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Mr. Peter Ainsworth (East Surrey) (Con): My hon. Friend always speaks well on these subjects. Does he agree that part of the problem that has dogged environmental policy for generations is that the Treasury seems to think that the environment is part of the economy, whereas of course the reverse is true?
Mr. Randall: My hon. Friend puts the point admirably, as befits his position as Chairman of the Select Committee on Environmental Audit. I congratulate him and the other members of the Committee on doing such an excellent job.
I have lived in Uxbridge all my life—I still regard it as Middlesex. I can still walk out of my house and go bird-watching, but I have noticed, despite the comments of the hon. Member for Sherwood (Paddy Tipping), that the number of species is declining. It may be part of the grumpy old man syndrome, but the environment around me is changing, and not for the better. My constituents, my family and I feel the effects of environmental pollution on our health every day. We should not take that lightly.
We all experience contradictions in our lives. Before I became a Member of this place and could speak on these matters, I used to walk to work, but now I travel to work by public transport and, yes, I drive here on many occasions because the public transport system is so bad. However, I shall try to make an effort, because of what I want for my children.
The environment is a wide subject—it can cover everything from litter to climate change, as has been pointed out. We must take it seriously and I hope that the debate has awakened some people's thoughts on the subject.
3.30 pm
Dr. Vincent Cable (Twickenham) (LD): It is clear from the contributions that have been made that this subject does not arouse enormous ideological division and passion, and there has been an extraordinary degree of consensus. My hon. Friend the Member for Lewes (Norman Baker) was generous in his introduction and acknowledged the many things that the Government are doing with which we agree. The hon. Member for Meriden (Mrs. Spelman), the Conservative spokesman, used language such as "common cause" and "credit where it is due", and any doubts that she might have had that she was speaking off message were assuaged by the contribution from the Conservative Whips Office. The Minister reciprocated by acknowledging Government failings in areas such as waste management in an open-minded spirit. In a particularly thoughtful contribution, the hon. Member for Sherwood (Paddy Tipping) discussed the need for a balanced approach.
People on the free market, libertarian right would regard the debate as wet and woolly, and people at the deep green end of the argument would regard all of us as hopeless consumerists, but none the less there is a fair
degree of agreement on the way we should head. However, this is not an Adjournment debate; it is an Opposition day debate, and perhaps I can focus on some of the areas of criticism.My criticisms are not of strategy, objectives or philosophy; they are criticisms of effectiveness. I shall quote the previous Minister for the Environment, the right hon. Member for Oldham, West and Royton (Mr. Meacher), who spoke openly about his position not with the freedom of the Back Benches, but shortly before he resigned from the Government. He said that he felt like a lone voice in the wilderness and that the Government had failed to grasp the magnitude of the environmental challenge. His point was that there was a lack of leadership on environmental issues. When we discuss that lack of leadership, we are talking about the top of the Government.
A few weeks ago, there was a revealing exchange in the Liaison Committee where the Prime Minister was being particularly articulate and effective. However, his exchange with the hon. Member for East Surrey (Mr. Ainsworth) contained a weak passage about what is being done at No. 10 Downing street about environmental strategy. He was asked, "Are you taking an active role?" He replied, "Yes, in two ways. First of all in the discussions that we have had about so-called liveability at local level, and then most particularly in relation to issues to do with sustainable development at an international level like Kyoto." On the first part of the reply, perhaps I am not fully in the loop on environmental jargon these days. Can the Minister explain what the Prime Minister means when he discusses his role in relation to "liveability at a local level"? What does that mean and what is No. 10 Downing street doing?
The other issue is more substantial. Labour Members were correct to say that the Government have adopted ambitious targets in relation to Kyoto. We have accepted a commitment to a big reduction, and although it is not quite as big as that accepted by countries such as Germany, we have accepted it and a positive lead is being taken.
I confess to not having been a great fan of many things that Baroness Thatcher did, but in the late 1980s I worked on one of the first big intergovernmental reports on climate change, which was submitted to the Commonwealth Prime Ministers in 1989 when concern first surfaced about sea level rises. The report was pitched at Mrs. Thatcher—as she then was—in particular. Although she may have had a blind spot over many other issues such as renewable energy and recycling, she was at least aware of the importance of global environmental problems. She took a leadership role on issues such as the Montreal protocol and even persuaded Ronald Reagan, whose environmentalism was best captured in his campaigning slogan about trees being the world's biggest source of pollution, to sign up to it.
That is in marked contrast to the current Prime Minister, who has staked much of his reputation on his close relationship with the President of the United States. Despite the advocacy and speeches in Congress, however, he has been totally unable to make any serious inroads into US policy on Kyoto.
Mr. Peter Ainsworth: I am flattered that the hon. Gentleman should refer to my brief exchange with the
Prime Minister. When I asked that question, it occurred to me that it was the only moment in the lengthy exchange between the Prime Minister and the Liaison Committee where his eyes went blank and his body language went pear-shaped. The hon. Gentleman is on to the right issue.
Dr. Cable: That is first-hand evidence to support my suggestion.
One very important Department, the Treasury, provides leadership and interest in environmental policy, and I am speaking in this debate because I shadow the Treasury. A lot of thought is going on, and the pre-Budget report contains 20 densely argued pages on the matter, and last year there were 100 pages. Many relevant tax instruments and economic instruments are going through the system such as the climate change levy, taxation on landfill and aggregates and the measures on biofuels, which we have discussed today. Innovation is taking place in those areas and, as a broad development in principle, I favour the introduction of economic instruments into environmental policies, which is positive from many different points of view. The introduction of economic instruments sends clear market signals to producers and consumers, it reconciles the environment and the market economy and it encourages the quantification of the economic costs of environmental damage.
My hon. Friend the Member for Lewes has recently tabled a series of parliamentary questions to which he has received helpful answers from Ministers. The answers suggest that in major areas such as road congestion and nuclear liabilities the aggregate economic cost of current policy is some £65 billion a year, and that is a superficial measure. My hon. Friend's questions help us in another way because they quantify the costs of regulation, which is desirable in itself. The regulation of the environment is, as with other matters, not desirable in itself, and there are often considerable costs associated with it.
David Taylor: Is the hon. Gentleman aware that under the removal of hazardous substances regulations, lead must be removed by July 2006, but there has been relatively little negotiation and discussion with the electronics industry, which is a major lead user in, for example, solder? Although the Government have a good environmental track record, they should take on board at a much earlier stage the concerns that industries put to them—the aggregate industry and the restriction of hazardous substances directive are two examples of that.
Dr. Cable: That is absolutely true. One of the advantages of economic instruments is that they enforce discipline in thinking about the problems and costs of regulation. Before I entered this House, I worked in the energy industry and saw at first hand the billions of pounds that often had to be spent across Europe in order to comply with requirements that had minimal environmental benefit. One of the advantages of using economic instruments is that they address that problem.
Having said flattering things about the Treasury and its approach, there is the major criticism about the basic lack of coherence at the heart of its actions. I make that
point as the Opposition spokesman, but the all-party Environmental Audit Committee—I think that this occurred before the hon. Member for East Surrey became its Chairman—produced a critique of the Treasury paper "Tax and the environment: using economic instruments", which is worth quoting. It said:
- "This document, for all its elegance as an economic and policy development treatise, certainly does not amount to an environmental tax and fiscal strategy. It is unclear to us in what way either the review or this document will help the Treasury develop its approach and implement its strategic objective of shifting the burden of tax from goods to bads."
The first example is climate change. It has been pointed out already that this country will pioneer a traded permits system, which is positive and I welcome it. However, it will be difficult, because there is no liquid market in permits at present. It will also be difficult to trade across national frontiers, and the scheme will not cover most small and medium-sized businesses. The major instrument at present is taxation, and the Government had the option of introducing a sensible, across-the-board system of carbon taxation that would tax carbon according to its role as a natural raw material. The carbon tax system could have been applied upstream on primary fuels, with minimal administrative costs, and would have spread throughout the economy. The Government did not take that route because they wanted to exempt households and the transport sector. As a consequence, the climate change levy fell almost exclusively on manufacturing industry, at a time when it was already suffering from all the problems of an over-valued exchange rate. The Government then exempted much of the most energy-intensive manufacturing and replaced taxation with voluntary negotiated agreements. That produced a system that is horrendously complicated. Even the most committed environmentalists in the green movement now want that system to be phased out and replaced by a proper system of carbon taxation. That is a good example of adopting the right principle—using a market instrument—but introducing a tax system that was over-complicated, discriminatory and ineffective.
A second example was mentioned by several hon. Members, including the hon. Member for North-West Leicestershire (David Taylor), and that is the imbalance between the taxation of motorists and of aviation. At the moment, motorists face extremely high rates of taxation—in theory for good environmental reasons, but in practice driven largely by revenue considerations. The Government manage demand for road use through queueing and congestion. That is in marked contrast to their approach to aviation, which is lightly taxed and enjoys a permissive approach to airport expansion, as the hon. Member for Uxbridge (Mr. Randall)—a fellow Heathrow neighbour—reminded us.
That problem can be dealt with in several ways. The hon. Member for Morley and Rothwell (Mr. Challen) advocated the introduction of aviation fuel taxation, and I support that in principle, although it would be difficult in practice because of treaty obligations. There are other ways to deal with the problem at national level. We have a system of regulation of airports—the so-
called single till system—which means that we have ludicrously low landing charges. We have a system of allocating permits for landing, in which they are handed out free of charge on what is called the grandfathering principle. There is no reflection of the scarcity or congestion involved. Both of those systems could be reformed at a national level if we were more aware of the environmental costs.The Chancellor has introduced some aircraft taxation—the passenger fuel duty—but it is only obliquely related to environmental costs, because it relates to the number of passengers, not the number of flights. Again, the broad principle of using economic instruments is understood and accepted by the Government, but it is applied incoherently.
The third example is in energy policy. Other hon. Members mentioned broad agreement with many aspects of the Government's energy policy. When I was my party's spokesman on the Department of Trade and Industry, I spoke on several occasions about the energy White Paper and I broadly agree with the Government's approach. Many of us would sign up to the renewable energy obligation and the commitment to carbon reduction, but the incoherence arises—as my hon. Friend the Member for Hazel Grove (Mr. Stunell) specifically highlighted—between the role of the DTI in energy production and the role of DEFRA in energy conservation. One of the issues that the Minister must explain is why his Department has been so weak in its dealings with the rest of Government on the key issue of the Warm Front programme. That is a small area of Government expenditure, but it is important, because it is one of the ways in which the Government can influence energy conservation and simultaneously address issues of fuel poverty—at relatively low cost. The cut of a third in the Warm Front programme sent a powerful signal that the Government were either uninterested in energy conservation or that DEFRA did not have the clout to deliver it.
The last example that I want to give is another issue that I dealt with extensively as the shadow DTI spokesman: the Government's approach to car recycling, where we have a European obligation. Again, the broad policy is right and I do not think that any of us have any problems with that. However, it seems that the Government were effectively nobbled by the motor car industry.
The Government were told that they could not introduce, as they should have done, a sensible environmental tax on the sale of the first car, but that the levy to pay for recycling had to be borne by the last owner. As we know, the last owner is generally at the bottom end of the income scale. Estimates of the recycling cost vary from £40 to £100, so there is a strong incentive for people simply to dump their vehicles, and the evidence that that is happening is already emerging. The total number of abandoned cars was, I think, 295,000 in 2001–02. It rose by 27 per cent. last year. The figure is growing rapidly.
My hon. Friend the Member for Lewes was unduly flattering when he said that the disposal cost was £40 million; it is probably 10 times that magnitude, for the simple reason that many vehicles are torched and then the fire brigade and the police have to be involved, at a cost of several thousand pounds per vehicle. There are enormous associated costs, and the problem has been
aggravated by bad policy produced by tension between different Government Departments and the wrong side winning the argument.There is a lack of coherence. Where we ultimately come together—and the intervention about the relationship between the environment and the economy was helpful—is in accepting that there is a very sensible principle underlying policy: the whole idea of sustainable development. I worked with Mrs. Brundtland when the original report on sustainable development went to the United Nations Secretary- General and so brought the idea into common use. There was then—and I think it has been accepted since—a powerful insight that, contrary to what many environmentalists had been claiming, there is no fundamental conflict between economic progress and the environment. Indeed, economic progress is vital to remove poverty, which in itself is the major source of environmental pollution. I think that we can all sign up to that.
For that concept to become really embedded in government, it must be taken seriously and given priority. Our main criticism of the Government is that although the words are right, the actions are often ineffective.
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