Previous SectionIndexHome Page

Harry Cohen (Leyton and Wanstead) (Lab): I am grateful to the hon. Member for Peterborough (Mr. Jackson) for referring to me as a class warrior. If that means that I battle for hard-working people to be better off, and for public services to be improved substantially, I am proud. I congratulate the Chancellor
28 Mar 2006 : Column 757
on another effective Budget that will keep the economy stable while boosting public services. I very much appreciate the extra £585 million that will be made available to schools by 2007 in direct payments. I am keen, too, to thank the Chancellor for £100 million to facilitate safer neighbourhood teams in wards throughout the country. In my constituency, for example, Grove Green, Forest and Snaresbrook wards will have safer neighbourhood teams from the beginning of next month, so I thank him for reducing the wait they would otherwise have had.

I am pleased that the Budget contains measures to tackle climate change, including an increase in line with inflation of the climate change levy from April 2007, the introduction of a new zero rate of vehicle excise duty for the small number of cars with the lowest carbon emissions, and a new top band for the most polluting new cars. It is incredible that the Conservative party, given its talk of consensus and its desire for green credentials, cannot embrace the levy, which is one of the biggest efforts in this country to tackle climate change. If the Conservatives think that a voluntary agreement would work, they are living in cloud cuckoo land. I urge them to get real and support the climate change levy.

Martin Horwood: The hon. Gentleman is a sincere supporter of green taxation, which Liberal Democrats support, too. Does he not think that it is rather disappointing that green taxes in total have fallen from 3.6 per cent. of national income in 1999–2000 to just 3 per cent., which is even lower than it was when the Conservatives were in power?

Harry Cohen: The gist of my speech is the measures needed to tackle climate change. At least the Chancellor has moved in the right direction, given the measures that I have already mentioned. It would certainly be a retrograde step if the Conservatives had their way with a so-called voluntary agreement instead of the climate change levy.

Aviation tax could be even more important than the levy. Figures from 2003 on carbon dioxide emissions from fuel combustion show that international aviation and marine bunkers were responsible for 3 per cent. of the world's total carbon emissions, or 223 million tonnes. That figure has since increased substantially. I shall return to aviation tax later, but I wish to deal with the taxation of oil companies, which is a complex issue and is not often raised unless the Chancellor refers to it or it is mentioned in the Treasury Committee. My perspective, however, is different. One of the Chancellor's greatest achievements was the introduction in 1997 of a windfall tax on oil companies that raised £5.2 billion, which was invested in the new deal—an employment strategy that put many young people into work. The new deal adopted four different approaches including, crucially, skills training. It transformed employment in this country and it was a great success.

Oil prices have gone through the roof, as have oil company profits. I tabled a question to the Treasury asking the Chancellor to

28 Mar 2006 : Column 758

A ministerial reply on 28 February said that in last year's pre-Budget report there was a package of changes to North sea oil taxation, but that

I thought that that was strange, given that there have been record increases in oil company profits. Indeed, although the new deal is still in place it has diminished, and we need to make a new effort on skills training, which is the biggest priority in the field of employment. The Government have delayed the introduction of a new approach called BoND—building on new deal, but another windfall tax could be utilised for that purpose.

I undertook some research in the Library. As I said, the windfall tax produced £5.2 billion in 1997. The pre-Budget report shows that the Chancellor will receive £6.5 billion from the continental shelf oil companies in the North sea over the next three years. However, in the pre-Budget statement the Chancellor pointed out:

this is a key point—

There is therefore scope for more taxation on oil companies. Indeed, the Chancellor told the Treasury Committee:

There is therefore scope to increase oil company taxation by about another £1.5 billion quite comfortably over the lifetime of this Parliament. The windfall tax represented 10 per cent. of the taxes of those continental shelf companies. With the changes, we will get 8 per cent., but we could have got extra money from them. Their profits went up from £14 billion in 1997, which was a good year, to £21 billion per annum. We could have used the extra tax on their profits to improve skills training.

Aviation kerosene is duty-exempt. The Prime Minister has said that it might be included in a new emissions trading scheme as a first step. That is welcome, but the Chicago convention makes it illegal to tax fuel for international flights. The crisis is great. On 2 March The Independent reported:


The article continued:

28 Mar 2006 : Column 759

Oxfam has stated:

Mr. Walker : Does the hon. Gentleman agree that one good way of reducing emissions in the long term would be to stop building additional runways for budget airlines?

Harry Cohen: The hon. Gentleman makes a good point. Government policy must deal with aviation in the round.

According to the Library,


Mr. Geoffrey Clifton-Brown (Cotswold) (Con): The hon. Gentleman has just defeated his own case. If the United Kingdom imposed an aviation duty unilaterally, that would affect only domestic flights. Airlines would get their fuel from other countries. How would he propose to deal with that?

Harry Cohen: As I pointed out, we are in a position of leverage because such a high proportion of airlines use the UK. We would be a big player in that argument.

The Government will not say how much would be raised by an aviation tax, but in an answer in 2003 they stated that introducing duty at the ultra low sulphur diesel rate would raise £5.8 billion and at the heavy diesel duty rate, £6.6 billion, so in addition to the environmental effects the Exchequer could raise a lot of money by that means.

A number of steps should be taken. First, we should threaten to leave the Chicago convention and use that as leverage to renegotiate it. It is ridiculous that there is a convention preventing taxation on international flights. We should press for renegotiation. Secondly, the Budget refers to the continental shelf oil companies and the taxation regime is directed at them, but all oil companies are making huge profits on all their activities. An excess profits tax could be imposed on them without the petrol price having to be raised. If we do nothing with regard to aviation, we should do more in respect of individual travellers, based on the price of a ticket so that the rich pay more. There should be more tax on cheap tickets as well.

Finally, there are still great emissions and energy wastage from buildings—in London, for example, as much as from cars. The Government need to address that in their taxation regime. We need to tackle climate change and promote environmental protection. The Budget has made a start, but we need to do more.

8.15 pm

Next Section IndexHome Page