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9.41 pm

Mr. Andrew Stunell (Hazel Grove): I am delighted to speak in the debate. First, I have to give credit where it is due and to say that any observer from any part of the House would have to give the Chancellor nine out of 10 for presentation this afternoon. It was very skilfully done, but the words of the right hon. Member for Bishop Auckland (Mr. Foster) must be borne in mind: what seems brilliant on Tuesday can often seem sour on Friday. I wonder whether today's message of tax cuts all round and enhanced public services will stand up to inspection. I have a strong feeling that, when many pensioners in their 80s in my constituency look at the small print, they will be disappointed at the small scale of the largesse that they are to receive.

Having endured cuts of £10 million in the last year of the Conservative Government, and £12 million in the first year of the Labour Government--and having just been confronted with another £4 million in cuts for next year--the chief executive of Stockport council will no doubt find the idea that public services are receiving extra support somewhat hollow.

The chief constable of Greater Manchester has reported that, during the last five years of the Conservative Government, the number of uniformed police officers in Greater Manchester fell by 156; that, in the period between the general election and last September, it fell by a further 34 officers; and that, as a result of the £12 million budget cuts next year, it will fall by a further 130 officers. I have a feeling that he, too, will not be convinced of the largesse that the Chancellor has been handing out.

I shall now concentrate my remarks on the environmental impact of the Budget. Last year, the Chancellor made himself look a little foolish by promising to produce a Green Book to match the Red Book, which would outline measures in respect of the environment. In the event, he produced one page. This year, he has done better; he has produced two pages: pages 84 and 85 of the Red Book.

The Chancellor said that the Government were committed to a target of a 12.5 per cent. reduction in carbon dioxide emissions by 2010. He did not say too

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much about the domestic target of 20 per cent. which is referred to elsewhere in the Red Book. That set of environmental Budget proposals is intended to reduce carbon emissions by 3 million tonnes a year. In broad terms, that is only 2 per cent. of the target that we need to reach, so there is a very long way to go to achieve even the limited statement of green objectives and results.

I shall comment on two of the proposals. First, we welcome the fact that the Government are taking seriously the Marshall report. We very much hope that it will be implemented in a practical and worthwhile way. We regret, however that what is proposed is not a genuine carbon tax. It does not allow consumers and industrialists to choose to use green and renewable energy and therefore to bypass the tax. Although the measure will no doubt raise money and be an incentive for greater efficiency, it will not promote the use of renewable energy.

The other features of the Budget that the Chancellor waved around to demonstrate his green credentials were the changes to vehicle excise duty and the fuel escalator. It is a great pity that he did not listen more carefully to what the Liberal Democrats have said. We proposed that vehicle excise duty on all vehicles smaller than 1,600 cc should be eliminated. The revenue should be compensated for by an increase on fuel duty of 5p per litre. That would leave any motorist doing less than 23,000 miles a year marginally better off. It would overcome the criticism to which the Chancellor has rightly been subject from hon. Members on both sides of the House--that his proposal will hit rural motorists particularly hard. Under his proposal for a £50 reduction for cars with smaller engines, motorists with cars smaller than 1,100 cc will be in credit for only the first 6,000 or 7,000 miles. After that, they, too, will pay more than before the Budget.

The Chancellor also omitted many other practical and sensible proposals that would have helped him to reach his Kyoto targets and would have benefited the people whom he was anxious to protect--those who live in poverty. A reduction in VAT on energy-saving materials and energy efficiency measures for buildings would have gone a long way towards helping many of the 8 million households living in fuel poverty, who currently spend more than 10 per cent. of their income on keeping warm. It would have helped them to have properly insulated and heated homes and would have helped to avoid the 40,000 excess deaths each winter in this country that result from fuel poverty. That is six deaths per week per constituency throughout the winter. The Chancellor's silence has denied us the chance of that benefit. There is scope, too, for an investment policy that concentrates on renewables. I could say a lot more if the clock were not racing towards 10 pm.

The Budget also lacks a clear policy on integrated transport. It was fine to hear that the Deputy Prime Minister will make a wide, sweeping statement, but we want to know when that is coming. The extra money that we have for rural bus services cannot be used to help existing services, but must be used on new ones. That produces some absurd results in my constituency on the urban fringe of Greater Manchester. To qualify for the grant, the strangest routes have to be devised. They must not run on an existing bus route and must have a qualifying amount of rural road. If that is the best that we

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can do to create an integrated transport strategy, the Secretary of State needs to come back from the Maldives in double quick time.

There were no proposals for a green-field development tax. We must ensure, particularly in areas such as Hazel Grove, that there is a strong disincentive to build on green-field and green-belt sites. I very much hope that there will be opportunities for consideration of such proposals in further debate on the Budget.

The aim of the Budget was to address some urgent priorities. We share those priorities, including a sound regime of taxation, high-quality public services and a real concern for the environment. Sadly, the opportunities have been missed in many areas. That is particularly true in terms of the environment.

In 2010, the Government's guideline figures become legally enforceable via the treaty into which we have entered. As a result of the Budget proposals we have heard today, we will be well behind the game. We are clearly missing the Kyoto targets with these proposals, and we are missing the opportunity for jobs and investment that worthwhile and vigorous pursuit of those targets would bring.

Worst of all, in the long term, we are heading into a situation where pursuing those environmental targets is seen as something that only people with hair shirts are prepared to pursue. The targets could be seen as a way of improving the quality of life for the people of this country, improving the investment and export potential of its businesses and giving a world lead on climate change. Those opportunities have been missed today. That is a great shame and a great mistake.

9.51 pm

Mr. David Chaytor (Bury, North): I am grateful for the opportunity to follow the hon. Member for Hazel Grove (Mr. Stunell), who made some constructive criticisms. It was interesting that both he and the hon. Member for East Worthing and Shoreham (Mr. Loughton) concentrated on environmental taxation--the point that I wish to raise.

If the hon. Member for Hazel Grove looks deeper into the Budget documents, he will find that, in addition to the progress made on environmental taxes today, further announcements will be coming on-stream in due course and further work will be set in train--particularly on the question of tax on aggregates, on pesticides and on water extraction.

Today's Budget is a landmark Budget, in so far as environmental taxation is now being taken seriously. It is crucial that the environmental objectives are integrated into fiscal policy. Some Conservative Members have said that not enough is being done to protect the environment, while others criticise the energy tax and the fuel taxes. There is a schizophrenia deep in the heart of the Conservative party on environmental policy.

The previous Government, to their credit, were the first to initiate environmental taxation with the landfill tax and the introduction of the road fuel duty escalator. However, when the Tories have the nerve to criticise the impact on petrol prices, we should point out that the difference between petrol prices under the Conservatives and under this Government is three Budget increases of 1 per cent.--the previous Government's policy was to increase duty by 5 per cent.; ours is to increase it by 6 per cent.

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The Budget is important in so far as it restores fairness to the heart of taxation policy. For a generation, it has been impossible to have a serious debate about taxation in this country because of the obsession with the level of taxation and with reducing taxation. By the various measures that my right hon. Friend the Chancellor has announced today, we once again have the concept of fairness at the heart of our tax policy. Many thousands of low-paid workers in my constituency, as well as the 15,000 pensioners, will welcome the new emphasis on fairness.

I wish to concentrate on the environmental measures, and I congratulate my right hon. Friend the Chancellor on grasping the nettle of the industrial energy tax. Had the previous Government not made such a mess of their VAT on fuel policy, that industrial energy tax could have been in place--developing, working and cutting carbon dioxide emissions. We are five years behind where we should be because of the incompetence of the previous Government on VAT on fuel.

Having said that, I urge the Chancellor and the Government to think seriously about the implementation of the energy tax. The ground has been well prepared by Lord Marshall and his colleagues, and most large companies are well aware of the implications of the tax--many are already developing their own internal emissions training systems. However, I fear that many smaller companies have not yet grasped the importance of the energy tax. They have not yet understood how it will impact on them. The Government must take the issue seriously and ensure that advice is available to small companies on how they can not only adjust to, but benefit from, the energy tax.

For many years we have not thought seriously about the use of industrial energy. We have become profligate because we have got used to low energy prices. When companies seriously consider how to conserve energy they will quickly find that they can save a considerable amount on their bottom line; but they can do that only with professional advice.

I hope that the Government will keep under constant review the way in which the proceeds from the industrial energy tax are used. It is right to establish the principle that it should be revenue neutral, but if it is used only to reduce employers' national insurance contributions an opportunity will be lost. If the tax is to work, it must be set against investment in renewable energy. Companies should be able to claim exemption if they can show that they are switching to renewable energy sources. That is one of the most effective ways of reducing greenhouse gases and other emissions.

We should consider the impact on rural motorists of road fuel duty, but we should not overplay the issue--and, when we talk about petrol prices and poorer people, we should remember that the poorest third of households do not have a motor car at all and are not affected. There is no real argument against the principle of the road fuel duty escalator, and there are other mechanisms whereby low-income motorists in rural areas can be protected. One method is to use the standard spending assessment system and adjustment to council tax. One of the most effective ways of protecting those poorer motorists is to adjust council tax to compensate them.

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