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Green Taxes

I repeat that I am perfectly willing to consider the case for a carbon tax as opposed to the climate change levy, but the key issue is outcomes and what range of measures will have the best outcomes. I emphasise the term ““range of measures””, as taxation is but one, albeit an important one. The need to implement a range of measures is the main point that I want to focus on—briefly, as I know that others wish to speak and time is limited. On carbon markets, it is right to note that this country pioneered national carbon trading. We were the first country in the world to do so and we greatly influenced the shape of the European emissions trading scheme, which I greatly welcome. It must, however, be built on: it is a developing market. Of all environmental issues, I certainly put climate change at the top and it is right to highlight growing evidence of the urgency of the problem and the need for a major culture shift within societies in respect of both developed and developing economies, on tackling this issue. Carbon markets and carbon accounting provide a highly efficient way of proceeding, so I greatly welcome the fact that the Treasury has confirmed that it is interested in the whole concept of carbon accounting. It shows the way forward. Carbon markets and the caps that go with them are among the most powerful drivers and they deal with some of the more difficult issues—aviation, for example, on which I shall touch. We need to extend our existing carbon markets and once again I welcome the Treasury’s willingness to consider the extension of the UK scheme, over which we have control, to include domestic buildings and the retail sector, for example. I also ask Ministers to consider a more radical approach to carbon markets. I particularly welcome the speech made recently by my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs in which he raised the concept of personal tradeable carbon allowances. That moves us into a completely new area. I accept that a network of administration would be needed in this country, and that they would pose an awful lot of challenges, but it is the kind of major cultural shift that we need. We could make a start on the idea in the area of transport. There is the technology now. Loyalty cards at filling stations and credit card technology are well established and could be adapted for carbon allowances. People could have an allowance on a credit card and when they bought fuel, the allowance could be deducted. If they needed more, they could buy the carbon allowance at the garage. If they did not use much carbon, they could sell that into a central pool and people with gas guzzlers would have to buy the additional carbon to cover that. That approach may be more efficient than simply applying tax, although I am not arguing that tax does not have a role. I strongly urge Ministers to think about it. We have to do the analysis, and sooner rather than later. I strongly encourage them to do that. I particularly like the idea of carbon allowances when it comes to aviation. Aviation is a problem—there are no two ways about it. It is not paying its fair share nationally or internationally, and, of course, it is an international activity. One could apply the same concept to the issue of tickets. This Government led the argument under our presidency to include aviation in the European Union emissions trading scheme. That was achieved. It was a great success to get political agreement. There is going to be an argument about the detail, but I hope that the UK sticks to the principle of applying carbon trading to all take-offs and landings in the EU, not simply intra-EU take-offs and landings. I do not think that that is enough; it has to apply to every plane that takes off and lands in the UK. I know that the Commission has got nervous because of international pressure over the issue. I hope that the Government will take steps to support the Commission and not back down on those points. People can be priced off planes. I am not sure it is the most socially equitable way of doing it. It allows people who can pay to pollute. That is why I would much rather have a cap on the emissions of the aviation sector, and the activity could then be based on buying and selling the allowances. I accept that that may take some time. Because of the urgency of the situation, there may be an argument for various interim fiscal measures. Again, I would like any fiscal measure that is applied to aviation to have an outcome. For example, some form of carbon offset levy on tickets or on the airline companies is worth considering. I do not believe that carbon offsets are an answer to the issue of climate change, or that offsets should be a substitute for reducing emissions. That has to be the priority, but there is a role for carbon offsets because we need to take action and it is one way of raising funds internationally to invest in clean energy in developing countries. I welcome what the Government have done to make all their flights carbon-neutral by offsetting. It is something to commend. Some of these measures could be included in a climate change Bill. There is an argument for such a Bill. I support the concept. I accept that such a Bill is not simply about legislating for targets. Targets have their place, but there is a debate about how to apply targets and structures. The important thing is to have a framework for action and a climate change Bill could be an important part of that framework. It is worth considering. I accept some of the arguments made about road pricing, which has a role to play, but it needs to be structured to achieve environmental as well as fiscal outcomes. However, the overriding issue is climate change. We must take an integrated approach across Government, because there are issues with the pricing of water and of waste collection. There is an argument for moving towards pricing waste by weight, and removing that charge from the council tax. Housing regulations and transport policy, too, are considerations. We must look at the way in which we can provide incentives, so that, as well as trying to tax bad practice, we encourage good practice. It is a pity that my hon. Friend the Financial Secretary has left the Chamber, because on a number of occasions he and I have discussed how we could use reductions in stamp duty on new build to encourage the building of low-carbon houses. He used an eloquent argument to explain why the Treasury did not favour that general approach, but there is a strong argument for an incentive to encourage zero emissions homes, of which only a few thousand are being built. The Treasury might like to consider an exemption from stamp duty, or a lower rate of stamp duty, for houses that meet the highest standards as part of the incentives needed in an integrated approach across Government. Of course, we should not forget the international dimension. The hon. Member for Bexhill and Battle discussed the Prime Minister’s legacy, but if he travels around Europe and internationally, he will find that the Prime Minister is held in the highest regard for what he has done on climate change, and for the way in which he has pushed it to the top of the political agenda internationally; for example, it was on the G8 agenda. He has made it a big issue, and he stood with Governor Schwarzenegger in California to argue for the type of changes that are taking place in the US, despite the stance of the present Administration, because there is bottom-up pressure for them. The hon. Gentleman should accept the lead that the Prime Minister has given, and the respect in which he is held. Nevertheless, there are big international challenges for us. For example, should there be a measure drawing a distinction between food produced in this country and distributed locally, and food that is flown many thousands of miles across the world to reach the UK? Should there be a mechanism or levy that reflects that? Those are difficult subjects, and we are straying into World Trade Organisation territory, but climate change is such an urgent and important issue that we as an industrial country—indeed, the first industrial country—have a responsibility to lead by example. We must think the unthinkable and not hold back from the more radical approaches that we need to take if we are to achieve our aim of stabilising global emissions. There is much that our country can be proud of having achieved, but there is a lot more that can be done on green fiscal measures. I know that my hon. Friends in the Treasury are thinking about that, and I urge them to be bold in the policies that they apply.