Here are the climate-related sections of speeches by MPs during the Commons debate Finance (No.2) Bill (Third sitting).
09:25 Kemi Badenoch (Conservative)
New clause 3, which was tabled by the hon. Members for Glasgow Central, for Glenrothes, for Gordon (Richard Thomson) and for Midlothian (Owen Thompson), would require the Government to publish a report on the effects of clause 98 on progress towards the UK Government’s climate emissions targets
“As these tax changes are introduced, the government will monitor fuel duty receipts of red and white diesel to evaluate the extent to which current users of red diesel that have lost their entitlement to use red diesel are switching to greener alternatives. The Treasury will also work closely with the Department for Business, Energy and Industrial Strategy to evaluate the extent to which these tax changes are accelerating the development of greener alternatives and how this interacts with the work of the government’s energy innovation programmes, like the Net Zero Innovation Portfolio.”
The Government continue to take our world-leading environmental commitment seriously and remain dedicated to meeting our climate change and wider environmental targets, including improving the UK’s air quality; that is why we are reforming the use of red diesel from April 2022. Reducing tax breaks on red diesel will mean that approximately 3.6 billion litres of diesel, equivalent to 9.5 million tonnes of CO 2 , will now be taxed at the standard diesel rate. I ask the Committee to agree that clause 98 and schedule 20 should stand part of the Bill and to reject new clause 3.
[Source]
09:32 Abena Oppong-Asare (Labour)
We support the Government’s intention behind the measure, which was first announced in the 2020 Budget. There is a clear need to ensure that fuel duty rebates are as limited as possible in order to meet our net-zero commitment. I note that several sectors retain their entitlement to use red diesel, including agriculture, rail transport and permanently moored houseboats. More recently, the Government have announced further exemptions, including generating power from non-commercial premises for amateur sports clubs and for travelling fairs and circuses.
[Source]
09:40 Kemi Badenoch (Conservative)
On new clause 3, we fully understand the point that the hon. Member for Glenrothes makes, but it takes time for us to be able to analyse what is happening with changes to tax. That is why we want to monitor fuel-duty receipts for red and white diesel, which will enable us to evaluate the extent to which the users of red diesel who have lost their entitlement are switching to greener alternatives. It is really important that we allow time for the policy to bed in before we carry out reviews, but the Treasury always keeps all tax policy under review. We want to ensure that we encourage the transition to net zero as well as maximising revenue for the Exchequer. We do not want to lose money, nor do we want emissions. I reassure him that we are all on common ground and will work together to achieve those stated goals.
On the question of biofuels, to respond to the hon. Member for Glenrothes, all users of biofuels will be taxed at the same rate as ordinary diesel, to reflect the fact that biodiesel releases just as much carbon dioxide when burned. The Government recognise that renewable biofuels deliver greenhouse gas savings, as they are sourced from feedstocks that extract CO 2 from the atmosphere. To incentivise the use of these low-carbon fuels and reduce emissions from fuel supplied for use in transport, the Government introduced the renewable transport fuel obligation in 2008, whereby all road transport fossil-fuel suppliers in the UK are required to show that a percentage of the total road and non-road mobile machinery fuels they supply come from sustainable and renewable energy sources. Again, I remind him that the Government keep all of these rates under review.
[Source]
09:54 Abena Oppong-Asare (Labour)
“short of the support needed to transform the industry and market to the net zero future to which both the Government and industry aspires.”
If UK car manufacturing is to survive the covid crisis and thrive as part of a net zero future, it needs the Government to develop a long-term strategy to support the sector. Labour urges the Government to do just that by implementing a strategy that accelerates the electrification process in a manner that provides a lifeline to the industry, stimulates investment and ensures the future of the automotive sector in the UK for the communities that rely on it. We have called on the Government to create new gigafactories by 2025, make electric vehicle ownership affordable by offering interest-free loans for those on low and middle incomes and accelerate the rollout of charging points, particularly in the areas that have lagged behind. That is the support the automotive industry needs.
[Source]
09:58 Kemi Badenoch (Conservative)
On the question of the impact of Brexit negotiations, I am afraid that is not a matter for the Treasury. I am sure officials will note her concerns and pass them on to the relevant Department. On the question of why the Government are not doing enough to incentivise the uptake of zero-emission vehicles, we use the tax system to encourage the uptake of cars with low carbon dioxide emissions to help us to meet our legally binding climate change target. Zero-emission cars and electric vans are liable to pay no VED. Furthermore, users of zero and ultra-low emission cars have beneficial company car tax rates in comparison with conventionally fuelled vehicles. From April 2021, the Government are applying a nil rate of tax to zero-emission vans within the van benefit charge. We believe that we are doing quite a lot to incentivise the uptake of zero-emission vehicles and electric cars.
[Source]
10:03 Abena Oppong-Asare (Labour)
We believe that part of any aviation support must include a clear commitment to tackling climate change and leading the industry to use cleaner fuel and other cutting-edge low or zero emission technologies. Government support should be contingent on airlines retiring old and inefficient aircraft, so that they meet the new industry standards in accordance with the framework of the Paris agreement and the UK’s Climate Change Act 2008.
[Source]
Kemi Badenoch (Conservative)
On the wider issues that the hon. Lady mentioned on the transition to net zero, we have introduced a wide range of scheme to support the decarbonisation of the aviation sector, including a £15 million competition to support the UK production of sustainable aviation fuel, and the inclusion of aviation in the UK’s emissions trading scheme, which we discussed in the last sitting. The Government will also consult on the overall strategy for the sector’s transition to net zero later this year.
[Source]
10:20 Kemi Badenoch (Conservative)
Clauses 105 and 106 make changes to ensure that the climate change levy’s main and reduced rates are updated for years 2022-23 and 2023-24, to reflect the rates announced at Budget 2020. Clause 107 increases both the standard and the lower rates of landfill tax in line with inflation from 1 April 2021, as announced at Budget 2020. Clause 108 repeals the provisions in the Finance Acts 2019 and 2020 relating to carbon emissions tax, which were not commenced following the Government’s decision to implement a UK emissions trading scheme from 1 January 2021 instead.
The climate change levy came into effect in April 2001. It is a UK-wide tax on the non-domestic use of energy from gas, electricity, liquefied petroleum gas and solid fuels. It promotes the efficient use of energy to help meet the UK’s international and domestic targets for cutting greenhouse gas emissions. At Budget 2016, it was announced that electricity and gas climate change levy rates would be equalised by 2025, because electricity is becoming a much cleaner source of energy than gas as we reduce our reliance on coal and use more renewable sources instead.
[Source]
10:22 Kemi Badenoch (Conservative)
Clauses 105 and 106 make changes to the climate change levy rates for 2022-23 and 2023-24, to continue the rebalancing of electricity and gas rates announced in Budget 2016. The 2022-23 and 2023-24 rates were announced in Budget 2020 in order to give businesses plenty of notice to prepare for the changes. At Budget 2020, it was also announced that rates for liquified petroleum gas would be frozen to 31 March 2024.
To limit the economic impact of the tax rate changes on energy-intensive businesses, participants in the climate change agreement scheme will see their climate change levy liability increase by RPI inflation only. That protects the competitiveness of more than 9,000 facilities from energy-intensive industries across some 50 sectors.
New clause 5, tabled by the hon. Members for Glasgow Central, for Glenrothes, for Gordon and for Midlothian, would require the Government to publish a report, within six months of the passing of the Act, on the effects of what would then be sections 105, 106 and 108 on progress towards the Government’s climate emissions targets. As clauses 105 and 106 make changes to ensure that the climate change levy’s main and reduced rates are updated for years 2022-23 and 2023-24, such a report would not be able meaningfully to assess the impact of these changes within six months of the passing of the Act. The Government currently assess and monitor environmental impacts across existing tax measures, and do that alongside other, complementary measures, such as regulation and spending, to understand the impact of policy making in the round. That alludes to the point made by the hon. Member for Glenrothes about landfill tax.
As it was not commenced, the carbon emissions tax’s role in meeting the Government’s climate emissions targets cannot be measured. However, Opposition Members should be reassured that the UK ETS, a market-based measure covering a third of UK emissions, will help to deliver a robust carbon price signal. The energy White Paper committed to exploring expanding the UK emissions trading scheme to other sectors and set out our aspirations to continue to lead the world on carbon pricing in the run-up to COP26. The Treasury will continue to work closely with BEIS on the introduction of the UK emissions trading scheme and will keep all environmental taxes under review to ensure that they continue to support the Government’s climate commitments.
In conclusion, the changes made by clauses 105 and 106 will update the climate change levy main and reduced rates for 2022-23 and 2023-24, as announced at Budget 2020 and to deliver on previous Budget announcements. Clause 107 will increase the two rates of landfill tax in line with inflation from 1 April 2021, as announced at Budget 2020. Clause 108 will ensure that the statute book is up to date by repealing the provisions in Finance Acts 2019 and 2020 relating to a carbon emissions tax that were not commenced. I therefore commend the clauses to the Committee and ask that the Committee rejects new clause 5.
[Source]
10:29 Abena Oppong-Asare (Labour)
If I may, I will address the clauses in reverse order. Clause 108 repeals the carbon emissions tax. As the Minister said, the Government introduced this legislation when deciding what to replace the EU emissions trading system with. We welcome the fact that the Government have decided to implement a UK emissions trading system, rather than a carbon emissions tax. The Minister and I recently debated regulations relating to the UK ETS, and I will not repeat the points I made then. However, I stress that our belief is that the UK ETS must be linked with the EU ETS in order to achieve a robust system of carbon pricing to meet our net zero target.
Clause 107 increases the landfill tax in line with inflation. We welcome this small, uncontroversial measure. We talked at considerable length about waste and recycling during our discussion of the plastic packaging tax. I repeat only the point that the Government should invest the revenue from these taxes into recycling facilities and technology. Finally, clauses 105 and 106 make a number of changes to the climate change levy over the coming years, including raising the gas levy and adjusting the climate change agreement rates. Could the Minister set out whether the Government intend to keep the climate change agreement scheme beyond its current period, and if not, what they will replace it with?
As we come to the end of the group of environmental clauses, I will make a few points about tax and our net zero commitment. In February, the National Audit Office published a report into environmental tax measures. The NAO criticised the Treasury and Her Majesty’s Revenue and Customs for failing to properly consider and evaluate the impact of these taxes on the Government’s environmental targets.
Does the Minister agree that we need information on the environmental impact of all taxes and reliefs? Will she commit to working with HMRC and other bodies to publish this information regularly? Currently, UK taxes with a positive environmental impact account for only 7% of tax revenue, and those with an explicit environmental purpose, such as the climate change levy or landfill tax, account for only 0.5%. So far, and particularly in the last Budget, we have seen a lack of vision from the Chancellor on the environment. We await the Treasury net zero review, but will the Minister set out what steps the Government will take in the short, medium and long term to ensure that our tax system plays a role in meeting our net zero commitment?
[Source]
10:33 Kemi Badenoch (Conservative)
The hon. Member for Erith and Thamesmead asked a specific question about climate change agreements. For my part within the Treasury, that is being dealt with by the net zero review, but those agreements are a BEIS lead. She also asked about linking the UK emissions trading scheme to the EU emissions trading scheme. We are open to linking the UK ETS internationally in principle and we are considering a range of options, but no decisions on preferred linking partners have been made. We are looking to innovate and create a scheme suited to the UK and to our climate commitments.
We started—as the hon. Lady will know, given our debates on the Greenhouse Gas Emissions Trading Scheme Auctioning Regulations 2021—by reducing the cap on emissions by 5%, compared with what it would have been within the EU. We will set up further plans ahead of COP26, but we are going further and faster than EU representatives on this matter.
[Source]