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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 490-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE ENVIRONMENTAL AUDIT COMMITTEE
Wednesday 24 March 2004 MR SIMON BULLOCK, MR ROGER HIGMAN, MS BRYONY WORTHINGTON and DR HUGH ELLIS MR PAUL EVERITT, MS KATHERINE BENNETT and MR MIKE HAWES Evidence heard in Public Questions 1 - 93
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Environmental Audit Committee on Wednesday 24 March 2004 Members present Mr Peter Ainsworth, in the Chair Mr Colin Challen Sue Doughty Joan Walley David Wright ________________ Witnesses: Mr Simon Bullock, Environmental Taxation Co-ordinator; Mr Roger Higman, Environmental Limits Co-ordinator; Ms Bryony Worthington, UK Climate Campaigner and Dr Hugh Ellis, Planning Adviser, Friends of the Earth, examined. Q1 Chairman: Welcome. Good afternoon. Thank you for coming in. Did you want to make a few introductory remarks? We have had your press release on the Budget, "Brown Ignores the Environment Again", which may be a summation of your views, but if you have any brief comments to add we would be pleased to hear them. Mr Bullock: Yes, we would be very grateful to make some introductory remarks. First of all, I am Simon Bullock and I work on Environmental Taxation Policy; Bryony Worthington is our UK Climate Campaigner; Hugh Ellis is our Planning Adviser and Roger Higman is our Environmental Limits Co-ordinator. So, briefly, to set out what we think three priorities for the Treasury should be: a priority for us - and I think we share this view with Tony Blair, it seems - is to tackle climate change to deliver at least 60 per cent cuts in carbon emissions. This level of target means that all sectors will need to do their part; domestic, transport, aviation and industry. We feel that to do this the Treasury must set a strategic approach to set the right economic framework to deliver that target for two reasons: to provide the incentives to change behaviour and redirect investment, but secondly, to signal the Government's intention that it has a strategic commitment to tackle this which will underpin all of its policies across all departments. Our view is that although at the moment there is some reasonable rhetoric we do not have such a strategy, as we can see from the Government's own projections on, for example, transport and aviation emissions. So the first of three priorities, we feel, is that the Treasury should set a net value strategy to deliver 60 per cent carbon cuts. Within that there are two priorities. The first would be to link the Budget more clearly to the spending review, particularly the coming spending review this summer. Taxes and economic instruments need to be introduced as part of well-designed packages, it has been argued for a long time, and a stronger link with spending is needed. Some proportion of revenue is needed to provide appropriate incentives, some spending will be needed to reinforce tax policy and some is also needed to address any adverse impacts that taxes may have. As an example for that we would cite transport. The right incentives are crucial. As we can see, the costs of motoring are continuing to fall and they need to increase, but that is not enough on its own; we need to have that hand-in-hand with spending to create alternatives for people to travel by public transport or make walking or cycling safer. The last priority for us is that this strategy should be very clear and open about the environmental and social objectives of its strategy. Often it has not been spelt out clearly enough that policies should be intended for environmental and social means, and these goals should be linked together as well. Again, transport for us is a good example of that. There is an urgent social need as well as an environmental need for alternatives to the car. Friends of the Earth are very keen on ensuring that policy delivers environmental and social goals together. If you look at transport, 60 per cent of the poorest fifth of households do not have access to a car. Even for the whole population, 30 per cent of the population do not have access to a car, so for those people having decent alternatives, a decent transport network and safe streets to walk on is an absolutely crucial thing and a basic need for most people. I have brought with me today a copy of a report we have done (I will leave a copy for you). It is work we have done with communities in Longsite, a quite deprived area of Manchester with very low areas of car ownership, and we were asking them what they wanted to see and what their priorities are for transport. Overwhelmingly it is better buses and safer streets. It is an issue that is eroding the quality of life for them and people in the city. So this is an example of where improving public transport and safety would meet environmental and social goals together. To conclude my opening statement, I think the two crucial elements to deliver a carbon strategy for the Treasury to meet the 60 per cent target we need to meet are clear, linked social and environmental goals and to link tax with spending, particularly with the spending review coming up in the next couple of months. Q2 Chairman: Thank you very much for that. We will come back to a number of the points you have raised in a minute or two. Can I ask you, first of all, whether you think the Government has, as it seems to claim, an environmental tax strategy? Mr Bullock: I think the statement of intent on environmental taxation in 1997 was very good. Two statements, in particular, were very good. The first one was that growth must be stable and environmentally sustainable, that quality of growth matters not just quantity; and that the Government will aim to reform the tax system to increase incentives to reduce environmental damage. That will shift the burden of tax from goods to bads. We think that was a very good initial, starting statement. In Labour's first term we felt they went quite a long way on this agenda: they introduced a climate change levy, they introduced an aggregates tax and they put in some good measures on road taxation. Since then we feel they have stalled, relatively. They have back-tracked on transport taxation; environmental tax as a proportion of GDP is 10 per cent and has been around 10 per cent for ten years - that is not moving up or down particularly much. Although they say there is a strategy to deliver a low-carbon economy, (coming back, again, to climate change and a 60 per cent target), for some sectors they are doing quite well; there is a long way to go and there is a lot more to do, but in industry, for example, we are going in the right direction. For the domestic sector things, at least, are not getting any worse. However, the two areas which are really crucial are transport and aviation, and the trends are in completely the wrong direction. We see the Government's tax and spending policies having a major effect here in stopping us getting towards those climate targets. Q3 Chairman: Coming back to one of the points you made earlier, is not the reason why it is moving the wrong way on transport exactly to do with social attitudes and social issues? We saw it happen with the fuel crisis/protest and the public objections that were raised. Whilst it may be the case that 60 per cent of the poorest fifth do not have a car at all there are an awful lot of people who are not well-off who do, and who object very strongly when the price of running their cars goes up. Mr Bullock: I think this is a clear example of the need to link environmental and social goals and deal with tax and spending at the same time. Of course, it would be politically very difficult to increase the costs of motoring if alternatives to the car are not put in place. I would note, however, that since 1980 the costs of motoring overall have fallen and since 1997 the costs of motoring have fallen as well. We have a tax and spend policy which does not provide for those alternatives. If you look at the spending figures the Social Exclusion Unit put out on transport, buses and walking get very small comparative sums compared with other modes of transport. Bus spending, I think, is around a third of annual spending for rail, or maybe a quarter - I forget the exact figures. Overall, though, they said that spending is very regressive. The poorest fifth of the population get 12 per cent of the transport spending budget and the richest fifth of the population get 38 per cent of it. So it is very important in the Comprehensive Spending Review that the Chancellor puts more money into creating decent alternatives to the car. Q4 Chairman: Taking it back to my first question, it seems, in the context of what you have just said, that rather than there being an environmental tax strategy which has stalled, there is no strategy as such at all. Mr Bullock: That is one way of putting it, yes. Q5 Chairman: There were some initiatives, there were some statements, there was Tax and the Environment: Using Economic Instruments published in 2002. These do not amount to a strategy. Mr Bullock: No, I do not think they do. That is why we are calling for an overall carbon strategy which would link the transport, aviation, domestic and industry sectors. As I say, we need to take action in all of these areas to ensure that overall that 60 per cent target is met. Q6 Joan Walley: Can I just press you a little bit further on that and ask: if you were advising the Chancellor how that strategy should look, are you saying there should be an action plan to it, or what would you say should be flagged up in that, in a bit more detail? Mr Higman: If I can come in on that, I think, firstly, we are looking to see that the Chancellor review all the areas of taxation in respect of carbon emissions to make sure they are moving forward on each of those areas. There are some areas that are not being taxed at all at the moment. Secondly, we have to consider other environmental impacts, and there are areas where we have seen voluntary initiatives, for example on pesticides, where we feel that tax approaches might be more suitable. We are looking for the sorts of initiatives that the Treasury was putting forward in the late-1990s to be reinstated, and that level of commitment moving forward to get the amounts of taxation on environmental bads increased such that we can reduce taxation on things that are considered to be environmental goods, like labour. Q7 Chairman: In the light of that, what do you see as the role for fiscal instruments? Do you see them as a way of reflecting the cost to the environment of various activities, or do you see them as a way of managing demand - as a stick to beat bads? Mr Bullock: We would say that the role of any fiscal instrument is to achieve the policy objective rather than simply just to internalise the external costs, which is I believe something the Committee has touched on before. Q8 Chairman: Do you think internalising the external costs is a worthwhile activity? Mr Bullock: I think it is worthwhile in that it certainly would be better than doing nothing. If you look at aviation, for example, the external costs are not being tackled at all at present due to the lack of duty on various sorts of fuel. We feel we would need to go beyond that. There are a large number of methodological differences in using internal and economic costs. We have got reservations about that almost at a moral level in some senses, in that it assumes that all environmental resources have a price and that there is no such thing as critical capital, that environmental goods can always be traded off. We would think that just dealing with internalising the costs, although it would be a useful and necessary first step, if that is the practical way to proceed at the moment, is worth doing, but in the long-term the price mechanism should be used to defend the policy objective rather than just to iron out external allowances. Ms Worthington: I would only add that there is an obvious trend in government to move to more flexible, market-based economic instruments. Where they are designed well and lead to the achievement of environmental objectives we support the use of those. I think the Government's policy is now far broader than simply a fiscal and spend policy; it now has a third string in its bow, if you like. I do not think they have, perhaps, been as explicit in telling us what their attitude to those instruments is and it might be useful for them to make a statement about their continued use of these trading mechanisms. Q9 Chairman: Coming back to something Roger Higman said, we hear a lot about environmental taxation and managing, controlling and punishing bads. Do you think there is enough done within the fiscal environment to encourage good behaviour? Are there a sufficient number of carrots (on the basis of what you said) as well as an insufficient number of sticks? Mr Higman: I think in some areas there are. Clearly, we have got incentives for alternative fuels and we support those. We may want to argue about the details of those but we generally support the framework. In other areas it may not be enough to give fiscal incentives, we may actually want to give direct support, financial support, through spending. Again, an example we have already mentioned, public transport, is a very good one. You can reduce the taxation of public transport quite substantially but that may not be the most effective way of providing the alternative people need. So, in that sense, we do not see it as simply a question of taxation. Mr Bullock: To add a little bit to that as well, if the Government was to increase road fuel duty just to keep the overall motoring costs constant, so no extra burden to motorists, that would raise between £16 and £30 billion pounds over the period to 2010, depending on the global price of oil. We feel that a large amount of that revenue could be used to create those incentives for alternative behaviour. For example, if you were able to walk safely (?) into every school in the country that would cost a mere billion pounds compared to the £16 to £30 billion figure. If you wanted to put 20 mile-an-hour zones into every residential street in the country that would be around £500 million. If you wanted to put a comprehensive network of bus lanes into the total built-up area that would cost £1 billion as well. So there is a major opportunity in the spending review coming up and the review of the transport 10-year plan to use some of the spending which should be raised from increasing motoring costs into providing safer streets, improving safety and improving public transport. Q10 Joan Walley: Have you actually got all of those details set out in some separate report that you have done? Mr Bullock: Ourselves and Transport 2000 will be publishing it on Monday, so I can get it to you. Joan Walley: That would be very helpful. Q11 Chairman: Yes, it would. Thank you very much. Can I just finally ask, we used to hear from you about Green GDP. I know that Roger Higman, for one, has been with Friends of the Earth for quite a long time. What has happened to Green GDP as a concept? Has it departed? Mr Bullock: No, I think not. In fact, the new Economics Foundation published a report very recently with an update called Measure of Domestic Progress, which is in fact very similar to the Index on Sustainable Economic Welfare. I think this agenda is still very relevant, mainly because it highlights that not all types of growth are good. It shows that much growth comes from running down environmental resources, treating capital like income (as no business would do); it shows that a lot of growth has large costs attached, like climate change and air pollution. So where we see the advantage of Green GDP is that it focuses on the fact that growth is for a purpose, it is not an end in itself; it is there to improve the quality of life, and from that you can show that some growth is just not worth having. It is very important that this debate continues. I think there is a danger that it simply focuses on how best to adjust Gross Domestic Product; it is not just about fiddling with the indicators or going down some statistical black hole, what is important is the idea behind Green GDP, which is that we need to focus on quality growth. We think this is a really major issue because, in principle, in the statements of intent and subsequently, Tony Blair and Gordon Brown have both said that quality growth is crucial, but we do not feel the Government acts on this in any strategic way. If the Treasury was to take quality growth seriously it would use economic instruments not just to promote any old growth but to promote growth that meets its environmental and social goals. I think this is part of the sustainable development idea; that you should link economic, social and environmental goals together. What we see, unfortunately, from Government on quite a number of occasions is that it still trades-off these goals - the language is very much about balance, about trading off. A good example was the Aviation White Paper where the environmental damage was considered to be the price to pay for economic growth. Our view is that the Government should use economic instruments to promote growth sectors in the economy that do not damage the environment or people's health. That is why it is so important that the Green GDP debate continues. Q12 Mr Challen: I was very struck by the headline of your overall press release, issued on 17 March, "Brown Ignores the Environment Again", and I was particularly struck by the "Again" word at the end. Obviously you do share some of the frustrations that this Committee has. To what would you ascribe this caution? Is it lack of commitment or is it confusion or is it, perhaps, a fear that if we go too far too fast the electorate is going to boot us out? Mr Bullock: I think, partly, it may be to do with a perception that some environmental issues are too politically difficult to deal with. I do not think that is actually the case. Transport is a good example of that. If you just increase road fuel duties then that is going to get people's backs up, but if you link it very explicitly to tackling problems and creating alternatives for people then I think it is much more politically palatable. I do not know, Roger, if you want to add anything. Mr Higman: I think there are a number of things I would say about that. Firstly, the Government made a lot of progress, as you said, up until 2000, and I do not think we would underestimate the importance of things like the fuel protest in terms of dissuading the Government from the strategy it was pursuing. What we are looking for, though, is for the Government to recognise that although the pursuit may have got difficult, the path may have got difficult, the eventual aim was the right one, and what they were committed to in the late-1990s was the right approach. Therefore, if you like, we need to get smarter about how we do it. That is the message we would have put, and that is where we have been a bit disappointed. We feel there might be things that the Government could do that would not be so controversial but would actually enable them to further the environmental tax agenda in a way that they otherwise have not been doing. An example might be the pesticide side. Q13 Mr Challen: This was described as a "Steady as she goes" kind of Budget, a consolidating Budget - and we have our differences, probably, about that. Should we not also try and consolidate the things that we have done in terms of the environment - climate change levy and things of that sort - which in their own areas are hugely controversial and which some people might want to get rid of still? Should we not allow things to work and to see how they work rather than saying that every year we are going to have more and more new measures? The Committee suspended from 4.15 pm to 4.35 pm for a division in the House Mr Higman: Essentially the question was why do we have to do more every year, I believe. The answer, obviously, from our perspective is that we are facing big environmental problems right across the range. We think that climate change is the most prominent of those but we have also got continuing air quality problems, we have got problems to do with over-consumption of resources, problems to do with water pollution and problems to do with abuse of fertilisers and pesticides. All of these environmental problems need to be tackled, in our view, and therefore we have been calling on the Treasury to have a progressive movement so that eventually all of those are tackled. That is why we feel that we need to do a little bit more every year. Q14 Mr Challen: Looking at a couple of graphs in the Budget document (I forget what it this is called: the Red Book or something), if we turn to page 161 (I do not know if you have access to it) it does show that there are fairly consistent trends downwards in, for example, CO2 emissions from new cars. I am just looking at the graph, which shows a steady downward trend. Chart 7.4 on page 162, UK particulate emissions from the transport sector show a dramatic decline. Some of it, of course, is fairly predictive but, even so, there is an actual decline in the last ten years, then a further decline down to 2015, and then a very slight increase at that point. I am pursuing this issue about how much can we get away with if we want to increase these rates of improvement before people say "That's enough; we are not going to go with it any further". That is the cut-off point for any government. Is it not? Mr Higman: There are a number of things to say about that. Firstly, not all of those indicators are going down. There are ---- Q15 Mr Challen: So you dispute the ---- Mr Higman: There are other indicators where, if you look, for example, at the 15 government headline indicators we had the report on last week, my recollection is that in three of them the emissions are actually going in the wrong direction and three of them are steady. So while we can draw attention to those where we seem to be making progress, there are others where we need to make more progress. Q16 Mr Challen: Let us be clear on this: you are saying that the Chancellor is using the information selectively to bolster the case and is ignoring other relevant information? Ms Worthington: Yes, absolutely. The indicators that were used in the Budget - they used a greenhouse gas statistic without comparing it to the year before. If you look at what is happening in carbon dioxide emissions in totality, they are increasing and have been increasing since 1999. That is not a good record for a Government that is supposedly using economic instruments to tackle climate change. So it is absolutely true that they are using indicators selectively; if they were to look at the totality of energy and fuel consumption they would see big rises, and yet that is buried in amongst the statistics that you really have to look out for in order to see that that is happening. Q17 Chairman: It is a fair point that Mr Challen draws attention to, which is that the graph that he refers to is detailing efficiency gains. It is reasonable that efficiency gains are there and real, and where, as a result, individual engines have been more efficient then there is a downward trend. The problem, I take it, is that total volume of traffic continues to rise and, therefore, the total problem continues to get worse. Ms Worthington: Yes, absolutely. The environmental goal for us is not efficient cars but to maintain the integrity of the environment. I am afraid that indicator is not very helpful in telling whether it is a green taxation policy or not. Mr Bullock: Efficiency is just one element of the solution. Q18 Mr Challen: You have argued for reinstating the fuel duty escalator and larger differentials in the VED. Would you put some figures on that? I have not seen any myself so I am wondering how far you would go down that route. Mr Bullock: We commissioned some research from the IEBP a couple of years ago which is still up-to-date but shows that if you were to increase the road duty to keep overall motoring costs constant that would raise £16-30 billion. It depends on the global price of oil, but it would range between 16 and 30 billion. On VED, currently the Government has lower rates for more fuel-efficient cars but we believe that there should be an incentive against gas-guzzling, very fuel-inefficient cars, so we are proposing a series of bands, 200, 250, 350 and 500 according to carbon emissions. The Department for Transport's research shows, I believe, that if you had a £100 differential between bands then that would not persuade 47 per cent of people to buy a more fuel-efficient car. So we think it would make sense for the Government to extend the VED range at the higher end as well as creating incentives at the lower end. Ms Worthington: There are other economic instruments that we know the Treasury and DfT are considering which would, in fact, increase the cost of transport, whilst delivering a valid gain. The one that they are looking at at the moment is to create an obligation for renewable fuels, so that it becomes obligatory to sell a proportion of bio-fuels within your fuel mix. That would have the effect of a very precise instrument. It would be smeared (?) across all industry so it would lead to an increase in the cost of transport but it would also deliver environmental gain. Q19 Mr Challen: If the money (£16 billion) that you estimate might be raised in these two particular ways was hypothecated to public transport, do you have any evidence to show that that would have greater public acceptance? Have you done any polling on that subject, for example? Mr Higman: I think there has been polling looking at motorists' attitudes in general to these things. We do not necessarily carry out extensive polls on every single item of policy - we have not got that sort of level of resources. The opinion polls I have seen have suggested that although there is hostility to some aspects of increased taxation, that is mollified quite dramatically when the money is used to promote an alternative. We can see that, also, in press reactions to government policies where large sections of the media have been crying out for more resources to go into alternatives. Ms Worthington: The best example of that is congestion charging, where you saw a new facility that was directly linked to visible improvements - the number of buses, frequency of buses and the cleanliness and newness of buses. So where it is obvious, it is common sense; people can see that the payment is going directly to something that they can perceive to be changing. That has made that a more popular instrument. Q20 Mr Challen: I am not really sure that is the case; perhaps it is a grudging acceptance that they have no choice other than to go on to a crowded tube train. More people are now complaining that there are empty buses running up and down the roads in London, and I believe one or two parties want to abolish the congestion charge. However, that is another matter. Can I just wind up, because we are short of time. In terms of looking at the Government's road building proposals, would you say that the environmental lobby has lost the argument - or certainly lost the argument with the Government - in principle? Mr Higman: That is an issue I have been working on for a decade, and if you go back to the full horror of the 1989 and 1990 road building proposals and then the plans, for example, for widening the M25 in parts of Surrey in the mid-90s, what you will find is that about 100 of the 1990 proposals were built and about 250 ( I think it is) have since been scrapped. There is a rump in the middle that is what the Government is currently talking about. We, obviously, are not happy with some of those proposals. We think that they will further reduce the incentive to use public transport and damage the countryside. That is a debate between us and the Government. I think, if you look at the record in the round, what you can see is that the environmental movement has done very well in persuading successive governments to abandon road building as a policy of first resort. Mr Bullock: As a further point on that, the Chancellor in his Budget said that overall transport investment was likely to go up in the spending review, and then we had an almost throw-away remark that, by implication, that would mean that road building would go up. I believe that probably that is just a throw-away remark but it does mean that the spending review in the next couple of months is really quite crucial; it could be a turning point for transport spending to be dealing with social exclusion, protecting the environment and providing people with decent alternatives or it could be a continuation of road building with the damage to the environment, the regressive nature of it and the increased demand that that would entail. Q21 Chairman: The Chancellor referred to hundreds of road projects planned by the previous government and never completed, and went on to say that the spending review "will provide not for cuts but for real terms growth in transport in our country." It seemed pretty unequivocal. I might have to invite Mr Higman back to my constituency ten years on! Mr Bullock: I think he was saying that the transport spending will go up but then it was just an implication that the reason it is going to go up is to fund road-building schemes. I was not sure it was directly "It is going to go up because of road building ...". The wording was very obscure. Q22 David Wright: There are some positive road building proposals, are there not? If you look at the M6 toll motorway, it has been, I think, fairly popular within the West Midlands. It seems to be reducing congestion, although I would argue that the pricing strategy for heavy goods vehicles is probably wrong and we probably need to shift more heavy goods vehicles. It seems to me to have been quite successful; the public have accepted it. That type of scheme is pretty positive, is it not? Mr Higman: We opposed the M6 toll. We were one of the only organisations that actually pointed out that discrepancy in the way the toll order was made that allowed the company to discriminate and actually discourage heavy lorries from using it and encourage them on to the public roads. I can see why they had an incentive to do that. I think it is early days to say whether that is truly effective or not. The modelling that was done at the public inquiry suggested that it would not relieve congestion in the long run on the M6 and that the levels of congestion on the M6 would be about the same as they were before the road was built. It remains to be seen whether that is going to be the case or not. Q23 David Wright: It seems to have shifted cars off but not HGVs. That was not the area of questioning I wanted to pursue, I was just interested in whether you had a view on the M6 toll because it is very close to my constituency. Could I ask a few questions on the Climate Change Levy and the EU Emissions Trading Scheme? The Government has previously argued firmly that Integrated Pollution Prevention Control offered the only possible criterion for CCA eligibility, and it now seems that they have turned that position around. What do you make of the new eligibility criteria for Climate Change Agreements? Ms Worthington: It is not something that I have worked on in a great deal of detail. We, on the whole, believe that the existing CCAs were not transparent enough for us to be able to scrutinise. Therefore, we were very sceptical of the reported savings that they delivered. So, in that context, we are definitely sceptical about the need for and, in fact, the correctness of extending it to further industries. Until that situation is resolved we will continue to oppose CCAs relative to the CCL. Q24 David Wright: Do you think there was a significant lobby here from companies? Ms Worthington: Absolutely. Q25 David Wright: Are you aware of any particular companies that were lobbying intensively? Ms Worthington: We are not aware. As I say, it is not something we have studied in a great deal of detail but we know that, in general, the tax is disliked and very unpopular - compared to CCAs which are seen to be negotiated agreements between Defra and the trade association - and which, as I have said, are very unclear and untransparent. So there is certainly a sense that industry prefers the CCA over the CCL. Q26 David Wright: The Budget contains, to be clear, a proposal to allow participation in the EU Emissions Trading Scheme as an alternative to adhering to the Climate Change Agreements. Is that the beginning of the end, in your view, of the Climate Change Levy negotiated agreement process and, indeed, the levy itself? Ms Worthington: It will be very interesting to see what happens. Everything is still in flux because the figures associated with the Emissions Trading Scheme are not yet fixed and will not be fixed until towards the end of this year. Companies will make an assessment based on which measure they think will have the least effect on their bottom line. The Commission has stated that there should be no difference in terms of environmental equivalence of effort so that the Climate Change Agreements should deliver the same level of savings that they would achieve if you were in the trading scheme. The Commission is still able to stop companies opting out if they do not believe that is the case, which has actually led to a commitment from government to improve the CCA target so that the second-round CCA target will be increase to ensure that equivalence of effort. The effect of the trading scheme is actually to drag a greater degree of saving from those people in the CCAs, so that they should be equal in their equivalence of effort. Q27 David Wright: Do you see, as an organisation, a continuing role for national energy or carbon taxes alongside the EU Emissions Trading Scheme? We have obviously got a whole raft of different strategies across the EU. Do you think there should be a move to participate on an equal footing? What are the trends, in your view? Ms Worthington: I think the unfortunate thing about the Climate Change Levy is that it is slightly wrongly titled; it should be an energy tax and it has been perceived to be a climate tax and that is why it seems now the industry is playing the role of regulator, and the Climate Change Levy ought to be abolished. We definitely see a continuing role for energy taxation in the UK and across Europe, but each country's situation with regard to energy security is very different and energy taxation is as much a measure for energy security as it is for environmental gain. So the two work in tandem and we would advocate that they should continue at a Member State level. Q28 David Wright: Do you support the introduction of the EU Emissions Trading System? How do you view the latest proposals on the use of foreign credits by Member States? Ms Worthington: Friends of the Earth has taken a largely supportive approach to the issue of the EU Emissions Trading Scheme. It is a well-designed scheme, in theory, and is far superior to the UK's own pilot scheme. However, the devil will be in the detail and, of course, the two questions that everyone is waiting to see the answer to are the overall allocation of allowances and the level of carbon price that emerges as a result of the balance between demand and supply at EU level, both of which are very hard to calculate at this stage. In theory, if it delivers a certain environmental goal then we are supportive of it. In terms of the linking directive, we still maintain that the EU scheme should have been maintained in isolation from flexible mechanisms to give us more flexibility over the results that it will deliver. However, we can see that politically it is a trade-off between linking with flexible mechanisms and the level of the ambition of the scheme. So that if you link with flexible mechanisms the Commission will feel more able to impose tighter targets on the countries within the scheme. Without the linking directive we may have seen less stringent targets. So there is a kind of trade-off between the two. If the link goes ahead then we are very supportive of the UK's position that there should be a cap on the overall use of those credits and that that cap should be both quantitative, in the sense that only a certain number of credits can be allowed for compliance, and qualitative in the sense that we would want to see exclusions of Sinks (?) projects, for example. Q29 Sue Doughty: I am going to try and keep it fairly brief, having had the interaction, but move on to energy. When we start looking at carbon emissions we seem to have a bit of a messy picture here and the Committee has been worried about it for a while. You have recently released some figures about the way you think 2003 is going in terms of carbon emissions. Could you go over that with the Committee? Ms Worthington: Yes. Each quarter the Department of Trade and Industry issues energy statistics which show the overall consumption of primary energy - fossil fuels - in this country. We were able to take those figures and derive a figure for CO2 using the IPPC methodology, which is the methodology that is used for us to communicate with the UNFCCC about our overall emissions. So, essentially, their top line message was that compared to 2002 our CO2 emissions from energy consumption, fossil fuels, was up 3 per cent compared to the year before, which to put it into context, actually equated to 4.5 megatons of carbon increase. If you consider that in 2010 the whole of the renewables obligation is only designed to deliver 2.5 megatons of carbon that is a big hike and really starts to cut into the savings that were made during the 1990s which has enabled us to take a lead on climate change. So the picture is not good. The principal reason for that quite sharp increase was through the increased use of coal in inefficient power stations, and that has led to a balance shift between fuels, between gas and coal, and an overall decrease in efficiency. Q30 Sue Doughty: Having said that, could the DTI address that by tightening the sectoral targets in order to put some correction in there? Ms Worthington: Yes, the best tool that we have in our armoury for correcting this imbalance between coal and gas is emissions trading, and the current proposal is that the power sector should take more of a burden in terms of delivering savings through that scheme, so they would be allocated fewer amounts relative to other industries. We believe that is correct because that is a sector where there is the least exposure to international competition and the most technological potential for low-cost savings. We think they should have even gone further than they have gone, but we are pleased they have gone as far as they have. Q31 Sue Doughty: Turning to wind energy, the Government has some good intentions and was supported by the RSPB until recently. Do you have any sympathy with the position that the Government is in now? Ms Worthington: Friends of the Earth has taken a very supportive line on wind energy developments and we believe that is justifiable because there is no source of zero impact energy. We, as a society, rely on energy; it is essential to maintain our lifestyles and there is no simple solution that would enable us to maintain that standard of living without some impact. We consider the impact of wind to be of a very low order and in no way comparable to the impact we get from fossil fuel burning and nuclear power. Q32 Sue Doughty: So you are reasonably happy about the Government's priorities still in renewable energies? Ms Worthington: Yes, we are happy. We consider that there still needs to be additional help for less close-to-market technologies. The support mechanism, at the moment, is designed to deliver least cost solutions, which is good for now, but we will need additional help to bring those less close-to-market technologies forward, like wave and tide. Q33 Sue Doughty: Thank you very much for being brief on that. I am going to turn very quickly to the Barker Report because, of course, we had that at the same time as the Budget. Last week you released a statement which said that the Barker review was a "social and environmental disaster"; yet in the introduction you were talking about meeting environmental and social goals. Are you pleased with the emphasis on social housing? Dr Ellis: If I could respond on that, I think our overall response to Barker is it is probably one of the least helpful and least authoritative statements on the housing crisis we have had in a long time. It also has very wide-ranging implications for the planning system. The principles of Barker go way beyond social housing and, in fact, Barker does not say anything new in her report and acknowledges quite explicitly that she does not say anything new about the social housing crisis. What she is doing inside the Barker report and what is the absolutely essential theme of Barker is to introduce price sensitivity into the provision of housing and to introduce price sensitivity into planning. There is a gulf between the press reports from Barker and the summaries of her report, and some of the most extraordinary recommendations for the future of the planning system which Barker contains. What those, essentially, seem to do is to misunderstand planning by saying, essentially, that if only planning regulation will get out of the way we could over-supply housing and reduce housing price inflation. There is nothing in Barker - no comprehensive assessment of environmental impact of that development. There is nothing which links increased supply of housing to redistribution, which is a critical issue in social housing, and there is nothing which analyses the capacity of particular regions to take the kind of housing which she suggests. If I just focus on one aspect of Barker, as a planner I do not necessarily get on well with economists, but Barker is A level economics at its worst. She is saying that in areas of high demand we must tackle that issue by high supply. That is a recipe for the exacerbation of regional inequality on a spectacularly imperial scale in relation to planning. If you try and make planning price-sensitive you have to ask the question "What is the point of planning?" Planning traditionally has sought to, at least, balance if not integrate public interest objections, like sustainable development, with a right space democratic process (?), and some market sensitivities to try and mix that pot, and it is a messy process; it is a politically difficult process. What Barker is essentially recommending is that we solve that problem by removing political input. There are seven or eight references and two recommendations which suggest that locally elected members should have less of a role in planning, and she is also suggesting some extraordinary recommendations which would remove the discretionary nature of planning. Just to focus on one, which I think is the most extraordinary, she suggested that local authorities allocate at least 40 per cent more land for housing than they need in order to deal with local price volatility, but land would be released if prices breached a certain point - known as a "price premia", which is a phrase I have never come across before. Her essential argument is that they will set thresholds in each particular local authority area on land prices and when those price premia are breached there would be a presumption in favour of the development of that type land. That is an extraordinarily bizarre and unworkable recommendation for a planning system which has to deal with all sorts of other critical issues. This is something we are developing a position on, but I want to emphasise as much as I possibly can that many organisations welcome Barker, I think, without reading some of the detailed recommendations that it contains. Barker has to be set in the context of a 20-year series of reports from Treasury which began in the early 1990s with McKinzie, which essentially does not understand why planning regulation has a vital role to play in local democracy, civil rights and sustainable development. What you need in order to balance Barker is to start again and to factor in those other important environmental costs. The direct and practical implication of Barker for the South East will be the most extraordinary increase in pressure for housing, which I do not think will solve the social housing crisis, which will breach environmental limits and which certainly will not be sustainable. Let me say a final word on social housing because I think our sector has not been as responsible as it should have been in meeting the needs of social housing. I think we acknowledge that more and more. The tentative position we have is that the demand for social housing, as Barker recognises (although there is a dispute about figures), should be met in every region and that there is an absolutely straightforward social justice case for that, but that general demand for housing - which Barker is saying should be entirely market driven - cannot be met in each region. What you need, in terms of general demand, is a national spatial plan for housing which has a redistributive nature. Without that redistributive element Teeside, where I was a week ago, will have housing abandonment on a grand scale and the South East will have a quality of life and, ultimately, a poor economic performance that will result from the most extraordinary development. Q34 Sue Doughty: Thank you very much for that. I think that is a topic this Committee could probably spend a whole session on in itself. Finally, because I know we have got a number of other questions waiting and other witnesses, can I turn to VAT on Greenfield sites. Barker has spent quite a bit of time constructing arguments for and against, and some of those arguments may not be very credible (I do not know how you feel about that), but are there not even more problems with a planning authority levelled development tax? If you could be fairly brief on that. Dr Ellis: I will be very, very brief because our position on this is emerging, if that is a polite way of putting it. For the last two years we have believed very strongly that a land development tax is better than taxation. I think that is preferable to changes to VAT, although clearly there are arguments that VAT should have parity between renewal and new build. The reason land development tax is much more effective in encouraging brown-fill site development, for example, is it is capturing a huge value-added when planning permission is given, that value is created by the community's democratic grant of permission and that resource should come back into the community. There is a powerful case for a land development tax, it is much more effective than the current 106 agreements, which are both regressive and you have all of the detailed negotiations and the public mistrust. Broadly speaking we would like to see that introduced. That part of Barker is one of the few parts which has merit in suggesting why it might happened. Why she sees fit to hook in to 106 agreements is not clear to me. Q35 Joan Walley: In view of what has just been said about this emerging view which Friends of the Earth have in relation to Barker, housing supply and how you balance all of the issues that planning has dealt with, can I just ask for your views on where you think the debate on all of this is? Where is it being played out, is it being played out through the press? I am not quite sure where people who have views on one side or the other side or who are attempting to find some way forward through these very real problem are. Where is that debate being heard or where is it taking place. I would be interested to know where you think the points are where that debate could be influenced, if you see what I mean? Dr Ellis: The shorthand response to that is that all planning policy - we are just working on PPS6 on re-sale at the moment as we review it - comes up against one central problem, which is usually the DTI's or Treasury's view of how a macro-economic model of the United Kingdom impacts on planning. The macro‑economic is the Golden Arc, Bournemouth to Cambridge, inside that area is the economic driver of the United Kingdom, it is what keeps us competitive and must not be restrained. I just draw your attention to PPS6 which now talks about managed decline in the retail sector, and that is something that we should be doing. Many communities are more and more being acknowledged in the North and West as essentially being places where we manage, decline and consolidate. Unless you can try and integrate the needs for the social equity and sustainable development with the Treasury's model of that economic driver in the United Kingdom more effectively then the policy debate becomes very sterile and is becoming very sterile. Every time we try and say "You are straying in to the South East" we are simply told that will be anti-competitive, there is no way you can deliver that. I think that issue is crucial. Q36 Joan Walley: In terms of the Treasury model that you are referring to is that being shaped by the current debate that is going on round the Comprehensive Spending Review? I am not sure where this new vision which is coming is actually being formed or shaped. Do you see what I mean? Dr Ellis: From my point of view, looking at it from a planner's perspective through ODPM, all I can say is that the PSA agreements as they stand at the moment are the most extraordinary inferential mechanism for the Treasury's implementation of its model, if you like, of planning regulations and, to some extent, environmental regulations. PSA 6 in relation to ODPM in relation to planning has been influential right across the board. I know under review the question has been raised quite innocently about whether or not sustainable development might feature more heavily, particularly in relation to the climate, in the PSA agreements, which of course it should. Chairman: I have a strong feeling that the question of Barker and all that her report entails is something which the Committee would wish to return to. That concludes our questions to you. Thank you very much indeed, we are very grateful to you. It has been a helpful session. Witnesses: Mr Paul Everitt, Head of Communications, Economics Policy, SMMT, Ms Katherine Bennett, Manager Government Affairs, Vauxhall and Mr Mike Hawes, Head of Corporate & Government Affairs, Toyata, examined. Q37 Chairman: Thank you very much indeed for coming and for your patience. I am sorry you had to sit there rather a long time listening to some no doubt fascinating discourse, even though it is not always discourse relevant to your own particular sector. I do not know whether you want to say anything in opening or whether you can weave your thoughts into the answers that you give to our questions. Mr Everitt: If I may introduce my colleagues, Catherine Bennett from Vauxhall and Mike Hawes from Toyota. I would like to make four very brief points in relation to the Budget and the focus of what we are looking at, low carbon vehicles: Firstly, in the run-up to the Budget the key message that we were delivering to the Treasury was we wanted a Budget that was going to deliver to us stability in the market place and greater certainty in terms of the fiscal framework for environmental, particularly for motoring and transport taxation. I think to a large degree we got that; I think also looking at the low carbon agenda I would like to register in our view this is a long-term process and not necessarily something which you can judge from budget to budget, that is why we were looking for greater stability and certainty from the Chancellor; It is also an agenda to which the motor industry is fully committed, and we may touch on that in various different questions and answers; I think it is also key to recognise that consumers in our industry dictate what happens in the market place, their preferences are ultimately driving the market place. We cannot avoid that, we may want people to buy certain things but unless they want to they will not buy them; the last point is that out of this low carbon agenda as an industry, and certainly as the SMMT, we are very much focused on ensuring that we take all of the opportunities which we can to maximise the competitive advantage for the United Kingdom based industry. Q38 Chairman: Thank you very much. We heard from our previous witnesses about the perceived over-consumption of resources, you will be aware that the Government has a sustainable consumption strategy, how does your industry fit into that? Mr Everitt: That is an interesting question, perhaps one we are not immediately prepared for. As an industry we take a view we are a commercial organisation, we supply the market place but we like to think we are taking a responsible attitude, particularly a responsible attitude as far as environmental issues are concerned across all elements of the products we produce, from the materials we use, the manufacturing processes which we use to construct them into the technology which we then sell on to the market place. Environmental factors are very much to the fore, we touch upon the recycability of our vehicles. We already have about 75 per cent to 80 per cent recycability with all of our products, we are legislated to reach 95 per cent, and that is an indication of the commitment that we as industry have made and pressures society has put upon us. Q39 Chairman: Yet the contribution of your industry to climate change continues to grow. Mr Everitt: I think we would dispute whether it continues to grow. Overall our transport figures in the United Kingdom indicate it has been about level for the about best part of a decade and we would believe that most of the modelling indicates that CO2 emissions from road transport will begin to move downwards quite significantly over the course of the next decade to two decades. Q40 Chairman: A lot of our questions will be to do with CO2 emissions, can I just ask you about HFCs, which has been a live issue in the European Parliament recently. I understand that your industry lobbied against the controls the European Parliament was seeking to replace HFCs, particularly their use in air-conditioning systems in cars. Mr Everitt: We were not lobbying against the restrictions on the use of HFCs we are looking for a Directive which is workable and implementable. Q41 Chairman: Would it not be simpler for them to be banned? Mr Everitt: One of the points we make is over the time period which that ban should come into effect. I do not think we have tried to suggest there should not be a ban. I think it is fairly interesting that the United Kingdom Government cost-benefit analysis indicated that improvements to systems reducing leakage rates was by far the most environmentally productive route rather than an outright ban. As an industry the difficulty we face at the moment is there is no ready-made alternative. There are a number of different systems which vehicle manufacturers are in the process of testing and developing which we believe we can bring on stream in a reasonable time period. Q42 Chairman: What is a reasonable time period? Mr Everitt: I think we are looking at a period of a ban from 2012. Q43 Chairman: It has been suggested that if you are saying 2012 you can do it a lot easier and faster than that. Mr Everitt: I think you will find traditionally there is always this particular debate that goes on between those who think everything can be done very quickly. If we were talking about one vehicle or even ten vehicles going on to the roads I am sure that would be the case. I think people have to remember that these systems are going to be fitted to millions of vehicles. They also have to be assured that when those vehicles are involved in collisions and accidents that the performance of materials and the components are not going to create a worse problem than the ones we already have. Q44 Chairman: Are HCs no good? Mr Everitt: Sorry? Q45 Chairman: Are HCs an alternative? Mr Everitt: I am not an expert in this particular area. There are a range of alternatives which we are looking at and also individual companies are developing. We believe there are ways in which we can replace those gases and we are keen to do that. What we are asking for is over a reasonable time period and in a manner that can be befitted into the normal production cycle of new models. Q46 Chairman: Is there any way the Government could help achieve the objectives which you stated that you want? Mr Everitt: I think the Government has been reasonably supportive in the discussions and debates that have gone on at a European level. I am not really certain there is a great deal more given the nature of this particular legislation and the fact that the systems that are being developed are being developed certainly as a minimum on European level, and indeed in most cases global level. I do not think one individual Member State can make that much difference. Q47 Chairman: It would probably help if they did announce these things were going to be banned on a given date, that would give you the sort of certainty you were asking for earlier. Mr Everitt: It would not make a great deal of difference. One of the key issues and one of the key debates in the Directive is the legal basis under which it is introduced. For us as a global industry working across a European market it is not very helpful if individual Member States take a different approach. Q48 Chairman: That is understood. Coming on to CO2 and the voluntary agreement which was introduced in 1998, the latest data we see suggests that progress and meeting targets set for the voluntary agreement is petering out. Mr Everitt: The EU agreement, as you said, was signed in 1998, within the agreement there were a number of interim milestones, one was the availability in 2000 of a vehicle with a performance of less than 100 grams per kilometre, the second was by the end of 2003 the average new car emissions should be between 175 and 165 grams per kilometre, the latest monitoring data from the EU is at the end of 2002, and I think it is 165. That would mean that we have met the two interim milestones and I think from our point of view we feel we are on target. We would not under-estimate the challenge which lays ahead of us because there are a range of constraints which we face but I think broadly speaking we are on track. Q49 Chairman: The 2010 target is 120 grams of CO2 per kilometre? Mr Everitt: The European one. Q50 Chairman: The EU one. Do you think you can hit that? Mr Hawes: It is a 2012 target of 120 rather than 2010. Q51 Chairman: Are you going to get that? Mr Hawes: We are looking at it. It is going to be great challenge to reduce from 140 in 2008‑09 down to 120. You have to reduce by an average of five grams per kilometre per year. That is a schedule which will be extraordinarily difficult to meet. We are looking to see how progress is developing and what other technologies are going to help us deliver that. Q52 Chairman: Are there technologies round which will enable you to do this? Mr Hawes: There are a wide range of technologies varying from hybrids to producing cleaner diesels to alternative fuels like LPG and CNG. Mr Everitt: We have an agreement which covers the period to 2008-09 which we are focused on. The European Commission is opening discussions and debate on the period after 2008. The focus that we have is to ensure that the discussions are taking into account the economic well-being of the industry as well as the environmental objectives. Q53 Chairman: The United Kingdom seems to be lagging behind the rest of the EU in terms of meeting targets, is there a particular reason for that? Mr Everitt: The target is pan-European it is not split nation by nation. Q54 Chairman: The individual performances are visible in data and the United Kingdom is doing worse than the rest of Europe, is that because we have bigger cars? Mr Everitt: We have to recognise where we started from, when the agreement started we were probably ranked fourteenth or fifteenth of the EU Member States and we have actually improved our performance at a slightly faster rate than some others. The historic make up of the car and purchasing trends in individual markets will have an influence. I think we feel we are making significant progress in the United Kingdom. Q55 Mr Challen: One of the tables which was missing from the Budget book was the one which shows that road transport carbon emissions rising and worryingly are forecast to continue rising, would you accept this represents a very serious threat to the prospect of us meeting our domestic target of a 20 per cent cut in carbon emissions by 2010? Mr Everitt: Our view is that carbon emissions from road transport, from passenger cars will turn down. Q56 Mr Challen: When do you think that will happen? Mr Everitt: Over the course of the next five to ten years I would be fairly confident that will be the case. Clearly the United Kingdom's domestic target is much broader than just the road transport sector. We as an industry feel that through the voluntary agreement and the commitment we have to introducing new technologies it will make a substantial contribution to achieving the EU Kyoto target and also the United Kingdom domestic target. Q57 Mr Challen: This sounds a little vague, I am just wondering if there is an element of crossed fingers there, what are the key elements which make you confident you will achieve these targets in five to ten years' time, even before 2010 possibly? Mr Everitt: We are seeing lower and lower emission vehicles being put on to the market. There will always be an element of doubt. This is one of the key points I was trying to make in the opening, this is a long-term project both for society and industry. We are talking about a very long period of time. If there is always a focus from year to year where you do not seem to be doing very well you need to change something and it does not create a stable environment where businesses can invest in the types of technology and in the types of products which will help achieve the goals we are trying to meet. Q58 Mr Challen: In the voluntary agreement and in the 10 Year Plan for Transport that envisages a four million tonne of carbon reduction from the United Kingdom, are we on target for that reduction? Mr Hawes: I think if you look at the various targets we have they are all reading in the one direction, we are all obliged to introduce technology to which the market will respond and help us deliver those. The indication is that we are on track for the 140 and that target will be complementary to some of the other targets. Ms Bennett: The other point to bear in mind is that cars have a lifetime of between possibly ten to 12 years, there is always going to be a time lag before the impact takes over. As Paul was saying we build the car but we need the customers to buy them, it has a knock-on effect in that way as well. Q59 Mr Challen: The Powering Future Vehicles Strategy set a target for ten per cent of new vehicles to emit less than 100 grams per kilometre by 2010. Are we on target to meet that target? Mr Everitt: We have to look very closely at that particular target. It is important to say - and we will come back to this as a continual theme - we are not a single United Kingdom market, we are a European market. To some degree the technology and the thrust of an individual company is going to be more geared towards a general 140 target that is part of the European agreement. Generally that is not inconsistent with the ten per cent target. The difficulty or what we need to be sure about as we move forward is that what we do not end up with is, if you like, a very small niche of vehicles in the United Kingdom which meet that particular target and the bulk of the rest of the car is off track. The technologies which we need to introduce have to work across the vehicle path, across all vehicles we are selling. As an industry we need to sell the full range of vehicles in order to generate the revenues that we need to make the investment. To give you a more direct answer, the ten per cent target is feasible but the dominant focus for industry is going to be the European level agreement. Q60 Mr Challen: It is like saying you only go as fast as the slowest. Could there be a future competitive advantage to meeting these targets earlier than other people so that you can get in with new technology and beat other manufacturers in other parts of the European market? Ms Bennett: You need to appreciate that most of the big car companies research and development is done centrally. We do not just design and build cars in this country, we sell cars across Europe that are designed and researched in the technology developed all over Europe, it is not just a United Kingdom developed car which is brought to the market. Q61 Mr Challen: What does that say about the United Kingdom Government's desire to have all of these targets? Ms Bennett: We work with the Government to help set the targets. Q62 Mr Challen: For the United Kingdom? Ms Bennett: Yes. Q63 Mr Challen: Then we are back to the market saying, "Why do we have all these targets?" Ms Bennett: You have to have targets. Q64 Mr Challen: Only if they are going to be sensible and smart, and all of the rest of it. Mr Everitt: I do not think we are trying to suggest there is something wrong with the ten per cent target. What we are saying is it needs to be seen alongside the broader European agreement and the opportunities in the United Kingdom are not so much, if you like, in the vehicle but the technologies that that vehicle will use. There are great opportunities and ones that we as the SMMT are keen to encourage the exploitation of and generate within the United Kingdom a supplier base of technological excellence to take advantage of that. All of these major car companies are looking for ways and means of improving efficiency which they will be able to supply. Q65 Mr Challen: If I came to either of the manufacturers here and said, "Could I buy a petrol or diesel car which meets this target now?", could you sell me one? Mr Everitt: Yes. Ms Bennett: Yes. Q66 Mr Challen: They are available. Mr Everitt: It is feasible. We know there are vehicles available today that are less than 100 grams per kilometre. I have to tell you that not very many of them are being bought and that is the issue. Q67 Mr Challen: Is it price? Mr Hawes: It is a combination, it is price, it is the utility of the vehicle. Coming back to the consumer, it is motivation behind choice, by and large consumers do not rate environmental performance very highly on their criteria in determining to buy a car. Q68 David Wright: They do on other products. If you go into a retailer to buy white goods one of the things which is on white goods these days is a sticker on the front of it which gives it a rating. When I go and buy a fridge I look at that rating and I decide how I am going to weigh off the comparison between the cost and the advantage to the environment, a conscious decision is made. When are you going to badge your vehicles in a similar way? Mr Everitt: The motor industry introduced voluntary environmental labelling in 1999 which highlighted CO2 emissions, that was superseded by a European directive which meant we had to slightly change the label. We have been labelling vehicles with CO2 information since 1999. Q69 David Wright: I do not remember wandering round the car dealers in my constituency when I bought my last car seeing any particularly high profile advertising - it was not one of yours, a terrible shock to you, I know - I do not remember seeing -- Mr Hawes: It is a requirement. Q70 David Wright: -- a very high profile campaign on this issue. Mr Hawes: It is a requirement to display that label. Q71 David Wright: About two millimetres high. Mr Everitt: A4. Ms Bennett: Perhaps it comes back to what I was saying earlier, we do extensive market research and in the list of priorities for a customer the environment is number eight or nine. Number one is cost. Q72 David Wright: Surely you have a responsibility to lead in terms of public opinion as well? We are talking about the global market now, there are increasingly less players in the car manufacturing market and you have to take on and deal with corporate responsibility now as global companies. You have to lead the market as well as follow it. Ms Bennett: We bring environmentally friendly vehicles to the market and have advertising marketing which supports that. I promise you we do advertise extensively on environmental issues, but you can image the discussions which go on in our head office in Luton when you are looking at an advertising campaign promoting the economic benefits of the car or other customer benefits, and our marketing people have to balance that up. The environment is one of the issues which we do push on but there are other benefits which customers look at. Q73 Mr Challen: I am sure you will not market cars on the basis of speed, I am sure that never appears in an advert. Ms Bennett: That is actually against the law. Q74 Mr Challen: It is done very, very subtlety. In the Powering Future Vehicle Strategy a zero emissions target is set for 2020. That was not set at that time, is that target now being set? Mr Everitt: As I recall the Powering Future Vehicle Strategy asked that the Low Carbon Vehicle Partnership view what might be appropriate for an ultra low carbon car target for 2020. The Low Carbon Vehicle Partnership is an advice body outside of Government which includes vehicle manufactures, component suppliers, energy providers as well as NGOs, local government and a range of other stakeholders. There was and has been a discussion on whether it is appropriate and possible to set a realistic target for 2020 and the view which was taken by the Partnership was that at this point in time there were so many technologies being developed, there were so many areas of investigation underway it was not possible to come up with a rational and dependable 2020 target. Where we are at the moment is very much on the cusp of what might be a very significant change in the sense of vehicle technology. The speed of which that change is likely to take effect is something which no one is really in a position to make a sensible judgment on. It was thought better to keep the situation under review rather than pin a number up on a board which had no value. Q75 Mr Challen: That is being kept under review, when do you think a decision might be likely? Mr Everitt: That is the reason why it is under review. If we could say it is going to be this people would go with it. At the moment the view is that we simply do not know. We have some significant and challenging targets to reach in terms of 2008 and indeed 2012. I think the closer we get to the 2008 situation it will make it slightly clearer about where we might get to in terms of the 2020 target. Q76 Mr Challen: I was wondering how the review worked, are you able to revisit on an annual basis? Mr Everitt: Within the Low Carbon Vehicle Partnership it is an on-going monitoring which they do. The 2012 target is discussed on a regular basis, the progress is discussed on a regular basis and the opportunity to make it a review and advise on that is an on-going issue. Q77 Joan Walley: Innovation is very much the watch word and the key word and just referring to the Powering Future Vehicles Strategy I wonder if you can tell us whether or not you feel there are too many organisations involved? Is there a need for one organisation, one port of call? How is it all panning out, how is it all working? Mr Everitt: It is true there are a number of organisations and there are a number of different funds and tasks. The first thing to state is that we should not over-estimate the potential. The major investments into R&D on vehicle technology are clearly being made by global companies, vehicle manufacturers and component suppliers. However, there are significant opportunities for leveraging investment into the United Kingdom and thereby the various programmes from the Foresight Vehicle Programme to the New Vehicle Technology Fund and the Ultra Low Carbon Car Challenge are all means by which they serve some direct benefit in terms of pushing the agenda along by providing important R&D and/or opportunities for demonstration projects but also, more importantly, they draw in the United Kingdom based supply chain and mix them with the experience within academia and some of the global car companies. It is a complex situation but I think broadly people understand what the different programmes are for. Since the publication of the Powering Future Vehicle Strategy there is a better understanding and greater coordination within Government itself. We now have the ministerial group with DTI, Defra, DfT and Treasury. There is a greater internal cohesion within government and that has benefits of allowing those people outside government to be a bit clearer on what is going on. Q78 Joan Walley: Given it is a big maze for people to find their way around do you agree with the recommendation that there should be a single point of advice and information? Has there been any progress on that? Are we likely to see a single one-stop-shop point of contact? Mr Everitt: In general terms the SMMT is very keen for business support programmes to be very much of the one-stop-shop variety. Given some of the organisations are relatively new, certainly the Low Carbon Vehicle Partnership is relatively new, some other organisations are perhaps more established, the Energy Saving Trust and indeed the Carbon Trust. I think there may be --- Q79 Chairman: You are doing well, we have it all written down! Mr Everitt: I am not making a good argument that it is all hanging together very well. It would be safe to say there is scope for some better co-ordination. Ms Bennett: The other complication is the RDAs. We talk about innovation in the different regions, for those of us who have sites in different parts there is a wide diversity of research grants on offer. We certainly agree with the one-stop-shop approach. We do think the partnerships which have been set up so far seem to be working but the regional aspect can be confusing. Q80 Joan Walley: Would you say there is some kind of inconsistency as to how this is being applied? Ms Bennett: I would say on low carbon that is very much more central. We do have the door knocked regularly by people with regional hats on talking about innovation and R&D. Q81 Joan Walley: Are there any particular regions you suggest we should go and talk to? Ms Bennett: I am generally impressed with the RDAs I have dealt with. Talking about our Luton closure we were very impressed with the work of the RDA, they were very helpful to us with the new training programmes. There is a diversity and maybe for some of the smaller businesses, the technological driven ones who have small staff they do not quite know where to go, let us hope the Partnership can help with that. Q82 Joan Walley: Could you explain to us about how the Ultra Low Carbon Car Challenge fits in with the New Vehicle Technology Fund? Are they working together and reinforcing each other? Mr Everitt: Yes. Q83 Joan Walley: Good. Mr Everitt: Yes is the answer to that question. I think the Ultra Low Carbon Car Challenge is a specific project designed to address some of the issues that we have raised here in terms of looking to create the opportunities for a real vehicle rather than a niche product. It was looking to draw in the best technologies and create some interest and excitement in a car that people could recognise as a car which had a utility value that people associated with that car but that was providing environmental excellence. That is an interesting and an exciting thing to try to do. Q84 David Wright: It would be good if some of the mainstream stands in the Motor Show could exhibit them because what tends to happen is we go round a corner and we will look at a strange looking vehicle that is particularly good and environmentally sensitive and we will go back into the main hall and have a look at the Ferrari. There is a bit of that about it, is there not? It is about mainstreaming that into your whole approach, so if are you doing the United Kingdom Motor Show you are mainstreaming some of this stuff rather than leaving it to one side. Mr Hawes: Absolutely. I think all of the major manufacturers are looking to launch vehicles and introduce vehicles into the market place which have to be mainstream. That means at the Motor Show having them on the stand, not off in the corner. I can assure you if you attend this year's Motor Show, the dates are... Mr Everitt: 26 May to 6 June. Mr Hawes: If you visit a range of stands you will see those vehicles on the stand. David Wright: I do not own a Ferrari! Q85 Joan Walley: In terms of support there could be from the Government is the Government doing enough to give support? If you look at Japan and you look at the larger number, percentage wise, they will have by 2010 is that because the Japanese Government is doing more to make that possible? Mr Hawes: Obviously it is the home base for a number of auto motor manufacturing companies who are investing significant amounts of money in to fuel cell technology. For that reason one would always look at one's home market first. I am sure American companies would say the same about the American domestic market. The United Kingdom Government is keen to attract much of that development into the United Kingdom and to foster those companies which are involved in research and development round fuel cell in the United Kingdom, that lies behind some of the initiatives Paul mentioned earlier. Q86 Joan Walley: The Low Carbon Vehicle Partnership is that doing enough or is it a waste of space? How well is it doing? Mr Everitt: It has been in operation for just over a year, given that a significant proportion of that time was taken up with adjusting the nuts and bolts and finding staff and finding accommodation I think it has made some reasonable progress. The big benefit of the Partnership is that it does bring people together and, if you like, builds trust and confidence within sectors of the market which would not normally discuss some of the key issues, certainly not in a non-commercial environment. I think the hope is that as the Partnership rolls on more and more initiatives which are essentially commercial initiatives run by individuals and companies within the Partnership take off and begin to roll forward the agenda rather than the Partnership being someone who tries to dictate. Q87 Joan Walley: Going back to my earlier question about fuel cells, is the United Kingdom Government giving enough financial support? The second question is about 2008, including transport within the EU Emissions Trading Scheme is that realistic? Ms Bennett: On fuel cells I am just speaking purely on behalf of General Motors. General Motors have said they believe that Europe is behind, considerably behind. Q88 Joan Walley: Behind where? Ms Bennett: The US, Japan and Canada. Q89 Joan Walley: What about the United Kingdom? Ms Bennett: They have not specifically commented on the United Kingdom. They are very interested in the market because we are quite environmentally focused having talked through what we talked about, we are a very cosmopolitan and intellectual type of purchasing public. Fuel cells we think will have take-up in this country and we think the Government could be doing more. Q90 Joan Walley: Have you made that clear to the Government? Ms Bennett: Yes, we have. Q91 Joan Walley: Is that information available? Ms Bennett: Yes, I can certainly write to you with that. Q92 Joan Walley: Finally 2008, is transport going to be part of the EU Emissions Trading Scheme? Mr Everitt: We have significant problems with the EU Emissions Trading Scheme related to our plants' facilities. Q93 Joan Walley: Are you going to stop it? Mr Everitt: I do not think we have the opportunity to do that. Given we have a voluntary agreement we think there is not the necessity for the transport sector to be within the Emissions Trading Scheme. Chairman: We may have further questions about that point and about a number of others. I am sorry we have been cut short. We are very grateful to you for the frank way you answered our questions. Thank you very much. |