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Justine Greening: That gives me the details that I was interested in. However, it seems unfair that people who have in the past two years caught on to the need to take steps against climate change and have bought a Euro 4 van, will have to pay the standard rate, whereas those who had already done that will still be benefiting from their behaviour, paying the reduced rate. I understand the limits on the Government’s ability to move in that area because of European legislation, but there seems to be inequity in the treatment of people who have tried to do the right thing and buy a low-emitting van, but bought it too late to get the reduced rate.
Question put and agreed to.
Clause 140 ordered to stand part of the Bill.

Clause 141

Not exhibiting licence: period of grace
Question proposed, That the clause stand part of the Bill.
Justine Greening: I understand that the clause has been introduced because some people now use the internet to renew their road tax. It would be interesting to hear from the Economic Secretary how many people use that channel. [Interruption.] My hon. Friend the Member for Fareham says that he uses it, so it is getting some take-up.
I recognise though, that when people go down that route it takes some time for their licences to arrive in the post, particularly perhaps in rural settings where larger areas are covered by each postal service, or in areas where the service is not as effective as in others. In my part of London we have had some problems with post not arriving on time, and we know that there are postal strikes. So I understand that the grace period takes account of the fact that people will be waiting for their licence to arrive when they have purchased it legitimately. Will the grace period apply to everyone? It simply suggests that there is a grace period, full stop. It would be helpful if the Economic Secretary clarified that.
Another brief point is on the enticing free prize draw that I noticed on the home page for people who were renewing. That explains some statistics that I received from the Government. According to Government figures, over the next three years Ministers expect the number of band A cars to go up by 11, from 395 to 406. Three of them can be won in this competition because the free prize draw is for one of three brand new Seat Ibiza Ecomotive cars, which is one of the few models that is under 100g per km in terms of emissions. We have found three of them and I will look for the other eight. Perhaps it is just the Government who are purchasing these cars and that is why the figures have gone up.
It would be helpful if the Economic Secretary could answer my questions and provide some clarification on the clause.
Kitty Ussher: This measure is uncontentious, as the hon. Lady implied. At present the amount of people using the electronic service declines at the end of the month as motorists must allow five working days for their new tax disc to arrive in the post. The clause allows customers an exemption from the offence of not displaying a tax disc for five working days at the start of the month. The exemption will apply only provided that an application for a new tax disc has been made before the expiry of the previous one. It is not a general grace period, but is simply intended to cover all situations in which people do not physically go to the post office to obtain their tax discs.
Mr. Mark Hoban (Fareham) (Con): I do not wish to interrupt in a clause that my hon. Friend the Member for Putney is leading on, but as a user of this scheme, I should say that one of the reasons why it is difficult to take it up is that one can apply for a tax disc only after the 15th day of the month. That causes a problem if one is away from home. My tax disc goes to my constituency home. That is an issue about how easy the scheme is to use. I welcome the grace period, but could the Government allow people to apply for a new tax disc before the 15th day of the month to encourage take-up and avoid the need for the grace period?
Kitty Ussher: I hear what the hon. Gentleman says. That is not precisely the point that we are addressing, but I will pass on his comments to the Exchequer Secretary who normally leads on these issues. I am sure that she will consider his point with sympathy.
The only remaining thing is to provide the hon. Member for Putney with the answer to her specific question about the take-up of the electronic vehicle licensing service. It is currently about 35 per cent. We want that to rise, but we are quite pleased with where it is. Our target is 60 per cent. by the end of the 2008 financial year, which is one of the reasons for introducing this measure to remove an inadvertent hurdle. We already have 1 million people per month, of whom the hon. Gentleman is one and I am another. Good luck to the hon. Lady in her prize draw.
Question put and agreed to.
Clause 141 ordered to stand part of the Bill.

Clause 142

Reduced pollution certificates
Question proposed, That the clause stand part of the Bill.
Justine Greening: I want to ask the Economic Secretary how this scheme will work in practice. I understand that it is an attempt to cut down on bureaucracy and simplify the process of issuing a reduced pollution certificate. Will she tell the Committee briefly how the procedure will work in practice, what sort of information will have to be provided and what declarations will have to be made to the Secretary of State? In what sorts of situations will a certificate be issued following inspections? If she could outline briefly the process by which reduced pollution certificates will be issued, it would be very helpful.
3.45 pm
Kitty Ussher: I will write to the hon. Lady setting out the precise process. This is intended to make things simpler. The Vehicle and Operator Services Agency currently does not insist on testing newly purchased Euro 5-compliant vehicles, as an examination of the complex systems in each case would not be practical or economic. We hope that the clause will regularise the current practice but, to put the matter beyond doubt, I will write to the hon. Lady and circulate that to members of the Committee.
The Chairman: I hope that in writing to the hon. Lady the Minister will ensure that all members of the Committee receive a copy and perhaps a copy is put in the Library as well.
Kitty Ussher indicated assent.
Question put and agreed to.
Clause 142 ordered to stand part of the Bill.

Clause 143

Climate Change Levy: Coal Mine Methane No Longer to be Renewable Source
Question proposed, That the clause stand part of the Bill.
Justine Greening: Again, I want to ask some brief questions of the Minister regarding the fact that coal mine methane is no longer being considered renewable under the climate change levy. I understand that the Government are saying that that is because the EU state aid exemption expires in October and the incentive has not had much effect. I want to press the Minister on why the Government feel that that has been ineffective.
A lot of the debate in this House and outside is around the effectiveness of green fiscal measures. When we have measures that the Government say have been ineffective it is useful, helpful and instructive to delve into that ineffectiveness a little more to understand why that has happened. It is important because the exemption was put in place to give financial incentives and assistance to coal mines. Over the past two years, partly owing to changes in energy prices, some old coal mines have re-opened. A good example is Hatfield colliery in South Yorkshire. It is ironic that as coal production and coal mines are being brought back into use the incentive to ensure that the methane created as part of the production process is used for energy generation is being taken away. Can the Minister briefly outline why it was felt that this fiscal measure did not work and whether the Government are considering other ways to tackle the environmental issue of methane in relation to coal production?
Kitty Ussher: The hon. Lady’s question gets to the point. We have been slightly mystified ourselves.
May I give a bit of context? In 2003, we applied to the European Commission for state aid approval for an exemption from the climate change levy for electricity generated from coal mine methane. The Commission ruled that the exemption constituted state aid but was approvable for five years under the Community guidelines on state aid for environmental protection. Coal mine methane is a fossil fuel but is regarded as a renewable source for the purposes of exemption in UK legislation.
The purpose of the exemption was to improve the rate of return on marginal coal mine methane extraction projects, thereby encouraging the capture and generation of electricity from the gas, mitigating emissions of methane into the atmosphere and preserving natural gas reserves.
We continue to recognise that using coal mine methane in electricity generation is beneficial to the environment. However, we have not found any evidence that the existence of the exemption has provided incentives to use the gas to produce electricity above what would have occurred without the exemption. We have worked closely with the industry to explore the case for extending the exemption but the combination of a lack of robust evidence about its need combined with changes to the European Community guidelines on state aid for environmental protection, under which we would obviously be required to apply to extend the exemption, led us to conclude that the UK would not be able to submit an application that would have persuaded the Commission to extend the relief. That is why we have concluded that that no longer depends on the levy exemption for its existence, and is rather a side point to our general efforts in this area.
Justine Greening: Does the Minister have any assessment of the impact on climate change levy receipts as a result of ending the exemption?
Kitty Ussher: I do not have such figures to hand, but my presumption is that since we could find no way in which the exemption was having a real effect on the economy, there is no marginal effect on tax receipts either.
Justine Greening: I am grateful to the Minister for her response. She has outlined some of the issues related to this clause, and the points that I wanted to make have been properly aired.
Question put and agreed to.
Clause 143 ordered to stand part of the Bill.
Clause 144 ordered to stand part of the Bill.

Clause 145

Landfill tax credit: withdrawing approval of environmental bodies
Justine Greening: I beg to move amendment No. 353, in clause 145, page 89, line 21, leave out from ‘substitute’ to end of line 23 and insert ‘“the withdrawal of approval of—
(i) an environmental body by the regulatory body;
(ii) the regulatory body by the Commissioners; and
(iii) an environmental body by the Commissioners on an occasion when the Commissioners have assessed that serious non-compliance has occurred on the part of an environmental body,”’.
The amendment seeks to put some clarification into the Bill that is in the explanatory notes but probably ought to be reflected in the Bill itself. It relates to the fresh HMRC commissioners powers that the clause creates. At the moment, the landfill communities fund is administered by Entrust, which can both give and remove approval for environmental bodies that are part of that fund.
Amendment No. 353, which I have tabled, seeks to ensure that what the explanatory notes set out—that HMRC will remove approval of an environmental body to participate in the landfill communities fund only when there is serious non-compliance—will, in reality, be the only time that HMRC has the use of those powers. My concern is that, at the moment, clause 145 gives HMRC commissioners and the regulatory body, Entrust, the power to remove approval of an environmental body that received contributions, whereas previously Entrust performed that function itself.
We do not really know what non-compliance and serious non-compliance constitute in relation to the landfill communities fund. Can the Minister set out some examples of where serious non-compliance has already occurred, and whether there is a serious issue about that which the Government are seeking to address through involving the HMRC? Does the Treasury have some concerns perhaps that Entrust is not in a position to handle cases of serious non-compliance? Does the Treasury nevertheless still see the process of dealing with that starting with Entrust, which would then refer possible cases to the Treasury, particularly HMRC? Does it see HMRC going through a parallel scrutiny process of those environmental bodies, in order to identify serious non-compliance for its own sake? That would seem to be an obvious duplication of effort.
To some extent, this is a probing amendment, but through it I am seeking to understand better why the Government think that this is an issue, and to make sure that the HMRC powers are proportionate for the occasions on which they will be used. As I alluded to earlier, it would be helpful to hear from the Minister how many times Entrust itself has withdrawn approval from environmental bodies, how many instances have been identified so far of serious non-compliance and what proportion that is of the total number of environmental bodies that are participating in the landfill communities fund. It would be helpful to get an idea of the breadth of the problem that the Treasury is seeking to address with the clause. Can the Minister confirm that the proposals have been brought forward with the consent of Entrust and that Entrust has been fully consulted so that it has a good understanding of how the measure will work practically on a day-to-day basis and how practically it will be in communication with the HMRC as and when occasions of serious non-compliance arise?
Kitty Ussher: The hon. Lady raised four points. She asked: what constitutes serious non-compliance? I will explain that shortly. What are the numbers? How many issues have there been in practice, and have we worked with Entrust in understanding how to implement these rules?
Prior to the change before us, the decision on whether to revoke an environmental body’s approval for non-compliance was made by the regulatory body. Entrust used that power on only six occasions between 1996 and 2008. I hope that that answers the hon. Lady’s question about numbers.
Are we working with Entrust? Yes, of course we are. On the specific amendment, it restricts the commissioners’ power to withdraw approval of an environmental body to cases where there is serious non-compliance on the part of the environmental body concerned. It is likely in most cases, as it has been to date, that commissioners will exercise the power to withdraw the approval of an environmental body where they assess that serious non-compliance has occurred. However—this is the crucial point that I need to explain to the hon. Lady—there may be cases that fall outside any interpretation of serious non-compliance but where under the circumstances it will still be reasonable to withdraw the approval of the environmental body concerned, for example, where there is an accumulation of a number of minor incidents of non-compliance. That is why we would urge the hon. Lady to withdraw her amendment because in those cases the Opposition amendment would mean that the commissioners could not withdraw the approval of the environmental body even though there had been serial minor incidents of non-compliance that, added together, were taken as sufficiently serious to warrant action.
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