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Because the Government are not doing as much as they should, the message is not getting through to some parts of industry, notably the boss of Ryanair. On 22 June, he dismissed other air carriers, who were trying to form a sustainable aviation group, as lemmings. He said:

I know which cliff edge we are shuffling towards and it is not the one that Michael O’Leary was describing.

There has been progress on the labelling of low-carbon cars, on which the Low Carbon Vehicle Partnership has been doing some work. It found that:

Labelling obviously provides some incentive, but only to 40 per cent; 60 per cent. of people ignore it. The partnership also found that

Labelling has its limitations. As the hon. Member for Scunthorpe said, we need to tackle climate change on a range of policy levels; we need to look at education, labelling, regulation, grants and cap and trade mechanisms, but tax must play its part.

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Dr. Whitehead: I thoroughly commend what the hon. Gentleman says about the need to work across a range of areas of activity to tackle climate change. So does he think the statement that the

is somewhat over-simplistic?

Martin Horwood: I know well the hon. Gentleman’s credentials on green issues, but I am surprised by his comment. It may be simplistic, but it is true that if people change their behaviour—for instance, by choosing one of the most fuel-efficient models of car—they will have more money at their disposal. The beauty of the fiscal approach to green issues is that sometimes we can deliver a win-win situation. The same is true of microgeneration in the long term: the more we invest in it, by providing it for low-income households, for example, the more we shall tackle fuel poverty and save people money. Although in respect of this debate there are lots of hair shirts, sometimes it is possible to deliver a win-win situation, and that is exactly what our green tax switch proposals are designed to do.

We should not apologise for concentrating on transport as one of the main areas. As has been pointed out, 25 per cent. of carbon emissions still derive from transport. The Tyndall centre report graphically points out that, while both industrial and domestic carbon emissions have in general been in decline since the 1970s, transport is the only major sector that has been increasing its emissions since those years. As part of its policy framework, the Tyndall centre report suggests how we might approach aviation. The hon. Member for Bexhill and Battle accused us of knee-jerk reactions and fag-packet calculations, but he might be interested in the conclusions that the Tyndall centre came to, with the wealth of policy reviews, commissions and experts that it has at its disposal. It stated:

It adds that its report

I do not know whether the hon. Gentleman cares to intervene. Does he disagree with either of those points?

Gregory Barker: The hon. Gentleman might be aware of the comment of our transport spokesman today, in which we said that the Government’s expected growth in aviation does not appear very sustainable. We have to look carefully at this matter, and we note what the Tyndall centre says.

Martin Horwood: I am grateful to the hon. Gentleman for that, and we still wait with bated breath for any actual policy proposals.

Mr. Weir: I am interested in the hon. Gentleman’s remarks and agree with much of what he says, but can he tell me about aviation? One of the greatest contributions to the problem is short-haul business flights between United Kingdom airports. Will his
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proposal tackle that, as opposed to holiday flights? I got the impression from the hon. Member for Eastleigh (Chris Huhne) that the Liberal Democrats were talking about holiday flights, rather than short-haul business flights, which are, perhaps, a bigger problem.

Martin Horwood: I am grateful to the hon. Gentleman for giving me the opportunity to clarify that. Our proposal is simply to shift the burden of taxation away from individual passengers and on to aircraft, thereby providing a direct incentive to the airlines to make their aircraft more efficient and to make their flights more economical by making them full, so that we see an end to half-empty aircraft flying with only a few people that pay little in aircraft passenger duty. That would shift the burden on to fuel efficiency and energy efficiency.

Gregory Barker: Earlier, Liberal Democrat Front-Benchers could not give me an answer as to how the Liberal Democrat tax on 4x4 vehicles would impact on sales—

Chris Huhne: No, the hon. Gentleman asked about the Porsche Cayenne.

Gregory Barker: Or 4x4 vehicles.

Madam Deputy Speaker: Order. Does the hon. Member for Eastleigh wish to make a second intervention?

Gregory Barker: Thank you, Madam Deputy Speaker. Can the hon. Member for Cheltenham (Martin Horwood) tell me how many fewer short-haul flights he expects will be made as a result of the implementation of the policy? The hon. Member for Eastleigh (Chris Huhne) failed to answer that question last Thursday, when it was put in a very straightforward way. Perhaps the hon. Member for Cheltenham could have a go now.

Martin Horwood: The wonder of market and fiscal mechanisms is that it is not for Governments—or even Oppositions—to plan exactly how many flights there will be and how the prices will be changed, but it is for them to set the fiscal framework, and to watch the market respond. We have got an economic projection.

David Howarth (Cambridge) (LD): It might assist my hon. Friend and the House to know that the Department for Transport says that the price elasticity of demand for aviation is 1, and the Canadian Government’s estimated price elasticity of demand for aviation is 1.15. The hon. Member for Bexhill and Battle (Gregory Barker) could work out the figures for himself from those statistics.

Martin Horwood: As ever, I am grateful for my hon. Friend’s intervention; he is extremely learned in matters of price elasticity of demand, and I am sure that he will communicate them at length to the hon. Member for Bexhill and Battle, should he wish to have more detail. The hon. Gentleman said that we were behaving frivolously and that we were in a hurry. I plead guilty to the latter—we are certainly in more of a hurry than the Conservatives are to elucidate our policies. He said that
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he supports the broad thrust of our motion, yet he opposed all the specifics. I am beginning to have some sympathy with the Government. In their debates on the NHS, the official Opposition proclaim support for the NHS —[Interruption.] The relevance of my point is shown by the Conservatives’ reluctance to give us any policy detail on anything whatsoever. They have promised depth and delivered green fluff—presumably inspired by their new logo.

The truth is that, for 30 years, the Liberals and then the Liberal Democrats have been the greenest party in Parliament. For many years, we were berated by members of the Conservative party and described as sandal-wearing bearded loonies for saying such things, but the truth is that we were simply —[Interruption.] I wear no sandals and I have no beard. The truth is that we were simply ahead of our time, and we remain so today.

9.30 pm

Alan Simpson (Nottingham, South) (Lab): I want to congratulate the Liberal Democrats on at least putting a raft of policy proposals on the table—even if half of them are wrong and misguided, and others are unworkable. However, others are extremely useful. That is in sad contrast with the Conservatives, who have called for a policy review committee to redesign a bus, but would not know how to find a bus stop to save their lives.

Let me turn to the most important starting-point that the Liberal Democrats have provided. Scientists are telling us that we have very little time—a 10-year window of opportunity in which not only to come up with nice ideas, but to make fundamental changes to the way that our economy is structured, in order to meet the three major challenges of climate change. For us and for everyone else on the planet, those challenges will be in the areas of food security, energy management and water management. In examining policies, we need to shift our whole thinking about the nature of markets, so that we can address those challenges.

It is right to say that taxation is only one of the mechanisms that should be used. We have to be very careful because, as was pointed out earlier, there is a paradox in green taxation. We cannot use the size of the green taxation slice as a percentage of gross domestic product as a measure of our green policies because, in order to be effective, that proportion needs to be as low as possible. We want to change behaviour; we do not want existing behaviour to continue.

Mr. Graham Stuart: Will the hon. Gentleman give way?

Alan Simpson: No, I will not, because I want to let the winding-up speeches begin in eight minutes time. People have been round the houses and the 4x4s to the point of doing them to death. I am happy to expand on this issue on another occasion, but I should point out that in my view, we need to focus much more on changing behaviour than on the ability to raise taxation.

Carbon emissions are also used as a proxy for climate change policies, but the reality is that, like most people in this country, most Members of this House would not know a tonne of carbon if we fell over it. It is extremely helpful that people have translated the concept into accessible terms. Roughly speaking, a hot air balloon
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10 metres in diameter is the equivalent of 1 tonne of carbon. Let us transpose that into aviation terms. Aviation in the UK is currently responsible for 35 million tonnes of carbon per annum, so let us picture 35 million hot air balloons cluttering the skies. On the most conservative assumption, the figure of 35 million tonnes will rise to 60 million tonnes by 2030. Sixty million hot air balloons in the skies would obliterate daylight from large sections of the UK. That is the scale of the issue that we have to tackle.

I doubt whether including aviation fuel in the emissions trading scheme makes a ha’p’orth of sense, and it is important that someone puts down a marker in this debate that such schemes are a complete scam. If one begins from the premise that in order to tackle pollution, one has to create a fictional good, against which one then unleashes speculation, only in doing so to deter long-term investment because it is impossible to predict the price of that good, one should not be surprised to end up in the mess that the European emissions trading scheme ended up in at the end of its first year of operation. People cheat. They make even more crass mistakes by giving away quotas to the most polluting, rather than to the least polluting.

I would like to believe that things would be better if we gave quotas to individuals, but I know that that is not true. As my hon. Friend the Member for Scunthorpe (Mr. Morley) knows, it is not the fishermen who own fishing quotas now; it is the banks. The outcome is a trading circle between the wealthy that does not address issues of sustainability.

I urge hon. Members to look at the work of one of the foremost authorities on this subject: William Nordhaus of Yale university. He urges us to move from quotas to taxes and tariffs. If we make that transition, we should not presume that the taxes come to us as a Government. Let us look at the German model, where the authorities have used, with incredible creativity, two pieces of legislation in combination: the 1991 electricity feed Act, which dealt with people’s right to sell energy back into the system, and the 2000 renewable energy sources Act.

The German authorities told their energy industry, “Right, we’re going to set different tariffs—you sort out the payments yourselves. ” They required the industry to pay people a much higher rate for energy that they supplied to the system than the industry charged for energy that it supplied to people. The rate paid in Germany for renewable energies is currently about 35p per KWh. I have just completed the construction of my own eco-house, which generates more energy than it consumes, but what do I discover but that in this country those who generate energy are paid next to nothing for it. Many companies pay nothing; others pay up to about 3.5p per KWh. Ten times as much is paid to those who supply energy in Germany as is paid in the UK. Furthermore, the authorities in Germany have told the industry to pay for all this—there is no Government subsidy. Everything must be internally financed by the industry. As a result, Germany is pulling away from the rest of us in terms of investment and trade in renewable energies, as well as in terms of the skills and training that deliver a different type of sustainable economy. We lag behind because, instead, we are obsessed with the idea of a market in mythical goods.

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We should apply the notion of duties to a series of measures that are within our own remit. Of course, we could do that by regulation, but we seem to have turned our back on the process of regulation. We could have created a requirement that all new housing should meet the minimum standard of a SAP—standard assessment of performance—65 energy efficient rating. That requirement is already in place in large parts of Europe. Did we do it? No—we turned our back on that in the Housing Act 2004, which we passed in the last Parliament. We could have said to owners of houses in multiple occupation—the most inefficient properties in the UK’s property portfolio—that, as a condition of their obtaining an HMO licence, those properties, too, would have to meet the minimum standard of SAP 65. We could have given a stamp duty rebate on properties that had been turned into energy generating properties, but we declined to do that in the Budget.

We could have introduced building and planning regulations to empower local authorities to require that all new buildings generate a proportion of their own energy and recycle water resources. I visited a school just outside Nottingham that recycles 50 per cent. of the water that falls on its roof and has thereby halved its water bill. I was impressed, but I was told that doing that was an obligation in some German states. The Germans understood that they had problems of flash flooding that needed to be tackled, so they told local authorities that such recycling had to be a duty. We retreat from such action. In the name of light-touch regulation, we abrogate our responsibilities to the future and to the planet.

If we are serious about transforming our economy into one in which we can live sustainably, within a single footprint of our ecological entitlements, we have to have the courage to transform markets radically. We must not be anti-market; we must become pro-ethical markets and pro-sustainable markets. In the process of doing that, we will discover that there will be markets that we own collectively. That would be a wonderful legacy for this Prime Minister; to be remembered for restoring clause IV and the principles of common ownership in the interests of a sustainable planet.

9.40 pm

Dr. Vincent Cable (Twickenham) (LD): We have had a short but valuable debate. This is the second parliamentary day in succession that we have debated climate change and related issues, which is a sign of the importance that we now all attach to it.

I would like to acknowledge the speeches of the hon. Member for Scunthorpe (Mr. Morley), who we all recognise was a knowledgeable Minister who did his best to advance climate change policy when in office, the hon. Member for Nottingham, South (Alan Simpson) who, like us, was well ahead of his time in pressing for a radical environmental agenda and my hon. Friend the Member for Cheltenham (Martin Horwood), who has spoken eloquently and effectively on environmental issues. My hon. Friend emphasised the point that several others made, which is that environmental taxation is part of the solution, but only a part; we must consider a mixture of measures.

Labour and Conservative Front Benchers endeavoured to introduce an element of Punch and Judy into the
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debate, but there is a fairly substantial degree of consensus on the subject. That was well summarised in the Treasury paper issued in 2002 under the Chancellor’s name, which said:

The paper went on to make an important point that both Conservative and Labour Members misunderstand; it said that the revenue raised by environmental taxes could also be used to reduce the level of other taxes. Some Members appear not to appreciate that it is possible to raise revenue and to change behaviour at the same time within a wide range of elasticities. Several hon. Members struggled to get their heads around this point. The hon. Member for Islington, South and Finsbury (Emily Thornberry) raised this issue several times before disappearing. Perhaps the Treasury can arrange a private seminar to clear up some of the misunderstandings.

The one element of controversy that the Minister for Climate Change and the Environment, the hon. Member for Dudley, South (Ian Pearson), tried to introduce related to whether it was a sensible objective to try to increase the share of taxation or of the national economy raised by environmental taxes. He described this as simplistic and wrong. Perhaps I can encourage him to read an excellent speech written by the Financial Secretary to the Treasury, the hon. Member for Wentworth (John Healey), two years ago in which he said precisely the opposite. He said that the Government’s aim

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