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Chris Huhne: I certainly do not believe that we can rely on achieving the sort of comprehensive approach that I am talking about merely through introducing pay-as-you-save measures. The reality is that there will have to be cross-subsidy, as there already is, but particularly to the fuel poor and to those in homes that are hard to heat and which need solid-wall insulation and so forth. I am afraid that the hon. Gentleman will have to wait for the final proposals in the Bill, but I very much agree that we need a comprehensive set of proposals to deal with the whole of the residential housing sector. Those proposals must cover homes owned by owner-occupiers but also the private rental sector, where many of the worst offenders when it comes to energy inefficiency are to be found. I hope that that is what he will see.
Barry Gardiner: I am grateful once again to the right hon. Gentleman. I welcome the measures that he is outlining and we will want to study them carefully, but I am troubled by his suggestion that one element of the coalition agreement was a decision that green taxes should rise as a proportion of the revenues into the Exchequer. I have heard him make the argument, from this side of the House, that green taxes should be used to change behaviour but not as long-term revenue streams on which the Exchequer can depend. I agree with that, but will he explain why that element of the coalition agreement is now seen to fund resource into the future?
Chris Huhne: The hon. Gentleman knows, as I do, that the two points that he makes are not as mutually contradictory as he suggests. There is a long history in this country of applying so-called "sin taxes" to alcohol and tobacco, and they have had the very desirable effect of helping to get people off smoking and of cutting their drinking. The success of those taxes is not perhaps as great as many hon. Members on both sides of the House would like, yet I am assured by the latest Red Book documents that the Treasury continues to raise a very substantial amount of money from both tobacco and drink excises.
The reality is that, while green taxes will change behaviour, the responsiveness of behaviour is such that revenue will continue to be raised for a very substantial period. I have to say that, in the present circumstances, that point is likely to commend itself to the Treasury, which always used to follow the motto of Colbert, the finance minister of Louis XIV, who said that the art of taxation lay in plucking the maximum number of feathers from the goose with the minimum amount of hissing. In that context, green taxes certainly are a very justifiable way to pluck the maximum number of feathers.
I am very grateful indeed to the right hon. Gentleman for giving way. I want to leave Louis XIV and return to future technologies, and I was interested in the response that he gave to the hon. Member for Chippenham (Duncan Hames) about support for wave technologies. The right hon. Gentleman will probably know that two of the UK's leading marine renewable energy businesses have their headquarters in my constituency. Can he assure me that support for marine renewables will be at the centre of his policies
for every constituency in the UK, and not just those in the south-west of England? More specifically, will he tell us how the Government's support for marine renewables will be affected by the Budget that we are discussing?
Chris Huhne: Quite properly, the hon. Gentleman wants me to anticipate announcements that will be made by the Government in the normal course of events. I understand that game, as I have played it myself on many occasions. At this stage, however, I can merely tell him that I visited Aberdeen recently for the All Energy conference, where I had interesting and fruitful talks with the marine energy specialists currently testing equipment off Orkney. I am deeply committed, as I believe the Government are, to making sure that what is a genuinely interesting source of potential future prosperity and jobs continues to get the support that it needs to get off the ground.
Obviously, we are in very tough times and have had to cut our cloth to fit our straitened circumstances, but I believe that marine energy offers real opportunities. We have made a number of proposals in that regard, and we will continue to support the sector.
Dr Wollaston: I am extremely grateful to my right hon. Friend for giving way. My constituency is home to Transition Town Totnes, of which he may have heard. It leads the way in looking at climate change and peak oil, and I am sure that the people involved will be very interested to know the size and scale of the projects that will be funded by the green banks. What will be the time scale? When might they be able to start looking forward to making applications?
Chris Huhne: I thank my hon. Friend for that intervention. [Hon. Members: "Answer!"] Opposition Members know perfectly well that there are certain processes in Government that we have to go through. We have to consult. We have to make sure not only that we produce decisions at the moment that both Opposition and Government Members would like, but that those decisions are right and have gone through all the normal processes.
However, I want to pick up on one very important point. My hon. Friend mentioned peak oil, something that, especially in the context of Deepwater Horizon in
the gulf of Mexico and our exploration west of Shetland, opens up a terribly important point about the whole thrust of what we are intending to do. That is that we have been given a wake-up call to move towards a low-carbon economy even more rapidly than before. That is not merely for climate change reasons but because an economy that is more independent of volatile sources of energy from geopolitically troubled parts of the world is also more resilient to oil price shocks. If the name of the game is not to end boom and bust, as the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) used to promise, but at least to moderate boom and bust, then an important objective for my Department has to be to ensure that that moderation takes place by making energy security a more serious objective and defining energy security not merely in terms of physical interruptions-problems, say, in the straits of Hormuz-but in terms of our ability to withstand price volatility and price shocks.
I think I have gone on far too long- [ Interruption.] As the hon. Member for Islington South and Finsbury (Emily Thornberry) says from a sedentary position, and I can agree with her- [ Interruption.] Sorry, the hon. Member for Wallasey (Ms Eagle)-I was being barracked. I want to make a key point about the prospect of the move to a low-carbon economy providing us with a new type of economy that will be more resilient to shocks, will be jobs-rich and will provide genuine prosperity, employment and profit for British businesses, including opening up enormous opportunities in export markets. The framework that we have set out enables us to do that, and I commend the Budget to the House.
Edward Miliband (Doncaster North) (Lab): May I start by congratulating the Secretary of State? He is by my reckoning the first Liberal to open a Budget debate in peacetime since 1914. That is a remarkable honour, which we should note today.
Chris Huhne: I am delighted to accept the right hon. Gentleman's commendation, but I should remind him that my right hon. Friend the Secretary of State for Business, Innovation and Skills opened the debate.
Edward Miliband: I do not want to be a pedant about this, but he was not the first speaker in the day's debate. That was the only point that I was making. The Secretary of State can accept my congratulations or not. I also want to congratulate him on something else. Today we have seen the completion of a remarkable political journey by the right hon. Gentleman. Remember the Liberal Democrat leadership election, Mr Deputy Speaker? He was the tribune of the left. He ran to the left of the current leader of the Liberal Democrat party. Today we heard the most remarkable political transformation from left-wing Liberal to Thatcherite. He could be the Reg Prentice of 2010. He could easily qualify as a Conservative candidate at the next election on the basis of the speech that we heard today.
There is a proud tradition here-Reg Prentice, Hartley Shawcross; maybe soon he will join those predecessors. But the problem for the right hon. Gentleman is that in order to complete this political journey, he has to engage in the most remarkable amount of doublespeak, which speaks to the heart of the traditions of liberalism. I
come to this House today to praise the traditions of liberalism; he comes to bury them. What is the legacy of John Maynard Keynes? [ Interruption.] I know that the right hon. Gentleman does not want to hear it. John Maynard Keynes taught us about the dangers of fiscal austerity at a time of global downturn. This Budget pays no heed to those warnings.
What is the lesson of William Beveridge? It is the principles of social insurance and protecting the most needy. What is the legacy of David Lloyd George? In 1909, 101 years ago, David Lloyd George delivered the people's Budget. The people's Budget-I say this as a Labour Member of Parliament-was a remarkable example of showing that one could be fair at a time of fiscal challenge. Nobody could claim that Tuesday's Budget was anything like a people's Budget. So I am afraid I give up on the right hon. Gentleman, but there are some Liberal Democrats in the Chamber today, and of course the new tribune of the left is the hon. Member for Bermondsey and Old Southwark (Simon Hughes). I am afraid that we have to put our faith in him as far as this Budget is concerned, because we have to give up on the Secretary of State. [Interruption.] My hon. Friends say he is conning me. I think that we should give him a chance during this debate.
The Conservatives will vote for this Budget at the completion of the Budget debates on Tuesday because they vote for unfair, unjust, unequal Budgets. I say to Liberal Democrats in all candour that they have to make a judgment. If the Budget is akin to the people's Budget of 1909 and if it shows fairness at a time of fiscal austerity, they should by all means vote for it. But if it is a rerun of Lord Howe's Budget of 1981, they have a duty to vote against it. I know that power is tempting. The Secretary of State is in power and has been tempted by office, but there are Liberal Democrat Members who are not in office, and they need to examine their consciences between now and next Tuesday. They should ask themselves, "Is this what I came into politics for?" That is the argument that I shall develop in my speech.
Chris Huhne: I wish to nip in the bud any temptation for the right hon. Gentleman to make parallels between what my right hon. Friend the Chancellor has announced and what Lord Howe announced in the early 1980s. The right hon. Gentleman says that this Budget is worse, but if he looks at the fiscal tightening set out in the cyclically adjusted budget deficit in the Red Book, it is 0.5% of GDP. The right hon. Gentleman is too young to remember, but the Howe Budget was more than 2%. So this is a very different Budget. We are talking about something that allows growth to continue, and indeed safeguards growth, precisely because it takes us out of the firing line of the southern European crisis.
Edward Miliband: I am afraid I disagree with the right hon. Gentleman. The fiscal tightening may be less than the Howe Budget, but he has to look at overall conditions in the world economy. There is a reason why President Obama has written to G20 leaders ahead of the meeting this weekend to warn about the dangers of early exit from fiscal stimulus. President Obama is worried about the world economy. Of course one has to look at fiscal tightening, but one also has to look at conditions in the world economy.
Let me develop my argument. First, let us look at economic growth. There was an honest difference of opinion at the election about economic growth and how we could ensure that growth, which is the surest way of reducing the deficit, could be maintained. The Labour party was on one side of the argument. We said that growth should be maintained by maintaining spending this year. The Liberal Democrats-the Secretary of State admitted this-were also on our side of the argument, and the Conservatives were on the other side of the argument.
The Secretary of State made much play in his speech about Greece-the Greek defence as I called it last time. He said that everything had changed because of Greece. Has the right hon. Gentleman changed his position because he is now in power and must defend a Conservative Budget, or is his change of position genuine? If it is genuine, we should give him credit for that, but I am afraid I have to say to him in all candour that it cannot be a genuine change. Look at the facts. He made great play of the fact that Greek bond yields had gone up from 7% at the beginning of the election campaign to 12% on the day of the election. The question is not whether Greek bond yields went up but what was the impact on the UK. What happened to UK 10-year bond yields between those two dates? Ten-year bond yields went down during that time, so there is no evidence for his claim about contagion.
The right hon. Gentleman must face a hard and uncomfortable truth. I do not blame him for taking the chance of office that he was offered, but he must come clean with us and admit that he has had to accept a macro-economic strategy totally at odds with the one that he went into the election defending.
Edward Miliband: I will give way to the right hon. Gentleman. Perhaps he will say that because he wants to do good things at the Department of Energy and Climate Change-I do not doubt his good intentions-it was worth paying the price of supporting a Budget that he would have opposed before the election. That is the reality of the situation.
Chris Huhne: May I remind the right hon. Gentleman that the former Chancellor of the Exchequer said that the ice always looks most solid just before it cracks? The contagion affected other countries in Europe including, as I cited, Spain, which had a lower central Government debt to GDP ratio than ours, and it is irresponsible to suggest otherwise.
Interestingly, the right hon. Gentleman has been sufficiently concerned about the public finances to put pen to paper. We should take at face value the concern
that he expressed at the start of the financial crisis in an interesting article in The Guardian titled "Cameron and Osborne are peddling skewed facts and scaremongering on public finances". He felt moved to open his article by writing:
"You do not normally expect opposition politicians to leap to the defence of the government of the day, but there is an important national interest in doing so on the key issue of public finances. If David Cameron's view that the 'cupboard is bare' gains ground, not only will policymakers feel more constrained, but we will risk thinking and talking ourselves into a worse downturn."
He does not even have a blank record to defend, because his record is one of defending us on the public finances- [ Interruption. ] I do not want to take up too much time, but if he wants to explain away his article, I shall give way to him.
Chris Huhne: The right hon. Gentleman really has to take on board my case that while there was no evidence of contagion at the beginning of the election campaign, there was massive evidence by the end of it. I changed my mind when the facts changed. He has not done so, but he should not be proud of that.
Chris Huhne: The right hon. Gentleman recently accused me of not changing my mind because I wanted office when he suggested in a newspaper interview that our negotiating sessions with the Labour party showed that we had somehow become right wing because we were insisting on cuts in this financial year. He cannot have it both ways: either we accepted the cuts for opportunistic reasons because we wanted office; or we are saying that the facts have changed and we need to move the economy away from the risks of contagion from southern Europe.
The real problem with the Budget in respect of economic growth is that it ignores the lessons of Keynes. The right hon. Gentleman is defending a Budget that, on the Chancellor's own figures, will reduce growth by 0.3% next year and lead to 100,000 fewer people in work not just this year, but next year, the year after and the year after that. Even that scenario is optimistic according to independent forecasters such as the Chartered Institute of Personnel and Development, which says that unemployment will go on rising, so there are real dangers in the Budget strategy.
A further problem with the Budget is that it has no plan for growth. The right hon. Gentleman waxed lyrical about green industries, but he can point to nothing in the Budget that will support the green industries of the future. The Liberal Democrats said at the election that they opposed cuts this year, but they are making not only the efficiency savings that the Conservative party promised at the election, but real cuts to regional development agencies, university places and Government support for industries of the future, the most outrageous example of which is the case of Sheffield Forgemasters.
During the debate on the Gracious Speech, I told the right hon. Gentleman that we would hold him to account on the Sheffield Forgemasters decision-and he will be held to account for it. I have to say to him in all honesty that the decision is short-sighted, damaging and wrong. The Labour Government approved a loan to Sheffield Forgemasters-not a grant, a loan. We had money from the European Investment Bank-those people do not throw money at problems when it is not required-and Westinghouse, which was going to order parts for the nuclear power stations that it wants to build in the UK, which will involve one of the only two reactor designs that we are going to have in the UK. The decision was therefore central not only to our economic strategy but to our green strategy. I know that the right hon. Gentleman does not like nuclear power, but prejudice against it will get us nowhere, either economically or in relation to the green industries of the future.
The grant to Sheffield Forgemasters would have given us the ability to make key components for the nuclear industry that currently have to be sourced from outside Britain, but the Government have turned their back on it. The Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry), who is in the Chamber, is an honourable guy whom I respect, because he supports nuclear power-that is slightly complicated given his Secretary of State-but during a debate on Tuesday, he said about Sheffield Forgemasters:
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