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“Since 1997, business and Government together have achieved a 25 per cent. reduction in the carbon intensity of the economy.”—[ Official Report, 21 March 2007; Vol. 458, c. 821.]
When I spoke this morning to an ambitious company based in my constituency called Commercial, it told me that it was aiming to save not just 25 per cent., but 75 per cent., of its carbon dioxide emissions in only three years, which makes the Government’s ambition look a little pathetic.
Commercial is one of the dynamic small and medium-sized enterprises that make up 99 per cent. of UK businesses. Given that those enterprises provide 59 per cent. of UK jobs and create 51 per cent. of UK turnover, they make up a vital sector. However, they are neglected by many of the Government’s environmental measures. For example, as Commercial has only 130 employees, it is too small to receive an onsite visit from the Carbon Trust to help its programme.
How is Commercial planning to achieve such a drastic reduction in emissions? It is trialling low-energy light bulbs to replace not only traditional incandescent bulbs, but all its high-intensity halogen bulbs. It is encouraging its employees to walk and cycle to work and providing showers on site for those who do. It is also encouraging its customers to look at competitively priced and high-quality recycled paper instead of more traditional paper stock. I did not notice any measures in the Budget to help Commercial in any of those initiatives.
The most important plank of Commercial’s carbon-reduction programme is shifting its van fleet from fossil fuels to biofuels. Its ambition is to achieve not the 5 per cent. target on biofuels by 2011 envisaged under the renewable transport fuels obligations, but a 75 per cent. biofuel-powered fleet in three years. When I showed the Chancellor’s measures on biofuel to Mr. Simon Graham of Commercial, he was not very impressed. He said:
“Personally, I think the initiatives are piecemeal, driven by promoting technology rather than providing value, difficult to find and apply to, difficult to plan with ... and seem to be directed away from the SME sector. What would be so much better from my point of view would be to have a system based simply on a given environmental benefit (say reduced CO2 or waste going to landfill) by whatever technology”.
However, I have to give the Government some credit because some elements of the Budget were designed to support biofuels. The fuel duty differential of 20p a litre will be extended to 2009-10. That is welcome, in that it does not stop doing something positive. The lightening of the burden of regulation on biofuels is also welcome, although an opportunity was missed to differentiate clearly environmentally beneficial biofuels
and harmful biofuels that cost more in energy than they save and that are grown at the cost of biodiversity in the rain forests. Although the Government have said that they are exploring the question of providing certification for the biofuels that are most environmentally-friendly, a standard is already on offer—EN14214—although it was not mentioned in the Budget.
The Government have also produced an incentive of a 2 per cent. discount on company car tax for those using bioethanol, but as the spokesman for Commercial said, the measure is a drop in the ocean that is targeted at one specific biofuel. Why not give an incentive that applies to all biofuels that reduce CO2? The Government plan a 100 per cent. first-year capital allowance for biofuel plants and have made an announcement on an international taskforce involving Brazil, South Africa and Mozambique. While both those steps are welcome, will they tackle the major obstacles to the take-up of biofuels faced by companies such as Commercial? Simply put, the answer is no.
A major barrier to the take-up of biofuels that stands in Commercial’s way is manufacturers’ warranties. In some countries, certain warranties will protect a vehicle using as much as 100 per cent. biofuel. However, in the UK, manufacturers generally offer a warranty only for cars using as much as 5 per cent. biofuel. What incentives does the Budget give for diesel car manufacturers to get their act together? None, sadly. The Secretary of State said earlier that Professor Julia King has been asked to examine technological developments, but she is being asked to look at developments over the next 25 years, which is too long. If the programme is successful, it will come too late for the drastic change that we need to make in the next 10 years.
If hon. Members need any reassurance that we are dragging our heels on biofuels, let me quote someone who knew what he was talking about at the time:
“The use of vegetable oils for engine fuels may seem insignificant today. But such oils may become in the course of time as important as petroleum”.
That statement was made by Rudolf Diesel himself in 1912. The diesel engine was originally designed with peanut oil in mind. Green Fuels, another company in my constituency, assures me that, if the problem with manufacturers’ warranties could be tackled, many vehicles on the roads today could happily run on 80 per cent. or even 100 per cent. biofuel. The technical barriers to such a move, which would make an enormous difference to this country’s carbon emissions, would be quite slight.
Let me turn to household microgeneration. I am afraid that the Budget is the latest in a long line of muddled, short-term and inadequate initiatives on microgeneration, especially household microgeneration. Let me share the grisly details with hon. Members. The £10 million clear skies programme, which started in 2003, had to be boosted by £2.5 million and extended to March 2006, presumably to bridge the gap until its successor, the low carbon buildings programme, was ready. The photovoltaic demonstration scheme, which started in 2002, had to have its budget of £26 million to £28 million boosted by £750,000 so that the scheme would last until March 2006. Phase one of the LCBP itself was launched in April 2006. Its budget was originally £30 million, although it actually received only
£28.5 million because £1.5 million was used for the bridge funds from the old schemes. The programme was supposed to last for three years, but only £6.5 million of the budget over those three years was for households, so there was barely half as much available for households as when the clear skies programme and PV demonstration schemes were running.
In a letter to the then energy Minister, the Renewable Energy Association commented:
“In 2005/6, £6.6 million was committed to household grants under the old programmes. But the equivalent LCBP household grant budget for 2006/7 is just £3.5 million, falling to £2 million in 2007/8 and £1 million in 2008/9”.
Since then, the household allocation has been increased twice. In October 2006, it was doubled to £12.7 million, but that was achieved through a reallocation from other LCBP funds. The Budget has added an extra £6 million, which is welcome given that the money really is additional, but that measure was immediately undermined when the Department of Trade and Industry suspended the whole programme. And of course, we have had the ludicrous spectacle in the past year of the Energy Saving Trust offering grants on the first day of each month and almost immediately running out of funds.
I am not sure whether the right hon. Member for Witney managed to get such a grant for his urban windmill. I did not get one for my solar thermal panels, which were installed by So-lar Smart—yet another impressive and successful green company that is based in Cheltenham. However, the company complained to me last year that the stop-start nature of the Government’s household microgeneration grants and incentives were causing it huge problems. I suspect that it did not gain much reassurance from the Budget.
All in all, the Budget falls far short of the shift in the economy demanded by the Stern review. The Budget advocated simplicity, but delivered more complexity; it sounded fair, but on closer examination was not that fair at all; it sounded green, but on closer examination it let down many of the individuals and organisations who try to do their best to safeguard our futures. If the Secretary of State for Environment, Food and Rural Affairs is looking for an excuse to split with his right hon. Friend the Chancellor of the Exchequer, the Budget surely provides it.
8 pm
Helen Goodman (Bishop Auckland) (Lab): I am grateful for this opportunity to take part in the Budget debate. I was pleased to hear all the firm environmental commitments that the Chancellor made last week, but I want to focus on the measures to reduce child poverty. I welcome the decisions that will lift 200,000 children out of poverty, and the recommitment to halving child poverty by 2010 and to abolishing it by 2020. I found the criticism that people could not understand the redistribution in the Budget rather strange. It is absolutely clear what the Budget is doing; it is redistributing money to families with children. The array of practical measures to support children who are living in poverty and their families is far better and more concrete than anything that has been offered by either the Conservatives or the Liberal Democrats.
It is clear from the criticisms that we have heard that Her Majesty’s Opposition basically do not understand
the phenomenon of child poverty, which is presumably why they allowed it to treble under the last Tory Government. It has also become clear to us that the right hon. Member for Chingford and Woodford Green (Mr. Duncan Smith) has completely misled his colleagues by suggesting that family breakdown is the prime cause of child poverty in this country. In January, there was a lot of talk about the UNICEF comparisons of child well-being among members of the Organisation for Economic Co-operation and Development, but I have looked at the more up-to-date comparisons between European countries by Jonathan Bradshaw of York university. They were published in a journal called Social Indicators Research in January this year, and they show that family breakdown is not the prime cause of child poverty in any of the European countries. Indeed, if we strip out the experience of the United Kingdom, we see that there is a positive correlation between child well-being and the number of single-parent families, with Finland and Sweden at the top of the table.
That large, comprehensive study looked at overall child well-being. It referred to all the European countries and included 51 different variables, which covered the material situation of children, their housing, their health, their subjective well-being, what they thought of their situation, their education, their relationships, their civic participation, and the level of risk and safety for children. The key factors influencing child poverty were found to be income inequality, child poverty itself, obviously, gross domestic product per capita—that is, the overall wealth of a country—social spending and spending on children and families. That is why the strategy announced in the Budget for tackling child poverty is the right course of action.
The key decisions that have been taken are absolutely what are needed to achieve reductions in child poverty. The increase in the child tax credit by £150 over the level of earnings growth, and the increase in the working tax credit threshold by £1,200, will have a significant impact. In my constituency, nearly 4,000 families and nearly 7,000 children will benefit. Those changes to tax credits are worth £2 billion in total, and that will be far more effective than the increase in tax allowances proposed by the hon. Member for Cheltenham (Martin Horwood). The problem with raising personal tax allowances as a route to addressing child poverty is that raising such allowances benefits the rich far more than the poor.
Martin Horwood: I beg to differ with the hon. Lady. As the lowest paid pay a higher proportion of the starting rate as income tax, surely they must gain proportionately more by its abolition.
Helen Goodman: The hon. Gentleman clearly did not listen, either to what I said or to what he said himself. I said that raising personal allowances would provide greater benefits for those at the top than for those at the bottom.
David Howarth: I simply do not follow what the hon. Lady is saying; what she says cannot be the case. If we increase the tax allowance at the bottom, that must be more favourable to those at the bottom than to those at the top, given the proportion of income taxed.
Helen Goodman: I am sorry, but the hon. Members for Cheltenham (Martin Horwood) and for Cambridge (David Howarth) are just revealing their complete failure to understand how the tax system works, and how the allowances operate at the top. If we slide all the allowances upwards, there is far greater benefit to the rich than to the poor.
David Howarth: Will the hon. Lady give way?
Helen Goodman: No, I have given way twice, and the hon. Gentlemen simply keep repeating their misunderstandings.
Another benefit of the Government’s approach of putting money into tax credits is the high take-up of tax credits. At the moment, 82 per cent. of those who are eligible claim tax credits, and 97 per cent. of those on incomes of under £10,000 a year claim tax credits, and that is a far more successful record than that of the Tory Government, who operated something called the family income supplement, for which the take-up was roughly 50 per cent. I welcome the increases in child benefit. It is clear that they will have a stronger impact in addressing child poverty than Opposition Members’ rather bizarre suggestion of reintroducing the married couple’s allowance. I simply cannot understand why they want to throw away money that they could use to good purpose, and to reduce child poverty, on people who are happily married, do not need the money, are high up on the income scale and may not even have children.
Taken together, the changes that the Chancellor announced this week, and the other measures that he has introduced, will result in a positively redistributive effect over the period from 1997 to 2009. People whose household incomes are in the bottom 10 per cent. will experience, over that period, a rise in income of 27 per cent., whereas those in the top 10 per cent. will have their incomes fall by 1 per cent. A single-earner couple with mean earnings who have two children will get a rise in their income of £320. A single-earner couple on median incomes with two children will have a rise of £500. Contrary to what has been claimed by Opposition Members, a single-earner couple on half median income with no children will also have an increase in their annual income; they will get a rise of £175.
One reason we Labour Members believe that it is important to address child poverty is that disadvantage is translated across the generations. Last week, the Cabinet Office published an interesting paper on families with multiple disadvantages, which showed that children with four experiences of family problems had a 70 per cent. risk of suffering multiple disadvantages by the time they were 30 years old. Interestingly, children from the 5 per cent. most disadvantaged households were more than 50 times as likely to suffer problems when they reached the age of 30 as children not in the top 5 per cent., but in the top 50 per cent.
One of the disadvantages that is being looked at is the disadvantage of being the child of a teenage parent. In October, I undertook an experiment, and tried to live on the income support rate for people under 25. Using the information from York university, I found that that gave me £21 a week for food, taking account of everything else for which one might reasonably expect to have to pay. I wanted to see whether or not
on that £21 I could have the kind of healthy diet recommended for pregnant women. At the end of the week, I had lost weight. Hon. Members may think that in my case that is not a problem and that there were advantages for me personally, but it is obviously not satisfactory for a pregnant 19-year-old to do so. I was therefore pleased by the improvements to benefits for pregnant young women. First, the Sure Start maternity grant is now £500, and it goes to young mothers on low incomes. Secondly, the payment of child benefit has been extended, and it will begin at week 29, so all mothers will be up to £200 better off.
That sort of practical measure makes a genuine difference to the people who need it most. The Budget documents include measures to help young people who are not in employment, education or training, but may I point out to my hon. Friends a contradiction that should be addressed? At the moment, teenage mothers, if they are still at school, are expected to return to school 18 weeks after the birth of their baby. This April, we will extend maternity leave to 39 weeks, so I suggest that young mothers need at least as much time to adjust to their new role and bond with their babies as older mothers. We should bring targets for those young teenage mothers into line with maternity provision for the rest of the community.
Frequently, what is said about children and child poverty is a way of thinking about how to construct a new and better society. Looking at things from a child’s point of view offers a vantage point from which to offer critiques of society as a whole. It is the child’s position as a future adult that is of interest to politicians. That has always been true—it was true in ancient Sparta, it was true under the Jesuits and it was true for Bismarck. That is largely because we know, or we think we know, that what happens to us as children is a significant influence on our lives when we become adults. It is extremely tempting to believe that by controlling the condition of childhood we can reach into the future and control the society that we want.
I believe, however, that we should be concerned about child poverty for a more important reason. Children are not human becomings—they are human beings. Childhood is part of life. It accounts for about 20 per cent. of life, so it matters in itself, as well as providing a good basis and preparation for adulthood. It needs to be enjoyable and fulfilling. Last year, Shelter and “End Child Poverty” put together a collection of poems written by children living in poverty across the country. If anyone was in any doubt about the importance, urgency and significance of the need to address child poverty, they would not be after reading those poems. I want to end with a poem written for that book by an eight-year-old child in my constituency called Lucas. It is called, “I Can't Live There”:
“Damp with rats carrying germs,
Leaking roofs, unstable floors, I hate,
Teenagers telling me things I shouldn't know,
I wish I was somewhere else, somewhere,
8.15 pm
Mr. Charles Walker (Broxbourne) (Con): Thank you, Mr. Deputy Speaker, for calling me to speak in this important debate.
Although today’s debate centres on the environment, I should like to discuss the moral case for ending tax poverty. I believe that the Government’s commitment to alleviating poverty is genuine, but I am concerned that there is a growing industry around poverty, with huge fortunes being spent on entrenching an immobile underclass. I am concerned that in the past 10 years, or perhaps even longer, the state has created an expanded pool of supplicants, with more and more people deriving an increasing share of their income from the state. It is wrong that those people should be patronised with benefits and hand-outs, which have a corrosive effect on their self-worth and self-esteem.
There are perversities in the benefit system, which is, in itself, extremely complex. As an MP, I try to help my constituents navigate it, but often it is beyond comprehension. There are tens of thousands of pages of legislation, backed up by thousands of forms, classes, groupings and exceptions. In too many cases, benefit recipients simply have their own money laundered back to them, minus the Government’s handling charge.
As a Member of Parliament, I believe that all Members have a duty to ease the benefits burden on our constituents by making large parts of it redundant. It is certainly complicated. In The Independent this weekend, Simon Carr wrote:
“Gordon Brown’s anti-poverty policy is literally unintelligible to ordinary people”.
It will not have escaped your notice, Mr. Deputy Speaker, that I am an incredibly ordinary person, and I find the Chancellor’s anti-poverty policy unintelligible. In The Sunday Times, economics correspondent David Smith wrote:
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