Examination of witness (Questions 20 -
39)
TUESDAY 30 JUNE 1998
RT HON
MICHAEL MEACHER,
MP
Mr Shaw
20. In evidence to the Committee, both oral
and written, we heard from the business community, ACBE, and the
Institute of Directors, and they were concerned about our unilateral
position on the 20 per cent reduction. What they said was that
they felt it did not emerge out of anything, there was no consultation
process as to how we arrived at this figure. The IoD were quite
scathing in their written evidence. They said it was the wrong
way round, that basically the target had been set and then there
was the consultation. They said it should be the consultation
then see what targets we can set. How do you respond to that criticism?
Where did the 20 per cent reduction come from and what process
led us to adopt that position?
(Mr Meacher) It emerged within the Labour Party
in Opposition. It certainly was on the basis of consultation.
It certainly was not plucked from the air. I would say to those
people who criticised, that we are not the only ones who are proposing
a 20 per cent cut or more: so are Germany, Denmark and Austria.
We did believe and we still do believe as Government now, that
although it is testing and challenging it is reachable. I would
point out that by the year 2000, we expect to be some five percentage
points below the 1990 level once again. It is not the case that
we are starting at zero. It was within the Labour Party's manifesto,
it has since been confirmed by the Prime Minister in the House
and we are firmly committed to it. The other thing I would say
is that so far from this being a great burden on business, it
does genuinely open very real business opportunities. The fact
is the main pillars of delivering these targets are three: one
is on transport. These are the fastest rising emissions and we
intend to deal with that through the Integrated Transport White
Paper. Second is the switch from fossil fuels to renewables and
again there are business opportunities there. The third and the
greatest one is unquestionably energy efficiency. There is enormous
waste of energy in this country as in virtually all the developed
countries and the market opportunities in investment and in changes
in working practice not only will cut fuel bills for business
but give them, through the environmental technology industry,
substantial market opportunities to expand both in this country
and abroad. We should not see these targets as a great ball and
chain on business. They should actually be seen as more gain than
pain in my view.
21. On the point of energy saving products,
this Committee has recommended a reduction of the VAT levy levelled
on energy saving products. Is that something that you are going
to take to Europe to discuss with our partners to see whether
we can have a reduction on those types of products? I realise
the Chancellor will have a view as well but if we are moving from
bads to goods in terms of positive tax action, is this something
you will be discussing?
(Mr Meacher) I hope I have the same view as the
Chancellor: I think I do. What is already done in the budget,
as you know, is to reduce VAT on energy saving materials used
in developments funded by Government grant schemes from 17.5 per
cent to five per cent. Five per cent is as low as is permitted
under the EC VAT rules. However, we are now and the Treasury is
now negotiating with Brussels and with partners in Europe to extend
this to other energy saving materials. That is what we should
like to do and it is a question of whether we can get agreement
within Europe to do that. I ought to make very clear to you, and
this is perhaps my other point to business with their concerns
about the 20 per cent target, that we have made it absolutely
clear and we will in this consultation paper that we are not going
to impose any measures which undercut competitiveness. This is
a consultation paper and business will have a full opportunity
to debate the particular mechanisms and deliveries that we are
proposing.
Mr Baker
22. There is the eight per cent target which
is a legally binding target. There is also the 20 per cent target
which is a manifesto commitment, which you had. You said on the
eight per cent target that it is a first priority and the consultation
process, as I understand it, is to see how to move towards this
20 per cent. What I am not clear about is whether the consultation
process is designed to establish how we reach the 20 per cent
or whether in fact we need to reach the 20 per cent or whether
in fact there are reasons, perhaps business reasons or other reasons,
why we might underscore the 20 per cent. Are you firmly committed
to reaching 20 per cent?
(Mr Meacher) We are firmly committed to the 20
per cent target. It is a domestic goal which we have set. It is
a unilateral domestic goal. We believe it is achievable, we believe
it will be beneficial to business as well as to the country for
us to achieve it. We are not unique in Europe in going for that
target. May I just make one point? You mentioned the eight per
cent legally binding target. Of course for the UK, as a result
of what we agreed on 17 June at the last Environment Council,
the UK target within the collective EU target of an eight per
cent cut, is a cut of 12.5 per cent. We are talking about a difference
between 12.5 per cent cut legally binding and a domestic unilateral
cut of 20 per cent. It is another 7.5 per cent.
23. As far as you are concerned, that is
a legal matter, a technical matter almost. The Government's clear
target is 20 per cent and the consultation process is simply about
how to get to the 20 per cent.
(Mr Meacher) Yes. It is about more than that but
it is certainly about how we achieve the 20 per cent target, yes.
24. May I ask briefly about the energy review?
I know it is not directly your Department but clearly you said
yourself a moment ago that two of the main areas to achieve the
20 per cent target would be in transport and energy. We have the
Transport White Paper coming up shortly which has been substantially
trailed in many of the nationals, accurately or otherwise. The
coverage recently suggests in fact a backtracking which I hope
is not true in terms of action to curb car use. Perhaps you would
like to knock that on the head. In terms of the energy review
of course I should like to ask whether you are aware, because
obviously it is DTI rather than DETR, what consideration was given
to the Kyoto targets as part of the energy review? It seems to
me that what we have is low politics designed to save the coal
industry rather than high politics designed to save the environment.
(Mr Meacher) On your first point, as Ministers
always say, I do not respond to newspaper speculation. I do assure
you that the transport objectives, both in terms of congestion
and pollution but particularly in terms of the Kyoto requirements,
are as tough and determined as we intended them to be. On the
question of the energy review, the key point to make here is that
the energy review in no way compromises our intention that there
should be a continued reduction in carbon emissions within the
power industry. That has always been our proposal and that is
consistent with the energy review. There are many ways to skin
a cat; there are many ways to achieve the Kyoto target. Our view
is that there should be diversity and security of supply, that
we should not have an over-dependence on one particular fuel and
of course the coal industry has already taken a very hard hit
from policies over the last 10 to 15 years. We do believe that
there should be fairness and reasonableness in the distribution
of that burden.
25. The Kyoto target and the Government's
policy on cutting emissions of greenhouse gases were built into
the energy review, were they?
(Mr Meacher) Absolutely; absolutely. There is
no question, I can give you an absolute assurance, that all major
considerations by all Departments now take into account the Kyoto
targets and the contribution which they have to make to deliver
that.
Chairman
26. Why therefore was there only one sentence
on energy conservation in the coal review?
(Mr Meacher) The fact that there was one sentence,
if that is correct——
27. It is correct.
(Mr Meacher) I am sure that is a well prepared
statement on your part but it does not demur from the point I
have made. After all, this was about the energy review. It is
not about conservation and Kyoto but it is consistent with the
Kyoto requirement.
Mr Truswell
28. As you know, the Committee has been
conducting a review of the Government's greening government process.
Our reservations on that score are going to be published in a
few days' time. In respect of the Kyoto target, however, could
you perhaps explain to us how the Government intends to drive
forward the quest to achieve that target in a dynamic coordinated
and one would hope structured way? In other words, who is going
to determine precisely what needs to be done in practice, who
should do it and whether they are making sufficient progress?
(Mr Meacher) That is a huge question and that
is the heart of the post-Kyoto agenda consultation paper which
will set out a very full and detailed answer to that question.
It is certainly the case that all departments in government will
be expected to achieve their contribution as set out in the paper,
that it will be coordinated, that it will be monitored on a regular
annual basis and that this will also be done at the European level.
There are already currently annual reports on our emissions which
go to the Commission, and there are annual reports on emissions
going to the climate change convention. This is going to be monitored
extremely carefully. What is of great significance is that even
at the European level when we come to common and coordinated policies
and measures, as they are called, which we agreed in Council's
conclusions ten days ago at the last Environment Council and the
Commission is now going to bring forward a paper both to the Council
and the European Parliament on exactly how it is going to deliver
these common and coordinated policies and measures, they have
major implications for other councils, particularly energy, finance,
agriculture and transport. So there is no question that all of
these other major departments, the same in Europe and it will
be the same in the UK, will be contributing to this. They will
be involved in the consultation very closely, they will agree
the targets and we will monitor extremely carefully that they
are delivered.
29. To go back to the question, in terms
of the UK, who is going to be driving the process? Will it be
through the Cabinet Committee, ENV, disseminated down through
the Green Ministers or what?
(Mr Meacher) Yes; yes. It is coordinated ultimately
through ENV as a Cabinet sub-committee. Green Ministers will be
the work horses within Whitehall to deliver it within their own
departments, to make sure that all the policies in their departments
are consistent with what their department has agreed to deliver
to those targets.
Mr Thomas
30. May I take you back to your point about
the policies and measures which are going to be worked up as a
result of the decision by the Environment Council? Do you have
a timescale on those measures? For example, how do you see those
policies and measures linking in to the consultation document
you are going to be publishing in the summer?
(Mr Meacher) I would expect the Commission to
bring forward a detailed timetable, probably for the October Council.
There are two Councils in the year, October and December; it will
certainly be for the second if not the first. That will be on
the basis of consultation with the Member States. We will be very
much participating in that process at the same time as we are
preparing for our own consultation paper. The two processes are
really part of the same process.
31. Will you be pressing for clear targets
and clear periods for those targets to be achieved in?
(Mr Meacher) Which targets are we now talking
about?
32. In terms of those cross-European policies.
(Mr Meacher) The common and coordinated policies
and measures are what it says: common measures which it is believed
will help countries to reach their targets, particularly some
of the smaller or middle sized Member States. I am not sure whether
they would say this publicly but it is helpful to them to have
a European target to which they are contributing. It helps in
their negotiations domestically and in achieving those targets.
We would nevertheless of course expect national measures to be
the main means of achieving Kyoto targets.
33. Do you see negotiations taking place
for within Europe specific targets, for example for aviation fuel,
reductions of emissions from cars? Do you see the need for specific
targets to be agreed by each of the countries at a future Environment
Council?
(Mr Meacher) Very much so. You mention two there
which are very important, which are very much on the agenda. First
of all aviation fuel. We should like to see the removal of the
tax exemption for civil aviation fuel. That is being discussed
in the International Civil Aviation Organisation. I have to say
there is resistance from some other major countries such as the
United States. In the light of that the Council asked the European
Commission to undertake a study of the environmental and economic
impact in Europe of removing that tax exemption. That process
has gone rather slowly, I have to say, and we recently made clear
to the Commission that we look forward to an early reply. On the
other matter which is CO2 from cars, it is a very important
matter indeed with enormous implication for all our targets. We
have been engaged in a negotiation with ACEA, which is the European
car manufacturers, in order to achieve a reduction in CO2
from cars from where it now is, above185gms/km to 120gms/km, which
is the Council target. After extensive and detailed and difficult
negotiations, ACEA have now offered 140gms/km, together with certain
assumptions which we are still pursuing. I hope that at the October
Council we will reach a final agreement with them, bearing in
mind that the package with the industry is only part of a total
package and it does also include fiscal measures and eco-labelling
of vehicles to reach the 120gms/km.
Mr Baker
34. May I put to you the happy scenario,
which I am sure may come to fruition given your promises on the
Transport White Paper and other such measures, that Britain overshoots
its target, its legally binding targets I am talking about, within
the European Union, will that count towards a total European Union
whole which will allow other countries to undershoot or will the
other countries still have their targets in place and we will
just do more than bargained for?
(Mr Meacher) If we were the country in this happy
position you referred to we would be permitted to bank that against
future targets, though I might say, for the reasons Mr Dafis referred
to in the first question, we expect those further targets to be
tighter and more stringent as we go along. We would be entitled
to bank it against those and our clear view would be that other
countries are still expected to achieve their targets.
35. You are going to overshoot by quite
a degree if you reach your 20 per cent.
(Mr Meacher) That is perfectly true: seven and
a half points. That would be banked against our future target
and is indeed another reason—thank you for reminding me—for
regarding a 20 per cent target, far from a unilateral eccentricity,
as merely a banked credit for the next round.
Mrs Brinton
36. May I carry on this point about targets
and European targets in particular? People have to understand
the rationale behind it to understand why a target for a particular
country has been reached. I was rather surprised and concerned
that Austria's target had been reduced to 13 per cent and wondered
whether you could tell me why. Also, suddenly Portugal's burden
was rather drastically increased. If we are going to get understanding
and acceptance, people have to know why these decisions are taken.
(Mr Meacher) That is a very well pointed question.
I was surprised by what happened on 16 June. I spent the entire
day engaged in bilaterals with my ministerial colleagues and it
is true that two states in particular made a substantially less
good offer than I was prepared to accept. There was a great deal
of discussion about those. One of them was indeed Austria. It
is a matter of internal Austrian politics as to why the reduction
was as great as it was. As you say, it came down from 25 per cent
and it finally ended at 13 per cent which is scarcely more than
half. That is unquestionably disappointing. All that I would say
is that we were looking to reduce the range. We have done that.
The increase which was permitted to Portugal of 40 per cent has
now been reduced to 27 per cent and Greece has gone down from
30 per cent to 25 per cent. At the other end Luxembourg is still
minus 28 per cent but in the case of Germany and Denmark it is
minus 21 per cent. Austria was in that category but is now in
the middle. It is a disappointing result and it is for my colleague
Martin Bartenstein rather than me to explain, if you wish to pursue
the matter further. The basis on which we agreed to increase is
that we did make an offer last year when provisional targets were
achieved on 3 March last year by my predecessor. Our view is that
was a modest target and that a small increase was justified. I
have to say that even if we did not take that view, we were pressed
extremely hard, which we resisted, and the 12.5 per cent is in
effect the combined effect of those two pressures.
Mr Grieve
37. May I widen this and go back a little?
Without wishing to sound too depressing, because I am in no way
trying to put a damper on what is an initiative which I see as
essential, but is not one of the problems in selling this to the
wider public, going to be persuading them that there is a long-term
strategy which is in fact workable? When one looks at the figures
and particularly those for Europe, there are some countries which
are going to have substantial increases over the period in question,
others which will have some decreases. All this is tinkering around
unless, when we get beyond that, there are real prospects of being
able to maintain reductions globally of emissions. Is not the
problem that emissions by their very nature are the result of
human activity? Unless we succeed, which seems somewhat far fetched,
in harnessing renewable resources to supply our energy needs globally,
the scale of it appears daunting at the moment. Then there is
a fear, certainly I would have thought looking at the figures,
that we may succeed over a 20-year period in doing some pegging
but unless the whole course of human development is going to be
arrested, it is simply going to take off under its own momentum
and is irresistible? What degree of persuasion do you think you,
through your advisers, can put over that in fact that is not the
case, in order to justify making the sacrifices which are going
to be required of people?
(Mr Meacher) That is a very fair issue you raise.
It is quite right to see it against a perspective which is quite
daunting. I would not wish to conceal that this is one of the
most profound changes in our world economic system and in our
society that we have ever attempted. It is true that if we continue
to see a rate of increase in population, bearing in mind your
point that emissions are very closely related to the level of
human activities, we should not in any way seek to underplay just
how enormous is the magnitude of what we are seeking to do. On
the other hand, we have no choice but to go forward and to try
to achieve it. If we do significantly interfere with the climate,
then the kind of changes which we have already begun to see, which
most scientists believe are connected with global warming, increased
desertification in some parts of the world, combined with increased
flooding, more extreme weather, including typhoons and hurricanes,
the dislocation of human beings in a large area and habitats,
the threat to global food security and water resources, the rising
sea levels taking significant parts of the world under water,
not just small islands but going into continents, these are consequences
which we cannot ignore. Whilst I accept the significance of what
you are saying, I rather welcome it because it is saying to public
opinion across the world that we do have to back what governments
are trying to do. This is not government imposing a burden on
us, this is the only way in which the human race can protect itself
and enhance its survival over the next one or two centuries let
alone beyond that. It does have to be put in very stark terms.
There are possibilities of improved technology: another option
is carbon sequestration. We will be discussing at Buenos Aires
the take-up of carbon by forests which have been planted since
1990, but it is much more than technology. We have to change our
style of life. We do have to make a massive change out of fossil
fuels towards renewables. The potential to do that is actually
quite good. I personally believe that after the centuries of coal
and then oil, the next century will be dominated by solar power,
which has almost infinite potential and is environmentally clean.
The British Government has doubled, although it is low, its R&D
expenditure on photovoltaic technology over the last few years
precisely for that purpose. We need to go a great deal further.
There is the potential and all of it has to be exploited. There
can be no question of turning back or baulking.
Mr Loughton
38. A point on Portugal and Austria and
Europe generally. Perhaps a cynic might say that the reason Portugal's
allowance has gone up so much is to fill up all the empty roads
which have been built courtesy of the European Union Regional
Development Fund in northern Portugal. What I wanted to ask you
about specifically was whether you envisage a harmonisation on
environmental taxes throughout Europe and particularly on the
point of road fuel gases where we have on LPG and CMG for example
the rates of duty in this country which are by far the highest
in the EU, almost double the next nearest. In some countries,
Benelux countries in particular, there is zero duty on environmentally
friendly fuels. If we are to achieve these levels of reductions,
is it in your thinking that we are going to have to have some
common level of favourable treatment of taxation towards the more
friendly road fuel gases or whatever may take over from them?
Is that actively being encouraged or discussed at the moment?
(Mr Meacher) The Energy Products Directive is
on the agenda and the Commission's view is that this is not so
much or not at all an environmental tax as filling in a supposed
deficit in the single market. We are not convinced by that argument.
We do believe that energy measures, fiscal measures in regard
to energy, are a very important part of the overall package. The
British Government has always taken the view that we do not accept
that fiscal measures should be imposed on us through European
mechanisms based on qualified majority voting. That does not mean
that we do not accept that energy measures are very important.
Indeed there is the fuel duty escalator which we increased from
the previous Government's five per cent. to the year 2000 to six
per cent per year, which should produce additional carbon savings
of something like 2.7 million tonnes, by that measure alone in
the year 2010, together with, most important of all, the Marshall
review, under Sir Colin Marshall, to look at energy taxation,
whether a carbon tax or some other form of energy taxation. The
only other point I would make is that we do have a very strong
social presumption against increasing the cost of domestic energy
as opposed to industrial energy.
39. The fuel escalator aside, why was there
nothing in this budget to bring down the cost of duty on road
fuel gases from such a high level compared to our EU partners,
particularly as we know we have the problem in this country. There
are 18 filling stations for CMG or something tiny, yet in Italy
there are over one million vehicles which run on road fuel gases.
It really does need a severe kick start along the lines of the
last Government on promoting unleaded petrol, which really got
that going. Why did you not do something in this budget really
to get that off?
(Mr Meacher) I suppose one answer to the question
is that one can always ask why a budget did not do even more than
it did. I would insist that the budget did a good deal on the
transport side. There was a series of measures. I will not bore
you by repeating them because you know them. I accept the basic
point you are making that if we are going to get a big increase
in LPG and CMG then we do have to have a market for the introduction
of these fuels on a significant scale. Fiscal measures are certainly
part of that. All I can say is that I accept the point you are
making. The Chancellor has already made a major start in terms
of taxation policy, significant increases in the scale charges
for free fuel for company car drivers, the VED to be reduced to
£100 for the least polluting cars and other measures. You
are referring to a further and additional measure and I accept
that there is a need to move further in that direction.
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