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
141Not
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
142Reduced
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
143Climate
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
145Landfill
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?
If I may take
those in turn, the obligations of an approved body are set out in the
landfill tax regulations. This change gives the commissioners for HM
Revenue
and Customs the power to revoke an approval if the body fails to comply
with any of those obligations. In exercising that power, however, they
will revoke the approval only if there is evidence of serious
non-compliance. Entrust is responsible for identifying and
investigating breaches of the regulations so the process is as follows.
Where in Entrust’s view the alleged breach is serious, it will
report the case to the commissioners for consideration under an agreed
process. Each case will be considered by the commissioners on its
merits so there are no duplicate processes in this regard. Factors that
may be taken into account include the financial sums involved, any
previous incidents of non-compliance, the circumstances under which the
breach occurred and the potential ramifications of the
breach. 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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