Examination of Witnesses (Questions 50
WEDNESDAY 13 DECEMBER 2000
TIMMS MP AND
60. It is how government joins them up together,
is it not?
(Mr Timms) I defend the way we are joined up. We work
very closely indeed with DETR over things like the Climate Change
Strategy which does contain a lot of information about projections
for CO2 emissions. I think that has been a model of joint working.
61. I take that but I am just thinking that
if we were really being successful in this, then presumably we
would know exactly how much extra energy was being used, for example
to produce ultra low sulphur petrol. Did you take account of the
extra energy which would then be contributing to the extra global
warming which you would need to produce the ULSP? Did you take
that into account?
(Mr Timms) I did not receive a set of data weighing
up that compared with the CO2 benefits of the GDI technology.
62. If we had generally an environmental appraisal
would you not have received that? Or could we look for that the
next time round?
(Mr Timms) What is clear is that there will be significant
environmental benefits from the introduction of ULSP and that
is the justification for the incentive we have introduced. I am
not sure that it is necessary to do a point by point calculation
about every single measure if it is clear that the measure we
are talking about is a beneficial one.
63. How do you know if you have not actually
looked? If you have not actually taken account of the extra energy
used for manufacturing, how would you know that it was clear that
this was the most environmentally favoured option to take? It
is not a criticism, this is really to get at how much we do it.
(Mr Timms) Indeed. From my understanding the point
is that on balance in CO2 terms, as well as in sulphur terms,
we can expect the change to be beneficial. I take the point entirely.
There are some serious issues here. For example, with the next
generation of the low sulphur petrol there are real concerns about
whether the amount of energy that is required to produce it would
outweigh the benefits of introducing it and I know that research
is being done at the EU on that subject specifically. The point
I am making is that it is not for the Treasury necessarily to
be doing all this.
64. It is the Treasury which is actually making
(Mr Timms) Some of the work will be done in the EU,
some of it will be done elsewhere in government and we have access
to that in reaching our decisions.
65. We can look forward to the whole balance
sheet on environmental factors being included in a more sophisticated
version when we get the next document, can we?
(Mr Timms) What I should be interested to know is
how the Committee feels about this form of the table, which is
a considerable improvement as a result of what the Committee said
previously on what we had before and if there is specific further
information you would like to see then let us know about it and
we shall certainly have a look at that.
66. The Committee would like the full environmental
appraisal with the methodology and everything else so we can actually
make an informed decision. That is really what I think the Committee
would wish to see. The question is: to what extent has that already
been provided to us?
(Mr Timms) It depends what you mean by "full
environmental appraisal". I am not quite clear.
67. The Government has set out a model way of
doing environmental appraisals with which we are all familiar.
We have discussed at endless length with endless Green Ministers
a model way of doing it. You have not done it on this occasion,
(Mr Timms) What I would say is that we have supplied
the information to the Committee and to members of the public.
Joan Walley: Environmental appraisal
68. You have supplied conclusions. You have
not supplied the reasoning.
(Mr Timms) It is the caseand I am being prompted
to remind methat we do assess all budget measures for their
environmental impacts using the guidance which has been set out
69. Can we see that? Can we see the papers on
the environmental appraisal which was done which you are now mentioning?
(Mr Maxwell) I know that the Government has made available
the documentation about environmental appraisal of measures it
70. Not to this Committee. We have seen nothing
in the nature of an environmental appraisal of the changes in
fuel duty which have taken place. Remember you did this back in
1999. You stopped the fuel duty escalator in 1999 so there has
been plenty of time for you to do a thorough analysis exposed
to the public on exactly why you are dropping the fuel duty escalator.
(Mr Timms) What I would suggest is that not increasing
fuel duty is not changing things. I know you have some difficult
things and you carry out an environmental impact assessment of
71. I would say it is changing things dramatically.
(Mr Timms) No, not changing duty is not something
72. Come on. You are playing semantics here.
The Government has altered its view about the role of the fuel
duty escalator. There is no doubt about that. That is a very significant
change in a very sensitive area. Why have you not done a proper
full environmental appraisal and published it?
(Mr Timms) I do not think I am just playing semantics.
An automatic annual increase in fuel duty clearly has a significant
environmental effect which one could discuss but that is the change
which needs to be assessed. Leaving duty unchanged in real terms,
which is what we did in the budget this year, is not something
we are going to talk about as having a significant environmental
73. I think most people would disagree with
you. Clearly if you are changing policy, that is a major event.
We will want to know the reasons for it.
(Mr Timms) We have set out the reasons for it.
74. That is a proper environmental appraisal.
How can you quantify it? What is the effect? What other policies
are affected by it and so on? Surely you want to do this thoroughly.
This is the whole point about an environmental appraisal. It is
not just presenting conclusions in half a page of the Pre-Budget
Report, it is exposing the logic behind it, the reasoning behind
it. You have had plenty of time to do it since you changed the
policy in 1999.
(Mr Timms) I simply say that we have amply set out
the thinking that we have been through which has led us to the
conclusions that we have announced and published. The difference
between us is about our understanding of what the nature of the
decision about the fuel duty escalator was. We are not any longer
going to have automatic annual increases.
75. Surely we agree that there has been a change
(Mr Timms) There has indeed.
76. That is right. What we are saying is that
every policy of this kind which has major environmental effects
must have an environmental appraisal underneath it, sustaining
it, discussing it and justifying it. That is Government policy.
(Mr Timms) I am being reminded that we have sent a
memorandum to the Committee on this topic specifically, presumably
after I appeared here a year ago. Maybe we should have a further
look at that and if there is further information you would like
us to provide
Chairman: You have changed the policy
again. You have now brought in other things like low sulphur content
fuel and so forth. The policy is developing but we have seen nothing
to justify that other than a very small statement of your conclusions
in the Pre-Budget Report. That is not consistent with a proper
environmental appraisal as anybody understands it.
77. If you were doing a true environmental appraisal
we should be able to take into account the recommendations, for
example, that organisations such as Greenpeace would want to look
at in terms of how you perhaps move away from dependence on oil
to other options instead, so you could look at the whole picture.
It is how you take that environmental process so we can measure,
so we can audit and measure what effects policy options and subsequently
the choice of policy which is adopted, what effect that has overall
on the environment. That is the situation we want to move towards.
(Mr Timms) I simply reiterate that I think we are
providing the information which is needed to make those assessments.
If there are specific things that the Committee feels are missing,
by all means draw our attention to them as you have done in the
past and we shall certainly have a look at them.
78. Let us change the subject. Let us go onto
technology and where we are going to be in five or ten years'
time. Some people would say that our discussions so far, interesting
though they be, particularly in the last five minutes, are tinkering
because in five or ten years' time we shall have hydrogen fuelled
cars and other forms of technology which will make discussions
about different types of fossil fuel taxation rather redundant.
What is the Government actually doing about looking to the longer
term to encourage these far more environmentally friendly forms
of fuelling car transport?
(Mr Timms) That is the background to the alternative
fuel challenge which the Chancellor announced in the Pre-Budget
Report. I agree with you that I think we can look to very substantial
improvements in fuel efficiency as a result of technological change,
some of which, as in the case of hydrogen fuelled cars, may well
be very radical indeed. We are also taking a number of smaller
steps. For example, in the new company car tax arrangements we
have discounts on the tax payments for electric cars for hybrid
petrol/electric cars as well, which are a couple of models we
have now seen on the market. We are taking steps within the company
car tax system as well and that is potentially very significant
because in company car fleets you are getting relatively small
numbers of organisations making very significant decisions about
purchasing large numbers of vehicles. If we can set the incentives
right to encourage people to choose the most beneficial technology
in company car fleets, there is the potential for us to have a
very substantial and wider beneficial impact as well.
79. What specific tax incentives has the Chancellor
given to the development of hydrogen fuelled cars?
(Mr Timms) I guess that could be one of the candidates
for the alternative fuel challenge, if people want to propose
that in response to the challenge the Chancellor has given. What
we have said is that once we have received all the responses to
the challenge and made an assessment of them, we would hope to
be in a position to introduce significant duty incentives for
the most promising one or ones at the time of the next Budget.