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Parliamentary Debates House of Commons Official Report General Committees PARLIAMENTARY DEBATES HOUSE OF COMMONS OFFICIAL REPORT GENERAL COMMITTEES Public Bill Committee FINANCE BILL (Except clauses 1, 5 to 7, 11, 72 to 74 and 112, schedule 1, and certain new clauses and new schedules) Eleventh Sitting Tuesday 10 June 2014 (Afternoon) CONTENTS Programme order amended. CLAUSES 90 to 93 agreed to. SCHEDULE 16 agreed to. CLAUSES 94 and 95 agreed to. SCHEDULE 17 agreed to. CLAUSES 96 to 100 agreed to. SCHEDULE 18 agreed to. CLAUSES 101 to 106 agreed to. SCHEDULE 19 agreed to. CLAUSES 107 and 108 agreed to. SCHEDULE 20 agreed to. CLAUSES 109 and 110 agreed to. SCHEDULE 21 agreed to. CLAUSES 111 and 113 agreed to. SCHEDULE 22 agreed to. CLAUSES 114 to 117 agreed to. Adjourned till Thursday 12 June at Two o’clock. Written evidence reported to the House. PUBLISHED BY AUTHORITY OF THE HOUSE OF COMMONS LONDON – THE STATIONERY OFFICE LIMITED £6·00 PBC (Bill 190) 2014 - 2015 Members who wish to have copies of the Official Report of Proceedings in General Committees sent to them are requested to give notice to that effect at the Vote Office. No proofs can be supplied. Corrigenda slips may be published with Bound Volume editions. Corrigenda that Members suggest should be clearly marked in a copy of the report—not telephoned—and must be received in the Editor’s Room, House of Commons, not later than Saturday 14 June 2014 STRICT ADHERENCE TO THIS ARRANGEMENT WILL GREATLY FACILITATE THE PROMPT PUBLICATION OF THE BOUND VOLUMES OF PROCEEDINGS IN GENERAL COMMITTEES © Parliamentary Copyright House of Commons 2014 This publication may be reproduced under the terms of the Open Parliament licence, which is published at www.parliament.uk/site-information/copyright/. 377 Public Bill Committee10 JUNE 2014 Finance Bill 378 The Committee consisted of the following Members: Chairs: MARTIN CATON,†MR GARY STREETER Burt, Lorely (Solihull) (LD) † Mahmood, Shabana (Birmingham, Ladywood) † Dakin, Nic (Scunthorpe) (Lab) (Lab) † Dinenage, Caroline (Gosport) (Con) † McKenzie, Mr Iain (Inverclyde) (Lab) † Duddridge, James (Rochford and Southend East) † McKinnell, Catherine (Newcastle upon Tyne North) (Con) (Lab) † Elphicke, Charlie (Dover) (Con) † Mearns, Ian (Gateshead) (Lab) † Evans, Chris (Islwyn) (Lab/Co-op) † Menzies, Mark (Fylde) (Con) † Fuller, Richard (Bedford) (Con) † Morgan, Nicky (Financial Secretary to the Treasury) † Garnier, Mark (Wyre Forest) (Con) † Pearce, Teresa (Erith and Thamesmead) (Lab) † Gauke, Mr David (Exchequer Secretary to the † Pincher, Christopher (Tamworth) (Con) (Hastings and Rye) Treasury) † Rudd, Amber (Con) † Rutley, David (Macclesfield) (Con) † Gilmore, Sheila (Edinburgh East) (Lab) Shelbrooke, Alec (Elmet and Rothwell) (Con) † Glindon, Mrs Mary (North Tyneside) (Lab) † Smith, Henry (Crawley) (Con) † Hames, Duncan (Chippenham) (LD) † Swales, Ian (Redcar) (LD) † Heaton-Harris, Chris (Daventry) (Con) Vaz, Valerie (Walsall South) (Lab) † Jamieson, Cathy (Kilmarnock and Loudoun) (Lab/ † Wheeler, Heather (South Derbyshire) (Con) Co-op) † Williamson, Chris (Derby North) (Lab) † Kane, Mike (Wythenshawe and Sale East) (Lab) Wilson, Sammy (East Antrim) (DUP) † Kwarteng, Kwasi (Spelthorne) (Con) † Leadsom, Andrea (Economic Secretary to the Matthew Hamlyn, Kate Emms, Committee Clerks Treasury) † Leslie, Chris (Nottingham East) (Lab/Co-op) † attended the Committee 379 Public Bill CommitteeHOUSE OF COMMONS Finance Bill 380 The Financial Secretary to the Treasury (Nicky Morgan): Public Bill Committee It is a pleasure to serve under your chairmanship, Mr Streeter. We have had an interesting debate on this Tuesday 10 June 2014 grouping, and I thank all hon. Members for their contributions. (Afternoon) Clauses 90 to 93 and schedule 16 make changes to the main rates and carbon price support rates of the climate [MR GARY STREETER in the Chair] change levy. They provide for exemptions from the levy for energy used in metallurgical and mineralogical processes. Finance Bill The climate change levy is designed to encourage the efficient use of energy and to reduce emissions by (Except clauses 1, 5 to 7, 11, 72 to 74 and 112, schedule 1, creating an incentive to use less energy and to source and certain new clauses and new schedules) electricity from renewable sources. Clause 90 increases the main rates of the levy in line with the retail prices 2pm index from 1 April 2015, as has been standard practice Amber Rudd (Hastings and Rye) (Con): I beg to since 2007. The new rates will apply to supplies of move, That the Order of the Committee of 29 April be taxable commodities made to business and the public amended as follows: sector on or after that date. That will ensure that the main rates of levy remain constant in real terms and ‘In paragraph (1) (g), leave out the words “11.30 a.m. and”.’ that the levy maintains its environmental impact by The motion will cancel the Committee’s planned encouraging businesses to reduce their energy use. sitting on the morning of Thursday 12 June, although Consistent with previous increases, the rates are being we will still meet at 2 pm on that day. announced a year before they come into effect to enable Question put and agreed to. business to prepare and to give time for energy suppliers to get their billing systems ready. Clause 90 On clause 91, the carbon price floor that came into effect on 1 April 2013 has two components: the market CLIMATE CHANGE LEVY: MAIN RATES FOR 2015-16 price for carbon under the EU emissions trading system; Question (this day) again proposed, That the clause and a UK-only element, which is the carbon price stand part of the Bill. support rate per tonne of carbon dioxide. Legislation sets out the carbon price support rates for the individual The Chair: I remind the Committee that with this we taxable commodities and, to provide certainty, those are discussing the following: rates are announced two years in advance. Clause 91 stand part. An ambiguity in published data affected the calculation Amendment 25, in clause 92, page 84, line 16, at end of the solid fossil fuel rates included in the Finance Act insert— 2013. The clause corrects the carbon price support rates ‘(3) The section shall not come into force except as specified in of climate change levy for coal and other solid fuels for subsection (2) below. 2014-15 and 2015-16 to ensure that they are consistent (1) The Chancellor of the Exchequer shall bring the section with how the rates for other commodities have been set. into force by order within six months of the passing of this Act. As I go through the clauses, I will try to answer the (2) A statutory instrument containing an order under questions asked by the hon. Member for Newcastle subsection (3) shall be accompanied by a report which details— upon Tyne North. On the error in the calculation, (a) the impact of the provisions in the section on carbon price support rates per taxable commodity are consumers and on fuel poverty; calculated by applying the carbon emission factor for (b) the impact of the provisions in the section on each commodity to the underlying rate per tonne of energy-intensive industries and on employment in carbon. In the case of solid fossil fuels, the carbon price those industries; support rate of the climate change levy is set in pounds (c) the level of carbon leakage in the energy-intensive per gigajoule of energy content. The previous legislated industry as a result of the provisions in this section; rates were calculated using Department of Energy and (d) the effect of the provisions in the section on investment in new renewable power generation and on Climate Change data on the calorific value of coal used investment in new nuclear power generation; in power stations and Department for Environment, (e) any effective subsidy provided to, or additional profits Food and Rural Affairs data on carbon dioxide released accruing to, operators of existing and new nuclear from coal used in electricity generation. power stations as a result of the provisions in the Unfortunately, the ambiguity in the published data section; affected the calculation of the solid fossil fuel rates in (f) what additional package of measures will be enacted to the 2013 Act. The calorific value of coal burned by mitigate the impact of the section on energy-intensive generators was found to reflect the energy content of industries; only UK-produced coal, but imported coal is consumed (g) the impact on business investment of— in UK power stations, and that often has a higher (i) changes to Schedule 6 to the Finance Act 2000 calorific content per tonne than UK coal, and therefore made by Finance Act 2011; a lower carbon emission factor per gigajoule. As a (ii) changes to Schedule 6 to the Finance Act 2000 result, the carbon price support rates for the two years I made by this Act.” mentioned were set too high, resulting in coal-fired Clauses 92 and 93 stand part. power stations being taxed more per tonne of carbon That schedule 16 be the Sixteenth schedule to the emitted than other forms of electricity generation, which Bill. was contrary to the Government’s intention. I stress 381 Public Bill Committee10 JUNE 2014 Finance Bill 382 that the methodology is sound and has not been altered price support rates will reduce electricity bills for all as a result of identifying the ambiguity. The ambiguity businesses. By 2018-19, businesses will have saved around in the published data has now been corrected by officials. £4 billion, and a typical uncompensated energy-intensive The hon. Lady asked about the amendment of the firm will save around £800,000 in 2018-19. In 2018-19, rate. The error was not identified in time to correct the capping the carbon price floor should take £15 off the rate for 2013-14, and the Government do not intend to average household bill, which will be in addition to the amend it retrospectively, because generators sold their £50 on average that the Government have saved for output in 2013-14 at prices reflecting the tax rate that households through the changes they announced at the was then in force, so any rebate would effectively constitute autumn statement.
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