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Finance (No. 2) Bill

We had a wide-ranging debate on a narrow set of amendments, but I should make some remarks in the clause stand part debate. In general terms, I welcome the fact that climate change is increasingly recognised as one of the most serious global challenges that we face. In the UK, we produce just 2 per cent. of global greenhouse gas emissions, but we must build on the progress that we have made on our Kyoto obligations. We are and remain one of the few countries on track to meet our obligation. We must also build on our ambitious domestic goals to cut carbon and move to a low-carbon economy. It is right to do more and it was right for the Chancellor to have done more in his Budget announcements. Transport is one of the key sectors in which we need to build on existing reforms. It is the second largest source of carbon dioxide emissions in the UK and a source of significant air pollution. The vehicle excise duty system has been radically restructured, and it is now based on carbon emissions. Under this Labour Government, the UK has taken the lead in introducing a structure for vehicle taxation that differentiates according to CO2 emissions, just as we did with the climate change levy and the first economy-wide emissions trading scheme. The European Commission has recommended that graduated VED should form the blueprint for vehicle taxation across the EU. The graduated VED system is designed to provide a signal to consumers at the point of purchase to bear in mind the environmental impact of the models that they are considering.