Examination of witnesses (Questions 80-99)
WEDNESDAY 14 MARCH 2001
MR STEPHEN
TIMMS MP, MR
CLIVE MAXWELL
AND MR
JOHN HALL
80. But if they have not been built into the
pilots, and we now have one fully fledged and it has not been
built into that, how can we be sure that they will have an environmental
and sustainability objective in their remit? It is ideal that
it should be, certainly as far as this Committee has said we appear
to agree with that, but when are we going to see it?
(Mr Timms) I am very confident that they will but
what I would advise the Committee to do is to take these matters
up with the Ministers responsible for them.
Christine Russell
81. Minister, we do welcome many of the measures
that were contained in the Budget to encourage urban renewal and
certainly measures like the capital allowances which will encourage
more people to go and live over the shop. Having said that, I
think there is great disappointment that the Budget did not address
what was the central issue that was highlighted by the Rogers
Report that at the moment there is not a level playing field between
greenfield development and brownfield development, ie greenfield
development is still zero rated and on brownfield development
you still pay 17.5 per cent. I know that there were measures introduced
in relation to contaminated land but in so many of our towns and
cities it is just tracts of vacant spaces that have been previously
used but they are not technically contaminated. What consideration
have you given, are you giving, in the Treasury to getting rid
of what is still a perverse incentive to build on greenfield sites?
(Mr Timms) I think this Budget has constituted a substantial
VAT reform package targeting resources where the market failures
are the greatest and where they will do the most. It is an ambitious
package and I think you made the point that the Committee welcomes
it. I would not want the significance of it to be under-estimated.
Having said that, it is the case that we do not plan currently
to make big changes to the VAT base, that would require a lot
of detailed research on the likely social, economic and environmental
impacts of such a move. It would certainly be a very controversial
thing to do and we do not have plans at present to do it.
82. Can I just ask you if you are prepared to
commission that research, because the reality is that it is still
a cheaper option to pour concrete on greenfields than face the
challenge of inner city regeneration? Are you at least prepared
to consider all of those impacts you have just listed?
(Mr Timms) I think the package that we have announced
represents a significant tilting of the playing field in the interests
of the objective that you described. I notice, for example, that
Lord Rogers himself responded to what we said in the PBR by making
the point that "one of the best new proposals we have seen
in recent months is the reduction in Stamp Duty on properties
in inner city areas". I think that is going to make a significant
difference. What I would like to do is see the impact of these
changes. I am not proposing to commission research at this stage
but, of course, we will keep the matter under review.
Mr Chaytor
83. Minister, could I take us back to the Climate
Change Levy very briefly and just pick up on a couple of points
that I think are quite important. First, I just want to endorse
what Mrs Walley was saying about the importance of transparency
on the energy efficiency and renewable technologies front, but
whenever I have discussed the Climate Change Levy over the last
12 or 18 months with companies in my constituency I have always
explained to them that to offset their liabilities there will
be a fund into which they can bid to improve their energy efficiency
or develop renewable technologies, although I was not aware of
what the process was by which they would bid. Are you assuring
us now categorically that all of the bids for new money for energy
efficiency innovation and renewable technology innovation will
be channelled through the Carbon Trust and as soon as the Carbon
Trust is established companies can then submit their bids? From
my experience there is zero understanding not only from small
companies but medium sized and some large companies about how
they can submit a bid to the various funds that you outlined earlier.
I think it is important not only do we have a comprehensive list
of all the budget streams that are now available but that companies
across the country have that list as well.
(Mr Timms) I think the answer is everything except
renewables, but let me ask Mr Hall to give you a full answer to
that question.
(Mr Hall) The Carbon Trust itself will have three
elements. First, it will take over the existing energy efficiency
best practice programme and expand that quite dramatically. Secondly,
it will promote research into the low carbon technologies. Thirdly,
it will be in charge of the list of the products that are going
to qualify for the enhanced capital allowances and we expect there
are going to be more than 1,000 on that. In response to your direct
question about how do firms actually do this, there is an Energy
Efficiency Helpline, the number of which I do not have in my head
but we will certainly be able to supply to you.
84. One phone number?
(Mr Hall) One phone number. You phone that number
and you are given instant advice over the phone. If you wish to
take the matter further then you can go into the form of an energy
audit, which means people will come to your firm, have a look
at the firm and give whatever advice is appropriate in terms of
energy efficiency measures.
85. Thank you very much. Is that Energy Efficiency
Helpline up and running from 1 April 2001?
(Mr Hall) It is up and running already.
Joan Walley
86. Could we have the number?
(Mr Hall) I am in a position to give the number: 0800
585794.
(Mr Timms) And it is in the Budget documentation as
well.
Mr Chaytor
87. Could I just pick up a second point on the
Climate Change Levy. You assured us that the £100 million
that the Prime Minister announced at the Chatham House Conference
a week last Tuesday was entirely new money—60 from the Capital
Modernisation Fund, 20 from the Performance Innovation Fund and
20 reallocated from the DTI—but given the slippage on the
predictions of the cost of the accelerated capital allowances
there is presumably a net saving to the Treasury of 40 million
there. So presumably the 100 million net growth that the Prime
Minister announced has to be offset by the 40 million net saving
and, therefore, the net increase to the Treasury as a whole is
actually only 60 million.
(Mr Timms) I do not think there is a saving to the
Treasury. The profile of the cost has been put back a few months,
that is all. So while in year one we would anticipate a lower
take-up than would have been the case if the information had been
available earlier, in a couple of years' time the cost to meet
the profile will be greater.
88. In two years' time the figure now is 130
million whereas originally it was 140 million.
(Mr Timms) That is for next year.
89. Even for the years ahead we are reducing
the estimate of the cost of the capital allowances.
(Mr Timms) I think I am right in saying the year after
that we would expect a greater sum simply because the profile
has gone back, that is all that has happened.
90. Within the current three year spending period
there is still a net saving of 40 million. In the next three year
spending period there may be a net increase.
(Mr Timms) No, I do not think there is.
(Mr Hall) It may be worth clarifying exactly where
the fall in the number for the first year has come from. There
has been no change in the list of technologies qualifying or the
number of products that expect to take up, what has happened is
originally it was envisaged this list of products would be made
available in around about December 2000 and although firms could
not claim enhanced capital allowances on those in the last tax
year they would be able to retrospectively submit claims in the
coming tax year. Because of the delay in the publication of the
list, as the Financial Secretary said, by four months then the
figure for 2001-02 now covers 12 months of take up rather than
the originally envisaged 16 months, so all that investment is
just pushed back and the profile has not changed.
91. So the profile has not changed and, therefore,
in 2003-04 the estimated cost will be 40 million more than it
would have been originally?
(Mr Hall) I do not have the figures.
Mr Chaytor: We need to know that to be
absolutely clear.
Joan Walley
92. You did promise that you would send a note
setting out the details of that.
(Mr Timms) We can certainly do that.
Mr Chaytor
93. If I can just move along to some more general
policy issues surrounding the Treasury as an institution. Minister,
you will have detected in your visit to the Committee today, and
I think in your previous visit, that we have a degree of scepticism
about the extent to which the Treasury as an institution is committed
to the values of sustainable development. What I want to ask you
is do you think that is fair comment?
(Mr Loughton) Yes.
(Mr Timms) I do not think that your scepticism is
justified, no. In fact, I was talking to a very senior official
of Friends of the Earth on Budget Day and he volunteered the point
to me that in his discussions with Treasury Ministers and officials
he identified this as a very, very serious agenda for the Treasury,
and I think he is right to do so.
Mr Chaytor
94. If it is not fair comment, why is it that
in the Treasury's published aims and objectives there is no reference
to "sustainable development" or "environmental
protection" or some such similar phrase?
(Mr Timms) I think the objective of sustainable development
is clearly implied in the aims that we have set out which are
in front of me here but I cannot put my hand on them. We do use
the term "sustainable growth" and that is why it is
there, precisely to pick up the importance of this agenda.
95. Nobody that I have come across ever used
the term "sustainable growth" before the Treasury in
recent years. I do not know quite what it means but if it means
that we are against boom and bust then I am all in favour of it,
and I suspect it does mean that. I think our suspicion is that
sustainable growth is to do with evening out the ups and downs
of the business cycle but still assumes a fairly traditional view
of the models of economic growth and it does not really mean what
we understand to be sustainable development with all the implications
for market transformation and concern about the depletion of natural
resources and concern about greater efficiency and use of natural
resources. Is it not time to clarify this or somehow strengthen
in the Treasury's aims and objectives the clear commitment to
sustainable development, which appears everywhere else in Government
policy statements?
(Mr Timms) I think the key thing is the inclusion
of the word "sustainable", which is there. No doubt
you are right to indicate that one of the things we mean by that
is that we do not want to return to boom and bust, that is true,
we do not, but it also means that environmental sustainability
needs to be achieved in the growth that we are working for as
well. My perception is that the inclusion of the word "sustainable"
there carries exactly the connotation that you are looking for.
96. Can environmental sustainability be achieved
if we have a commitment to year on year economic growth of 2.5
per cent or thereabouts ad infinitum? You are using the traditional
models of what constitutes economic growth.
(Mr Timms) We need between us to ensure that it can,
that is the central challenge that we face, and that is what this
chapter in the Budget documentation addresses, how can we ensure
that safeguarding the environment is consistent with our objectives
on economic growth. I think it is absolutely vital for the nation
that we are able to deliver on both. Certainly we see that as
an important concern for us and the Treasury.
97. If I can just pursue this point in respect
of the Treasury's relationship with other departments in the Public
Service Agreements. Is there within the model Public Service Agreements
for other departments any reference to the importance of environmental
sustainability in their policies and practices?
(Mr Timms) There certainly is, yes. The PSAs do contain
a reference to most of the indicators of sustainable development.
That was very clearly built into the Spending Review process and
into the PSA process. I think we had a good deal of success in
the Spending Review this time in building sustainable development
into the process, it was an important part of the guidance at
the outset. We discussed it at Green Ministers' meetings and I
think the outcome has been quite widely welcomed as a successful
exercise.
98. In terms of your environmental targets it
was the case, I think, until this year that shifting of the tax
burden from the taxes on labour to taxes on pollution was a key
target for the Treasury itself. Is it the case that the commitment
has slightly been watered down? Does that now appear in the PSAs,
that specific commitment to shifting the tax burden?
(Mr Timms) I certainly do not think it has been watered
down at all, no. We are taking forward the Climate Change Levy,
which is being introduced next month, which is a very big step
in this direction. A year later we will be introducing the Aggregates
Levy, which is a further step in exactly the same direction. No,
it has not been watered down at all.
99. Does it still appear in the PSA documentation?
Our understanding is that it has been dropped?
(Mr Timms) The PSAs refer to the sustainable development
indicators and I can provide a table for the Committee setting
out exactly where they are.
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