Examination of Witnesses (Questions 233
- 239)
WEDNESDAY 15 DECEMBER 1999
MR PETER
AGAR, MR
MICHAEL ROBERTS
AND MR
PAUL EVERETT
Chairman
233. Good morning, gentlemen. You have had the
benefit of hearing some of the questions which the Energy Intensive
Users Group have fielded. Obviously ours will be a little bit
different for yourselves, but covering some of the same ground.
Is there anything you would like to say by way of initial statement
before we begin the questioning?
(Mr Agar) Thank you, Chairman, and perhaps
I should introduce my colleagues. I am Peter Agar, the Deputy
Director General of the CBI. Michael Roberts, sitting on my left,
is Head of our Industrial Policy Group which, amongst other things,
means that he has day-to-day responsibility for our work on climate
change and energy policy, and I also am accompanied this morning
by Paul Everett, on my right, who is Head of Policy and Economics
at the Society of Motor Manufacturers and Traders, the SMMT. We
thought Paul particularly might be able to help the Committee
in discussions about non-IPPC sites and our concerns over eligibility
of non-IPPC sites for climate change rebates for which the automotive
sector is a good example of a major sector which is currently
excluded from negotiated agreements. The only other thing I would
like to say to open, Chairman, is that the CBI over the past year
has been at the forefront of discussions about the proposed Climate
Change Levy and has expressed strong concerns about the initial
proposals, as set out in the March Budget, that those concerns
are concerns about means, not about ends. The CBI, as a membership
organisation, has always supported the Kyoto process and supported
the outcome of the Kyoto process and the allocation of targets
both to the European Union and then to the UK, so this is not
an argument and has not been an argument about the fact that we
have to do something about climate change and that the Kyoto agreements
are the right first step to guide us in what we should do both
as a nation and as Europe. The concerns have been purely about
means, not about ends.
Chairman: Well, thank you for saying
that and thank you also for bringing your colleagues along with
you this morning.
Joan Walley
234. I must say I am reassured that you feel
that it is an important objective to strive towards. First of
all, the submission which you have sent the Committee I think
predated the Pre-Budget Report, so I just wonder if you would
like to comment on concerns that you actually put out in the paper,
to what extent you feel they have been addressed and to what extent
you feel they are still outside the issues. I know you have just
referred to the eligibility issue, but could you just expand on
that a bit for us?
(Mr Agar) Of course. I think the Committee does have
a paper from us which is an initial reaction to the Pre-Budget
Report. It is a short paper or an extract concerning climate change
from our response to the whole Pre-Budget Statement which these
days is a rather wide-ranging statement. On climate change, we
were pleased that the Chancellor moved a considerable way towards
what we had asked for, by announcing revenue neutrality for the
private sector. Certainly for some energy-intensive sectors, the
combination of 80 per cent rebates plus the NICs reduction will
more or less give them 100 per cent relief from the levy; it is
a combination of those two things of course because even energy-intensive
users have some employees, although they may not be very labour
intensive. It remains the case that that revenue neutrality is
certainly not perfect for all those who will enter into negotiated
agreements and there are a number of sectors where there will
be a net cost and there are a number of sectors which remain outside
the current negotiations, with automotive being one of those,
which will certainly still have a significant net cost as a result
of even the new proposals. So one of our key concerns, which really
was not addressed in the Pre-Budget Statement is how do we extend
the eligibility for negotiated agreements to other sectors who
are willing to enter into negotiations and who are willing to
accept challenging targets. Nobody on the business side, certainly
in our membership, believes that negotiations are, as it were,
a free lunch; negotiations are simply, in our view, a more efficient
and effective way of getting the changes in energy efficiency
and behaviour that we require nationally to meet the Kyoto Treaty
commitments. Therefore, our key concern remains the question of
who is allowed into the negotiated agreements framework and that
is something which I am sure this Committee will want to return
to. We were also pleased, however, that the Government also recognised
that there needs to be more effort to provide positive support,
particularly to small companies, to help them become more energy
efficient. We had argued very strongly that the £50 million
in the original March proposal was inadequate to that end and,
although it was a considerable increase over what had previously
been spent, it was still, in our view, too small and, therefore,
we were very pleased that the Chancellor has now tripled that
to £150 million and pleased too that there is now a consultation
paper on the table, which I think only came to us at the end of
last week, so we have had very little time to look at it, which
sets out the range of questions that need to be answered about
how we could use that £150 million in the first estimate
in the most efficient way. Those were the key concerns. There
are some other specific concerns about the structure of negotiated
agreements, how the targets are set, some of which I know you
have covered with our colleagues from the Energy Intensive Users
Group.
235. Can I just ask you to go into a little
more detail about the extension of the eligibility because in
your paper to us you do mention the scrap metal industry and you
make the point that it is not covered by the IPPC and, therefore,
not currently eligible for negotiated agreements.
(Mr Agar) That is right.
236. Can you talk in terms of the inclusiveness
which you obviously would like to see in terms of the Government's
procedures from the Marshall Report through to the stage we are
at with the Budget and how we get the mechanisms to go further
forward to meet these objectives.
(Mr Agar) I am going to ask Paul to comment in a moment
on the automotive sector because I think that is a very good example
of a major sector—
237. It is scrap metal actually.
(Mr Agar) You want to talk about scrap metal?
238. Yes.
(Mr Roberts) I think in our paper we identified scrap
metal as a sector where perversions have arisen as a result of
the way that the negotiated agreements are being pursued, with
eligibility based on IPPC, but there are other examples, for example,
industrial gases, which was mentioned in your previous session.
That is another classic case where we have a very highly energy-intensive
sector which is not going to be eligible for rebates simply because
it is not covered by IPPC.
239. What I really wanted to do was to try and
get at the issue which is all about how inclusive the procedure
is actually for getting a mechanism in place for the Climate Change
Levy and the extent to which that can sit comfortably side by
side with other environmental objectives, like the one that you
flag up in respect of scrap metal which is to do with recycling.
(Mr Agar) I think you do need a kind of holistic view
and I think our colleagues previously when I came in were answering
a question about, as it were, the need in some cases to use more
energy to produce a material, for example, which will then help
save energy when it is incorporated in some final product. Another
example of that is the glass industry where if you want to produce,
as it were, triple glazing and very energy-efficient glass for
use in buildings to cut down energy use, it is actually a more
energy-intensive process to produce the glass in the first place.
Therefore, I agree there is a question there of how you take a
whole view which I think on the whole has not been addressed as
part of the design of the CCL; I think it has been put probably
in the "too difficult" category by the Government, too
complex actually to do that, but Michael might want to add to
that.
|
