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Climate Change Bill [HL]

Volume 698: debated on Wednesday 23 January 2008

My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.

House in Committee accordingly.

[The LORD SPEAKER in the Chair.]

Clause 36 [Trading schemes]:

On Question, Whether Clause 36 shall stand part of the Bill?

My purpose in opposing the Question that Clause 36 stand part of the Bill is to inquire about a potential problem with Clause 36 and not to deal a mortal blow to the trading scheme. I want to find out whether this will have a detrimental effect on on-site regeneration renewables, which might well be limited in their potential under the trading scheme to earn ROCs. This issue seems quite technical, but could have a major effect on the implementation of companies on site building micro-generation schemes which would reduce their carbon dioxide emissions. However, we believe that if Clause 36 is implemented there might be a significant problem with them claiming ROCs. I may be completely wrong on this issue but I very much hope that the Government will look at this potential problem. The whole purpose of the Bill is to reduce the release of carbon dioxide. Therefore, anything that reduces the incentive for private firms to build microgeneration schemes would be detrimental.

I apologise for not being here right at the beginning. We wanted more discussion of Clause 36 because there is concern about the issue of emission trading systems generally. We on these Benches welcome emission trading systems because they are an efficient means of reducing carbon emissions. The financial community is concerned about schemes such as the CRC, which is excellent in its own way, and the amount of trading that can take place. The number of units under the CRC, for instance, which will be the first emission trading system to be introduced under the Bill in 2010, will not be enough commercially to sustain a market. As the majority of these units will be used by those organisations that ask for an allocation in terms of an auction, is the Minister convinced that a trading system will work and that there will be sufficient liquidity in the market to make these instruments something of value that can be traded? I understand that most of the organisations involved in the EU ETS do not see the market being of a sufficient size for it to be credible and for there to be the type of market for other instruments that we have talked about under the clean development mechanism and joint implementation in the EU ETS.

I have read a great many of the papers, including the excellent consultation on the recommendations of the climate change simplification project, Climate Change Instruments: Areas of Overlap and Options for Simplification, produced by Defra in 2007. I started to print it out on my computer before realising that it was some 67 pages long. It gives an excellent description of many of these instruments. However, I do not see the question that I believe has been asked by the financial services sector about the liquidity of these types of units. If that is true of the CRC, which will probably be the largest of these schemes, does that give credibility to other schemes that might be introduced under this part of the Bill?

I remind the Minister that microgeneration schemes are very micro and need base load electricity back-up to support them when the wind does not blow or there is not enough rain or because of other factors. They have their place but I hope that the Minister will remind himself when considering legislation that at the end of the day it is base load CO2-free generation that we have to look to if we really want to save the globe. At the moment only one technology can meet that—nuclear. I congratulate the Government on bringing forward their nuclear programme.

I apologise for jumping up before the noble Lord, Lord Teverson. I thought that I had the answer to the noble Lord, Lord Redesdale, without going through 12 pages of speaking notes. I think that there would be support for that.

On renewables, the carbon reduction commitment aims to incentivise energy use among organisations covered by the scheme. Incentives to change the way in which energy is generated are already provided through the renewables obligation and the EU Emissions Trading Scheme. We do of course want to encourage the uptake of renewable energy. However, where the carbon savings from renewables are already counted by supplier schemes, perhaps in the form of renewables obligation certificates, there would be double counting if the same units of renewable electricity could count towards the CRC targets. Therefore the proposed approach is to ensure simply that CRC participants do not double count emissions savings.

We propose, however, that participants in the CRC may count renewable electricity, generated on site, if it is not counted against targets in the renewables obligation. This approach demonstrates our commitment to ensuring that the CRC delivers additional carbon savings over and above those that the suppliers are required to deliver under the renewables obligation, and to helping to encourage the further development of on-site renewable energy. The proposals have already been the subject of wide consultation, and the Government will publish their response to the latest consultation in February. I hope that that deals with the point about the commitment to renewables. Nothing in the clause is anti-renewables; there is simply the caveat of ensuring that renewables are not double counted.

I take on board the point made by the noble Lord, Lord Vinson. He is absolutely right about the base load. He commented on the Government’s paper on nuclear energy, for which I am grateful.

I am not sure whether I have given the noble Lord, Lord Teverson, an answer here or whether I gave it when speaking to other clauses. If I have not, we may be coming up to it in our debates on other clauses in the list.

I thank the Minister for that very helpful reply.

Clause 36 agreed to.

Clause 37 [Activities to which trading schemes may apply]:

On Question, Whether Clause 37 shall stand part of the Bill?

I am on a similar tack. In opposing the Question that Clause 37 stand part of the Bill, we seek clarification of the precise extent to which trading schemes will apply. We on this side of the Committee are uncomfortable leaving such complicated and significant portions of the Bill to regulatory fiat. Will the Minister tell the Committee how these trading schemes will work? Is the list of activities, as stated in the Bill and to which the trading schemes apply, exhaustive? The list is unclear. Indeed, it could be interpreted that any activity of any kind falls under a trading scheme. Indeed, does this extend to individuals and to personal consumption? Will individuals be made part of a trading scheme for using,

“materials in whose production energy was consumed”?

After all, that implies any material at all. That is surely not the intention of the clause but it may be construed that way. The whole clause needs greater clarity.

Will the Minister take us through the trading scheme process? Can he explain precisely what sort of activities will be included and what sort of businesses will be affected? How will this relate to the Government’s own activity? How will individual departments fit their carbon budgets into the major scheme of things? Where will a businessman find a mechanism to assess the activities that might cut carbon emissions, and indeed generate credits that could be traded? Will the Minister make clear the intention behind the trading schemes? Are they intended to act as a way of encouraging a reduction in emissions? If so, will the Government regulate them to ensure that this happens? In essence, will the Minister indicate the degree to which he sees the Government intervening in trading scheme markets?

I would be very interested to discover whether the noble Lord, Lord Taylor, and his party are in favour of trading schemes.

While these trading schemes are designed to reduce emissions—indeed Clause 37(2) makes it clear that anything which reduces emissions is desirable—it is not necessarily emissions alone which need to be addressed but also carbon sequestration. While I realise that it is going to be very difficult for the time being to put in place a trading scheme that recognises increased sequestration, we may just get there one day. Carbon sequestration does not in itself reduce emissions so increased carbon sequestration—for example, by managing soils or afforestation—will for ever be excluded from trading schemes. That seems unfortunate.

When the noble Lord, Lord Taylor, comes to respond, I wonder whether he could indicate whether the Conservative Opposition oppose the use of any provisions in this Bill to introduce a scheme for trading in personal carbon allowances. That would be very helpful. This issue was discussed on a previous Committee day but I do not think we had the benefit of that advice.

The noble Lord, Lord Taylor, is getting a taste of what it is like to be on the receiving end of the questions. I will do my best to explain how Clause 37(1)(a) to (d) would operate but I have a few notes to put on record first.

Clause 37 builds on the provisions set out in Clause 36. While Clause 36 covers schemes which directly and indirectly cause or contribute to emissions, Clause 37 provides more detail on the activities which may be considered indirectly to cause or contribute to greenhouse gas emissions. Perhaps I may give a quick example of the distinction between directly and indirectly causing emissions. The former may be the burning of coal which produces greenhouse gases emissions from power station chimneys because the emissions occur directly on-site; the latter relates to the consumption of electricity produced by the power station, wherever this may occur. An example of a trading scheme which targets indirect emissions could be one which targets the supply of heating fuel. This could be regarded as relating to indirect emissions as the emissions themselves take place at the point of use by the consumer rather than at the point of sale. However, it would be easier and more cost effective to target the suppliers of the heating fuel through a trading scheme rather than to seek to introduce emissions trading schemes between the millions of consumers of heating fuel.

The Government already have some limited powers to introduce trading schemes relating to direct emissions from a point source such as a power station chimney under the Pollution Prevention and Control Act 1999. However, there are notable gaps in these powers as they apply only to quotas of emissions and would not allow trading schemes to be introduced with the purpose of encouraging activities which reduced the emissions. In addition, those existing powers relate only to direct emissions and would not allow a trading scheme to be introduced which targeted indirect emissions alone or a combination of direct and indirect emissions. For instance, it would not be possible to introduce the new carbon reduction commitment under those existing powers as it targets direct carbon dioxide emissions from the organisations covered by the scheme as well as their indirect carbon dioxide emissions from electricity use. The powers in the Climate Change Bill resolve this situation by allowing for schemes which target both direct and indirect emissions. In short, we need to encourage greater energy efficiency from all parts of the economy if we are to meet our targets. The aim of Clause 37 is to ensure that the trading scheme powers can be appropriately targeted so that all these possible sources of emissions could be included in a trading scheme. The powers fill a gap which currently exists in terms of introducing timely and cost-effective policies to tackle greenhouse gas emissions.

Changes to the taxation system can be introduced quickly through the annual Finance Bill process, and EU measures, including regulation, can be implemented using the European Communities Act 1972, without the need for new primary legislation. Without those powers, the Government would be forced to rely on fiscal measures or regulation to ensure that particular sectors were helping in the fight against climate change. I am sure that Members of the Committee do not intend that potentially more cost-effective trading policies with a lighter touch should not be introduced, because that would be the effect of removing the powers from the Bill.

In relation to parliamentary scrutiny—it is constantly one of our themes, although it was not raised this time—I have already set out the very strong safeguards in Clause 40 which will ensure that these powers are used appropriately. I was also asked about the breadth of the energy consumption definition—which could include, for example, breathing, and why we need such a broad power—and indirect emissions. I shall give an example from a manufacturing point of view.

As regards the simplest way to think of Clause 37(1)(a) to (d), let us say, for example, that the noble Lord, Lord Taylor, produces motor vehicles. Under paragraph (a), he uses electricity to operate all his plant. Production of electricity leads to direct emissions. Under paragraph (b), he buys components from specialist manufacturers, which are all direct emitters or use electricity, which is an indirect emitter. Under paragraph (c), the motor manufacturer throws away waste components and off-cuts. Although he did not necessarily use them for the purpose of paragraph (b), it led to effectively throwing away direct or indirect emissions needed in their production. This category is separated from paragraph (b) to provide the exemption for things that are to be recycled—off-cuts are a good example. Under paragraph (d), his cars run on petrol, so their use leads to direct emissions by consumers. That sets out how the different parts of Clause 37 might apply. The aim is to ensure that trading powers can be appropriately targeted so that all the possible sources of emissions can be included in the trading scheme at the most appropriate point in the supply chain.

As I have already mentioned, the trading scheme power is intended to be broad enough to enable the Secretary of State or devolved Administrations to make any trading scheme they consider appropriate within the powers in Schedule 2. However, as we made clear in the debate on 14 January, it would be inconceivable that the powers in the Bill would be used to introduce a trading scheme at this personal level. There are strong scrutiny arrangements before regulations making trading schemes can be introduced.

Clause 40 provides requirements that must be met before a new scheme can be introduced; that is, consulting those who are likely to be affected, seeking and taking into account the advice of the Committee on Climate Change and, of course, requiring affirmative procedure in Parliament. In addition, a decision to use the powers for a specific scheme will need to be based on a cost-benefit analysis of the scheme, including its impact on business. That will be in the impact assessments, which are generally published alongside consultations on the individual schemes.

The noble Earl asked me whether we are excluding sequestration. The answer is no. It is covered by Clause 36(2)(b), which relates to schemes encouraging the removal of carbon from the atmosphere. I hope that that answers the questions that I have been asked.

I have listened to the Minister with fascination. Am I right in understanding him to say that, if you were, for instance, a motor manufacturer using various metals, which were produced by power—say, electricity—and that certain amounts of that material were off-cuts, if you threw them away that would be credited to you? Who will keep all those figures?

I gave the off-cuts as an example of Clause 37(1)(b), which refers to,

“the use of materials in whose production energy was consumed”.

I gave the example of a motor manufacturer. At the end of the production line, we would have all the cars, but also several skips of scrap which are not included, let us say, in the price of the cars, although obviously the price would be there. The point is that the off-cuts could be recycled. They could be put back into the system. Therefore, this category would be different and would provide an exemption for items that are recycled. Obviously, the energy content is still there in the first place, so it would not be charged for twice, I hope.

Does that mean that all these figures are going to be collected, collated and passed on to some department?

I hope not in the way implied in the noble Earl’s question. I see where he is coming from. The electricity consumption and the carbon footprint of the motor manufacturer’s plant, and the items that have gone into the plant, will be collected. I hope it would not be at the fine-detail level. It would be the original component supplier, for example. There would be another factory producing the components. To that extent, you would not be separating the several hundreds of components in a vehicle because you would go for the emissions at the most suitable and most cost-effective point of the supply chain. This is not a question of having lots of burdens on business, collecting figures that are of no use to anybody.

To follow the noble Earl’s question, to what extent have the Government considered the administrative regulation and burden that would be involved in a scheme of this kind? It seems very large to me.

We are talking about big figures. That is the whole point of these trading schemes. We will be dealing with mega-millions of pounds. This is a big part of the economy, subject to what happens with the trading schemes. We know that now. I cannot put figures on it, but we are dealing with huge figures in the economy. There is bound to be an oncost—the backroom cost is going to be big.

What happens then if some of these parts come in from overseas? How and at what stage is it recorded, and who has to keep records? It seems an absolute nightmare. In principle, the idea is good. Most of us around the Chamber would agree that it is sensible, but I can see this paper trail going everywhere. If you are looking at component parts that come into this country which are then put together or manufactured here, where does the buck start and how does it get passed back to the relevant authorities?

I do not know, but we are talking about carbon emission trading schemes. The whole point is that there is going to be trading between different suppliers and manufacturers, some of which will not necessarily all be in this country. That is how one would take account of trade between countries. The key issue is that in, let us say, the production of a component that is imported, its carbon footprint must only be counted once in a scheme. Double counting would not make sense. It has to be separated out. As I said, the point of original production is the place to do that.

I do not know whether we are being thick—I probably am—but the Minister is describing something akin to the VAT system, so that the inputs to a business have a carbon footprint which has a carbon cost in it and that is paid. That is fine, but the trouble when you are operating such a system is that it is not like VAT, where you have a flat rate and everybody knows what the input VAT is. In this instance, we will be dealing with a trading system, and the effect on the outputs will depend on the cost of the certificates that the manufacturer has to purchase to cover that liability. We have not got a straightforward calculation because it depends on a market price, which may vary from day to day.

You also have this further difficulty, as my noble friend is saying, of how you handle imports, particularly if they come from a country where there is no trading system and, in effect for the manufacturer of the product, no measured carbon footprint. If we do not find some way of picking this up, this gives a completely unreasonable advantage to the manufacturers of imported raw materials from third countries where there is no trading system. We are in some real difficulties over this. I do not know whether the Minister is going to be able to explain his way out of it this afternoon. Can he set his scribes in motion to write to us all, explaining to us in simple language that we can understand precisely how this might work?

I might have to do that at the end of the day. Obviously I have been inadequate in explaining these matters so far, for which I apologise, but I shall try to answer the question by reading the Bill that we are scrutinising. We are dealing with Clause 37, which says:

“For the purposes of this Part activities are regarded as indirectly causing or contributing to greenhouse gas emissions if they involve, in particular”,

paragraphs (a), (b), (c) or (d). I recited examples of that in the production of motor vehicles. Clause 36, which we have just passed, defines a trading scheme—at the bottom of page 17—as,

“a scheme that operates by … limiting or encouraging … activities that consist of the emission of greenhouse gas or that cause or contribute, directly or indirectly, to such emissions”.

For the purpose of this part of the Bill, those activities indirectly contributing to greenhouse gas emissions—because there has to be a definition of direct or indirect—are those listed in paragraphs (a) to (d) in Clause 37. I gave the example of a motor vehicle plant. It would not matter where that plant was because the end of Clause 37 says:

“This Part applies to activities carried on in the United Kingdom, regardless of where the related emissions, reductions or removals of greenhouse gas occur”.

We have always said that a tonne of carbon anywhere on the planet is a tonne of carbon. It does not matter whether it is in the UK or anywhere else.

This comes back to what I was saying about the previous clause. Defra’s own documentation says that the CRC, which is the first of the schemes, is expected to cover 52.1 million tonnes of carbon dioxide equivalent, which is a little under 10 per cent of the UK’s total emissions. I am not sure whether that is after rationalisation and overlaps. At the moment the EU ETS, according to Defra, accounts for some 52 per cent of carbon emissions in the UK under phase 2; we now have this scheme, which goes down to 10 per cent. Having spoken to the Carbon Markets Association and that sort of organisation, I seriously believe that we are already down to a level at which these schemes get quite uneconomic to operate in cost-benefit terms.

That brings us back to one of the fundamental things about the Bill: while we all strongly support trading schemes—they have an important role—they cannot be the whole answer. I suspect that much beyond the CRC, at 10 per cent, the answer is really none of this and that it is regulation and all sorts of other things that stop carbon emissions. I entirely agree that the CRC is hugely less administratively expensive than the EU ETS, but below that level the administrative costs will be large enough to be a burden to the businesses that are then not covered. The CRC already covers all those businesses above £500,000 of electricity or energy costs a year. I would be interested to understand from the Minister what the one after the CRC is likely to be. Surely we need to start using other instruments after that, because I am concerned—as I said earlier on, when the Minister was unable to answer, although I can perhaps understand why—that even with the CRC there is not sufficient liquidity in the market for the serious financial institutions that make these things work, for which London has become a great centre, actually to get involved.

I shall come back to that issue if I may. I apologise for not answering the question about liquidity, but I have a better answer than the one that I gave to the noble Lord, Lord Dearing, about the administrative burdens. All the issues would have to be looked at when considering whether to develop a scheme. The question would be whether it was too costly or administratively burdensome to introduce a trading scheme, in which case the Government would have to look at other instruments. It is hypothetical, but when there are proposals for a scheme the Government have to consult and Parliament must approve it by affirmative procedure. There is no chance of something that would damage industry in a big way slipping through on the nod, without any debate.

On the liquidity of the market, it is expected that the carbon reduction commitment will cover up to 5,000 direct participants. While the volume of each trade may be small, we expect the amount of trades to be considerable; that will be the test of a liquid market. In addition to direct participants, third parties will be able to trade in a secondary market, which will further increase that amount. The noble Lord mentioned the consultation; as I said, the Government will publish our response to that next month and, as part of this process of looking at more detailed aspects of the CRC, we will consider further issues relating to that market.

I am not in a position to answer the question asked by the noble Lord, Lord Teverson, about where we go next. The snag is that there is a trigger for industries or bodies that use a certain amount of electricity. I cannot put my finger on it—I know that I have seen it somewhere in these notes on a future amendment—but the figure that I have in my head is some hundreds. Whatever it is, a separate set of metering covers those industries, so that there is no argument about who is and is not covered.

Would the Minister be good enough to try to help me a little further, as this seems to be becoming complicated? He was good enough to give an example of a person building a motor car. That has alarmed me, since as far as I can see this system will increase hugely the amount of civil servants and be a huge burden on business. Is that the wrong interpretation, or am I right?

I certainly hope not, as it is not intended to be either a job creation scheme for civil servants or overly onerous on business. Indeed, I am assuming—falling back now to our position on the early part of the Bill—that when we have the great and the good appointed to the committee, it will look at issues such as this. We have spent hours on this; it is now our sixth day in Committee. That is no criticism, because I want to be able to tell the noble Earl that he ought to be able to rest assured that this is not intended to increase bureaucracy, although there will be an increase. This is a new enterprise of looking at what we are doing to tackle climate change. It will create new industries and businesses, some of which will probably go to the wall, as there will be winners and losers. However, it is far from being a job creation exercise for Whitehall civil servants.

I am sorry if I am still being particularly stupid. I am in the business of manufacturing some metallic product; in order to do that I require to purchase energy with a carbon cost, but I trade in the market to buy carbon certificates to cover that cost. That is how the new system will work. As I trade in the market, the price of those certificates will go up and down across the year, depending on circumstances and how people judge the market, and so on. Now, I have to include that cost in my product costs, but the truth is that because it is a variable cost I will not really know the cost of my purchased carbon certificates until I am well into the year, if not until the end of it. I would only then be able to assess what they have actually cost me and make a proper price for goods that I supplied at the beginning of the financial year. That is because we do not immediately know the effect of one on the other. The alternative way is to charge the carbon certificates that you use at a particular time directly on to the cost of your output, but that will mean that, if the cost of carbon certificates fluctuates, the cost of your product will have to fluctuate to take account of that. That seems to me a rather peculiar system to operate.

I am completely ignorant, but I thought that that was how the City worked on all the commodities in the world. I thought that manufacturers who are making products with raw materials buy on the futures and that the price of their end products going out of the factory gates was fixed. I was the mere factotum at a factory making these things, which I did not own, yet the cost of the products and materials that we used went up and down every day on the world markets. Account is taken of that. I thought that that was what the City of London was for.

I have a further question for the Minister regarding the CRC. He said that it would be likely to cover some 5,000 participants, with the definition of a unit being those that consume above 6,000 megawatt hours. Is that a site-based calculation or one that covers the manufacturing base across the country for the company or organisation?

I do not know the answer to that and will take advice. I also remember looking at it, because some of these units will include hospitals. I am not sure whether the unit would be the hospital on a site or the health trust, which may have more than one hospital. I do not know, but it is a practical question; it is the type of issue that will be touched on. It is true that different sites will have different supplies; I am talking about this trigger mechanism of the electricity that they consume. However, I do not know whether it would be linked up or not. I do not know the answer to that, but I will do my best to get one.

The noble Lord, Lord Teverson, asked me—this is the question that I did not answer—what further schemes might follow the CRC. The powers in this part of the Bill may also be used to introduce a household energy supplier obligation to succeed the carbon emissions reduction target, which ends in 2011. However, it is difficult to specify at this stage how the powers might be used, as the purpose is to maintain flexibility in supporting activities that will enable us to meet the targets in the Bill.

The point of enabling powers is that they will allow schemes to be introduced quickly without the need for further primary legislation, although subject, as I said, to a vote in both Houses following consultation with those affected and—and I do not mean this in a nasty or pejorative sense—advice from the great and the good on the Committee on Climate Change. As has been said, the Committee on Climate Change has to be authoritative. These are strong safeguards, which will make sure that the powers are used appropriately and not inappropriately.

I thank the Minister for responding to this debate, which has shown what happens when you drop a pebble in the pond; it has been illustrative of the complexities to business that some of these schemes might bring. If we are asked directly whether the Opposition are in favour of these schemes, the answer is that of course we are, provided that they reduce carbon emissions and can be introduced in a non-complex and satisfactory manner. What has been shown is how difficult these schemes can be. Nevertheless, we all know that the waste recycling obligations had similar critics when they were first considered. We will learn as these schemes progress. However, they are no panacea and there comes a point, as the noble Lord, Lord Teverson, said, when it is totally counterproductive for them to be introduced. I am grateful to the noble Lord for elaborating on how he sees this part of the Bill operating.

Before the noble Lord sits down, will he take this opportunity to clarify the position of Her Majesty’s Opposition on personal carbon allowances and trading in them? Does he share the view expressed by the Minister last time that it is unimaginable that personal carbon allowances and trading could be smuggled in on the basis of the provisions of this Bill?

The noble Lord, Lord Woolmer, has tempted me to comment on that now, because it was very late when we debated the amendment that I introduced on that topic. One of the things that prompted me to question the noble Lord, Lord Taylor of Holbeach, this afternoon was that he did not have anything to say about personal carbon allowances. I have no idea whether he is in favour of them or not, so I am grateful for the intervention of the noble Lord, Lord Woolmer. Is the noble Lord, Lord Taylor of Holbeach, in favour of carbon trading for small and medium-sized enterprises or personal carbon allowances? Certainly, to progress much beyond the big schemes, one has to be in favour of something.

It is not my job to defend the Government’s legislation or even to use the opportunity to make a policy statement on behalf of Her Majesty’s Opposition. There is a gradualism that the Minister has expressed—

I have no need to take a lead from the Lib Dems on these matters. I was seeking to suggest that I was at one with the Minister in accepting that this section applies to a whole area of economic activity. One would imagine that there will be a gradualist approach. We will learn a lot from the major schemes, which are already in existence, and soon be able clearly to define where it is no longer viable for these schemes to be introduced. But this is not the place for me to say what that position is as far as the Opposition are concerned.

Clause 37 agreed to.

Clause 38 agreed to.

Schedule 2 [Trading schemes]:

165A: Schedule 2, page 39, line 35, leave out sub-paragraph (4)

The noble Lord said: I will speak also to the other amendments in this group. Amendment No. 165A is a probing amendment designed to elicit the operation of allowances and in particular to examine the scope of the prohibition against the allocation of allowances for money. Perhaps I may give an example. Let us imagine a situation where a large business owned and controlled by one person—perhaps a beef baron or a cereal Croesus. In the unfortunate circumstances of unexpected death or bankruptcy, would the estate be able to sell any allowances left unused against business already completed at the time of death; or would the allowances have to be returned to the scheme pool? Presumably, in the event of a sale, merger, takeover or break-up, the unused allowances would be transferred to the new owners. However, I should like the Minister to clarify exactly how the situation would roll out in such circumstances.

I turn now to our other amendment in this group. The Committee will all too readily remember, in 2001, the images of pyres composed of burning carcasses and thick smoke from the combustible materials used to sustain the flames. It was obvious that there were considerable emissions of various sorts, some of which appear on the list of greenhouse gases. Two years ago, the Home Counties were awoken by the explosion at Buncefield. Television reports again showed black clouds shot through with flame. More recently, some four months ago, there was a fatal fire at a Warwickshire warehouse, again with smoke and associated emissions.

None of those happenings was expected; they may have been feared in a general way but they were not planned for in any business sense. We hope that animal disease will never again require disposal by burning. However, if there is an event that overwhelms the alternative methods, it is conceivable that the Government of the day may have to order it. The report on the Buncefield explosion indicates that there are infrastructure problems throughout the oil distribution industry. A glance at any local authority asset management plan will identify infrastructure problems with gas mains, school boilers, oil tanks and so on. Any of those could cause a major fire with its attendant emissions. Then there is the level of arson prevalent in this country, with major fires at schools, warehouses, offices, railway switchgear housings and so on.

Where does the responsibility lie for the emissions generated by these events? Will the owner of a business adversely affected by government decree or the activities of a third party—an arsonist—be liable for carbon emissions that could well consume more than his annual allowance? Should there not be a reserve that can be used to mop up the excess and avoid the problems of non-accidental damage, for example? Can one insure one’s business against government action? I beg to move.

I speak to Amendment No. 166. One of the major flaws with the whole ETS was that the allowances allocated to some energy companies led to a windfall to energy producers. The allocation was probably due to the lobbying power of some of the German energy companies involved in the European scheme. The point of Amendment No. 166 is to say that these allowances should not be allocated. One of the major problems with the ETS is how to keep the price of carbon at a realistic level. If the price collapses, as has happened in the past, the whole basis of the scheme becomes almost irrelevant and the scheme suffers. This is a probing amendment to find out the Government’s view on the value of such a proposal.

This group of amendments, and the next few that we shall discuss, concern how the trading powers under Schedule 2 operate. I appreciate that these are probing amendments, but in many cases they seek to place restrictions on how these powers may be used. We believe that a better approach is for many of these issues to be considered on a case-by-case basis.

As I said, Clause 40 requires both Houses to approve any new trading schemes. We can certainly explore in detail issues such as the rules on auctioning allowances, the use of carbon units from other schemes and the enforcement arrangements when we have the facts and proposals before us. I hope to be able to provide some reassurance about the Government’s thinking on these issues.

Amendments Nos. 165A, 166 and 166A concern the way in which allowances in trading schemes are allocated to participants. As currently drafted, paragraph 5(4) of Schedule 2 makes it clear that trading scheme regulations introduced by the powers in the Bill may not include provision for allowances to be offered in return for consideration—effectively by auction or otherwise for sale. As the Government explained during pre-legislative scrutiny, we do not consider that it would be appropriate for provisions in regulations made under the Bill to allocate allowances by auction or otherwise for sale. Instead, given the importance of auctioning to government economic policy, with a potentially significant fiscal impact on the UK as a whole, we believe that the right approach is for these powers to be taken through a money Bill. For example, the Finance Bill was the legislative vehicle for introducing provisions to allow for the auction or sale of allowances in the EU Emissions Trading Scheme. Amendment No. 165A would remove the Bill's provisions on auctioning, and we therefore cannot accept it.

Although it is government policy to push for increased levels of auctioning in trading schemes, as that approach is consistent with the “polluter pays” principle, Amendment No. 166 would be overly restrictive by requiring all allowances in every scheme established by the powers in this part of the Bill to be auctioned post-2012. It is essential that the relevant national authority should be able to decide the right level of auctioning to be used alongside other possible measures, to ensure that environmental goals are achieved effectively and without undermining wider government aims, such as supporting business competitiveness.

That was also the view of the Joint Committee, which stated that,

“auctioning allowances might have very different implications depending on the design of different trading schemes, and on the differing economic and administrative circumstances of the participants”.

It concluded that the Bill,

“should not contain a blanket provision to rule auctioning in or out for all trading schemes, but that rather this should be decided on a case by case basis”.

We agree with that reasoning and therefore cannot accept Amendment No. 166, which takes that restrictive approach.

Amendment No. 166A introduces the notion of some kind of force majeure provision relating to auctioning, to be used in an unspecified and unexpected situation, examples of which were given by the noble Lord, Lord Taylor. We have been keen to stress the importance of the flexibility of the trading scheme powers, and we feel that the aim of the amendment is already covered by paragraph 5(3). This provides:

“The regulations may specify the method of allocation or provide for it to be determined in accordance with the regulations”.

This would allow the relevant national authority to include force majeure provisions where they are required.

I am not a lawyer and cannot say anything definitive about this, but the examples that the noble Lord gave—both the fires and the burning of the carcasses in 2001—seem to be unexpected events that are outwith the normal rules. They would have to be covered by some kind of arrangements. I will not nitpick about the drafting of the amendment, which I assume was designed to elicit the response I have given. That kind of arrangement or example would be dealt with by the national authorities within the terms of the Bill.

The noble Lord twice mentioned the Joint Committee, and he was quite right in his second reference that we agreed with the Government on that particular point. However, he did not make it clear that we did not agree with the Government on the first point. We listened to the explanation of why paragraph 5(3)(a) of the schedule was in the draft Bill, but we also pointed out that it appeared to be contradictory to the Government’s intention to decide on auctioning case by case. The Government’s argument was that there were good reasons for auctioning, and I agree with that.

We were told that the Government’s legal advice was that this provision would not be an impediment to provision in the Finance Bill. However, we said in paragraph 196 of our report:

“Notwithstanding this assurance, we continue to have some doubts. The wording of paragraph 5(3)(a) does not limit the powers of the regulations that can be made under the draft Bill, but rather asserts those powers over the method of allocation, and states that this method must be free of charge. Moreover, while paragraph 5(3) states explicitly that ‘Paragraph (a) does not affect the power to require the payment of a fee’ (which we understand to relate to administration fees, rather than the purchasing of allowances), it does not contain an equivalent clarification that the paragraph does not affect the power to auction allowances under other legislation. At the very least, the current wording could cause confusion. We note that some industrial groups have welcomed this provision, potentially under the misapprehension that it was ruling out the use of auctioning for any trading schemes that would be set up in the future. Most importantly, there does not appear to be any need for the provision in paragraph 5(3)(a) at all: were the draft Bill to remain silent about whether allowances would be auctioned it would achieve precisely the Government’s intention, simply through failing to provide the power to introduce auctioning through secondary legislation. Given that the provision in paragraph 5(3)(a) appears to be superfluous as well as problematic, we recommend that it be deleted”.

I have listened to the Minister, but no argument has been produced that counters the Joint Committee’s conclusion. I simply do not understand why the Government insist on leaving this provision in the Bill. It adds nothing and retracts nothing. We think that there should be the power to auction, and that it is perfectly appropriate that that is done through the Finance Bill. Why on earth should we have a provision in the Bill that is likely to cause confusion and appears to deny the very principle that the Government want to pursue?

I will have to take advice on that. I am not sure whether the noble Lord was accusing me of misquoting the committee. I cannot quote the paragraph. In the first quotation I was not quoting a full sentence, because it does not start with a capital letter. I have no advice about what the committee felt about paragraph 5(3). I think he was saying that the committee felt the paragraph was not required. Basically, I have used paragraph 5(3) as my defence for covering the points that the noble Lord, Lord Taylor, made, points that probably were not put to the committee.

I agree that the Joint Committee’s report was as read to the Committee by the Minister. However, paragraph 5(3) applies to more than just the possibility of allocating by auctioning. It is entirely likely that different trading schemes would require careful thought about how to allocate any quotas, as it were, and that is likely to be different for each scheme. To put it crudely: without involving the question of auctioning, how are we to determine who gets how much? I should have thought that the basis for deciding those principles of allocation would come under paragraph 5(3). I agree that the Joint Committee addressed that matter in considering the issue of auctioning, but I hope my noble friend will agree that paragraph 5(3) would apply to much more than just the question of whether or not to auction.

I fully accept that. There has not been criticism of this, but the way in which paragraph 5(3) has been drafted could almost, in the context of the Bill, mean what you wanted it to mean:

“The regulations may specify the method of allocation or provide for it to be determined in accordance with the regulations”.

The fact that that was my defence, or rather my answer, to the point made by the noble Lord, Lord Taylor—that the paragraph allows the relevant national authority to include force majeure provisions where required—indicates that the provision is pretty wide. I am working just with the Bill as it was introduced into the House, by the way; there were other draft Bills around.

I now have the answer. The Bill’s wording on auctioning changed in response to the Joint Committee’s report to clarify the situation, but we remain of the view that any auctioning should be done through a money Bill. So there has been a change. However, there is the central point which I made—that there ought to be a different kind of legislation, as was the case for the European Union trading emissions programme.

I have noted that the wording has been changed from that which was considered previously, but I am still puzzled. I had thought that this was now partly covered by paragraph 5(4), but in the light of what has been said I am not entirely clear what is the intention of the wording:

“The regulations may not provide for allowances to be allocated in return for consideration”.

Does that not cover auctioning? I am not clear. The Minister may say that it is not the regulations that will provide for it and that it will be dealt with in the Finance Bill. All I am saying is that where we have a clear recommendation from the Joint Committee and a change is made, it is useful to have a clear explanation from the Minister about what change has been made and why, so that people reading the original report and looking at the Bill again can see where we are. I confess that I was confused. I still am, a bit.

I hope that we are, overall, less confused than we were when we started, because I do not have anything to add.

The Minister referred to the money Bill element. Would there be no scrutiny of that element in your Lordships’ House? I do not believe that in practice we get involved in money Bills.

That is the case. Mr Speaker issues a certificate as to whether a Bill is a money Bill or not. We are unelected; we do not do money.

I take it that the noble Lord is saying that we will not be involved in any discussion about these auction provisions.

I have not dealt with a money Bill; when there is a money Bill, a screen goes up and I run a mile. In this House, we have a Second Reading debate on a Finance Bill, for example, but we do not do anything else. We do not table amendments; we do not scrutinise it. That is the normal process and that would be the case. That is not to say that there would be no facility for debate, but scrutinising in the normal legislative way is outside our powers on a money Bill.

I come back to the Minister’s response to my original contribution to the debate. I was trying to establish, first, to what extent the allowances were assets to the business and would be transferred to any successor business and what would happen in the case of liquidation, mergers, takeovers, and so on. I was not sure that the Minister had given me a reply on that point. It would be useful to know how that might work.

Secondly, I listened to the Minister’s reply on the force majeure element. In truth, at any level, fires and so on can be catastrophic. My illustrations were dramatic, because they involved a lot of atmospheric pollution. As far as training schemes and allowances are concerned, an unintended loss through fire is a problem at any level of business. One can envisage situations where these catastrophes might have to be allowed for in any scheme if they were not to distort an individual company’s chances of recovering from such a catastrophe. Is that the way the Minister would see it happening?

I honestly do not know. I do not have a detailed response on that. I assume that businesses—and we are dealing here with professionally run businesses—have to assess their risks and try to mitigate any potential losses from unforeseen circumstances via insurance and other matters. Therefore, this would probably be covered in the same way. I do not know, but my answer, as an ordinary, reasonable person, is that if a company has purchased something, it becomes an asset of that company, irrespective of what happens to the company. In other words, if a company disappears or gets sold, the assets and whatever it has purchased get transferred. That asset may be intellectual or physical property, or certificates to do certain things. They would go with the company.

I come back to the Minister’s first response; I understand and am quite happy with the second part. What if you are a farmer? One example given by my noble friend concerned foot and mouth disease and the burning of livestock. Surely the Minister would agree that, at the moment, it is not possible to get proportionate insurance against that sort of liability. Indeed, the Minister has a consultation out with the livestock industry at the moment, looking at how cost sharing can happen in the future. His statement is, if he will forgive me for saying so, a bit broad in accepting that it is always possible to take out insurance and for that to be affordable. In some cases—including flooding, which is not a good example—it is not possible to get insurance coverage. Some people or companies might well be jeopardised by these provisions in the Bill.

I hope that I was not implying anything incorrect. I appreciate that it is virtually impossible to get insurance for flood damage to crops in the ground and for exotic diseases in our food animals. There is no provision for that; I have discussed it with insurers. One could not even offload this. That is why the consultation on cost and responsibility sharing is under way. The noble Lord, Lord Taylor, gave examples of what happened in 2001 when the Army commandeered a field, dug a trench and filled it with cattle that had come from all over the place. In those circumstances, that would clearly not be a burden on a particular landowner or farmer. There would have to be a different set of rules for it. That would be force majeure; it would require the national authorities to have some kind of arrangements and regulations to cover it. I do not think that there is a case to be made. My answer about insurance in relation to companies and businesses was quite legitimate, but it did not apply in any way to livestock or the fact that you cannot get insurance for crops in the ground. That is well known, but it is not well enough known in some quarters.

I am grateful for the Minister’s response, which has clarified the situation considerably. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 166 and 166A not moved.]

167: Schedule 2, page 42, line 13, at end insert—

“( ) The regulations must provide that units under other trading schemes at a European or international level must not contribute more than one quarter of the total allowances and credits in any one trading period.”

The noble Lord said: Most of our amendments in this group, which seek to set a maximum limit of overseas carbon credits at 25 per cent, are probing amendments. With the first of the amendments we are seeking to secure assurances from the Government on the limits that will be placed on trading overseas credit. In an earlier debate on this topic, my noble friend Lord Cathcart used the analogy of the buying of indulgences. That is a powerful analogy, if one-sided. The philosophical points surrounding the balance between ensuring genuine carbon reductions at home and support for overseas development were covered substantially at Second Reading.

Our amendment contains a firm number, although that number may well taper over time. By indicating that we believe that a maximum of a quarter of our national reductions should be used in this way, we hope to encourage the Government to offer a firm position themselves. We understand that carbon trading and international offsetting are complicated issues, as the debates this afternoon have demonstrated. However, we still hope that the Minister will be able to furnish the Committee with some idea of the Government’s position on the international offset of emissions at home.

Our Amendment No. 167A is an attempt to ensure that the reporting procedures allow a clear account for how much in the net UK carbon account is based on contributions from home and how much from abroad. We do not anticipate much controversy with this amendment, as we hope that it is in keeping with the Government’s commitment to transparency on these issues and the intention on clear reporting mechanisms to account for the provenance of the contributions to the UK carbon account. I beg to move.

I do not intend to repeat what I said in the lengthy debate at Second Reading, to which the noble Lord referred, and in the discussions earlier in Committee. I found myself agreeing strongly with two of the noble Lord’s amendments—those labelled “A”, which perhaps means that they have been tabled more recently than the others. I was glad that he said that Amendment No. 167 is a probing amendment. As he says, the issue is complicated and the development of these schemes will change substantially over time. Therefore, the Committee on Climate Change needs to look at the situation as schemes develop and to produce firm recommendations.

I support the requirement for adequate reporting. Amendment No. 168A would leave it for the committee to approve. That is exactly the kind of issue on which we should look to the committee to come up with a figure. I do not think that I am qualified to know what the percentage should be. I am encouraged to say that because my son, who gave evidence to us and who knows infinitely more about these things than I do, reached exactly the same conclusion. I think that he thought, as I do, that we need to come down from the 40 to 50 per cent level, which has been widely accepted up to now in the international market, and seek advice from the Committee on Climate Change. The figure will change from time to time as the issue develops. I firmly support the two “A” amendments but would leave the other two as probing.

I am pleased to support the spirit of the amendments. I shall not repeat the points that I made when moving a similar amendment previously. In replying to that, the Minister promised to come back with some suggestions on Report. Clearly there is consensus in the Committee for making a move in this direction.

I have two or three points to clarify with the Minister. I think that I am right in saying that the amendments apply to individual trading schemes as opposed to the overall figure for the net UK position. As drafted, clearly for probing purposes, Amendment No. 167 indicates a limit of 25 per cent on any scheme, which raises one or two issues. First, is it legally possible under some trading schemes where UK participants are entirely free to trade within the European Union to set a limit on their ability to buy credits from elsewhere in the EU—up to, say, a quarter of their target? As drafted, the amendment raises the issue of whether a limit can be set in UK terms when we are involved in an EU trading scheme. That is an important issue if we apply it not to an overall position but to an individual trading scheme.

The second issue is just to express a doubt. On aviation, it is highly likely that over the years two or three things will happen. First, aviation will continue to grow considerably and we shall be unable to hold that tide back. We may hold it back to a degree but it will continue to grow. Secondly, aviation will not be able to introduce carbon emission reduction schemes fast enough to offset that growth for a considerable time. If, as I understand it, the European scheme sets the cap at the average of the previous three or four years, that raises the interesting question of how aviation will cope. It is likely to be in one of two ways: in the early years by buying credits from outside the European Union, through the clean development mechanism, and so on; and over time by increasingly squeezing other sectors in the EU by pushing up the price of carbon, hence making it expensive for other industries that can undertake carbon emission reduction measures.

Whether or not aviation would get caught in that would depend very much on its remaining part of the Emissions Trading Scheme in the European Union as a whole, which is the current intention, or on moves being renewed in the European Parliament to keep aviation separate if, despite the current intention, aviation being part of the trading scheme is not yet embodied in law. If we passed an amendment such as this, or even an amendment in the spirit of this one, aviation would be in a tough position. In effect, we would be telling people that we were going to stop aviation growth in this country.

I should say at the outset that we accept the spirit of one of these amendments, which I shall come to in due course.

Amendments Nos. 167 to 168A relate to limits on the amount of carbon units, whether international or European. The Bill allows participants in UK trading schemes to use emission reductions delivered through European or overseas trading schemes towards their domestic obligations. This allows UK trading schemes to be linked to other trading schemes across the world. That is fully consistent with the development of a global carbon market, which will help to strengthen the global response to climate change. However, Amendments Nos. 167 and 168 would place limits on this and reduce the flexibility to develop domestic trading schemes that have the best outcomes for cost-effective emission reductions, which could therefore lead to increased costs to UK business both now and in the future. An example of how this power may be used comes from the carbon reduction commitment, which proposes the conditional use of credits from the EU Emissions Trading Scheme but purely as a safety valve to prevent the CRC allowance price rising to undesirably high levels.

Other trading schemes established under the Bill could target other sections of the economy, operate in different ways and have different linkages to trading schemes elsewhere, whether within the European market or more widely. Our view is that the right approach—the Government always have the right approach—is to keep our options open at this stage. That makes sense. We are in uncharted waters here and it would be quite wrong to limit ourselves. If there is to be a limit on the use of units from the EU or from overseas in a domestic trading scheme, the best way to proceed is to have this debate when this House and the other place discuss individual future schemes, as they will. Indeed, the Bill requires both Houses to approve any new trading schemes.

On Amendment No. 168A, we have previously discussed whether there should be limits on the contribution that European and international credits can make towards the UK net carbon account. I undertook to consider that issue, which we are doing throughout government. I assure noble Lords that Whitehall is abuzz with packages of ideas flowing from your Lordships’ five days of debates so far. It will be no different today. The volume of paperwork being generated is enormous. I hope to bring good news in due course.

We do not see why any limit for the national net UK carbon account as a whole should be set through regulations making trading schemes under Part 3 of the Bill. This has the potential to be confusing and we are not sure what value this part of Amendment No. 168A would add. The amendment would also require any such limit to be approved by the Committee on Climate Change. As we have previously discussed, Clause 40(1) requires the Government to seek the advice of the Committee on Climate Change before making any regulations under Part 3. This is an important safeguard, which relates to all the matters set out in Schedule 2, so we see no reason to single out the possible use of overseas credits in trading schemes as Amendment No. 168A proposes.

Amendment No. 167A would require new trading scheme regulations explicitly to state the amount of units from schemes abroad that may be counted towards the net UK carbon account. We accept the spirit of the amendment, which seeks to provide further transparency regarding the extent to which the UK uses international credits to meet its target. However, it is not clear how the wider question relating to the UK net carbon account as a whole is linked to the establishment of an individual trading scheme. In addition, Clause 12(6) already requires the Government to report annually on the number and type of carbon units that have been credited to or debited from the UK carbon account. In effect, Amendment No. 167A would do no more than replicate what is in Clause 12(6), if we have understood it correctly. Not only do we agree with the spirit but we agree with the practicality and the desirability of having something such as this in the Bill. I hope that, if I have got that right, noble Lords will not press these amendments.

I thank the Minister for his response and the noble Lord, Lord Woolmer, for raising the question of aviation and how an aviation trading scheme might fit in, which in turn raises the question of how trading schemes might interrelate. The Committee is not seeking to damage the British economy; we want to provide a mechanism for the reduction of carbon emissions, which is, of course, the whole purpose of the Climate Change Bill. I am grateful to the Minister for confirming that he envisages that figures will be presented and not netted off so that it is clear and transparent how much has been offset. In the circumstances, I beg leave to withdraw the amendment.

Amendment by leave withdrawn.

[Amendments Nos. 167A to 168A not moved.]

168B: Schedule 2, page 48, line 12, at end insert—

“( ) The regulations must not make enforcement the responsibility of local authorities.”

The noble Earl said: This is a probing amendment. Perhaps I should start by declaring an interest. I have been a councillor on Breckland District Council in Norfolk for the past 10 years. During that time local authorities have had increased responsibilities foisted on them in a number of areas, including: strengthened rules on food hygiene; changes to licensing laws; legislation on open access and rights of way; new data requirements on schools and their pupils; disposal costs of waste to landfill by tonnage; antisocial behaviour and dangerous dogs legislation, both of which have recently come from the police to local authorities; data protection and freedom of information laws; equalities and diversities regulations, and so on. These new duties cost local authorities money and it all adds up. Local authorities are given these greater tasks without being given greater resources to match, which leads to greater pressure to increase council tax. Can the Minister give an estimate of the increased financial burden to local authorities that will be incurred by the Government’s proposals in this area, and do the Government intend to help local authorities financially? I beg to move.

I understand the reasoning behind the amendment. Under a Private Member’s Bill on climate change local authorities will be obliged to reduce the amount of carbon dioxide emitted from the domestic sector. Although this is not covered by this Bill, it might well be covered by further Bills and much of the regulation of local industry will be dealt with by local authorities. I believe that this amendment would be overly restrictive, but I quite understand the fears behind it. If local authorities are to take on this obligation, will they be given extra powers in the public spending round?

Having read some of this earlier in the day, I said to officials, “This will no doubt flush out a huge number of Members of your Lordships' House who are members of local authorities”. In fact, as I discovered some years ago, there is an even huger number who are members of police authorities”. People come here with experience and I appreciate what the noble Earl has said. Let me explain who the enforcement authority is under the existing and the proposed trading schemes. Under the EU Emissions Trading Scheme, the enforcement authority is the scheme regulator. In England and Wales, it is the Environment Agency; in Scotland, it is the Scottish Environment Protection Agency; and in Northern Ireland, it is the chief inspector.

We expect to take a similar approach for the carbon reduction commitment. The enforcement authority is expected to be the scheme administrator, which will be the same bodies as in the EU Emissions Trading Scheme. The scrutiny arrangements that I have set out will ensure that proposals for the technical details of trading schemes, including who the enforcement authority should be, will need to be justified and such decisions taken on a case-by-case basis. We therefore consider that it would be unnecessarily inflexible at this stage, ahead of having any detailed provisions of particular schemes in front of us, to place restrictions on which persons or bodies may be appointed to undertake enforcement action.

It may be the case that in a future scheme administered by these powers, a local authority would be the most appropriate body to act as the enforcement authority. But as a preliminary view, we think that it is unlikely that local authorities would be chosen, because trading schemes work best on a much larger scale, which is why the larger agencies tend to be chosen. I asked whether we could rule out local authorities in order to have clarity in the Bill, but I have been assured that it has not been envisaged that local authorities will play a big role. However, there is the possibility that in a future case for which we do not have a hypothetical example, they might be the most appropriate body, although we cannot conceive of a case where they might be.

As I understand it, under the new burdens agreement between central government and local government, no new burdens are placed on local authorities unless central government provide the wherewithal and the resources. I know that there is always an argument about this, but I think that about 80 per cent—certainly well over 70 per cent—of local government money is provided by central government in the first place. The idea that local government is out there raising all its own money is preposterous. One should not seek to give the impression that it does. However, clearly there is no doubt that this would be a new burden in the context of climate change and local authorities should be properly financed and resourced for any new burdens relating to activities under this Bill. I cannot conceive of anyone in Whitehall who would disagree with that. The argument would be about the amount and, probably, the area. However, as I have said, it is unlikely that they would be chosen, simply because trading schemes are working on a much larger basis.

I thank the Minister for that—I am sure that local authorities and council tax payers will like that response—and for his assurance that they will be properly financed for any additional burden under this Act should they need to be. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

168C: Schedule 2, page 48, line 40, leave out “51 weeks” and insert “6 months”

The noble Earl said: This amendment seeks to make the maximum term for an offence six months and not 51 weeks. This is the first time of which I am aware that the Government have proposed a greater offence for offending in England. I wonder whether there is anyone who concurs that the punishment meted out by an English court should exceed that of a Scottish or Northern Irish one. The scale of punishment in England is twice the length of the other two jurisdictions.

There is also the question of the lower maximum in Northern Ireland for an offence triable either summarily or on indictment—it is six months for Northern Ireland and 12 months for England, Wales and Scotland. Is there an overriding reason for this distinction? I beg to move.

I hope I will be able to answer the noble Earl on the devolution point, because it might be quite inappropriate to say that separate provisions apply in Scotland and Northern Ireland, which the Bill reflects. There is a reason for the Bill being drafted as it has been.

Until the passing of the Criminal Justice Act 2003, legislation conventionally provided for a maximum penalty of six months’ imprisonment or less in the magistrates’ court. Section 154(1) of that Act states that the maximum sentence that a magistrates’ court may pass for any one offence is 12 months’ imprisonment. In addition, there are also provisions in Section 280 and Section 281 for raising the maximum penalty on conviction of existing summary offences to 51 weeks’ imprisonment. This is to enable a court to pass the new sentences of custody plus and intermittent custody under Section 181 and Section 183 of the Act.

These provisions are not yet in force and nothing in the 2003 Act prevents a later Act that creates a new summary offence making a different provision about the penalties on conviction for that offence. Yet it is consistent with the policy behind the 2003 Act for the Climate Change Bill to provide for a maximum penalty of 51 weeks for summary-only offences so that the new sentences will be available, with a transitional reduction to six months, until the relevant provisions of the 2003 Act are in force.

As I say, separate provisions apply to Scotland and Northern Ireland, which the Bill reflects. That is a matter for legislation in Scotland and Northern Ireland. They are devolved matters, and not matters that I am competent to comment on. If there is any serious concern about this—there should not be on what I have said—then officials are more than happy to meet noble Lords on this issue.

I thank the Minister for explaining that. In the Bill, it looks particularly cack-handed. It seems quite strange that the Bill is drafted in this way. I wonder whether there is a better way of drafting it so that it does not look quite so odd. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 2 agreed to.

Clause 39 agreed to.

Clause 40 [Procedure for making regulations]:

168D: Clause 40, page 19, line 39, leave out paragraph (g)

The noble Duke said: In moving the amendment I shall speak of our misgivings about the contents of Clause 46. The definition of enactment is contained in Clause 69, which refers to,

“an enactment contained in subordinate legislation within the meaning of the Interpretation Act 1979”,

and legislation under an Act of the Scottish Parliament, the Northern Ireland legislature or the National Assembly for Wales. That seems clear enough, except that the definition begins by saying that enactment “includes” these things. This implies that it could mean something else or include something else in certain circumstances.

There is possibly room for definition but it is not separately defined in Clause 47 on the interpretation of Part 3, which covers this clause and Clause 46. The Explanatory Notes do not help us any further. Our concern is that Clause 40(3)(g) refers to,

“an enactment contained in primary legislation”,

while Clause 46(a) contains the phrase,

“repealing or revoking any enactment as the authority considers appropriate”.

Clause 46 relates to the devolved legislations.

We have already indicated some of our concerns about the possible ways in which the national authorities may or may not be allowed to set up trading schemes. We wish to ensure that there is no possible way in which the legislation could be interpreted to allow a devolved Administration to amend primary legislation, possibly only within the confines of its own borders, when it was introduced by the UK Parliament. I beg to move.

We appreciate that the power of the regulation made in Part 3 of the Bill to repeal or revoke existing primary legislation, which Clause 46 provides, might appear unnecessarily broad, so I shall seek to explain why it is included—and the conditions in which we consider it will apply, which is the point that the noble Duke raised.

There are a number of trading schemes in primary legislation or made using very narrow powers, including the landfill allowance trading scheme and the renewables obligation, which we consider might at some point be consolidated or replaced with schemes made using the new powers. In these circumstances, it would be more appropriate to make the appropriate revocation, repeal or amendment using secondary legislation. This would allow the consequential changes to be made at the most appropriate time and with suitable transitional arrangements. For example, the Greenhouse Gas Emissions Trading Scheme Regulations 2005 made small consequential amendments to the Pollution Prevention and Control Act 1999 and to the Environment Act 1995 to ensure that the Environment Agency and other regulators were able to charge operators for the various services that they provide under the EU Emissions Trading Scheme.

A key aim of this power is to allow the burdens on business to be managed more effectively. It will also remove the need to make primary legislation to effect minor or technical changes when the principle and contents of a new trading scheme have been consulted on, debated and passed using the affirmative procedure, which is an explicit requirement for changing existing legislation under Clause 40. In addition to this safeguard regarding the parliamentary procedure which must be followed, as we have previously discussed, Clause 40 also requires public consultation and advice from the Committee on Climate Change. Any consequential amendments to existing legislation would be done in certain specific circumstances, with a view to streamlining the process and reducing the administrative burden on business and industry.

Although I have not specifically addressed the matter, I do not think that it is possible for the legislation to be used or—as the noble Duke meant, although he did not use the word—misused by the Scottish Parliament in particular to change legislation made by Westminster, probably save for when it is agreed that they are purely technical and minor adjustments. Parliamentary counsel is the arbiter on that. That is the norm: sometimes Bills go through and technical and minor adjustments in how they are printed are made even at the last minute, just to make things practical, without necessarily coming back to the House. I do not think that the way in which the Bill is drafted leaves it open or gives scope for misuse to the Scottish Parliament to amend legislation passed by the UK Parliament. I remind the Committee that this Bill is agreed by the devolved Administrations as it is brought before your Lordships' House.

I thank the Minister for explaining in a bit more detail some of the thinking behind the clause. We are all very clear that the Bill is full of aspirations and powers and has more Henry VIII clauses in it than anyone would care to count on the fingers of both hands. One has to look carefully at how it could be extended in improper ways. It is interesting to hear the Minister quoting examples where secondary legislation has been used to modify or trim primary legislation. We might all want to think carefully about the extent to which that practice should be encouraged or allowed. We would like to take this away and look at it a little further, but I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 40 agreed to.

Clause 41 agreed to.

Schedule 3 [Trading schemes regulations: further provisions]:

168E: Schedule 3, page 51, line 26, leave out from beginning to end of line 41 on page 52

The noble Duke said: This is a probing amendment. The first part of my questioning involves interpreting the phrase in the final line of paragraph 13(1) of Schedule 3:

“Her Majesty may by Order in Council revoke it”.

Is this simply standard phraseology when applied to Orders in Council that should be taken to mean that the order will revoke it in all circumstances, or might there be circumstances in which the annulment is refused? If the latter is the case, will the Minister give examples of occasions on which the Prayer for annulment will or might be turned down?

The second part of my question is harder to explain, so I hope that the indulgence of the Committee will allow me to try. Part 2 of Schedule 3 covers regulations made by any two Administrations, excluding Scotland. It is clear that the regulations are to be made by each authority involved and that either legislature may then pray for an annulment. Part 3 of Schedule 3 is differently worded, as its paragraphs 9 and 10 do not refer to the Secretary of State, although paragraph 9(3) specifies “a national authority”. Paragraph 11 covers the case of a draft order made by the Secretary of State and approved by Parliament. Paragraph 12 then refers to annulment, but in a different fashion from the reference in paragraph 8. My doubt is whether paragraph 12, as worded, actually covers that peculiarity allowed under paragraph 9(2)(b); namely, an order that contains provision outside the,

“competence of the Scottish Parliament”,

but extends only to Scotland.

In such circumstances, would the competence automatically belong to the United Kingdom Parliament, and would there conceivably ever be any need for that Parliament to wish to stop an order that affected only Scotland? If that were to be the case, would part 3 of Schedule 3 allow an order raised in and affecting only Scotland, but containing provision outside the Scottish parliamentary competence, to be annulled at the behest of the UK Parliament? I beg to move.

We are in quite different territory here with the Bill; we are on to the devolution process and Orders in Council. I am already familiar with the procedure with such orders, having been the Northern Ireland Minister—an issue that Northern Irish Members of your Lordships’ House thoroughly objected to, as no detailed scrutiny is allowed.

I will kick off by reminding the Committee again that this Bill is brought to it with the agreement of the devolved Administrations. I am not clear whether I am fully seized of the noble Duke’s actual concerns, which may give him a way out. However—to explain why this approach has been taken—the Bill reflects the Scottish devolution settlement, which we are not trying to unstitch here.

When an emissions trading scheme is to be set up in Scotland only and the proposals would be within the,

“competence of the Scottish Parliament”,

then the appropriate procedure will take place entirely before the Scottish Parliament. As I said at the end of the last debate, this is allowed for under the Scottish devolution settlement by way of an Act in the Scottish Parliament. This new power allows such a scheme to be made by the Scottish Ministers through secondary legislation. As noted elsewhere in the debate, we have agreed the relevant aspects of the Bill with each of the devolved Administrations and, like us, Scottish Ministers wish to ensure a facility to create, in a single instrument, trading schemes that operate across all territories of the UK or any combination of them.

We in this House have adopted a convention that we do not seek to legislate in areas over which the devolved Parliaments have competence without the consent of those Parliaments. The Bill covers devolved elements, and therefore a legislative consent motion has been sought and obtained in the Scottish Parliament and the Northern Ireland Assembly. The Scottish Ministers’ policy is that the appropriate procedural mechanism to establish such a scheme which includes provision within the competence of the Scottish Parliament is an Order in Council made by Her Majesty. An Order in Council is the procedure required for various purposes under the Scotland Act 1998, and precedents for its use in relation to matters containing a mix of reserved and devolved matters in Scotland are set in the Health Act 1999 and the Energy Act 2004.

I stress that the various devolution settlements are not the same as part of the process of devolution. Part 2 of Schedule 3 provides a different procedural mechanism to apply to trading schemes set up by the Secretary of State, Welsh Ministers and a Northern Ireland department or any combination of them to reflect the situation. The multi-legislature procedure that applies to these schemes is regularly used; for example, it is not uncommon for this House to scrutinise statutory instruments covering England and Wales made jointly by the Secretary of State and Welsh Ministers. The Scottish devolution settlement is different; there is a precedent in the Scotland Act for the Order in Council procedure in the Bill. If the proposers of the amendment simply wanted the same procedure to apply for Scotland as for Wales and Northern Ireland, they would simply need to add Scottish Ministers to paragraph 5 of Schedule 2. I do not think that is the issue, but I hope I have satisfied the noble Duke.

In answer to the question about whether Her Majesty would turn down a request to revoke an Order in Council that had been annulled by a parliament, that is a matter of constitutional practice. In law Her Majesty can do what she likes, but conventionally she always follows advice from Parliament.

The Minister has now said on two occasions that the Bill is before this House with the agreement of all the devolved Administrations, which is fine. The question I wish to be clear about is what happens if we amend it. I note that the Minister himself has amendments tabled. It seems that we are then approving the Bill outwith that original agreement. Is there a procedure by which that is dealt with? He may have covered this point in his last answer, but I am not absolutely certain whether he has.

Those who are sitting in the Chamber as former Ministers will be well aware of the procedure. If you want to amend a Bill once it has been introduced to Parliament, you generate an enormous amount of paperwork by getting the consent of all the relevant Whitehall departments and, in this case, the devolved Administrations. Therefore, it would be a matter of discussing the way forward for the amendment and coming forward with a consensus.

We are in very tricky territory, and the Minister is doing very well trying to sort his way through it. Those who are in the Scottish Parliament have always seen it as a problem that they have to pass what used to be known as a Sewel motion, which the Minister described as a legislative consent motion, to a Bill that has not yet passed. As I understand it, we have powers to amend the Bill, although that causes ripples and would be likely to cause a bit of excitement in the devolved legislatures if we started hacking the thing to bits rather irresponsibly. That is why we have to look at these things rather carefully. We all understand that emissions to the atmosphere are a devolved function of the Scottish Parliament and it can legislate as it wishes. I am interested to see this element about the Order in Council being brought into this Bill because, as far as I understand it, the Scottish Parliament does not require Orders in Council in many areas—this must be one of the first—unlike the Welsh Assembly, which relies very largely on Orders in Council, because it does not have the full legislative powers that the Scottish Parliament holds. However, this will help to extend the powers of the Scottish Parliament, if it wishes to deal with matters which are not fully devolved to it.

One interesting area is emissions from vehicles, which is not a devolved element and will require uniform treatment throughout the UK—and of course, it would be impossible because who is to say where a vehicle will land up as it travels around. It has been useful to hear the Minister say what powers the Scottish Executive think they may need in having Orders in Council. In the mean time, we will study carefully what he said. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 3 agreed to.

Schedule 4 [Trading schemes: powers to require information]:

168F: Schedule 4, page 53, line 21, leave out paragraphs (b) and (c)

The noble Lord said: Amendment No. 168F is a probing amendment. We wish to examine the degree of privacy that might be involved in this part of the Bill. Does the word “persons” in these two paragraphs refer to private individuals? If so, does it mean that personal information about households and their consumption can be passed on from a supplier? At this point of the Bill there are strange echoes, which the Minister will appreciate, of yesterday’s statutory instrument debate.

In such a case, what restrictions will apply to the detail that is passed on? Will there be a restriction on handing over names and addresses or any other personal information that the supplier may have gleaned; for example, age, nature of any disability or number of people in the household? If personal matters are involved, has the Data Protection Commissioner been consulted during the drafting of the Bill and will he be involved in determining the detail of information to be supplied under any trading scheme?

If “persons” also encompasses privately owned businesses, what safeguards will operate that information passed across will not breach commercial confidentiality limits? Finally, what rights will individuals or businesses have to vet information relating to themselves or their undertaking before it is passed on?

Amendment No. 168G is also a probing amendment. What sort of persons would these potential co-participants be? Could the supply of detailed information under paragraphs (e) or (f) at the potential stage ever amount to divulging sensitive commercial information? Could the supply of this information take place without the knowledge or the permission of the potential co-participant?

If such information supply did take place without the knowledge or permission of the potential co-participant, who then felt that he had been disadvantaged in some way by it, would he be able to claim against either the participant who divulged the information or the environmental authority that used it in establishing a trading scheme?

Finally, is there in this paragraph an implication that a named potential co-participant, considered by an environmental authority to be suitable for a particular scheme, will have no right to refuse? I beg to move.

I say at the outset that to the lay person—that is, us and people outside—the use of language in legislation can sometimes be misleading. The use of “persons” in this part of the Bill does not apply to individual citizens. Therefore, age, disability and so forth does not arise. I will explain that in a moment.

The sub-paragraphs which Amendments Nos. 168F and G would remove are essential to the effective identification of organisations which would be required to participate in the proposed carbon reduction commitment—the CRC. The CRC will target the energy use from large non-energy-intensive private and public sector organisations. A briefing note that described in further detail the scope and intention of the scheme has already been circulated, but let me reiterate that the CRC may affect up to 5,000 organisations whose participation will be assessed on their electricity consumption from a 100 kilowatt metering system. The information-gathering power that Schedule 4 provides is necessary to begin identifying organisations covered by the scheme.

The Government have recently consulted on an identification process that would require energy suppliers to provide a list of all 100 kilowatt metering systems in the UK, and the electricity consumption from those metering systems, for 2008. Amendment No. 168F would prevent an environmental authority accurately identifying potential CRC participants as it would remove the power to seek from electricity suppliers data concerning the users of particular types of meters; that is, users of a 100 kilowatt metering system, which the CRC will target.

The process of identifying CRC participants also requires electricity users to collate their organisation’s total electricity consumption from 100 kilowatt metering systems and to confirm to the environmental authority whether it meets the inclusion threshold. Owing to the potential number of participants, and to give those organisations sufficient time to gather the necessary data, the Government intend to allow 12 months to administer the process.

Paragraphs 2(b) and 2(c), which are the subject of Amendment No. 168F, are required to ensure that the information needed may be requested in the required timeframe for the introduction of the carbon reduction commitment. Removing the paragraphs would therefore hinder the effective and timely introduction of the CRC, the consequences of which are self-evident.

Amendment No. 168G concerns the power to identify potential co-participants under the carbon reduction commitment. I will explain why the power is necessary. A key, basic objective of the carbon reduction commitment is to ensure that organisations as a whole are covered by the scheme, with the CRC obligations being placed on the highest UK parent organisation. This is to stimulate greater awareness of energy use emissions within an organisation’s senior management. Large businesses are often structured and restructured into groups, the constituent parts of which are separate legal entities or subsidiaries. To deal with this, and to ensure that we cover organisations in their entirety and therefore maximise emissions coverage, it is proposed under the CRC to capture business group structures. That also better explains one of the answers I gave earlier. It means that an organisation’s aggregate energy use will be used to determine whether it is a participant; that is, whether its aggregate energy use reaches the 6 megawatt threshold.

In addition, certain exemptions ensure that there is no overlap with other existing schemes, including the EU Emissions Trading Scheme and the climate change agreements. It does not relate to energy use at individual sites, but to aggregate use of energy. That would cover the point that I made about hospitals.

To ensure that the paragraphs in Schedule 4 are used for the specific purpose discussed of identifying potential CRC participants, a sunset clause associated with them provides that the majority of these powers cease to have effect by January 2011. By then, it is expected that regulations will be in place to govern the following phases of the scheme.

Schedule 4 is intended solely to help with the implementation of the carbon reduction commitment, so we are talking about businesses with electricity bills of more than £500,000 a year. That is where the reference to persons is relevant. Schedule 4 is intended solely for that part of the CRC. Therefore, it could not go outside that power in relation to information about individual citizens in this country. I hope that I have reassured noble Lords.

I just want to come back to the Minister on that. He was very helpful with regard to our earlier conversation, but I read through that the CRC includes gas consumption. Major businesses such as retailers operate major distribution fleets. Is road fuel or other energy use included in the criteria for qualifying for CRC?

I will have to take advice on that because as far as I can see the provision was purely based on electricity consumption as measured by this special metering system for large users. It is for measuring the electricity use of large non-energy intensive businesses. I am not sure where gas comes into it. The Box says no, which I am quite pleased about.

A sunset clause must be there and I would welcome some help in finding it. Definitions are made in several parts of the Bill and the definitions are particular to that specific part of the Bill. You cannot always find the relevant paragraph. I am very glad to see this: the sunset clause is on page 20. Clause 42(2) states:

“Paragraphs 1 to 5 of that Schedule”—

Schedule 4—

“shall cease to have effect on 1st January 2011”.

I am very grateful for the speedy response to that—any more?

I thank the Minister. I had no intention of trying to catch him out. As he said, you have to look in several places at the same time in order to make sense of what is going on. I am also grateful for the definition of a person or persons not being individuals. That is complicated, but one understands that language can have different meanings in this place as opposed to in the world outside.

In his response, the Minister gave a clear indication that he understood the sensitivity of collecting data and the confidentiality involved. Businesses are naturally nervous and suspicious about information which might be used to place them at a competitive disadvantage. We understand that a scheme will require the sort of facility that the schedule provides for. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 168G not moved.]

Schedule 4 agreed to.

Clauses 42 to 45 agreed to.

Clauses 46 and 47 agreed to.

Clause 48 [Report on impact of climate change]:

169: Clause 48, page 21, line 18, leave out “from time to time” and insert “every year”

The noble Lord said: The Committee will know that we in the Opposition consistently try to beef up the reporting process. We are anxious that every opportunity should be taken to keep government, Parliament and the nation informed and focused on climate change and our progress.

In moving Amendment No. 169, and speaking to the others in the group, I seek to emphasise that reducing carbon emissions is only part of the process of dealing with climate change. The inclusion of a programme in Part 4 for adapting to climate change more broadly is warmly welcomed by this side of the Committee. Yet, as important as the issue is, it seems that the Government have not been clear enough about the ways in which they will report on the different impacts of climate change, and what must be done about it.

The Bill as it stands places a duty on the Secretary of State to lay before Parliament an assessment of the risks for the UK of the impact of climate change, which is a very good thing. However, it states that this must happen “from time to time”, with the first report being presented within three years and future reports every five years. We feel that this is inadequate. While we appreciate that gathering the data required to produce a good report might take time, we expect government to monitor progress on an annual basis anyway. It should not be difficult to use this to provide the statistical basis for a report. We would see such a report as a very useful driver of policy and direction. It should be annual.

The impact of climate change, and our policies to stem it, should be presented in a way that enables us to gauge progress annually. This will help to ensure that we have access to the most accurate and up-to-date information and can reassess policy in the light of these reports. The Minister expressed concerns that years vary and that therefore annual reporting could be misleading. I take a contrary view. Given an annual report which included the year in the context of past performance and future progress, we would have a continuing view in much the same way as government finance is reported at present. If the report is made only every five years, we run the risk of losing a chance to fix any problems that would have been called to the attention of the Secretary of State or Parliament had there been a yearly report.

There seems to be little reason why we should wait so long. I understand that this is the sort of issue that requires a rather long-term view. However, as we make policy and begin to develop ways of assessing adaptation to climate change, a yearly report would enable us to consider our proposals in an ongoing manner with regard to their past progress and impact. It might take five years for a particular impact of climate change to become apparent but there is no guarantee that nature will correspond to the reporting periods. We need to be kept up to speed.

I am also very pleased to offer my support to the amendment of my noble friend Lady Byford in this group. Reporting on the progress of how the Secretary of State is implementing the adaptation programme is important. Just as we should be able to see our progress towards emissions reductions, we should be able to see our progress towards meeting adaptation objectives. As the Bill stands, mere lip service to adaptation could be considered a sufficient way of dealing with it. We want to ensure that this is not the case. I beg to move.

We have added our names to this amendment, and we fully endorse those tabled by the noble Lord, Lord Taylor, to which our names are not added. I have always concentrated on mitigation in terms of climate change, because we all wish that we could solve the problem before it gets so difficult that we almost have to plan for failure. That is the bad news about adaptation; it means planning for failure. Clearly, we have to do that. That is the responsibility of the Government and the other public agencies in this country and, more broadly, in the international sphere, as we will hear later on another amendment. When we read in the Bill:

“It is the duty of the Secretary of State to lay before Parliament from time to time a report”,

that the first report should be,

“no later than three years”,

and when we have had many examples over the past two years of what we believe to be the effect of climate change on our communities and society, clearly the matter is far more urgent than the Bill suggests.

It is excellent that adaptation appears in the Bill, otherwise it would be a Bill around enabling carbon trading, setting targets and setting up the Committee on Climate Change. It is to the good that adaptation is included, but it needs to be far stronger. To have a clause saying, “Despite the very long timescale for reports, the Secretary of State has power to put back even those”, as the noble Lord, Lord Taylor, pointed out, adds insult to injury. I do not think that the Government would disagree with this line of argument, but it is essential that the timetable is tightened up, not only in taking this topic seriously but in really starting to plan for something very big that is going to happen to local communities, regions and us as a whole.

My amendment is grouped with this one, and it reinforces the desire to have an annual progress report. The impacts of climate change are indeed very striking. I hope that I am right in citing that, out of the past 50 years, the past 11 to 12 have been some of the hottest on record. I accept that from time to time during the years ahead that pattern may well change, and we may go from hot to cold. That should not stop us from coming forward with a report to reflect the circumstances with which we have had to cope during that year. Like the noble Lord, Lord Teverson, I think that the expression “from time to time” lacks focus and suggests that it is not important, when it is very important.

I support the amendments tabled by my noble friend, which tend to be similar to mine. I hope that the Minister will say, “Yes, we particularly like that one and we will take it on board”, but I am not really worried about which amendment it is. The Minister could even come back and say, “No, we cannot accept them as they are, but in theory we support the message behind them”. We are asking the Minister to accept that the rationale of a five-yearly timetable for risk assessment and action planning does not give adequate opportunities for public scrutiny of the progress that has been made or the opportunity to hold the Government to account for delivery, particularly if the five-year intervals overlap different Parliaments.

It is important that there should be a minimum requirement to report to Parliament every year on the progress made on delivering the programme of action. I hope when the Minister responds, if he is not able to accept the amendment or indicate that the Government would be willing to move on this, he will state very clearly why not, because it is not asking too much of the Government to do what the group of amendments is asking for.

I strongly support what has been said from both Front Benches and by my noble friend who has just spoken. The Joint Committee felt that, as currently drafted, the Bill does not communicate the right degree of urgency. After all, we are dealing not with the mitigation of events into the future but with the consequences of the situation we are already in, due to what has happened over the past 150 or 200 years. We are feeling those effects now and the need for action to deal with them is urgent. Surely we ought to reflect that in our approach to reporting.

I have one other matter to raise. I was hoping that the noble Baroness, Lady Young of Old Scone, might speak. During the proceedings of the Joint Committee she made what I thought was an important suggestion: that the adaptation report should be timed carefully to come before the Committee on Climate Change considers the next five-year targets and before the process of the Government setting those budgets. The effort regarded as practically and scientifically sensible needs to be informed by the impacts on the ground. Again, if we accept these amendments we will have the reports in adequate time for them to be taken into account in the setting of budgets. That is another good reason for supporting them.

As I read this clause, it has to be looked at in relation to the next one. As I understand it, Clause 48 deals with the assessment of the risks involved and what actions might be needed. It is the next clause that deals with the programme of action being proposed. I would have assumed that a careful and rigorous assessment of risk had to be drawn up thoroughly. I hope that will not change every year; you cannot have consequential policies that change annually. The measures and the programme of action that follow from the subsequent paragraph will be on the basis of the risk assessment.

I do not find it quite as unacceptable as other noble Lords that that risk assessment, setting out any risks that we have to face up to and programmes of action that are needed, would take some time in the first instance, nor is it unacceptable that this would not require a reassessment of those strategic risks every year. That is not to say that if events happen, that will not require a reassessment—although the noble Baroness, Lady Young, is far more qualified to comment on that than me.

If there is to be any continuity of policy, it is essential that the risk assessment in Clause 48 is done rigorously, thoroughly and not in a way that invites change every year. If we kept getting that assessment so wrong that measures flowing from the programme of action in Clause 49 had to be changed, it would be chaotic. The idea of a considered and measured approach to assessing the risk and then reporting on that to Parliament, with reports on assessing risk being laid no more than every five years, is fairly reasonable. If something came up that made a reassessment of risks necessary, that would not prevent a reappraisal happening, but to insist that there be an annual risk assessment in this way is unnecessary—unless there are matters that require that. It is under Clause 49, which we are not yet able to discuss, that a programme of adaptation would come forward. Again, that programme should be adhered to in the medium and long term. One thing is certain: you could not implement everything in the first year. There will be a programme of action over a period of years. We will discuss that clause when we come to it. I do not see that the Government have got this wrong in this paragraph. I hope the Minister can reassure me, or I may have to agree with noble Lords opposite.

I was not intending to speak to this amendment but, having been asked to speak to it, I suppose I ought to clarify why I was not going to do so. I am confident that the Government will adhere to the undertaking given by the Minister. When we debated Amendments Nos. 158, 175 and 183B, we talked about an adaptation committee, or some independent scrutiny mechanism, that would include a mechanism or set of descriptors similar to the ones that exist in the Bill for the Committee on Climate Change, as to what that committee would do and how it would undertake its work. I look forward to seeing what results from the Minister’s undertaking to the House when we debate those amendments.

In terms of the periodicity of any reports, I will hedge my bets and go for a middle course. Every five years seems slightly too infrequent, but annually is quite an onerous commitment. When we debated those amendments, it was suggested that an adaptation committee might not be a standing committee, but rather one that was set up from time to time, if that would save the Government a little cash. I pointed out that that was a bit cheese-paring, bearing in mind the cost of the impacts of adaptation that this committee would help to diminish. When we debate future amendments on the adaptation duty that needs to be laid on a whole variety of bodies, I hope we will conclude that we are rather running out of road in getting some impetus behind the adaptation agenda. Therefore, in the early stages, a committee on adaptation that reports more frequently, until the head of steam that really gets us moving has been generated, might well be one way forward.

I fully understand why having the words “from time to time” in the Bill might send the wrong signals; I am with noble Lords on that. I still have a rule as a parliamentarian, as well as a Minister, that two things should not be contradictory. I understand why those words might send bad vibrations, but I hope I can give a satisfactory answer. The caveat is the requirement in the subparagraphs following the words “from time to time” which refer to three and five years. I am not criticising the use of the term—I realise that it is well tried, well tested and understood in legislation—but I can understand why, when the Government are being held to account on new provision such as this, the signals might seem somewhat negative.

As we move to the discussion on adaptation, I should apologise to the Committee that my substantial block of amendments was not tabled sooner. They have been tabled for a while, but it has taken us time to finalise the details. I shall speak to those amendments later, at the appropriate time.

Adaptation requires a long-term approach and has to be based on sound evidence and evaluated as far as possible. To that extent, a five-year reporting period is the most appropriate. We have to remember that we are dealing with gradual changes over a very long time. It is true that you can find examples where change seems to be speeding up but that is because the penny has dropped on the planet only in the past few years that these changes are happening and we will be in trouble if we do not do something. That does not alter the fact that the changes have been incredibly gradual. It has taken 100 years for the temperature to rise by 1 degree. That is a long time. I do not argue that adaptation is not important, but we are talking about a long period of time.

If we were to try annual reporting, it would not be practical, and so many people would need to work on it that we would not get anything else done. We are committed to providing regular risk assessment reports for the United Kingdom. We believe that it is unlikely that there will be significant progress in the evidence base more frequently than every five years and certainly not within the space of 12 months, as Amendments Nos. 169 and 173 would require. A yearly update of the risk assessments would not be a worthwhile task.

Work of this nature is detailed and complex. Perhaps I may give a comparison. The Intergovernmental Panel on Climate Change, for example, has worked on a six to seven-year basis, and modelling on the United Kingdom Climate Impacts Programme 2008 scenarios started as far back as 2001. The assessment of the risks of climate change under Clause 48 is a major piece of work—I make no bones about that. We need something that is thorough, based on proper analysis and not superficial.

New scenarios need to incorporate advances in new observations, new models and new methods, but none of those gets updated annually. Creating a new methodology annually would also require significant advances in computing capacity, and it is beyond the resources and academic capabilities of the relevant staff at the Met Office's Hadley Centre, who are world leaders in this policy area. That is the reality of what noble Lords are asking for. I have not come here with any surprises. It is almost a knee-jerk reaction to say, “We want annually to know what’s going on”, but in this case that is just not a practical proposition.

Adaptation will of course be reported on in Defra's annual departmental report on departmental strategic objectives and as part of its public service agreement reporting. However, we want to guard against unnecessary reporting burdens detracting from our delivery capabilities. So much resource would be put into this that we could not deliver what we are supposed to deliver. Departments will continue to address adaptation throughout the period and work with stakeholders to ensure that they are aware of the measures.

Amendment No. 172 would require the first risk report under Clause 48 to be produced within 12 months of Royal Assent. The risk report is an important and unprecedented piece of work which will form the basis of the Government's adaptation programme. It is important that the quality of the report is not compromised by rushing the work before all the relevant evidence is available.

We are due to deliver new probabilistic climate change scenarios for the UK in autumn 2008 in UK Climate Impacts Programme 2008. It will provide up-to-date information based on a number of climate change models and with a greater degree of spatial and temporal detail. Due consideration of these results as well as other scientific developments from, for example, the intergovernmental panel will be required. Further work will then be undertaken to produce a robust assessment of risks and vulnerabilities. Therefore, we do not plan to publish the initial risk report within 12 months but will produce it as soon as possible without compromising the quality. Our best estimate is that it will be within three years.

Amendment No. 174 would remove the flexibility to vary the reporting cycle under Clause 48. I would like to assure the Committee that the Government do not expect to have to extend the reporting period and that they have plans in place fully to meet the reporting requirements. However, we also want to ensure that we are able to take into account new developments in the scientific and economic evidence as and when they occur. A lack of flexibility in the reporting cycle could make the adaptation programme less responsive to the latest scientific developments and international research, such as new findings from the intergovernmental panel. It would be self-defeating if, for example, we were forced to publish a UK risk report a few months ahead of a new piece of work from the intergovernmental panel analysis that significantly advanced the global scientific consensus on the issue. We therefore cannot accept Amendment No. 174.

Amendments Nos. 176 and 182A to Clause 49 would require the adaptation programme to be produced annually. However, the programme will be addressing risks that change over timeframes that are longer than one year and more likely to be five years plus. Insufficient information would be available to produce a meaningful updated report on progress every 12 months. In addition, annual reporting risks overreaction to extreme events. It tends to lead to reflex responses to a current crisis, such as the floods last summer. That is not to say that the proposal is not important or that we do not need to react—we certainly do—but it could de-prioritise the longer-term, and equally problematic, incremental impacts of climate change .

Many adaptation measures may take time to take effect and it is important to be able to evaluate their effectiveness. Effective indicators for adaptation are not yet available, but one measure of the effectiveness of the government programme will be whether it makes a difference to our exposure to risk. That would not be possible without the risk assessment. It is therefore crucial that sufficient time is available for a robust assessment to be developed. Departments will continue to address adaptation throughout the period and work with stakeholders to ensure they are aware of and contribute to these measures. I am not pouring cold water on this, saying that it is impractical or too expensive and cannot be done. I have not used cost as an argument at all—that is not an issue. The response is based on sheer scientific practicality, to ensure that we have the necessary flexibility to make meaningful reports in conjunction with other work being done on an international basis. As I said, we will operate on the basis of what is in the clause, but annual reporting is just not a runner in this part of the Bill.

Perhaps I may press the Minister on bringing forward proposals to respond to our debate on the need for independent scrutiny. Will reporting provisions be part of that?

Perhaps I may intervene before the noble Lord responds; he may be able to cover both points together. I understand absolutely and sympathise with what he has been saying about long-term assessments, international assessments, weather assessments and all that. Clearly the assessments cannot be rushed. However, I am a little worried that we may not be acting quickly enough to respond to the practical lessons we have been learning from events on the ground. The noble Baroness who has just spoken has more experience of those than I have because she has had to deal with them. However, apart from the long-term assessments, we have been learning some painful lessons from events. If we have to wait some time for the publication of conclusions, I am worried that it will be a very long time before effective action is taken.

When I was chairman of the National Rivers Authority, we launched the Maidenhead flood defence scheme, a major scheme that has provided hugely improved protection for a large area of the Thames Valley. It took a long time because we had to deal with every sort of obstacle along the way—with those who opposed it, for good and bad; with the planning process; and so on. If we are to take a year or two to assess events and then have to go through all those procedures, it may be a good many years before measures are in place to prevent a disaster that might have been avoided if we acted more quickly.

The noble Lord may almost have given me the beginnings of an answer in his last sentence, when he referred to the annual reporting of the departments and so on. There may be another way of dealing with the matter. However, I ask him to consider carefully that although there must be a long timescale for major international assessments, we have to learn quickly the lessons from recent events which have caused so much damage and disruption.

My noble friend Lord Crickhowell has touched on some of the ground that I wished to cover. Continuous risk assessments will presumably be made regardless—I assume that it is one of the committee’s main roles—and information will be made available as part of that process. I have two questions for the Minister. He referred in his opening remarks to new mythology. I do not see how that is relevant to the requests in our amendments. He also said that the Government were committed to regular reports. However, in his first response to me he said that the reports would come only every five years. We are not getting a regular report “from time to time” on this aspect of the Bill. It will probably be five years at the earliest and could be longer. The noble Lord, Lord Woolmer, pleaded that we support the Bill as it is, but some Members of the Committee are not happy that it should be left as it is. Will the Minister clarify the position?

For the purposes of Hansard I should say that I think the noble Baroness—unless I misheard her—meant “methodology”, not “mythology”. I am listening.

I fully accept that I am on the rack on this. I shall try to give a further defence of why we cannot produce a yearly risk assessment, for example. It is not possible to obtain the updated scenarios on which to base an annual risk assessment. I mentioned the modelling for the United Kingdom Climate Impacts Programme which started as far back as 2001. The bulk of the work has been carried out since 2004; so for three years. The report is due later this year and is based on brand new methodology that the Met Office Hadley Centre has had to develop from scratch; so there is new work. I accept that once it has been developed, it is developed, but I am giving an example of looking at these issues. New methodology has to be agreed and developed from scratch. We are working in new territory and it has taken considerable time.

The downscaling step—turning global model output into a regional model output—takes a year. The UK Climate Impacts Programme has a new terrestrial carbon cycle component that makes the model run 20 per cent slower. For the next set of scenarios, the Met Office Hadley Centre would like to include an ocean carbon cycle component that would make the model run even slower. The Met Office wants to use the most up-to-date models, HadGEM2 and HadGEM3, for the United Kingdom Climate Impacts Programme. It is using one model called HadCM3 that would make it run even slower. Creating a new methodology annually is beyond the resources and academic capabilities of the Met Office Hadley Centre staff. That is not to rubbish them; this is leading-edge technology. New scenarios also need to incorporate advances, new observations, models and methods. None of these is updated annually. It would not be practical. That is not to say, as the noble Lord, Lord Crickhowell, mentioned, that new information and a capability of annual scrutiny will not be available.

I gave Defra as an example, but this is not only about Defra’s annual reports. If the way in which the departmental reports are put together could be rethought to overcome the difficulties that I have explained and to meet the need for some aspect of an annual assessment, I would be more than happy to think again about how they could be re-presented, which is what that would mean, simply because the Committee is asking. I suspect that I need to explain the difficulties in meeting the needs of the amendments. We would probably need a large-scale, multidimensional screen at the end of the Chamber to show how the different scenarios are working, and to show the impact and the timescale, from the design of the methodology to the output, to get an assessment that is scientifically robust. I am not seeking to make any excuses. Nor am I resting on the case for linking in with international programmes, although that is not unimportant; indeed, we will provide input into those programmes ourselves.

I grab the lifebelt that the noble Lord, Lord Crickhowell, threw me with both hands so that we can see whether we can make a difference to how the information is put into the annual reports, although that would not meet the needs of the amendments’ requirements, which are on a much bigger scale. I see nods of agreement. On that basis, I am more than happy to consider that aspect of the amendments.

We have had a useful and interesting debate and my thoughts on the matter have developed as a result of the dialogue and the contributions that we have heard. We have not had a precise answer to the direct question asked by the noble Baroness, Lady Young of Old Scone. I do not know whether the Minister wishes to reply now.

In that case, I will move on. This has become almost a matter of linguistics again in the sense that we know that we are investing in the science of the case. The science is heavy. It can be dense and needs time, because there will be a huge amount of material to be considered. Even with new technology, I understand the limitations on getting models to work properly and reliably. I have great respect for Hadley and what it is doing. It is vital to the success that we will have with the Bill that we have the scientific back-up to implement it.

I have been trying to think how business would approach such a situation. All businesses have continual risk assessments and all businesses have annual reports. They do not rewrite the risk assessments every year, but they review them every year. I wonder whether the word “review” has a bit more mileage; it is another hook on which the Minister might be able to hang something.

My noble friend Lord Crickhowell made the point about different departments. I am particularly keen to ensure that Defra has a vehicle for getting everyone active in this area. Five years is enough time for people to go to sleep and to stop caring about things. That applies just as much to great departments of state as it does to the public, whom we are also trying to keep on side. The public will expect an annual review if not an annual report. They will hope that the Secretary of State can give an update. The two things go together. The risk assessment is more profound and perhaps more difficult to predict, but the adaptation programme needs almost constant updating. You soon know whether you are making progress in implementing the programme, and an annual report on that is possible.

I am thinking aloud, in a way, because I see where the noble Lord is coming from and I want to help. One of the key issues is that the public, this House and the other place need to know that the work is going on. A report or a review might be too strong, but they are entitled to know that there is a work programme and what work is actively being done. It should be dead easy to keep track of the work programme. We need to be reassured that people have not gone to sleep for five years—I thought about this because the noble Lord said five years. If they know what the work programme is—this can be done on a real-time basis in some ways—they will be assured that people have not gone to sleep. We can certainly look at some way of building that into the requirements. That may not go as far as what is wanted, but I want to meet the spirit of what the amendments would require.

I am grateful to the Minister for coming back into the debate at that point and helping me to continue this important dialogue. The debate has been useful in that the exchange of views has probably led the Minister and the Government at least to take a fresh look at this whole clause to see how it might work in the interests of the success of the Bill and of the war against climate change. There are two elements, which are very important. With the Minister’s assurances that he will get back to us with some of the thinking that has come out of this, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

170: Clause 48, page 21, line 19, after “Kingdom” insert “and the rest of the world”

The noble Baroness said: I move Amendment No. 170 on behalf of my noble friends Lady Northover and Lord Avebury. The amendment takes us to international issues again, as it suggests that the report to be prepared on the impact of climate change should look wider than just the UK, to which the Bill is confined. The Minister may say that the phrase,

“containing an assessment of the risks for the United Kingdom”,

in Clause 48 implies an assessment of the state of the rest of the world. However, my noble friends’ amendment asks that the rest of the world be explicitly stated in the Bill. Evidence is clear that the poorest countries, such as those in sub-Saharan Africa, and those least able to adapt—the islands of Tuvalu were a dramatic illustration of this on the BBC last night—will be hit first and hardest. When we consider how little land in the world is fit for growing food, or the speed at which soil is being eroded and the importance of preserving forested areas, as we have discussed numerous times in our consideration of the Bill, we can see what the pressures are—water shortages, food shortages, instability and migration. I need not rehearse those any further.

Why should we ask for this to be in the Bill? It should be in the Bill because our efforts here in the UK are directly related to what is happening in the rest of the world. So they should be, as they are the fundamental reason why we have chosen to bring forward the Bill and why the Government feel as strongly about the Bill as we do. Every time we fail a target, should we do so, a real price is paid in someone else’s life in a different part of the world. Some effects of the Bill may make life somewhat different for UK citizens, so we shall have to make different plans and choices, such as living nearer to where we work. It is important that those choices are seen in the context of the rest of the world and that we see this as a global issue. The Bill rightly sees the target as ours to set, although there is still some debate to be had on how much of that target we shall meet by overseas credits. I am sure that we will come to a conclusion on that on Report. This amendment is a chance to set the context of our efforts regularly and visibly on a global basis. I beg to move.

This has become an interesting process as the Minister manages to distinguish between methodology and mythology. Some people regard our approach to climate change as mythology but we are determined to turn it into methodology. Time might tell that what we consider to be methodology has become mythology. However, effective risk assessment identifies a specific risk in its many forms in general situations and in very specific, individual situations. It would not be feasible to have an assessment of the risk of climate change worldwide at a level of detail that could be useful without an enormous amount of work, although we certainly sympathise with the noble Baroness, Lady Miller, in her efforts to have the situation in the world taken into account.

I was searching through the Bill to see whether the Committee on Climate Change would be required to produce this report but I could not find anything on that. The Secretary of State already has to report on this and that, and it is an interesting question where all these reports will emanate from. The question of risk assessment is likely to be dealt with by the Met Office Hadley Centre. That is a great relief because, with any luck, it will be provided without any further charge to those with responsibility.

We on this side recognise the global scope of climate change and that our actions at home can affect the rest of the world, but I would have thought that, in producing this report on risk, any politician worth his salt would refer to the problems in the rest of the world just as a matter of giving context. A specific duty to include risk assessments for the entire planet places a very large burden on the Secretary of State and whomever he asks to draw up his report, and it risks drawing attention away from the kind of information and detail that would allow the Government to minimise the risk domestically.

I share my noble friend’s concern that a requirement for an adaptation plan for the whole world might put too great an onus on the Secretary of State. However, the Government probably should acknowledge the role that they are playing in those countries that are being helped by our environmental sciences. This is not an overall plan to solve adaptation issues around the world. As I reminded the Committee earlier, I am chairman of the trustees of the Royal Botanic Gardens, Kew, which is funded by the Government—by DfID and Defra in particular. There are discrete programmes which clearly address certain adaptation issues. I would have thought it helpful—although this amendment is not perhaps totally appropriate—for this country to report on the contribution that it has made and is proposing to make in these areas. It is a record of which we should be proud and the Secretary of State would no doubt wish to acknowledge the contribution that we are making to other countries. However, I suspect that the terms of this amendment are drawn rather too widely.

Another connection that could be helpful to the noble Baroness, although I do not think that it is quite in the terms of her amendment, is the European context. I have spent an hour this afternoon reading the European Union communiqué, Boosting Growth and Jobs by Meeting our Climate Change Commitments. It says that the Commission estimates that the revenue from the auctioning of emissions trading could hand over to developing countries about €50 billion annually by 2020. That is not peanuts—it is something like the whole of the aid budget—and 2020 may be in the lifetime of some people in this Chamber. So there obviously is going to be a European stream of accounting mechanisms dealing with these huge sums of money.

I support the amendment moved by my noble friend Baroness Miller. Everybody understands that there is an international dimension to every aspect of climate change. That is clearly the case in areas of mitigation, but it has to be the case in adaptation as well. We would not suggest from these Benches that there should be an international report with the same detail as in the United Kingdom one. That is not the point that we are trying to make. However, there needs to be an international dimension within the report. That is important not just in its own right but morally. The various adaptation measures are needed, particularly in the developing world, because of emissions from the developed world over the past 100 years. We have a moral and ethical responsibility to see what is going on in the rest of the world. That needs to be recorded in our official governmental, national assessment of adaptation requirements worldwide.

There is also a very practical reason for doing that. If adaptation abroad does not happen, that will not just affect those nations and those communities, although, believe me, they will be very greatly affected. There will equally be knock-on effects for us within the timescales that we are talking about, whether in forced migration on a scale far greater than Polish plumbers, in biodiversity and the migration of species or in the transmission of illness. The Minister is well aware of bluetongue and we are going to see more of that. How we stop it is a difficult mitigation issue.

I strongly support the idea that we should include this international dimension in terms of adaptation, partly and importantly because of an ethical consideration of our own history and the much greater effects that climate change has on lesser developed societies, but also because the effects of those changes, our lack of ability to adapt abroad and our requirement to help on the international stage will come back to us in future years.

This has been an interesting and important debate at this point in our deliberations. I am delighted to see that the mythology that was mentioned did not affect the monitor for too long; the monitor suggested for a time that we were debating the Children and Young Persons Bill, but we have come back to climate change now. I congratulate the noble Baroness on initiating this important debate and I hope that I can give noble Lords a reassuring reply. The Government see these issues as being extremely important and I hope that I can build on the comments that my noble friend has made about government reporting in general.

First, let me get to the specifics. As noble Lords have said, a changing climate will have an impact on developing countries; we are all well aware of that in your Lordships’ House. Those countries are less well equipped to deal with these changes than the UK is. I am pointing towards the moral and ethical issues that the noble Lord, Lord Teverson, mentioned. We recognise the need to support these countries practically and, through better understanding of the likely changes, to build their resilience to a changing climate.

However, we do not think that government reports under Clauses 48 and 49, as proposed in Amendments Nos. 170 and 178, are necessarily a good route for doing that. That is for two reasons. First and most important, adaptation must be integrated into our mainstream development work for it to be most effective. That is part of sustainable development in the round. Secondly, by building the resilience of the UK to the impact of a changing climate, we will be better able to help other countries and to share our experience with them. To do that, we need to have a clear focus for national risk assessment and to follow up with a programme of action. We will make a step change by doing this and by addressing those issues in the UK.

On Amendment No. 170, we do not see that it would add any value for the UK to duplicate the role of the Intergovernmental Panel on Climate Change, nor do we consider that that would be appropriate. The IPCC is the leading global scientific body on climate change, as we have heard, bringing together more than 2,000 scientists from across the world. The IPCC is already charged with carrying out regular, detailed and independent analysis on the global impacts of climate change. The award of the Nobel Peace Prize, received jointly with Al Gore, for its efforts to build and disseminate knowledge on climate change and measures to combat it is a measure of the esteem in which its work is held worldwide.

The UK has had a leading role in the IPCC and contributes to it through the work of hundreds of UK scientists involved in the IPCC process—I take this opportunity to pay tribute to their work. We are active participants in IPCC events and through financial support. We believe that the better approach is to continue to work through the IPCC. Therefore, we cannot accept this amendment. However—this is an important point to make—I assure Members of the Committee that the Government will take into account the existing work done by the IPCC and others on the global impacts of climate change in formulating our development programmes.

Amendment No. 178 would require the Government’s adaptation programme to report on our activity to support adaptation to climate change outside the UK. However, the Government already provide this information, so this amendment would lead to unnecessary duplication. To be specific, the Government already report to Parliament on our work to help developing countries to adapt to climate change through DfID’s annual departmental report, alongside reports on our overall progress towards meeting the millennium development goals. The most recent DfID annual report is in the House Library.

I shall now pick up my noble friend’s comments on government reporting. The information is there, although I understand that from time to time it may not stand out as much as it should. My noble friend has been very responsive to concerns expressed in Committee about how we can promote transparency and make information widely available to the public and to Parliament. I am sure that we will continue to be receptive to that. In addition, the Government have responsibility through the International Development Act to provide assistance for sustainable development and poverty reduction and are obliged to report annually to Parliament on these commitments through the International Development (Reporting and Transparency) Act 2006. There is not a strong argument for duplicating existing activity, which would be the effect of the two amendments.

However, I want to reinforce how seriously we take the impact of climate change on developing countries and to remind the Committee of some of the practical steps that the UK is taking to support adaptation work internationally. The UK has already put in place a number of major initiatives to help developing countries to adapt to climate change, including £74 million for building capacity and improving knowledge of the problems in Africa, Asia and Latin America, and an £800 million environmental transformation fund. The UK is contributing £20 million to UN funds for developing country adaptation strategies and pilot projects. We are following up on actions from the climate risk assessments of the UK development programmes in China, India, Bangladesh and Kenya. This is part of the work to mainstream the need to adapt into development programmes. For example, in Bangladesh, the child livelihood programme is a £50 million programme to work with 100,000 people who live on low-lying islands, thus reducing their vulnerability to floods. It is a mainstream development activity and a direct response to the increased risk of disasters as a result of climate change.

I have a long speaking note on a number of other initiatives, but I am sure that Members of the Committee would be delighted if I moved on. Previously, we have discussed the relationship between the action that we are taking in the UK and the wider international context; for example, Clause 10 requires the Government and the Committee on Climate Change to consider international circumstances in relation to carbon budgets. We also had a good discussion earlier in Committee about the need for the Committee on Climate Change to be aware of the international dimension and not to focus purely on domestic issues. We promised to take this away and to consider it, which we are doing.

The Government are willing to ensure that the Bill covers domestic and international issues, as that will add important value to the work that the Bill will promote. In this case, we are not convinced that the amendments would add value, but we think that this debate has been important; it has given us the opportunity to be clear about our commitment to take the much wider view. With that, I hope that the noble Baroness will withdraw her amendment.

I thank all Members of the Committee who have spoken. In particular, I pay tribute to the work of the noble Earl, Lord Selborne, and the whole staff at Kew. In thanking the Minister very much for her full reply, I declare an interest: the British embassy in Argentina funded a visit that I made as a member of the Joint Committee on climate change to have a discussion with Argentinean parliamentarians, the media and so on. It was the British embassy’s initiative, under the Government’s programme, and it really raised the level of discussion in Argentina. I concur with the Minister that the Government are making important strides in the world. The sort of work that Defra and the noble Earl, Lord Selborne, are doing needs to be kept at the heart of our debates and the information that we receive. I accept that this may not, therefore, need to be in the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

171: Clause 48, page 21, line 19, leave out from “Kingdom” to end of line 20 and insert “including the risks of damage to, or deterioration of—

(a) society, including the health, wealth and well-being of the population;(b) the environment, including biodiversity, living organisms and the ecological systems of which they form part, and natural resources; and(c) the economy;of the current and predicted impact of climate change.”

The noble Lord said: Our amendments in this group follow on from our previous discussion about the impacts of climate change. I will not speak to Amendment No. 181, which is part of this group, as we have already covered it. As we have noted before, these amendments concern the impacts of global warming and our efforts to combat it, which extend beyond simply the UK net carbon account. As we have already debated, the Government have included a section that places a duty on the Secretary of State to report on the risks to the UK of the impacts of climate change. However, the Bill is not clear enough on what precisely is to be included. Our amendments are designed to supply this clarity.

When considering the impacts of climate change, it is essential to include the impact on society in the broad sense, as well as the health and well-being of the population. We are mindful of the rigour underlying the Stern report. We need to understand how global warming and our efforts to stop it are going to affect daily life. With this must come an understanding of how climate change will affect the life of people in this country as well as ecosystems and the environment.

We have included in these amendments a duty to report on the impact on natural resources and the economy. By making this a part of the report, we by no means want to suggest that economic pragmatism will be driving efforts to stop global warming. Yet a forecast of the likely economic ramifications of climate change would be advantageous to business, to industries that might have a hard time with this legislation, and to the fight against climate change itself. Understanding the economic implications and their development enables us to identify areas for improvement. We need to ensure that we fully understand the extent of the problem so that our solutions will be firmly set in a real-world framework. We need to be as sure as we can that our efforts are going to work. I beg to move.

I would like to be as brief as the noble Lord in introducing this, but the issues raised are absolutely crucial. I want to be as open as I can be in Committee as it will help on Report. First, let me reassure your Lordships that the Government develop their policies and deliver their services within the overriding framework of sustainable development. We are trying to live within environmental limits and to achieve a just society by means of a sustainable economy, good governance and sound science. The policy development process is based on a sound analysis of the costs and benefits of different courses of action. That said, these amendments do not add value to what is already in the Bill.

Amendment No. 171 would insert a reference to particular issues in relation to the risk report under Clause 48. I want to make it clear that the risk assessment will be thorough and comprehensive. The report will make use of expert and independent knowledge and include spatial, sectoral and temporal coverage of the risks from climate change and the associated vulnerabilities of these risks for the UK. It will identify gaps in the knowledge of these areas. At the moment, Clause 48(1) requires an assessment of the risks for the United Kingdom that do or may arise from climate change. This covers risks to the whole range of factors in the amendment and more besides. It is already as wide as it could be. We think it better that the Secretary of State should have a duty to assess all the risks to the United Kingdom, rather than to pick out particular risks now, before we have even conducted the first risk assessment under Clause 48.

On Amendment No. 177, we fully intend to base the adaptation programme under Clause 49 on the risks identified in the risks report under Clause 48. To this end, Clause 49, line 38, reads,

“addressing the risks identified in the most recent report under section 48”.

This applies to Clause 49(1)(a), (b) and (c), not just to the objectives—that is, paragraph (a)—which Amendment No. 177 refers to. We do not think that the amendment adds to the existing provisions.

On Amendment No. 179, we agree that consideration of costs is an important part of developing policy responses to climate change adaptation. Costs are routinely considered as part of the impact assessment carried out through the normal policy development process, and we do not feel that a specific provision is required to this effect in the Bill.

Amendment No. 179A introduces a new definition of adaptation. While we sympathise with some of the arguments put forward by the noble Lord, we take the overall view that this new definition is unnecessary. At the moment, adaptation is not defined in the Bill. That was quite intentional, because we think that its meaning is clear. The Oxford English Dictionary defines adaptation as,

“the process of modifying a thing so as to suit new conditions”.

That is exactly what we intend to do—modify all sorts of things to suit the new conditions presented by climate change. We really think that that is enough.

The danger with having more than one detailed description of an ordinary word is that it can change the focus in ways that are not necessarily helpful. It is, of course, important to take into account both the harmful and the beneficial effects of climate change, but that is covered by the natural and ordinary meaning of adaptation. If the intention is to ensure that the adaptation programme addresses the need to secure a healthy natural environment and a healthy and just society, then this is already covered by the provision requiring the adaptation programme to contribute to sustainable development.

Amendment No. 180 would amend Clause 49(2) to require the contents of the adaptation programme to be consistent with achieving sustainable development. The current text provides that the adaptation programme must “contribute” to sustainable development. We are grateful for the noble Lord’s explanation of his amendment, and are particularly pleased that there is a consensus that sustainable development is an important consideration in any adaptation programme. Yet we do not think that this amendment enhances the Bill. It is better that the adaptation programme should contribute to sustainable development as an active part of the overall effort made to achieve sustainable development. We would be concerned that, if the programme only had to be consistent with sustainable development, some of the sense of activeness might be lost. “Consistent” seems neutral to us.

The noble Lord did not speak to Amendment No. 181 so I will ignore it. I hope I have addressed the details of the amendments. Frankly, while there are important issues to be raised, we believe they are fully encompassed within both the terms of the Bill and the spirit in which the Bill will be interpreted.

I am grateful to the Minister for reaffirming the direction in which both risk assessment and programme adaptation will move. Many of the amendments we have put down in this section try to make sure that adaptation is seen to be an important element of the Bill and its progress. Following the Minister’s comments, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 172 to 175 not moved.]

Clause 48 agreed to.

Clause 49 [Programme for adaptation to climate change]:

[Amendments Nos. 176 to 181 not moved.]

182: Clause 49, page 22, line 8, at end insert—

“( ) The Secretary of State must implement the programme for adaptation to climate change.”

The noble Lord said: I move Amendment No. 182, and this is—

The Minister had me worried there for a moment. Amendment No. 182 relates to the Secretary of State implementing a programme for adaptation. If there is a programme for adaptation, we on this side of the Committee think that there should be a duty to implement it. There is a duty to introduce the risk assessment, but it does not extend to a duty to implement the programme. It is not enough to just have some good ideas.

I anticipate a few objections to the duty placed on the Secretary of State in this amendment, and thus want to make our intentions behind the amendment absolutely clear. It is not our intention to bind the hands of the Secretary of State such that he must follow only the specific programme outlined. We recognise that contingency is always a part of policy-making and there needs to be some space for a Minister to respond to it. However, this part of the legislation places the duty for developing the programme on the Secretary of State. We feel that it is important that the programme that is developed can and will be effective. Thus, we want to ensure that it will in fact be put into effect.

I do not for a moment think that the Government intend this clause to be only about making plans and not taking action. However, there is no requirement for any action at all to be taken. We want to change this to make sure that there is a duty for the Secretary of State to act on the proposals that he will table in the programme. It is not enough to make plans. In addition to having a programme, plans must be carried through to action. Should the Minister think our wording here too prescriptive, what assurances can he give that the programme for adapting to climate change will in fact be implemented? Does he agree that there should not be any scope for a Secretary of State to avoid these responsibilities? I beg to move.

I lend my support to my noble friend. Much of this Bill seeks a fair balance between mitigation and adaptation. We have discussed the need for special provisions and expertise to deal with adaptation. I am sure that the Minister will say that, as the Bill places a requirement on the Government to develop an adaptation programme—matters for which the Secretary of State is responsible—it is inconceivable that the Secretary of State would not fulfil or implement such a programme, which must contribute to sustainable development. All that is clearly the case but I cannot for the life of me see that any harm would be done by putting responsibility firmly and squarely on the Secretary of State, if only to state the obvious.

I apologise for my earlier interruption. I am working from my notes, and I have this amendment down under the wrong name.

I should make it clear that my remarks will be a little longer than usual, as I want to take us back to an earlier debate on the duty to implement and meet. There are some issues here that it would be well worth rehearsing—and obviously I am trying to work it out so that we do not have to do all this again on Report. That is one of the objectives. We shall have a more informed debate on Report, to put it that way.

With the amendment, we return to the issue of whether the Government should be placed under an obligation to implement a report setting out their proposals and policies. I assure this Committee that adaptation is an integral part of this Bill and we fully intend to deliver on our commitments to ensure that the impacts of climate change in the UK are effectively addressed. No reasonable Secretary of State is going to develop a set of policies and then just ignore them. The whole idea of putting a programme in place is, for the first time, to ensure that coherent adaptation planning actually takes place. Clause 49 represents a significant step forward in the UK's response to the impacts of climate change, and we should not lose sight of this fact. Those plans will inevitably lead to action; for one thing, Clause 49(3) requires subsequent adaptation programmes to contain a report on progress of earlier programmes, which will be the trigger for assessing how effective the programme has been.

We must be realistic. Best practice changes, and the Government ought to follow it. A statutory obligation to implement a programme may remove flexibility to amend the delivery programme if more appropriate and effective policies and measures are developed, so it might also result in significant costs if circumstances change after the programme is announced. We of course expect to be held to account under the usual parliamentary scrutiny process and will be reporting to Parliament on both the risk report and the adaptation programme. In addition, as I set out in our previous debate, a duty to implement a programme could be seen as a very broad enabling power for a Government to carry out any actions it proposed through the plan. I am sure that the Delegated Powers and Regulatory Reform Committee would have something to say about that.

On the more general question of duties to implement, which I believe is at the nub of this, I shall respond in some detail to some questions raised in a previous debate on Amendment No. 60. In that case, I noted the inappropriateness of giving the Government a wide and unfettered enabling power, and the need for clarity and certainty when imposing duties on people. These points are equally applicable to this amendment. The noble Lord, Lord Crickhowell, suggested previously that the duty in Clause 1 was not clear or certain. It is not fair to draw a comparison between a duty to implement a qualitative policy programme that has not yet been written, and the clear and quantified duty in Clause 1(1). I hope that this helps to clarify why we believe the duty to meet the 2050 target is of a different nature from those proposals for a broader and less well defined duty to implement a policy document.

It will be clear from the statement published by the Secretary of State under Clause 15—the final statement for 2050—whether the net UK carbon account has been reduced by at least 60 per cent. If the figures show that the 60 per cent reduction has not been made, then it will follow that the Secretary of State has breached his duty. That is what we mean when we talk about clarity and certainty in the context of a legal duty. To the extent that the noble Lord was really saying that the shorter-term implications—between now and 2050—of the duty in Clause 1 might be less clear, which is why we have carbon budgets to set the trajectory to our 2050 target, I repeat that we are considering how the concerns of the Committee can be met, as previously discussed. In other words, this is not the end of the issue. We are giving further consideration to the matter.

I apologise for the length of my reply.

I am extremely grateful to the Minister for replying in advance to the speech that I drafted this afternoon, based on remarks that I made earlier. He has not altered my arguments one jot, but it is nice to have his statement today and not have to wait until Report.

As the Minister detected, this was really a probing amendment to find the degree to which the Government saw the opportunity for using the adaptation programme as a vehicle for change. I acknowledge that the provision would need to be flexible, as I made clear in my introductory speech. I am reassured by the Minister’s remarks and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 182A not moved.]

Clause 49 agreed to.

182B: After Clause 49, insert the following new Clause—

“The Carbon Tax Industrial and Consumer Impact Forum

(1) There shall be a body to be known as the Carbon Tax Industrial and Consumer Impact Forum (“the forum”).

(2) The forum shall include representatives from Her Majesty’s Government, employer groups, trade unions and consumer organisations.

(3) It is the duty of the forum to produce a report advising the Secretary of State, in relation to each budgetary period, on the impact of each sector of the economy, including transport, manufacturing and services, of meeting the carbon budget for that period.

(4) The forum must also propose to the Secretary of State measures to ameliorate the impacts identified in its report.

(5) The forum must give due regard to—

(a) increases in the taxation of carbon,(b) changes in relative costs and prices between different sectors of the economy, and(c) the role of the European Globalisation Adjustment Fund.(6) For each budgetary period, the forum must produce its report not later than six months after the carbon budget for that period has been set.”

The noble Lord said: In proposing a body known as the Carbon Tax Industrial and Consumer Impact Forum, I first need to explain how I see the jigsaw puzzle overall and then demonstrate why such a forum will have such an indispensable part to play in moving this process forward in a way that can be sustained. Sustainability, of course, is the name of the game. I hope not to speak at excessive length—I will certainly break no records—but by the end I hope that my noble friends will think that I have covered a reasonable number of points on the proposal.

I begin from a point where many would begin—including people in the trade unions, a constituency with which I still have some contact. We are talking about an almost unbelievable reversal of the energy coefficient of growth, on the carbon side at least. I have been involved for many years in this whole business of how to have emissions trading and how to get China and India involved. I remember saying at Rio de Janeiro in 1992, as chairman of the world trade union group on the environment, that we needed to bring in India and China and, at some point, to have a degree of support from the developing countries on the basis that we are each entitled to so much carbon. I remember the American being astonished at what he called those communist ideas. However we do it, the central point is to recognise that there must be pain as well as gain.

I am reminded of the story of the American President who called in a top US admiral in wartime and said, “Admiral, I have figured out the solution to the U-boat problem”. “What would that be, Sir?”, asked the admiral. “Drain the North Atlantic”, said the President. “How do I do that, Sir?”, asked the admiral. The President riposted, “Admiral, am I not the President of these United States and your Commander-in-Chief”. “Yes, Sir”, said the admiral. “Then go out there and obey my orders”, said the President. At the present time, to the order “Drain the North Atlantic”, we would add, “Install windmills to keep out the water”. The extent to which we think we can run an economy without carbon will quite surprise some people. We are a long way from getting that into the bloodstream of—that is, owned by—people. We need to talk to people in their representative capacity to be sure of that.

I am sorry that my noble friend the Minister is not present. I hope he does not think this an unimportant matter for debate. The Bill is overwhelmingly predicated on choking off demand through price, either directly through taxation, indirectly through energy supply-side increases or through emissions trading and carbon taxation. I use the generic term “carbon tax” in my amendment. That predication is palpably clear from the Oxford Economics reports commissioned by the Treasury, but has it been openly stated by Ministers? I think not; at least, I have not heard my noble friend Lord Rooker say so. He may correct me if I am wrong.

A research paper produced by Oxford Economics, again commissioned by the Treasury, gives this equation: an increase in carbon prices to about €60 per tonne to all sectors of the economy is sufficient, at 2006 prices, to reduce emissions by 30 per cent relative to their 1990 levels by 2020. That finding assumes that all reductions in carbon emissions are achieved by UK firms and households rather than by a purchase of carbon reductions from other countries. That quite explicitly demonstrates that we are predicating our whole approach on choking off demand though prices—and, we could add, through taxes. That process will be inherently regressive; certainly so, if we take no steps to reverse the regressive effect. It is no poll tax, but if we think about the proportion of income that the bottom 25 per cent of the population, or the bottom 10 per cent, have to spend on heating their homes then is not far off that. If they have a car, we should be saying—as one Oxford study does—that the proposal is equivalent to removing one-third of cars from the road. Well, guess whose cars those would be?

If we think that we have approval for all of this, we are kidding ourselves. We are far from that. I strongly support this Bill’s principles, having been involved in this business for a very long time. However, I am afraid that the principle of choking off demand through price increases—whether through taxation, energy supply increases or emissions trading carbon taxation and so on—will not be without huge social conflict unless we make provision in advance to avoid that. It will not be sufficient, in a few years’ time—when we have doubled the price of carbon through tax, or whatever—to say “Well, nobody opposed the Climate Change Bill. You all supported it”. I would not care to have to make that argument in a pub by that stage.

There is nothing wrong in having a lobby; goodness gracious, I have been involved in enough of those. Yet it seems that the environmental lobby has never said these things; again, I stand to be corrected. I am glad to see the noble Baroness, Lady Young of Old Scone, in her place, as she can say whether this quote is wrong. She was quoted in the Daily Telegraph of November 20 as saying that,

“climate change is World War III”.

There is no hyperbole there, then. Is she getting ready to help dish out the ration books? As we found in World War II, ration coupons are the fairest way—fairer by far than rationing by price. Another way of looking at it, if my analysis is correct, is that we need to take other steps to change the income distribution back from the drift to the 1930s, yet without massive programmes of cross-subsidy all over the place that would cause havoc with administering the carbon trading and taxation system.

The standard line in the Treasury cannot be a million miles away from the analysis of the Stern report as the noble Lord, Lord Stern, was in the Treasury all of his life. It argues that the macroeconomic numbers for meeting our carbon targets would not produce a shock out of line with the sort of numbers that vast structural changes to our economy in the past 100 years or so have entailed. I think people have in mind a Ted Heath-type period—the oil shock and so on—but the numbers are totally different. We have to achieve the results advocated in the Bill. The jury may still be out on whether an ice age will come back in the next 5,000 years. As an old trade union official, I know that trade union officials are very long-sighted in negotiations, but no one normally looks ahead for 5,000 years. We all have to agree that this is a programme that will be relevant for 50 years, and we cannot go on without the price tag being associated with the Bill. It is like having an orchestra in which the only instruments are the trumpet and the harp. We need all the instruments in the orchestra.

Some sections of society—the wealthiest—will be able to take this in their stride. Poorer people will not. There will also be an effect on employment. The noble Lord, Lord Stern, acknowledged that. To make a purely arithmetical point, all other things being equal, lower economic growth would mean that we would have to take a hit on employment or productivity. We are committing ourselves to reducing carbon in an economy that will be three times bigger at the end of the planning period than now. All the studies have shown that the price elasticity of demand for carbon is rather low; in other words, people need a lot of it. It has also been remarked that if we are going to push up the price of carbon in this way, which may be necessary, it is tantamount to saying that as soon as ordinary people can afford to go to Malaga on their holidays, they cannot go. It is all right for everyone else to go, but we will push the price up so they cannot go. That is what we are saying in the programme that the Bill is inaugurating.

Those are blunt statements that lead to discussion, but I hope they demonstrate that there is a huge problem in the lack of ownership in Birmingham, Manchester, Scotland or Wales of what we are talking about. No one has bought into this so far. They may have done so at a casual level; everyone says, “What a good idea”, but it is not true. The noble Baroness, Lady Young of Old Scone, has described the changes in our socioeconomic set-up as being as profound as World War III. If that is true, it means that we cannot simply write a blank, post-dated cheque without giving anybody any guess about the amount of money the cheque is for, which we will all have to pay. When I say, “no ownership”, I mean among consumers. My noble friend Lord Whitty wears a hat on the National Consumer Council, but everybody is involved wearing two or three different hats: as taxpayers, workers, consumers, industrialists and so on.

In the two or three days in Committee that I have attended, noble Lords have talked about the need for a new politics. I am afraid that there is no point saying that we need a new politics without responding to some of the points I am making. This is my only contribution to this debate. There have been 30 hours of debate so far, and this is my only speech, but I have to say that there will be a collapse of trust in government when Ministers of whatever Government tell people in due course why this pain is being imposed on them and, to add insult to injury, that they agreed to it because Parliament agreed the Climate Change Bill. The paradox is “no pain, no gain”. We are being very precise about numbers when it comes to the targets for 30, 40 or 50 years’ time, but there are no numbers on the fiscal side. We cannot guess at that.

I have given some of the reasons for establishing a Carbon Tax Industrial and Consumer Impact Forum. I am sure that someone can think of a simpler title or acronym for it. I acknowledge the formal point that the Minister always makes, which is that this is not a Defra Bill, but sitting round the table in such a forum we will need people from the Treasury, BERR and Defra as well as interested parties such as workers’ representatives, consumer representatives, industry and others to show their ownership of mitigating the negative side of the cost-benefit outcome for the less privileged people in society. The climate change committee has a separate, very important function but it is not the function to which I am referring, and it cannot do the trick of delivering ownership. It is essential that there is something in the Bill along the lines of my amendment, and I will be happy to discuss it any level. I thank the Committee for being accommodating about the time that I have taken.

Finally, on the European front, which is mentioned in the amendment, today’s announcements in Brussels remind us that the fiscal numbers are easier to get at when we look at the European picture. We need a European agreement on the carbon tax, which was the basis of my maiden speech in 1999. However, we do not want a contradictory mess of competing subsidies that would destroy the internal market. That was also a theme of the statement agreed in Brussels today. Bringing people in to get some ownership of this agenda and to take the responsibility of explaining it to their affiliates is the way to win hearts and minds. I hope the Minister is able to say that proper consideration will be given to it. I beg to move.

I shall respond to the presentation made by the noble Lord, Lord Lea of Crondall, in general rather than on specifics because we have spent time discussing the pain and problems that will occur on the international scene and he has highlighted the pain and problems that may occur on the domestic scene. That is very realistic. We do have to think of it and I know the Minister will have been thinking about it.

It reminds me of some sentences that characterise a great deal of what we are doing in the Bill. They were written by Matthew Arnold:

“We cannot kindle when we will

The fire which in the heart resides,

The spirit bloweth and is still,

In mystery our soul abides”.

The real nub is:

“But tasks in hours of insight willed

May be through hours of gloom fulfilled”.

May I make an observation? Earlier, the Minister said that this Bill would not make an impact on extra civil servants or the Treasury. I have thought about that quite a lot since he made that remark. As far as I can see it is going to have a huge impact. It can only increase bureaucracy like mad. The noble Lord, Lord Lea, wanted to set up a forum to include,

“representatives from Her Majesty’s Government, employer groups, trade unions and consumer organisations”.

The forum then has to produce a report—all forums produce reports—

“in relation to each budgetary period, on the impact of each sector of the economy”

and it must “give due regard” to increases in taxation, and so forth.

That can only be an enormous increase in bureaucracy and it will not reduce an extra car, reduce a hole in the atmosphere or anything.

I am grateful to the noble Earl for giving way, but I do not know that he can have been listening to what I was saying. The cost of a forum—goodness gracious—will be infinitesimal compared with delivering this £50 billion or £100 billion result that we want. Does he, if I might put it in the form of a question, not accept that this is going to have an enormous impact on people—that they have got to start to understand and be persuaded to accept when they are at the delivering end?

I am not persuaded by that. There is no doubt that the way this is being done can only result in a huge bureaucracy, which can only add more cost and produce nothing beneficial in the end, unless, of course, there is a marginal decrease in carbon, but I rather doubt it.

Perhaps I may act as something of a tiebreaker and speak in general terms in support of my noble friend Lord Lea. If my memory serves me right, in his diaries, Sir John Colville makes the point that the standard of living for the average British family fell by 50 per cent between September 1939 and December 1940. I remember asking my mother when I was a child how she dealt with that. The truth was that she dealt with at least half of that through adaptation—changing the way in which we lived. Our family standard of living did not fall by 50 per cent, it probably fell by, let us say, 20 per cent. I suspect that this might well be the general experience of a great number of people over the next 20 or 30 years.

In that diary, Sir John Colville also says that he did not at the time think it would be possible to persuade the British people to accept this level of deprivation. He puts it entirely down to the power of Prime Minister Winston Churchill’s speeches to convince the public that there was a common enemy and it was worth it. That is one relatively inexpensive way of dealing with adaptation. I do not know who will make those speeches. No doubt, the noble Baroness, Lady Young, will be among them.

As I have said several times during the Committee stage, the pain of adaptation will be very real. To pretend otherwise, is not to do ourselves—and certainly not the younger people who are going to feel the full effects of this—any favours at all. However, it can be managed. The other thing I remember my mother saying over and over was, “Don’t forget, we were all in it together, and there was a common enemy”. Climate change is a common enemy. Once again, we will be in it together and in that sense I suspect that new adaptation methods will be devised.

In a general sense, I want to underline the argument made by my noble friend Lord Lea. A few amendments ago, the Minister chose the Oxford English Dictionary definition of adaptation by referring to “modifying in the light of new circumstances”. That is a nice, gentle, Oxfordy way of describing it. These will be drastic changes. They might take some time and be differential in their impact, but the changes will be drastic over the period that this Bill envisages. They are changes in our lifestyle, the pattern of the economy, the nature of work, the balance of work and life and the pattern of consumption. All of those require us to face up to them in a similar way to the concentrated period to which my noble friend Lord Puttnam has just referred.

They are not minor modifications; they are huge. In wartime—and in this sense, the equivalence referred to by the noble Baroness, Lady Young, is quite correct—all the elements of civil society pulled together and the pain was at least assumed to be more or less equivalent across all levels of society. One of the phrases that we remember from wartime is the late Queen Mother’s remark that at last we can look the East End in the face.

We will be in similar times over these kinds of adjustments. That will require the engagement of leaders of industry, business, commerce, trade unions and other parts of society—and indeed of consumer organisations, such as my own—to make their communications available in putting across the same message. I suspect the Government are not going to be too keen about the prescription put forward by my noble friend Lord Lea. It is a bit corporatist and not with the Zeitgeist. However, it is inevitable that we will have to find some new way to bring all the leaders of society into this battle.

Going back to the previous amendment, it is not just the Secretary of State who will have to implement this, but all of us in any leadership capacity in any part of this nation. There ought to be some reflection of that in the Bill.

The other aspect is that many measures that the Secretary of State—the Government—will introduce through trading schemes, taxation and so on, will have regressive impacts. I have made speeches in this House on that. We are paying too little attention to the regressive, social impact of some of the most obvious measures that we will have to adopt to meet the challenges of climate change. We will need compensatory measures and consensus on them.

A forum and its bureaucracy are, perhaps, not the most obvious ways of doing it, but the spirit behind my noble friend’s amendment is important and deserves some reflection in this Bill and its proceedings.

This has been an interesting and wide-ranging debate. With his usual perception, my noble friend Lord Rooker recognised that this amendment would be expansive and cover the wide range of the economy. Therefore it was felt that it might not be unhelpful for a Treasury spokesman to reply to this amendment. I am sorry that my noble friend Lord Lea finds that a totally inadequate response on the Government’s part—even before I have managed to utter a few words.

I withdraw what I said. I did not realise the distinction with which my noble friend would be able to respond, with his Treasury connections. I also apologise to my noble friend Lord Rooker. I have clearly insulted two of my noble friends on the Front Bench and, before I make a hat trick by insulting someone else, I had better go home. However, I am looking forward to it.

I hope my noble friend will stay to hear the response, because I want him to stay to withdraw his amendment as well. I hope he will tarry a little longer. We recognised that his amendment raised very broad issues. That is why I am expected to make a short contribution to this important amendment.

He will appreciate that Clause 10 already requires a number of factors to be taken into account both by the Government in coming to any decision about carbon budgets and by the Committee on Climate Change in formulating its advice. The list of factors includes economic circumstances, in particular, the likely impact of the decision on the economy and the competitiveness of particular sectors of it. That is a recognition of the substance of the point made by my noble friend.

This Bill has to be set in the context of a substantial impact on the economy. I am grateful to my noble friends Lord Puttnam and Lord Whitty who seized the opportunity to emphasise that these will, in due course, be epoch-making changes. They will be as great as those that have affected our society at any time in the past. However, we should not underestimate the ability of our nation or others to adapt to change.

When great challenges are thrown down to societies, the adaptability of people to transform their lives quickly and adopt strategies that they would not have thought of a decade earlier is remarkable. It is forced on them by circumstance, but it is also a realisation that a larger objective needs to be attained. People respond to leadership in those terms and recognise when society is being challenged. We had instances during the two world wars of the last century, but we should not underestimate the convulsions that occurred in centuries prior to that. People then had to adjust to even more significant change because, having lived in static societies for almost the whole of their lives, they found themselves in societies subject to substantial convulsions. So people can and do adapt to change.

However, I do not underestimate the level of change that is required by the challenge that faces us on global warming. But that is the whole raison d’etre of the Bill. I hear what the noble Earl, Lord Ferrers, said and was glad that he returned us to prose. There was no way that I could keep up with the noble Duke, the Duke of Montrose, with his poetic flights, although they were much appreciated. I am therefore very glad that the noble Earl, Lord Ferrers, brought us back to the prosaic. He was right: these challenges will make demands on society in terms of the necessary resources.

The trouble with the concept of a huge bureaucracy is that it suggests that everyone is being told what to do and is responding unwillingly. We did not talk about huge bureaucracies in the First and Second World Wars, although the numbers of government servants increased on both occasions, as they were bound to do. Even in a society much more committed to limited government, the United States was transformed by the Second World War in the amount of its bureaucracy, as the noble Earl calls it. Others among us would not express that in pejorative terms. However, there was a large number of public servants dedicated to fulfilling a goal which society recognised as being of such significance that all society subscribed to it.

I had in mind the subject so dear to the heart of the noble Lord, Lord Rooker; that is, the single farm payment. It has resulted in colossal bureaucracy and no one benefiting.

If the noble Earl will forgive me, I will not go down the single farm payments route this evening. Sufficient unto the day is the challenge thereof, and we have quite enough with this Bill as it is.

This Bill does not underestimate the necessity of engaging with the public and ensuring that we can only make progress. If there is answerability for decisions taken, we take the whole of society with us. That is why the broader approach of the Government is that all new policy proposals will be examined for their impact on business, charities, the voluntary sector and so forth. All that must be subject to an impact assessment to determine the costs and benefits of the proposals. It is clear that we will be going through a process of considerable business and societal change, but we are building into the Bill a model to ensure that there is careful assessment of the impact of the policies that are to be followed.

In addition, I emphasise that we are committed to help businesses to reduce their carbon emissions. It is not a question of dictation, which suggests that others should jump to the Government’s tune; this is a way in which the resources of society are committed to help those who need to be assisted with change for the benefit of the overall objective. We will be helping businesses with the reduction of carbon emissions and encouraging the development of new low-carbon technologies. We grant-fund the Carbon Trust, which is the private company established by the Government to work with businesses on energy efficiency. We also offer the enhanced capital allowance scheme for energy-saving technology. That is government assisting the necessary processes of change which businesses will need to undertake.

Ministers from Defra and across government—of course, the Treasury will play its role in this—will regularly meet employer organisations and trade unions to discuss a wide range of issues, including climate change and technology. Good government requires us to consult widely, particularly when we have to effect the transformation in society which this Bill envisages, and when we bear in mind the nature of the challenge which global warming represents.

The Bill already has an expert independent body—the Committee on Climate Change—to provide advice on the budgets. I cannot see that the amount of expensive administration needed in setting up an additional body would be justified in the purpose for which it is proposed. We have established a body, which is charged and fully accountable to the nation through Parliament, to take responsibility for this process. The Bill makes it absolutely clear that it must be governed by accountability and that there needs to be a significant committee on climate change at the centre of it.

I entirely understand that my noble friend is motivated by the highest principles and that you achieve large change in society only through consent. Governments will have to take people with them down difficult roads. There is no doubt that there is pain in this process as well as gain. There is a growing realisation in the wider society that if we do not control and abate the growing impact of global warming, it will produce disastrous consequences for us all. That is the basis on which we expect and can anticipate the whole of our society to respond to the challenge. The Opposition here and in the other place will do their job of critical scrutiny of the Bill and at times we will look divided, but every sentiment expressed from both Opposition Benches is set against an acceptance of the broad principles of what the Bill seeks to achieve. It is a challenge to which we all need to respond. I hope that my noble friend will recognise that the legislation envisages just that.

I have to thank my noble friend for that reply, but I thought that it was very poor. The Treasury brief did not address the issues which two weeks ago I signalled I wanted to raise. That only reinforces in my mind the notion that on this climate change programme the Treasury has no comprehension whatever of the social dimension. I am certainly very disappointed.

I asked specific questions about regressive taxation and price rises, as did my noble friend Lord Whitty. I also asked about the impact on income distribution. Can I stop for a minute and ask my noble colleague whether he heard me ask those questions and whether he would like another opportunity to come back to me now?

The Committee probably recognises that we are moving into the expectation of dinner time against the background in which my noble friend deployed his case at considerable length and with his usual skill. I responded to the broad issues raised by his noble friends on the challenges that we face. I also responded to his amendment, which he contends is necessary to the Bill. I sought to establish that the Bill contains all the necessary provisions to reach his objectives.

Will my noble friend Lord Rooker and other Ministers at senior level agree to write to me on the points that I made in my speech, not the points in a brief that was written beforehand? Secondly, if you read any history of the labour market and the involvement of people during the war, you find that that Ernest Bevin became Minister of Labour. The noble Earl, Lord Ferrers, would not have any comprehension of these matters, but bringing the trade unions around the table with the employers, the Government and people in the region made an enormous difference. People were able to see each other's problems face-to-face and they could be carried along. Thirdly, this whole programme around the world is predicated—

My noble friend Lord Ferrers is a big chap and well able to defend himself, but I must admit that, as a mere Back-Bencher, which I now am, I found the comment that the noble Lord, Lord Lea, has just made unacceptable.

The noble Earl, Lord Ferrers, disparaged as “bureaucracy” what I had said about the need for a committee with a totally different function from the Committee on Climate Change. When my noble friend the Minister referred to the functions of the committee, including those referred to in Clause 10, they were totally different. Moreover, as the noble Baroness has raised the matter, Schedule 1 does not refer to any representatives of the sort of people—the hearts and minds—who need to be convinced. This is a job of a totally different character from the semi-technical job of the Committee on Climate Change. I have nothing to withdraw from what I said about the remarks of the noble Earl, Lord Ferrers.

I hope that before Report my noble friends in the Government will agree that something needs to be included in the Bill. I said that I would be happy to discuss this further, because there could be a great failure. Mark my words: it will be seen to be a foolish and short-sighted decision in future years if no opportunity is taken to put on the face of the Bill the whole challenge of the ownership of this process by members of civil society, industry, commerce and workers’ representatives. On that basis, I look forward to the response in writing from my noble friends and will decide how far I will press the amendment on Report. At the present time, I feel that I will need to press it. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 50 agreed to.

I beg to move that the House do now resume. In moving this Motion, I suggest that the Committee stage begin again not before 8.45 p.m.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.