Examination of Witnesses (Questions 160-173)
JOHN HEALEY
MP AND MS
BETH RUSSELL
31 JANUARY 2007
Q160 Joan Walley: One thing which
keeps on raising its head over and over again, particularly in
respect of popular campaigns, are campaigns for example in respect
of things like carrier bags and I think batteries in Sweden. Is
the Treasury doing anything that could replicate the successful
campaigns like for example in Ireland, the 10p tax on plastic
bags? Are we likely to be examining the options of those kinds
of taxes?
John Healey: We have been watching
very closely what the Irish have done with their bag tax. I am
happy to send you what information and analysis we have on the
impact of that at the moment.
Q161 Joan Walley: When the Treasury
has looked at it in the past it has not really looked at it necessarily
from the environmental perspective. Is that something that you
are looking at with Defra as well?
John Healey: Yes, but plastic
bags are less than 1% of the waste stream. There have been some
perverse consequences of what they have done in Ireland. It is
not necessarily the right thing for us to be doing in the UK,
which is why we have not yet decided that it is the right thing
for us to do.
Q162 Joan Walley: It may be part
of the whole public debate about behavioural change as well. There
could be spin offs in other directions.
John Healey: That is one of the
arguments I have heard for a plastic bag tax, that it is in your
face and helps people think more carefully about their use of
them.
Q163 Mr Caton: If we could move on
to microgeneration, Greenpeace have argued strongly to us that
rather than focus on individual households the government ought
to be looking at larger units: blocks of flats, office blocks,
retail parks and community buildings. They argued that this would
be a lot more efficient and would lead to far swifter progress.
Do you have policies for accelerating microgeneration in these
sectors?
Ms Russell: The DTI low carbon
buildings programme in phase one provides grants not just to domestic
but also to commercial customers and, in phase two which is being
developed, to public sector and charitable bodies as well. The
existing measures are not just focused on the domestic sector.
Q164 Mr Caton: Do you feel that there
should be greater emphasis, as clearly Greenpeace do, on the rather
larger units?
John Healey: Yes, and that is
why in the Budget the Chancellor announced another £50 million
that would be put into these programmes. It is why in phase two
it will not just be the domestic and commercial that are eligible
for this support. It will be public and communal buildings, precisely
the sorts of buildings that Greenpeace are concerned about.
Q165 Mr Caton: Greenpeace have also
argued that the government is underestimating the efficiency of
decentralised electricity production given its reduced losses
in transmission. Indeed, Biffa made the same argument in relation
to energy production from waste. What is your response to this
and are you prepared to reassess the cost effectiveness of increased
support for these sorts of energy production?
Ms Russell: I suspect—although
I do not know—that these are the sorts of issues that the
DTI are looking at as part of their Energy White Paper. It is
not something that we have looked at specifically in the Treasury.
John Healey: Ofgem as well are
at the moment doing a review on where the incentives and the barriers
are to more distributed electricity generation. You may have noticed
that in the Pre-Budget Report we have also given a commitment
to legislate in the Finance Bill to make clear that anybody who
installs microgeneration in their home and, as a result of that,
has a surplus that they may want to sell back to the grid will
not be chargeable for income tax on those receipts.
Q166 Mr Caton: Also in the Pre-Budget
Report there was an announcement of 7.5 million to improve coordination
between government grants to alleviate fuel poverty on the one
hand and to improve household energy efficiency on the other.
Does that mean all households which receive warm front grants
will have energy efficiency measures fitted as well?
Ms Russell: My understanding is
that that money is to try and kickstart local partnerships on
those sorts of issues. It is left with these local partnerships
to decide exactly how that money would be spent and what it would
be used for.
Joan Walley: I am very pleased that Stoke-on-Trent
is about to benefit from a warm home zone.
Q167 Mark Lazarowicz: The PBR announced
the Government's ambition for all new homes to be zero carbon
by 2016. That was welcomed by the NGOs and did not get too bad
a reception from the industry as well. Is that target a UK, GB
or just England and Wales target? Although the ambition for new
homes is welcome, why did the Government not consider extending
the target to all commercial and public buildings as well?
John Healey: We have said that
we will set out the full details of what we aim to try and do
on zero carbon homes and the incentives in the Budget. Bearing
in mind what I said earlier on, this is an example where tax can
support other policy measures which are likely to do more of the
heavy lifting. The logic of that would suggest that as planning
is a devolved function then clearly as the UK Government we are
in a position to make these sorts of commitments and put in place
the planning or the building regulations or codes that may be
required to help deliver this for England. It would be something
for the devolved administrations, the extent to which they use
some of their planning policy instruments to pursue the same ends,
something I very much hope they would do.
Q168 Mark Lazarowicz: There are other
fiscal instruments that you have at your disposal which would
apply there as well, provided it does not slip in the middle between
the two administrations.
John Healey: To the extent that
the fiscal system—stamp duty in this case—is UK wide,
that will be available UK wide.
Q169 Mark Lazarowicz: The other question
was more generally about commercial and public buildings. You
indicated in your answer that the consultation was in relation
to policy as far as new homes. Does that mean you have ruled out
the possibility of extending it to commercial and public buildings
or not?
John Healey: You are right. It
is specifically connected with new homes. We have not ruled out
extending it but we have not yet had the case made and the evidence
that suggests that extending that wider than new homes is deliverable
or a sensible thing to do. If through the Committee I can invite
Budget representations, I am happy to do so.
Q170 Mark Lazarowicz: Are you considering
them at the Treasury at the moment?
John Healey: We are concentrating
at the moment with DCLG on how we can put in place what is needed
to deliver the 2016 commitment on all new homes being zero carbon.
Q171 Mark Lazarowicz: You are waiting
for the case to be made for commercial and public buildings?
John Healey: I am happy to receive
a case if there is one from whatever source for other buildings.
Q172 David Howarth: One final point
about a completely different topic: corporate reporting and environmental
impacts. I do not want to go through the saga of the OFR and the
business review, especially as I have spent months of my life
on the Companies Bill. Could I put it to you that the final position
does seem to be unsatisfactory in one important respect? Directors
themselves decide what is material to report on environmental
impacts. There are no mandatory standards. The audit regime is
less than full. That puts good companies with good environmental
stories to tell at a disadvantage because there is no level playing
field. They will not get the full credit for their actions because
there is no great credibility in the market for the statements
they make because of the lack of a mandatory framework. When business
complained on one side that they did not like the extension of
the business review, for example, to supply chain issues, and
on the other side they did not know where they stood, they were
contradicting themselves. If there had been mandatory standards
they would have known where they stood and the whole system would
have worked better for all concerned. Are you prepared to accept
that there might be a problem here and that it might be something
we should come back to at a later date?
John Healey: Like you, I am not
really keen to reopen the original arguments on this. You will
remember better than most if you served on the Companies Bill—you
are probably as relieved as others that it is now the Act—that
there was a balance in our view to be struck between ensuring
that information that was useful, meaningful and forward looking
was provided with the imposition of something that may be unnecessarily
inflexible and costly for business. You are right obviously that
the Companies Act places the business review at the heart of this
reporting regime. It brings together important reporting on commercial
and sustainability grounds. It does so to the extent that it is
necessary to understand the business. I think that is the right
balance. It is a good starting point. You may follow these things,
having served on the Bill, more closely than I do and more consistently.
What I now get are reports that analysts increasingly are including
this in their assessment for clients of business information,
business performance and business reporting. If that is the case—you
are nodding which suggests I am not wrong here—that is likely
to be much more effective in driving the importance of this within
board rooms and within reports. It is an encouraging sign that
here we have a basis on which the sort of information you are
concerned to see regularly published and regarded as important
in place.
Q173 David Howarth: It is certainly
an advance and what you are saying is going on. It is just that
analysts would find it much easier to do their jobs and their
clients would find it much easier to believe them if there was
comparability, if there were a common set of standards which companies
could be judged against.
John Healey: I understand that
argument and that was an argument that we took into account when
we made our decision before. On the other hand, if analysts are
now actively looking for and demanding this information, I would
suggest there is going to be quite a strong incentive on businesses
that are concerned to see the view of analysts, which will potentially
affect investors and others, taken in a company. That is likely
to drive more of the sort of reporting you are concerned to see
in the future.
Joan Walley: Thank you very much indeed.
There are lots of very complex issues but can I genuinely thank
you. In a way, what this session has demonstrated as we move towards
our Pre-Budget Report is there is lots of opportunity for this
Committee to drive some of the thinking in terms of things like
the environmental transformation problem but equally, hopefully,
our report when it comes out will be looked at very closely and
carefully by government and may even be a way of putting further
pressure on taking the whole environmental journey further forward.
Thank you.
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