Clause 19
Finance Bill
2:15 pm
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
I beg to move amendment No. 69, in clause 19, page 9, line 10, leave out ‘in particular’ and insert ‘specifically’.
The amendment, which is probing, relates to the regulations that clause 19 authorises the Government to produce on the carbon reduction trading scheme. It would ensure that the list of matters on which regulations may make provision contained within clause 19(3) is exhaustive rather than illustrative. The clause contains a number of provisions concerning what the regulations may address.
The Exchequer Secretary sent me a letter yesterday—it arrived today—to clarify that the list of regulations that may be made under clause 19 is not yet complete and that we will therefore unfortunately not have the opportunity to debate them in the course of these proceedings. There is a limit to how much can be said about the clause in the absence of those regulations. I do not know whether you intend, Sir Nicholas, to allow a stand part debate on the clause, because I want to make only one point on that. Equally, I should be happy if you guided me to make that comment now.
Nicholas Winterton (Macclesfield, Conservative)
I am certainly happy, and I hope that the Committee will be, to allow the hon. Gentleman to make his point under this amendment, which would avoid a stand part debate.
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
I am grateful for your guidance and wisdom, Sir Nicholas.
Kitty Ussher (Economic Secretary, HM Treasury; Burnley, Labour)
You read the mood of the Committee, Sir Nicholas.
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
Exactly. You assessed the mood of the Committee as well as the appropriate requirements of the circumstances, Sir Nicholas.
My point is that the European Union’s emissions trading scheme has received a great deal of criticism. Some say that it has been ineffective in reducing carbon emissions, that it set carbon at the wrong price and that it has been used too easily. This is an important point for the development of the Government’s own carbon reduction trading scheme. How does the Government see the EU ETS? Does the Minister believe that the criticisms that it is deeply flawed are fair and accurate? If so, what will she do about it? I appreciate that this is not the time for a detailed debate on the matter, but in formulating the regulations under clause 19, how will the Government avoid some of the difficulties? How will the Minister distinguish between what the UK will do and what has happened under the EU to ensure that we are not left with an ineffective scheme that imposes a bureaucratic burden but does nothing to reduce carbon emissions?
Nicholas Winterton (Macclesfield, Conservative)
Before I call the hon. Member for Taunton, may I say that Solomon was known for his wisdom and Job for his patience?
Jeremy Browne (Shadow Chief Secretary To the Treasury, Treasury; Taunton, Liberal Democrat)
Thank you for your wisdom and patience in calling me, Sir Nicholas. I hope to reward both of them in the next few seconds. It is worth putting on record the fact that I am extremely supportive of the principle of carbon trading. We need to explore the potential of market mechanisms for reducing carbon emissions. Simply banning more and more activities—or, in some cases, pricing people out of activities that they may need to undertake—is a blunt instrument. It is a necessary instrument for dealing with the problem of climate change, but it is quite limited. The theory of carbon trading is worth developing further.
I have a few brief questions for the Minister to answer. The first follows on from previous clauses but is directly relevant to this one. The Government’s overall approach lacks coherence. There is a little bit here and a little bit there, but it is difficult for somebody trying to understand the Government’s aim in their entire policy to work out why they have chosen to adopt such a confusing array of policies. Does she believe that they could be consolidated into something more coherent?
My second point was raised with me in representations from the Carbon Trust. As I understand it, the Government will produce a league table of the best and worst companies for CO2 emissions. Depending on where companies come in the table, they will receive payments from the Government. Assuming that I have understood that correctly, will the Minister expand on how much revenue will come in, how much will go out and what companies have to do to become financial beneficiaries of the scheme? To take an alternative approach, it may be possible that the incentive is to lose less, rather than gain financially, under the proposals. Obviously, that could have revenue implications.
Finally, why is primary legislation not being used to set the charge levels? I think that everybody in the House is a bit uncomfortable when we are asked to buy into a policy in broad-brush terms. We are reassured that the details will all be filled in later, when we will not necessarily be scrutinising matters in such detail, and told that we do not need to worry ourselves too much about them. As the Government have learned to their cost in many other matters, the details can be the most controversial aspect of any proposal. I should be grateful if the Minister explained why the Government cannot bring forward a full package of proposals so that Committee members can satisfy themselves that they have agreed to them in their entirety.
Siôn Simon (Birmingham, Erdington, Labour)
I want only 30 seconds to assure you, Sir Nicholas, that lauding you from a sedentary position for having the wisdom of Job was not biblical ignorance in my case—I pride myself on my biblical knowledge—but a Freudian slip.
Nicholas Winterton (Macclesfield, Conservative)
Before I call the Minister to reply, although not to that intervention, I thank the hon. Gentleman for his courtesy and explanation.
Kitty Ussher (Economic Secretary, HM Treasury; Burnley, Labour)
I shall try to be Job-like and full of wisdom at the same time. I shall answer a specific point and then move to the more general ones. The Opposition’s amendment seeks to remove the flexibility that we have deliberately put into the clause, because we want to ensure that we have all the tools at our disposal to adapt to the market as it evolves in years to come without having to return to primary legislation. We will not necessarily use all our powers but, if we accepted the Opposition amendment, we might take away a power that we may need subsequently. That is why I encourage members of the Committee to resist it.
As for the general points about the EU emissions trading scheme, I do not accept that it is deeply flawed and is a disaster. In fact, as an economist by training—Lord, forgive me—there is a beautiful simplicity to carbon auctions and trading. I share the view of the hon. Member for Taunton about that. However, there is a consensus that, as a global leader of its kind, the EU emissions trading scheme perhaps started a little too lightly and will have more of an effect as it is ratcheted up—the position that we are now in. The hon. Gentleman asked what my colleagues at DEFRA are doing about matters. They are negotiating hard to achieve that precise result and simply to reach an agreement, because those innovative traders in the City who want to make a liquid market in carbon permits need certainty beyond the current time frame for that to happen and, obviously, the policy will be more successful if there are liquid secondary markets.
There is a fundamental difference between our proposal and the EU emissions trading scheme. First, it has been designed deliberately to apply to different organisations and, secondly, it will start charging for permits and thus will have a faster effect than the EU emissions trading scheme, even though that scheme is now proving extremely useful. I reject the suggestion that we are incoherent. We have a wide range of measures to combat climate change, and they reinforce each other in a positive way. As for the question of precisely how firms can apply for grants to offset the cost, the hon. Member for Taunton was right that they will be charged for the permits and will then receive grants to support the innovative changes that they will have to make to reduce their emissions. I do not have the precise details. I am not sure that it would be a good idea to set them out in the Bill, but I shall make sure that they are made publicly available to members of the Committee. Furthermore, setting out in the Bill the level of charges is neither necessary nor desirable. Since the power is a regulating one, I presume that there will be an opportunity for hon. Members to make their feelings known in the usual way.
David Gauke (Shadow Minister, Treasury; South West Hertfordshire, Conservative)
I am grateful to the Economic Secretary for her comments. I appreciate her argument for flexibility although, touching on the remarks made by the hon. Member for Taunton, certain important matters should be dealt with by primary legislation. I put to her the concerns expressed by third parties on the EU emissions trading scheme. I did not use the word, “disaster”. For example, Open Europe, of which I suspect the Minister is not overly fond, has expressed serious concerns about the scheme, and I noted her comments about regard to it, as I did her comments about distinguishing the scheme from what the Government intend to do. I beg to ask leave to withdraw the amendment.
Nicholas Winterton (Macclesfield, Conservative)
Does the hon. Member for Waveney wish to say something?
Mr. Bob Blizzard (Waveney) (Lab) indicated dissent.
Nicholas Winterton (Macclesfield, Conservative)
I was perhaps ill informed of the hon. Gentleman’s intention.