Finance (No. 3) Bill

Debate between David Drew and Robert Jenrick

Committee: 1st sitting: House of Commons
Monday 19th November 2018 Commons Chamber

[Dr David Drew (Stroud) (Lab/Co-op)]

Does the Minister accept that now that the Government have greater freedom of operation, this is fairly timid? We have an emissions crisis in this country, as we do across the rest of the world. Why are the Government not being more ambitious in trying to bear down on emissions, as seen in the Intergovernmental Panel on Climate Change report?

[Robert Jenrick]

I appreciate the point the hon. Gentleman makes, but perhaps he has missed the argument I have tried to make, which is that this is not prejudging the later outcome of how we should handle our carbon pricing as we leave the EU; it is trying to ensure that in the unlikely event, which the Government wish to avoid, of a no-deal Brexit we can maintain the system as close as possible to the present one. We chose the price of £16 because that is broadly the same as where the EU’s floating price has been in recent months. Of course the price has floated very widely from as low as £6 to as high as over £20, so making that assessment is not a precise exercise, but we believe that £16 is a reasonable figure to maintain stability, and that seems to have been well received by the industry and environmental groups.

Clause 90 is about preparatory expenditure. Alongside preparing for no deal, the Government are developing long-term alternatives to the EU emissions trading scheme. As set out already in the outline political declaration on the future relationship between the EU and the UK, we are considering options for co-operation on carbon pricing, including, if possible, linking a UK national greenhouse gas emissions trading system with the EU ETS. Clause 90 will allow Departments to begin preparatory expenditure on a UK ETS, which is included in the Bill, to prepare for a linked or unlinked domestic trading scheme. It does not mean, as I said earlier, that a final decision has been made as to which option to implement, but it does ensure that all the options are kept open and we can proceed with the kind of planning that one would expect.

I shall now turn briefly to amendments 8, 9 and 10 and new clause 10 tabled by the SNP. Amendments 8 and 9 propose that the Government must table a statement on the circumstances that require expenditure in the case of clause 90 and an estimate of the expenditure to be incurred and that the House would come to a resolution to approve that expenditure. New clause 10 and amendment 10 would require the Chancellor to review the expenditure implications of the carbon emissions tax and lay a report of that review before the House within six months of the passing of the Bill, and no regulations could be made by the commissioners unless that had taken place.

A statement of circumstances, as required by amendments 8 and 9, is in our opinion unnecessary. We are legislating because the UK is leaving the EU, and as part of that we have to prepare a domestic ETS, as mentioned in the outline political declaration, and for a carbon emissions tax only in the event of no deal.

More importantly, with all these amendments, the Finance Bill is not and has never been the place for detailed questions of expenditure. The Finance Bill is primarily a Bill about tax. Parliament gets other opportunities to review and vote on departmental expenditure, and if that is important to the hon. Member for Aberdeen North (Kirsty Blackman), I suggest that she direct her scrutiny to the estimates process when it arises in due course.

New clause 17 would require the Chancellor to review the carbon emissions tax to determine its effect on the UK carbon price and the UK’s ability to comply with its fourth and fifth carbon budgets. We are confident that the carbon emissions tax would be similarly effective to the EU ETS, and I can assure Members that there are already robust requirements to report on progress towards the UK’s emissions reductions targets. For example, the Climate Change Act 2008 provides a world-leading governance framework that we certainly support. First, it ensures that the Government are required to prepare and lay before Parliament an annual statement of emissions, setting out the total amount of greenhouse gases emitted to, and removed from, the atmosphere across the UK and the steps taken to calculate the net UK carbon accounts. Secondly, the independent Committee on Climate Change is required to prepare and lay before Parliament an annual report on the Government’s progress towards meeting the UK’s carbon budgets, which the Government are required to respond to. Thirdly, the Government are required to prepare and lay before Parliament a statement setting out performance against each carbon budget period and the 2050 target. We believe that, taken together, these are strong existing mechanisms, which are respected and understood, to ensure that we monitor and report to Parliament on greenhouse gas emissions. I therefore urge hon. Members to reject new clause 17.

Let me turn to amendments 2, 7 and 21 to clause 89, which deals with minor amendments in consequence of our EU withdrawal. We need to ensure that the tax system continues to work effectively and that we maintain stability and certainty, including in the event that the UK leaves without a deal. To allow us to do that, clause 89 will allow minor technical amendments to be made to UK tax law to keep it working as it does now and to update it to continue to work with changes made to other areas of law on account of EU exit. Clause 89 will provide the Government with the power to make such minor amendments.

These are, I stress again, minor and technical changes that are absolutely necessary to maintain the continued effect of tax legislation in the unlikely event of no deal. I can reassure the Committee that the power is not being taken to make changes to do anything other than ensure that existing tax legislation continues to have effect in the event of no deal. It will not be used to change tax policy or the tax paid by taxpayers. To reassure the Committee of that, I have placed a list of changes that the Government intend to make under the power in the Library and sent a copy to the shadow Chief Secretary to the Treasury.