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Climate Change Levy

6. Mr. Nigel Evans (Ribble Valley) (Con): If he will make a statement on the effect of the climate change levy on manufacturing output. [997]

The Financial Secretary to the Treasury (John Healey): We published an independent evaluation of the climate change levy alongside the Budget this year. It was undertaken by Cambridge Econometrics. This estimated that with the levy, the total economy output should increase by 0.07 per cent. by 2010, compared with a situation without the climate change levy in place.

Mr. Evans: Is it not true that when this tax was introduced it was supposed to be tax neutral? Last year it raised £800 million. Since 1997, we have lost 1 million manufacturing jobs in this country. The Labour-dominated Trade and Industry Committee has asked
 
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the Government to review the workings of the climate change levy to help manufacturing industry in this country during its difficulties. That plea was backed by the Engineering Employers Federation. How many more manufacturing jobs will be lost in this country before the Government do something about the climate change levy?

John Healey: The hon. Gentleman will remember that the climate change levy was introduced with off-setting tax cuts that, in fact, are worth more than the amount raised by the levy. Frankly, the picture that he paints of British manufacturing is contrary to the figures. I have the statistics here: in 2004, manufacturing output was 1.4 per cent. up, manufacturing investment was 3.2 per cent. up, productivity was 5.3 per cent. up and manufacturing exports were 2 per cent. up. Clearly, many British manufacturing firms are not thinking what the hon. Gentleman is thinking.

Andrew Miller (Ellesmere Port and Neston) (Lab): My hon. Friend will know that much research and development work is being undertaken in this country that is beneficial to addressing climate change issues. The Government have introduced an important R and D tax credit, but may we have an assurance from the Government that that tax credit will continue and that they will look closely at supporting R and D that addresses climate change issues?

John Healey: My hon. Friend takes a close interest in these matters, and he is absolutely right: we have introduced for the first time a tax credit for research and development in this country. It has been worth £700 million to British business since we introduced it. We have also put in place other tax measures, such as enhanced capital allowances, to support the sort of research, development and technology that he is keen to see. The real question, which relates not just to climate change but to support for manufacturing, is whether we as a country are prepared to invest in the skills, innovation, research and development, science and business support that will secure our manufacturing for the future—the promises and spending that the Government have made, which the Conservative party failed to match during the election campaign.

Unemployment (Glasgow)

9. John Robertson (Glasgow, North-West) (Lab): If he will make a statement on unemployment levels in Glasgow. [1000]

The Economic Secretary to the Treasury (Mr. Ivan Lewis): Since 1997, the Government's labour market reforms have contributed to a fall in unemployment in Glasgow of almost 50 per cent., to a record low of 4.2 per cent.

John Robertson: May I thank my hon. Friend for that answer, welcome him to his new post and wish him all the best? Although unemployment has improved in Glasgow—1,100 more young people have been put into employment thanks to the new deal—it still has one of the highest unemployment rates of any city in the
 
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country. What does my hon. Friend propose to do to try to eradicate unemployment in Glasgow? May I ask him to visit the city to see its problems for himself?

Mr. Lewis: I would be delighted to visit Glasgow at any time. We will continue our policies of economic stability, which are absolutely central to maximising employment. We will also continue our new deal programme, which has reduced youth unemployment in Glasgow by 70 per cent. and long-term unemployment by more than 90 per cent. We will extend that new deal to skills to support employability for life, and that is in contrast to the Conservative party. The shadow Chancellor said in the House in January that he would abolish the new deal—there is nothing new about that—and leave such things to the market, whatever the consequences for individuals, communities and our society. The only intergenerational unemployment that the Labour party is prepared to tolerate is that of Leaders of the Opposition and shadow Chancellors.

Taxation

12. David T.C. Davies (Monmouth) (Con): What mechanisms he uses to assess the effect of the level of taxation on the state of the economy. [1003]

The Economic Secretary to the Treasury (Mr. Ivan Lewis): The Government's macro-economic framework has consistently delivered stability, with strong growth and low inflation, establishing a track record that has been internationally acknowledged. The Government's approach to taxation balances the need to finance better-quality public services, promotes sustainable development and ensures a fair tax environment.

David T.C. Davies: Under this Government, 1 million jobs have been lost in the manufacturing industries, as a result of the 66 tax rises that they have levied. Why will the Chancellor of the Exchequer not come himself to the Dispatch Box to answer a very simple question: does he have plans to raise national insurance levels—yes or no?

Mr. Lewis: I welcome the hon. Gentleman to the House and urge him not to get too excited in future.

The consequences of the tax policies deployed by this Chancellor and this Government are simple: lowest interest rates, lowest mortgage rates, lowest inflation, record levels of sustained investment in public services and the World Bank saying that the UK is the best country in Europe for business. The hon. Gentleman really should speak to his Front-Bench colleagues about taxation. The shadow deregulation Minister wants bigger tax cuts—

Mr. Speaker: Order. I shall stop the Minister there.

Mr. Brian Jenkins (Tamworth) (Lab): Will the Minister try to nail once and for all in the House the lie or misunderstanding that a low-tax economy is a golden rule for a growing or buoyant economy? For every low-tax economy in the world that has been successful I can point to one that was unsuccessful and to a high-tax economy that was a buoyant success. What is important is not necessarily the level of taxation, although I realise that there is an absolute level, but the effective use of
 
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resources by Governments. Can my hon. Friend give us an assurance that he will try to turn the argument to how effectively we use resources for the benefit of our country?

Mr. Lewis: I agree entirely with my hon. Friend. What is important is that we have a fair tax system supported by a stable economy, which enables us to invest in public services. Under the previous Government, we had an ideological commitment that put tax as the first priority. It led to the slashing of public services and meant that we had a boom and bust economy, with all its consequences for individuals and businesses.

Red Diesel

13. Mr. Alistair Carmichael (Orkney and Shetland) (LD): Whether non-commercial boat users will be able to purchase red diesel after 31 December 2006. [1004]

The Financial Secretary to the Treasury (John Healey): Private boat owners in Britain are permitted to use red diesel under a derogation of the European energy products directive, which is due to expire at the end of 2006. We shall be discussing that and other derogations of the directive in Europe closer to that time. Before that, we shall hold further discussions with boat owners and their associations.

Mr. Carmichael: The use of small non-commercial boats is integral to the way of life of many people living in island and coastal communities. If the diesel used in those boats is to become subject to fuel duty, that use will be greatly curtailed. The move to charging duty will inevitably be bureaucratic and will add many infrastructure costs for the many small piers in my constituency. Will the Minister pursue the question with urgency both in his Department and with the EU Commission as, in those terms, the end of 2006 is approaching rapidly?

John Healey: I remind the hon. Gentleman and the House that commercial boat owners are entitled to use fuel with no duty at all. I welcomed the early-day motion that he tabled in the last Parliament, which commended the Government on securing the derogation in negotiations on the energy products directive.

Let me reassure the hon. Gentleman, if I can. We shall take the decision on whether to seek to extend the derogation in good time. We shall hold full discussions
 
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with those who have interests and are concerned about that beforehand, and when we make the decision we shall take into account all factors that may be relevant—social, economic and environmental.

Mrs. Betty Williams (Conwy) (Lab): I hear what my hon. Friend is saying, but will he agree to meet a delegation from my constituency of people who are raising issues similar to the ones set out by the hon. Member for Orkney and Shetland (Mr. Carmichael)?

John Healey: My hon. Friend is assiduous in bringing delegations from her constituency to meet me. I rarely respond to a question from her in the Chamber without troubling my diary secretary. Of course, I shall be pleased to meet whatever delegation representing the interests of private boat owners from her constituency that she wishes to bring to see me.

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