Treasury Committee Press Notice No. 34

Session 2005-06, 24 April 2006

Failings in European energy markets are increasing British gas prices, according to Committee

The rise in energy prices appears, so far, to have had muted second-round effects, although failings in continental European markets are clearly increasing prices paid by British householders for their gas supplies, according to the Treasury Select Committee of the House of Commons, in its Fourth Report of the 2005-06 Session on The 2006 Budget (HC 994) published at 11.00 am today (Monday).

Noting the Government's proposed actions to encourage an "independent investigation" into European gas markets (and energy markets in general), MPs recommend "that the Government provide an update on the outcome in the 2006 Pre-Budget Report". Rt Hon John McFall MP, Chairman of the Treasury Committee, said: "We expect the Government to have something to show for its stated commitment to press for independent investigation of European gas markets later this year."

The Committee calls on the Government to re-examine whether it is making the fullest possible use of taxation instruments as a mechanism to achieve its environmental targets. In particular, the Committee is puzzled by the Government's incoherent and unconvincing attempts to justify freezing Air Passenger Duty for the fifth year running and recommends that the Government gives serious consideration to increasing rates of Air Passenger Duty.

Mr McFall said: "The UK is currently lagging behind on its domestic CO2 targets, and greenhouse gas emissions in the EU from international aviation rose 73% between 1990 and 2003. In this context, the explanations offered by the Treasury about the behavioural effects of its environmental tax policies, and Air Passenger Duty in particular, were unconvincing. In addition to continuing to press for action at the EU level, the Government must also act at a domestic level, to demonstrate its commitment to curbing greenhouse gas emissions arising from aviation."

The Committee welcomed the national debate promised by the Chancellor as part of the Comprehensive Spending Review. Mr McFall said: "Parliament, and the select committees of the House of Commons, will have an important role to play in the national debate on the Comprehensive Spending Review. The Treasury Committee will examine how the Government proposes to combine its commitments on education, international development and health with the efficiency drive across central and local government to arrive at spending allocations across Government which are compatible with the Government's fiscal rules."

The Report also contains a series of conclusions and recommendations relating to the analysis of factors affecting the state of the economy, the position of the public finances and certain specific Budget measures.

Mr McFall is available for comment on the report today on 020 7219 3521 (Westminster office), 0773 0987802 (mobile) or 07644 004586 (pager).


1. Committee Membership is as follows: Rt Hon John McFall (Chairman), Lorely Burt, Jim Cousins, Angela Eagle, Mr Michael Fallon (Chairman, Sub-Committee), Mr David Gauke, Ms Sally Keeble, Susan Kramer, Mr Andrew Love, Kerry McCarthy, Mr George Mudie, Nr Brooks Newmark, Mr Mark Todd, Peter Viggers.

2. Press Notice No. 34

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