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Mr. Ainsworth: We have supported the banding, and I have said that we support the principle that if we are to have green taxation, it should apply at the point of
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choice, not retrospectively. So, if I have understood the hon. Gentleman’s question correctly, I think the answer is yes. However, the important caveat that we have made clear is that any revenues from additional green taxes should not just disappear into the Exchequer, but should be used to cut taxation on families and on other things that help society and help to make the country a better place.

I believe that people, by and large, are genuinely anxious about climate change and keen to be part of the solution. A responsible Government would provide leadership and encouragement, not use the cover of eco-taxation simply to raise funds because they have been spending beyond their means. Cynicism of that kind is deeply damaging to the green cause.

The next announcement is the plan to support auctioning 100 per cent. of allowances for large electricity producers in phase 3 of the EU emissions trading scheme. We support that—in fact, we have been calling for it for quite a while—but what do the Government intend to do with the proceeds of the auction, which are likely to run into billions of pounds? Will they be earmarked for investment in green technologies or simply be pocketed by the Chancellor? Perhaps a Treasury Minister will answer that question now, or, if they prefer, when they speak later in the debate. Later, then.

Next is the setting up of the new green homes service. I say that it is new, but we had already heard about it last year—from the Secretary of State, I think, and from the Prime Minister himself. The £26 million allocated to the green homes service, spread across the country, would mean each household receiving £1-worth of advice on how to green their home. Is there not already advice available on a multitude of websites and from a multitude of Government-sponsored agencies and supported organisations, from the Energy Saving Trust to Warm Front and Warm Zone, which I had the pleasure of visiting up in Newcastle at the weekend.

Then we have this:

As the Secretary of State knows, there is absolutely no benefit to the task of dealing with climate change if renewable fuels are grown at the expense of the rain forest.

We on the Conservative Benches have a serious objection to the renewable transport fuel obligation in its current form because we believe that there is a real danger that it will do more harm than good—damaging some of the most important and fragile habitats on the planet, endangering already-threatened species such as the orang-utan and enhancing the risk of food shortages.

DEFRA’s own chief scientist has warned that

The implication in the Budget that axing the duty differential on biofuels and placing all our hopes on the renewable transport fuel obligation will solve our problems altogether is naive or even deceitful. The truth is that, by cutting the duty differential, the Chancellor will save some £550 million in 2010-11. It
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has nothing to do with the environment and everything to do with the fact that the Chancellor is living beyond his means.

Here is the next item in this sad litany:

That is okay, as far as it goes, but the truth is that the climate change levy does not do the job—it does not do what it says on the tin. It does not even live up to its own name. It is a tax on industry’s use of energy, and a largely ineffective one as well. We have been saying that for some time.

Only the other week, the Select Committee on Environmental Audit found that the climate change levy has had

The way in which the Prime Minister clings to the climate change levy as if it is some kind of lifeline to save his green credentials is increasingly pathetic and desperate.

Next is the re-announcement of aviation duty to replace air passenger duty. That is not new, but I have no problem with the measure since it was a Conservative proposal in the first place. Then there is

I applaud that ambition. However, there is a yawning chasm between the Government’s ambitious rhetoric and the reality of delivery. It will take a Conservative Government to ensure that that particular ambition is turned into a reality.

Next there is

There is some extending to do here, because by the end of 2007, the number of homes throughout the country claiming zero stamp duty on the basis of being zero-carbon was six.

The final item in DEFRA’s highlights of Labour’s greenest Budget yet is an increase in the aggregates levy from 1 April 2009, which is unexceptional. However, slipped in before the news about that levy is:

That was the thing that was designed to grab the headlines and to act as a smokescreen to cover the rest of a limp, half-hearted, piecemeal, unambitious and disappointing set of rehashed and boring announcements.

The DEFRA press release does not tell the whole story, however. This eye-catching initiative proposes the possibility of legislation if “sufficient progress” to reduce the use of plastic bags is not made voluntarily. What do the Government mean by “sufficient progress”? Is it a reduction from the present number of plastic bags—about 13 billion—to 12 billion, to 10 billion, or to 5 billion? We have no idea what “sufficient progress” is. Industry has no idea. How can the Government expect it to deliver voluntarily when it is not being told what it is expected to deliver? The DEFRA press release talks about action “to eliminate” the use of plastic bags. It is up to the Government to clarify the target for which the industry should be aiming voluntarily to avoid legislation. The big highlight of Labour’s greenest Budget yet was a
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vague threat about plastic bags, which has nothing to do with the Budget or the Chancellor anyway. This was a serious missed opportunity.

While I accept, and welcome the fact, that there are hopeful signs that Ministers are executing a U-turn on our proposal to introduce electricity feed-in tariffs, which could transform the economics of renewable energy in this country and create a huge number of new jobs, where are the green individual savings accounts to encourage people to invest in technologies that will help to combat climate change? Where is the plan for a new market exchange for environmentally responsible companies? Where is the proposal for an effective replacement for the climate change levy that can play a proper part in helping to price carbon across the economy? Where is there any sign that the Government recognise the need to create incentives to capture and use waste heat from power generation? Where is the vision? Where are the ideas that will propel Britain to the forefront of the huge commercial opportunity for low carbon growth that is opening up across the world? That opportunity is being exploited by France, Germany, Japan and the United States, but Britain is being left behind. The answer is not in this Budget and not in this Government.

We have an environment Department that cannot even control its own budget. When it is not cutting support for environmental schemes, it spends its time losing arguments with other Departments. We have a Government who are tinkering at the margins, fiddling about with unpopular stealth taxes, and failing either to deliver properly joined-up policies on climate change, or to protect the environment.

Faced with our greatest obligation to future generations and the most serious and pressing challenge that the world faces, it is pathetic to wag a finger at plastic bags while simultaneously waving through plans to build a new generation of coal-fired power stations without carbon capture and storage. It is pathetic to scowl at people with Mondeos and people carriers while simultaneously ushering in a huge increase in aviation capacity. It is a betrayal of trust to dress up stealth taxes as green taxes and it does not fool anyone. This was a pathetic, boring and unambitious Budget from a Government who have run out of ideas, run out of money, and overstayed their welcome.

5.25 pm

Alan Simpson (Nottingham, South) (Lab): I would normally try to make my contribution to the Budget debate on the day on which the Chancellor delivered his statement, but unfortunately I was laid low by a bug from which I am still struggling to recover. If I think that I have had a difficult week, however, it must be said that the world outside has had a dramatically catastrophic week in comparison with mine.

Perhaps it will prove helpful to me to make my speech today rather than last week, as I had planned. It is certainly nice to be able to do so on a day on which my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs is present. He is very kind in putting up with being pestered by me on climate change issues. I hope he will forgive me if I add
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to that today, and pester him as though he were Chancellor for the day. I do not think it sufficient for us to hold the Government to account on climate change issues. We must recognise that we face a challenge from an unholy trinity: climate change, peak oil and market meltdown.

This bad week for me has been a wretched week for Bear Stearns, the fifth largest United States investment bank. Last year its shares were trading at $176 each; over the weekend it was sold for $2 a share, and the markets are saying that they see no end to the prospects of meltdown. The Fed has intervened, and for the first time since the great depression has extended its lending rights to companies that are not banks or investment banks. Such is the level of concern about the extent to which conventional money markets have been creating funny money and a bubble economy that is now bursting all around us, and shows no sign of coming to an immediate end. It seems to me that we cannot have this Budget debate without seeking to engage with the fact that we may have to think about systems failure on a global scale, and about what the United Kingdom must do to manage what is within our grasp in the context of that failure.

Kelvin Hopkins: This may be a trivial point, but is my hon. Friend saying that bankers have learned nothing since the south sea bubble and the Wall street crash?

Alan Simpson: Sadly, that is precisely what I am saying. We are going back to the days of the south sea bubble, when money in the private sector could be created without constraints on a scale that led the world in pursuit of follies for which we all paid a phenomenally high price. What makes the present position harder is the fact that it comes at the same time as other developments. Today oil hit a record price of $111.80 a barrel, from which it has just slipped back. The oil companies are beginning to say to us openly that the world will face an oil crunch by 2015. That means they understand that the last four years, in which oil production has never really exceeded 85 million barrels per day, have nailed the lie that there are vast untapped reserves that will just cope with the burgeoning demands on oil from India and China and from developing nations. We live in an era of declining quantities of available oil and escalating oil prices, and even according to the oil industry’s calculations, that will hit us by 2015. Furthermore, over the weekend scientists told us that glaciers were melting faster than even they predicted.

The challenges of climate change, peak oil and economic meltdown redefine the parameters within which national Governments must construct their budgets. I think that it is time for us to be bold, and say that it is impossible to run conventional budgets in unconventional times. That requires us to think outside the box and to think in much more dynamic terms.

It is right that hon. Members on both sides of the House have thrown into question the purpose of green taxation. If it is no more than a form of stealth taxation, we as politicians will kill the public support for green taxation. It has to be transparent that the purpose of green taxation is to change behaviour: it is not to fill the Chancellor's pockets, but to change the mechanisms through which the markets work in the
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United Kingdom, and the ethical basis on which those markets work. Perhaps it is a good time to cut out the Chancellor as the middleman in that process. Easy and available mechanisms are on offer to us today, if only we had the willingness and the vision to reach out beyond our shores, or beyond the Treasury mindset, to see how those might work.

I want to focus on five aspects of the challenges that the Budget should have addressed and all future Budgets will have to address: energy security, food security, water management, sustainable transport and financial accountability. I begin with financial accountability. There are no easy solutions to paper over the mess that has been created within the international financial systems, but we should be saying that the UK will place two principal requirements on how our financial systems work. First, we should introduce legislation that says that directors will be made personally liable for anything not reported in their annual accounts. That would bring to an end the off balance sheet accounting and securitisation of assets that have allowed the creation of Mickey Mouse money on a colossal scale.

Mr. Redwood: Would the hon. Gentleman also apply that to the Government, who are the biggest offender in not putting huge off balance sheet private finance initiative, public-private partnership and Network Rail obligations on their balance sheet, unlike the directors of Northern Rock, who put the whole of Granite on the balance sheet?

Alan Simpson: I would include the Government. In fact that was my second point. The second rule that I would bring in would say that no public contracts should go to any company that was registering its activities in an offshore tax haven. As an adjunct to that, it should be a precondition of all public sector contracts that they would not include any entitlement to shift the company or the assets offshore for the duration of the PFI contract. It seems that large numbers of contracts are shifted offshore to make them more tax-advantageous to the companies that have been getting them. It is wrong for us in government to preach one set of ethics if we practise another, so we should set that as our own requirement and set those preconditions for all other companies.

Moving on from that, I want to look at ways in which we should as a Government and as a House be requiring markets to be the drivers of their own transformation. The best example of how to do that is in Germany and it is in the context of energy. Opposition Members and a number of Members on the Government Benches have tried over a number of years to get the Government to do precisely what the Secretary of State has now said they will do, which is to look at feed-in tariff legislation and the way in which it works in Germany. However, it is not enough to say that we will be looking at that. That system has a proven record of delivery. How it works is simple. Germany introduced market rules that gave citizens the right to supply clean energy. In addition, the Government placed a requirement on the energy sector, saying, “You will pay your customers four times the market rate on 20-year guarantee periods, reducing at 5 per cent. per year, for the clean energy that you
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supply in the system.” Yes, other customers within the energy system have to pay for that. It worked out at an average of £12 to £14 per year per household energy bill.

When I tried to raise that with Government civil servants in the Department for Business, as Usual, they said, “It is an interventionist measure, which we do not support.” I said to them, “You do support interventionist measures; it is just that you support only incompetent ones.” We have the renewables obligation, climate change agreements, the climate change levy and commitments to carbon emissions trading. They all add costs to people’s bills, amounting to £140 a year on the average household bill. For that we get one tenth of the carbon savings that people get in Germany for their £12 a year. This is not about market intervention; it is about shaking off the shackles of our own incompetent intervention. I hope that amendments—supported by Members of all parties—will be tabled to the Energy Bill that say at the very least, “Yes, by all means look at feed-in tariffs, but we should be under a statutory obligation to bring in a scheme of feed-in tariffs within one year of the passing of the Bill”. There should also be a commitment to extend that not only to electricity, but to gas. We must look into that; I know that the Secretary of State has looked into it in terms of his own Department.

There are some rules that we must change. Green energy electricity suppliers have been queuing up in the UK for up to 10 years to get access to the system. They cannot do so because the existing suppliers have first call on access to the system and the rules are that only if they cannot meet the energy demands of the day are new suppliers to be drawn in. Therefore, as Kingsnorth comes from an existing supplier, it will take precedence over a green energy supplier that has been in the queue to get access to the system for 10 years. We must give green energy suppliers preferential access to the system.

In terms of renewable gas, we currently have problems with the disposal of waste, and they will become even greater when the EU waste directive comes into effect in 2010. Germany, however, has been putting decayable waste not into landfill or incineration, but into anaerobic digesters. It therefore turns the waste into energy and puts the gas back into the system, and it does so at the locations—the communities, towns and villages—that the waste was collected from. The waste is used there in combined heat and power plants to deliver a local energy system. We cannot do that because our current system of renewables obligations applies only if the gas is converted into energy at the anaerobic digester plant, as a consequence of which there would be the huge cost of ducting heat for many miles, which would be utterly uneconomic. We need, therefore, to change the market rules for our energy systems.

Mr. Bellingham: The hon. Gentleman is making a superb speech, and I congratulate him on having one of the six houses in the entire kingdom that achieve the target of total energy-efficiency.

Does the hon. Gentleman agree that anaerobic digester technology is far preferable to the straightforward incinerators that many local authorities throughout the country are hoping to build?

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