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“in the broadest sense, was to move the burden of tax over time from good to bad.”
In practice, the opposite has happened. We have had an increasing share of taxation on good activities such as work and a declining share of taxation raised from environmental pollution. I thought it might be a bit imprudent for departmental Ministers to talk about Treasury language as simplistic and wrong, but no doubt the Minister has his reasons for doing so.
The Minister, however, was a model of constructive argument compared with the Conservative spokesman, who I calculated spoke for 25 minutes and did not tell us a word about the Conservatives’ rebalancing of the tax system, which they have been promising.
Mr. Ellwood: The hon. Gentleman complains that the Conservatives have not given information. I have requested on three occasions information on the Liberal Democrat position on green taxes. Will the hon. Gentleman put a note in the Library to say, were the Liberal Democrats to win the next election and were such taxes to have an impact and change lifestyles, by how much carbon emissions would change year by year and how much taxation would be raised in each year?
Dr. Cable: We have set out these figures in considerable detail in a report that is available on our website. I have a copy here. It is a question of basic economics.
Perhaps the hon. Member for Bexhill and Battle (Gregory Barker) should have shown a little more
humility in his speech. If the leader of the Democratic Unionist party were here, I am sure that he would furnish us with a biblical reference about the benefits of sinners who repenteth, but we did not get much repentance. I do not think that the hon. Member for Bexhill and Battle was in the House at the time, but I remember when the Conservatives supported civil disobedience against increased petrol duties. I have sat on the Committee that considers the Finance Bill for many years, ever since the climate change levy was introduced. Conservatives opposed the levy in principle, and not on the grounds of the current, rather subtle arguments about the balance of carbon taxation—that is, of course, a perfectly sensible comment, but it is not what they said for many years.
The hon. Gentleman endeavoured to rubbish our policies by referring to Friends of the Earth, which he now claims has endorsed Conservative environmental policy. A few weeks ago, Friends of the Earth said:
“The Liberal Democrats have thrown down a green gauntlet to Labour and the Conservatives with their new green taxation plans. They are very progressive measures to make doing the right thing for the environment also the right thing for your pocket...The Conservatives and Labour need to follow through with equally progressive tax plans”.
Perhaps he should check his support in Friends of the Earth.
Many of the things that we are advancing from these Benches are not specifically Liberal Democrat ideas. The Conservative spokesman, in particular, seemed to overlook the work of the Environmental Audit Committee, which has a Conservative Chair and a majority of Labour Members. What he called the obsession with gas guzzling Chelsea tractors is almost identical to the policy that that all-party group put forward. The numbers were checked out with the Department of Trade and Industry. We did not manufacture the calculations.
The same Committee described the current taxation policy in relation to aviation as “scandalous”, because of the Government’s failure to adopt higher aviation taxes. That did not come specifically from Members on the Liberal Democrat Benches; it was an all-party consensus. For a variety of reasons, it is right to say that the Government’s policy on aviation, in particular, is scandalous. Aviation is the sector in which the growth of emissions is most rapid and the damage is disproportionate. A typical flight from London to Glasgow or Edinburgh produces 10 times as much carbon dioxide per passenger as a rail journey or, for that matter, a coach journey—it is roughly equivalent. There have been repeated studies—some of them are very good—from the Department for Transport about the environmental externalities generated by the aviation sector that are not currently captured. For many years, the aviation sector has been grossly undertaxed. The landing charges are hopelessly below what would be a realistic economic rate. Landing rights are not auctioned. There is no taxation of fuel and the current system of taxing tickets is exceedingly inefficient.
One of the main significances of our policy is that it is designed to make taxation of the aviation sector much more environmentally friendly, encouraging airlines—particularly low-cost airlines—to use their capacity much more effectively. That is why we have
placed such emphasis on aviation taxation. I find the Conservatives’ comments on this matter incomprehensible because the approach has been endorsed by so many people on their side.
In conclusion—I want to give the Minister a chance to respond—it may be useful to go back to the basic areas of consensus and the 2002 paper that establishes the framework within which we should be debating the subject. The Green Alliance commented positively on that paper, describing it as a
“significant driver of policy over the years to come”.
It also restates the argument that environmental taxes can be offset against other taxes, as the Liberal Democrats are now demonstrating, in quantitative and specific ways. It describes the paper in positive terms as
“the way for significant steps forward in the use of economic instruments—if the Treasury is brave enough”.
The problem is that the Treasury has not been brave enough, which is why we are having this debate.
9.49 pm
The Chief Secretary to the Treasury (Mr. Stephen Timms): We have had a useful debate in which we have heard interesting ideas from hon. Members on both sides of the House. I applaud the Liberal Democrats’ commitment to tackling carbon emissions, but I warn them of the danger of becoming a one-club golfer. Over the past nine years, we have successfully tackled emissions in a range of ways: certainly through taxation, but also through emissions trading—I do not agree with my hon. Friend the Member for Nottingham, South (Alan Simpson) about its potential—obligation regimes and regulation.
It is certainly the case that tax measures can tackle environmental externalities. Taxes on broad aspects of economic activity, such as energy use, waste and transport, can deliver real behavioural change. My hon. Friend the Member for Scunthorpe (Mr. Morley) reminded us in his characteristically thoughtful speech of the huge savings delivered by the climate change levy. Like others, I pay tribute to his contribution to policy in this area over a long period.
The hon. Member for Twickenham (Dr. Cable) was right that the levy was introduced in the teeth of virulent opposition from the Tory party, which I recall vividly because I was the Minister with responsibility for the matter for two years from 1999. I welcome the Tories’ change of heart and tone, and it will be good to see exactly what they are proposing. The levy has saved more than 16 million tonnes of carbon so far and will save 4 million tonnes this year. However, it would be a mistake to focus only on tax.
Gregory Barker: I am glad that the Minister has noticed the change among Conservatives—there will be more to come. Does he agree with Tony Grayling, the special adviser of the Secretary of State for Environment, Food and Rural Affairs, that the climate change levy is a tax on energy that should be reformed?
Mr. Timms: It is a tax on the business use of energy, and it is entirely appropriate because it creates a big incentive for better energy efficiency in the business sector—that is why it has been so effective.
The Liberal Democrat motion is wrong to fasten on the take from environmental taxation as the measure of environmental commitment because, as others have pointed out, if revenues from environmental tax go down, it probably shows that the tax is working, which is a good thing, rather than a bad thing. Of course, the take from environmental tax could be increased if environmental pollution were increased, which would be a bad thing. No one should be surprised that the Liberal Democrat metric is measuring the wrong thing.
Chris Huhne: The yield from air passenger duty has certainly gone down. Does the Minister regard that as a sign of success?
Mr. Timms: I draw the hon. Gentleman’s attention to the climate change levy. It is a good example of switching the focus of taxation from goods to bads—from labour to pollution in this case. There are several examples of how we have done such a good thing successfully. However, we need a range of measures, so it is misleading and wrong to consider simply the take from environmental taxation.
The Liberal Democrat proposals have left a huge gap. I understand that the package of changes in income tax spelled out by the hon. Member for Eastleigh (Chris Huhne) will cost £20 billion—I think that the hon. Member for Twickenham is nodding in assent—but although £8 billion will come from the package that we are talking about, we do not know where the other £12 billion will come from. At this stage, I am afraid that the numbers simply do not add up. As we have heard about gaps in policy, it is right to draw attention to that gap.
We need the right mix of tax measures, trading, obligations and regulations, so that is what we have been developing. We especially need to deliver the promise of emissions trading. In June, we announced a national allocation plan that will reduce UK emissions by 8 million tonnes of carbon, over business as usual, between 2008 and 2012. That amount is far in excess of our Kyoto obligations and demonstrates our commitment to the scheme. The scheme will be a way of tackling carbon emissions Europe wide that will be much more effective than a UK-only tax. We will be working with the Commission and our European partners to ensure that we have an effective scheme in place. We want aircraft fuel to be included in the scheme as soon as possible so that we can have the pan-European solution on aircraft fuel that we need.
My hon. Friend the Member for Scunthorpe drew attention to the fact that my right hon. Friend the Prime Minister met the governor of California over the summer to discuss US interest in participating in emissions trading. Since that visit, and to some extent encouraged by that visit, California has legislated for state-wide carbon reductions, which the governor has said will require a carbon emissions trading scheme. At the governor’s request, UK Government officials are soon to advise the Californians on how to set that up. That is the right way to go, aiming for a worldwide approach that can deliver a change in worldwide behaviour. Such is the scale of ambition that we need, by contrast with the rather parochial tone of what we heard from the Liberal Democrats this evening.
The Government need to use the most effective range of instruments to achieve our environmental aims. We have introduced a series of good tax examples, such as the climate change levy. We have reformed vehicle excise duty, company car tax, introduced differentials in fuel duties, reduced VAT rates for professionally installed energy-saving materials and for microgeneration—another point that was raised in the debate—and have introduced the landlords energy saving allowance. We have introduced a host of effective non-tax measures too—emissions trading, climate change agreements, the renewables obligation, the forthcoming renewable fuel transport obligation, the energy efficiency commitment, new building regulations, and support for the work of the Carbon Trust and the Energy Saving Trust. That is the rich mix that the challenge of climate change demands.
Martin Horwood: The Minister mentioned the renewables obligation. Does he intend to carry out the threat contained in the energy review to remove onshore wind from the renewables obligation?
Mr. Timms: We are continually reviewing the renewables obligation to make sure that it continues to be effective. Opening the debate, my hon. Friend the Minister for Climate Change and the Environment spoke about one of the changes that we are making.
We need to maintain our ambition for environmental protection, alongside our aims for high and sustainable levels of growth and employment, macro-economic stability, business competitiveness and social inclusion. We reject the arguments of those who claim that we need to choose between them. We must achieve them all. The sustainable way to protect the environment is with a strong platform for long-term economic growth. We need to continue to deliver progress towards our environmental aims, alongside strong growth in the economy.
Since 1997 we have demonstrated in the UK, as my hon. Friend the Member for Scunthorpe said, consistent leadership in tackling climate change, starting with the Kyoto protocol in December 1997. We are on course to deliver nearly double our Kyoto target for greenhouse gas reductions. Last year, through our presidency of the G8 and the EU, we achieved the Gleneagles communiqué in which all the member countries of the G8 recognised that climate change is happening and that human activity is contributing to it, and the plan of action securing agreement on a range of key issues. We are working to extend that discussion—for example, through the G20. UK Ministers made further progress in the Gleneagles dialogue in Mexico a fortnight ago, and it will be on the agenda when I attend the meeting of G20 Finance Ministers next month.
With publication of the Stern review on the economics of climate change, we will provide significant new substance to the evidence base on the matter, helping to build the international consensus on how best to act. We are making good progress with our proposal for an energy investment framework led by the World Bank to promote energy efficiency and low carbon energy sources in developing and emerging economies. Today the Prime Minister met the Prime Minister of Norway to open the
new Langeled gas pipeline, whose construction I negotiated as Energy Minister in 2003, to bring gas to the UK from Norway. That has capacity for 20 per cent. of our gas needs and will ensure a more reliable gas supply and more predictable prices. That supports the aims of the energy review last July, setting out our intention to secure more reliable energy supplies while also protecting the environment.
Mr. Adrian Sanders (Torbay) (LD) rose in his place and claimed to move, That the Question be now put.
Question, That the Question be now put, put and agreed to.
Question put accordingly, That the original words stand part of the Question:—
The House divided: Ayes 66, Noes 296.
AYES
Alexander, Danny
Baker, Norman
Barrett, John
Beith, rh Mr. Alan
Brake, Tom
Breed, Mr. Colin
Brooke, Annette
Bruce, rh Malcolm
Burstow, Mr. Paul
Burt, Lorely
Cable, Dr. Vincent
Campbell, rh Sir Menzies
Clegg, Mr. Nick
Davey, Mr. Edward
Farron, Tim
Featherstone, Lynne
Foster, Mr. Don
George, Andrew
Gidley, Sandra
Goldsworthy, Julia
Hancock, Mr. Mike
Harris, Dr. Evan
Harvey, Nick
Heath, Mr. David
Hemming, John
Holmes, Paul
Horwood, Martin
Hosie, Stewart
Howarth, David
Hughes, Simon
Huhne, Chris
Hunter, Mark
Keetch, Mr. Paul
Kramer, Susan
Lamb, Norman
Laws, Mr. David
Leech, Mr. John
Llwyd, Mr. Elfyn
MacNeil, Mr. Angus
Mulholland, Greg
Oaten, Mr. Mark
Öpik, Lembit
Price, Adam
Pugh, Dr. John
Reid, Mr. Alan
Rennie, Willie
Rogerson, Mr. Dan
Russell, Bob
Sanders, Mr. Adrian
Smith, Sir Robert
Stunell, Andrew
Swinson, Jo
Taylor, Matthew
Taylor, Dr. Richard
Teather, Sarah
Thurso, John
Webb, Steve
Weir, Mr. Mike
Williams, Hywel
Williams, Mark
Williams, Mr. Roger
Williams, Stephen
Willis, Mr. Phil
Willott, Jenny
Wishart, Pete
Younger-Ross, Richard
Tellers for the Ayes:
Mr. Jeremy Browne and
Paul Rowen
NOES
Abbott, Ms Diane
Ainger, Nick
Ainsworth, rh Mr. Bob
Alexander, rh Mr. Douglas
Allen, Mr. Graham
Anderson, Janet
Armstrong, rh Hilary
Atkins, Charlotte
Austin, Mr. Ian
Bailey, Mr. Adrian
Baird, Vera
Balls, Ed
Banks, Gordon
Barlow, Ms Celia
Barron, rh Mr. Kevin
Battle, rh John
Bayley, Hugh
Begg, Miss Anne
Benton, Mr. Joe
Berry, Roger
Betts, Mr. Clive
Blackman-Woods, Dr. Roberta
Blears, rh Hazel
Blizzard, Mr. Bob
Borrow, Mr. David S.
Bradshaw, Mr. Ben
Brennan, Kevin
Brown, Lyn
Browne, rh Des
Bryant, Chris
Buck, Ms Karen
Burden, Richard
Burgon, Colin
Burnham, Andy
Butler, Ms Dawn
Byers, rh Mr. Stephen
Byrne, Mr. Liam
Caborn, rh Mr. Richard
Campbell, Mr. Alan
Campbell, Mr. Ronnie
Caton, Mr. Martin
Cawsey, Mr. Ian
Chapman, Ben
Chaytor, Mr. David
Clapham, Mr. Michael
Clark, Ms Katy
Clark, Paul
Clarke, rh Mr. Charles
Clarke, rh Mr. Tom
Clelland, Mr. David
Coaker, Mr. Vernon
Coffey, Ann
Cohen, Harry
Connarty, Michael
Cooper, Yvette
Cousins, Jim
Crausby, Mr. David
Creagh, Mary
Cruddas, Jon
Cryer, Mrs. Ann
Cummings, John
Cunningham, Mr. Jim
Cunningham, Tony
Curtis-Thomas, Mrs. Claire
David, Mr. Wayne
Davidson, Mr. Ian
Dean, Mrs. Janet
Devine, Mr. Jim
Dhanda, Mr. Parmjit
Dismore, Mr. Andrew
Dobbin, Jim
Donohoe, Mr. Brian H.
Doran, Mr. Frank
Dowd, Jim
Drew, Mr. David
Dunwoody, Mrs. Gwyneth
Durkan, Mark
Eagle, Angela
Efford, Clive
Ellman, Mrs. Louise
Engel, Natascha
Farrelly, Paul
Field, rh Mr. Frank
Fisher, Mark
Fitzpatrick, Jim
Flello, Mr. Robert
Flint, Caroline
Flynn, Paul
Follett, Barbara
Foster, Michael Jabez (Hastings and Rye)
Francis, Dr. Hywel
Gapes, Mike
Gardiner, Barry
George, rh Mr. Bruce
Gerrard, Mr. Neil
Gibson, Dr. Ian
Gilroy, Linda
Godsiff, Mr. Roger
Goodman, Helen
Griffith, Nia
Griffiths, Nigel
Grogan, Mr. John
Gwynne, Andrew
Hall, Mr. Mike
Hall, Patrick
Hamilton, Mr. David
Hamilton, Mr. Fabian
Harris, Mr. Tom
Healey, John
Henderson, Mr. Doug
Hendrick, Mr. Mark
Heppell, Mr. John
Hesford, Stephen
Hewitt, rh Ms Patricia
Heyes, David
Hill, rh Keith
Hillier, Meg
Hodge, rh Margaret
Hodgson, Mrs. Sharon
Hoey, Kate
Hood, Mr. Jimmy
Hoon, rh Mr. Geoffrey
Hope, Phil
Hopkins, Kelvin
Howarth, rh Mr. George
Hoyle, Mr. Lindsay
Hughes, rh Beverley
Humble, Mrs. Joan
Hutton, rh Mr. John
Iddon, Dr. Brian
Illsley, Mr. Eric
Ingram, rh Mr. Adam
Irranca-Davies, Huw
James, Mrs. Siân C.
Jenkins, Mr. Brian
Johnson, rh Alan
Johnson, Ms Diana R.
Jones, Helen
Jones, Mr. Kevan
Jones, Lynne
Jones, Mr. Martyn
Jowell, rh Tessa
Joyce, Mr. Eric
Kaufman, rh Sir Gerald
Keeble, Ms Sally
Keeley, Barbara
Keen, Alan
Keen, Ann
Kemp, Mr. Fraser
Khabra, Mr. Piara S.
Khan, Mr. Sadiq
Kidney, Mr. David
Knight, Jim
Ladyman, Dr. Stephen
Lammy, Mr. David
Laxton, Mr. Bob
Lazarowicz, Mark
Lepper, David
Levitt, Tom
Lewis, Mr. Ivan
Linton, Martin
Lloyd, Tony
Love, Mr. Andrew
Lucas, Ian
MacShane, rh Mr. Denis
Mactaggart, Fiona
Malik, Mr. Shahid
Mallaber, Judy
Mann, John
Marris, Rob
Marsden, Mr. Gordon
Marshall-Andrews, Mr. Robert
Martlew, Mr. Eric
McAvoy, rh Mr. Thomas
McCabe, Steve
McCafferty, Chris
McCarthy, Kerry
McCarthy-Fry, Sarah
McCartney, rh Mr. Ian
McDonagh, Siobhain
McDonnell, John
McFadden, Mr. Pat
McFall, rh John
McGovern, Mr. Jim
McGuire, Mrs. Anne
McIsaac, Shona
McKechin, Ann
McKenna, Rosemary
Meacher, rh Mr. Michael
Meale, Mr. Alan
Merron, Gillian
Michael, rh Alun
Milburn, rh Mr. Alan
Miliband, rh David
Miliband, Edward
Miller, Andrew
Mitchell, Mr. Austin
Moffatt, Laura
Mole, Chris
Moon, Mrs. Madeleine
Moran, Margaret
Morden, Jessica
Morley, Mr. Elliot
Mountford, Kali
Mudie, Mr. George
Mullin, Mr. Chris
Munn, Meg
Murphy, Mr. Jim
Murphy, rh Mr. Paul
Naysmith, Dr. Doug
O'Brien, Mr. Mike
O'Hara, Mr. Edward
Olner, Mr. Bill
Osborne, Sandra
Owen, Albert
Palmer, Dr. Nick
Pearson, Ian
Plaskitt, Mr. James
Prentice, Bridget
Prentice, Mr. Gordon
Prescott, rh Mr. John
Primarolo, rh Dawn
Prosser, Gwyn
Purchase, Mr. Ken
Purnell, James
Rammell, Bill
Raynsford, rh Mr. Nick
Reid, rh John
Riordan, Mrs. Linda
Robertson, John
Robinson, Mr. Geoffrey
Rooney, Mr. Terry
Roy, Mr. Frank
Ruane, Chris
Ruddock, Joan
Russell, Christine
Ryan, Joan
Seabeck, Alison
Shaw, Jonathan
Sheerman, Mr. Barry
Sheridan, Jim
Simon, Mr. Siôn
Simpson, Alan
Skinner, Mr. Dennis
Slaughter, Mr. Andrew
Smith, rh Mr. Andrew
Smith, Ms Angela C. (Sheffield, Hillsborough)
Smith, Geraldine
Smith, rh Jacqui
Smith, John
Snelgrove, Anne
Soulsby, Sir Peter
Southworth, Helen
Spellar, rh Mr. John
Starkey, Dr. Phyllis
Stewart, Ian
Stoate, Dr. Howard
Strang, rh Dr. Gavin
Straw, rh Mr. Jack
Stringer, Graham
Stuart, Ms Gisela
Sutcliffe, Mr. Gerry
Tami, Mark
Taylor, Ms Dari
Taylor, David
Thornberry, Emily
Timms, rh Mr. Stephen
Tipping, Paddy
Todd, Mr. Mark
Touhig, rh Mr. Don
Trickett, Jon
Truswell, Mr. Paul
Turner, Dr. Desmond
Turner, Mr. Neil
Twigg, Derek
Ussher, Kitty
Vis, Dr. Rudi
Walley, Joan
Waltho, Lynda
Wareing, Mr. Robert N.
Watson, Mr. Tom
Watts, Mr. Dave
Whitehead, Dr. Alan
Wicks, Malcolm
Williams, rh Mr. Alan
Williams, Mrs. Betty
Wills, Mr. Michael
Winnick, Mr. David
Winterton, rh Ms Rosie
Wood, Mike
Woodward, Mr. Shaun
Wright, Mr. Anthony
Wright, David
Wright, Mr. Iain
Wright, Dr. Tony
Wyatt, Derek
Tellers for the Noes:
Mr. Michael Foster and
Liz Blackman
Question accordingly negatived.
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