Energy Bill

Debate between Nigel Evans and Michael Meacher

Wednesday 19th December 2012 Commons Chamber

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

The interpretation that the Secretary of State put on the two main mechanisms underpinning the Bill was, in my view, disingenuous at best and seriously misleading at worst. Under the contracts for difference, the Government will agree a strike price with an electricity generator, offering a guaranteed payment per megawatt-hour of electricity. That means that nuclear generators will have a built-in certainty that, come what may, they will get whatever they demand as a necessary return on their investment—and nuclear plants do not come cheap at £8 billion a time—courtesy of the taxpayer.

Today the Secretary of State repeated again the fake promise that there will be no public subsidy. Parliamentary answers of 8 March 2011 showed that the cost of generating new electricity will be up to £98 per MWh, yet even EDF’s chief executive, Vincent de Rivaz, has estimated that the strike price will be at least £140 per MWh. That implies a public subsidy of £4 billion or more. However, Citigroup analysts have estimated that it is likely to be £166 per MWh. That would require a public subsidy of £5 billion—so much for there being no public subsidy.

Then there is the issue that nuclear costs are on an ever-rising spiral, while renewable costs are set to fall dramatically. For example, large-scale solar will reach grid parity prices this coming year, so feed-in tariff payments to renewable technologies have falling digression rates attached to them, requiring ever lower annual payments for their electricity. Nuclear, however, is a technology requiring an internal subsidy on a rising cost curve. Contracts for difference are therefore in this Bill the mechanism to lock the UK into an ever rising cost spiral for uncompetitive nuclear.

Then there are the so-called capacity mechanisms, which bail out the old fossil fuels. Wind, waves and sun are, of course, free, unlike gas. The obvious policy is to give them priority in meeting grid requirements, leaving the more expensive and polluting fossil fuels to fill in the gaps. That is exactly what happens in Germany, which has reduced the price of electricity at peak demand by between 25% and 40%. If that were done in the UK, it is estimated that it would generate another 77,000 jobs and remove nine out of 10 families from fuel poverty. But that is not what is going to happen in this country under the Bill. Experience in the US of the first six rounds of capacity payments showed that existing fossil fuels took over 70% of the payments under such auctions. It is really tragic that this Government are squeezing renewables in this way, even though they are the most cost-effective methods.

There is one further absurdity. DECC’s own demand-reduction project, published in July this year, found the following:

“We have identified…155 TWh of demand reduction potential…across all…sectors, of which current policy is estimated to capture…54 TWh”.

Frankly, that undermines the whole case for building any nuclear power stations at all, since the 100 or so TWh of savings that remain to be captured are almost exactly the same as the total quantity of electricity that the eight new nuclear power stations are expected to generate.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order.

Income Tax

Debate between Nigel Evans and Michael Meacher

Wednesday 28th November 2012 Commons Chamber

[Mr Meacher]

I believe that second or third homes—and all other non-primary homes—should incur a higher rate of tax. I never supported the discount given for second homes, which has now been raised to a level nearly equal to that for first homes, and there is a case for the rate for empty homes being raised above that.

As I was saying, HMRC’s report shows that the loss will be £3 billion a year, as opposed to the sum that the Exchequer Secretary kept on talking about today: the £100 million that Treasury Ministers signed off originally, on the basis of arcane taxable income elasticity calculations, about which the Government’s own Office for Budget Responsibility said there was huge uncertainty.

A table given in Hansard on 25 April this year, at column 898, is also interesting. It shows that 80% of those earning more than £1 million paid more than 40% in tax. In other words, tens of thousands of people were—and are—paying the 50p tax rate. They were unable to dodge it. That is an important point, because it serves to destroy the Government’s argument that the 50p rate is a very inefficient method of raising tax revenue and that its abolition will have a negligible effect. I think it will have a very significant effect.

The Exchequer Secretary’s other argument in support of cutting the 50p rate was the old Thatcherite canard—which he stated repeatedly in his speech—that we should not tax the wealthy more because we depend on them for our future. That is the old trickle-down theory. However, we know that the opposite is, in fact, the case. Over the past 30 years, there has been a steady trickle-up effect. There has been a ballooning of inequality, with most middle England incomes having stagnated. That would not be so bad if the trickle-up effect made us more competitive.

The fact is that since 1987, when the top rate went down from 83% to 40%, we have not had a surplus on our current account in the balance of payments for the past 35 years. Our share of world trade was 6.5% in 1970, but it has dropped by two thirds to just 2.3% and our deficit on traded goods last year was £100 billion. That is a monument of uncompetitiveness.

Not only did the Chancellor originally impose £18 billion cuts on the poorest families in the country, but he is now proposing a further £10 billion of cuts to fill the gap left by his failed deficit-cutting policies. The housing benefit cuts that are coming in next April will remove thousands of families across the country from their homes because they simply will not be able to pay the rent. The disability living allowance cuts will leave thousands of disabled people housebound. Atos is cutting a swathe through thousands on incapacity benefit who simply cannot get a job. The poor are being punished for what they did not do, and the rich, who have a great deal to answer for, are almost getting off unscathed.

The second reason for keeping the 50p rate is that the very rich are in a far better position at this time to contribute to meeting Britain’s needs. According to The Sunday Times rich list published this April, the richest 1,000 people—a tiny group who make up 0.003% of the adult population—racked up gains in the past three years of austerity of £155 billion. If those gains were charged to capital gains tax, about £40 billion would be raised. Perhaps the real figure would be less and only £20 billion or £30 billion would be raised, but if it were well invested, it would be enough to kick-start the economy and begin to reduce the deficit in a way that we need to do—by real growth.

The third reason for keeping the 50p rate is the real anger building up across the country about what rich individuals and rich multinationals are getting away with on tax avoidance. I return to the Exchequer Secretary’s table, because it shows that 9% of those earning more than £10 million, which is more than £200,000 a week, paid tax at a lower rate than their cleaning ladies—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order.