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Chris Huhne: First, let me cite a third-party assessment of the relative positions of the hon. Gentlemans party and the Liberal Democrats. The director of Greenpeace said that the Liberal Democrats had set the gold standard with their policy on green taxes. Despite the somewhat ribald terms in which the hon. Gentleman is describing our policy, I think it worth considering the words of an impartial judge with no partisan axes to grind.
Gregory Barker: I am sure that that was the hon. Gentlemans point, although I did not quite follow all of it. I would describe the policy as more Marlboro Light than gold standard, but given that the hon. Gentlemans is the only Opposition party to come forward with a full array, he certainly has first-mover advantage.
For too long the Government have talked a good game on climate change, raised expectations and failed to deliver. A climate change Bill alone will not deliver solutions to the United Kingdom, but it will establish a transparent long-term framework and a clear and demanding criterion against which this Government and successive Governments of whatever party can be held to account here in Parliament.
If one strong message emerges from this debate, I hope it will not be the carping about large cars driven by a tiny minority of the population, although that problem will need to be addressed. I hope it will be the altogether more serious message that this Prime Minister, so desperately in search of a legacy, still has a chance to make his mark in a profoundly positive way that will command support across the House: he has the chance to include a climate change Bill in the forthcoming Queens Speech. I very much hope that the Minister will acknowledge the support for such a Bill this evening, not just on the Conservative Benches but throughout the House, and convey it to No. 10 in no uncertain terms.
Mr. Elliot Morley (Scunthorpe) (Lab): We have had an interesting debate on a serious issue. I welcome the fact that the Liberal Democrats chose the subject for an Opposition day debate, but am disappointed about their preoccupation with gross domestic product, which provides a weak assessment of the performance of green taxes.
Apart from the examples provided by the Minister for Climate Change and the Environment, the Government have introduced a range of measures that will not feature in the calculation at alltradeable landfill allowances, for example, which have a tremendous effect in boosting recycling. In turn, that provides more efficient energy use, which reduces CO2 .
My hon. Friend the Minister will correct me if I am wrong, but another big change that would not necessarily be calculated in green tax schemes is the Treasurys policy on company car taxation. Companies buy the most new carsthey account for the bulk of new car salesand the changes that the Chancellor introduced to company car taxation have made a real difference to marketing and emissions in respect of manufacturers. I am inclined to agree that green taxes represent a low proportion of physical activity and there is a case for expanding a whole range of green fiscal measures. I know that the Treasury has not been afraid to look into them. There have been some shifts on that issue and the climate change levy provides one example.
I listened carefully to what the hon. Member for Bexhill and Battle (Gregory Barker) said, but as my hon. Friend the Member for Southampton, Test (Dr. Whitehead) said, we heard no indication of any kind of policy. I understand that a policy review is taking place, but that argument can be run only for so long. It is time-limited. The Conservatives cannot go on saying that the answer to everything is to have a policy review. It is already damaging the right hon. Member for Witney (Mr. Cameron), because people are beginning to get tired of the fact that the Conservatives have no policies, as everything is subject to a review.
There may well be a case for having a carbon tax as opposed to a climate change levy. We should be open-minded about that and any proposals should be examined, but we have to see what the proposals are, how they are going to work, how they will be applied and whether they will prove more effective than the climate change levy. If the hon. Member for Bexhill and Battle looked at independent analysis of the climate change levy, he would find that it has been very effective in reducing emissions.
Mr. Morley: I repeat that I am perfectly willing to consider the case for a carbon tax as opposed to the climate change levy, but the key issue is outcomes and what range of measures will have the best outcomes. I emphasise the term range of measures, as taxation is but one, albeit an important one. The need to implement a range of measures is the main point that I want to focus onbriefly, as I know that others wish to speak and time is limited.
On carbon markets, it is right to note that this country pioneered national carbon trading. We were the first country in the world to do so and we greatly influenced the shape of the European emissions trading scheme, which I greatly welcome. It must, however, be built on: it is a developing market.
Of all environmental issues, I certainly put climate change at the top and it is right to highlight growing evidence of the urgency of the problem and the need
for a major culture shift within societies in respect of both developed and developing economies, on tackling this issue. Carbon markets and carbon accounting provide a highly efficient way of proceeding, so I greatly welcome the fact that the Treasury has confirmed that it is interested in the whole concept of carbon accounting. It shows the way forward.
Carbon markets and the caps that go with them are among the most powerful drivers and they deal with some of the more difficult issuesaviation, for example, on which I shall touch. We need to extend our existing carbon markets and once again I welcome the Treasurys willingness to consider the extension of the UK scheme, over which we have control, to include domestic buildings and the retail sector, for example.
I also ask Ministers to consider a more radical approach to carbon markets. I particularly welcome the speech made recently by my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs in which he raised the concept of personal tradeable carbon allowances. That moves us into a completely new area. I accept that a network of administration would be needed in this country, and that they would pose an awful lot of challenges, but it is the kind of major cultural shift that we need. We could make a start on the idea in the area of transport.
There is the technology now. Loyalty cards at filling stations and credit card technology are well established and could be adapted for carbon allowances. People could have an allowance on a credit card and when they bought fuel, the allowance could be deducted. If they needed more, they could buy the carbon allowance at the garage. If they did not use much carbon, they could sell that into a central pool and people with gas guzzlers would have to buy the additional carbon to cover that. That approach may be more efficient than simply applying tax, although I am not arguing that tax does not have a role. I strongly urge Ministers to think about it. We have to do the analysis, and sooner rather than later. I strongly encourage them to do that.
I particularly like the idea of carbon allowances when it comes to aviation. Aviation is a problemthere are no two ways about it. It is not paying its fair share nationally or internationally, and, of course, it is an international activity. One could apply the same concept to the issue of tickets.
This Government led the argument under our presidency to include aviation in the European Union emissions trading scheme. That was achieved. It was a great success to get political agreement. There is going to be an argument about the detail, but I hope that the UK sticks to the principle of applying carbon trading to all take-offs and landings in the EU, not simply intra-EU take-offs and landings. I do not think that that is enough; it has to apply to every plane that takes off and lands in the UK. I know that the Commission has got nervous because of international pressure over the issue. I hope that the Government will take steps to support the Commission and not back down on those points.
People can be priced off planes. I am not sure it is the most socially equitable way of doing it. It allows people who can pay to pollute. That is why I would much rather have a cap on the emissions of the aviation sector, and the activity could then be based on buying and selling the allowances.
I accept that that may take some time. Because of the urgency of the situation, there may be an argument for various interim fiscal measures. Again, I would like any fiscal measure that is applied to aviation to have an outcome. For example, some form of carbon offset levy on tickets or on the airline companies is worth considering. I do not believe that carbon offsets are an answer to the issue of climate change, or that offsets should be a substitute for reducing emissions. That has to be the priority, but there is a role for carbon offsets because we need to take action and it is one way of raising funds internationally to invest in clean energy in developing countries. I welcome what the Government have done to make all their flights carbon-neutral by offsetting. It is something to commend.
Some of these measures could be included in a climate change Bill. There is an argument for such a Bill. I support the concept. I accept that such a Bill is not simply about legislating for targets. Targets have their place, but there is a debate about how to apply targets and structures. The important thing is to have a framework for action and a climate change Bill could be an important part of that framework. It is worth considering.
I accept some of the arguments made about road pricing, which has a role to play, but it needs to be structured to achieve environmental as well as fiscal outcomes. However, the overriding issue is climate change. We must take an integrated approach across Government, because there are issues with the pricing of water and of waste collection. There is an argument for moving towards pricing waste by weight, and removing that charge from the council tax. Housing regulations and transport policy, too, are considerations. We must look at the way in which we can provide incentives, so that, as well as trying to tax bad practice, we encourage good practice.
It is a pity that my hon. Friend the Financial Secretary has left the Chamber, because on a number of occasions he and I have discussed how we could use reductions in stamp duty on new build to encourage the building of low-carbon houses. He used an eloquent argument to explain why the Treasury did not favour that general approach, but there is a strong argument for an incentive to encourage zero emissions homes, of which only a few thousand are being built. The Treasury might like to consider an exemption from stamp duty, or a lower rate of stamp duty, for houses that meet the highest standards as part of the incentives needed in an integrated approach across Government.
Of course, we should not forget the international dimension. The hon. Member for Bexhill and Battle discussed the Prime Ministers legacy, but if he travels around Europe and internationally, he will find that the Prime Minister is held in the highest regard for what he has done on climate change, and for the way in which he has pushed it to the top of the political agenda internationally; for example, it was on the G8 agenda. He has made it a big issue, and he stood with Governor Schwarzenegger in California to argue for the type of changes that are taking place in the US, despite the stance of the present Administration, because there is bottom-up pressure for them. The hon. Gentleman should accept the lead that the Prime Minister has given, and the respect in which he is held.
Nevertheless, there are big international challenges for us. For example, should there be a measure drawing
a distinction between food produced in this country and distributed locally, and food that is flown many thousands of miles across the world to reach the UK? Should there be a mechanism or levy that reflects that? Those are difficult subjects, and we are straying into World Trade Organisation territory, but climate change is such an urgent and important issue that we as an industrial countryindeed, the first industrial countryhave a responsibility to lead by example. We must think the unthinkable and not hold back from the more radical approaches that we need to take if we are to achieve our aim of stabilising global emissions. There is much that our country can be proud of having achieved, but there is a lot more that can be done on green fiscal measures. I know that my hon. Friends in the Treasury are thinking about that, and I urge them to be bold in the policies that they apply.
Martin Horwood (Cheltenham) (LD): I am grateful to the hon. Member for Scunthorpe (Mr. Morley) for his comments. When he was a Minister, I briefly shadowed him, and I was immediately impressed by the way in which he tried to take the Government down many of the right roads. He should take credit for many of the policy initiatives that the Government have taken, but he will be the first to admit that there is still a long way to go. He rightly emphasised the urgency of the issue for the UK because climate change science is becoming increasingly scary. More and more of the statistics and data from scientists suggest that the changes are beginning to happen even faster than was predicted. Scientists studying the rate of thaw of the Arctic perennial ice have found that it is 30 times faster than it was only a few years ago, so clearly there is a risk that we are approaching a tipping point, or at least that the rate of climate change is much faster than first thought.
Susan Kramer: Does my hon. Friend accept that, although the UK and the developed world are vulnerable, as he has begun to describe, the developing world and the worlds poorest people are most vulnerable to climate change? For example, in Zimbabwe, more than 55 per cent. of people are dependent on environmental resources. The crisis that they face is far more extreme than that in the UK.
Martin Horwood: My hon. Friend is right. There are many other examples from the developing world of the seriousness of this issue. In Bangladesh, millions face dispossession and homelessness through rising sea levels, while desertification in Africa may also displace millions of people and add to the economic chaos and disruption worldwide. Even in the UK, we face the prospect of more flooding, more extreme weather, more droughts, and even rising sea levels threatening major cities and coastal towns. If the north Atlantic currents that drive the gulf stream are disrupted, we may end up in the short term with a much colder climate, comparable to that of Canada, which is on the same latitude.
The issues are very urgent and the Conservatives approach displays some complacency. They seem to think that we can sit back for a year or two and gather more information, but there is a wealth of information and policy advice available for them to read and consider.
Mr. Ellwood: I remind the hon. Gentleman that the Conservatives are not in government yet. It is the responsibility of this Government to make decisions. We will make our announcements shortly, but it would be unwise, three years before a general election, to roll out policies today.
Martin Horwood: At least the Government have a policy. We may quibble with the detail and the pace, as I am about to do, but the hon. Member for Bexhill and Battle (Gregory Barker) mentioned Margaret Thatcher, who first said that the Conservatives were the real friends of the earth some 20 years ago. It has taken them some time to get their green act together.
I referred to the wealth of policy advice available and some reports were produced in the summer, notably the Tyndall Centre for Climate Change Research report, which mapped out a path to a low-carbon economy with reductions of 90 per cent. by 2050. I was pleased that the Minister mentioned the need to go well beyond the Kyoto targets. A consensus is emerging that those targets will not be sufficient to deliver the kind of change that is needed. That is a positive step. The Tyndall centre has also made it clear that a drastic change in the policy framework and much more deliberate actions than we have had so far from the Government are needed.
Another report was from the New Economics Foundation, which published something called the happy planet index. That sounds like something that the right hon. Member for Witney (Mr. Cameron) might have dreamed up in one of his sunshine moments, but it is a quality of life index that balances indicators of quality of life and life expectancy against the ecological footprint of the country. The UK comes 108th in that index, just behind Libya, although we are ahead of Laos. The reason is our heavy ecological footprint, which is the 18th largest in the world, despite our relatively small population.
The Chancellor put a few measures in the budget and my hon. Friend the Member for Eastleigh (Chris Huhne) elaborated on the weakness of some of them. We need to find measures that will change behaviour. Some of the measures on vehicle excise duty, and the freezing of aircraft passenger duty in recent years, have not been enough to shift behaviour substantially. Other opportunities have also been missed. We have talked about energy efficiency, but why is not the code for sustainable buildings compulsory? Why does it not include an element of microgeneration in every new build house or at least, at community level, for every new development? Those are missed opportunities that we need to seize. Action is needed at individual level, by companies and by Government.
We need to consider what will work to change behaviour. Government regulation, bans on the worst offending products and Government guidelines will play their part, but they can be clumsy tools. Despite my background in the voluntary sectorI worked with Oxfam for many yearsI am well aware that many of the grant-based initiatives and projects can seem a drop in the ocean compared with the changes effected by changing markets and the way in which economies work. That is the beauty of using fiscal measures as one of the tools in the policy armoury. My hon. Friend the Member for Eastleigh noted that the initial carbon dioxide targets
had been met almost by accident, due to a structural change in the energy marketthe dash for gas. With gas prices rising, we may not find that that price advantage works to the benefit of carbon emissions in future, so more methods will have to be used.
A smaller example relates to the washing machine market, which may seem mundane, but there has been an astonishing change in recent years, as the Energy Saving Trust pointed out: 90 per cent. of the washing machines bought in the UK are now energy rating A. The introduction of the labelling scheme itself has helped not only to shift consumer behaviourobviously when price was equal consumers looked for the most energy-efficient machinebut has also changed the behaviour of the manufacturers, because there was no market advantage in producing anything other than the most energy-efficient model possible.
We have many surprising allies in the arguments about climate change. The Association of British Insurers has become a strong advocate of more urgent action to tackle climate change because it can see the commercial realities. That in turn influences manufacturers and the economic landscape. We need to change the economic landscape of this country and move much more towards a low-carbon economy, whereas we have a Chancellor who, far from changing the landscape, is merely pottering around in the flower beds in many respects.
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