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The Financial Secretary to the Treasury (John Healey): We are strongly committed to supporting the development of biofuels in Britain. The Budget announced an extension of the 20p per litre discount on both biodiesel and bioethanol and that will run until at least 2008-09. The Chancellor also made a range of announcements to bring into force a renewable transport obligation.
Several weeks ago, I had the pleasure of launching one of the countrys first bioethanol pumps at a filling station in Lowestoft. This is a symbol of our determination in East Anglia to lead the way on biofuels. We have new biofuel plants coming on stream, but is my hon. Friend satisfied with the present rate of progress? Does he think that the process needs more encouragement? What discussions is he having with motor manufacturers to ensure that we have vehicles
that can use bioethanol and petrol in the same tankas they have in Brazilready for the new bioethanol revolution?
John Healey: I welcome the introduction of the new bioethanol pump in my hon. Friends constituency. East Anglia is taking the lead in many ways. One of the first bioethanol plants is likely to be set up in Wissington, close to my hon. Friends constituency. The industry is being given great support and encouragement by the package of measures that the Chancellor announced in the Budget. That will give greater certainty about the development of the market. Clearly, even to reach the level at which 5 per cent. of our road fuels are derived from renewable sourceswhich is the level of the obligationwill involve a huge step up. However, I am confident that we now have in place the sort of package that will lead to that sort of development. The development of engine technology and of the technical specifications for fuel will be part and parcel of our ability to push well beyond 5 per cent. after 2010-11.
Mark Pritchard (The Wrekin) (Con): In an earlier response to a question about bioethanol, the Chancellor mentioned Mozambique. Does the Minister acknowledge that there are many sugar beet farmers around this country, not least in Shropshire, which has 600, with 200 in my constituency alone? They would be more than willing, able and keen to assist the Government in meeting their climate change targets, if only there were a guaranteed market, and incentives rather than a stick. Will the Minister send out a message today to Shropshire farmersrather than just Mozambique farmersabout how the Government will encourage them to get into the bioethanol market?
John Healey: I am not sure that the hon. Gentleman has looked at the package of proposals put in place by my right hon. Friend in the Budget. Nor am I sure that he has looked at the reaction of the industry to those measures, or at the plans for the new bioethanol plants in this country. The purpose of our policy is to develop the biofuels market in Britain, which will provide new opportunities for British farmers. However, we are not providing a fresh form of subsidy for British production. We are interested in building the biofuels market and gaining the environmental benefits from it. The managing director of Losonoco, one of the firms due to set up two bioethanol plants in the UK, has said that, from the firms perspective, it was a good Budget and that the support that the Government is giving to the biofuels sector was very encouraging.
Mr. David Kidney (Stafford) (Lab): We now have in place all the right economic instruments, including the reduction in fuel duty, the capital allowances for new developments and the proposed renewable transport fuel obligation. Does my hon. Friend agree that what we need now are home-grown entrepreneurs to come forward to make the most of home-grown fuels?
My hon. Friend is right. The Government can go only so far. We have put in place the framework of incentives and support for the
development of the market, but, in the end, it requires private investment and private enterprise. The signs are good, but private industry and investment must now do the heavy lifting.
Mr. Robertson: I thank the Minister for her response. She will be aware that a considerable amount of tax credits have been overpaid through no fault of the claimant and that, when they have to pay the money back, it causes considerable hardship. I recently wrote to her about a case in which the claimant had put her income down on the claim form, but not in the specific box required. She subsequently confirmed that that was her income, but was then overpaid because the Inland Revenue was unable to take account of what she had reported to them. She is now faced with a bill for £3,500, which she cannot pay back. Will the Paymaster General look into that case, and into the whole issue of overpayments that are absolutely no fault of the claimant?
Dawn Primarolo: I am sure, Mr. Deputy Speaker, that you would not want me to conduct an MPs surgery here in Treasury Questions[Hon. Members: Go on.] Perhaps I should not have said that. The hon. Gentleman should write to me on that specific case and I will look into ita facility that I offer to all Members. I remind him that during 2003-04, the first year of the schemes operation, 54,000 families received tax credits. In 2004-05, that figure rose to 60,000, and some of those families, because of their income, benefited to the tune of £2,400 or more. The crucial point is that tax credits in Gloucestershire and everywhere else are contributing to lifting children out of poverty and assisting families and parents to return to work.
The Economic Secretary to the Treasury (Ed Balls): The Budget report provided an assessment of all areas of the UK economy and UK competitiveness, including gross domestic product, productivity growth, labour market performance and economic stability.
I think that I thank the Minister for that non-answer. He was a special adviser in the Treasury when the Chancellor of the Exchequer made
it one of his first priorities, back in 1997, to raise economic productivity. The Minister must know that his Government have singularly failed to do that, and that we have actually dropped down the economic competitiveness league. What is he going to do, through tax and regulation, to make the economy of this country a good deal better than it has been in the past nine years?
Ed Balls: I thank the hon. Lady for her question and for being here to ask it. The fact is that since 1997, productivity has grown in every quarter under this Government, unlike under the previous Conservative Government, when it fell. This weeks edition of Employment Outlook, produced by the Organisation for Economic Co-operation and Development, tells us:
Britain has scored the highest employment rate and the best combination of unemployment and inactivity rates in the G7 countries for the first time in 50 years.
We have combined stability, strengthening productivity and record levels of employment. People will remember the difference between that record and the record of previous decades, when we suffered the deepest recession since the second world war and the longest recession since the second world war, when people suffered from negative equity and when we had high interest rates. People do not want to go back to those days.
Mr. Brian H. Donohoe (Central Ayrshire) (Lab): One of the areas of concern for manufacturing in my constituency is the cost of energy. In the light of that, and given what has been stated about the next generation of nuclear power, what is the Treasurys view?
Ed Balls: My hon. Friend is right to point out that the high cost of energy in recent months has been an issue for British industry, and more generally for the economy. On Monday, the Governor of the Bank of England talked about the pressures on the economy as a result of the high oil prices around the world. An energy review, which will report in a few months time, will be a Government report and will set out exactly how we can have an energy policy that meets our climate change obligations and also delivers security and diversity of supply. That report will refer to the need for a range of measures and of sources of energy, but we will need to wait for the final details before we can comment on it.
Ann Winterton (Congleton) (Con): Is the Minister aware that business and industry are more heavily taxed now than ever before? In 1997, the tax take was £80 billion; this year, it is £140 billion, due to corporation tax, national insurance tax and other taxation. On top of that, there a huge amount of regulation, some of which is emanating from the European Union. Is it any wonder that companies, including headquarters in the City of London, are thinking of relocating elsewhere?
As I said in a speech yesterday, the number of listings in the UK has been rising, rather than falling, in recent years. We have cut corporation tax
from 33p to 30p. We have cut small business tax. We have also cut capital gains tax from 40p to 10p since 1997. However, the hon. Lady includes in her figures one tax that we did raise: a £5 billion windfall tax on the privatised utilities. The Conservatives opposed it, but it has helped to get down unemploymentparticularly youth unemploymentin constituencies across the country. I would like her to support that tax rise, but I fear that she will not do so.
The Financial Secretary to the Treasury (John Healey): We have discussions with a wide range of groups on a wide range of issues, including the climate change levy. Talking of discussions, next week we will be able to debate and vote on the climate change levy as part of the Finance Bill; indeed, we will discuss it with all parties in this House, and I hope that all will back it at that point. In particular, I hope that, for once, we will see backing from the Conservatives on the environment, instead of opposing the levy. I hope that they will support the measures that we are taking. Albert Owen: I am grateful to my hon. Friend for that response. He will know that high energy users, including the aluminium smelter sector, have reduced their CO2 emissions considerably because of incentives provided by the Government, through changes to national insurance and part-exemption from the climate change levy. That has allowed smelters, including Anglesey Aluminium in my constituency, to reduce their carbon emissions by up to 30 per cent. Will he consider that issue further when climate change is under discussion, to ensure that British manufacturing, including smelters, is more productive? Does he agree that that carrot and stick approach is just what British industry needs?
John Healey: My hon. Friend is right in that the package that we introduced with the climate change levy included the important climate change agreements, giving an 80 per cent. discount from the levy for high energy, high intensive sectors, especially those facing international competition. We were able to introduce those discounts for 42 sectors and have since added five more. We are looking to legislate for those five more, building on an extra nine that we added previously. We are trying to strike an essential balance with a package of measures that gets us the environmental gains that we need, but protects the competitiveness of British industry. We have achieved that with the climate change levy package and I hope that we will receive support from both sides of the House for the Finance Bill next week, instead of the Toriesto coin a phrasetalking tough and voting soft.
20. Greg Clark (Tunbridge Wells) (Con): What criteria he used in deciding on his response to the request from the Institute for Fiscal Studies for information on the cost of the £25,000 income disregard for tax credits. 
The Paymaster General (Dawn Primarolo): In responding to the freedom of information request from the Institute for Fiscal Studies and in the subsequent review of the decision, officials at Her Majestys Revenue and Customs followed the criteria set out in the Freedom of Information Act 2000.
Greg Clark: The Paymaster General knows exactly what the likely cost of the increased disregard will be, but in rejecting the freedom of information request she said that officials had to balance the public interest in disclosing the information with the public interest in withholding it. What is the public interest in preventing MPs from knowing the cost of her policy? Is it not a shameful situation for the Chancellor of the Exchequer to be afraid of scrutiny of his flagship policy?
Dawn Primarolo: On the first question that the hon. Gentleman posed, the information has been made available to the House. On the specific point of the Freedom of Information Act 2000, Her Majestys Revenue and Customs is a non-ministerial department. It is for officials to follow the criteria set out in the Act, and that is precisely what they did.
Mr. David Gauke (South-West Hertfordshire) (Con): The Paymaster General will be aware that the Treasury Committees report, published recently, criticised the lack of understanding of the cost of the new package, including the disregard, as well as a failure to understand the roles of IT, fraud and official error. The report also stated that the Committee was not convinced that the Paymaster General fully realised
the extent to which HMRC needs to re-focus its administrative structures for tax credits around the needs of claimants.
We commend HMRC for the positive step it has taken towards improving the way it deals with complex cases, by setting up a specialist team for the express purpose.
we welcome the fact that the Government is seeking to improve the operation of the tax credits regime by introducing a package of reforms.
The Treasury Committees report commented in detail and commended the department on the administrative changes it is making. The press release by the Committee also acknowledged that tax credits are the right policy.
The Economic Secretary to the Treasury (Ed Balls): I am pleased, if somewhat surprised, to be able to answer question 21. My right hon. Friend the Chancellor and Treasury Ministers have regular discussions with the Secretary of State for Work and Pensions on a range of matters, including those relating to pension reform.
Mr. Dunne: I am grateful for that very informative response. In evidence to the Treasury Select Committee earlier this week, the Secretary of State for Work and Pensions was unable to give a clear-cut assurance that increases in the basic state pension would definitely be linked to earnings, not just in 2012 but throughout the life of the next Parliament. It is increasingly unlikely that the Chancellor will be in a position of influence over the next Government, but will the Economic Secretary say whether he has any doubts about the affordability of that key plank of the Governments pension reforms?
Ed Balls: I know that the hon. Gentleman keeps a close eye on pension issues, as a member of the Select Committee and through his website, where he has expressed his concerns about affordability. The Governments position was set out clearly in the White Paper. We want to introduce the earnings link by 2012, and certainly by 2015. Our aim is to reform pensions in an affordable way that is fair to future generations as well as to this one. That is what we will deliver.
Rob Marris (Wolverhampton, South-West) (Lab): Tax relief on pension contributions currently costs £18 billion a year in foregone tax revenue, and there will be further tax relief under the new pension arrangements proposed by my right hon. Friend Secretary of State for Work and Pensions. However, the evidence from the Department for Work and Pensions is that tax relief has a negligible effect on how much is saved in pension schemes. Why is there tax relief under the new scheme, when the existing relief is not doing what it was designed to do?
Ed Balls: As my hon. Friend knows, people pay tax on their pensions when they receive them, and they receive tax relief as they contribute to their pensions. That has been the system in this country for many years, and it is the right way to ensure that we encourage people to save for retirement. We want more rather than fewer people to use the tax reliefs by saving for their pensions, and that is why the current system will continue after the White Paper has been implemented.
Wednesday 21 JuneOpposition day [17th allotted day]. There will be a debate on the future of the BBC, followed by a debate entitled The Failure of the Governments Housing and Planning Policy. Both debates arise on Opposition motions.
Wednesday 28 JuneA motion to approve the Police and Criminal Evidence Act 1984 (Code of Practice C and Code of Practice H) Order 2006, followed by consideration of Lords amendments to the National Lottery Bill, followed by consideration of Lords amendments to the Childcare Bill.
Mrs. May: I thank the Leader of the House for giving us the business over the next two weeks. A few weeks ago, the Health Secretary said that it had been the best year ever for the health service, but the chief executive of the NHS Confederation said yesterday that the NHS was facing its toughest year ever. She said that trusts were facing
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