Oral Answers to Questions — Treasury – in the House of Commons at 11:30 am on 10th March 2005.

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Photo of Norman Baker Norman Baker Liberal Democrat, Lewes 11:30 am, 10th March 2005

What further plans he has to encourage the adoption of good environmental practice through the use of economic instruments.

Photo of John Healey John Healey The Economic Secretary to the Treasury

We will continue to build on the success that we are achieving in the use of economic measures to protect the environment. As with other taxes, my right hon. Friend the Chancellor will give a policy update in the Budget next week.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

Does the Economic Secretary agree with the conclusions of the report on fiscal incentives published last month by the Institute for Public Policy Research and the Green Alliance, which said that many people felt that

"the government was providing clear signals about the importance of climate change and the need to take action, but that there was no clear link between this overall message and individual policies."

In other words, the Government's use of economic instruments is not working. Will they, in particular, consider replacing the climate change levy with a carbon tax and stop trying to water down Britain's commitments under the EU emissions trading scheme?

Photo of John Healey John Healey The Economic Secretary to the Treasury

I do not agree with that at all, and if the hon. Gentleman looks at the range of measures that we have introduced since 1997 he will realise that it is a difficult argument to sustain. I do not doubt the hon. Gentleman's commitment to the environment—he speaks on that subject for his party—but his problem is the Liberal Democrats' lack of credibility and consistency. They always say one thing and do another. I have to tell the hon. Gentleman that they have been rumbled, because the director of Greenpeace has said that they

"lecture other political parties on the environment and then fail to apply those principles in places which they actually control."

Photo of Mr Tam Dalyell Mr Tam Dalyell Labour, Linlithgow

Will Ministers get together with Derek Simpson and his senior colleagues in the engineering section of Amicus? What could be a better economic instrument to help the environment than doing something to finance new nuclear stations at Sizewell, Hinckley and Hunterston?

Photo of John Healey John Healey The Economic Secretary to the Treasury

As it happens, I was with senior officials from the Amicus union, including the general secretary, only last Friday, but they did not raise that matter with me. If my hon. Friend would like to bring a delegation of officials from that union who have an interest in this, I would happily see him to discuss those issues.

Photo of Mr Howard Flight Mr Howard Flight Special Envoy To the City of London, Economic Affairs

Do the Government believe in the implicit principle of their environmental taxes—that fiscal incentives and disincentives drive behaviour in this and other areas?

Photo of John Healey John Healey The Economic Secretary to the Treasury

The short and simple answer is yes. It is fundamental to the rationale of many of the polices that we have introduced. However, as the hon. Gentleman knows, because we have dealt with these matters in our discussions on Finance Bills, it is not simply a question of environmental taxes—other economic measures such as voluntary arrangements, trading agreements and public support measures are often equally important in tacking the challenges that we face in relation to climate change.

Photo of Mr Lawrie Quinn Mr Lawrie Quinn PPS (Mr Douglas Alexander, Minister of State), Foreign & Commonwealth Office, PPS (Mr Douglas Alexander, Minister of State), Department of Trade and Industry

My hon. Friend will know about the difficulty of disposing of plastics and the problems that it causes the environment. What can his Treasury colleagues do to encourage small firms that want to innovate through trying to find other sources and different ways of disposing of plastics? Econoplas, a firm in my constituency, converts and recycles plastics to create an effective drainage medium, which helps to benefit the environment through drainage schemes in rural areas. Would my hon. Friend be interested in hearing about that good innovation and bringing it to the attention of the regional development agencies?

Photo of John Healey John Healey The Economic Secretary to the Treasury

I am well aware of my hon. Friend's efforts to promote the interests of businesses and jobs in his constituency, and I pay tribute to him for that. I will write to him with details of new tax reliefs that we have recently put in place precisely to encourage the development of new, environmentally friendly technologies. If those special reliefs to try to help us to tackle some of the environmental problems that confront us are of interest to the company that he mentioned, I will happily meet him and the company.

Photo of Michael Jack Michael Jack Conservative, Fylde

I am sure that the Economic Secretary acknowledges that carbon dioxide emissions from the transport sector have continued to increase in recent years. Why, therefore, has no United Kingdom bioethanol plant been built so far, to fulfil our European Union requirements to blend biofuels with non-biofuels? Why has the European Union apparently rejected Britain's proposals for emissions trading in the air sector?

Photo of John Healey John Healey The Economic Secretary to the Treasury

In fact, transport-related emissions have fallen by 50 per cent. in the past decade. The right hon. Gentleman will know that the duty discounts—of which he was one of the strongest advocates, and I pay tribute to him for that—to support the development of the market in and UK production of bioethanol were introduced only in January. It is therefore a little early to tell.