HL Deb 03 March 2003 vol 645 cc602-4

3 p.m.

Lord Campbell of Croy

asked Her Majesty's Government:

For how long they intend to retain the climate change levy.

Lord McIntosh of Haringey

My Lords, the climate change levy was introduced in April 2001 as an important part of the Government's climate change programme. The levy package is expected to deliver emissions savings of at least 5 million tonnes of carbon a year by 2010. The Government therefore have no plans to end the levy. Decisions about its rate and scope are, of course, subject to review on a Budget by Budget basis.

Lord Campbell of Croy

My Lords, I thank the noble Lord for his reply. As the levy was not introduced as a permanent fiscal feature and has now been operating as a tax for nearly a year, are there any plans for the period after that prescribed by the Kyoto Protocol, which was the original cause of the measure?

Lord McIntosh of Haringey

My Lords, the Kyoto Protocol has been updated and there are now much longer-term targets for tackling climate change. The energy White Paper published last week talks about dealing with climate change over 50 years. Our policies have to be adapted to deal with those problems.

Lord Ezra

My Lords, in view of the emphasis that last week's energy White Paper places on improving energy efficiency—with which I am sure that the House fully agrees—will the Government ensure that all the proceeds of the climate change levy are devoted to that purpose?

Lord McIntosh of Haringey

My Lords, of course the noble Lord, Lord Ezra, is right that a considerable part of the White Paper is concerned with energy efficiency. We look forward to the resolution of the outstanding issues with emissions trading. We are talking about energy efficiency not just in buildings, but also, through European regulation, in fridges, personal computers and so on. We are looking forward to lower carbon fuels in transport.

There are no proceeds for the Government from the climate change levy. It is revenue-neutral as far as business is concerned.

Lord Dixon-Smith

My Lords, will the Minister kindly tell the House how much carbon dioxide is not being emitted into the atmosphere, let us say up until the end of the last year for which records were kept? He gave us the estimated figure at the start of the scheme, but he has not given us the actual figure.

Lord McIntosh of Haringey

My Lords, emissions in 1997 were 155 million tonnes of carbon. Taking that as a baseline, by 2020, under the business as usual position there would be 135 million tonnes of carbon. Adding in the target of reducing that by 15 million to 25 million tonnes by 2020 leaves a figure of 110 million to 120 million tonnes, which is equivalent to between 11 and 19 per cent.

Lord Jenkin of Roding

My Lords, have not carbon emissions from power generation been increasing over the past two years?

Lord McIntosh of Haringey

My Lords, I have no reason to doubt the noble Lord's figures.

Lord Dixon-Smith

My Lords, with respect, the noble Lord did not answer my question. I asked what the actual reduction had been until the present time.

Lord McIntosh of Haringey

My Lords, the noble Lord, Lord Ezra, tells me that it is quite a lot. I am sure that that is right, but I shall have to write to the noble Lord, Lord Dixon-Smith, on that point.

Lord Ezra

My Lords, the purpose of my question was to ask whether the total proceeds of the climate change levy should be devoted to improving energy efficiency. The Minister said that the levy was tax-neutral. That is not the point. I feel it is wrong for it to be used for other purposes. We should be concentrating the whole of the proceeds on energy efficiency.

Lord McIntosh of Haringey

My Lords, there are no proceeds for the Government. We are talking about approximately £900 million a year. That money is revenue forgone, because we have a decrease in employers' national insurance contributions of 0.3 per cent. No money is available to the Government to spend on energy efficiency. The energy White Paper makes it clear that we are providing substantial increases in capital grants and research and development expenditure specifically for renewables. The noble Lord, Lord Ezra, is well aware that we are also encouraging energy efficiency in the ways that I have described.