The
Committee consisted of the following
Members:
Chair:
Mr
Roger Gale
†
Anderson,
Mr David (Blaydon)
(Lab)
†
Burden,
Richard (Birmingham, Northfield)
(Lab)
†
Carmichael,
Neil (Stroud)
(Con)
Clwyd,
Ann (Cynon Valley)
(Lab)
Donaldson,
Mr Jeffrey M. (Lagan Valley)
(DUP)
Gardiner,
Barry (Brent North)
(Lab)
†
Goodwill,
Mr Robert (Scarborough and Whitby)
(Con)
†
Greening,
Justine (Economic Secretary to the
Treasury)
†
Gummer,
Ben (Ipswich) (Con)
†
Hands,
Greg (Chelsea and Fulham)
(Con)
†
Hemming,
John (Birmingham, Yardley)
(LD)
Hepburn,
Mr Stephen (Jarrow)
(Lab)
Hoey,
Kate (Vauxhall)
(Lab)
†
McCarthy,
Kerry (Bristol East)
(Lab)
†
McCartney,
Jason (Colne Valley)
(Con)
†
Poulter,
Dr Daniel (Central Suffolk and North Ipswich)
(Con)
†
Wharton,
James (Stockton South)
(Con)
†
Williams,
Stephen (Bristol West)
(LD)
Mark Etherton, Committee
Clerk
† attended the
Committee
Second
Delegated Legislation
Committee
Monday 28
February
2011
[Mr
Roger Gale
in the
Chair]
Draft
Climate Change Levy (Fuel Use and Recycling Processes) (Amendment)
Regulations
2011
4.30
pm
The
Chair:
Good afternoon, ladies and gentlemen. Hon. Members
may remove their jackets if they wish to do
so.
The
Economic Secretary to the Treasury (Justine Greening):
I
beg to
move,
That
the Committee has considered the draft Climate Change Levy (Fuel Use
and Recycling Processes) (Amendment) Regulations
2011.
It
is a pleasure to serve under your chairmanship, Mr Gale. As
the Committee will know, the climate change levy was introduced in
2001. It is a tax on energy delivered to non-domestic energy users in
the United Kingdom. Its aim is to provide an incentive to increase
energy efficiency and to reduce carbon emissions. It taxes supplies of
natural gas, electricity, solid fuel and liquefied petroleum
gas.
A
number of exemptions were included, for various policy reasons. One
exemption benefited the primary production of aluminium, lead and
steel. To avoid the climate change levy having the perverse effect of
disadvantaging environmentally friendly recycling processes when
competing with the more energy-intensive primary production of those
metals, energy used in the recycling process was also exempted from the
levy.
The
UK secured a 10-year state aid approval from the European
Commission in respect of the recycling processes exemption, which
expires on 31 March 2011. The Government have applied to renew the
state aid approval for aluminium and steel recycling only, because the
case for including lead recycling in the exemption no longer exists.
While reviewing the case for continuing the exemption as a whole, my
officials consulted the International Lead Association and found that
the primary production of lead had ceased in the UK. As there
is no longer primary production of lead in the UK, the
rationale for exempting lead recycling no longer exists, because there
is no longer a competing
process.
The
legislation requires that there be a competing primary process for
recycling producers to claim the
exemption, and the International Lead Association has advised my
officials that the exemption has not been claimed by lead recyclers for
some time. Removing lead from the list of metal recycling processes
prescribed for the purposes of paragraph 18A(1) of schedule 6 to the
Finance Act 2000 tidies up the legislative position and will ensure
that the exemption cannot be inadvertently claimed in future. Doing so
from 1 April will also ensure that there is no technical breach of the
state aid rules. I hope that the Committee will support this
change.
4.33
pm
Kerry
McCarthy (Bristol East) (Lab):
As always, it is a pleasure
to serve under your chairmanship, Mr Gale. I appreciate the explanation
that the Economic Secretary has given about why the exemption for lead
is no longer relevant. I have just a couple of questions, which she may
have come across during the no doubt extensive research that she did in
bringing the regulations before us.
First, I
appreciate that if there is no primary lead production in this country,
the trade-off in ensuring that there is no disadvantage to people
involved in lead recycling does not work. I wondered whether there was
still a lead recycling industry in this country and, if so, whether
there was an issue about that industry perhaps not being at a
disadvantage compared with primary lead production in this country, but
being at a disadvantage in now finding it more expensive to carry out
its
trade.
My
other question is whether exemptions for other metal recycling
processes are under consideration that could have been considered when
the 10-year exemption for aluminium and steel was being considered. I
have no other queries, and we are happy to support the
regulations.
4.34
pm
Justine
Greening:
On the first question, we sought the reaction of
the lead recycling industry to the exemption. The International Lead
Association accepts that there is no longer a case for an exemption.
Interestingly, it also told us that no one in the industry has claimed
the exemption for some time. Given that there is no primary production,
it clearly understands that the case for a recycling exemption is not
valid.
The
exemptions for aluminium and steel will continue. We originally had
exemptions for aluminium, steel and lead, but as the case for lead has
fallen away, we are left with the original two. We do not propose
adding other metals. I hope that I have clarified matters.
Question
put and agreed
to.
4.35
pm
Committee
rose.
