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Let me turn to the third question, on which, again, the shadow Chancellor did not want to focus—how we face the challenges, including on the public finances, in a way that is fair. We have set out some pretty clear objectives on efficiency savings and plans of how we
can get those savings—[Hon. Members: “How?] Five reports were published on Tuesday about precisely what needs to be done. Again, there is a difference of philosophy that the shadow Chancellor probably will not want to talk about. He now says that he accepts the higher top rate of income tax, but he did not mention his uncosted proposals on inheritance tax, which are still out there and have, I think, been reaffirmed. This is an interesting point, given that we are in the middle of a time when resources are scarce. The shadow Chancellor made his promise in 2007; he now has an opportunity to move off it. Indeed, the shadow shadow Chancellor, the right hon. and learned Member for Rushcliffe (Mr. Clarke), gave him a heaven-sent opportunity to do so when he said:
“I don’t think we’re going around any longer saying this is something we’re going to do the moment we take power”.
Just to be clear about the proposal on inheritance tax, it represents an extra £200,000 each for the richest 3,000 estates in the country—£600 million. What is extraordinary about the shadow Chancellor’s judgment and priorities is that at this moment, of all moments, he continues to think that that would be a good way to spend resources. He says that there will be posters around the country. I can tell him that there will be posters all round the country talking about his commitment on inheritance tax—people all round the country will know that his priority is a tax cut for millionaires. If he wants to challenge the idea that it is a tax cut for millionaires, he is welcome to do so, but the figures are—
Mr. Osborne: So that we are fully in command of the facts, will the Secretary of State confirm that the Labour Government cut inheritance tax from the beginning of this tax year?
Edward Miliband: Yes, of course I will, but that was to reflect the particular position of couples. Again, I invite the shadow Chancellor to intervene to confirm that he wants to spend well over £1 billion on inheritance tax.
Mr. Osborne indicated dissent.
Edward Miliband: The hon. Gentleman shakes his head—is he denying it? Oh, so it is his policy. He does not really want to talk about that policy. The shadow shadow Chancellor gave him the opportunity to dump it, but what did he do? He pushed the right hon. and learned Gentleman to issue a statement saying that actually he got it completely wrong and that that was the priority at this stage of the recession. The shadow Chancellor rolls his eyes from a sedentary position, but it is a fair question to ask: does he really think that spending some £600 million on the richest estates in the country, on millionaires, is the right priority at the moment? [ Interruption. ] He is talking from a sedentary position; I am happy for him to intervene to say that he thinks that spending that £600 million, given all the competing pressures on public spending and tax, is the right thing to do. He has suddenly gone a bit coy. I do not think that he really wants to say that it is the right priority.
Angela Browning (Tiverton and Honiton) (Con) rose—
Edward Miliband: Perhaps the hon. Lady would like to answer for the shadow Chancellor.
Angela Browning: How much has the tax take to the Treasury declined since the Labour Government introduced their inheritance tax proposals in a mad panic because we had introduced ours? It is in the Red Book; perhaps the Secretary of State would like to give us some figures.
Edward Miliband: Funnily enough, I do not know the figures off the top of my head. What I do know, however, is that there is a big difference in priorities. At this most difficult economic time, the shadow Chancellor thinks that the right priority is more inheritance tax cuts for millionaires. If he wants to abandon the policy at the Dispatch Box, I am sure that many people, including some on his own side of the House who are probably more sensible, would think that was the right thing to do. I give him that chance: he can now say that it is an aspiration rather than a firm pledge. Funnily enough, he does not want to do so.
Let me move on to the hon. Gentleman’s other tax priorities. I think that the Conservatives are still committed to a married couples allowance—presumably another uncosted commitment that they have no clue how they would fund. We are very clear about our priority: we think that the right way to support families in the tax system is to support children, and that is what we are doing.
Mr. Osborne: Will the right hon. Gentleman confirm that his changes, or cuts, to inheritance tax introduced a recognition of marriage into the tax system?
Edward Miliband: No, it was correcting an anomaly in the tax system regarding the position of married couples compared with other couples. That is the explanation. If the hon. Gentleman wants to abandon his married couples allowance today, I am happy for him to do so. I think that it is right to support children through the child tax credit.
The other problem for the shadow Chancellor arises from his proposals on tax credits, which have not got much attention. He says that he wants to cut the number of people who get tax credits. When he was on the “Today” programme a few weeks ago, having trouble finding what areas he would cut, he said:
“We raised the question, for example, of whether in-work benefits, tax credits, should go to people on incomes of over £50,000.”
Presumably, he wants to cut tax credits for those people.
Edward Miliband: I will give way in a moment, but this is a Conservative policy to which I should like wider attention to be given, as it is significant. Not only is the shadow Chancellor going to go into the election saying that he would take money away from people, but to cut the level of tax credits he would either have to cut the overall rate, which would affect everyone, or raise the taper in the tax credit, which would worsen work incentives. Those are the two ways in which he could take money away from people through tax credits. That is another policy that he was hoping not to talk about.
We have a completely different set of priorities. Although the shadow Chancellor claims a modernising face, the truth is that on inheritance tax, on the married couples allowance and on tax credits, he does not present a modernising face at all.
Mr. Walker: Could the Secretary of State tell the House how many billions of pounds in tax credits have been overpaid in the past five years, how much of that overpayment has been recovered, and how many billions have been lost as a result of overpayment?
Edward Miliband: That says it all, really. There were overpayments in the tax credits system. Some of that is to do with the design of the system, in that it is a flexible system that responds to people’s circumstances. As a result, as my right hon. Friend the Chancellor said yesterday, hundreds of thousands of people have seen their hours reduced and their income go up by up to £35 a week. That would not have happened if we had followed the advice of the Conservatives, or if the system had not been designed as it is. We know what their hidden agenda is—it is to cut tax credits, and that is what they would do if they were in government.
Edward Miliband: I have already given way to the hon. Gentleman.
The Conservatives were not supporters of the tax credits system in the first place—they thought it was a bad idea. They do not want to have the courage of their convictions and say that they would abolish it, but that is the reality.
The truth about this Budget is that we have shown that we have a plan to get our economy out of recession—unlike the Conservatives. We have a plan to build our economy for the future—unlike the Conservatives. In addition, we are the people who will—to use the words that the shadow Chancellor claims that he wants to use but will not be able to—stand up for the many, not the few. That is why this was the right Budget for Britain. We know that the Conservatives have no plan to get our economy out of recession if they are ever in power. We know that they have no plan for the future. We know that what they offer is tax cuts for the few and spending cuts for the many. That is why the House should vote for this Budget next week.
2.10 pm
Martin Horwood (Cheltenham) (LD): This Budget, like the previous one, was widely hyped as a green Budget. The Secretary of State himself, who knows that I give him credit when it is due, last week told The Independent on Sunday that it would represent a
“massive greening of the Government.”
If green words, green targets and green titles were enough, that would have been true, and perhaps he could have taken the credit. But they are not, it is not, and on this occasion I am afraid he cannot.
The background could not be more serious. Despite the scepticism still being expressed from the Conservative Benches today, the intergovernmental panel on climate change’s 2007 assessment painted a deeply worrying picture, stating that any more than 2° of global warming
would usher in higher and higher risks of massive species extinctions, droughts affecting billions of people, a loss of food production and increases in deaths from diseases and the physical risks of heatwaves, droughts and floods.
Yet as we warned from these Benches at the time, even the IPCC is an inherently conservative, consensual body with a built-in time lag in its use of data. The latest data suggest that ice sheets in Antarctica and Greenland might be melting faster than predicted by the IPCC, and the same appears to be true of mountain glaciers. Sea levels will therefore rise faster than expected, making floods and storm surges much more dangerous and threatening the homes and lives of millions in coastal communities worldwide. The latest data on Arctic sea ice show its likely summer disappearance in just a couple of years’ time. The IPCC predicted that that might happen by the end of 21st century. Some 80 years earlier than expected, the summer Arctic ocean will turn into a dark, heat-absorbing sea and accelerate the melting of permafrost on nearby continents. The latest data on that show that it will in turn release far more methane and carbon dioxide into the atmosphere than previously thought.
More such possible feedback mechanisms are being revealed in study after study. The clear risk is now of global warming of not 2° but 3° or 4° above pre-industrial levels, with almost unimaginable consequences for human civilisation. In theory, we could one day have to evacuate large parts of Africa, Asia, America and the Mediterranean region, which would probably become uninhabitable. Realistically, we would face social and political upheaval, conflict and economic collapse on a scale that would make the current global downturn look like a vicarage tea party. My children, Maya and Sam, are seven and nearly five, and that is not the world in which I want them to live their lives.
The December report of the Committee on Climate Change rightly set out the challenge, stating:
“To contain that threat, the world needs to cut emissions by about 50 per cent. by 2050, and to start cutting emissions now. A global agreement to take action is vital. But a global agreement will not be possible unless the countries of the rich, developed world provide leadership.”
We might feel a little less rich than we did two days ago, but we still cannot put that off. We have just seven months to demonstrate that leadership before the critical Copenhagen summit. We need to show continued commitment to decarbonising our economy so that we have some chance of convincing developing countries that we believe in convergence around what the Committee on Climate Change called a “sustainable global average” of per capita emissions, and that we believe that sustainability is compatible with a high quality of life. Of course, we have to show leadership so that we can persuade our fellow economies in the richer world to play ball too. In Kyoto, remember, we allowed a global deal to be watered down for American and Australian Governments who then failed to deliver ratification. Times and people have changed, but initial pronouncements by Mr. Obama’s climate change envoy, Todd Stern, that the reduction targets agreed in Bali are just “not going to happen” are pretty depressing.
The Secretary of State will claim that green measures in this Budget, the carbon budgets announced yesterday and the carbon capture and storage announcement that he has just made demonstrate the necessary levels of
leadership. However, this is the Government of Gordon “Read the small print” Brown. Their environmental record so far is, to quote the same newspaper article that quoted the Secretary of State, “mainly hot air.” In just four years, we have all been able to contribute to a grand total of 91 different consultations relating to sustainable energy in one way or another, yet the proportion of taxation derived from behaviour-changing green taxes is actually falling. Green measures formed only 6 or 7 per cent. of the Government’s supposedly world-beating stimulus package, and one study suggests that that package overall could well help to push carbon emissions up, not down.
Mark Lazarowicz (Edinburgh, North and Leith) (Lab/Co-op): May I clarify one point? I assume that the hon. Gentleman’s party will support an increase in fuel duty as part of the move towards green taxation.
Martin Horwood: I am grateful for the opportunity to clarify that, ideally, we would abolish fuel duty, and we have suggested a number of fairer ways of taxing motorists. One of the most innovative is a showroom tax, which would place a much higher duty on the most polluting brand new vehicles, so that I am afraid those hon. Members who want to spend their increased salaries next week on Porsche Cayennes would face a much higher bill. That is our approach to that taxation—we need a much fairer system.
Mr. Bone: I am sorry to interrupt the hon. Gentleman’s well thought out speech. The Government say that the car scrappage scheme is a green measure, but surely so much carbon dioxide is used in the production of a new car that it is actually an anti-green measure.
Martin Horwood: The hon. Gentleman makes a valuable point. If it ends up stimulating the more frequent purchase of new vehicles, it could well contribute to carbon emissions. Once again, it may be more of a prop to the car industry than a genuinely well thought out green measure. Perhaps more research and analysis needs to be done on that.
As I said, the Government’s record has been said to be “mainly hot air”, and some of their practical programmes sound a lot like some of the economic stimulus programmes. The four-year-old marine renewables deployment fund has yet to part with a single penny. The low carbon buildings programme has taken household grants for renewable energy to a five-year low. As we heard in questions earlier today, the office for renewable energy deployment has not been set up as such. The implementation of the carbon reduction commitment is threatening to close on-site renewable energy at companies such as BT. The Government’s first attempt at a carbon capture and storage competition did close carbon capture and storage projects, and the National Audit Office has recently concluded that Britain’s participation in future phases of the EU emissions trading scheme might result in hardly any reduction in real UK carbon emissions.
To give him his due, the Secretary of State made a string of important concessions when he took office last year, from the 80 per cent. target for greenhouse gas reduction to the Climate Change Act 2008 and to the promised introduction of feed-in tariffs for renewable energy in the Energy Act 2008, but even those were
relatively easy to concede in the short term, just like the Government’s stimulus package, because they are putting off all the really tough decisions.
For years, Ministers cheerfully claimed to be on target to meet their Kyoto greenhouse gas reduction targets, despite knowing full well that they had been met years previously because of the so-called dash for gas in the power industry. That was made quite clear in Sir Nicholas Stern’s report to the Government. With a cool economist’s eye, Stern also pointed to another successful example of carbon reduction in a major economy—Russia’s reductions in the 1990s, achieved through the spectacular collapse of its economy. Come to think of it, perhaps that was the bit of the Stern report that the Prime Minister did read. Let us hope that neither he nor the Secretary of State attempts to make similar claims in future that the inevitable fall in greenhouse gases that will result from recession are anything to be proud of. Instead, we should be wary of the false message that those possible reductions could send. They could mask a dirty but rather shrivelled economy that will be just as dirty or even dirtier when it reflates. If we have started to build a third runway at Heathrow and an unabated coal-fired power station at Kingsnorth in the meantime, that outcome seems pretty likely.
If the Department for Communities and Local Government ignores the Campaign to Protect Rural England, Friends of the Earth, the Environmental Audit Committee and tens of thousands of public objections to its regional spatial strategies—up to 35,000 in my own south-west region alone—it will wake up to see any revival in house building taking place first all over an area of England’s green belt the size of Birmingham. Much of that will be prime local, food-producing agricultural land, while a million properties lie empty elsewhere.
The regional spatial strategies assume an annual year-on-year growth forecast of 3.2 per cent.—that is plus 3.2 per cent., a fantasy assumption that makes even the Chancellor’s growth forecast for the economy as a whole look pessimistic. Incidentally, the Government’s reply to the Environmental Audit Committee’s call for the suspension of regional spatial strategies on environmental grounds was due in January, but I understand that the Committee is still waiting for a reply. Perhaps the Secretary of State will lend the Minister with responsibility for communities a hand.
Even if his Department does not have that much clout across Government, thank goodness this Secretary of State is at least listening to the Committee on Climate Change. The committee has provided clear advice that we should commit to a greenhouse gas budget that represents a 34 per cent. reduction by 2020, which may give us a chance of challenging other policies. We obviously welcome the Government’s acceptance of that target, even if it is comparable to the Chancellor’s decision not to cut pensioners’ winter fuel allowances or the decision not to beat one’s mother—correct, obviously, but anything else would be unthinkable. Let us make it clear that 34 per cent. is the minimum interim target recommended by the committee, assuming no ambitious global deal is struck in Copenhagen.
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