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Emissions Trading Scheme

5. Miss Anne McIntosh (Vale of York) (Con): If she will make a statement on the impact of the European Union emissions trading scheme on UK business. [224753]

The Minister for Energy and E-Commerce (Mr. Mike O'Brien): The emissions trading scheme affects 12,000 installations across the EU and aims to tackle the problem of global warning and climate change by reducing emissions. To protect our competitive position in the world, the UK Government have allocated allowances to industry in a way that recognises their projected needs. One sector that has a below business-as-usual allocation is the electricity supply sector, but it is not subject to substantial international competition.

Miss McIntosh: I am grateful to the Minister for that reply, but I am sure that he is aware that his Government are in danger of speaking with forked tongue. His Department has agreed to negotiate with Europe on this matter, but the Department for Environment, Food and Rural Affairs is the lead Department. Under the national allocation plan, a number of high-energy industrial companies have reached a climate change agreement that will be subject to a decision—taken behind closed doors and with no politicians present—of a comitology committee of national officials in the European Commission on whether the climate change agreements will be exempt from the Commission's trading plan. The Minister was kind enough to meet me to discuss this point. Will he assure me that progress has been made and that those companies will not face the double whammy of being subjected to a national allocation plan and a European Union emissions trading scheme?

Mr. O'Brien: The Government believe that the provisions of the climate change agreements satisfy the temporary exclusion criteria that allow installations to opt out of phase 1 of the EU emissions trading scheme. We are working with companies to reach agreement on how to put forward various proposals to the EU to allow certain exclusions. Obviously, the final allocations cannot be made until the Commission and the comitology committee have made a decision. We have, however, informed operators that they should monitor emissions from 1 January 2005, in case approval is not given. I take the hon. Lady's point, however, and when we return to Government in due course, I shall be happy to discuss with her the problems in her constituency.

Mr. Eric Illsley (Barnsley, Central) (Lab): May I reinforce that last point on climate change agreements and emissions controls by referring to the glass industry?
 
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I urge my hon. Friend to consider the precarious competitive position of that industry, which is subject to emissions limits under the climate change agreement. Will he ensure that he takes no action on emissions agreements that will dent the industry's competitiveness any further?

Mr. O'Brien: If we are to deal with global warming and climate change, there will be implications for industry. Those implications will, however, stretch right across the EU and, we hope, across the wider world as well in due course. All of those areas will have to take steps to deal with emissions. We are watching with great care to see how the ETS and the climate change agreements will operate, to ensure that the UK maintains its competitiveness. That will apply to the glass industry as well.

Mr. Crispin Blunt (Reigate) (Con): Will the Minister confirm that Britain was unable to take part in the EU emissions trading scheme when it began operating on 1 January 2005 because his Government got the national allocation plan wrong? Will he also confirm that the Government have had to go to the Commission on bended knee to try to change the allocation to make it less damaging to British industry and that the Commission has said no? Who is going to take responsibility for this mistake?

Mr. O'Brien: I will not confirm the nonsense that the hon. Gentleman has just spouted. The Government propose to issue the allocation of 736 million allowances—which has already been approved by the Commission—as soon as possible to allow the operators of UK installations covered by the scheme to start participating fully, as they wish to do.

There is an argument over 20 million of the allocations. Those relate to one specific sector—energy generation—because we have allocated the rest of industry on the basis of its projected needs. Therefore, although one sector will be affected, it is not subject to substantial international competition and we believe that it will be able to deal with that. We also believe that we have a strong case and we are prepared to take it to the European Court of Justice if that should prove necessary.

Mr. George Foulkes (Carrick, Cumnock and Doon Valley) (Lab/Co-op): Is the Minister aware that even people who have been around as long as I have can change their mind? When I was on the energy review committee, as a former nuclear sceptic, I came to the view that we can achieve our emissions targets and a balanced energy policy only if we replace our existing nuclear capacity. When will the Government grasp the nettle and take a decision on that?

Mr. O'Brien: We wait for those companies that want to make a viable economic proposition to build a nuclear reactor. If they came forward, we would have an open mind on the issue. We have been very clear about that. We have said that we would publish a White Paper and hold a widespread consultation, but I have to tell my right hon. Friend and the many supporters of nuclear power generation in the House that at this point there is not an economic case that is causing companies to come forward and volunteer to build a nuclear reactor. If that should change, we would have an open mind.
 
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Small Business

6. Mr. Archie Norman (Tunbridge Wells) (Con): What steps she is taking to promote small business growth. [224754]

The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths): Many small businesses are the economic dynamos of our economy and to promote small business growth, among other things, we raised the VAT threshold to the highest in Europe, abolished automatic fines for late payment for 200,000 small businesses, introduced a flat-rate VAT scheme to cut red tape for up to 700,000 small and medium-sized enterprises, and abolished corporation tax for 150,000 businesses. Our Phoenix fund has helped more than 89,000 people from disadvantaged areas to start and grow SMEs, and our nine regional venture capital funds have made 199 investments, totalling £37 million.

Mr. Norman: Since this is the last chance that I will have to do so, may I gently remind the Minister that the biggest gift that this Government can give to small business is to reduce the burden of regulation that has increased so much under them? Has he noticed that the Chancellor has committed to implement in full the Arculus report, which includes the principle of regulatory budgets and a one in, one out principle for new regulation, yet the Secretary of State has already committed, if re-elected, to new regulations that will cost small business up to £200 million to £300 million in additional regulatory burdens, according to her own Department's impact assessments? Which equivalent regulations do the Government plan to withdraw?

Nigel Griffiths: The hon. Member is leaving the House, and the House will be the poorer for losing somebody with business experience. We all wish him well.

Yes, of course, we have read the Arculus report. As the Secretary of State and the Chancellor have made clear, elements of it are being examined and are being implemented—in fact, the bulk of the recommendations—but I do not take lessons from the party that introduced 51,599 regulations. The important thing is that the way we have tackled regulations means that a record number of small businesses started in Britain last year, and the survival rates are the best for a decade. Last year, 445,000 businesses were started. That is more than 1,000 businesses for every working day. We are the party of business growth.

Mr. Peter Pike (Burnley) (Lab): Does my hon. Friend accept that the Northwest Development Agency, and indeed development agencies generally, have an important role to play? Are not business growth and small businesses encouraged by actions that they are taking in many places in the country, including the former Michelin site in Burnley, which is being brought back into use for small businesses?

Nigel Griffiths: My hon. Friend has been a powerful advocate for his area and for business and jobs growth as well. We will certainly be sorry to lose him and wish him well. He is right about the important role played by the regional development agencies and the importance
 
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of the support they receive from the DTI, which, under the Conservative party, would be abolished, with all the threat to jobs and growth that that would bring about.

Mr. Henry Bellingham (North-West Norfolk) (Con): Our plan is not to abolish the DTI but to set up a department for business that will focus on entrepreneurship and on really helping small businesses.

As this is the last DTI questions before the election, may I say what a pleasure it has been to shadow the hon. Gentleman? Although we disagree on regulation and despite the fact that he has not answered the question put by my hon. Friend the Member for Tunbridge Wells (Mr. Norman), he has been a doughty champion of small businesses and we admire his energy.

What has happened to the National Audit Office value-for-money report on the Small Business Service, which the NAO assures me has been finished and is awaiting clearance by the Secretary of State? Will it be cleared before the election?

Nigel Griffiths: The NAO is a much respected organisation. It spends a great deal of time on its reports and makes many thoughtful points, and it would be wrong of any Minister to jump to hasty conclusions. The report is being studied in detail and I am sure that it will inform Government policy when we come back after the election.

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