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3.4 pm

Mr. Alan Simpson (Nottingham, South): I begin with three comments of praise. First, I praise and thank the Select Committee on Environmental Audit for its report and the context in which it set the report. It is important that the Committee acts as a conscience and a critic of where we as a Government have got to, and sets out ways in which we can get to where we want to be. The whole House should thank the Committee, especially for the way in which it has set out the carrots and sticks involved in the process of reaching our goals.

Secondly, I thank my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs for the statement she made prior to this debate on the UK's commitment to signing the Kyoto treaty. She set out with firm commitment the Government's intention to deliver on the reduction of carbon emissions in our society and to change to an economy that gives people a serious prospect of surviving through the century. I do not use the latter phrase lightly.

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Thirdly, perhaps unusually, I thank the Prime Minister. In an important speech made a year ago, he pledged to create a low-carbon, low-waste economy in Britain and to green the agriculture sector and the common agricultural policy. Such statements are welcome, but they will not be realised unless they fit into a comprehensive green fiscal strategy, which should be put in place quickly. The question of how to put such a strategy in place quickly focuses our attention on the coming Budget, and it is right that we examine that.

From the report and our many debates in the Chamber emerge four principles around which environmental taxation should be structured and four types of measurable outcome that the House and the Government must take seriously. Taking the principles first, it is right to say that if environmental taxation is to command public support, it has to be clear and honest. Secondly, it must be based on a process that rewards the virtuous while penalising the villainous. There must be a sense of environmental justice in our policies.

Thirdly, there must be a direct connection between environmental taxation and environmental gain. The public will not object to environmental taxation if they can see that the payback directly enhances the quality of life that they, their children and their communities enjoy. Only when the money dissipates in the mist and nothing about the quality of their local environment changes do they begin to be deeply and legitimately sceptical about the purposes of that taxation.

John McDonnell (Hayes and Harlington): Has my hon. Friend heard that this week the Republic of Ireland introduced a 15 per cent. levy on plastic bags, of which each person in that country gets 325 a year? The levy will bring in £120 million to use for promoting green issues and environmental projects. Should we introduce that sort of thing in this country?

Mr. Simpson: We certainly should. I had not heard of that initiative, which I welcome, although I was aware of a similar one introduced in Greece not only to change the culture in Greek society as a whole, but to target specifically and encourage the re-use of shopping bags by the large number of people who visit Greece as tourists, whose lasting legacy appears to be the polythene bags they leave behind. We should consider such measures as practical applications of the principles I am outlining.

The fourth principle is perhaps the most contentious. We need to be unafraid of saying that if we are to deliver a sustainable low-carbon economy, we have to change the nature of market rules so that markets favour the sustainable rather than the polluting. The practical application of that principle will probably be the most contentious area that any Government have to tackle.

Where does that lead us? On the principle of clarity, and in terms of the specifics that I hope the Chancellor will consider in his contemplation of the coming Budget, the House and the country understand that we should adopt a clear position on the case for a pesticides tax and a fertiliser tax.

I hope that the Chancellor will also consider aviation fuel and the enormous damage that it does through ozone pollution and depletion. It is a mechanism through which suppliers can externalise pollution. The stripping of productive processes out of the United Kingdom to locate

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them in another country with lower environmental standards is not a global environmental gain. The connectedness of pollution issues means that we cannot consider in isolation what happens in one country. Rules must be set that apply across an international agenda.

On domestic initiatives, I welcome the Government's introduction of the energy efficiency contribution that is required of the energy supply industry to meet energy efficiency initiatives in domestic energy consumption and changes in the technology for environmental sustainability in the industry.

I also praise in advance the support that I am confident will be forthcoming from the Cabinet for the private Member's Bill introduced by my hon. Friend the Member for Brighton, Kemptown (Dr. Turner), the Home Energy Conservation Bill. I know that it has slight financial implications, but in budgetary terms they are little more than the cost of a can of paint, and it would be tragic if the Government missed the opportunity of making changes that would be of enormous benefit to the fuel-poor and to those who are forced to be the most polluting energy consumers.

In terms of rewards and gains, I shall suggest a number of measures that I hope the Chancellor will consider. To promote energy efficiency in the home, we could make considerable mileage from offering rebates on stamp duty for properties that met high energy efficiency standards. That will become more straightforward when we introduce seller's packs that make available surveys of all homes, but we could it introduce before then.

An energy survey of a home would cost about £150. Even on the cheapest property that would be affected by stamp duty—one that cost £60,000—that would offer a potential saving of about £450, which could be used towards improvements in energy efficiency. Once in place, the measure could be widened to encourage households to undertake other improvements such as the recycling of water and the use of low-impact materials. The rebate is the sort of carrot that we ought to have in mind when we discuss environmental gain.

We should introduce flexibility for local authorities to vary council tax on properties that are already energy efficient or which we want to induce to become energy efficient. That would have the advantage of extending the payback period for improvements, reducing the cost to those undertaking the improvements, and saving money on their fuel bills and council tax. Large numbers of households around the country would welcome such a measure.

We could extend the measure to the business community by allowing variation in business rate rebates which would allow cheaper rates for businesses that employ local people, cut their traffic impact and implement green transport schemes for workers and energy efficient premises. My authority in Nottingham is beginning to move in that direction by discussing the introduction of a company car parking levy. Exactly such rebates are being offered to companies that sign up to local green transport schemes.

All these proposals involve hypothecation and the identification of a payback where the return of taxation to virtuous ends binds people in as net gainers from the process. That could be extended to arrangements for recycling in every home. I know that the landfill tax is contentious, but if householders saw its proceeds

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manifesting themselves in the setting-up costs of recycling schemes, it would allow them to make choices about being environmentally virtuous. Virtue will strongly influence where public pressure takes us in the years ahead.

We must allow the public to make important ethical choices that are also environmental choices. We must allow companies tax breaks to deliver the next generation of renewable energy technologies. We should examine ways of offering similar tax breaks to farmers and households for applying renewable technologies and using them in the daily process of their work and lives.

We should consider how regulation can offer consumers the choice that they want. My hon. Friend the Member for Reading, East (Jane Griffiths) made a powerful case for liquefied petroleum gas—LPG. It is a wonderful example. About a year ago, I was fortunate to be allowed to test drive an LPG vehicle for a week. It was an enjoyable experience, with one exception: I went into a state of panic when the fuel started to run low and I had to work out where to fill the thing up. I remember real anxiety and pulling into petrol stations to ask where I could get LPG. The attendants would scratch their heads. I even stopped the police to ask them. They said that they knew of a place in Southampton—I was going south—and suggested that I go into the centre of Southampton and ask there.

We must contrast that with the experience in France where, by regulation, the terms of franchises for petrol stations were changed. It is an obligation that one out of every six pumps must offer an alternative fuel, such as LPG or biodiesel. There is an important and legitimate argument to be had about which alternative fuel, but the key fact is that when one pulls into a forecourt, one knows that one can make an ethical choice. One is not offered the Hobson's choice of the polluting technologies that we are seeking to move away from. The introduction of alternative fuels makes it possible for motorists to fill up virtuously. I am certain that huge numbers—even greater than those cited by my hon. Friend—would make that change if they could go about their daily lives without panic or confusion.

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