Examination of Witnesses (Questions 120-139)
2 FEBRUARY 2005
MR PAUL
HAMBLIN AND
MR TOM
OLIVER
Q120 Chairman: But surely there is a
world of difference between decoupling the over-production of
food from agriculture and the possibly new relationship between
agriculture and non-food uses of crops. It is a completely different
issue. One of the reasons for the decoupling of food is that we
are producing too much of the stuff and it is grossly inefficient.
If there is a new market opening up for biofuels it is something
which agriculture can helpfully provide, I would have thought?
Mr Oliver: Absolutely! We agree
that if there is a new market agriculture should respond to it,
but it should not be on the basis of a subsidy, which is just
as inefficient or can provoke just the same market inefficiencies
as the food production subsidy system did. So the same logic applies.
You do not want farmers following subsidies, you want them following
markets. If I may just add, however, you do want to encourage
the development of technology and we do need to be positive about
how best to achieve efficient renewable energy. One of the things
which is so very difficult about renewable energy of that kind
is the diffuse nature of it. We have been in discussions with
various academics about this and we are told that if all the arable
fields in Norfolk were deployed solely for biofuel it would not
produce enough biofuel for the cars of Norfolk alone. So you do
see there is a huge question about the diffuse nature of production
and, if you like, the relatively insignificant nature of it by
comparison with other means of delivering renewable energy.
Q121 Mr Chaytor: You are weaving together
two separate objections here, I think, are you not?
Mr Oliver: There are two, yes.
Q122 Mr Chaytor: One is the objection
to subsidising an industry where the consequence of the subsidy
leads to inefficiency and distortion and the other is the objection
about the reality of the potential for biofuels and the impact
on the landscape. I can see there is a concern about the impact
on the landscape if we produce a national mono-culture, and I
can see that is a genuine issue, but surely that is dealt with
by other forms of restriction on the percentage of land which
is used for biofuels? But in terms of the subsidy and the inefficiency,
I am sure it must be that any emerging industry, if it is going
to reach maturity, needs some kind of financial incentive?
Mr Oliver: I think there need
to be incentives and leadership when it comes to technology, and
I think that previous experience of Eggborough and other places
shows how important it is for that to be of a very high quality
and very well led, and with a very high calibre of people doing
it. I think we are quite nervous about the track record in many
cases of leading technology with investment, but I recognise there
is a need there. What we are very much not keen on doing is reintroducing
the idea of a sort of acreage-led policy where a subsidy per acre
for biofuels or biomass leads to farmers making decisions about
land use. However, going back to your point about the landscape,
which I am very grateful to you for raising, yes, there are some
concerns there but I am actually much less worried about the landscape
implications of biofuels and biomass than I am about the distortion
of the market and the over-reliance on a fuel which is of relatively
little significance. That is because it is very important to recognise
that farmers must be free in many places to diversify their crops
and we must be realistic about that, and we will have a future
countryside which is different from the present one. I am very
keen, as the head of rural policy at CPRE, to lead that debate
from a positive, embracing perspective and not from a negative
one. So I am anxious not to say that we are so worried about the
landscape implications of biofuel that we want to resist it; rather,
I would rely on intelligent dialogue and landscape character assessment,
which is already in place, to help farmers make wise decisions,
together with other agencies such as the Integrated Agency we
expect will soon be in place.
Q123 Mr Chaytor: But are you opposed
to all subsidies on alternative fuels?
Mr Oliver: No. No, we are opposed
to the idea of coupling acreage payments for the production of
bio crops.
Q124 Mr Thomas: Just to clarify on the
biofuels issue, and I was interested in the Norfolk example you
gave of not enough biofuel for all the cars in Norfolk, is that
at a five% mix within diesel or at a hundred%?
Mr Oliver: I do not know, I am
afraid, and I am quoting from Tim O'Riordan's figures, which I
do not have, but we can furnish the Committee with those.
Mr Thomas: If we could have a note just
to clarify that.
Q125 Chairman: Yes, if you could let
us have a note.
Mr Oliver: Certainly.
Q126 Mr Thomas: The second point on the
issue which you have just addressed to Mr Chaytor—the cross-compliance
issues within the single farm payment and the need to maintain
the farm—whether you are taking subsidy for biofuels or
not, you will still have a single farm payment presumably, which
is the new replacement for agriculture subsidies? There is a need
within there about cross-compliance and maintaining good husbandry.
Surely that rules out a mono culture appearing on these farms
anyway? That just gives scope for farmers to go after a new market,
which is biofuels, and surely we do need some incentives to develop
that market, albeit over a period of time then the incentives
are withdrawn and we have a viable free market existing in those
fuels themselves?
Mr Oliver: I think I agree with
your analysis, but I think the critical point is that you do not
lead farmers with a acreage payment because the problem with the
rendering of the landscape through subsidy from a layman's perspective
is that you see farmers doing things because they are paid by
the acre or by the head of livestock to do them and for no better
reason than that. It is entirely different to encourage a technology
to become cleaner, more efficient, more competitive and more effective
and within that, if we are going to grab the bull by the horns,
there is the issue of genetically modified crops as well, which
we do not entirely reject for the very reason that it does help,
one can argue, in terms of efficiency of biofuel production. We
do not have a position on it yet, we do not know the facts, but
we are certainly aware of the importance of such issues. When
it comes to a single farm payment, of course you are right that
the single payment allows a degree of flexibility of response
from January this year onwards. However, I think we should be
realistic about the length of time the single payment will be
in existence and its scale. We very much expect there to be reductions
in the single payment and a fundamental political desire to end
it for all the obvious reasons which have been very well rehearsed
on previous occasions.
Q127 Mrs Clark: Before I go to the question
I was going to ask, I just want to take this debate about biofuels
a little bit further. For the past seven and a half years I have
been arguing the case for this Government to actually be more
proactive in terms of biofuels, and I have been doing that alongside
British Sugar, which is just outside my constituency. I am surprised
and a little discouraged that you have used the word "insignificant"
in relation to biofuels, bioethanol, etc., particularly when we
see in Germany that the government there is very much actually
putting its full fist behind biofuels. How can we encourage it?
Warm words are not going to do it, are they? What is CPRE going
to do in terms of really getting this on the map?
Mr Hamblin: I think the debate
we have been having is about the way in which that sector can
be supported and making sure that through that support we are
not generating other adverse effects. One of the other issues
which we have not touched on, but which is important, is looking
at the overall carbon balance from the use of biofuels, where
for some it is positive and for others it is less positive. We
would expect all these sorts of issues to be addressed in the
Treasury's assessment of that programme.
Mr Oliver: It is a question of
value for money as much as anything else and I think I used the
word, I hope I did and I certainly meant to use the word, "relatively"
insignificant rather than insignificant when compared with huge
changes which are required of society in order to reduce carbon
emissions overall. Also, if I may say so, with regard to British
Sugar, I think it is a very interesting case where the industry
is doing a good job to try and see whether it can make a positive
contribution, but I think again we would be keen on that not being
led by an acreage subsidy.
Q128 Mrs Clark: Okay. You have actually
stated quite openly that you would like the Department for Transport
to set a target for reducing traffic levels. You will probably,
like myself, remember the furore in 1997 when John Prescott
actually said that he wished to reduce the number of car journeys.
I believe it made national coverage and the Government has since
refused to set a target. Do you honestly think they are going
to go back to that and that sort of bad coverage, particularly
before an election, and taking on board the comments which Mr
Barker has made about people living in rural areas actually regarding
their car as a bit of a lifeline, etc?
Mr Hamblin: Well, we were talking
then about a national target and forgive me if I do not comment
on the comments of the Deputy Prime Minister. I think what we
are trying to say in our submission is that traffic levels are
a very important indicator of a wide range of effects from transport
on people's quality of life. And we have been deeply concerned
by the way in which the Government has lurched towards seeing
congestion as almost the single most important issue to be addressed.
Congestion is important, it has environmental, social and economic
downsides, but there are a wide range of other effects which need
to be captured. We do have traffic as a headline sustainable development
indicator. We have got various PSA targets for a whole range of
sustainable development indicators. We do not have it for traffic,
but what we are promised in July is a number of congestion targets.
There is a big debate about how you measure congestion meaningfully,
but our locus on this is very much to say that congestion is only
part of the bigger jigsaw.
Q129 Chairman: It is one thing to set
a target for reducing traffic, but how would you actually do it,
ban people from using their cars on certain days of the week,
or close the roads? How do you actually do it?
Mr Hamblin: In the same way that
a range of other Government targets are set, you establish the
target, it provides the aim around which you then set the framework
in order to deliver that, and you measure the variety of different
proposals coming out of the Department for Transport, and I would
also argue out of the Office of the Deputy Prime Minister in terms
of the communities plan, against whether it is going to move towards
it or move away from that target. I would remind the Committee
that the Government's Commission for Integrated Transport, which
looked at this issue, did actually recommend that the Government
establish an aspirational target of zero traffic growth by 2010.
We are some way on from when that report was published now so
that might need refining, but the Commission for Integrated Transport
has made that recommendation to the Government.
Chairman: The Government may feel, with
some justification, that it has already broken enough of its targets
without the need to set another one, which frankly would be impossible
to meet.
Q130 Mrs Clark: What is CPRE's view on
developing a national road charging framework? Is that a good
thing or a bad thing? Is it possible? Would you accept that in
reality it might be much more of a sort of blunt instrument for
tackling environmental impacts than the current structure we have
got of VED and differential fuel duties? Is it capable of greening
it?
Mr Hamblin: There are a lot of
questions in there. First, I would say CPRE supports in principle
the introduction of national road user charging. We do have a
more detailed position statement, which I am happy to make available
to the Committee on the whole issue of charging. Our concern is
that the Government is looking at this again principally as congestion
charging rather than road user charging and that has some potentially
quite significant downsides in relation to encouraging traffic
on to less congested roads at less congested times of the day.
Indeed, that is the objective of the measure. Our concern with
that, though, is that it is not addressing the wider effects of
traffic on people's quality of life and indeed it could even undermine
policies to try and encourage an urban renaissance. So we need
to approach the whole issue around charging very carefully, but
we think it has a very important role to play. It need not be
blunt because it could comprise a number of different factors
in order to come to your final charge, if you like, based on distance,
based on place, which again we would argue needs to be varied
to take into account the needs of those in deep rural areas compared
with urban areas and elsewhere. So there are a lot of issues still
to be resolved. I think the package that we have at the moment
with VED is important in terms of influencing choice of vehicle
or choice of fuel but what it does not do is address overall traffic
levels or journey lengths where they have been increasing over
time, and that represents a significant problem.
Q131 Joan Walley: Sustainable development
and sustainable communities is very much the key phrase at the
moment in view of the conference in Manchester, which finishes
today as we speak. Could I just ask you first of all, in terms
of taxation on property and the role of taxation in all of this,
how do you think the Government should square the circle between
the need for affordable homes in the south-east and providing
a protect and provide approach? How does it, by the same token,
ensure the urban renaissance in the northern areas where we have
communities that are not quite there for the purposes for which
they were originally built? What is the role of taxation in assisting
the squaring of the circle on those issues?
Mr Oliver: To give a top-line
answer first, demand management is fundamental and we have set
out our arguments in a document, which if the Committee wishes,
we could provide, which we launched last week entitled Building
on Barker to address the premise that Kate Barker sets up that
supply side management is the solution to the housing shortage
in general and we come to the conclusion that although there are
some supply side issues, particularly and crucially with affordable
housing, the wider question of the provision of housing and its
location is something which requires demand side action as well
as supply side action. When it comes to the role of tax the Committee
may be familiar with the fact that we have recently published
a document entitled The Taxation of Property, which we commissioned
from Europe Economics, which is not our policy but which I think
provokes quite useful discussion, and to answer your question
concerning the role of tax we would say that there are some serious
points worth making. The first one is that the issue of mobility
and economic competitiveness is an important one that we recognise
and therefore we wish to reduce the effect of any taxation mechanism
on that. We observe from a report commissioned for the Council
of Mortgage Lenders that stamp duty does not seem to have reduced
the number of transactions which take place, despite the fact
that total sums have of course gone up because property prices
have risen. We raised the question that perhaps sellers should
be taxed rather than buyers when it comes to stamp duty. We observe
that the Treasury has observed itself that property investment
is relatively lightly taxed and we recognise that if capital gains
tax were to be imposed on the disposal of property there are important
qualifications for that, the principal three being getting relief
on establishing the need to move for economic reasons, which to
some extent answers the question I have previously raised, that
there might be the possibility of relief on moves which were happening
less frequently than every five years, and that there would be
very important relief on any expenditure made on improving the
property.
Q132 Chairman: Why should anyone move
if they do not need to? I mean, it is not a pleasant experience.
They do not do it for fun.
Mr Oliver: No. That is entirely
true. However, there is evidence that not all moving is entirely
down to economic justification and is partly down to the cost
of travel.
Q133 Chairman: It would be very hard
to make it stick in law.
Mr Oliver: Yes. That is a fair
point. We are merely raising the issues which we think are important
in engaging with this matter and we are not, as I said earlier,
making a point of policy. But it is important that the question
is faced as to whether housing is an investment or a basic necessity
and the inevitable answer is that it can be both, and as a result
our consultant suggests a policy where there is a recognition
that some element of property value is down to basic necessity
and some of it is down to the opportunity to benefit from investment
and that might be a means of addressing the question of taxing
fairly and effectively. We subscribe entirely to Kate Barker's
suggestion that second homes should be subject to the full rate
of council tax, as she suggests herself, and when it comes to
a property tax instead of a council tax we recognise the interesting
question of whether this might reduce the volatility of the housing
market by encouraging the better use of existing stock as the
market becomes more buoyant rather than only that happening as
the market declines and owners seek other means of securing income
than simply owning a house singly. So those are some of the issues
which we hope are germane to your question.
Q134 Joan Walley: Just before we come
on to the contentious tax issues there, could I just press you
a little bit further on the Building on Barker report which you
referred to and just ask you whether or not, in the light of that
report, you feel there is further work by way of environmental
impacts, etc., which needs to be embedded into the basis of the
Barker Report in respect of building in the south-east?
Mr Hamblin: Absolutely. We have
been very concerned by the way in which the Barker Report came
on the scene. As part of the report, was the clear statement that
environmental implications were not properly considered and that
this was the role for Government. Well, now we need to see how
the Government is going to actually respond to that and we have
advocated in our evidence that a full strategic environmental
assessment be undertaken, because although Defra has done a post
hoc analysis of the Barker Report and the Communities Plan
it is after the event, obviously, and it does not address some
key issues such as transport and consequently overall greenhouse
gas emissions.
Q135 Joan Walley: In respect of that,
could I then ask you to wed that approach that you would like
to see from where Barker leads us to the Treasury and to the opportunities
that there might be through taxation to try and deal with some
of these perversities, if you like, and to ask you particularly
about greenfield development. You are advocating, presumably,
that we get a level playing field? It just seems to me, representing
a northern area, a former manufacturing area where we have so
much brownfield—why should we have these huge incentives
to build on greenfield land? How do you think the Treasury could
really play a part in all of that?
Mr Oliver: I think that the Office
of the Deputy Prime Minister has an important role to play in
raising the brownfield target.
Q136 Joan Walley: But should that be
done through the tax system, VAT?
Mr Hamblin: In terms of the Treasury's
role, we have said that we want to see changes to the VAT regime
so that there are incentives provided for brownfield development
and urban regeneration and moving away from greenfield housing
development.
Q137 Joan Walley: You have said that
and the Richard Rogers Report said that. Do you see any signs
that that is now being understood, acted upon and implemented
by ODPM in conjunction with the Treasury? Have we made any headway
on that?
Mr Hamblin: Well, I think I would
step back from the immediacy of that issue to where the Government
strategy is going in terms of taxation. Our concern has been that
one never knows from year to year what the next measure might
be. Is it going to be a little more tinkering on company cars?
Is it going to be a plastic bag tax? Is it going to be measures
to try and encourage an urban renaissance? Since the Lord Rogers
Report came out we have seen very little evidence of the Treasury
really taking that message on board and that is something we want
to see coming forward in the next Budget.
Q138 Joan Walley: Do you think that you
see little evidence of it because it might be too contentious
an issue, or do you feel that there are, as we speak, people working
behind the scenes, looking at ways of getting that level playing
field and getting the 17% VAT on a level playing field?
Mr Hamblin: I think there has
been quite a lot of work done in the Treasury on looking at how
you can create incentives for better design of new housing. Whether
there is more work being undertaken to look at the overall location
and amount of housing, we do not have those signs yet.
Joan Walley: Thank you.
Q139 Gregory Barker: Could I just come
back to this taxation issue. You are a campaigning organisation
with a mass membership that is very well respected and does very
important work, but the notion that you could associate yourselves
with putting capital gains tax on to housing is politically contentious
and widely unpopular, while at the same time being somewhat equivocal
to the extremely common sense and urgent issues which Joan raised
about greenfield and brownfield. Do you not think you are sort
of losing your political antennae as to what is possible, what
is achievable and what is desirable? It sounds to me as though
you are tilting at the most extraordinary target and saying, "Put
capital gains tax on homes," which right the way across the
political spectrum people will just think is barking mad because
often the home, for very good reason, is people's largest single
asset and there is a whole argument there, yet I cannot understand
your being very conservative (with a small `c') about the types
of areas of taxation which are realistically under debate and
where people do want to see progress. Have you not got your priorities
wrong?
Mr Oliver: I think it is important
to re-emphasize—and I know you understand this but it is
important as a matter of record—these are not policy recommendations
by CPRE.
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