Taxation: Green Taxes 14:48:00 Lord Jenkin of Roding asked Her Majesty’s Government: What discussions have taken place between Ministers, including the Chancellor of the Exchequer, about the introduction and level of new green taxes. Lord McKenzie of Luton My Lords, Ministers are in regular contact on a range of matters related to environmental policy. Any decisions on taxation are taken by the Chancellor and announced as part of the Budget process. Lord Jenkin of Roding My Lords, I am delighted to see that it is a Treasury spokesman answering this Question and not the noble Lord, Lord Rooker, given the rebuff that the Secretary of State for the Environment, Food and Rural Affairs got from the Chancellor earlier. Quite apart from any question of an increase in taxation, given the fact, which the Government now admit, that the life-cycle carbon footprint of new nuclear power is about the same as that for wind power, would it not make sense to relieve nuclear power of the climate change levy, which ought never to have been imposed on it in the first place? Lord McKenzie of Luton My Lords, so far as I am aware, there are no proposals to relieve nuclear power of the climate change levy. The levy has been an important component of the Government’s approach to achieving their environmental goals. It has ensured that we have achieved carbon savings of something like 28 million tonnes to date, and savings in 2006 are estimated to be around 6 million tonnes. It is important that the levy, as one instrument in our approach, is maintained. Lord Barnett My Lords, the noble Lord, Lord Jenkin, was unnecessarily unkind to my noble friend Lord Rooker, who has always been very friendly with Treasury Ministers in the past. Is government policy in this regard to punish polluters and raise a lot of revenue or to deter polluters and not raise any revenue at all by having very high levels of tax? It is understandable if my noble friend cannot answer the question, but would he ask the Chancellor to? Lord McKenzie of Luton My Lords, I will try to answer the question. Fiscal policy is one component of our approach. The thrust of that policy is to shift the burden of tax from “goods”, such as employment, to “bads”, such as pollution. That is exactly what we did in introducing the climate change levy, where there was a reduction in the employers’ national insurance contributions, which is still of greater benefit to business than the cost of the climate change levy. Baroness O'Cathain My Lords, how can the Minister justify the fact that the tax will be removed from renewables, such as wind turbines, but will still be left on nuclear, which does not cause any carbon pollution at all? Lord McKenzie of Luton My Lords, it is not true to say that nuclear does not cause any carbon pollution at all. The noble Lord, Lord Jenkin of Roding, recognised that there is a carbon footprint to nuclear. You have to look at these things over the whole life cycle. However, I acknowledge that nuclear pollutes at a lesser level than some other sources. Lord Tanlaw My Lords, does the Minister agree that any carbon-based tax is really an extension of the ancient hearth tax, which was basically a wealth tax on the number of chimneys that one had? Instead of taxing the chimneys for polluting, we are now taxing the number of cylinders that a householder has in a car, and we are going to tax industry not on the number of chimneys that it has but on the size of them. Lord McKenzie of Luton My Lords, my briefing does not cover some of those earlier levies, and I was not around when they were introduced. The climate change levy, however, is a tax on the non-domestic business, service and public sectors’ use of energy. That is its thrust and why it is constructed as it is. Lord Newby My Lords, given that the Minister has just acknowledged that fiscal measures will play a part in reducing carbon dioxide emissions, will he congratulate Richmond Borough Council on introducing variable taxation of motor vehicles based on their capacity to pollute? Lord McKenzie of Luton Again, my Lords, my Treasury brief does not cover what Richmond council has done, but if the outcome of the policy is as the noble Lord suggests, it seems a worthwhile tax. Lord Tomlinson My Lords, does my noble friend agree that there is no way of securing the continued generation of electricity to the extent necessary to fuel our industry, and therefore our economic prosperity, without nuclear being an important, non-carbon-generating part of that process? Is it not therefore logical that it should never be put at a fiscal disadvantage in comparison with other fuels? Lord McKenzie of Luton My Lords, I certainly agree with the proposition that nuclear will be an important component of energy policy going forward. We have to look at the environment in which it operates across the piece, over a whole range of policies, and not just at the fiscal impact. However, I do not see that nuclear is being put at a fiscal disadvantage compared with its main competitors. Lord Lawson of Blaby My Lords, how large an increase in air fares does the Treasury consider will be necessary to achieve the reduction in air travel sufficient to ensure the reduction in carbon dioxide emissions from air travel, which is the Government’s declared goal? Lord McKenzie of Luton My Lords, I have not seen a figure in those terms, if one has been produced. The right approach to tackling aviation is its inclusion in the European Emissions Trading Scheme, which is the most effective way of pricing carbon in that market. Other things also need to be done, such as the development of new and more effective technologies and of better means of operation, particularly in relation to air traffic control, which can cause emissions to be greater than they otherwise should be. Lord Ezra My Lords, can we be assured that the proceeds from any possible new green taxes would largely be devoted to providing incentives to increase energy saving? Lord McKenzie of Luton My Lords, the Government’s position is that issues such as the climate change levy involve recycling back to business, and any increase or change to that levy would be recycled back to business on an appropriate basis and on the basis of consultation when changes take place. Lord Dixon-Smith My Lords, I hope that the Minister will forgive me if I observe that the limitations of his brief this afternoon on occasion leave a lot to be desired. Will he go back to his right honourable friend in another place and request him urgently to put into place a satisfactory system of liaison between government departments, so that in future when he is asked a Question of this nature he is able to give more thorough answers? Lord McKenzie of Luton My Lords, that is a little unkind. The Question is about green taxes. I have explained that taxation and fiscal policy is just one component of the Government’s approach. A lot of work is being done on that. I could go through all the issues in which the Government have been involved in producing their environmental objectives, which certainly embrace taxation matters but cover lots of other things as well. If the noble Lord wants a list of those now, I would be happy to try to provide one, just to show how extensive my brief is. In fact, my brief is so extensive that I cannot find the piece of paper that it is written on. There is a whole range of measures that, if I keep talking, I will get to sooner or later. There is not only the climate change levy, but climate change agreements, reduced VAT rates for professionally installed energy saving materials and the landlord’s energy saving allowance. Vehicle excise duty has been reformed, as has company car taxation, and we have used differentials in fuel duties to assist. We have been leading international action, including the Gleneagles agreement, and we have been at the forefront of introducing the EU Emissions Trading Scheme and climate change agreements. We have set up the Carbon Trust and the Energy Saving Trust. There is an energy efficiency commitment, and we have dealt with building regulations and the renewable transport fuel obligation. I will be happy to write further to the noble Lord. Lord Tebbit My Lords, why did not the Minister answer the question asked by the noble Lord, Lord Barnett, if he has all those briefings? Lord Blackwell My Lords, if the Chancellor, at some point in the future, sees fit to introduce green taxes, will the noble Lord undertake to ask the Treasury to provide a corresponding list of non-green taxes that have been reduced to keep the fiscal balance? Lord McKenzie of Luton My Lords, I thought that I had touched on that in relation to the climate change levy and the reduction in employers’ national insurance contributions with, at the same time, the introduction of enhanced capital allowances for certain fuel efficiency capital equipment. That is what we have already done, and I outlined earlier our proposals to recycle. I am sure that that will be the subject of a full explanation if and when the changes occur. Lord Tebbit My Lords— Lord Rooker My Lords, please, we must move on. We have had 11 supplementaries and we are now in the 24th minute of Questions. Lord Tebbit My Lords, the Minister has not answered the question that I put to him. He did not even stand up.