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Finance Bill

It is a pleasure to follow the hon. Member for Beverley and Holderness (Mr. Stuart), although I was deeply disappointed that in his passionate espousal of the cause of the working poor he was not able to remind us what the standard rate of income tax for the working poor was under the previous Tory Government and at what level of earnings that 23p standard rate of income tax kicked in. Before we progress this debate, we must expose the hypocrisy of those on the Conservative Benches when they now talk about the plight of the working poor. I feel strongly about some aspects of the elimination of the 10p rate of income tax, but I do not intend to focus my remarks on that. I should say that I associate myself with the general approach adopted by my right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher). He gave the House some specific suggestions on the way forward, and I hope that the Government will consider some of them in the next few days. I want to draw attention to the hidden agenda of this Budget. Overall, the Budget is a good one for the vast majority of British people: it supports pensioners, children and families, and it makes the vast majority of British people better off. There is a difficulty with the anomaly of the impact of the abolition of the lower rate on a certain group of people, and I know that many others have discussed that. What this Budget also does, possibly for the first time in 11 years of Labour Budgets, is take seriously the issue of climate change and the environment. Interestingly, although I have not been here for the entire debate I cannot recall a single Conservative Member touching on that issue. The Budget of course paves the way for the establishment of five-year carbon budgets. The UK is the first country in the world to adopt that policy. It makes an important commitment that in the third phase of the European Union emissions trading scheme 100 per cent. of permits will be auctioned, which is an enormous improvement on phases one and two; and it recognises that the taxation of aviation has to change from a per person basis to a per plane basis. To their credit, the Opposition have raised that issue over the past year or two, but they chose not to mention it this evening. The Budget also takes other important steps forward in respect of transport taxation, particularly the changes to fuel duty and vehicle excise duty, and contains ambitious targets for zero-carbon homes and new buildings. I want to say a word or two in support of fuel duty, because in this House, over many years, fuel duty has been the issue that almost everyone has united against. We now need to realise, given not only the urgency of the problem of climate change but the imminence of peak oil, that fuel duty is a sensible, effective, environmentally sustainable and efficient form of taxation. It is socially just, because it impacts least on those who consume the least amount of fuel. It is easy to collect and, in the long term, it will serve to conserve our supplies of fossil fuel, rather than burn them off in a great orgy of consumption. I want to put the case for fuel duty, but I do not argue that fuel duty should rise infinitely every year without any changes to other forms of taxation. What is especially good about the Budget is that it balances a slight increase in fuel duty with a significant reduction in income tax. That is the way forward and, for the first time in 11 years, the Government have started to take seriously the important message about shifting the burden of taxation from the bads to the goods, reducing taxation on income and labour and increasing taxation on pollution, and I welcome that. I am just desperately sorry that the official Opposition, who have tried over the past two years to identify themselves opportunistically with the politics of climate change and the environment, are silent on the really important measures in the Budget. I welcome the ambitious targets for zero-carbon buildings. All new homes should be zero-carbon by 2016 and all new commercial buildings by 2019. However, we still have the problem that the overwhelming majority of buildings in the country are not new. Most were built decades ago and, in some cases, centuries ago. We have to do more to address the problem of retrofitting those buildings, because they are the source of the most significant proportion of carbon emissions. I know that other hon. Members wish to speak, so I shall conclude my remarks. Although the Budget does the right things in terms of climate change and the environment—it takes huge steps forward—the Government need to do more. We have not yet succeeded in properly explaining to the population as a whole the purpose of this historic shift in the basis of taxation away from taxation of labour to taxation of pollution. My final comment is an appeal to my right hon. Friend the Minister—I am sure that she will pass this on to other Treasury Ministers and the Chancellor—to ensure that taxation goes hand in hand with explanation. If the Government do not take more seriously the need to explain to the citizens of the United Kingdom the urgency of the challenge of climate change and the imminence of the threat of peak oil, we will not be successful in building support for the green tax policies that the Government are now successfully pursuing.