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Climate Change Levy

6. Mr. Laurence Robertson (Tewkesbury): What recent representations he has had from manufacturing industry on the impact of the climate change levy. [60342]

The Economic Secretary to the Treasury (John Healey): As part of the normal process of contact with business, my right hon. Friend the Chancellor of the Exchequer and the Treasury ministerial team have met a variety of businesses and business organisations and have heard a range of representations, including those on the climate change levy.

Mr. Robertson: I am grateful for that reply. I suppose that the Minister will have met the Engineering Employers Federation, among other organisations. The federation has said that the climate change levy impedes manufacturing initiative and enterprise. Given the problems caused by the weakness of the euro and the decline that has continued in the manufacturing industry, do not the Government rather regret introducing the climate change levy, which is yet another problem that manufacturing industry has had to face?

John Healey: On the contrary, all sectors have a part to play in reducing carbon emissions, which are a major part of climate change challenges. All revenues to the Treasury have been recycled as a result of the climate change levy. There have been national insurance contribution cuts and a significant boost to energy efficiency support. It is important, as the Engineering Employers Federation will recognise, not to look at one tax alone. The level of business taxation means that, with corporation tax cuts, we have the lowest rates ever in the UK.

The federation will know also that research and development tax credits mean that large companies and small companies, especially in manufacturing, are benefiting. That has been welcomed. The OECD recognises that business tax rates in the UK are lower than those of 12 of our EU competitor countries.

Ms Joan Walley (Stoke-on-Trent, North): Along with my other north Staffordshire colleagues, I have been having close talks with the ceramic industry across the region. Contrary to the Luddite approach that we have heard from Opposition Members, that industry in the potteries is saying that it is at the forefront of helping this country to meet its international obligations.

Will my hon. Friend recognise that where we have carbon trading and a September end of year, as in the pottery industry, it is essential that as well as informal

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guidance we also have precise rules, so that the companies that will need to buy carbon credits know exactly how they can meet their targets and how, more importantly, they can benefit from the rebate? When can we have these rules?

John Healey: I am glad to hear that businesses in my hon. Friend's constituency are keen to play a part in reducing carbon emissions to help to address the climate change challenges. The climate change levy has been operational only since 1 April last year. It needs longer to bed down, but, in keeping with all other taxation, my right hon. Friend the Chancellor keeps the detailed operation and the impact of the levy under constant review as part of the normal budget process.


7. Mr. Jonathan Djanogly (Huntingdon): What recent bilateral discussions he has had with the Secretary of State for Trade and Industry regarding how his policies are affecting manufacturing industry. [60343]

The Chancellor of the Exchequer (Mr. Gordon Brown): I meet the Secretary of State for Trade and Industry regularly to discuss a wide range of issues, such as the future of manufacturing industry and the measures that we took in the Budget, including the research and development tax credit.

Mr. Djanogly: The right hon. Gentleman will be aware that manufacturing productivity in this country is suffering. The Government's own manufacturing strategy document states:

My understanding is that the position is getting worse all the time. When I speak to businesses in my constituency, they complain about the increase in taxes and regulations, yet this document does not even mention either of those issues. Will the right hon. Gentleman tell me what conversations he has had with the Secretary of State for Trade and Industry, how they intend to resolve the problems facing businesses, and why those issues are not even mentioned in his own strategy document?

Mr. Brown: In the Budget, we announced the first major simplification of the VAT regime as it affects small businesses. For the first time, instead of having to produce every estimate for every transaction, a percentage figure is being applied to the VAT bills for small businesses. This is a major simplification measure—which we hope to extend to other areas—affecting more than 500,000 companies. We are alert to the need for simplification, and we will continue to pursue that.

I think that the hon. Gentleman will find that, when he talks to businesses in his constituency, what they want most of all is economic stability. The fact that, as a result of making the Bank of England independent and of the new fiscal and monetary regime that we have introduced, we have had greater stability over the last five years than we had in the previous 18 years, shows the value of policies for stability against the old boom and bust.

Mr. Stephen McCabe (Birmingham, Hall Green): Does my right hon. Friend agree that criticisms of

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Government policy of the kind that we have just heard from the hon. Member for Huntingdon (Mr. Djanogly) and, earlier, from the shadow jouster—or should that be "jester"?—from Buckingham, would have much greater impact, were it not for the fact that manufacturing productivity is actually up 12 per cent. on the figure that we inherited in 1997, and that exports are up almost 20 per cent. over the same period? This contrasts sharply with the 700,000 jobs lost and the 5.3 per cent. drop in output when the present shadow Chancellor was the Minister responsible for these matters.

Mr. Brown: I have to disappoint my hon. Friend: it was a million jobs that were lost under the shadow Chancellor, and he should continue to apologise to the House for his performance as Secretary of State for Employment. So far as manufacturing is concerned, the first thing that we had to do was to create more stability. There has certainly been an increase in employment overall in the economy. Equally, we have created a better environment for investment through reforms in corporation tax and capital gains tax. Yes, there is an all-party interest in boosting productivity growth in the economy, and I hope that the Opposition will support the measures that we have taken in the Budget.

Chris Grayling (Epsom and Ewell): Does the Chancellor recognise the real concern in the manufacturing organisations that support the oil industry—and in the North sea oil industry as a whole—about the adverse effect that his budgetary tax changes will have on that industry? Will he now reconsider those measures, and will he listen to the cross-party campaign to encourage him, at the very least, to delay them until a full economic impact assessment can be made?

Mr. Brown: I hope that the hon. Gentleman will not fall for the propaganda of some organisations in that area. He knows perfectly well, if he has looked at the detail, that the 100 per cent. investment allowance for the development of new oil fields will make it more profitable to develop new oil fields in the future, not less.

As for the resource take from the North sea, our tax regime is more favourable than that of other countries. If the hon. Gentleman does not want us to go ahead with that tax proposal, he will have to explain to the House how he would raise the £500 million that is going into our public services.

Charlotte Atkins (Staffordshire, Moorlands): What success has my right hon. Friend had in encouraging manufacturing to take up information and communications technology much more effectively? Is he aware of such initiatives as the e-bus in my constituency, which is promoted by Leek college and Advantage West Midlands, and provides a mobile facility for micro and small businesses? It has 10 ICT terminals, and aims to encourage training, especially among micro-businesses, which to date have been poor at taking up ICT challenges.

Mr. Brown: I have not yet been on the e-bus, but I am interested that there are so many different initiatives as a result of our computer learning proposals. Council houses have been allocated for computer learning centres, BBC local studios have become computer learning centres and they have been set up in colleges, schools and other public

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places. With the mobile computer learning centres, we are trying to diffuse computer literacy education throughout the country. That is absolutely crucial for business, which is why there is 100 per cent. tax relief for businesses that adopt new computer and information technology. Although it is costly in lost revenue, I hope that both sides of the House will support expenditure on that.

Financial Mis-selling

8. Dr. Vincent Cable (Twickenham): What assessment he has made of the performance of the Financial Services Authority in protecting consumers from financial mis–selling. [60344]

The Paymaster General (Dawn Primarolo): The Financial Services Authority has statutory objectives to secure appropriate consumer protection, taking account of the costs and benefits of regulation, and to promote public understanding of the financial system. The FSA reviews its performance in its annual report, which will be laid before Parliament later today.

Dr. Cable: Will the Minister explain the difference between the commission-driven mis-selling of millions of pensions, which led Treasury Ministers to name and shame the worst offenders, and the commission-driven mis-selling of millions of endowments, as a result of which many of our constituents have not been able to repay their mortgages, but the FSA, backed by the Government, is refusing to name the worst offenders?

Dawn Primarolo: In some 80 per cent. of cases in which pensions were mis-sold, it was as a direct result of advisers. There are far fewer such instances in cases of mis-selling of endowment mortgages, and the compensation required is smaller. Of course, the FSA is active in ensuring that people with mortgage endowments know where they stand and how to complain. It is requiring firms to resolve areas of significant consumer detriment, and pockets of mis-selling and mis-pricing of products are being investigated. Some 218,000 policies have already been investigated, and compensation has been made available.

Mr. Mark Lazarowicz (Edinburgh, North and Leith): My hon. Friend will be aware of the scandals involving split-capital investment trusts. One of my constituents tells me that she has lost 96 per cent. of the value of her investment with the Aberdeen investment trust, which is part of the Aberdeen asset management group. She made that investment believing that it was low risk, and it was intended to pay for her elderly mother's nursing home fees. Will my hon. Friend urge the FSA as soon as possible to complete its investigation into the split-capital investment trusts scandal? Will she also join me in urging the Aberdeen asset management group to compensate my constituent and the many thousands of people up and down the country who have similarly lost as a result of the mis-selling of investments?

Dawn Primarolo: I understand the seriousness of the position that my hon. Friend illustrated with his constituent's experience of split-capital investment trusts. Although the FSA does not directly regulate that area, it has been investigating such trusts since last year. It will

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look particularly at marketing material, collusion between managers of split funds and mis-selling by advisers. As for my hon. Friend's constituent, of course she must take up her complaint with the firm. When firms cannot resolve complaints themselves, those complaints can be referred to the Financial Ombudsman Service. However, the FSA is pressing ahead with that review as quickly as possible.

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