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4.29 pm

Sue Doughty (Guildford): I will be brief as I know that time is running short. As a member of the Environmental Audit Committee, I pay tribute to our Chairman, who drove us hard but with a lot of kindness to get us where we are today, and to the people who support the Committee, who did a tremendous amount of work.

I was surprised by some of the comments about changing policies on tax because the Select Committee report says that we need to keep reviewing what works and what does not. That is a strong theme throughout the report. The Government started very well in 1997, and we were all pleased to see the work to set up an environmental taxation regime. We look forward to further developments. It would be easy to be rude about the Government, but their heart is in the right place; they have simply slowed down a little too much for comfort.

We need to use the opportunities presented to us in the Treasury approach to see what changes can be made. As other hon. Members have said, the Treasury needs an internal unit for sustainable development to look at not only fiscal development but the outcomes and effects of fiscal work. We need research and promotion of environmental tax policies. We need resource productivity indicators. I saw examples of those in Germany last week; we need them here so that we can find out whether we are on the right track.

We need to monitor the adequacy of environmental appraisal in new policy proposals and the impact of existing environmental tax policies. It is important that we co-ordinate the work of other Departments in which the Treasury is taking a lead, and we must ensure that Departments submit their sustainable development reports. We need to consider exciting changes. We have been talking about biofuels, which are wonderful. Our rural industries are ailing, and biofuels provide opportunities for rural regeneration.

We are concerned about home energy conservation. We do not seem to be doing enough for the fuel-poor, and we should do more to encourage the fuel-rich to use devices such as energy-saving light bulbs. Could we not give tax breaks on such items to encourage people who leave their lights on all day to do so much more cheaply? It is not the fuel-poor but the fuel-rich who burn excess fuel, and we are doing nothing to encourage them to use energy much more efficiently. Home energy conservation measures target the fuel-poor, but the fuel-rich are important if we are to achieve sustainability.

There is much more to be done, and I hope that the Budget includes major increases in landfill and incineration taxes. Many Members on both sides of the House, including the Deputy Prime Minister, who is not present, and me, have deep concerns about sustainable

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waste management. We look to the Treasury to support us in encouraging councils to take a new approach to achieving sustainable development.

Mr. Bruce George (Walsall, South): On a point of order, Madam Deputy Speaker. I have been sitting here for 20 minutes enthralled by this truly important subject. As Chairman of the Defence Committee, I point out that we have an equally important subject, terrorism, to discuss. I know that this is not strictly within your terms of reference, but may I, through you, implore my colleagues to take note that, if equity is to be taken into account, this debate should terminate at 4.40 pm, after which my colleagues and I will become a little irritated. I plead with you to invite our colleagues to finish the debate no later than that.

Madam Deputy Speaker: I am afraid that the right hon. Gentleman is correct: that is not a point for the Chair.

4.34 pm

Ms Joan Walley (Stoke-on-Trent, North): I am sure that everyone will be relieved to hear that I will be as brief as possible.

Whatever has been said about the urgency with which we need to proceed to the next debate, the whole point of the Environmental Audit Committee is to talk about putting environmental issues at the heart of Government. We want not only annual reports to Parliament but Ministers in all Departments considering the detail of the Committee's work. Those proposals have been on our agenda for a long time. We want to make sure that Ministers leave Parliament today ready to implement our recommendations.

We have had a thorough debate, and it falls to me, as vice-Chairman of the Committee, to impress on the Minister the urgency with which he should address the points that have been made. Our Committee is cross-cutting, and in many areas of policy the Government have, thankfully, recognised the importance of cross-cutting reviews and working parties. It is essential that environmental issues are at the heart of what the Treasury does. That means that we will get the right forms of environmental taxation. It falls to the Minister to tell us how the Treasury will implement our recommendations.

Many points have been made. My hon. Friend the Member for Bury, North (Mr. Chaytor) has introduced a private Member's Bill that, if successful, would mean that the Committee had resources on the scale that is available to the Public Accounts Committee. The proposals of my hon. Friend the Member for Nottingham, South (Mr. Simpson) are even ahead of those of the Environmental Audit Committee. The hon. Member for Rayleigh (Mr. Francois) said that the sustainable development reports that are available to the Treasury need to be made fully transparent and they must be available to Parliament through the Select Committee. Will the Minister tell us what he is going to do about that?

We are still mystified about what happened to the pesticides tax. If ever there was a case of wanting to put the polluter pays principle at the heart of policy, the pesticides tax is it. I urge the Minister to look at that again. We have not had a satisfactory response, and we need to keep a close watch on the arrangements whereby the water companies have to pay for the clean-up mechanism.

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These issues are at the same time both local and global. I urge the Minister to consider urban development and the nonsensical situation of having zero-rated VAT on greenfield site development. We have heard about the recycling of brownfield sites—what happened to that proposal? [Interruption.] Whatever conversation he may be having at the moment, will the Minister, when he winds up the debate, tell the House why the Government have not even carried out the research that would enable us to make proposals to encourage investment in the recycled brownfield sites that are so badly needed? I want to congratulate the Government on what they have done, but will the Minister tell us, even if he cannot provide the information to Parliament this afternoon, how we can deal with state aid rules and how we can find money to match the concessions that have been made on environmental issues?

We heard much about the climate change levy. I say to the right hon. Member for Suffolk, Coastal (Mr. Gummer) that the ceramics industry has shown that the levy can work and make a real difference. Today the Government have ratified the Kyoto protocol, and we can now proceed with emissions trading.

Many issues have been raised, and there is no time to deal with them now. The recommendation for a green tax commission has been before the Government for five years. Does the Minister understand that if we are to avoid another conflict over fuel, we need a green tax commission to raise public awareness and to encourage as many people to engage in the environmental debate as took part in the "Pop Idol" debate on television a short time ago?

I hope that we can have more debates on environmental issues because many hon. Members, including those who are not on the Select Committee, have a great interest in the subject. It is now incumbent on Parliament to see how more time can be made available, so that the Government can respond without undue haste and the threat of the clock ticking away, as it is this afternoon.

4.39 pm

Mr. David Lidington (Aylesbury): I congratulate all members of the Environmental Audit Select Committee and, in particular, my hon. Friend the Member for Orpington (Mr. Horam) on their report, which is an important and wide-ranging piece of work. I note that today my hon. Friend is celebrating his birthday. He will regard the opportunity of this debate as the icing on his cake.

The hon. Member for Stoke-on-Trent, North (Ms Walley) and other hon. Members from all sides pointed out that the debate and the report cut across Whitehall departmental boundaries. My right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) in particular noted that it brings us into debate about European and international policy, not just policy that is the sole responsibility of those of us who legislate at Westminster. Emissions trading, for example, is covered by a British scheme, a European scheme and, at some stage in the not too distant future, a global scheme. We shall have to make all three work and mutually compatible.

I am aware of the point made by the right hon. Member for Walsall, South (Mr. George), so I will concentrate on a few key aspects of the report rather than do justice to

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its entire contents. It is a trenchant report and I hope that the Minister will take seriously the criticisms made by a Committee that spans the party membership of the House. The Committee talks of a desperate need for greater clarity in the presentation of figures to do with environmental measures; and of the Treasury

The report calls for much greater use of specialist expertise, both within the Treasury and Whitehall more generally to track the practical effectiveness of environmental measures, including environmental taxes once they have been legislated for.

I want to focus in particular on the aggregates levy and the climate change levy. As the hon. Member for Truro and St. Austell (Matthew Taylor) pointed out, the aggregates levy already appears to be having a beneficial effect on the prospects for the use of china clay waste in Cornwall. I have read that the same is true of slate quarry waste from parts of Wales. But it is undoubtedly true also that there are serious worries in other parts of the quarrying and aggregates industry about the impact of the levy on its ability to compete, particularly with overseas rivals. The point was made strongly by the hon. Member for East Antrim (Mr. Beggs) when he drew our attention to the particular difficulties of the Province. I read, for example, that in Scotland a £20 million project to increase trade at Peterhead bay harbour is under threat because the impact of the aggregates levy will be to impose an additional £1.5 million on the cost of that project, putting 500 actual or prospective jobs in that hard-pressed area at risk.

Whatever the arguments about the principle of having an aggregates levy or the shape which the Government have chosen for that tax, there can be no excuse for the botched way in which the Government are seeking to introduce it. As the hon. Member for North-West Leicestershire (David Taylor) pointed out in an intervention, we are now about three weeks away from the date when the levy comes into force and firms start having to pay it, yet businesses do not have available the detailed regulations which will govern the implementation of that new tax. Worse still, the Government announced on 28 November last year that they were going to amend the Finance Act 2001 on which the aggregates levy is based.

The Government are proposing no fewer than 10 changes, which presumably will have to be legislated for in this year's Finance Bill. We are unlikely to know its contents before May. I imagine that those changes will be imposed retrospectively. It is hugely unfair on businesses to leave them trying to cope in this state of limbo. The Government, as I hope the Financial Secretary will have the grace to concede, have breached seriously their guidelines for giving businesses a minimum of 12 weeks between the publication of new regulations with which they are expected to comply and the date at which those regulations come into force. I do not believe that there is an adequate excuse for treating businesses in that way.

As my right hon. Friend the Member for Suffolk, Coastal pointed out, when one looks at what the climate change levy is likely to deliver in terms of reduced carbon

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emissions, it is small beer in terms of what the country has signed up to under Kyoto and other international agreements. It will bear heavily on particular sectors of industry. In practice it will transfer money away from manufacturing at a time when manufacturing is in recession and away from small service businesses employing part-time or low-paid workers, to service businesses employing a lot of people. Banks, for example, will probably benefit from the way in which the Government have chosen to introduce the levy.

The Financial Secretary will be familiar with the criticisms made by the Engineering Employers Federation on behalf of its members over many months, but other industrial representatives are making similar criticisms. The British Rubber Manufacturers Association says that the levy will add 1 to 2 per cent. to its production costs. Representatives of firms making industrial gases through to the trade associations for convenience stores and for high street launderettes, each from their different perspective, are making comparable criticisms of the disproportionate impact that the levy is likely to have on them, with them paying far more out than they will receive in national insurance rebates, and of the complexity of the levy for small businesses in particular having to deal with the paperwork that it entails.

The National Farmers Union estimates that the agricultural sector will pay out some £25 million in climate change levy and receive only about £9 million back in national insurance rebates. It is a badly designed tax. As the Secretary General of the United Kingdom Aluminium Federation said last year:

Part of the problem arises from the fact that the Government have decided to link eligibility to enter a climate change agreement with the integrated pollution prevention and control regulations part A. The problem is that the IPPC is a system designed to capture the biggest polluters, not necessarily the biggest users of energy, so some big users of energy are excluded from the whole system of climate change agreements. The makers of industrial gases account for about 1 per cent. of the UK's entire consumption of electricity, yet they are ineligible to enter a climate change agreement. That sector faces an annual tax bill of perhaps £13 million in the first year and is likely to get rebates of perhaps £500,000 in national insurance contributions. The Cold Storage and Distribution Federation says that its members too are big energy users but are ineligible under the IPPC, yet for these companies up to 10 per cent. of total costs can be in electricity alone.

The climate change levy will distort markets and put some British industries at a competitive disadvantage with their rivals elsewhere. British glassmakers have a climate change agreement, but their German competitors—who account for a quarter of the entire EU glass output—are exempt from such a tax altogether.

The levy will even have some perverse environmental effects. In the steel industry, if a company uses acid to remove oxide scales—known as "pickling" in the industry—it can join a climate change agreement. However, if it uses a better, more environmentally friendly process—mechanical descaling—it falls outwith the IPPC regulations, and so is barred from entering the climate change agreement. Perversely, therefore, it will

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face a bigger bill from the levy as a result of having introduced a more environmentally friendly industrial practice.

As other hon. Members have said, a complex system of administration has presented small businesses in particular with difficulties. The British Printing Industries Federation pointed out that

It concludes that

There are many other subjects on which I would wish to press the Minister, such as the Curry report's reference to the need for more incentives for biofuels and the Government's timetable for consultation on the landfill tax credit scheme. Why have the Government chosen to reject, according to a written answer on 4 March, the idea of a tax on incinerators?

I want to conclude with another theme that has come through strongly from the Select Committee report: the need for much greater openness on the part of the Government in general and the Treasury in particular about how they research and track the effectiveness of their environmental policies. Paragraph 39 of the report states that

It quote Friends of the Earth as saying:

In paragraph 41, the Select Committee calls for a detailed environmental appraisal to be published as a supporting document for every future pre-Budget report. In paragraph 52, it again calls on the Government to make sustainable development reports from Departments subject to scrutiny and audit.

I understand the Government's argument that the sustainable development reports are part of the process in Government for considering plans for a Budget document or public spending decisions, and that they should be kept confidential until those decisions are made and announced. However, I cannot for the life of me understand the case for keeping those reports and analyses secret even after the decisions have been made and announced. It will make for better parliamentary scrutiny and, even more important, better policy-making in the interests of our country and its people if the Government are prepared to be more open about the criteria that they use to introduce and design environmental taxes than they have chosen to be hitherto.

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