§ 2. Andrew Selous (South-West Bedfordshire)What recent discussions he has had with manufacturers about the effect of the climate change levy on UK competitiveness. [78223]
§ The Paymaster General (Dawn Primarolo)The Government have regular discussions with business about a wide range of issues, including matters related to tax.
§ Andrew SelousWill the right hon. Lady tell the House whether the Government are considering the proposals of the Engineering Employers Federation, which would not only help the environment more quickly, but would be less burdensome to business? Is 417 she aware of the extreme difficulty caused to Linpac, a manufacturer in my constituency, which has had to move two of its moulding machines to Spain, where neither the climate change levy nor anything similar operates—a move that was demanded by one of its major customers? When the company briefed the Chief Secretary on the matter, he apparently turned to his officials and said, "Oh, it wasn't supposed to operate like this." What does the right hon. Lady have to say about that?
§ Dawn PrimaroloI am aware of the report that the hon. Gentleman refers to. As he will know, the initial report on the introduction of a climate change levy was undertaken by Lord Marshall. He recommended, and the levy went on to include, two principles: that the revenues from the levy would be recycled, and should be broadly revenue neutral; and that specific issues should deal with energy-intensive industries where they are subject to international competition. The levy undertakes both of those arrangements.
The hon. Gentleman will also know that the amount of revenue that is recycled to business—as a result of enhanced allowances, or the Carbon Trust, or directly through the national insurance rebate—is greater than the amount that the levy raises. The suggestions in the recent report confirm, therefore, that the Government are going in the right direction. However, they rightly raise issues that the Government need to scrutinise closely as the climate change levy beds in.
§ Mr. Barry Sheerman (Huddersfield)Does my right hon. Friend agree that the climate change levy is a very important environmental tax, and that getting it right is important? I was pleased to hear her comments on that point, but does she also agree that we need a range of innovative environmental taxes that help industry to do the right thing, and that have the right touch? Will she continue with the environmental taxation review, and introduce measures in the near future?
§ Dawn PrimaroloI can of course confirm that the climate change levy contributes to the Government's programme in committing ourselves to reach our Kyoto targets. I should also remind my hon. Friend that, before the levy's introduction, there were some two years of consultation with business. That consultation continues, but, as he rightly says, climate change is a threat now, and we cannot wait for solutions tomorrow. We need to move forward on these issues, and the climate change levy is an important aspect of that agenda.
§ Mr. Michael Howard (Folkestone and Hythe)Is the Paymaster General proud of the fact that this Government have managed to combine the anticompetitive impact of the climate change levy with an increase in greenhouse gas emissions, as was recently pointed out by Friends of the Earth? Has she read the recent remarks of Digby Jones, Director General of the Confederation of British Industry, who said that the levy is
damaging key sectors of the UK economy, driving jobs abroad, [and] has become a great friend to our French and Spanish competitors?418 Is that the Government's intended consequence of this bungled tax, or was the Chief Secretary right in what he said during a visit to the constituency of my hon. Friend the Member for South-West Bedfordshire (Andrew Selous)?
§ Dawn PrimaroloI am sure that the right hon. and learned Gentlemen will be aware that at least seven other member states in the European Union have comparable measures and that others are moving to introduce them, precisely because we need to address the issue of climate change. As Lord Marshall's report clearly pointed out, the climate change levy includes reductions to assist energy-intensive industries that are subject to international competition. What the right hon. and learned Gentleman has to tell the House is whether he is serious, as the spokesman for the Opposition, about tackling climate change. If he is, how should it be done? Will he tell us whether he is prepared to commit himself now, or will it be another promise for tomorrow?