§ 10. Mr. David Chaytor (Bury, North)What responses he has received to the changes that he announced in his pre-Budget report to the proposed climate change levy. [112222]
§ The Financial Secretary to the Treasury (Mr. Stephen Timms)The refinements to the design of the climate change levy announced by the Chancellor of the Exchequer in November will further both our aims for the levy: to increase its environmental effectiveness, while protecting the competitiveness of UK firms. Those changes were welcomed by both business leaders and environmental groups.
§ Mr. ChaytorI thank my hon. Friend for that reply. First, does he think that we now have the right balance between the need to protect the environment and the need to support industry? Secondly and quite specifically, will he look again at the operation of the combined heat and power exemption, particularly the definition of what constitutes high-quality CHP, as I understand that there is a debate about that?
§ Mr. TimmsThe climate change levy forms an important part of our climate change programme, which, as my hon. Friend may know, is published today. One feature of the package in the pre-Budget report that has been particularly welcomed has been the trebling of support for business energy-efficiency measures, including combined heat and power. That underlines our determination to tackle the huge challenge of climate change, but to do so in partnership with business and other interested parties.
We are getting the balance right. We are consulting on the right definition for good-quality combined heat and power systems. It is important that we get it right and provide incentives for the right type of power generation. I will look carefully at the responses to the consultation when it is completed.
§ Mr. David Heathcoat-Amory (Wells)Why are the Government persisting with that damaging energy tax, which will be levied on all firms, whatever their size, in all sections of industry? Will the Minister confirm that the same firms that will have money taken off them through the tax are being blocked from installing gas-fired electricity generating plant, which would itself reduce carbon dioxide emissions and counter the threat of global warming? Why do not the Government start to practise joined-up government, instead of just talking about it? As usual, it is all talk and no delivery.
1184 To put that contradiction beyond dispute, will the Minister confirm the fact—the calculation has been made by the House of Commons Library—that the entire carbon dioxide saving that is hoped for under that tax could be achieved simply by permitting those firms to generate electricity through gas-fired plant, which would render the entire tax, with all its expense and complexity, completely unnecessary?
§ Mr. TimmsI can certainly reassure the right hon. Gentleman that we are delivering the climate change levy. The problem of climate change is huge and a major programme is required to tackle it. That is why we are publishing the programme today. It makes it clear that the climate change levy will make an important contribution to achieving our Kyoto targets. It will save 2 million tonnes of carbon a year by 2010, and there will be at least as much again in negotiated agreements. That is a big contribution towards meeting our objectives. The right hon. Gentleman asks about the stricter consents policy. That policy addresses entirely different issues about the security and diversity of UK energy supply. Both policies are right.
§ Mr. David Taylor (North-West Leicestershire)How would my hon. Friend compare the energy tax rates in the UK with those of our main competitors in the European Union, and what impact might such rates have?
§ Mr. TimmsMany other EU countries have introduced carbon or energy taxes—eight of them so far. France and Belgium are working up their proposals at the moment. My hon. Friend asks about the rate of the climate change levy. The headline rate is around the middle of the rates in the eight EU states that have already introduced such taxes, so we are about in the middle.