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Climate Change Levy

Oral Answers to Questions — Treasury – in the House of Commons at 11:30 am on 19th July 2001.

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Photo of Anne McIntosh Anne McIntosh Shadow Spokesperson (Culture, Media and Sport) 11:30 am, 19th July 2001

If he will make a statement on the estimated revenue to the Treasury of the climate change levy from (a) manufacturing and (b) agricultural firms.

Photo of Mr Paul Boateng Mr Paul Boateng Financial Secretary, HM Treasury, The Financial Secretary to the Treasury

The climate change levy will raise an estimated £1 billion in its first year, all of which will be recycled back to business through cuts in national insurance contributions and support for energy efficiency.

Although the levy is broadly revenue-neutral, it is not possible to say at this stage what the effects on any specific sector or industry will be. That will depend on several factors, including the future energy consumption of firms in the sector and employment levels in those firms, the number of energy-intensive firms in the sector that are eligible to receive a discount on the main rates of the levy by signing up to an energy efficiency agreement, and what use firms in that sector make of electricity generated from levy-exempt new renewable sources of energy and combined heat and power.

Photo of Anne McIntosh Anne McIntosh Shadow Spokesperson (Culture, Media and Sport)

I thank the Minister for that reply. Does he accept that the Government are discriminating between sites that are covered by integrated pollution prevention and control and those that are not? Does he accept that businesses are now the principal tax collectors in this country? What would he say to Chennell and Armstrong, a firm in my constituency, which will pay out £3,562 more in tax but receive a reduction in national insurance contributions of only £78?

Photo of Mr Paul Boateng Mr Paul Boateng Financial Secretary, HM Treasury, The Financial Secretary to the Treasury

No. This is the Government who cut corporation tax and capital gains tax, and introduced generous capital allowances as part of the climate change levy. The hon. Lady should welcome all that, not criticise it.

Photo of Colin Challen Colin Challen Labour, Morley and Rothwell

Does my right hon. Friend agree that the best leader for the Conservative party would be Dr. Faustus, who believed that a short-term gain pays off with a long-term pain? What is the cost to the country of not leading in the development of new technology to combat climate change? What is the cost to the country of businesses suffering the effects of flooding and other consequences of extremely severe weather? All those costs are mounting, and if we do not deal with them, we will have a long-term pain.

Photo of Mr Paul Boateng Mr Paul Boateng Financial Secretary, HM Treasury, The Financial Secretary to the Treasury

Given the record of Conservative Members, I do not think that Dr. Faustus would have got through the first round. [Interruption.] They don't like it up 'em. The whole House recognises that combating climate change and reaching the Kyoto targets are desirable objectives. This is a business-friendly tax, and one that the whole House welcomes, or ought to welcome, as it should welcome the good news that we are due to reach those targets, with 5 million tonnes of carbon saved by 2010.

Photo of Patrick Cormack Patrick Cormack Conservative, South Staffordshire

Will the Minister look carefully at the impact of the tax in those areas that have been particularly affected by foot and mouth disease? Does he accept that in many of those parts of the country, any extra burden is crippling?

Photo of Mr Paul Boateng Mr Paul Boateng Financial Secretary, HM Treasury, The Financial Secretary to the Treasury

The hon. Gentleman makes a very important point. We are concerned to make sure that in rural areas, particularly those affected by foot and mouth, Customs and Excise takes a sympathetic attitude to the problems experienced by farmers. We have not only made sure that energy-intensive parts of agriculture have access to the 80 per cent. reduction, but established a Customs and Excise national advice centre, which has a specific remit to give advice and help on claiming discounts, on collection arrangements, on other technical issues relating to relief and, importantly, on arrangements for deferring payment of VAT, where that will help.