House of Commons Hansard Debates for 10 May 1993

Mr. Portillo : Despite all that I have said, we undertook to give extra help to the poorer pensioners and to those people on income-related benefits and to increase the cold weather payments. Contrary to what the hon. Member for Peckham said, it was included in the Budget statement and stated by my right hon. Friend the Chancellor on Budget day.

We made it clear that extra help would be available before the first fuel and power bills with VAT arrive next April and that the exact nature of what we intended to do would be included in the autumn uprating statement by my right hon. Friend the Secretary of State for Social Security who is obliged by statute to take everything into account in deciding what the appropriate uprating should be.

I now turn to the point raised by my hon. Friend the Member for Teignbridge (Mr. Nicholls). I know that he is concerned about pensioners who are not on income support as well as those who are. Mr. Michael Stern (Bristol, North- West) rose --

Mr. Portillo: Perhaps I could remind him of some of the Budget arithmetic. We need to bear in mind the fact that it is necessary to raise revenue to deal with the public sector borrowing requirement, and that VAT on fuel and power will raise £2.3 billion in 1995-96. Out of that, automatically through the effect on the retail prices index, and the effect of that on the uprating of benefits, there will be £300 million spent in 1995-96 and £600 million in 1996-97. That is absolutely without reference to the extra help that I referred to previously.

Mrs. Angela Browning (Tiverton) : Will my right hon. Friend give way?

Mr. Portillo : In a moment.

Our record on pensioners is also a good one. Pensioners' average income has risen by 30 per cent. in real terms since 1979. Following an amendment, or an innovation brought in by the Labour Government, we now offer all people during their working life times the opportunity to be in SERPS or to be contracted out of the state earnings-related pension scheme into an occupational or personal pension scheme.

In April, thanks to our success in reducing inflation, the uprating of pensions was 3.6 per cent. whereas the retail prices index figure for April was 1.9 per cent. The effect of that on a pensioner couple's income is compensation of £1.60 over and above the retail prices index. Opposition Members may sneer, but that is very close to the amount

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which it is speculated the extra cost of VAT on fuel and power will come to when the full 17.5 per cent. rate comes into effect in two years' time.

Mr. Marlow : Will my right hon. Friend give way?

Mr. Portillo : I have promised to give way to some other hon. F the line between those who are defined as in special need, because they are in poverty, and others, there will always be people just above that line whom my hon. Friends will believe to be especially deserving.

Mr. William Powell (Corby) : Will my right hon. Friend give way?

Mr. Portillo : We must also recognise that there are benefits, such as housing benefit and council tax benefit, which are payable to people who are not on income support. One and a half million pensioners will benefit from what we have already announced, and we intend to go on giving extra help to the poorest people. One and a half million pensioners who are not on income support will benefit through council tax benefit and housing benefit--2.25 million households in all will benefit, including the 1.5 million pensioners.

It is necessary to draw lines somewhere. I believe that it would be unrealistic to give extra help to all pensioners over and above the RPI effect. I remind my hon. Friends that pensioners will benefit from that effect. If we were to take extra measures to try to identify the impact of fuel bills over and above the RPI effect felt by pensioners and all others, we might be talking about another £1 billion on benefits. My hon. Friends will recognise that that would wash away a great deal of the revenue being raised in this way--

Mr. Alex Salmond (Banff and Buchan) : On a point of order, Mr. Morris. Is it in order for the Chief Secretary to address the House with this posture? He seems to be arranged in such a way that he can see all who want to intervene and are sitting behind him but none of those in front of him. Would it be possible to ask you to ask the Chief Secretary to adjust his crooked posture?

The Chairman : I am grateful that, for once, an hon. Member is addressing the Chair.

Mr. Portillo : I give way again to my hon. Friend the Member for Teignbridge.

Mr. Nicholls : I am grateful to my right hon. Friend for dealing specifically with this point. I hope that he can clarify another point for me. He has referred to the fact that rebates on council tax can take account of the circumstances of a pensioner who, although not on income support, clearly needs help. Am I right in thinking that the amount of rebate available through that mechanism was set without reference to the impact that VAT on fuel bills will have? Surely, if that is the mechanism to be used to help these pensioners, there should be some flexibility for building into the calculation the fact that they now face extra bills at a time when many of them are already having their incomes cut by depreciating interest rates.

Mr. Portillo : All pensioners, whether on income support or not, will be compensated for the impact on the

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retail prices index of extending VAT to fuel and power. In addition, those on income-related benefits will be compensated, especially and in advance. Whereas it is generally believed that there are people above the income support line who might also require some help, it is perhaps not always realised that 1.5 million pensioners who are not on income support will receive compensation through the uprating of benefits due to the RPI, and extra help because their council tax benefit and their housing benefit will be adjusted, by means of the special help that we are discussing.

Mr. Stern : I wonder whether my right hon. Friend will allow me to pursue the point a little. Many people, not necessarily pensioners, live in hard-to-heat homes and are trapped in those houses either because they are council tenants or because they suffer from negative equity. Their council tax benefit or housing benefit, if any, bears no relation to the fact that their fuel costs are much higher than average. In the scheme of compensation that my right hon. Friend is planning, will he take those facts into account so that people will not inadvertently lose out because, for instance, they moved into a Parkinson house, from which the heat leaks away through the walls? 4.45 pm

Mr. Portillo : My hon. Friend draws attention to a well-known difficulty. When we moved from supplementary benefit to income support, we did not think it right to continue the whole range of special payments made to people in various circumstances--the so-called single payments. Since then, we have relied heavily on identifying the people who have the greatest need to heat their homes : the elderly and the very elderly, who attract premiums under income support, the disabled who do the same, and those with children who also attract them. That is how we have dealt with the problem on the basis of many years of experience.

Dr. Berry : Will the Chief Secretary recognise that the reason why pensioners and many other people are angry about what is happening is that on 27 March last year the Prime Minister clearly said : "We have no plans and no need to extend the scope of VAT"? Was that statement based on ignorance, dishonesty or both?

Mr. Portillo : The hon. Gentleman's question was clearly based on ignorance, as I dealt with it in the first part of my speech.

Mrs. Browning : I must draw my right hon. Friend's attention back to the point made by my hon. Friend the Member for Teignbridge (Mr. Nicholls) about pensioners and people who are not on income-related benefits. My right hon. Friend has said that it would be impossible to make any alteration in the RPI calculation, but that calculation will be a national average which does not take into account the disproportionate amount of money spent on fuel by retired people and people with disabilities. In the west country, the additional benefits that he has mentioned--from council tax benefit, for instance--have

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been sopped up by the additional charges that people have had to pay for water, so this will hit them particularly hard.

If my right hon. Friend, within the RPI formula, were to take account of those much higher charges and the money were paid to pensioners on higher incomes, he would at least recoup the money through the tax system, because pensioners with higher incomes pay tax like everyone else. That would at least ensure that pensioners who do not have income-related benefits but who are not exactly well off have their fuel charges covered.

Mr. Portillo : It is well understood that what most concerns us is that we should compensate pensioners through the RPI ; but the amount that many of them spend on fuel and power may figure

disproportionately in what they spend. There is a great danger, however, in seeking to compensate people for particular items of expenditure. We have always sought to raise benefits by the retail prices index, or by the Rossi index, according to what was right. If, since 1979, we had looked at the things that pensioners spend most money on, we would have excluded from their index mortgage interest payments, because pensioners do not spend much on them. The result would have been, as the Secretary of State for Social Security has pointed out several times, that today's pension would be £6.65 less than it is. That would have been the result of picking and choosing our way through the index, trying to find out what pensioners spend their money on.

Mr. Terry Dicks (Hayes and Harlington) : This leaves us in an odd position. I will still have to tell pensioners in my constituency, "I am sorry that you will not get any help--but if you went to the Royal Opera House, you would get help, because the Government subsidise it to the tune of £30 per seat per show." Why do we subsidise people's pleasure to the tune of £700 million while punishing pensioners at the other end of the scale ? If my right hon. Friend cut out overseas aid and subsidies for the arts tomorrow, there would be no need to be doing any of this.

Mr. Portillo : My hon. Friend certainly anticipates some of the arguments that will arise during a very difficult public spending round indeed. He talked about penalising people for saving. It is a very difficult problem : how to devise a benefit system which, on the one hand, provides a safety net for people--which means that we have to have an income-related system and to be aware of their means and capital--and, on the other hand, avoids excessively penalising people who have shown thrift throughout their lives. Those are serious problems which cannot be solved easily.

We are, of course, now committed to embarking on a review of social security and to looking at the balance between targeting and universal benefit. These are genuinely difficult problems, and the questions that my hon. Friends are raising about the people who are just above the income support level are obviously questions which we shall have to think about very carefully indeed.

Mr. Peter Fry (Wellingborough) : Does my right hon. Friend not appreciate that, despite all his talk about second pensions, about 1.5 million to 2 million people, many of them living in their own homes, so that they do not get any housing benefit, do not have a second pension and very often have no extra income at all? Is he aware that, on the night when the original Budget resolutions

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were put, I asked our right hon. Friend the Chancellor of the Exchequer whether there would be recognition of the plight of that sector of the community, and he said that of course there would. Does my right hon. Friend accept that what he explained this afternoon falls a long way short of reassuring me about the fate of those people who do not have that extra income? Would he like to comment on that?

Mr. Portillo : If my hon. Friend reads what I have said, he will not reach that conclusion. I have pointed out that the retail prices index will be adjusted, and that will be of general help to pensioners. I have pointed out that we will give special help to people on income-related benefits ; that 1.5 million pensioners and 2.25 million households altogether, above the income support level will benefit ; and that 8 million households altogether will benefit from special measures that we are taking.

The people to whom my hon. Friend refers as living on their own may none the less be in receipt of council tax benefit. If they have only their state pension, and no occupational pension, they will certainly be on income-related benefit. That is where I believe the help should be concentrated, because we have a system that identifies the people who are most in need and brings help to them.

Several hon. Members rose --

Mr. Portillo : I really do want to get on. We are in Committee and there will be time for hon. Members to make their points. Turning to the question of standing charges, VAT is normally chargeable on the whole of a charge--

Mr. Marlow : Will my right hon. Friend give way?

Mr. Portillo : No, I have already given way to my hon. Friend. VAT is normally chargeable on the whole of a charge for supply, both the fixed and the variable element. If we were to exclude standing charges from VAT that would mean a substantial reduction in the revenue and we would then have to seek that revenue elsewhere. It would be administratively extremely inefficient to exclude standing charges, and it would certainly mean that in the long term the industries would be given the opportunity to restructure the way in which they charged people in order to avoid VAT falling on their supplies.

However, most important of all, perhaps, is that the effect of what the Opposition are proposing would be no help to the people in most need --that is, the people who pay for their electricity and gas supplies through slot meters. They are often the poorest people, and many have smaller standing charges than other people. Therefore, paradoxically and perversely, what the Opposition are proposing would, I believe, leave those people in the worst position of all. The general approach of the Government to charities is that we should give tax relief for all those who wish to give to charity, rather than seek to give relief to charities on the items that they purchase. The advantage of that is that the charities that are best able to attract public support are the ones which get the subsidy from the taxpayer. It is extremely difficult to sort out the purchases that are made by charities from those that are made by other taxpayers.

The hon. Member for Peckham said that the extension of VAT to charities would affect them by £25 million. I

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should like to put that in some sort of context by pointing out to the Committee that tax relief on charitable giving is now running at over £900 million a year.

The Government have a magnificent record of introducing reforms that have been of particular help to charities. In 1980, for example, we introduced a reduction in the length of time that a covenant to a charity had to run from seven to four years. In 1987, we introduced payroll giving, and we introduced gift aid in 1990. According to the latest figures, £307 million has now been contributed through gift aid. We are now spending £2.68 billion on the voluntary sector. All these figures absolutely dwarf the one that the hon. Member for Peckham mentioned.

None the less, we were well aware that, under this Budget, charities would have to pay more in VAT, and we therefore sought a reform within the Finance Bill that would be of benefit to charities. We have extended payroll giving and gift aid, and the benefit of that is about £30 million, which broadly matches the impact of VAT on charities through fuel and power. [Interruption.] The hon. Member for Newcastle upon Tyne, East (Mr. Brown) says from a sedentary position that it is different charities, but the Opposition are proposing the maintenance of an exemption for charities that would mean that Eton college, for example, would continue to benefit from VAT relief. Indeed, for all I know, Eton college might benefit more than Help the Aged from VAT relief. The Labour party is proposing that we should set up arbitrary distinctions between, for instance, care homes that are run in the private sector and those that are run by charities.

I therefore believe that the Committee will agree that the Government have set out in the Finance Bill to provide an equivalent measure of compensation for charities to enable them to cope with the extra imposition of VAT.

Mr. David Nicholson (Taunton) : My right hon. Friend rightly makes the point that there are different kinds of charities. It might be sensible to consult the charities on how they would like their tax relief. Is he aware that there is a particular kind of charity, particularly in rural and semi-rural constituencies--village halls? Many of us have had a large number of letters from village halls about the concern that is felt regarding what they may have to pay next year or the year after because of VAT on fuel. I appreciate that we are dealing with a hypothetical situation, because nobody knows what will happen to the prices of electricity and gas over the next two or three years. Will my right hon. Friend undertake to listen very sympathetically to representations from Conservative Members--and, no doubt, Opposition Members--on behalf of village halls, if they get into difficulty as a result of VAT on fuel?

Mr. Portillo : My hon. Friend makes a most interesting point. As he says, time will tell and perhaps we can learn from experience. He may have had in his mind, when he asked the question, a point that I had already made--that fuel prices have been falling recently and we are looking at phasing in this increase over two years. But we will, of course, look very carefully at the impact of the change on village halls.

Ms Harman rose--

Mr. Portillo : Yes, I have been on my feet a long time, and I will give way.

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Ms Harman : Will the Chief Secretary recognise that, even leaving on one side the drop in donations to charities by individuals and companies, the effect of the Budget is to cut income to charities? Although, as he has mentioned, they will get additional relief from payroll giving and gift aid, they will lose out on VAT on their gas and electricity, and they will also see a drop in their income from dividends because of the reduction in relief for advance corporation tax? While the Government estimate that that will be about £50 million, the charities estimate that it will cost them about £100 million.

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Mr. Portillo : The dividends come under a separate clause, but the hon. Lady needs to bear in mind that what we are talking about in that clause is a reduced rate of compensation for a tax liability that does not arise for charities. Charities are exempt from taxes on their income and at the moment they are getting a credit on their dividends, which they can cash in. Obviously, reducing the rate of credit reduces their income. That is why the hon. Lady will discover within those provisions, when we reach them, special transitional arrangements for charities to help them with that.

Environmental questions have been raised. As I have said previously, the Bill is intended to raise revenue ; there are no two ways about that. It also helps significantly to achieve our environmental commitments. The 150 countries that were signatories to the Rio convention signed up to reduce carbon dioxide emissions to their 1990 level by the year 2000. We predict that we need to reduce our carbon emissions by 10 million tonnes by the year 2000 or by about 6 per cent.

We have taken a range of measures to bring that about, some of which are directed to better fuel efficiency. They include the setting up of the Energy Savings Trust, which is to bring together the Government, British Gas and the electricity supply industry under the chairmanship of my noble Friend, Lord Moore, to find schemes that will enhance energy efficiency and make grants for those schemes. We are putting our trust in that body to achieve carbon reductions of 2.5 million tonnes on that programme alone.

The VAT increase that we are talking about and the increase in petrol prices that my right hon. Friend the Chancellor mentioned in the Budget will each achieve carbon reductions of 1.5 million tonnes. That will leave a gap of 3 million tonnes of carbon for the Government to be able to meet the commitments that they made at the Rio convention. I know that it has been suggested that the gap should be filled by way of a carbon tax. I think that my right hon. Friend the Paymaster General may wish to say something about that when he winds up. I would simply say that there are considerable doubts about the efficacy or appropriateness of a carbon tax. We will have to consider such factors extremely carefully as discussions progress within the EC.

I commend the VAT proposals to the Committee. I have been astonished by the way in which Opposition parties have criticised the Government on this when, in the past, they wished to extend VAT and made their wishes clear. The right hon. Member for Berwick-upon-Tweed, for example, always wriggles when this quote is mentioned to him, but he knows perfectly well that a Liberal party document called "Costing the Earth" said :

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"The Liberal Democrats advocate as a first priority the imposition of a tax on energy The UK is unusual amongst EC members in not applying even standard rates of VAT on domestic fuels if it proved completely impossible to persuade our international partners to adopt energy taxes, we would nevertheless press forward by ending the anomalous zero rate of VAT on fuel."

That really could not be clearer.

Mr. Beith rose --

Mr. Portillo : If the right hon. Gentleman wishes to say that it was only a Green Paper and not Liberal party policy, he may say so and we shall treat that comment with our customary derision.

Mr. Beith : Will the right hon. Gentleman recognise that that document was not party policy and did not become so? If he would like to have the Conservative party election manifesto compared with ours and see which party is sticking to its manifesto, that would do for us.

Mr. Portillo : My predictions about what the right hon. Gentleman would say were absolutely correct.

Mr. Ian Bruce (South Dorset) : Has my right hon. Friend read a little further into Liberal party documents? Not only does "Costing the Earth" contain the quotations that he used, but "Policy Briefing 22", which came out in October 1991, gave the same commitment. "Changing Britain for good", which was the manifesto on which the party fought the election, says :

"Our new Energy Tax is this manifesto's key proposal in this area."

Mr. Portillo : My hon. Friend makes his point supremely well. He has set the right hon. Member for Berwick-upon-Tweed gibbering with fury that he has been discovered.

The Labour party has been just the same, from top to bottom. The Leader of the Opposition said in his election address when he was seeking to be elected leader of the party :

"We should consider the increased use of the fiscal system to promote environmental protection and conservation."

What did he mean by that if he did not mean taxes on fuel? The hon. Member for Islington, South and Finsbury (Mr. Smith) said in Green Magazine in February that he believed in increasing VAT on environmentally unfriendly products. He went further and said : "If I was Secretary of State now I would twist the Chancellor's arm right up his back to see these measures implemented."

We know that the Labour party spokesman in the House of Lords, Lord Desai, who has now been fired, said in Tribune on 6 May : "I would remove zero rating for VAT on all items."

What was so extraordinary, as the House saw on Thursday, was that my right hon. Friend the Chancellor, in Treasury Question Time, used that quote and made it clear that it came from Tribune that day. A moment later, my right hon. Friend the Prime Minister mentioned the quote and the Leader of the Opposition said that it came from the days when Lord Desai was not an Opposition spokesman. I have never seen anyone fall more clearly into a trap. Sitting next to him were the hon. Members for Peckham and for Dunfermline, East, both of whom knew that the quote came from Tribune that day. However, neither of them cared to warn the Leader of the Opposition about the trap into which he was walking.

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It is extraordinary that Tribune is never read. It has reached the position that television reached for Noel Coward, who said that television was a thing for appearing on, not a thing for watching. Now it appears that Tribune is a thing for writing in but not something for Labour party members to read.

The hon. Members for Peckham and for Dunfermline, East led their general straight into a disaster and sent him charging off between the trenches. They knew that that quote was current and of the day, but they let the Leader of the Opposition fall into that trap. With a general misled by his brigadiers, the Labour party's response was to fire the corporal. Poor Lord Desai has now been sacked as a spokesman in the House of Lords. On behalf of all my right hon. and hon. Friends, let me say that we shall miss him greatly.

The humiliation that the Leader of the Opposition suffered on Thursday, the rout that he endured in the House of Commons, led him, over the weekend, suddenly to stir up a campaign on VAT on fuel and power. That from a Labour party which has never once addressed the question of public borrowing or committed itself to controlling public spending. The Government are prepared to face up to those serious issues. We understand that, in order to control public borrowing and to pursue a responsible fiscal policy, we have to take unpopular decisions. Only a natural party of opposition--the Labour party--could believe that one can govern without any pain and that it is possible to get control of public borrowing without taking unpopular decisions.

The Conservative party is committed to responsible government and sound public finances. It is willing to take the decisions necessary. Therefore, I urge my right hon. and hon. Friends to resist the amendments.

Mr. Beith : I do not know how the Government have the face to go ahead with their proposals after Thursday's result in Newbury. My hon. Friend the Member for Newbury (Mr. Rendel), who is sitting beside me, received the votes of more than 37,000 electors, who expressed their anger about this and other aspects of Government policy so clearly and decisively that a Government who were listening and learning would have asked the House today for time to reconsider the fuel tax proposal and to come up with a better way of dealing with the hole that they have created in the public finances. The Government go on at us about the state of those finances, but it was they who secured the prolonging of the recession and they who said that it would not last so long. According to their manifesto and their election campaign, recovery would come as soon as the ballot boxes had closed on polling day and it was clear that they would remain in power. It was they who insisted that they did not and would not need new taxes. We made no such claim ; we evinced no such bravado about the ability of Government to survive without new taxes, or tax increases, in any circumstances.

All the Chief Secretary's talk this afternoon about how only a natural party of government like the Conservative party ever considers unpopular measures such as raising taxes is absolute nonsense. There was not a word about that during the general election campaign, which was all about lowering taxes. It was we who said that, in some circumstances, we would be prepared to raise them, if there was a strong and legitimate case for doing so.

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We heard none of that from the Government ; but, during the Newbury by-election campaign, we heard plenty on the doorsteps about the imposition of VAT on domestic fuel and power. We collected thousands of signatures from people who objected strongly to the proposal, and those of us who were canvassing the local elections around the country heard the same message time and again.

If the Government are listening and learning, to what and to whom are they listening and what have they learnt? They do not appear to be listening to their own Back Benchers, who have expressed doubt and concern about aspects of their proposals. Some pertinent questions have been raised this afternoon.

Mr. Nicholls : Will the right hon. Gentleman give way?

Mr. Beith : I am almost reluctant to give way to the hon. Gentleman, because he has got in twice already. However, I shall do so.

Mr. Nicholls : In that spirit of friendship, I wanted to give the right hon. Gentleman an opportunity to disown what was said in his own party's Green Paper and election manifesto--that the Liberal Democrats were in favour of putting a tax on energy. Will he take that opportunity and disown the pledges that were given then?

Mr. Beith : On the contrary, I shall take the opportunity to read the proposal which another hon. Member misquoted so ludicrously. We said in our manifesto that we would

"support a Community-wide energy tax on all energy sources ... related to levels of carbon dioxide emitted".

We said that that would

"provide a strong incentive for saving energy and investing in cleaner sources. Extra revenue raised through the tax will be fed back into the economy reducing other taxes such as VAT".

That is the part that the hon. Member for Dorset, South (Mr. Bruce) did not quote--the proposal to reduce VAT.

Mr. Ian Bruce : Will the right hon. Gentleman give way?

Mr. Beith : No. If the hon. Gentleman ever quotes me accurately, I shall be prepared to listen to his interventions. Moreover, I have not finished the quotation ; apparently, the hon. Gentleman does not wish to hear the rest of it.

We said that we would act by

"reducing other taxes such as VAT and by protecting those least able to adapt to the higher price of energy."

Not only our manifesto, but even the "Costing the Earth" document--which did not become party policy--contained a string of proposals to invest in energy efficiency : to invest resources in the communities that found it most difficult to cope with high energy costs. It is ludicrous to quote a proposal to reduce VAT as if it were a proposal to increase VAT.

Mr. Stephen Milligan (Eastleigh) rose--

Sir Teddy Taylor rose--

Mr. Phil Gallie (Ayr) rose--

Mr. Beith : I shall give way later, when it is less difficult to choose which Conservative intervention to take. The Chief Secretary argued- - [Interruption.] Perhaps I will give way after all, to the hon. Member for Southend, East (Sir T. Taylor).

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Sir Teddy Taylor : To maintain the high standard of honesty claimed by the Liberal Democrats, will the right hon. Gentleman make it abundantly clear--not only to the voters of Newbury--that, no matter how much money the Liberal Democrats might gain through a new energy tax, that money could not be used to cut VAT? If the Government's proposals are accepted, a future Labour or Liberal Democrat Government will be able to do nothing about it.

Will the right hon. Gentleman at least make it clear that VAT cannnot be reduced, because of EC obligations which I thought his party supported? I am not attacking him ; I am merely asking him to tell the people the truth. Then his party might get on even better.

Mr. Beith : I do not agree. It is possible for any member country to have different VAT rates from the rest of the Community. A number of member countries have far lower rates than our existing 17.5 per cent. and it is open to us to apply lower rates to various of the commodities on which that rate is now levied.

However--as the hon. Gentleman well knows--it appears that, under Community law, if we surrender the zero rate on fuel tonight, we shall never be able to restore it. I hope that the hon. Gentleman will continue to remind Ministers that their proposal appears to constitute an irrevocable removal of the zero rate--one that they cannot go back on. That is another argument for not surrendering the zero rate to raise more money and for devising a more effective form of energy taxation.

This is not, and was not intended to be, a genuine energy tax. The Chancellor made it clear to the Treasury Select Committee that the primary motive for the proposal was to raise revenue, and the Chief Secretary devoted much of his speech to explaining the reasons why that was necessary. No money from this tax will increase energy efficiency. It is not a device to transfer money from energy users to measures that will lead to less use of energy. It is indiscriminate : it draws no distinction between energy raised by coal burning and that raised by oil burning, wind power or tidal forces. All are treated in exactly the same way. This is not a serious energy measure.

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The tax will be applied not only to energy used, but to the fixed standing charge, which bears no relation to the amount of energy that a person uses. How can it be an energy tax designed to encourage people to use less energy, when it applies to an amount over which their use of energy exercises no control? Moreover, by and large, it is not targeted at people who have much choice about how much energy they use.

Many who will be hardest hit by the tax do not have control over the energy efficiency of their homes, because they do not own them--or, as a Conservative Member pointed out, because they are victims of negative equity, stuck in their houses without the resources to make them more energy-efficient. Often, they have not the means to do so either : they cannot afford to take out an extra mortgage and put some capital into real energy efficiency improvements.

No new resources will come from this measure to be directed at some of the valuable schemes that exist, such as the neighbourhood energy action schemes--schemes that are making a limited but extremely valuable contribution

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