Oral Answers to Questions
Debate between Chris Huhne and Ian Swales
Chris Huhne
I agree that we have to look very carefully at the sources of finance for green investment. There are undoubted obstacles in the way of some of the technologies that are furthest away from the market, in particular, and that makes the very important case for the green investment bank. That—not the concept—is what is under review at the moment. The commitment to a green investment bank is clearly in the Government’s coalition agreement, and it was an idea of the Chancellor of the Exchequer. Some of the reports suggesting that the Chancellor would want to murder his own baby seem a little far-fetched.
Ian Swales (Redcar) (LD)
T7. Following on from that question, will the green investment bank include the proceeds of asset sales, as the Chancellor announced recently? Given the importance of green investment to the Tees valley, will the Secretary of State consider putting the administrative centre of the bank in the Tees valley?
Electricity Market Reform
Debate between Chris Huhne and Ian Swales
Chris Huhne
I could not be clearer than to say that there is no subsidy here which attaches to nuclear power. The subsidy attaches to low-carbon generation, and whatever the Member’s view, the reality is that nuclear power is a low-carbon energy source and the subsidy applies to low-carbon generation. Over time I want to see the technologies as they are at the moment compete, so that we can find which are the most effective at providing our consumers with low-cost electricity from low-carbon sources—and the framework will allow us to do that.
Ian Swales (Redcar) (LD)
How can the Secretary of State ensure that those who want to invest the much-needed billions right now do not get delayed by the consultation period and the navel-gazing that might follow today’s statement? For example, if someone has half a billion pounds for a biomass power station today, can they spend it?
Chris Huhne
My hon. Friend and I have had discussions on the specifics of biomass power stations, and I hope that some of the announcements that the Department has made, for example about bringing forward the review of the incentives for that type of plant, will help. We have also been able to issue some letters of comfort to different investors to try to ensure that they do not have problems with financing projects. I want to minimise the uncertainty that inevitably exists in changing from one regime to another, and make these investments happen as quickly as possible.
Budget Resolutions and Economic Situation
Debate between Chris Huhne and Ian Swales(14 years, 5 months ago)
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Chris Huhne
The hon. Lady clearly did not listen to my earlier answer. When looking at the distributional impact, it is very important, particularly with indirect tax measures, to look at the expenditure effects, not the income effects. The IFS report shows very clearly the enormous distinction between the conventional answer on the distributional impact on income and the answer when we look at the expenditure effects.
The choice for this Government has been clear: either we manage the transition to lower borrowing to sustain the recovery, or we will have those choices yanked from our hands by the markets and we will face force majeure. It is far better to design a fair package, as we have done, than to have an unfair package imposed on us that no one has had the time or thought or energy to design.
No fiscal package responding to a market emergency that I have ever seen has been fair, whatever Opposition Members may say. I spent five years of my pre-political life analysing sovereign risk and sovereign crisis. I was in Seoul before Christmas 1997, in Djakarta at the time of the food riots, and in Bangkok when the authorities struggled with the collapse of the Thai baht, and I never want to see a British Government have to go cap in hand to the International Monetary Fund as those countries did, as Greece is now doing and as the friends of the right hon. Member for Doncaster North had to do in 1976.
Had we run the risk of contagion—of a sharp spike in Government and probably short-term policy interest rates too—the impact on growth would have been severe. The truth is that the course of action that the right hon. Gentleman and his friends recommend—the Micawberish course of hoping that something will turn up—would have put the British economy and British jobs in the international firing line, and no responsible Government would have done that. Frankly, I have enough respect for the intelligence and judgment of the right hon. Gentleman to believe that he would not have adopted that stance if he and his friends had been re-elected.
Ian Swales (Redcar) (LD)
Does my right hon. Friend agree that regressive taxes are those that stay the same regardless of people’s income, such as council tax, whereas progressive taxes are those that increase with income, such as value added tax, under which the rich will pay more because they will spend more? [Interruption.] I say that as one of the qualified accountants in this House. [Interruption.]
Chris Huhne
Before Opposition Members start chortling away, let me say that my hon. Friend makes a very good point. I would merely remind Opposition Members which Government raised council tax so steeply—the most regressive tax in the entire toolkit. Year after year under a Labour Government it was pushed up and up and up.
Let me now turn to the issue of growth and jobs. At this stage in every business cycle that I have followed, going all the way back to the recovery from the bust that followed the Barber boom in the early ’70s, the cry always goes up, “But where will the jobs come from?” That cry is particularly urgent whenever, as has too frequently happened, Governments are trying to deal with the legacy of past fiscal misdeeds. However, the forecast from the Office for Budget Responsibility is a reasonable central assessment and is similar to independent forecasts. It shows that the biggest impetus to growth this year comes, as is usual at this point in the cycle, from the inventory cycle. Recessions inevitably put businesses under enormous financial pressure. Businesses try to raise cash by cutting output and by meeting the demand for their goods from stocks, but that process has to exhaust itself as those stocks of finished goods run down. More of the demand for those goods then has to be met from output, and businesses once again gear up production. That is where we are today. The inventory cycle is a powerful stimulus. The OBR forecast has it contributing 1.2% of gross domestic product this year.