HC Deb 27 March 1996 vol 274 cc1099-106

`.—In each year Mr. Chancellor of the Exchequer shall lay before Parliament not later than 30th June a report stating for the previous financial year the environmental impact of the provisions of the previous Finance Act and of the taxes and duties levied during that year.'.—[Ms Primarolo.]

Brought up, and read the First time.

7.45 pm
Ms Primarolo

I beg to move, That the clause be read a Second time.

The new clause concerns the environmental impact of the Finance Bill. We depend on the integrity of the environment for our survival and for that of generations to come. As Herman Daly of the World bank puts it: There is something fundamentally wrong with treating the earth as if it were a business in liquidation". We are continuing to pollute our seas and rivers. The Sea Empress is the most recent tragedy to hit the headlines. The oil spill has damaged miles of coastline and smothered hundreds of birds in oil. What is less well known is that large incidents—spills of more than 100 gallons—number almost 100 a year.

Industrial and commercial development and modern farming continue to have a profound impact on our countryside and wildlife. We accept the Brundtland commission's definition of environmentally sustainable development: development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs. We seek initiatives that promote economic efficiency, social justice and environmental protection—all together. The Government need to ensure that we look more closely at the environmental impact of our policies, just as many progressive companies do. We must also ensure that environmental considerations are properly integrated.

The Government now publish indicators of more and more services—from schools, to the citizens charter, to water leaks. It is right to introduce new indicators of environmental factors too. The Government's new report is welcome in that respect.

The relationship between environmental concerns and those of social justice is not always straightforward. The environment will never be protected unless people are convinced that their livelihoods are protected as well. In many cases, environmental sustainability and a thriving economy go together. The key to the relationship between the economy and the environment is the concept of environmental productivity. Protecting the environment means increasing the economy's environmental productivity. It means using resources more efficiently and producing less pollution per unit of output. That is the key to sustainable development.

Evidence from Germany, Japan, the United States and Sweden suggests that domestic regulation provides firms with a "first-mover" advantage in environmental industries, as finns are stimulated to innovate and create new, cleaner processes and attract greener products. We need to see improving environmental standards as an economic opportunity. The world is adopting higher environmental standards, and it is crucial that British industry is ready to lead the way.

There are tremendous opportunities for job creation in the new environmental technologies. The environmental sector is now very large. The global market was thought to have been worth $200 billion in 1990. It is growing by more than 5 per cent. a year and will be worth $300 billion by 2000. A survey by the German Government showed that 50 per cent. of the market is currently shared by only three countries—Germany, the United States and Japan. Britain should be leading the way in environmental management techniques, but it is not.

A recent Department of the Environment report, "Indicators of Sustainable Development for the UK", published in March this year, laid out clearly the Government's failure to respond to their objectives. Having set out report after report, they continue to fail in putting those objectives into action. Their own figures show that road traffic is likely to grow by between 58 and 92 per cent. by 2025 compared to what it was in 1994. Since 1970, car travel per head of population has nearly doubled. At the same time, travel on buses and coaches has dropped by a quarter.

On page 34 of the report, the Government state that they have recognised that they have a role to play in influencing people's travel behaviour and the choices that they make. One way to do that is through price. Having acknowledged that pricing is important in influencing behaviour, the report says: Since 1974, the real increase in bus fares has been 55 per cent. and in rail fares, 71 per cent., both higher than the 51 per cent. real increase in disposable income. Meanwhile the cost of motoring, which includes all costs like insurance, servicing and repairs, road tax as well as fuel and oil, has fallen by nearly 2 per cent. The real price of fuel and oil only—which is the perceived 'marginal' cost for an individual journey once someone owns and runs a car, and is therefore more important to decisions about individual journeys—has fallen by nearly 8 per cent … This demonstrates that the real cost of motoring, particularly the marginal cost of petrol, is very much more affordable, in relation to the real increase in personal disposable income, than it was 20 years ago. That is obviously true, but I would add that that demonstrates the Government's total lack of commitment to public transport. How can they possibly hope to encourage more people to use public transport in our congested cities if they make the car cheaper?

The report also refers to energy use, and says: Fuel use for road passenger transport has nearly doubled since 1970 and has increased by over 60 per cent. for freight. The volume of traffic, measured in terms of passenger-miles and freight tonne-miles has increased by about the same amount, showing that there is little change in efficiency of fuel use, in marked contrast to the industrial and commercial sectors. For passenger traffic, vehicle engines are more fuel efficient than they used to be, but the advent of unleaded petrol, catalytic converters, higher safety standards, higher specifications and performance have all tended to counter the fuel efficiency gains from improved engine design. There are more vehicles on the road and fewer people use public transport. The Government's report shows that clearly. Even the most minimal targets are not being met.

The second report of the British Government panel on sustainable development was published in January 1996. Its first recommendation, in paragraph 12, says: the Panel recommends that the Government should give higher priority to the definition of its environmental objectives and targets, and how it intends to meet them. Paragraph 13 reads: The Panel … recommends that the Government enter into discussion with industry to draw up proposals in key sectors for pilot projects involving economic instruments. On the progress on last year's recommendations, paragraph 8 on page 8 says: Commitment to setting targets has so far been patchy. The Panel believes that more should be done to define environmental objectives. It recommends that priority should be given to setting targets for agriculture and transport over the coming year. The most important recommendations in that report, which tie in with European recommendations, are on environmental accounting. New clause 2 attempts to start that slow and difficult process in moving towards environmental accounting.

The Secretary of State for the Environment (Mr. John Gummer)

How would the hon. Lady answer the accusation made by Friends of the Earth, that in refusing to support an increase in VAT on fuel, the Labour party had turned its back entirely on the very principle that she mentioned—increasing the cost for overuse of energy? This is not a party political point, of course.

Ms Primarolo

Of course it is not a party political point, and I am happy to take a few minutes out of my speech to inform the Secretary of State of the correct position—

Mr. Andrew Smith

It is VAT on fuel.

Ms Primarolo

Yes, I know.

The statement is linked to the belief that Friends of the Earth supported at that time the idea that VAT should be raised to prevent people from consuming too much fuel. We take the view that that creates fuel poverty, which means that the poor cannot afford to keep warm. Therefore, we need an energy efficiency programme to ensure that people are able to keep warm but consume less energy. Had the Government not cut the neighbourhood energy scheme by £30 million in this year's Budget, we would be in a better position to help families who are suffering fuel poverty.

Mr. Gummer

Surely the hon. Lady remembers that the £30 million was to ensure that people were not energy poor but recompensed for the additional VAT against which her party voted—a vote that meant that the £30 million was no longer necessary. The hon. Lady has not answered the question. She is not prepared to adopt unpopular measures to defend the environment, but she will always attack the Government for adopting them and leading Europe in that regard.

Ms Primarolo

Is the right hon. Gentleman saying that the Government still want to raise VAT on fuel to 17.5 per cent? Having imposed such a massive tax increase on the population, would the Government be prepared to restore that £30 million to the energy conservation budget?

8 pm

Mr. Gummer

The hon. Lady was asked how she had replied to Friends of the Earth. She told that organisation that the Labour party did not care about the environment, and could not answer the challenge issued to her.

Ms Primarolo

It is very unusual for a Cabinet Minister to intervene so many times on such a junior Opposition spokesperson, but I am extremely grateful for the opportunity to correct a misunderstanding by the Secretary of State. I am not the one who is on the run; I am clear. Labour's commitment is to energy efficiency and energy saving—and when we deal with VAT on energy-saving materials later this evening, I expect the Secretary of State to join us in the Division Lobby.

The right hon. Gentleman is still not prepared to answer the question that we have raised. Are not the Government still committed to raising VAT on fuel to 17.5 per cent? The British electorate may want to hear a different message, but let them be clear about this: a tax-raising Government are attacking the poor. They would not deny that.

I would be happy to continue to discuss the merits of reducing VAT on fuel to 8 per cent.—a cut achieved by the Opposition against the Government's wishes—but I am sure that you would call me to order, Mr. Deputy Speaker. I had assumed that the Government would accept new clause 2, as they claim to be committed to the environment. According to paragraph 34.1 of their White Paper "Sustainable Development: The UK Strategy", published in 1994, For development to be sustainable, environmental considerations must become a central part of the decision-making process within government and industry. For this to happen, better information is needed on the way in which economic development impacts on the environment. The ultimate goal would be the integration of environmental and economic accounting in national accounts". Our new clause would start that process. We understand that it is a difficult process, that definitions will be difficult to achieve and that any system that is established must be credible and accepted if it is to be a useful tool in management; but we also believe that the Government's progress in developing new forms of accounting has been slow, and of little use so far. If we leave it to the Government, they will continue to drag their feet. It is time that, having preached to industry, the Government put their own house in order and began the process of economic assessment and environmental protection.

We had intended to press the new clause to a vote, but we have decided not to do so, in order to save time. We support amendments Nos. 25 to 31, which deal with a reduction of VAT on energy-saving materials. Those amendments give the House a chance to force the Government to practise what they constantly preach, and I hope that every hon. Member will support them.

Mrs. Helen Jackson

I have little to add to what was said by my hon. Friend the Member for Bristol, South (Ms Primarolo), but I want to make some general points.

I am sure that, before too many years have passed, the requirement in the new clause will be written into the environmental policy that Parliament expects. I understand why the new clause is not to be pressed to a vote, however: in a sense, that is appropriate. We have made our point, we have presented our arguments and we look forward to the day when our proposal is supported throughout the House.

As we all know, if we are to make progress we must increase environmental awareness. As the Secretary of State might have pointed out, the Department publishes—in a nice green cover—an annual report of its expenditure and activities. The Department may think that that is sufficient, but it is weak on two fronts. That is why the new clause is necessary. The report does not sufficiently assess the impact of the Department's expenditure proposals, and it fails to mention the environmental impact of any other Department.

We have heard that every Government team has its environment Minister. In Committee, we heard about the environmental responsibility of the Paymaster General, but we also heard—or surmised—that there was little communication between the "green" Ministers. Certainly, there is no requirement to include in the Department of the Environment's annual report the detailed environmental implications of the legislation and regulations that are pushed through by any other Department.

We would start at the heart of the Government—in the Finance Bill. It is through financial measures that we affect every area of policy, and every area of policy should be aimed at improving the environment. In Committee, we discussed air pollution and the possible impact of vehicle excise duties on the quality of air in our towns and cities. The new clause would enable that impact to be reported each year: we would be able to see whether our measures relating to unleaded or super-unleaded petrol, for instance, had had the right effect.

In Committee, we discussed some of the potential effects of the environmental tax on water. The new clause would enable us each year to look more constructively at proposals for the following year's Finance Bill. For example, we could ensure that the management of water resources, leakage and pollution were properly dealt with in the ensuing year.

The new clause would also give us an opportunity to consider the impact of each Finance Bill on local government expenditure. We could decide whether the legislation would have a positive or a negative impact, depending on the cuts in discretionary expenditure from which local authorities suffer, which have affected litter and parks and the general environment. Because of financial constraints, many cities do not now have the pleasant environment they once had, but the new clause would enable Parliament to examine those systematically every year. I could add to the list. We could debate the Bill's impact on housing and on the work environment in terms of health and safety expenditure.

I hope that the new clause will command support. Parliament should look at our position in Europe and at the contribution that Europe makes to establishing high environmental standards. In that context, we should criticise neither our contributions and gains from environmental issues nor the financial requirements that they place on European Union Governments. Such topics could be debated annually in Parliament to discover whether Europe's environmental influence on EU Governments was positive or negative. Such debates would have a significant effect on our policies in Europe in the ensuing year.

We have a chance to boost jobs and to put Britain at the head not just of the European environmental debate but of the world debate on that subject. As my hon. Friend the Member for Bristol, South said, boosting the technologies of industries that are trying to benefit the environment would result in a major boost for jobs in the years ahead. As we said in Committee, we are ahead of the field at the moment. We need to stay ahead, and the new clause would show all industries that Parliament and the Government mean business on the environment.

8.15 pm
Mr. Heathcoat-Amory

I agreed with the first few paragraphs of the speech made by the hon. Member for Bristol, South (Ms Primarolo) about the importance of the environment and about the need to improve environmental standards. There is no difference between the parties on that: we have shared aims in that respect. Economic growth can be fully compatible with protecting the environment, and economic failure and decline can bring their own environmental problems.

Some environmentalists used to think that zero growth was required to protect the environment. I have visited a zero growth economy. I went to Poland under the communists and saw signs of environmental dereliction that were brought on by a stagnant economy and by command and control political methods that were clearly inappropriate to the well-being of the people and to the environmental well-being of the country.

I believe in strong economic growth sustained in a way that protects the future of the environment, but I do not think that we need another bureaucratic and unnecessary report, or series of reports, as would be required by the new clause. The new clause overlooks the enormous quantity of information that is routinely published by the Government. I refer in particular, because it is topical, to the latest in a series of White Papers on the environment. "This Common Inheritance" was first published in 1989 and the series has continued annually since then. It sets out the Government's targets and shows progress in meeting them.

The latest White Paper in the series was published only yesterday and, to answer the query made by the hon. Member for Sheffield, Hillsborough (Mrs. Jackson), it includes the environmental targets that have been discussed and agreed on a European basis. It fully integrates European environmental aims and achievements with our national ones. An example concerns carbon dioxide emissions, which are central to the debate about global warming. The White Paper makes it clear that we are now expected comfortably to meet the aim to which we signed up of returning carbon dioxide emissions to below the 1990 level by 2000.

Of course the achievement of that target is affected by taxation, especially by fuel duties, but it is not affected only by taxation. There is a range of regulatory, expenditure and taxation mechanisms to achieve environmental targets. The hon. Member for Bristol, South seemed to suggest that motor taxation was too low, but she stopped short of telling us exactly what her party thinks the true rate should be.

Ms Primarolo

The Prime Minister referred to the targets that have been set by the Government for reducing greenhouse gas emissions by 2010. Why did the Government panel on sustainable development say in January that, to meet the targets, the Government would have to use all appropriate means to achieve greater energy efficiency and energy saving by domestic users, industry and transport? Will he confirm that he will support amendments Nos. 25 to 31 as the beginning of that process?

Mr. Heathcoat-Amory

We shall debate that subject when we get to it. The point that I made, and which the hon. Lady does not dispute, is that we have signed up to a target reduction of CO2 emissions by 2000, and it is clear that we shall achieve it. We use a range of mechanisms to do that, and they include vehicle taxation.

The hon. Lady evidently believes that vehicles are undertaxed. I had half hoped that, in her intervention, she would state Labour's thinking on the subject rather more clearly. The intervention by my right hon. Friend the Secretary of State for the Environment drew from the hon. Lady the fact that she altogether failed to support a move effectively to increase the price of fuel and power—a move that would have helped to achieve these targets. For purely opportunistic party reasons, she and her party did not support the Government and environmental groups such as Friends of the Earth when we urged putting VAT at the standard rate on fuel and power, which is done in practically every other country with a VAT system. No one can take either Labour or Liberal Democratic environmental policies seriously because those parties drew back from supporting an environmental measure simply for opportunistic reasons.

The hon. Member for Bristol, South spoke about fuel poverty, but she overlooked the fact that, even with the addition of VAT, gas and electricity prices to consumers are now lower than they were two years ago. I have not even mentioned the impact of schemes such as the home energy efficiency scheme, which deliberately caters for those who live in houses that are or have been inadequately energy-efficient.

The report for which the hon. Lady is calling is not only unnecessary and bureaucratic, but conflicts with a superior method to improve the environment—the setting of targets and the use of a range of measures, not only those in the Budget, to achieve them. We in the Conservative party believe that economic instruments have an important part to play. That is why the switch from leaded to unleaded petrol was, in part, achieved by creating a duty differential. We have also established the landfill tax to reduce the quantity of waste going to landfill. That environmental achievement is gained from an economic instrument.

We are also committed to increasing fuel duties by, on average, 5 per cent. a year in real terms. We have also reduced the duty on liquified petroleum gas and compressed natural gas. We are also increasing the duty on super unleaded petrol in case increased usage of that fuel were to increase the emissions of benzene and other harmful aromatic compounds. We do not shrink from using economic mechanisms as part of the overall picture. They were all carefully laid out in the White Paper, and are reported on at the time of the Budget.

The hon. Lady may have overlooked the fact that, at the time of the Budget, we drew together the measures used to reduce vehicle emissions. They specify the increases and, in some cases, decreases in fuel taxes that were introduced to achieve our environmental aims.

Possibly the best example I can give of where we drew on published information to put forward a specific environmental policy was the preparation of the landfill tax. Officials and Ministers drew on a study by Coopers and Lybrand, commissioned by the Department of the Environment, to design and legislate for the structure of that tax. Officials also drew on the report by Professor David Pearce on externalities of landfill and incineration. All that information is publicly available. We do not need another report to bring before the House and the public information that is already freely available.

The conclusion that I must reach at the end of this short debate is that the Opposition are, characteristically, more interested in reports than in delivering on published targets. I end with the simple assertion that, whereas the Opposition talk about the environment, we deliver on it.

Ms Primarolo

We intend to deliver on the environment later this evening and to defeat the Government. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

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