Petition
I refer members to PE68 from the National Farmers Union of Scotland, which calls for the agriculture sector to be exempted from the proposed climate change levy. I also refer members to the covering note.
The petition was referred to the Transport and the Environment Committee by the Public Petitions Committee, and the Rural Affairs Committee was asked to give us comments. At a meeting on 29 February, the Rural Affairs Committee agreed to
"alert the Transport and the Environment Committee to the agricultural community's concerns that there might be a differential, and say that, when the taxing policy comes to fruition, it should be sensitive to rural and urban needs."—[Official Report, Rural Affairs Committee, 29 February 2000; c 425.]
Members will be aware that the implementation of the climate change levy is a reserved matter. There are three main options open to the committee. First, we could note the petition. Secondly, we could write to the Executive setting out the concerns raised by the petitioner, seeking information on the available options in the context of devolution. Thirdly, we could write directly to the Whitehall department, expressing the concerns raised by the petitioner.
Are there any comments?
The second and third options are not mutually exclusive. Presumably we could do both.
Yes.
I have much sympathy with the petition. Agriculture is in a difficult financial position. The petition also identifies several areas where our agricultural sector is at a geographic disadvantage—we cannot grow tomatoes here, except under glass. There are things that the sector has to do and energy that it has to use.
I could not quite find the reference, so I eventually dug out a Department of the Environment, Transport and the Regions press notice, issued in December, about the agreements that the UK Government reached with manufacturing industry. The proposal is to rebate the climate change levy by about 80 per cent in exchange for an agreed strategy on energy-efficient targets. That sort of quantitative, negotiated, consensual and gradualist approach is better than a crude fiscal measure.
I am sure that there is every justification for saying that agriculture has to become more energy efficient, and I imagine that the financial pressures that those guys are under just now make them conscious of that. However, I am sure that that would be a more constructive route to take than simply taxing them, especially when they cannot earn the benefits from the national insurance dividend. I would like us to adopt a sympathetic response and communicate that to the Executive, with a steer that we would still like work to be done to achieve energy efficiency. That is important, but we do not want to penalise the industry.
You might expect me to take a hard line on energy efficiency, but through working on the organic food and farming targets bill, I have become conversant with the current problems with agriculture in this country. The amount that we would gain by imposing a climate change levy on farmers would not be significant compared to the contribution that would be made by transport and by home heating. What we could lose by pushing small farmers and the horticulture sector to the very edge of profitability swings the balance in favour of the arguments—made in the petition and by Murray Tosh—that we should support the agricultural sector.
We should offer our support, with the caveat that farmers should play their part in achieving energy efficiency gains in the fullness of time, but not until we have sorted out the other problems of the agriculture sector through European funding and support. Once agriculture has gone through those changes, the farmers will be in a better position to play their part in energy efficiency. To hit them with the climate change levy now would be quite inappropriate.
I agree with Robin Harper and Murray Tosh that we should note the petition with sympathy and agree with the petitioners. First, however, we need to know the Executive's position and how it relates to Westminster. We have seen the statutory instrument this morning—clearly, things are moving apace and steps are being taken to deal with pollution—but I would like to know the overall thinking. It is not simply to do with controlling air quality, or the climate change levy. The Utilities Bill also ties into this policy area.
We need to be told how the Executive sees those three things interacting and what it thinks will be the effect. Farmers are saying that it will cause problems, but no doubt other industries also have legitimate grievances. We need to know what outcome the Executive predicts from the air quality control strategy, the climate change levy and the Utilities Bill. Without that knowledge, we will be dealing with matters piecemeal and in a reactive fashion, instead of gathering them together. I suggest that we note the petition, say that we sympathise and are considering the matter, and ask the Executive to deal with all three matters and tell us where it thinks that the nation is going over the next 10 or 20 years.
I come at the question from a slightly different tack from Kenny MacAskill, but we reach the same end point. The farming sector benefits from a series of subsidies. We must ask whether the Government, in imposing the climate change levy, should reflect the circumstances that Murray Tosh described when allocating subsidies, rather than exempting farmers from the levy. There are two ways of recognising those circumstances. As Kenny said, it is all part of a general package.
My general inclination is against giving a series of different groups exemptions from the climate change levy, because having a broad environmental strategy is an important issue of principle. There may be different ways of taking into account the concerns and requirements of the Scottish agricultural sector. The problem should be considered in the round, so that we can identify the best approach. Are exemptions from the climate change levy best, or should we reconsider the pattern of distribution of subsidies and how that pattern reflects certain circumstances such as energy use?
I want to make a general point on behalf of the agricultural sector. It has been said that subsidies are always being flung at that sector, but we must accept that the subsidy is not for the agricultural industry but for the consumer of the eventual end product.
I liked Murray Tosh's idea. If a climate change levy is implemented, people could get that money back as a rebate to help them to tackle energy efficiency. I am coming round to the idea of obtaining more information about the options before we come to a final decision about the petition. We should examine more thoroughly the implications of the climate change levy.
I want to clarify my position on the petition. I am not saying that the agricultural industry should be exempted from the climate change levy in the long term. However, at present, it seems clear that the agricultural industry—certain sectors of that industry in particular—would not be in a position to survive the imposition of the climate change levy in the way in which that is envisaged. One could go down the line of exempting those sectors from the levy, or one could postpone its application until the position of the agricultural industry is clearer. One could allow time to consider suggestions, such as Murray Tosh's, that the levy could go back to the person paying it as a subsidy for the implementation of energy efficient methods, which would recycle the levy in a positive way.
I fear that Des McNulty's approach will take us into the debate about agricultural subsidies, payments, agri-environmental schemes and so on; it opens up an enormous area that is not really in our remit.
I go along with Robin Harper's comments. The time is absolutely not right for implementing the climate change levy in the agricultural industry. There should be a clear strategy for considering energy efficiency within the agricultural sector. A specific agreement was reached with a range of manufacturing industries that are all big energy users, including the producers of cement, food and drink, glass, metals of various types, paper, and chemicals. That agreement was for a discount of 80 per cent in exchange for the development of an industry strategy to work towards agreed targets.
That is a far preferable way in which to approach the application of levies such as the climate change levy. One should not clobber people with crude fiscal methods; rather, one should engage the sector's leadership in dialogue about how significant improvements could be undertaken. That is the approach that the Government should take towards the agricultural industry. I agree with Robin Harper: now is not the time to put burdens on that industry.
I am content with options 2 and 3, which are to write to the Executive and to the relevant Whitehall department. We should say that we want to investigate the trade-offs that Murray Tosh mentioned and to consider the broader picture of climate change and the Utilities Bill, to which Kenny MacAskill referred, and how they fit in with other initiatives, such as the air quality strategy.
In our letter we should specify the responses that we are seeking and when we want to receive them, given that one of the issues involved is much broader and that we may wish to revisit it. We will reflect the petitioners' concern, but also deal with the issues that have been raised by committee members. We will segment the responses, so to speak, to ensure that we get early action on the issues for which we want it. We may then come back to the broader issue of the overall strategic objectives at a later date.
We view this petition sympathetically and will pass on the petitioners' concerns. We will also take further the issues raised by committee members. Are members happy with that approach?
Members indicated agreement.