The Economic Secretary to the Treasury (Miss Chloe Smith)
This has been an extremely interesting debate on the important issue of how to achieve a green economy in the United Kingdom. I am delighted to be back at the Dispatch Box discussing a subject of great importance in a civilised and reasonable way. Indeed, I shall be happy to take interventions, having already had such extensive experience of that practice during the week.
Let me echo the tributes that have been paid to my hon. Friend the Member for South Thanet (Laura Sandys). She did a fantastic job in setting out the terms of the debate. She spoke of jobs and opportunities, she spoke of transparency and evidence, she spoke of the long term, and she spoke of a role for the UK in being proudly and successfully resilient, innovative and productive. I think we can all identify with the sentiment and the passion with which she dealt with those issues.
Many Members mentioned the Environmental Audit Committee’s report on the green economy, which was published in May. I had the pleasure of giving evidence to the Committee during its inquiry. I commend its Chair, the hon. Member for Stoke-on-Trent North (Joan Walley), for her work and for the speech she made this afternoon. Like my ministerial colleagues, some of whom were able to join us today, I read the report with interest. The Government are preparing a response, and will release it shortly.
As I said a moment ago, some of my ministerial colleagues were able to join us for a debate that, ultimately, dealt with much wider issues than the fiscal aspects of the green economy. It should be noted that, in many areas, the UK is leading the way globally. The Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury (Richard Benyon)—who was present in the Chamber until recently—is off to Panama this weekend to represent the UK. The work that he and others have been doing demonstrates that the UK takes the protection of our natural environment and the development of the green economy very seriously indeed.
I pay tribute to Members for their contributions to this debate, including the hon. Members for Southampton, Test (Dr Whitehead), for Brighton, Pavilion (Caroline Lucas), for Luton North (Kelvin Hopkins) and for Kingston upon Hull North (Diana Johnson), and my hon. Friends the Members for Sittingbourne and Sheppey (Gordon Henderson), for Romsey and Southampton North (Caroline Nokes), for Selby and Ainsty (Nigel Adams), for Cleethorpes (Martin Vickers), for St Ives (Andrew George) and for Waveney (Peter Aldous). I hope to be able to address their points, and those of other speakers, later in my remarks. Sadly, my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) has had to leave the Chamber, but I suspect even he would agree that this Government are focused on reducing the deficit, keeping our country safe in the global storm, and doing everything possible to help people in Britain deal with the rising cost of living.
We must consider the effects our comments this afternoon will have on households and businesses. The hon. Member for Brighton, Pavilion mentioned interest rates, and I assure her that our actions more broadly throughout the economy have helped keep them low for households and businesses. My hon. Friend the Member for Romsey and Southampton North talked about simple household measures that can help, and she and I share the same principles in this regard.
The Government have made it absolutely clear that we want a growing economy. That cuts to the heart of the issues we have been debating this afternoon. I make no apology to those that have heard me—and other members of the Government—say this before, as it bears repeating: green growth and a green economy are not separate from the economy at large. On the contrary, they are closely intertwined, as my right hon. Friend the Deputy Prime Minister made clear in his statement on the outcomes of the Rio+20 summit earlier this week. Our entire economy needs to be environmentally sustainable, enabling us to maximise growth while, importantly, managing our natural assets sustainably. That is plain common sense; it is about the efficient use of assets in the interests of the nation. It is both economically and environmentally the right thing to do.
We all know that that is the case from our experiences in our constituencies—I certainly do. I must pay tribute to my hon. Friends representing Suffolk constituencies who have spoken today about the thriving low-carbon sector in their seats—and mine—in East Anglia. As well as all the other sectors mentioned this afternoon, I might refer to the beer industry—which is a presence in the constituency of my hon. Friend the Member for Suffolk Coastal (Dr Coffey)—as all of us might almost prefer to be enjoying its products on this warm afternoon than to be here in the Chamber.
The Government are using the broad range of tools at our disposal to help support the transition to a green economy. Those tools include regulation, financial incentives, voluntary commitments, public sector procurement and fiscal measures. As the motion highlights, we need to have the right regulatory and fiscal framework to achieve that, and we are putting such a framework in place.
From the outset, the coalition Government have committed to being the greenest ever and to increasing the proportion of revenue from environmental taxes. Some have said that Budget 2012 was not green enough. I disagree. We need to be realistic and acknowledge that not every Budget can be full of new green measures and proposals. After all, these are projects for the long term, as has been acknowledged in our debate. I might cite the examples of helping to protect households in the long term through taking action on energy bills, creating investment, supporting new infrastructure—I welcome the comments on that by my hon. Friend the Member for Waveney—and putting in place a stable fiscal and regulatory regime. Budget 2012 demonstrated the Government’s commitment to continuing with their plan to meet their environmental commitments while reducing unnecessary administrative burdens. Let us also be clear that, as well as incentivising behavioural change, the environment-related tax decisions in the Budget make an important contribution to reducing the record deficit left to us by the previous Government.
I shall now discuss how we can bring forward green growth and incentivise it. As I have said, our priority is to achieve strong, sustainable and balanced growth that is evenly shared across the country and between industries. May I set out a couple of areas of policy on which the Treasury and others are collectively leading that we think are in a position to help with green growth? The first of those is the carbon price floor. At Budget 2012, the Chancellor set the carbon price support rates for 2014-15 to meet the carbon price floor as it was set out at Budget 2011. This is a first-of-a-kind tax, and it will provide greater long-term certainty to the carbon price. It will give a secure future for billions of pounds of investment in low-carbon energy, which I am sure all hon. Members will welcome.
Support is also being provided to key industries—our energy-intensive industries—to ensure that they can adapt over time. Electricity market reform has recently been proposed in the draft legislation currently undergoing pre-legislative scrutiny, and that programme talks of needing more than £100 billion of investment to 2020 in electricity generation and networks.
Dr Whitehead
I am taking up the Minister’s invitation to intervene. Will she consider, even at this late hour, telling us about electricity market reform and how it affects the Treasury at the next meeting of the Select Committee on Energy and Climate Change, which I hope will be held next week? May I assure her that if she does take up our invitation, she will receive a warm welcome and some very straightforward and supportive questions during that discussion?
Miss Smith
I thank the hon. Gentleman for his good-natured reiteration of an offer to appear before the Committee. I have not appeared before it because it is scrutinising the draft legislation of another Department. I believe that my right hon. Friend the Secretary of State for Energy and Climate Change, who was also here this afternoon, explained to the Committee this week that he, of course, is representing the Government’s collective position. Although I welcome the hon. Gentleman’s faith in me, I regret that I do not feel that I could usefully add more than that which the Secretary of State has already provided to the Committee. May I also point out that electricity market reform, as my right hon. Friend will have set out, is an early and credible signal to investors that the Government are serious about encouraging investment in low-carbon electricity generation now?
I shall now deal with some of the points made in this debate. My hon. Friend the Member for Sittingbourne and Sheppey exhorted the Government to be clearer on wind energy. I say to him that the Government have been conducting a thorough review of the support provided by the renewables obligation and the Department of Energy and Climate Change will publish the results of it shortly. I know that he and others will take a deep interest in that.
Let me discuss other ways in which the Government have set out action, for example, in the area of accounting for our natural capital. The natural capital committee will help the Government to prioritise actions to support and improve the UK’s natural assets. I reassure the hon. Member for Stoke-on-Trent North that sustainability is considered when developing policy. Her Majesty’s Treasury’s Green Book already does that in guidance, clearly setting out how Departments can take into account natural capital and long-term sustainability issues.
May I further reassure the hon. Members for Southampton, Test and for Glasgow North East (Mr Bain) on the green investment bank? The important point is that the GIB pathfinder—UK Green Investments—is now open for business, with more than 20 individual projects under active consideration, including in renewable energy, waste management and energy-efficiency. All those are large markets with enormous growth potential. Calls have been made this afternoon for it to move forward more quickly and be able to borrow. I wish to reassure the House that it has been given £3 billion in its initial capitalisation and has the potential to borrow from April 2015 when debt is falling as a percentage of GDP—that is a crucial point.
Across the economy, we are focusing on creating the conditions for private sector investment and growth, including through innovation. As Members would expect, that includes supporting private sector investment and focusing on sustainability. I could point out fiscal steps that are in line with the motion, including a new above the line credit to support research and development activity in the UK and increases to the rate of enhanced deductions of SME research and development tax credit. Together with the green investment bank, those measures will play a crucial role in encouraging innovation in the green technology sector, which will have benefits for the wider economy, jobs and growth. Together with the green deal, the measures will help householders both directly and indirectly. I can reassure the hon. Member for Brighton, Pavilion that her calls for a whole-house approach in retrofitting are in line with what the green deal and the ECO aim to achieve. Those schemes also target funding at low-income households, which is very important for the battle against fuel poverty.
Regulation can play an important role in setting common standards and expectations. The Government recently announced that we will introduce mandatory reporting of greenhouse gases for all companies quoted on the London stock exchange. Again, that goes back to the theme of transparency. In this current economic climate, it is crucial to make it simpler for businesses and industry to meet their environmental responsibilities. We will continue to review and amend existing fiscal instruments and regulatory instruments to ensure they remain focused on achieving both economic and environmental objectives. An example of that is the review of the carbon reduction commitment scheme. Budget 2012 announced a consultation on proposals to reduce administrative burdens in that scheme and the Government are considering the responses to the consultation, which has just closed.
Let me return to the importance of this afternoon’s debate. It has been interesting and has demonstrated the importance of appropriate Government action across a breadth of sectors and using various tools. That action must encourage and drive forward an environmentally sustainable and growing economy. It must pay attention to skills, and I was interested to hear the calls for attention to be paid to the high level of skills we can achieve in the British economy in a fully competitive sense. Once again, I welcome the passionate speeches from hon. Friends and hon. Members. I fully agree with those who have said growth and greenness are not mutually exclusive. We can have both. This Government want an economy that is growing, balanced and sustainable, which is good for businesses and for households. The actions that this Government are taking will help us get there and I thank the Backbench Business Committee and the House for raising the issue.