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Mr. Tim Devlin (Stockton, South): If the hon. Gentleman is so in favour of a carbon tax, why did he not support the imposition of VAT on fuel?
Mr. Taylor: First, because VAT was imposed on all energy uses, not only those that created pollution. That does not make sense in environmental terms, although it may have made sense to the Government in terms of trying to balance their books.
Secondly--and crucially--the difference between what the Government did and what we are proposing is that our proposals are tax-neutral. We are talking about imposing environmental taxes, but cutting taxes on jobs and other goods. The hon. Gentleman would probably have preferred that had the Government proposed it; however, they made no such proposal.
Let me add one final difference. We make such a proposal before the election and spell out what we would do, whereas the Government pledged not to increase taxes, and specifically, not to increase VAT. There is a choice between explaining one's policies to the electorate and deceiving them, and we come down firmly on the side of explanation.
Carbon taxes have been introduced in four European countries--the Netherlands, Finland, Norway and Sweden--without hurting either their citizens or their industry.
There is no evidence that higher energy prices need to be detrimental, even to the competitiveness of relatively high energy-using industries, providing that they know what is happening and have time to invest in energy-saving measures. Energy prices in Japan are 49 per cent. higher than those in the United Kingdom, and energy prices in Germany are 41 per cent. higher, but that has not made them uncompetitive, as they use energy more efficiently. The aim of a carbon tax is to create the expectation that energy prices will rise, so that energy conservation becomes a powerful incentive for designers, manufacturers and consumers.
The tax raised would help to cut other taxes such as VAT and employers' national insurance, leaving most people better off and creating extra growth in the economy and more jobs.
However, tax reform in itself is not enough. We also need to reform the energy market. The achievement of those environmental and social aims implies an energy market structure that requires energy suppliers to treat energy conservation on a par with energy supply. We have built in incentives to encourage suppliers to improve energy efficiency for their customers rather than to sell ever-increasing quantities of fuel. That approach also ensures that poor or geographically remote consumers are guaranteed access to supply on equal terms with those who are richer or live in less remote areas. That would be almost impossible to achieve under the current Government's plans to liberalise the domestic energy market.
We strongly supported the Government in introducing more competitiveness into the energy markets, as it encourages greater efficiency, but we would reform the system of awarding licences to promote investment in energy conservation. A commitment to energy efficiency measures should be a prerequisite for the award of a licence, and suppliers should be monitored by the regulator to ensure that they meet agreed targets. Without such an arrangement, they will not meet the targets, as we have seen with British Gas, which is already dropping several of its programmes.
I do not believe that any supplier should secure a long-term contract, with all the advantages that that brings, unless it can show that it will be linked with investment in energy conservation. In that way, we aim to ensure that suppliers compete in the provision not only of energy but of energy conservation.
Many still argue that we cannot afford to protect the environment. They say that environmental measures would increase unemployment and harm most people. That is a myth. The fact is that action to protect the environment, whether it means moving towards environmental taxes or encouraging people to drive more energy-efficient cars less often, can increase jobs and competitiveness, and will certainly improve our quality of life. Moreover, our carbon tax proposals would leave people better off financially.
In addition, the Organisation for Economic Co-operation and Development estimates that environmental protection--
Dr. Spink:
The hon. Gentleman is making a brave speech, and, and unlike Members from the other Opposition party, he is actually spelling out what his policies are. That is good, although I think that some of my constituents might be afeared of the 40 per cent. hikes in energy prices that the hon. Gentleman seems to espouse. Does he agree with the hon. Member for Barnsley, West and Penistone (Mr. Clapham) that the energy sector companies should be renationalised during the coming decade? Or would he step back from that idea?
Mr. Taylor:
No, I do not believe that the companies should be renationalised, and--unlike the Labour party, perhaps--we never proposed that they should be. I am
So the measures would be fiscally neutral. If anything, the nature of energy use in this country means that the benefits of our policy would result in a slight transfer away from business and towards the consumer.
The switch to cleaner generating technologies and more energy-efficient products, together with the huge backlog of home energy conservation work, will create major export and employment opportunities. Ours is a win, win, win strategy. Householders will win because investment in energy conservation will provide warmer homes and lower net energy bills as people need to use less energy. Taxpayers will win, because our proposals mean not paying more tax but paying different tax, and most households will pay less--although businesses and individuals that simply waste energy will pay more.
Mr. Nigel Waterson (Eastbourne):
I begin by paying a warm tribute to my right hon. Friend the Minister for Industry and Energy, who opened the debate, because he has been at the centre of so many of the exciting and productive developments in energy in recent years.
When we have stripped the Opposition motion of its party political rhetoric, although it makes a passing reference to consumers, it has nothing to offer them. There is no mention whatever of energy saving or of the environment. The wording of that motion confirms the Opposition's total lack of interest in the environment.
In the week when the parties to the United Nations framework convention on climate change are meeting in Geneva to discuss the report of the intergovernmental panel on climate change, which unanimously concluded that there is now a discernible human influence on global climate, the Labour party has tabled a motion on energy policy that does not even mention energy conservation. That beggars belief.
We know that energy conservation is important for three main reasons. The first reason is the need to conserve finite resources, which has a broad measure of support among the British people. Secondly, there is the protection of our environment, and all the follow-through from the Rio summit. The third reason is our desire to help the consumer, especially in places such as Eastbourne, where there is a combination of older people, often on limited incomes, and aging housing stock. Everyone has a contribution to make--individual property owners, local authorities and business.
On that note, I would like to refer briefly to "Making a Corporate Commitment", a Government campaign seeking board-level commitment to good energy management. More than 1,900 organisations from the private and public sectors have agreed to make the
commitment, and 53 trade associations and professional bodies--including the CBI and the Institute of Directors--have agreed to endorse it to their members. Signatories agree to appoint a board member to take responsibility for these matters and to join the campaign to raise the profile of energy management at the highest levels of their organisation. "Making a Corporate Commitment" seems to bring real results, as market research indicates that the energy management performance of signatories is significantly better than that of business generally.
Local authorities have their own role, and I wish that I had more time to discuss the Home Energy Conservation Act 1995, which was widely supported in the House and effectively calls on local authorities to carry out an audit of the housing stock in their area so that measures can be taken to conserve energy. That again will help the constituents whom I have described.
Individuals are not just involved out of a sense of altruism or because of their concern for the environment, but because it also makes sound financial sense. A major thrust of the Government's energy policy is greater efficiency and lower prices, as we have heard, as well as removing burdens from the taxpayer--something of which we must not lose sight. We know that the nationalised industries cost the taxpayer £50 million each week in 1979, and that they now contribute £55 million each week to the Exchequer. We know that domestic electricity prices have fallen by 8 per cent. in real terms, and that electricity customers in England and Wales received this year a £50 rebate on their bills following the sale of the National Grid. It is worth reminding the House that under the previous Labour Government, the price of electricity went up in cash terms by 2 per cent. every six weeks--some 16 per cent. a year.
The average industrial gas price has fallen by 48 per cent. in real terms, while the domestic price--including VAT--has fallen by 18.5 per cent. in real terms. Consumers in the gas competition pilot area in the south-west are being offered discounts of up to 20 per cent. on the existing British Gas tariff.
Oil prices are now lower in real terms than at any stage since oil was discovered in the North sea, and we have also heard some incredible statistics about the effects of privatisation on the coal industry. I had the honour of serving on the Committee that considered the Coal Industry Act 1992.
These are tangible results of the Government's policies to open up markets to free competition and to privatise. Electricity bills have fallen, and they will fall also as a result of the reduction in the fossil fuel levy in England and Wales and changes to the nuclear energy agreement in Scotland. In June, Professor Littlechild announced that, as a result of nuclear privatisation, he expected to be able to reduce the fossil fuel levy from 10 per cent. to 3.7 per cent. This will result in reductions in typical household electricity bills of up to £20 a year.
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