HC Deb 03 February 2000 vol 343 cc1198-200
7. Mr. Tony Baldry (Banbury)

What recent representations he has received on energy taxation. [106887]

The Financial Secretary to the Treasury (Mr. Stephen Timms)

We have received several representations on energy taxation. In particular, we have listened closely to the views of business and other interested parties on our proposals for the climate change levy. We intend to continue the development of those proposals in an open and consultative way.

Mr. Baldry

I hope that the Chancellor's mother received a reply to her letter sooner than the average six weeks that most of us have to wait for a reply from the Treasury.

Is it not correct that, because of the Treasury's divide and rule negotiations over the energy tax, many larger industries have been let off, whereas smaller firms, such as Colegrave Seeds in my constituency, have been disproportionately clobbered? As the firm points out, that is all the more crazy, given that the thousands of flowers produced in its greenhouses reduce carbon dioxide emissions. Will the Government produce a year-on-year estimate of the amount of the reduction in carbon dioxide emissions in relation to the tax garnered by the Treasury, or is the measure merely about further tax gathering?

Mr. Timms

There is no size discrimination in the arrangements. We have made it clear that all the sites covered by the integrated pollution prevention and control directive will be eligible to enter discussions for a negotiated agreement. The rationale for that is strong; those sites are already treated distinctively because of their energy efficiency measures.

We remain open to the consideration of alternatives for energy-intensive firms exposed to international competition. However, such alternatives would need a clear rationale, to be legally robust and administratively simple and to comply with EU state aid rules. We are confident that, on a conservative estimate, the levy will lead to reductions in emissions of 2 million tonnes of carbon a year and at least as much again as a result of the negotiated agreements.

Mr. Bob Blizzard (Waveney)

On the tax regime for the North sea oil and gas industry, notwithstanding the rise in the oil price over the past year, does my hon. Friend agree that, looking to the future, we shall have smaller fields of oil and gas? They will be marginal fields and production will be more expensive. If we are to continue to attract investment in those fields, given worldwide competition, we need a tax regime that will encourage such investment. Will he agree to keep that tax regime under review, so that we can look forward to another 30 years' production of North sea oil and gas?

Mr. Timms

We keep those matters under continual review and I met representatives of the North sea industry recently. As my hon. Friend said, the oil price is very buoyant at present and I very much hope that that will be reflected in increased activity in the North sea.

Mr. Oliver Letwin (West Dorset)

Now that the Government have mercifully—albeit possibly temporarily—withdrawn their ludicrous pesticides tax on the splendidly rational ground that it would have done nothing to limit the use of pesticides, will the Financial Secretary, after a prolonged period of reflection, promise to get rid of the dreadful energy tax, which still has a massive impact on some firms and will do little or nothing to reduce CO2 emissions?

Mr. Timms

No, I do not agree with the hon. Gentleman on that. On the pesticides tax, we said in the pre-Budget report that we were working with the British Agrochemicals Association. It has now come forward with proposals for a package of voluntary measures and my right hon. Friend the Chancellor of the Exchequer has said that, on that basis, he will not proceed with the introduction of a pesticides tax in the Budget.

The climate change levy, however, is very widely welcomed. It is important that we meet our Kyoto objectives, and competitor nations are also taking steps to meet them. We all want the problem of climate change to be addressed. We are taking the steps that need to be taken.

Fiona Mactaggart (Slough)

On the climate change levy, I know that firms in my constituency have welcomed the level to which the Treasury has been open to considering changes and receiving representations. However, many firms are still concerned about the decision to use integrated pollution prevention and control as a proxy for the tax. British Plasterboard, which is based in my constituency, is not part of the scheme—which is not related to climate change—and it produces a very energy-efficient product. The Treasury constantly saying, "Give us an alternative" is all very well, but does my hon. Friend think that there may be other better measures?

Mr. Timms

I am grateful to my hon. Friend for acknowledging the extent to which we have listened and taken careful account of all the representations that have been made to us. She is right that the changes that my right hon. Friend the Chancellor of the Exchequer announced in November—they increased the environmental effectiveness of the levy while safeguarding the competitiveness of UK firms—have been widely welcomed. There are number of significant benefits, such as legal certainty, to using integrated pollution prevention and control as the basis for the negotiated agreements. However, I assure my hon. Friend that we remain open to considering alternatives as long as they meet the criteria that I set out a moment ago.