Asked by
To ask Her Majesty’s Government what assessment they have made of
the benefits of implementing a tax strategy that aligns with the
United Kingdom’s net zero greenhouse gas emissions target.
(Con)
My Lords, this Government are committed to net zero and take
their legally binding climate commitments very seriously. The UK
emissions trading scheme and a wide range of taxes, including the
climate change levy and vehicle excise duty, are designed to
encourage businesses and consumers to make greener choices. The
Government’s net-zero strategy will be published later this year.
Any tax changes in future will be considered and announced by the
Chancellor.
(LD)
My Lords, I declare my interests as set out in the register. In
2019, UK taxes per barrel of North Sea oil were just $1.72,
compared with Norway’s $21.35. HMRC estimates that the cost to
taxpayers of tax relief for decommissioning the mess the oil
companies created themselves is at least £24 billion. Does the
Minister think that providing huge tax subsidies to fossil fuel
industries while refusing to consider tax incentives such as
stamp duty rebates to improve tax efficiency is sending the right
signals to meet the net-zero target?
(Con)
My Lords, we are conscious that the net-zero transition requires
us to think more strategically about the role of levers that
change the price of emitting greenhouse gases in supporting that
transition—including carbon prices through taxes or emission
trading schemes—and we are doing that work in the context of the
net-zero review.
The Lord Speaker ()
I call the noble Lord, . ? I call the noble
Lord, .
(LD)
[V]
My Lords, the House is considering the Environment Bill at the
moment. It has important environmental principles within it, but
strangely enough, the Treasury is excluded from them. The Bill
says that
“taxation, spending or the allocation of resources within
government”
are not included in those principles. Given the important and
excellent Dasgupta report that the Treasury produced, will it
reconsider that position and persuade the Defra Secretary of
State to include Treasury expenditure within those principles?
(Con)
My Lords, the Government are committed to meeting their legally
binding climate change targets and use the tax system to aid
this, alongside a suite of other policy instruments. However, in
designing tax policy, the Government have to balance their
environmental obligations with the need to ensure that revenues
are sustainable and economically optimal and enable the
Government to continue to fund crucial public services and other
priorities.
(Con)
My Lords, does my noble friend agree that, be it net zero or
other overriding objectives, we will be best served by a digital
tax system which is inclusive, underpinned through distributed
digital ID, and not only revenue generating but fundamentally
changing for the better the very social contract within which we
all operate?
(Con)
I absolutely agree with my noble friend’s point. That is why,
last July, the Government published their 10-year vision for
delivering an effective and modern tax system—the tax
administration strategy. If any noble Lords want to read that
exciting document, it is on GOV.UK. The strategy includes an
extension to making tax digital, intended as the first phase of a
modern, digital tax service.
(CB)
My Lords, I declare my interest as co-chair of Peers for the
Planet. I welcome the Minister’s remarks about thinking more
strategically on tax issues. The recent Climate Change Committee
report recommended a net-zero test for every government policy,
and the recent Public Accounts Committee report on environmental
tax measures suggested that, from the next Budget, Her Majesty’s
Treasury should both assess the environmental impact of every tax
change considered and publish the expected environmental impact
for each tax measure in the Budget. Will the Government accept
those two recommendations?
(Con)
My Lords, the Government will respond to the Climate Change
Committee’s report by October, as they are obliged to. They have,
in fact, already responded to the PAC recommendations. While the
Government have taken on a number of those recommendations, they
disagreed with that specific one. We recognise the importance of
considering the impact of tax on environmental measures and make
those assessments where relevant. However, we think that the
recommendation may constrain the Government and place undue
burdens. For example, in looking at income tax thresholds or
national insurance tax rates, those environmental considerations
would not be proportionate or relevant.
(Lab) [V]
My Lords, the Treasury promised a net-zero review on 2 November
2019. It said that this review would cover
“how the transition to net zero will be funded”
and
“consider the full range of government levers, including tax.”
It was to be published “in autumn 2020”—seven months ago. In June
2021, the Climate Change Committee recommended that the Treasury
“Complete the overdue Net Zero Review”.
On 22 June 2021, the shadow Chancellor asked twice when the review would be published. The best she
got was “imminently”. I looked up what “imminent” means. It means
“coming or likely to happen very soon”. Surely that assurance
given two weeks ago must mean now. Sadly, I heard the Minister
say “later” earlier in her answers. Does she agree that the
Treasury’s net-zero review is crucial to tackling the climate
change emergency? When will it be published? Surely it should be
now.
(Con)
My Lords, I agree with the noble Lord on the importance of the
net-zero review. He will be aware that we published an interim
report of that review to update people on progress, but I am
afraid that I do not have a further update for the noble Lord
from my right honourable friend the Chancellor on when the final
review will be published, apart from to reiterate his sentiments
that it will be imminent.
(GP)
Do the Government agree that, in view of the climate emergency,
we must move away from a fossil fuel-dependent economy? If so,
why not take to COP 26 the great, world-leading idea to bring in
a carbon tax globally? It is all in our Green Party manifesto—I
can send a copy to the Minister.
(Con)
My Lords, the Government are taking to COP 26 one of the most
ambitious nationally determined contributions towards meeting
those global climate change challenges. We are also looking at
working internationally to look at issues such as carbon leakage
across different markets, and we will continue to do so.
(Con)
We can welcome the steps that the Government have taken to
support our climate and environmental objectives through the tax
system—I am certainly eagerly looking forward to COP 26, when I
hope that the net-zero review will have been published—but can my
noble friend the Minister describe how these policies fit with
the Government’s wider climate strategy across tax, spending and
stimulating the commercial sector?
(Con)
My noble friend is absolutely right that our climate strategy
extends beyond tax. That is why the Prime Minister’s 10-point
plan mobilises £12 billion of government investment to create and
support up to 250,000 highly-skilled green jobs. Crucially, we
hope that it will also spur over three times as much private
sector investment by 2030.
(CB)
My Lords, I declare my interest as a director of Peers for the
Planet. The Energy Innovation and Carbon Dividend Act, which is
currently passing through the US House of Representatives,
proposes a carbon tax that rebates all revenue from the tax back
to households. What assessment have the Government made of such a
mechanism, which would help low and middle-income households and
may be key to ensuring public support for, and the success of,
new carbon taxes?
(Con)
My Lords, the Government look with interest at initiatives taken
across the world to tackle this important issue, particularly
around maintaining public support as we transition to net zero.
The receipts that the Government raise through their
environmental taxes already help to fund all of the Government’s
public spending commitments; these include £500 million in grants
to those buying zero-emission or ultra low emission vehicles to
make them cheaper to buy and incentivise the transition to a
cleaner option.
(Non-Afl)
My Lords, in April, I asked in Grand Committee whether it would
be useful to introduce a metric for reducing greenhouse gas
emissions in the UK as a coefficient of GDP growth. The Minister
said that he would look into it. What progress has been made on
inquiries into the practical merits of such a metric?
(Con)
My Lords, I undertake to follow up on the noble Lord’s point from
Grand Committee. I know that, as far as the Treasury approaches
these things, it is undertaking constant review of its Green Book
guidance to ensure that net-zero commitments are incorporated
into our fiscal decision-making. Although GDP remains one of our
most important economic indicators, we are working on other wider
indicators. For example, we are looking at taking the importance
of the natural environment into account when we look at our
public finances as well.
