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Baroness McIntosh of Hudnall: My Lords, does my noble friend accept that—notwithstanding the point he quite rightly makes, that this was a tax loophole that needed to be plugged—to call this action not retrospective fails to take account of the fact that film preparation takes a very long time? One major project lost in this melee was in preparation for six years and was about to go into production and will not now do so. Although technically what my noble friend says is correct, will he accept that possibly there is an argument for suggesting that projects that have been that long in preparation are being quite unfairly punished by the sudden closure of this loophole?
Lord Davies of Oldham: My Lords, of course we are aware of the long production costs for films. That is why the Treasury has signalled that one of the reliefs due to expire in 2005 is the subject of discussion between the Treasury and the film industry in order to safeguard the future. The Chancellor has made clear that we will be looking towards ensuring that there is proper consideration for the film industry in the next Budget Statement. But this particular abuse had to be stopped forthwith. That was done.
Baroness Strange: My Lords, is the Minister aware that as a result of this many films will now not be made
in Britain but in other places, such as the Isle of Man? It is surely better to have some tax coming in rather than none at all.
Lord Davies of Oldham: My Lords, the situation is that the legitimate tax reliefs make the British film industry and the making of films in Britain competitive with most other countries. Reflected in the abuses taking place was an extraordinarily advantageous scheme for a limited number of people, and the Treasury had the right—and in fact the duty—to put an end to it.
Lord Tebbit: My Lords, does the Minister not regard this as a classic example of the effects of friendly fire?
Lord Davies of Oldham: My Lords, I think not. The Treasury remains on the side of the film industry, to the extent that we intend to ensure the support which has been offered in the past with regard to legitimate tax reliefs. In fact the industry is in discussion with the Treasury with regard to the future position on this. The Chancellor has already signalled his intent in the matter.
The fire was directed at people who were using tax avoidance in an exceedingly extravagant way and the Treasury has the right to safeguard public revenues by dealing with such forms of tax avoidance.
Lord Morgan: My Lords, does my noble friend agree that in fact the Treasury need not be on the defensive in this situation at all? In fact it should be congratulated on stopping widespread abuse and a proper attempt to aid the film industry. There is nothing to apologise for.
Lord Davies of Oldham: My Lords, I am grateful to my noble friend for making explicit what perhaps I was dealing with in a more rotund way.
Coal-based Technologies
11.15 a.m.
Lord Ezra asked Her Majesty's Government:
- What is their policy on coal-based technologies which can contribute to a reduction in carbon dioxide emissions.
Lord Triesman: My Lords, the Government's recent energy White Paper recognised that, for security of supply reasons, coal still has a role to play in the UK's energy mix. Coal will continue to play a major part in energy production in countries such as China and India which offer business opportunities for British companies.
However, in order to meet the strict environmental requirements, coal-fired power generation must be much cleaner than it is today. To encourage this, the DTI is developing a carbon abatement technologies strategy which will take forward and expand the work
of the current Cleaner Coal Technologies Programme. We plan to publish the new strategy in the summer. In the mean time, we have recently published a final call for research and development proposals under the current programme, which must be worth about £4 million of government funding.
Lord Ezra: My Lords, I thank the noble Lord for that response. Does he recall that in Grand Committee on 12 February, in response to an amendment I moved in support of new coal technologies, the noble Lord, Lord Whitty, said:
- "Rather than encourage an increase in coal-based technologies we are looking to reduce the use of coal through various mechanisms"?—[Official Report, 12/2/04; col. GC 562.]
Is the noble Lord aware that the United States is spending 1 billion dollars to develop a large coal-fuelled plant with near zero emissions?
Lord Triesman: My Lords, I thank the noble Lord, Lord Ezra, for reminding me of the discussion, held relatively recently, in Grand Committee. I confirm that we have not resiled in any respect from the energy White Paper. It was fully supportive, as the noble Lord reminded us, of cleaner coal technologies and recognised that, to exist in a low carbon world, emissions from coal use must also be reduced considerably. The Government are working with the industry to look at technologies to tackle that problem. We are still pursuing the Cleaner Coal Technologies Programme and the fourth call offering of about £4 million in support was announced in January.
I am aware that in the United States, and indeed in some other countries, large sums are being spent in the cleaner coal technologies area. My understanding of the matter, which will in no sense match the understanding of the noble Lord, Lord Ezra, is that their strategic reliance on these fossil fuels remains very much greater than ours.
Lord Jenkin of Roding: My Lords, does not the question in fact go wider than that? Has the noble Lord seen the report that last year—in 2003—the emissions of carbon dioxide actually increased by some 3 per cent, representing approximately 4.5 million tonnes more from burning fossil fuels than in 2002? Is not part of the problem the fact that the Government have now set their face against fossil fuels—and I recognise that—to the extent that they are denying help to processes like coal mine methane and combined heat and power on the grounds that these are fossil fuels, while pouring all the money into wind farms? Yet those other two technologies will reduce CO 2 a great deal more than the programme of wind farms. Have the Government now got their priorities wrong?
Lord Triesman: My Lords, the priorities must be right. Coal emits about twice the CO 2 emissions of a natural,
gas-fired plant. That is plainly disadvantageous in the present circumstances in an emissions trading regime or in a regime where we are trying to protect the environment in the way that the Government's Chief Scientific Adviser, Professor Sir David King, urged in a recent speech in Seattle, which I think was referred to in your Lordships' House only yesterday.These are important factors. Wind generation emits none of these toxic substances into the atmosphere. These technologies are plainly directed at trying to improve the environment, which is at the moment subject to serious harm. That does not rule out the undertakings that I have given that the arguments in the energy White Paper for cleaner coal use will be sustained.
Lord Livsey of Talgarth: My Lords, does the noble Lord agree that the point put by the noble Lord, Lord Ezra, is that the technology does exist, albeit that it is being developed in countries other than the UK? Emissions can be much lower. Surely, the point is that the coalfield communities in particular have been absolutely devastated socially over the past 20 years or so. We need new developments to stimulate those communities, which in some places are now on their last legs.
In Wales, the landscape is being devastated by wind farms. Our coalfield communities are still suffering. Surely, now is the time to make a decision. We should not delay with further research and development, when the technology already exists.
Lord Triesman: My Lords, my understanding of the economics of the proposition that has just been made is that many of these technologies are not yet in a finely developed form and that they are relatively expensive. That has been somewhat of a sheet anchor in each of the instances where people are developing them. That is not an argument for not trying to develop them, but it is an argument about the relative cost of doing so. Appropriately regulated markets that can respond to changing prices in electricity should ensure that generators provide sufficient electricity to meet our needs and make rational choices about the methodology for doing so. It must be right to look at new technologies thoroughly—I fully accept that argument—but for future generations, we must balance the economics and the environment correctly.
Lord Clark of Windermere: My Lords, I declare an interest as chair of the Forestry Commission. I remind my noble friend that wood is a renewable, and that many of the technologies needed to burn wood are similar to those used for burning coal. Can the Minister assure me that some of the advice and some of the assistance that comes from the DTI will also apply to wood-burning power stations?
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