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Mr. Gareth R. Thomas: I am surprised by that part of the Select Committee's report. Rather than agreeing that the Treasury has withdrawn from a commitment to environmental taxation, I think that it is merely pausing for breath, having been very radical. Does the hon. Gentleman agree that a green tax commission, which was supported by the Environmental Audit Committee when I was lucky enough to serve on it, might be the way to provide additional support to the Treasury while it considers what further green tax initiatives are needed?

Mr. Francois: I hear what the hon. Gentleman says. As I understand it, the Committee is continuing to push the concept of a green tax commission, and it is for the Treasury to decide whether it wishes to take up the suggestion. The hon. Gentleman suggested that there had been a pause; I would say that it has actually been quite a long pause, and leave it at that.

Another theme that emerged from our inquiry was that if the Government are serious about seeking to derive environmental, as well as purely financial, benefits from so-called environmental taxation, they need to organise themselves accordingly. Specifically, the Treasury needs properly to resource a specialist unit within its ranks to deal with environmental taxation and related sustainable development issues. The Committee made the point that such a unit could also specialise in examining individual departmental sustainable development reports. That subject was touched on earlier and I would like to return to it.

There is also an important issue relating to access to these reports. Departments were expected to produce reports on their sustainable development strategies as part

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of their submissions for the Treasury's spending review 2002. Our Committee was particularly vexed by the refusal of the Treasury to make available copies of those departmental reports for subsequent examination by the EAC. We argued in paragraph 20 of our conclusions and recommendations:

From a sustainable development viewpoint, the reports are obviously of considerable importance, as they lay out the commitment to sustainable development of each individual Department. Taken as a whole, they provide an important illustration of the commitment to sustainable development across government, and are thus key source documents.

As a compromise, the Committee has suggested that the Treasury could make these reports available at least to the National Audit Office, and allow it to audit those documents and report its results to the Committee, which could take a view on its analysis.

Access to these reports is an issue not just for us. Yesterday morning, as part of the Committee's inquiry into the forthcoming world summit on sustainable development in Johannesburg, it took evidence from Sir Jonathon Porritt, who is chairman of the Sustainable Development Commission. The SDC was appointed to advise the Prime Minister and the Government on sustainable development issues, including environmental taxation. In his evidence to the Committee yesterday, Sir Jonathon also raised the matter of access to these departmental reports, and he supported the Committee's desire to be allowed to examine them. As he has the Prime Minister's ear, Treasury Ministers may like to pay some heed to his opinion.

I confess that it was principally the Labour party that argued for the establishment of the Environmental Audit Committee, but that gives it an added responsibility to allow the Committee to do its job. I remind the Minister of the Committee's remit:

To perform that role effectively, it should have access to departmental plans for sustainable development so that it can examine them. I urge the Treasury to drop its opposition to making that information available to the Committee and to allow us to perform the task for which we were originally constituted by the House.

I shall conclude my remarks in the hope that other hon. Members on the Committee will be able to speak. I ask the Minister to give serious consideration to what I have said.

3.52 pm

Mr. Gareth R. Thomas (Harrow, West): I have long thought that our party's future lay partly in strengthening our environmental credo. We should aspire to be a modern, left-of-centre party delivering year-on-year improvements in public services, and if we are to stay committed to the interests of the many and not the few we need to embrace the environmental agenda more

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rigorously than we have so far. I believe that new, bold steps in environmental taxation would be a positive move in that process.

I was lucky enough to serve on the Select Committee on Environmental Audit in the last Parliament, and I congratulate its Chair and members on their continued detailed scrutiny of environmental taxation. I apologise to the House, but I have to chair a meeting with the Minister for Industry and Energy to consider how to implement the recommendations of the energy review, so I shall not be able to hear the Financial Secretary's summing up.

By contrast with the mealy-mouthed attitude of some Opposition Members, the Treasury has been responsible for some significantly radical steps on environmental taxation, either through the climate change levy or the incentives to encourage alternative, cleaner fuels. Those steps are making a significant difference to market expectations and to the interest of business in developing environmentally friendly technologies.

However, we need to go much further on energy, transport and waste policy. We should be bolder in our use of environmental taxes and the revenues that they generate, and in our advocacy of taxation across national boundaries to help to solve some of our environmental problems. The point that my hon. Friend the Member for Nottingham, South (Mr. Simpson) made about the urgency of the challenge to deal with pollution, particularly carbon emissions from aviation, is an important example.

There is also an urgency about the need for new consideration of environmental taxes, partly because of the concern raised by the recent report of Cambridge Econometrics about the rise in carbon emissions last year and this year. It is concerned that, despite our ambition of a 20 per cent. reduction in carbon emissions by 2010 on 1990 levels, if its analysis is right, on current trends we will achieve only a 6.5 per cent. reduction. That is a reason to consider afresh the case for a green tax commission. Norway, Sweden, Denmark, Belgium, Canada and the Netherlands already have such a commission.

A green tax commission could consider carefully how we encourage and give incentives to households to reduce unnecessary energy usage. The Cambridge Econometrics report shows that, if no further action is taken, on current trends there will be a 19 per cent. increase in CO 2 from households by 2010 on 1990 levels. The cut in energy conservation materials that the Treasury initiated—down from 17.5 per cent. to 5 per cent.—is a useful step in the right direction. The suggestion of my hon. Friend the Member for Nottingham, South about stamp duty rebates for households with high levels of energy efficiency is an interesting suggestion that such a commission could explore. In the Netherlands, domestic energy is taxed, but there is a tax-free allowance of 800 kilowatt hours per month for all households, so as not to penalise essential energy use. Households in the Netherlands are also required to meet much higher insulation standards.

I hope that the Financial Secretary will tell the House what further tax incentives the Treasury is considering to encourage the development of renewable energy. There is a huge challenge for us to take forward the recommendations of the recent performance and

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innovation unit report on energy. It highlighted the fact that, if we are to achieve our 10 per cent. target and the equally realistic target of 20 per cent. energy from renewable sources by 2020, onshore and offshore windfarms will have to be installed and operate at the rate of 1 GW to 2 GW per year in the period 2010 to 2020. Given Britain's current record on renewable energy generation, that is a huge challenge, but it has already been achieved in Germany, Spain and Denmark. Perhaps there is a case for further tax breaks to help to generate new investment in onshore and offshore windfarms, and wave and solar power.

I want to flag up the specific recommendation of the PIU report, endorsed by the chief scientific adviser, that there is a huge need for further funding for low carbon and energy research. I hope that significant action will be taken in that respect under the comprehensive spending review. In the Netherlands, an interesting scheme, supported by tax breaks, has been established to generate private sector investment through green funds, which are regulated by the central bank. The projects that they fund must be approved by the Dutch Ministry of Environment. I encourage my right hon. Friend to explore those points and the possibility of a green tax commission.

There has been a huge rise in the level of litter in the past 10 years. Litter is not the sexiest subject that the House must consider, but there is huge potential for the taxation system to help to solve the litter problem. My hon. Friend the Member for Hayes and Harlington (John McDonnell) flagged up the plastic bags tax in Ireland, which shows the potential of the taxation system for exploring these issues. Another PIU report is being prepared in that area, and I hope that my right hon. Friend is closely engaged in the consideration of the taxation measures that could help to solve some of our litter problems.

I look forward to reading my right hon. Friend's comments in Hansard tomorrow.

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