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Industrial Energy Tax
9. Mr. David Chaytor (Bury, North): If he will make a statement about the implementation of the industrial energy tax. [79453]
The Paymaster General (Dawn Primarolo): Following the recommendations made by Lord Marshall, the Government will introduce a climate change levy on the business use of energy from April 2001. The new levy will make a significant contribution to meeting our targets for reducing greenhouse emissions.
The climate change levy will entail no increase in the overall burden of tax on business, since it will be recycled in full through a cut of 0.5 per cent. in the main rate of employers' national insurance contributions. Businesses will also benefit from an additional £50 million for schemes aimed at promoting energy efficiency directly, and from extra support for renewable sources of energy.
The Government recognise the need for more special consideration for the position of energy-intensive industries, given their high energy usage and exposure to international competition. We intend to set a significantly lower rate of tax for energy-intensive sectors. My right hon. Friend the Deputy Prime Minister initiated discussions with the sector concerned at a meeting on 29 March.
Mr. Chaytor:
I thank my hon. Friend for that reply, and congratulate the Government on the way in which a consensus has been developed in recent months on the need for the climate change levy. However, does she agree that, although large companies are now well aware of the arguments surrounding the levy and the need for it, many thousands of small companies have not been party to the debate surrounding Lord Marshall's report, climate change and the Kyoto protocol? Can my hon. Friend assure the House that, in implementing the levy, and also in explaining its purpose, special attention will be given to the needs of small companies?
Dawn Primarolo:
I can give my hon. Friend that assurance, because the consultation now taking place on the details of the scheme and the percentage of the levy, and the discussions on how it will operate, are not only targeted at assisting the energy-intensive industries. As my hon. Friend rightly pointed out, they will also ensure that small and medium companies are aware of their obligations and of the process that will take place.
Mr. Eric Forth (Bromley and Chislehurst):
The Minister has just emphasised the Government's environmental concerns, as the Economic Secretary did a moment ago. Ministers have argued for some time that they can justify huge and stringent increases in fuel tax for vehicles because they will be environmentally helpful. Given that the pollution of the environment by domestic energy is at least as great as that by vehicles, how can she explain the reduction that the Government made in domestic fuel energy tax?
Dawn Primarolo:
The answer is fairness, and to assist pensioners so that people could afford to keep warm. The Government's targets for meeting their Kyoto obligations are clearly laid out, in connection with both the industrial energy tax and the measures taken in the transport sector, in the consultation documents that are to be published by the Department of the Environment, Transport and the Regions.
Mr. Alan W. Williams (East Carmarthen and Dinefwr):
Are not the energy-intensive industries the very ones that benefited most from the collapse in energy prices in the past 10 years? Oil prices have fallen from $30 a barrel to $10 a barrel, the price of gas has fallen by half, and coal is down to £30 a tonne. I am disappointed to hear that the Government have decided to introduce a lower rate when those industries have benefited the most from low energy price and have the most to contribute to carbon dioxide savings.
Dawn Primarolo:
I am sorry that my hon. Friend is disappointed, but we need to pay especial attention to the question of competitiveness. The consultation document, which suggests an illustrative rate reduction for intensive energy industries, is designed to ensure that they make a contribution and fulfil their obligations. At the same time, we are mindful of the environment in which their businesses operate.
10. Mr. Jonathan Sayeed (Mid-Bedfordshire):
If he will make a statement on his plans to increase the savings ratio. [79454]
The Economic Secretary to the Treasury (Ms Patricia Hewitt):
The Government want to encourage people to save more and that is why we have taken the tough decisions necessary to create a climate of low inflation, economic stability and an end to boom and bust. Those are the conditions that will encourage people to undertake long-term saving and improve their security.
Mr. Sayeed:
The verdict of the professionals in the savings industry is that ISAs are more expensive and more bureaucratic than PEPs, and less generous. ISAs are not attractive to those on modest means, which is why Marks and Spencer and Sainsbury have refused to sell them over the counter in their supermarkets. As the decline in the savings ratio is especially acute among those who are less well off, will the Minister agree to publish and place in the Library a savings ratio disaggregated for each of the income groups and then explain to the House how she will encourage the less well-off to save, because ISAs are clearly failing?
Ms Hewitt:
Contrary to what the hon. Gentleman suggests, ISAs are clearly set to be an enormous success.
Mr. Peter L. Pike (Burnley):
As my hon. Friend has said, the Government want to make ISAs successful among those lower income families who are the people we need to encourage to save. All the publicity for PEPs and TESSAs in the past few weeks will have soaked up some of the money that may have been available for savings schemes. Does my hon. Friend agree, therefore, that we need to give ISAs a reasonable amount of time before we can judge their success? I am sure that, in 12 months' time, my hon. Friend and my right hon. Friend the Chancellor of the Exchequer will be able to say that it has been a successful scheme for lower income families.
Ms Hewitt:
I am grateful to my hon. Friend for those points. He is right to say that the majority of savings schemes are sold in the last few months of the tax year rather than at the beginning of the new tax year. That is another reason why the take-up of ISAs in the first week of their introduction is so very encouraging. We know that the lock-in period that was one of the conditions of TESSAs was one of the biggest barriers to putting money into savings, especially for lower income people. People want to know that they can get at their savings when they want them, and they want to be sure that there are no nasty surprises or excessively high charges hidden in the small print. That is why we have introduced the cost access terms--or CAT--standards for ISAs, to ensure that they offer fair charges, easy access and reasonable terms in which people can have confidence.
Mr. Howard Flight (Arundel and South Downs):
I put it to the Minister that the demand for ISAs at the beginning of the new financial year is substantially down on the demand for PEPs and TESSAs in the same period last year. In addition, although it is not directly a Treasury area, the uncertainty in pension arrangements between now and 2001 and the introduction of stakeholder pensions is causing a vacuum in pension saving. If one takes together the potential decline in new pension schemes and the lower accumulation in ISAs than obtained in PEPs and TESSAs, I do not see how the savings rate will rise; rather, it will continue to decline.
Ms Hewitt:
The hon. Gentleman has done nothing but abuse ISAs ever since we announced the plans for them. I regret that he seems to have a vested interest in seeing them fail. On the contrary, we are confident that they will be extremely successful, as the take-up in the first week has already shown.
The Financial Services Authority has just published guidance to providers on how to advise people to make appropriate provision for their pension savings in
anticipation of stakeholder pensions. As the hon. Gentleman will know if he has read the consultation document on stakeholder pensions, we will ensure that millions of people on middle incomes, for whom personal pensions have been, in most cases, a disaster because of the charges that were imposed by providers, will in future have access to a low-cost, secure form of provision through the stakeholder pension.
11. Mr. Paul Goggins (Wythenshawe and Sale, East):
What representations he has received from children with regard to debt relief. [79455]
The Chancellor of the Exchequer (Mr. Gordon Brown):
The Treasury has received around 2,000 letters and postcards from children on the vital question of debt relief. The Government welcome the strong interest shown by many young people in debt relief and the poverty relief that can be made possible by it. Our plan for 2000 is to cut the debt, increase the aid to the poorest countries, sell International Monetary Fund gold to make that possible and increase giving by individuals and companies.
Mr. Goggins:
I thank my right hon. Friend for his answer and draw his attention to a letter that I received recently from one of my constituents, seven-year-old Joshua Deegan. Joshua's message is quite straightforward: "Help cancel the debt". For Joshua's sake, but more particularly for the sake of the millions of young children who live in the poorest, most indebted countries, will my right hon. Friend continue to press at every point to ensure that that noble aspiration can be turned into a practical reality in the new millennium?
Mr. Brown:
I thank my hon. Friend for bringing to the attention of the House the concerns of one child, which are also the concerns of thousands of children who have taken up the issue. I applaud the work of the Churches and other voluntary organisations that have taken a lead in pressing for the millennium year to be remembered for the debt relief that is made possible.
I can assure my hon. Friend that, when it comes to the IMF and World bank meetings in the next few days, we shall be pressing our colleagues in other countries to join us in trying to secure in 2000 a debt reduction of $50 billion as a minimum, and an increase in aid to the poorest countries so that they receive $60 billion in 2000. To do that, we want initially to sell $1 billion of IMF gold. I hope that my hon. Friend will join me, as will other hon. Members of all parties, in encouraging individuals in our community to sign up to millennium gift aid, under which the Government and the Treasury will match donations that are given by individuals throughout Britain.
Mr. Nick St. Aubyn (Guildford):
I am sure that it was only an oversight on the part of the Chancellor not to pay tribute to the previous Conservative Government's role in promoting debt relief. The idea of selling IMF gold was particularly promoted by the previous Conservative Chancellor, and many children in Britain supported the Conservative Government's actions in that regard. But may I ask the Chancellor about a quite different form of
Mr. Brown:
I have already answered the question about the withholding tax and what the Government are doing, and I do not think that it is covered by this issue of debt relief. I am sorry that, on an issue for which there should be all-party support, the hon. Gentleman chooses to turn a question on overseas aid and international debt relief into an obsession with the Conservative party's policies on Europe. I did praise, and have on previous occasions praised, the work of the former Chancellor of the Exchequer, although he seemed to get small thanks from the Conservative party for the work that he did. At the same time, there is an urgency about what we have to do over the next year; and I hope that Opposition Front Benchers will join us in pressing everybody in the country to take part in the campaign to secure international debt relief and make 2000 a year when debt relief is converted into poverty relief too.
Ms Tess Kingham (Gloucester):
For many years, the United Kingdom Government have been at the forefront of pressing to persuade the IMF to sell off gold stocks to finance debt relief in developing countries. If today's media reports are to be believed, that campaign has achieved a measure of success and I congratulate my right hon. Friend on his staunch and unending work in this area over the past couple of years. Will he elaborate on the details of today's media reports? What will the time scale for selling the gold stocks be? How much will be sold, and how will this be implemented?
Mr. Brown:
I am grateful to my hon. Friend for that and for the work that she and others have done in pressing the cause of debt relief. We put the proposal to sell IMF gold to the G7 Finance Ministers' meeting a few weeks ago, as we have done on previous occasions. The American Government have said that they will support the proposal and the German Government, who have resisted in the past, are now in a position to support the proposal. I confidently expect that all G7 members will now support the sale of gold, so the IMF will go ahead with the proposal later this year. We have initially proposed the sale of $1 billion of gold. That is an initial sale that can take place, but there is pressure for more to happen.
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