Examination of Witnesses (Questions 160-179)|
BOATENG MP, CLIVE
WEDNESDAY 5 DECEMBER 2001
160. And on the scale of the Department and
the task that lies before us.
(Mr Boateng) I think it is indicative of the levels
of yield that are indicated there. But I do think it is important
to remember that we are looking there at pilot projects that are
designed to inform future decisions; so if, on the basis of that
work, certain decisions were to be made then the sums would be
considerably more than £5 million. But, as it is, less than
£5 million, it is not, within the wider scheme of things,
a very, very large amount of money, no, it is not.
(Mr Maxwell) I would just add, this stage of the Green
Fuels Challenge followed an earlier stage at which the Government
consulted on different green fuels, rather than new green fuels,
and, as a result, in the Budget, announced reductions in duty
for various road fuel gases and biodiesel, which did cost significantly
more than this.
Mr Best: That is helpful.
161. Minister, a few weeks ago, before we move
away from transport, when Stephen Byers appeared before this Committee,
some of us expressed a degree of scepticism about the ability
of the Government to raise money on the markets to finance transport
spending, and there was specific reference made to the tube network
and the PPP proposals there. Without going round that entire loop
again, it is being suggested, on Teletext this afternoon, that
the Secretary of State is appearing before the DTLR Select Committee
as we speak, and that, according to Teletext, at least, if he
cannot persuade the Committee of the efficacy, as it were, of
the Government's proposals, he may then announce that the PPP
proposals are being dropped for the tube. I wonder if, from the
Treasury point of view, there is anything you can add on that?
(Mr Boateng) No, Mr Francois, I cannot, it is entirely
a matter for the Secretary of State.
162. Could I pick up a point that was raised
earlier. There is talk at the moment that there is going to be
some transfer of funds from the roads budget to support the railways,
and I wondered what the implications were for the environment,
either positively or negatively, of that transfer of funds?
(Mr Boateng) That, again, is a matter for the Secretary
of State and for his Department, and I am not really able to assist
in relation to the impact of talk.
163. So the Treasury have not been involved
in those discussions?
(Mr Boateng) I am not able to assist, in terms of
the impact of talk.
164. Can I ask you about the Climate Change
Levy; it is my view that it is a very complex taxation, certainly
with regard to renewable exemption certificates, certainly some
of the negotiated agreements that have taken place. Have the Treasury
made any attempt to calculate the total regulatory costs of the
Climate Change Levy?
(Mr Boateng) Can I say, first of all, in relation
to the Climate Change Levy, that it is the result of the Task
Force to which I referred you earlier on; no-one would pretend
that this is an easy area, it is not, but the package is broadly
revenue-neutral for business, and it includes a range of exemptions,
it includes a number of measures that are designed specifically
to make it business-friendly. And, in terms of progress, in relation
to the negotiated agreements, so far, we have 44 such agreements
completed with eligible energy-intensive sectors, covering over
13,000 sites, and I think that is an indication that the compliance
costs are not such as to dissuade companies, who see the benefit
to them of entering into such agreements, from so doing.
165. Forgive me, Minister, for interrupting
your flow. Are you saying you just have an indication, rather
than a calculation of the regulatory costs?
(Mr Boateng) WellMr Maxwell.
(Mr Maxwell) I know that Customs & Excise have
published a Regulatory Impact Assessment, and that is available
on their website. I am afraid I do not know very much detail about
it, but they will have published one as part of the standard budget
166. Thank you for that. Can I change the subject
slightly. We are about to have the Renewables Obligation and an
Emissions Trading Scheme; are you concerned about the increasing
complexity of these instruments in the energy field, and do you
think there is scope for simplifying and rationalising them?
(Mr Boateng) I think it is early days yet. We have
got a very good indication that the City of London is likely to
become a world leader in emissions trading, they have already
taken the lead in this area, and I would be very keen to give
it time to bed in before even beginning to contemplate changes
to the regime. The last thing the market wants is uncertainty
in this area. Business, the City, have welcomed emissions trading,
they see it as a profitable area of activity, and I am very keen,
and I know colleagues in DEFRA are very keen, that we should take
the lead here. It will be launched in the UK in April 2002, we
are helping kick-start it, with the equivalent of £30 million
after tax, which will be available from 2003-04, in order to provide
an incentive for firms to join. So I am optimistic about it, and
I think so is the City.
167. Can I just follow up on that, because we
are talking about emissions trading. What would be the effect
on the market and of what you have just said by what was agreed
very recently at Marrakech. The agreements at Marrakech, a few
days ago, really, largely affected these kinds of areas, when
we are talking about emissions trading, and what I would like
to know is your ministerial view on how what was agreed at Marrakech
will impact on this?
(Mr Boateng) I have not got one at this stage, because,
as you say, such agreements were arrived at only a few days ago,
and I do not know what the impact is. Mr Collins?
(Mr Collins) No.
(Mr Maxwell) No.
(Mr Boateng) The impact has not been dramatic; when
we are able to ascertain what the impact is, I will certainly
give the memorandum.
168. So the level of impact is not visible in
(Mr Boateng) No, not yet; not yet.
169. Have you got anything you want to add?
(Mr Maxwell) Just to say, I do think those sorts of
agreement highlight the need for schemes like emissions trading;
obviously, responsibility for emissions trading is primarily the
responsibility of DEFRA and for their Secretary of State.
170. That was why I asked, because regulation
of the City, in some respects, at least, is partly the responsibility
of the Treasury.
(Mr Boateng) I think, if I may say so, it is a perfectly
proper question, and it is a very interesting question, and when
we have an answer we will certainly let you have it.
Chairman: Thank you very much indeed.
171. Can I apologise for coming late to the
Committee, I was detained in the House. Can I just ask, within
the context of the Climate Change Levy, whether or not you have
had a chance to take account of representations in respect of
CHP? Because it seems to me that if we are really going to be
looking at the long-term changes that we want to see, and if we
are really going to be meeting targets, somehow or other, the
Treasury has to balance what is going on, on the one hand, in
the DTI, in respect of the New Electricity Trading Arrangements,
and also in the efforts to achieve targets for carbon emissions,
etc., etc. Do you feel it is right, or the right time, to give
a total exemption to CHP, and are you going to be in a position
at any stage to make any statement on that?
(Mr Boateng) We certainly do recognise the difficulties
faced by CHP at present, since the introduction of the New Electricity
Trading Arrangements, and its impact on price; and we certainly
will be, and are, considering the environmental case for more
favourable treatment for CHP within the CCL. I think it is important
to say that CHP still has relatively favourable treatment, compared
with conventional electricity generation, but undoubtedly NETA
has made a difference. As to whether or not we will be seeking
full exemption under state aid, we have not made any decisions
yet, while we are carrying out that evaluation, and we have not
made any approaches to the Commission.
172. Minister, you referred to pesticides earlier,
and I said I would like to return to that. The Government had
a view that it was to introduce a Pesticides Tax; following consultation,
the Prime Minister, or whomever, decided very rapidly that a voluntary
approach might be better. When will you have evaluated the effects
of the voluntary package on pesticides?
(Mr Boateng) We certainly intend that, in the run-up
to Budget in 2002, that assessment will need to be made, and I
really do want to stress that we have by no means ruled out a
Pesticides Tax, it remains an option, and no-one should be under
any illusion that if the partnership approach does not work and
if we are not satisfied in making that assessment that it is working
then we will take the necessary measures. We know that pesticide
use is associated with damage to biodiversity, we know that it
leads to water contamination; we have said, and I will repeat,
that the tax could be a useful tool in addressing those environmental
impacts, everybody has to understand that, and we have not changed
our view one iota from that. But we have made it clear that we
are prepared to give the partnership approach a chance, and that
voluntary package of measures has been in place now since April
of this year. DETR published some work on a possible design of
a tax in 1999, so that design work, as it were, has been done,
and we intend to keep that under constant review, so it will not
take long to get it off the shelf, the dust will not be allowed
to accumulate on it.
173. Thank you very much, Minister, for the
forthright exposition of the view of the Treasury, and your predecessor
made similar points, which you have made even more strongly. I
think the Committee will be pleased to hear them. What criteria
will you be using to evaluate whether this pesticide voluntary
package is working or not?
(Mr Boateng) Mr Maxwell.
(Mr Maxwell) There is a steering group that has been
set up to oversee implementation of the package and to review
progress on the package; that involves a number of environmental
organisations, so I am sure they will be very rigorous in their
174. Yes, that is the process; what are the
(Mr Maxwell) I do not have a list in front of me now.
(Mr Boateng) We will be happy to make the criteria
known to the Committee. My own view about this is that we need
to be as transparent as we possibly can; everybody has to understand
where the goalposts are. And if the assessment, as I say, is not
one that demonstrates that the voluntary approach has worked then
we will take the necessary steps.
175. Thank you, again, and also for mentioning
the effects of pesticides on water pollution, as well as the effects
on biodiversity. This Committee brought up that point, again,
with your predecessor, that there are very considerable costs
on water consumers, as a result of the water companies having
to clean pesticides and fertilisers out of water. Will you be
making, or this group, will they be making any assessments of
(Mr Boateng) I would be very surprised if that was
not a factor that they took into account.
176. Good. Have you reconsidered the case for
taxes on fertilisers, as well as taxes on pesticides?
(Mr Boateng) No.
Mr Jones: Thank you.
177. Can I just ask about Pesticides Tax, please,
Minister. This evaluation process, do you have a fixed timescale
whereby this will be complete, and you will then have a set of
proposals before you to make a decision as to whether you will
make a compulsory Pesticides Tax go forward?
(Mr Boateng) I think the phrase that we have used
is that the Tax will be assessed in the run-up to Budget 2002.
What I must not do in any way is to anticipate what the Chancellor
will do in 2002, in terms of his package; but what I regard it
as my duty to ensure is that the Chancellor, in the run-up to
making his decisions about Budget 2002 has the product of this
178. So do I understand that by saying there
is a chance there will be a Pesticides Tax in the 2002 Budget,
(Mr Boateng) The Chancellor will have the assessment,
and he will then determine what will be in his Budget.
179. Minister, the Secretary of State for the
Department of Environment, Food and Rural Affairs last month convened
a waste summit. Now, given that taxation has a very important
part to play in waste policy, can you, first of all, enlighten
us as to any input that the Treasury had into that waste summit,
and what conclusions you draw?
(Mr Boateng) I am very anxious to ensure, in relation