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Climate Change (Economic Impact)

Volume 470: debated on Thursday 24 January 2008

The Stern review assessed a wide range of evidence on the impact of climate change and its economic costs. It concluded that the benefits of strong and early action far outweigh the economic costs of not acting. The intergovernmental panel on climate change has also assessed the economics of taking action, and come to similar overall conclusions.

I am grateful to the Chief Secretary for that answer. As he knows, the Stern report is iconic—a word that I understand could be attributed to my right hon. Friend! The report states that the Government should spend 1 per cent. of gross national product to mitigate the effects of climate change. Have we met that target? When can we hope to do so?

I am not sure that I have done anything to deserve such lavish praise from my hon. Friend, but he is right that the Stern report on the economics of climate change has changed the debate, in this country and around the world. It made it clear that the people who could suffer most from a failure to tackle climate change, or from a lack of ambition in our approach to it, are those living in the developing countries. They are the most vulnerable, and he is right to say that Stern said that the cost of not acting would be large. That is why the Government took various measures in the recent spending review to ensure that we are prepared to face the challenges posed by climate change.

Should not the committee on climate change be set up now, as a matter of urgency? It is not due to report on the 2050 target or the inclusion of aviation in that target until late 2009, and the fact that it has not been set up yet gives an impression of a lack of a sense of urgency on the Government’s part. Setting up the committee as soon as possible would send out a very good signal that the Government are intent on taking this matter forward as fast as possible.

I hear what the hon. Gentleman says, but I assure him that every step is being taken to set up the committee as soon as possible. Every action that the Government are taking makes it clear that we recognise the urgency of the situation, and we have already asked that the committee consider the new scientific evidence being produced to see whether higher targets should be set—although the target of reducing carbon emissions by 60 per cent. by 2050 remains very challenging. The Bill currently being considered in another place is pioneering and groundbreaking, and it sends a very clear signal to the rest of the world about the level of this country’s ambition.

What assessment has my right hon. Friend made of the effect of the climate change levy on industries that are high users of energy, such as the paper-mill in my constituency?

The evidence that the Treasury has collected shows that the climate change levy has reduced harmful emissions overall and has produced revenue that is useful in the fight against climate change. I recall that the levy was introduced in the face of opposition from Conservative Members. It was a far-sighted decision taken back in the early days of this Government. That shows that the Government have always had climate change at the heart of their agenda, unlike others who came to the issue more recently.

With the rapid, dramatic rise in the cost of fuel, energy and food, and in council tax, will the Government be extremely careful about imposing any more additional costs on either the individual or industry? In respect of industry, to follow up on the last question, it would be easy to make British manufacturing industry far less competitive, but we would be a fool to do so, given that so much of climate change is caused by other places and not this country, and given that there remains considerable scientific debate about the impact of climate change.

The hon. Gentleman raises an important point. There is a tension between legitimate objectives, and there is a balance to be struck, but I hope to assure him that the Government seek to strike that balance in all their actions. However, he must recognise that the Stern review identified that there are economic costs to the country and its citizens of not taking action at the appropriate level. If we do not take action on climate change, the cost of food could rise well into the future. We need to consider both the short term and the long term. He rightly raised the issue of fuel bills; we, as a Government, must ensure that we take further steps to help people who are struggling with energy costs, particularly those who face the threat of fuel poverty. He will know that, to meet that objective, we have committed ourselves to the winter fuel payment for the duration of this Parliament.

The Stern report rightly recognises that it is people in the poorest countries who will be affected most and first. In the Minister’s discussions, both at UK and European level and with China and India, will he ensure that any financial measures that are taken to impact on climate change in the UK are reciprocated in places across the globe? Given the growth in the economies of China and India, they will increasingly be at the forefront of having to tackle climate change. Will he ensure that any discussions are international, not just domestic?

My hon. Friend is absolutely right. I think the phrase that Stern uses is that hundreds of millions of people could suffer if we do not take appropriate action. It is true to say that those who would suffer most are those around the world who have perhaps contributed least to climate change. He is right to say that international action is the key. We should take some encouragement from the fact that the European Commission’s package, published this week, draws heavily on the Stern review. It shows that climate change is territory on which there needs to be constructive engagement at the heart of Europe; that is particularly relevant this week, as we have been debating those matters. We want to meet the challenges of this century, whereas others seek constantly to fight the battles of the last century, and constantly bang on about Europe.