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7 Nov 2002 : Column 416—continued

Climate Change Levy

2. Andrew Selous (South-West Bedfordshire): What recent discussions he has had with manufacturers about the effect of the climate change levy on UK competitiveness. [78223]

The Paymaster General (Dawn Primarolo): The Government have regular discussions with business about a wide range of issues, including matters related to tax.

Andrew Selous : Will the right hon. Lady tell the House whether the Government are considering the proposals of the Engineering Employers Federation, which would not only help the environment more quickly, but would be less burdensome to business? Is

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she aware of the extreme difficulty caused to Linpac, a manufacturer in my constituency, which has had to move two of its moulding machines to Spain, where neither the climate change levy nor anything similar operates—a move that was demanded by one of its major customers? When the company briefed the Chief Secretary on the matter, he apparently turned to his officials and said, XOh, it wasn't supposed to operate like this." What does the right hon. Lady have to say about that?

Dawn Primarolo: I am aware of the report that the hon. Gentleman refers to. As he will know, the initial report on the introduction of a climate change levy was undertaken by Lord Marshall. He recommended, and the levy went on to include, two principles: that the revenues from the levy would be recycled, and should be broadly revenue neutral; and that specific issues should deal with energy-intensive industries where they are subject to international competition. The levy undertakes both of those arrangements.

The hon. Gentleman will also know that the amount of revenue that is recycled to business—as a result of enhanced allowances, or the Carbon Trust, or directly through the national insurance rebate—is greater than the amount that the levy raises. The suggestions in the recent report confirm, therefore, that the Government are going in the right direction. However, they rightly raise issues that the Government need to scrutinise closely as the climate change levy beds in.

Mr. Barry Sheerman (Huddersfield): Does my right hon. Friend agree that the climate change levy is a very important environmental tax, and that getting it right is important? I was pleased to hear her comments on that point, but does she also agree that we need a range of innovative environmental taxes that help industry to do the right thing, and that have the right touch? Will she continue with the environmental taxation review, and introduce measures in the near future?

Dawn Primarolo: I can of course confirm that the climate change levy contributes to the Government's programme in committing ourselves to reach our Kyoto targets. I should also remind my hon. Friend that, before the levy's introduction, there were some two years of consultation with business. That consultation continues, but, as he rightly says, climate change is a threat now, and we cannot wait for solutions tomorrow. We need to move forward on these issues, and the climate change levy is an important aspect of that agenda.

Mr. Michael Howard (Folkestone and Hythe): Is the Paymaster General proud of the fact that this Government have managed to combine the anti-competitive impact of the climate change levy with an increase in greenhouse gas emissions, as was recently pointed out by Friends of the Earth? Has she read the recent remarks of Digby Jones, Director General of the Confederation of British Industry, who said that the levy is

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Dawn Primarolo: I am sure that the right hon. and learned Gentlemen will be aware that at least seven other member states in the European Union have comparable measures and that others are moving to introduce them, precisely because we need to address the issue of climate change. As Lord Marshall's report clearly pointed out, the climate change levy includes reductions to assist energy-intensive industries that are subject to international competition. What the right hon. and learned Gentleman has to tell the House is whether he is serious, as the spokesman for the Opposition, about tackling climate change. If he is, how should it be done? Will he tell us whether he is prepared to commit himself now, or will it be another promise for tomorrow?

Waste Recycling

4. Dr. Alan Whitehead (Southampton, Test): What appraisal he has made of the case for the introduction of an incineration levy to encourage future re-use and recycling of waste. [78225]

The Economic Secretary to the Treasury (John Healey): The Government announced in the Budget 2002 that they would consider the case for a tax on incineration in the light of the strategy unit waste project, which is due to be completed later this autumn.

Dr. Whitehead : Will my hon. Friend also appraise the large, long-term contracts being entered into by local authorities that centre on waste incineration? When he considers such a levy, will he address how it might help local authorities move beyond their reliance on such contracts?

John Healey: I pay tribute to my hon. Friend as one of the House's renowned experts on the subject and I thank him for his question. The need to minimise the production of waste and maximise the re-use and recycling of waste is at the heart of our waste policies. Technologies, including incineration, have a role to play in recovering value from waste, whether through recycling, composting or energy from waste, as my hon. Friend's question suggests. We will consider the specific questions he raises, and also the general questions, in light of the waste report that the Prime Minister's strategy unit is currently completing and which we expect to be able to publish shortly.

Mr. Mark Prisk (Hertford and Stortford): Why is it that whenever the possibility of improving business behaviour arises, the Government's knee-jerk reaction is always to increase the number or rate of taxes? Is not this an opportunity to reduce taxes to encourage behaviour?

John Healey: We have cut corporation tax, capital gains tax and small business tax. On the incineration tax, I made it clear in my original answer that the

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Government have agreed to consider the case—no more, no less—for a tax on incineration as part of the long-term waste management policies that we need to put in place.

Dr. Nick Palmer (Broxtowe): Does my hon. Friend agree that important though this issue is, the problem partly arises because of the sheer amount of packaging and unnecessary extra material that is thrust on consumers, whether we want it or not? Will he consider a levy on packaging or other ways to discourage firms from generating unnecessary waste with which consumers have to grapple?

John Healey: We have no plans to introduce or consider such a tax. The specific questions and the wider long-term aims of our waste policies will be considered in the light of the strategy unit's report, which is currently being completed and which we expect to be able to publish shortly.

Gross Domestic Product (East Sussex)

5. Mr. Charles Hendry (Wealden): What his latest figure is for the GDP of East Sussex; and what this is as a percentage of (a) the mean GDP across the country and (b) the highest GDP for a county. [78226]

The Financial Secretary to the Treasury (Ruth Kelly): The latest sub-regional GDP data relate to 1998 and show that the GDP of East Sussex at current basic prices was #3,850 million. That represented 0.5 per cent. of total GDP for the UK. It is not meaningful to calculate mean and highest levels of GDP for counties, as counties vary in size.

Mr. Hendry: The Financial Secretary will be aware that East Sussex's GDP per head is the third lowest in the country, below Liverpool, Newcastle and Glasgow. The Government's plans for local authority spending could result in East Sussex losing #44 million a year, despite its GDP level. Will the hon. Lady therefore have urgent discussions with her ministerial colleagues to make sure that they understand that any system designed to make local government funding fairer—a Government objective—should assist poorer counties rather than penalise them?

Ruth Kelly: Perhaps I could point out that East Sussex has benefited from this Government's policies: unemployment has fallen by 46 per cent. in the hon. Gentleman's constituency and, as a result of personal tax and benefit measures since 1997, pensioners will be #1,150 better off on average by October of next year.

I do accept that we are not prepared to ignore pockets of deprivation in areas of prosperity. That is why we are committed to balanced regional economic growth, and why we are funding the regional development agencies at an average rate of 4.5 per cent. in real terms over the next few years. We are working extremely closely with the south-east economic development agency to make sure that East Sussex benefits from a major regeneration programme over the next 10 years.

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