Examination of Witnesses (Questions 290
- 299)
TUESDAY 18 JANUARY 2000
MR STEPHEN
TIMMS MP, MR
SIMON VIRLEY,
MR DAMIEN
MCBRIDE
AND MS
HEATHER MASSIE
Chairman
290. Good morning. Thank you for coming here
this morning. We are delighted to see you. We have decided to
start five minutes early. Thank you for your various memoranda
and the letter dated 13 January, which dealt with the various
questions on the Climate Change Levy that we are anxious to hear
more about. I would not encourage you, but if there is anything
further that you want to add before the Committee questions you,
please do so.
(Mr Timms) I shall say a few words, if
I may. First of all, thank you for the opportunity to appear before
the Committee for the first time. I am grateful for the Committee's
work in pushing forward the environmental agenda in a number of
ways. I hope that the committee will agree that a number of its
previous recommendations were reflected in the environmental tax
measures that were announced in the Budget in March and in the
Pre-Budget Report in November. A lot of progress has been made
since the statement of intent on environmental taxation in 1997.
The Committee described the last Budget as the "greenest"
ever. The recent Pre-Budget Report contains significant progress
on environmental modernisation. Responding in particular to this
Committee's recommendations, there was, for the first time, a
separate chapter in the Pre-Budget Report on environmental issues
reiterating the importance that we attach to economic growth taking
place in a way that ensures effective protection of the environment
and prudent use of natural resources. I would be very happy to
answer any questions that the Committee may wish to put to me.
I shall introduce the officials who are with me. On my right is
Simon Virley, who heads the Treasury's environmental tax team.
Immediately on my left is Damien McBride from the tax policy team
in the Treasury dealing with indirect taxes. At the end of the
table is Heather Massie who has responsibility for environmental
issues at Customs & Excise.
Chairman: Thank you, Minister, for that
brief statement. We want to take it tax by tax. To begin with,
on one or two general points, I shall ask Joan Walley to start.
Joan Walley
291. Minister, I welcome how much you have done
personally to take this agenda forward. We were pleased to see
that the Pre-Budget Report has a special chapter on environmental
issues. In the light the statement of intent back in July 1997
as regards the precautionary principle, we are a little bemused
about the section in 6.4 on page 101 of the Pre-Budget Report.
You refer to the fact that environmental policies must be based
on sound evidence. Does that not conflict with the precautionary
principle? Should we not underpin everything with the precautionary
principle? Is there a conflict there?
(Mr Timms) I do not see a conflict. I think we have
been quite careful to research thoroughly all the measures that
we shall discuss this morning. There has been some research work
commissioned at the outset, some consultation following the conclusion
of that work and only then have we come forward with announcements.
I believe it is very important, particularly given the uncertainties
in some of these areas, that we research thoroughly and prepare
for the announcements that we make. That is what we have done
and that has been the right thing to do. I do not see a conflict
with the precautionary principle, and certainly no conflict with
anything in the statement of intent.
292. You do not feel that the formulation such
as the one that is in the Pre-Budget Report would have been at
variance with the lessons of the BSE crisis or the lessons from
asbestosis where you need a long incubation period to find out
the long-term effects? Why not spell out the precautionary principle?
Why not have it set out as clear as daylight?
(Mr Timms) If you look at the range of issues with
which we are dealing, they are rather different in character from
the examples that you have just given. There is a substantial
body of work on climate change, for example. That is not to say
that we know everything about what will happen in the future,
but there is a good body of research to draw on. The same is true
in the case of the use of pesticides. It has been possible, therefore,
to proceed on the basis of careful research in each of these areas.
There may be areas where in future that will not be possible and
I take your point. However, where it is possible—it has
been in these cases—we should proceed on the basis of research
where we can, not least because if we were to get it wrong the
consequences could be quite damaging and we want to avoid that
if we can.
293. In terms of the water environment, there
are a lot of questions to be asked. Why not have the precautionary
principle included? Will you look at that further?
(Mr Timms) I am not sure what you mean. I do not imagine
that you are urging me to do things before we are reasonably confident
at least about the implications of those measures. For example,
there was a good deal of concern about the proposals announced
in the Budget on some aspects of the Climate Change Levy. You
and I discussed those. I think it was important that we were careful,
consulted thoroughly and carried out widespread research before
moving on to the next step of the announcements that were made
in November. That is quite a good illustration of the importance
of being careful and thorough in planning measures that we take
in this area. It sounds a little as though you may be encouraging
me to rush ahead before we know what the implications are.
Joan Walley: I am not trying to do that.
I feel that there are questions raised by the way in which this
is framed, not least in terms of how much research, for example,
might have been done on any particular subject. You might have
one particular area where a lot of research has been done, such
as Climate Change Levy and greenhouse warming, but you might have
other issues where the same sort of research has not been done
and it is a question of where the precautionary principle underpins
all that follows.
Mr Jones
294. Welcome, Minister. I do not envy you your
role. I have been there before. On the Government's proposals
on pesticides, in the representations that our Committee received
from the RSPB and the NFU there was some dispute concerning the
external environmental costs imposed by pesticide use. What is
the view of the Government on that?
(Mr Timms) I have seen different figures assigned
to that as well. I am aware that conflicting evidence has been
presented to the Committee. I think the ENTEC report put a figure
of £274 million on that. Industry figures have been somewhat
less. The figures are different. However, I believe that there
is agreement on the fact that there is considerable potential
in reducing the damage caused by pesticides while consistent with
providing an adequate level of crop protection. We have seen the
different views that you have seen. We have not taken the view
about which is the more accurate, but we have proceeded on the
basis that there is potential there for some beneficial change.
295. Given that you have looked at the evidence,
as we have, and that you have seen that it is conflicting, why
have not the Government commissioned their own study into such
environmental costs?
(Mr Timms) We have commissioned a number of studies
in that area, in particular the Department of the Environment,
Transport and the Regions commissioned the ECOTEC study that was
published and consulted on during the course of last year. That
was a very valuable piece of work and it led to quite a wide-ranging
discussion. It has allowed us to take forward the process of deciding
what needs to be done in that area. It was a good piece of work.
It drew on a lot of previously carried out research which happened
to be available in that area, and that was helpful. It has been
a valuable piece of work from our point of view.
296. Have you considered any work to compare
the costs and benefits of the use of pesticides with the disbenefits?
(Mr Timms) There are a number of existing studies
that address both those issues. I believe that we have the research
information that we need to make progress on this. I do not think
that there is a need to commission further work before we go forward,
although that is not to say that we know everything possible that
could be known. I think we have the basis for making progress.
297. Have the Government considered the costs
that the water industry bear in capital costs of plant and running
costs of treating drinking water to remove pesticides?
(Mr Timms) Yes, we have had some data on that. Certainly
the water industry has figures. Yes, we are aware of those figures.
298. The figures are considerable—hundreds
of millions of pounds. Would you agree that that is a considerable
distortion of the market and in effect, a hidden subsidy, whereby
water consumers are paying hundreds of millions of pounds for
intensive agriculture?
(Mr Timms) There is a good deal of uncertainty in
this area. It is certainly the case that the water companies spend
a lot of money cleaning water. It is quite difficult to say that
part of the spending is as a result of pesticides and the rest
is the result of other things that have to be cleaned up. It is
not clear that if there were to be even no pesticides in the environment
how much of the water companies' spend could be avoided. In reality,
of course, there will always be some pesticides, so I am not sure—I
have not seen the data on this and the Committee may be aware
of more data than I am—that we know quite what the relationship
would be between a reduction in the use of pesticides and a commensurate
reduction in the spend of water companies in cleaning water.
299. Do you see it as the responsibility of
the Government to find out, given that we are talking about considerable
sums of money? There is at least an arguable hypothesis that organic
farming, for example, is considerably disadvantaged by that very
large subsidy that water consumers pay for products that they
may not wish to buy.
(Mr Timms) There is an agreement about what we want
to do which is to reduce the level of pesticide use commensurate
with adequate crop protection. We have the data that we need to
make progress on that. I am sure there are a number of other things
that it would be interesting to know, but I would not want to
hold up progress on that by commissioning additional research
at this stage.
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