Clause 17
Finance Bill
1:45 pm
Jeremy Browne (Shadow Chief Secretary To the Treasury, Treasury; Taunton, Liberal Democrat)
I beg to move amendment No. 57, in clause 17, page 8, line 40, at end insert—
‘(3) In sub-paragraph 2(1) of Schedule 6 to FA 2000 after “on”, insert “the level of carbon dioxide emissions emitted by”.’.
My party supports the climate change levy in the absence of a better alternative, but the amendment proposes the introduction of something that we regard as a superior alternative—a carbon tax. I shall explain briefly why we believe that to be the case. The climate change levy is too complex, it offers too many exemptions and suffers from a confusion of objectives. It does not apply at a standard rate to each tonne of carbon, and it applies only to business users. What is more, several confusing initiatives are used concurrently, such as the European Union emissions trading scheme, which is compulsory for heavy industry and the power sector; the United Kingdom emissions trading scheme, which is a voluntary scheme in which firms are incentivised by the Government to reduce emissions through trading; and other climate change agreements between industry and the Government. The amendment would consolidate the various initiatives and schemes into a more effective and efficient carbon tax.
The carbon tax would apply to all carbon fuels at a uniform rate per tonne of carbon at the point at which they enter the economy. Our party policy is to tax emissions from energy supplies, as is done in other European countries that we often regard as leaders in good practice, such as Sweden, Norway and the Netherlands, and it would enable us as a nation to reduce pollution. The proposal is to set the carbon tax to achieve a level of emissions reduction that is not otherwise achieved through the emissions trading scheme; to adjust the carbon tax to maintain progress towards our long-term target of carbon neutrality, with any changes to the tax notified well in advance to give investors time to adjust; and to use the revenues to cut other taxes when possible so that the overall net effect of the tax burden is neutral.
I enter one caveat. A reasonable objection has been made about the impact in the short term on domestic users and those who suffer from what is commonly called fuel poverty. Transitional measures would have to be put in place to ensure that people were not penalised unfairly in respect of their lifestyle when they could not afford to take an alternative approach. Nevertheless, for the reasons that I have set out as succinctly as I could, a carbon tax would be a superior way in which to reach the objective that we pretty much all share in Committee.
Being a realist, I do not anticipate that the Committee will be persuaded of the case for the amendment, however brilliant my speech may, or may not, have been. It is worth my saying, to save my rising to speak again, that we support the climate change levy, because it is better than not having such a levy, and we support increases in line with inflation. Until that levy is replaced with a more coherent carbon tax, we will support the arrangements advanced by the Government.