Finance Bill (Fourth sitting)

Debate between Emma Reynolds and Angus MacDonald

Committee stage
Thursday 30th January 2025 Public Bill Committees

[Gareth Davies (Grantham and Bourne) (Con)]

As the Minister said, the clause amends the main rates of the climate change levy from April 2026, in line with RPI, for electricity, gas and other taxable commodities, while continuing to freeze the rate for LPG. We will not oppose the measures in the clause.

I was pleased to see the Government confirm their plans to extend the climate change agreement scheme at the Budget. The scheme allows energy-intensive industries to claim a discount on the climate change levy, subject to taking steps towards increasing their energy efficiency and reducing emissions. At autumn statement 2023, we announced a new six-year CAA scheme, and I am genuinely pleased that the Government have chosen to reaffirm our announcement and take that forward, following consultation.

However, as the Minister may expect, I want to raise an issue with her. It has been raised at oral questions, so will not be a surprise to her. There have been several reports in recent weeks about the UK chemicals industry that are directly relevant to climate change and the CCA scheme, as the Minister will know better than me. Sir Jim Ratcliffe has warned that the UK chemicals industry is at risk of “extinction”. His firm, INEOS, closed its synthetic ethanol plant at Grangemouth this month, which will result in the loss of many jobs. That was the last remaining synthetic ethanol plant in the country. Given the ongoing concerns, I would be grateful if the Minister could provide an update on what consideration has been given to the UK chemicals industry in calibrating these policies.

As the Minister knows, the UK chemicals industry is the third-largest manufacturing sector in this country. It contributes £30 billion to our economy and directly employs 138,000 people across the country in 4,100 businesses. I presume that the Chancellor has met representatives of the sector, but I would like to hear the Minister confirm that, given how topical this issue is, how concerned the industry is and how widely reported the issues have been.

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

As always, I speak on behalf of the highland industries. In rural areas, only electricity and kerosene are available; mains gas is not. Electricity users pay four times more for their energy than mains gas users, so a hotel on the island of Skye may pay £80,000, whereas one in a city may pay £20,000. That causes enormous issues for people in the windiest, coldest, darkest part of Great Britain. The reason for the big disparity is that the tariffs and taxes are largely on electricity, rather than gas, and of course electricity is largely renewable. In my constituency, people can see wind farms out of their window, yet we still pay four times more for our energy than people in cities. Will the Minister elaborate on what could be done to make us more competitive?

[Emma Reynolds]

I welcome the Opposition’s support for the clause. For quite some time there has been cross-party support for the CCA scheme. I welcome what the shadow Minister said about the Opposition’s support for the extension of that scheme for energy-intensive industries.

The shadow Minister asked me about the UK chemicals industry. As he said, it is a very valuable sector of our economy. It is obviously included in the climate change agreement scheme, which exists to ensure that businesses for which energy makes up a larger proportion of their operating costs, and that are at higher risk of carbon leakage, are supported to make changes to their processes to reduce their energy intensity. The example he provided is concerning, but we have introduced measures to help such industries to cope with the fact that they are energy intensive. I hope that answers his question. I do not know whether the Chancellor has met representatives of the sector, but I am happy to write to him on that.

The hon. Member for Inverness, Skye and West Ross-shire spoke about the cost of energy for people in his constituency. As I said, the rates on kerosene are frozen, which is why we are not uprating the rates on LPG. That will go someway towards helping those in rural areas. I declare an interest: I am not on the gas either, so we also rely on this form of energy.

[Mr MacDonald]

LPG is not the issue; electricity, along with kerosene, is largely the issue. Very few people use LPG to heat their properties or businesses. It is electricity where the taxes are. I would be delighted to share information; I am doing a big thing about it shortly, so I have done a lot of research.

[Emma Reynolds]

Obviously kerosene is zero rated, but the effect of the clause is to increase the main rates of CCL on gas, electricity and solid fuels by RPI. That is in line with what we announced at the Budget, and takes forward those measures, so hopefully it will come as no surprise to hon. Members.

Question put, That the clause stand part of the Bill.

High Streets: Autumn Budget 2024

Debate between Emma Reynolds and Angus MacDonald

Thursday 23rd January 2025 Commons Chamber

[The Economic Secretary to the Treasury (Emma Reynolds)]

I congratulate the hon. Member for Harpenden and Berkhamsted (Victoria Collins) on securing the debate and thank her for sharing her story of working in her mum’s gift shop. It was very moving to hear that she has had direct experience of working in a shop on the high street. I also thank her for her survey of local small businesses on her seven high streets, which is an impressive number. She outlined very well the importance of the businesses there; I think she said that there are 197 retail, hospitality and leisure businesses, employing some 6,000 people. I thank her for sharing those statistics, and the feedback from those businesses.

I share the hon. Member’s passion for the regeneration of our high streets. I think it is a concern for Members across the House. High streets are focal points of economic activity, but most importantly—she said this in her speech—they are often a key part of the unique character of our communities. We know that high street businesses are contending with a range of challenges. She listed some of them, but I will list a couple: changing consumer shopping habits and the rise of online shopping, and a series of economic headwinds, including the pandemic, which we know was particularly difficult for small, independent businesses on the high street.

The Government are committed to reforming Britain’s economy to bring about a decade of national renewal. Creating an environment in which our high streets are able to flourish is critical to that commitment. In her speech, the hon. Member recognised the Government’s dire economic inheritance from the Conservatives, none of whom are in the Chamber. We had some very difficult decisions to make in the Budget, but it was necessary to wipe the slate clean to deliver the economic stability that high street businesses need.

[Mr MacDonald]

Will the Minister say why taxes were put on poor, struggling organisations, such as high-street shops and hotels, rather than the massive online businesses that are emptying our high streets? Why did she not consider imposing a higher rate of corporation tax or income tax, rather than hitting the poorest businesses in our society?

[Emma Reynolds]

The hon. Member pre-empts my next sentence, so I thank him for that. We have committed to reforming business rates, because we need a fairer system, fit for the 21st century. That important part of our reforms and plans will, I hope, benefit the businesses that the hon. Member for Harpenden and Berkhamsted spoke about.