areas just to businesses so that you do not have this
  anomaly?  Whereas if it is to be done on a ward by ward basis, and you are
  confirming that it will be done on a whole ward on the basis of these indices
  ----
        (Mr Timms)  Yes.
        75.      Therefore you must admit there is a potential anomaly in the
  Islington case which I have brought up, and Members have brought up time and
  time again, where the owner of a œ750,000 nice Georgian terraced house, not
  to name any potential owners amongst Government members, which happens to be
  in the same ward as a run-down estate, few properties on which will actually
  be worth above œ60,000 and therefore not qualifying for any Stamp Duty at all,
  on the basis of what you are promulgating will benefit very nicely indeed and
  the people in the area of deprivation within that ward will benefit not one
  jot, or only slightly.  If you are first of all admitting to that potential
  anomaly, what checks and balances are you considering bringing in to avoid
  that or are you happy it should be a blanket exemption?
        (Mr Timms)  What I advise the Committee to do is await the list of wards
  and then we can have a discussion about these decisions and others.  Of
  course, attracting new businesses in to disadvantaged areas does have very
  substantial benefits for the people who live in those areas.  You were
  suggesting that the people living on estates where properties are of
  relatively low value would not benefit from this but they certainly will if
  we are successful, as I believe we will be, in attracting new businesses, new
  jobs, new enterprise into areas where there has been far too little enterprise
  in the past.  I think that would be a very big gain.  Most of the high value
  transactions that will benefit from this will be in commercial property or in
  land for development.  There will, no doubt, also be some big residential
  properties that are purchased for conversion into residential units, multiple
  residential units, for sale or for rent.  We see relief for transactions of
  that kind as being very valuable in encouraging the establishment of diverse
  communities.  No doubt you will return to these matters when the list is
  published.  I would not favour, and we did have this discussion last time I
  think, attempting to draw a distinction between residential and business
  properties in terms of this exemption, I think that is an unnecessary
  complexity.  There are benefits, significant benefits, in terms of building
  prosperous and diverse communities for the Stamp Duty exemption on residential
  property as well as on business property.
        76.      We agree with all of that, Minister, but the point I am making,
  and you are not ruling it out, is that there is a very distinct possibility
  that the owner of the property, the example of which I gave, would save
  œ30,000 and yet the number of people in properties on deprived estates in the
  same ward whose homes perhaps are worth more than œ60,000 residential is
  negligible, and on that basis it would seem to be a rather self-defeating
  Stamp Duty on the residential side in which case you could just limit it to
  business, the merits of which are for everybody, and I agree with that, or you
  could cap it at people with properties above a certain level or it only
  applies to people doing conversions and everything else.  That is purely the
  point I am making and I am just trying to see whether you are making any
  progress or you are happy that you do not need to make progress so that the
  less deserving, to put it one way, of the exemptions you are trying to bring
  in do not scoop the big exemptions.  I do not think we will get any further
  on that.  Can I just ask you about the Urban Regeneration Companies where in
  the Pre-Budget Report based on the three pilot companies which were
  established post-Rogers, those being East Manchester, Sheffield and Liverpool,
  the Pre-Budget Report, and the Urban White Paper a week later, promised up to
  a dozen further Urban Regeneration Companies, of which one has been announced
  in the form of Corby thus far.  I am not aware there has been any progress
  report on the success or otherwise of those three pilots in the three places
  I have mentioned to warrant rolling out up to a dozen more.  Is the Treasury
  happy that those pilots have been a success?  If they are, on what criteria
  is that based and when will they publish the results?
        (Mr Timms)  We are certainly taking a close interest in the development
  of Urban Regeneration Companies as they evolve beyond the three pilots.  They
  are still pilots.  I think it is too early to draw firm conclusions from those
  pilots about the way forward.  We will consider, as we have said, providing
  Corporation Tax relief for company donations to Urban Regeneration Companies
  and similar bodies across the UK when we are in a position to do so.  For now
  we want to wait until the final form and functions of those bodies are clear,
  which at the moment, because they are still pilots, is not the case.
        77.      Is this not slightly putting the cart before the horse, that
  without knowing, as you have just admitted, how well or not the three pilots
  have done, conceivably 12 more fully fledged companies could be in operation,
  of which you have already done one, before certainly we know and you have
  assessed the evidence to suggest whether they have been a success or not? 
  Surely a pilot is something that needs to be tried, assessed and if it has
  been successful then turned into a real scheme?  It strikes me that you are
  going to have 12 real schemes before you have even assessed whether the pilots
  have been beneficial or not.
        (Mr Timms)  We do see them as a very promising initiative for effecting
  regeneration in our urban areas but we will take a view at a future Budget
  about the appropriate Corporation Tax treatment for them.  I think that what
  we have done has been right, we have identified this as a promising
  initiative, we have identified a way in principle to assist them and we will
  make a decision on the detailed arrangements as soon as we are in a position
  to do so.
        78.      The Corporation Tax treatment of those companies is an entirely
  separate issue on which there have been no pronouncements from the Chancellor. 
  All I am concerned about is whether they are a success in terms of are they
  doing the job that they are set up to do, on which I am not entirely clear. 
  Do they have sufficient teeth to achieve the targets set by the Government? 
  How much more resources do they need to achieve that?  For example, what
  assurances are there that these Urban Regeneration Companies, be it three
  pilots or one fledgling company in Corby, will have environmental protection
  and sustainable development ideals and targets built into their remit?
        (Mr Timms)  Let me just return to the Corporation Tax point because we
  have said that we will consider providing Corporation Tax relief for company
  donations to those companies and other similar bodies across the UK.  That was
  the announcement that we made.
        79.      That is a side issue, it is not Corporation Tax of the companies
  themselves.
        (Mr Timms)  No, indeed, it is the Corporation Tax relief point.  The aims
  of the companies and the detailed briefs they are being given others are in
  a better position than I am no doubt to comment on, but I certainly would
  expect to see - I think one can be absolutely certain - that a commitment to
  sustainable development will be built into companies and other institutions
  having an urban regeneration brief, as these will.
        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 œ100 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: 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
        93.      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.
        100.     It would be very useful if we could have a copy of that.
        (Mr Timms)  I will certainly do that.
        101.     Could I just touch on an issue which I think was a point we
  raised at your previous visit to the Committee, the question of the Office for
  National Statistics and their indicators for green taxation.  We had this
  debate before and I would like to push this again.  Given what you have said
  about the Treasury's commitment as an institution, would it not be very useful
  if we could get the ONS to develop a more useful indicator of green taxes? 
  This does seem to us to be a hole in the overall policy. There seems to be a
  mysterious reluctance on the part of the Treasury to push the ONS in that
  direction.
        (Mr Timms)  We had an exchange about this earlier on this afternoon as
  well.  I made the point then that I do not think the percentage of total taxes
  which are environmental is a good indicator because it is not clear whether
  that going up is a good thing or a bad thing, so while actually it has gone
  up I am not sure how much one can read into that.  Increasingly we are going
  to need to carry out very careful evaluation of measures that we have
  introduced and to see whether the environmental benefits that we expected from
  those measures have actually been achieved. With such a lot of environmental
  tax measures taking effect recently and in the near future there is quite a
  lot of work that we will need to do and we are committed to doing that.  I
  think that is the answer, to monitor effectively how successful we have been.
        102.     Has that process stopped yet or are you flagging up the fact
  that this will start to take place in the next few months?
        (Mr Timms)  We have done a good deal of planning for this.  I made the
  point earlier on that on the company car tax changes that are coming in the
  Revenue has put in a good deal of work to plan how we can see whether the
  million tonnes of COý emissions reduction that we expect from that is
  achieved.  I think we are going to need to do similar pieces of work with
  other measures too.
        103.     On a similar point, in terms of the advice you gave to
  departments following last year's Spending Review in respect of sustainable
  development policies, has there been any follow-up to that?  Has there been
  any monitoring of what individual departments are doing and how they are
  implementing their responsibilities in this respect?
        (Mr Timms)  I think the monitoring, certainly in the first instance, will
  need to be carried out by the departments.  Having signed up to the PSAs it
  is for them to monitor how they progress.  Of course there will be a process
  centrally reviewing progress as well but the primary responsibility rests with
  the departments.
        104.     Has the second instance process started then in terms of you
  exercising your supervisory role over departments' work?  Is that in place? 
  Will that happen?
        (Mr Timms)  We have not yet started the three year period, that begins at
  the beginning of the new financial year.  We have not quite got there.
        105.     But there will be mechanisms in place by which departments
  will be monitored in this area?
        (Mr Timms)  Yes.
  
                               Chairman
        106.     Just to come back to this point about shifting the tax burden
  in Public Service Agreements.  In your previous PSA for the Treasury you did
  have a target for shifting the tax burden and also Customs and Excise and the
  Inland Revenue had such a target but this is not in your new PSA, there is no
  target at all mentioned.  Is that because you have intellectual doubts about
  the sense of this, as you have just indicated, or is it some other omission?
        (Mr Timms)  There certainly has been no stepping back at all from the
  sustainable development commitments that we have entered into which are very
  firmly built into our work.
        107.     I appreciate that, but shifting the tax burden, which we were
  concerned about, that was a target in your previous PSA but not in your new
  PSA and I wonder why that is?
        (Mr Timms)  What I would say is that I do very much see that as part of
  the sustainable growth commitment that we have been talking about and is in
  our objectives.  It does very much imply that process we have put a huge
  amount of effort into and are continuing to put a huge amount of effort into
  to deliver.
        108.     I am wondering why it has been dropped?  The specific target
  that was there is no longer there.  Why has it been dropped and can it be
  replaced?
        (Mr Timms)  There was a process and a conscious aim in the PSA round this
  time to reduce the number of targets and to shorten the ----
        109.     So it is a victimisation of simplification.
        (Mr Timms)  I hope nothing has been lost by the process.
        110.     It clearly has.
        (Mr Timms)  Certainly there are not as many words as there were first
  time around and I think that is an improvement rather than a loss.
  
                              Joan Walley
        111.     I would like to endorse what Mr Chaytor was saying about the
  importance of clarifying the difference between "sustainable growth" and
  "sustainable development".  I do feel that maybe that is a job for the Green
  Ministers, to make sure that the language in which the Treasury expresses
  itself is not committed to growth per se but takes account of the sustainable
  development argument that we want to see at the heart of policy.  Can I just
  ask you about your role as the Green Minister for the Chancellor's Department,
  which I understand includes the Inland Revenue and Customs and Excise.  How 
  many meetings have been you been to this year?
        (Mr Timms)  I have been to two of the meetings.
        112.     Out of how many?
        (Mr Timms)  Out of four.
        113.     Did you send a substitute?
        (Mr Timms)  An official was present when I was not.  I should say in
  self-defence that one of the meetings was on the morning of the Pre-Budget
  Report, so that was obviously a difficult one for me to attend.
        114.     I think you could be forgiven for that.
        (Mr Timms)  Thank you very much.
        115.     We do not know how they work from outside and we want to get
  a flavour of how the Green Ministers Committee is actually changing things. 
  Have you brought any best practice away from what you have seen in other
  departments back to the Treasury?
        (Mr Timms)  Yes.  What tends to happen is that there is a presentation
  from one of the departments that are present.  I think I am right in saying
  that at the two meetings I have attended, both of which I found very valuable,
  at one there was a presentation on the part of the Home Office and at the
  other there was a presentation on the part of MAFF.  For example, the sort of
  thing that happens, I guess, is part of the MAFF presentation dealt with work
  on energy crops which tied in very closely with the work that we were doing
  on the Green Fuel Challenge.  That was very useful, to make that connection,
  and I subsequently had a discussion with the Minister involved. I see it as
  a very useful way for joining up efforts across Government to tackle all these
  issues.  I certainly had not appreciated before that presentation the scale
  of the work that the Ministry of Agriculture, Fisheries and Food was doing on
  that and it was a valuable thing to know for my work as well.
        116.     Can I just follow on from that.  Arising out of that, what
  consideration did you give to agriculturally supplied fuels?  Do you feel that
  they should be given parity with fossil gas fuels in the Budget?  Do you feel
  that the Green Ministers Committee can be a forum whereby, if you like, you
  can get parity, you can deliver on whatever issues are raised during the
  course of the Green Ministers meetings?
        (Mr Timms)  Do you mean duty parity?
        117.     Yes, in terms of tax.  It is interesting that you happened to
  give the MAFF presentation as an example of good practice.  It seems that
  there are still so many things whereby we need to be much more joined up so
  we are not discriminating against some fuels that could be environmentally
  produced by MAFF to move towards a more sustainable route.
        (Mr Timms)  Certainly MAFF, as I learned on that occasion, has an
  interesting, quite an ambitious programme on energy crops.  In terms of
  decisions about levels of duty, of course they are a matter for the
  Chancellor.
        118.     You are the Chancellor's Green Minister, are you not?
        (Mr Timms)  I am, yes, indeed.  It is for the Chancellor to decide on the
  basis of a recommendation from me because I am the Minister who deals with
  these matters directly at the Treasury.  We did announce a significant duty
  incentive for bio-diesel in the Budget, 20 pence a litre.  I know from what
  people have said to me since the Budget, and indeed before the Budget as well,
  that that will be a significant incentive for the take-up of bio-diesel as an
  alternative fuel.
        119.     I think it is unfortunate that you mentioned the MAFF meeting
  because we have had a letter from the British Association for Bio-fuels and
  Oils and they are tearing their hair out because they feel that MAFF has not
  actually recognised the environmental issues on a level that they would have
  liked them to have done.
        (Mr Timms)  Let me come on to that.  I also receive a large number of
  letters from the British Association for Bio-fuels and Oils and I met Mr
  Clary, who I imagine would be the signatory of that letter, as part of the
  process of the Green Fuels Challenge.  I have not spoken to him since the
  Budget but I think he will have been pleased by the announcement we made in
  the Budget on bio-diesel.  I discussed with MAFF Ministers the right approach
  to this as part of that decision and I want to defend them.  I think this was
  a good piece of joined up work that we put in together with a good outcome
  from everybody's point of view.
        120.     I just raise the Green Ministers Committee because I think it
  is so important that that forum starts to work effectively across Government. 
  There is one issue that is concerning me as well which is following on from
  the commitment that the Government gave at Okinawa about the purchase of
  sustainable produced timber.  It is clear to me, for example, that there are
  a whole load of issues which could be taken up whereby there is not a clear
  reporting system as yet despite one that was promised some nine months or so
  ago.  It is really how the process of the Green Ministers Committee is
  enabling the Treasury to take on board these issues which comes back to the
  whole issue of parity and transparency that we have been raising throughout
  the course of this session.  I would like to think that the Treasury has a
  system of reporting in respect of sustainable produced timber.  Perhaps you
  could let us know about that.
        (Mr Timms)  On that point, I would make the point that the Prime
  Minister, of course, did make a number of references to this point
  specifically in his speech last week.  I think there will need to be
  mechanisms put in place across Government to deliver what is the Government
  policy.
        121.     It is the delivery mechanisms that I am concerned about which
  is why I think the Green Ministers Committee is so important.  Just finally,
  and briefly, the Green Technology Challenge, you mentioned this in your
  introductory comments to the Committee, could you just very quickly tell us
  how much money you are going to commit to this initiative and how long the
  competition and consultation is aimed to be?  Is it going to be in 2002 that
  people will be starting to have the effect of that?  Are you going to be
  making it part of the long-term initiatives so that, for example, just looking
  at the long-term it is linked to other cleaner technologies innovation and
  design?  How and when do you see it actually operating?
        (Mr Timms)  To pick up your last point first, yes, I do see this as a
  long-term exercise.  I am sure you will have noticed in the announcement about
  the Green Fuel Challenge the comment about hydrogen.  It is clearly going to
  be some years before we see commercially available hydrogen fuelled vehicles
  but I think there is a widespread view that is the direction we are going to
  be going in and what we said in the Green Fuel Challenge about duty incentives
  or duty exemptions for pilots in that area I see as the first step, a fairly
  modest first step but a very significant first step, in a much longer term
  process of change in moving us towards a hydrogen economy, which I think is
  the direction we need to move in.  Equally, the Green Technology Challenge I
  see as being a long-term exercise as well.  We have not, as yet, put a
  timetable on how we see that challenge being developed.  I would certainly
  hope we would have something significant to say by the time of the next
  Budget, but quite what the steps are going to be between now and then I am not
  certain at this stage, there is still some further work to be done.
  
                              Mr Gerrard
        122.     Can I just come back briefly to this question of the
  evaluation of performance and reporting which we touched on earlier which Mr
  Chaytor asked about.  There is nothing in the Treasury's Annual Report at the
  moment about environmental performance.  There may be a table in the Budget
  but there does not seem to be anything in the Annual Report.  When can we
  expect to see that information in the Annual Report, or might you even think
  of a separate environmental report or something?
        (Mr Timms)  I think we have talked this afternoon about a good deal of
  work that we have carried out in the Treasury on sustainable development,
  sustainable growth.  There is a lot in Treasury publications more generally
  on these areas.  I hope the Committee will accept that these are matters we
  are taking extremely seriously.  I must admit I cannot recall precisely what
  was in the Annual Report.  I certainly regard what appears in a document like
  this one as much more significant and a much more important document setting
  out the policy objectives that we are pursuing.  I would not want to read too
  much into what did or did not appear in the Annual Report.
        123.     I take the point that the Budget book is about policy
  objectives but we did agree earlier that a very important part of what needs
  to be done is looking at what has happened, evaluating performance, and that
  is something which maybe one would not find so easily in the Budget book.  Can
  I ask a question on a connected issue, or I think it is connected anyway.  You
  said to us in 1999 in your Greening Government memorandum that a specific
  environmental audit was a topic in the assessment of audit need to be put to
  the Treasury's Audit Committee in 2000.  I am not necessarily sure I know
  exactly what that meant but if it meant that the Treasury was looking, for
  instance, at what internal audit capacity it needed to be able to do an
  environmental audit then that is obviously something I think we would want to
  see happening.  Can you tell us what the outcome was?  Did anything come out
  from the Treasury's Audit Committee specifically in relation to environmental
  audit or is that something that you may need to come back to?
        (Mr Timms)  I think I need to check back on that reference.
        124.     It was in the 1999 memorandum from the Treasury on Greening
  Government, there was specific mention of that.
        (Mr Timms)  I will check back on that.  Can I just make the point that
  there is a section, I have been reminded, in the Treasury Annual Report on
  environmental performance.  The Annual Report is very much an internally
  focused document.  In external policy terms it is documents like this one that
  are more important.
        125.     The final point I want to ask is about associate bodies.  The
  Treasury has not got a huge range of non-departmental public bodies that some
  Government departments have but each department was supposed to be producing
  an action plan by March 2001.  It was the Green Ministers' deadline for an
  action plan for integrating sustainable development into the work of associate
  bodies.  Has the Treasury actually done that?
        (Mr Timms)  There has been a good deal of work to achieve that.  We do
  have a number of bodies such as Customs and Excise, Inland Revenue, the
  Central Computer and Telecommunications Agency, the Buying Agency, ONS.
        126.     I was thinking more of, say, the Bank of England rather than
  people like the Inland Revenue who are to some extent within the Government
  departmental structure.
        (Mr Timms)  The Royal Mint I can comment on, which has had a good record
  in this area.  I think they hope to be accredited to the ISO 14001 standard
  by the end of 2001.
        127.     Has the Treasury actually done the action plan it was
  supposed to be doing that the Green Ministers said every department was
  supposed to do?
        (Mr Timms)  Let me ask Mr Hall to comment on that.
        (Mr Hall)   The Minister has asked to see the action plan within a month.
        128.     Within a month?
        (Mr Hall)   Yes.
        129.     The deadline was March 2001, so we are slipping a bit.
        (Mr Timms)  We might be a few days behind.
  
                               Chairman
        130.     Minister, I think we are all very grateful to you for your
  patience this afternoon.  We have covered a great deal of ground.  Thank you
  very much again.
        (Mr Timms)  Thank you for giving me the opportunity.