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Mr. Goodman: I want to begin by referring back to an observation made by the hon. Member for Falmouth and Camborne (Julia Goldsworthy), who pointed out today, as she did in Committee, that there is not only uncertainty about this demand-side measure, but nothing much on the supply side to ensure that we reach the figure of 200,000 homes by 2016. That observation set the context for this debate, because there is doubt whether the Government will reach that figure, which is what we wanted to explore today.

That brings me to the Economic Secretary, who commendably spoke at some length—I thought that I heard him say, “Was I long enough?” although I cannot imagine why he would say that. I cannot possibly complain that he failed to address the detail. As this might be the last occasion when I shadow him in a debate—

Mark Tami: Are you joining?

Mr. Goodman: I would not advise the hon. Gentleman to intervene, because the last time he did so he succeeded in broadening the debate so far that the Deputy Speaker had to get to his feet. We cannot possibly have that now, can we?

Whatever happens to the Economic Secretary, we know that he is a perceptive man. He dealt with today’s debate calmly and with a smile on his face, which suggested that he knows that the Government were rumbled in Committee. He was able today—we will accept this as a graceful form of retreat—to announce that there will be a two-and-a-half-year review, which we had not heard before and which he was good enough to share with us. He also provided some welcome details about the introduction of the regulations.

One accusation that is occasionally thrown at us is that we do not want the measure to succeed. Although we are still sceptical whether the 200,000 figure will be reached, and although the Economy Secretary did not answer the point originally raised by my hon. Friend the cynical and sceptical Member for Braintree (Mr. Newmark)— [ Interruption. ]. If my hon. Friend is cynical about the Government’s endeavours, he is entirely right to be so. We do not want to pursue any proposal that is likely to ensure that the scheme runs into difficulty. We accept that it will produce some zero-carbon homes, although we do not know how many any more than the Economic Secretary knows how many there are currently. For that reason, we will not seek to press the amendment to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 1, page 14, line 37, at end insert—

‘“(5) The first set of regulations under section 58B (new zero-carbon homes) may not be made unless a draft has been laid before and approved by resolution of the House of Commons.’.— [Ed Balls.]

Clause 20

Income tax exemption for domestic microgeneration

Mr. Goodman: I beg to move amendment No. 3, page 15, line 10, leave out sub-paragraph (b).

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Madam Deputy Speaker (Sylvia Heal): With this it will be convenient to discuss the following amendments:

No. 34, page 15, line 17, at end insert—

‘(3) The Treasury shall prepare and lay before the House of Commons annually a report on the effectiveness of the tax relief mentioned in subsection (1) in achieving its objectives, with particular reference to the change in the amount of electricity generated by microgeneration systems.’.

No. 4, page 15, line 29, clause 21, leave out sub-paragraph (c).

No. 35, page 15, line 20, leave out clause 21.

No. 5, page 16, line 5, clause 21, leave out sub-paragraph (c).

No. 36, page 16, line 19, clause 21, at end insert—

‘(5) The Treasury shall prepare and lay before the House of Commons annually a report on the effectiveness of the tax relief mentioned in subsections (1) and (2) in achieving its objectives, with particular reference to the change in the number of domestic microgeneration schemes.’.

Mr. Goodman: In the course of saying farewell to the Economic Secretary before he is elevated onwards and upwards to higher things, I forgot to mention that this is the Chancellor’s last full day. I intend principally to discuss amendments Nos. 34 and 36, and I shall begin by marking that point.

This afternoon gives the Chancellor a final chance to act on the emerging consensus in this House that the Treasury should take a clear departmental lead on the environment in relation to microgeneration and energy efficiency. Hon. Members will recall that at this stage of last year’s Finance Bill, the hon. Member for Nottingham, South (Alan Simpson), who is in his place, tabled an amendment to make the Treasury issue an annual report on fiscal measures to assist with microgeneration, energy efficiency and small-scale energy generation. Hon. Members will also recall that we supported that amendment in the Lobby along with the Liberal Democrats when it was pressed to a vote. We tabled the same amendment in this year’s Committee of the whole House, when we were supported by the Liberal Democrats. The hon. Member for Falmouth and Camborne (Julia Goldsworthy) agreed with me in the closing moments of that debate that it was worth returning to the matter, and amendments Nos. 34 and 36 are that return to the matter.

Following a slight adjustment, the amendments propose that the Treasury report annually to the Commons on the effectiveness of the tax reliefs in clauses 20 and 21. In the debate in the Committee of the whole House, which was somewhat compressed, I tried to sum up the emerging consensus on microgeneration in a sentence:

I said that the information on page 177 of the Red Book does not tell us how effective the Treasury expects clauses 20 and 21 to be or how many microgeneration systems the Treasury expects to be installed by how many people over what period of time. In that respect, this debate has an eerie resemblance to the debate that has just taken place.

In Committee of the whole House, the hon. Member for Nottingham, South pointed out that responsibilities for reporting on microgeneration and energy efficiency are spread across several Departments—the Department
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of Trade and Industry, the Department for Communities and Local Government and the Department for Environment, Food and Rural Affairs—and that the Treasury is not currently one of them. He stated that Finance Ministries in other European countries have a more enhanced role and that the lack of that role here leaves

In response to that debate, which was necessarily truncated, I thought that the Chief Secretary went through the motions. He said that the new clause was

There is such a requirement, but it does not apply to the Treasury outside the Red Book and the Green Book, to which the Chief Secretary referred the House. However, it is hard to see how those documents give the House what it needs, because they provide less detail than other Departments.

Sections 7.42 and 7.43 on page 177 of this year’s Red Book cover microgeneration. They contain a slightly more detailed explanation of the two clauses than that provided by the Chancellor in his Budget speech. They do not answer the questions that I asked a few moments ago, such as how many extra microgeneration systems the Government expect to see installed as a result of those measures and what the overall effectiveness of the Government’s strategy has been to date. In short, the emerging consensus in the House wants a continuing assessment from the Treasury of how effective the Chancellor's microgeneration measures are, and not merely a description of what those measures entail.

It is not, after all, as though the background to clauses 20 and 21 is completely encouraging. We welcome the direction of travel outlined in last year’s microgeneration strategy, but if one compares our record with that of some of our international competitors, we are not setting the pace. By the end of 2004, 200,000 Japanese homes had fitted photovoltaic cells; 300,000 micro-renewable systems have been installed in Germany; more than 10 per cent. of homes in Sweden already use micro-renewable technology to heat their homes; German companies are already generating half the entire turnover of the global wind industry; Japanese firms are at the forefront of fuel cell and hybrid engine technologies; and American companies are leading the way in bringing affordable renewable technologies to the market. We clearly have some way to go to catch up.

The amendments, which, as I have said, are supported by an emerging consensus across the House, will not automatically improve our position, but the case for them—that the Treasury should publish an estimate of how successful it expects those measures to be—is surely unanswerable. I hope that the Minister will accept the principal amendments, Nos. 34 and 36, but in the event that he does not, may I ask him directly, as I did not get a chance to do so in Committee of the whole House, how many schemes the Treasury expects to be brought into effect by these provisions and over what period of time?

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6.30 pm

John Bercow (Buckingham) (Con): I well recall last year’s amendment tabled by the hon. Member for Nottingham, South (Alan Simpson) to which, if memory serves me correctly, I put my name. It seemed to me that its rejection was unjustified. Is it not safe to work on the assumption that if the Government did not think that their proposal will be environmentally effective they would not have introduced it, and that they therefore reckon that it will be effective? Given that, they should surely want to trumpet the fact on an annual basis for some years to come.

Mr. Goodman: Yes, my hon. Friend is entirely right. If the Government expect the scheme to be effective, as they surely do, it does not seem unreasonable to ask them for some figures. I apologise to my hon. Friend for omitting to mention his support for last year’s amendment, which I must confess had slipped my mind.

Mr. Newmark: Photovoltaic solar panels cost £11,000 to install in a house, with payback in some 25 or even 30 years. Is it not important that we monitor their success, particularly in the absence of economies of scale, because there is likely to be first, little take-up, and secondly, little benefit to society?

Mr. Goodman: My hon. Friend is making the central case for the amendments. It is all very well for other Departments to produce reports, but if all we get is a brief summary of the proposals in the Green and Red Books, it is impossible to monitor how successful they may or may not be.

Amendments Nos. 3, 4 and 5 are drawn from the remarks of the hon. Member for Falmouth and Camborne, who rightly pointed out in Committee of the whole House that there is no good reason to restrict the tax incentives to homes that are producing energy only for domestic purposes. Householders may want to sell any excess electricity that they produce back to the national grid.

Today is the Chancellor’s last opportunity as Chancellor to respond to this emerging consensus, and his last chance to ensure that the Treasury takes the departmental lead on microgeneration and becomes a powerhouse for energy efficiency. I commend the amendments to the House.

Julia Goldsworthy: The hon. Member for Wycombe (Mr. Goodman) talked about the need for an annual report on top of whatever is in the Green and Red Books. What we see on microgeneration in this year’s Red Book makes that case more strongly than anything. It makes statements that seem on the face of it to be incredibly positive, such as:

If one considers that statement in the wider context, one realises that at that point the low-carbon buildings programme was suspended altogether, and that when it was restarted at the end of last month, the maximum grant of £15,000 that was available to households had been reduced to £2,500. As the hon. Member for Braintree (Mr. Newmark) said, the cost of photovoltaic cells is
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considerable. Many campaigning climate change organisations have been vitriolic about the impact that the change has had. They would far rather extend to more households the opportunity of taking up this option as opposed to probably making it prohibitively expensive for them to do so. The devil is always in the detail, and often the Red Book is not the place to see all the information presented in the most appropriate way.

I very much welcome the amendments, which reiterate the spirit of those tabled in Committee of the whole House. It is important to make clear the impact of such measures and to be certain that they are not a green fig leaf for a Bill that otherwise contains very few environmental measures and shows the Government’s timidity in pushing forward this issue.

The hon. Member for Wycombe referred to an aspect that I highlighted in Committee of the whole House. Clauses 20 and 21 limit the amount of tax relief available on the basis of an individual’s intention not to generate more electricity than would “significantly exceed” that needed for personal use. I do not see why it is necessary to limit it in that way. Surely we should be encouraging people to use the maximum capacity that they have available at a personal level.

Moreover, there is already a definition of microgeneration in section 26 of the Climate Change and Sustainable Energy Act 2006:

It then lists the sources of energy and technologies that must be used to qualify for that definition: biomass, biofuels, fuel cells, photovoltaics, water, wind, solar power, geothermals and combined heat and power systems. It also defines the capacity of a microgeneration system: 50 kW for the generation of electricity and 45 kW thermal for the production of heat.

Given that we have that incredibly specific definition of microgeneration, why is it necessary for the Bill to limit the scheme on the basis of the individual’s personal use and intentions? That makes absolutely no sense and prompts the question of what impact and benefit it will have. How will it affect people’s behaviour, and how is the Government able to assess that? Surely, as the scheme is based only on what people intend to use, the threshold will be so low that there will not be any real incentive for them to take microgeneration on board. What happens in circumstances where they mistakenly produce more electricity than they intend for their personal use? What happens if they have a wind turbine and it blows a gale throughout the middle of the autumn? What would be their intention in that situation?

In a whole series of areas, the measure is, on the surface, very welcome, but what is not welcome is the way in which it is limited. On that basis, I commend amendments Nos. 3, 4 and 5, which are virtually identical to amendments tabled in my name and those of my hon. Friends in Committee of the whole House and the amendment tabled last year by the hon. Member for Nottingham, South (Alan Simpson). I would hope that the Minister welcomes them as a way of beefing up what is essentially a very weak green thread running through the Bill.

Alan Simpson (Nottingham, South) (Lab): I am grateful to the two preceding speakers for referring to
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the amendment’s point of origin in an amendment to a previous Finance Bill tabled in my name and that of the hon. Member for Buckingham (John Bercow). I mention that because it reflects the genuine cross-party consensus that exists in the interests of promoting the shift into microgeneration and the move towards sustainable and renewable energies.

I have never understood why the Treasury has taken a line whereby it is willing to go along with the notion that reporting should be included in legislation as long as that reporting does not extend to the Treasury itself. The Energy Act 2004 placed reporting duties on the Department of Trade and Industry, and the Climate Change and Sustainable Energy Act 2006 placed reporting duties on the Department for Environment, Food and Rural Affairs. That is welcome, but the programmes end up being piecemeal. That starts to hit the credibility, not of the intention of policies or reporting duties, but of programmes’ ability to deliver the targets to which the Government claim to be committed.

In a previous debate, there was considerable discussion about regulations that affect new, low-carbon or zero-carbon homes, and we considered the prospect of building 200,000 homes a year that might fall into that category. However, the introduction of microgeneration systems applies more appropriately to the existing 25 million properties in which people live. It is right for the Opposition to draw our attention to the scale of change that has meant the introduction of microgeneration systems into existing properties in other parts of Europe. Although the United Kingdom has a policy commitment, we are so far adrift in practice from our partners or competitors that it is embarrassing.

Perhaps I should have begun by declaring an interest. I have a roof that is full of photovoltaic panels. The house uses them in conjunction with micro combined heat and power generating systems to produce a surplus of energy, which I supply back to the grid. I hope I do not do that on a scale that would put me in breach of the law, but it would be an absurd law that punished someone for supplying too much green energy back to the system and not polluting enough. Indeed, I would relish being prosecuted for such an offence.

Jeremy Corbyn (Islington, North) (Lab): I know that my hon. Friend has studied those matters carefully, and I applaud him for it and for his house. Has he made any calculation of the amount of electricity that could be generated if the roofs of this wonderful building were covered with photovoltaic cells? Would we breach the law if we did that?

Alan Simpson: I am sure that we would not breach the law because we make the law. I suspect that a Parliament and parliamentary estate the size of ours could generate more than enough energy to fulfil its needs. We face such transformational challenges not only in Parliament but in society.

Mr. Newmark: The hon. Gentleman makes an excellent point and I support his personal initiative in using photovoltaic solar panelling in his house. When he decided to install PV on his roof, was the decision based on economics or a desire to be green and show his neighbours that he was being green? If we stuck PV panels on the whole of Parliament, it would be hugely expensive, with the payback taking some 25 years or more.

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