moved Amendment No. 19:

moved Amendment No. 20:

My Lords, it might be convenient if I spoke at this stage to Amendment No. 145, which the noble Lord, Lord Teverson, has joined me in tabling. I must apologise for having tabled amendments when I have taken so little part in the Bill, but it seemed of such importance that I desired to try my luck.

Clause 27 provides for the committee to give advice on contributions to meeting the carbon targets of the various sectors of the economy. That is fine. However, as the White Papers of 2003 and 2007 make clear, a quarter of carbon emissions come from households and, in addition, some 10 per cent come from private passenger cars, making a total of 35 per cent of emissions which are outside the scope of the committee's advisory role. That seems surprising, because if one thing is clear, it is that we need a major contribution from that sector.

The Government are not saying in the White Papers for a moment that they cannot influence consumption by the household sector as a whole, to which my amendment refers—they list ways in which it can do so. The Energy Saving Trust has written to me with proposals for further enhancing the contribution of the sector. So the proposals are there. When I read the 2007 White Paper I saw, around about the middle, a table showing how cost-effectively the target of 60 per cent might be met and giving projections for what might be reasonable expectations from various sectors, one of which is private households. The expectation is a fairly modest one; only one-third, compared with the overall target of 60 per cent. The Energy Saving Trust says in its letter that it thinks that they should be aiming for 60 per cent. That is another reason why the matter should be open to consideration and advice to the Government.

If I have interpreted the White Papers correctly, the 2003 White Paper refers to an objective of moving towards a 20 per cent reduction in carbon emissions by 2010, taking 1990 as a base. It says that we had achieved a reduction of 8 per cent by 1999, which is fair progress. However, it also acknowledged that we had fallen back to 5 per cent in 2001, though it looked forward to a recovery in 2002. When I looked with a magnifying glass at the very small footnotes to an appendix to the 2007 White Paper I saw—if I read it right—that by 2006 we were still at 5 per cent, whereas the target is 20 per cent, or moving towards it. That indicates the difficulty of meeting the target.

Finally, in earlier discussions, we talked about whether the target of 60 per cent is enough. However, the economy will have doubled by 2050 compared with its 1990 base, so that is really equivalent to 80 per cent per unit of industrial or commercial activity. We need the help of the household sector, both in the home and the car, and it is material to add to the role of this committee the opportunity and duty to advise the Government on what the household sector might contribute.

My Lords, there is no need for the noble Lord, Lord Dearing, to apologise to the House for raising this important matter. He has done the House a good service, and I am grateful to him. I congratulate my noble friend on putting down this amendment, and I thank the Government for moving as they have; they were rather reluctant to move in Committee but they have certainly listened to what we have to say.

The report of the Joint Committee shows that Mr Robin Mortimer, head of the Bill team, said when giving evidence that,

“the Committee will have to look sector by sector at what it considers possible across the economy”.

Mr Mortimer went on to say:

“Having said that, it would certainly need in its analysis to look sector by sector, and it could make that publicly available”.

Could the Minister confirm that it will be made publicly available?

My Lords, I thank the noble Lord, Lord Dearing, for having brought me back to real people and individuals with choice at a micro-dimension in their own lives which we, in talking about the macro and the global, sometimes forget about. We are all aware that much of the change that will have to take place in how we live and in bringing down our carbon emissions will concern not just individuals being forced to do things but households being given incentives or motivated to make their own, individual, unforced contributions to reducing climate change.

As the noble Lord, Lord Dearing, has said, households account for some 27 per cent of emissions—and, taking into account their transport, more than that. It is absolutely right that, as we start talking about sectors, we should particularly take the household sector, which I see as focused on individual citizens’ decisions on and reactions to global warming, and specify that in this part of the Bill. The noble Lord also brings up a particularly interesting point in looking at the targets against those that the Government already have. We are, indeed, nowhere near that 2010 reduction of 20 per cent. Again, that shows that the Bill is fine in what it does, but just having committees and targets does not mean that we will meet the latter or be successful in this important mission.

The noble Lord mentioned the carbon performance of the UK economy over the past few years. When the Minister spoke about annual targets, it was interesting that he mentioned the big year-on-year changes in total greenhouse gas emissions during the 1990s; if only those still occurred! Regrettably, they do not, as we have almost completely flat-lined our carbon emissions over the past four or five years, and all the gains made pre-1997 have levelled off. The Bill must involve individuals and households in this matter and this amendment would make an important move towards achieving that goal.

My Lords, like the noble Lord, Lord Teverson, I congratulate the noble Lord, Lord Dearing, on bringing us back to the reality of how this affects people. I shall always remember the phrase used by the noble Lord, Lord Redesdale, about making brave decisions. Is this a brave decision? We shall certainly have to confront that matter after the climate change committee has reported.

We discussed some of these amendments in Committee when we had a useful debate on sectoral targets and I rested my case then on the need for flexibility. We believe that these amendments would considerably constrain this flexibility by giving powers to government to carve up the budget into sector-specific parcels.

As I said in Committee, the Government may be unable to realise fully the emission-abating potential of some new technology. We do not want to be prevented from diverting resources into using this technological breakthrough to reduce emissions more quickly in one sector instead of reducing emissions in a different sector because that is what our sectoral targets say we must do. We do not want to be held to that rigidity.

We also discussed the importance of avoiding a rigid top-down approach to sectoral targets. It is not clear that these amendments would prevent such an undesirable approach. Amendment No. 20, for example, gives no clear role to the Committee on Climate Change in deciding which sectors should be subject to its own targets within a budget, nor how this target would be set. The committee would have a role in assessing progress towards meeting such targets under Amendment No. 158, but would have no role ahead of this stage. This suggests there is a risk that the amendments would result in just the kind of inflexible, top-down approach towards sectoral targets that we are strongly opposed to.

While we are therefore strongly opposed to mandatory sectoral targets, there are also shortcomings with the idea of optional sectoral targets, as proposed in these amendments. As they would be optional, there would be a risk that if the Government decided not to set sectoral targets, nothing more would happen. We would therefore not be any further forward than under the current situation in the Bill.

I recognise that these are new amendments since Committee stage, and agree that it is important that information is provided on the emissions from different sectors of the economy. There is no dispute between us on that. However, we do not think that Amendments Nos. 61, 78 and 85 would achieve this because they relate to sectoral targets which are optional—and which therefore may not exist.

I reassure noble Lords that this information will already be available, regardless of whether any targets are set for particular sectors. The UK is already under an obligation under the UN Framework Convention on Climate Change to report the annual emissions of a detailed range of sectors in accordance with the sectoral tables in the common reporting format set out by the Intergovernmental Panel on Climate Change.

So the latest UK national emissions inventory, for example, contained UK emissions data disaggregated by key sectors of the economy under broad headings including energy, industrial processes, agriculture and waste. These categories are then further disaggregated to provide more specific sectoral information. In view of the optional nature of any sectoral targets and sectoral reporting under these amendments, we therefore consider that the Government already go further than these amendments propose.

On Amendment No. 145, I should say at the outset that household emissions are crucial, as the noble Lord indicated. In 2005, emissions from the residential sector represented 23.8 per cent of overall UK greenhouse gas emissions. It is interesting that since 1990 the sector’s emissions have reduced by 7.4 per cent. That is a significant change, so there are moves under way.

My Lords, will the Minister clarify a point? I thought that he was saying that the committee would be able to give advice on any sector, but Amendments Nos. 54 and 144 are limited to sectors of the economy, which would exclude the household sector. Will the Minister clarify whether he intends that the committee should have the opportunity to look at households? That is of the essence, since they account for about a quarter, plus another 10 per cent through passenger transport. It is such an important area. It is in no way restricting the role of the committee to add it; it gives the opportunity to do more than the Government had intended. We and the economy need such an opportunity.

My Lords, I am not going to give an interpretation on my feet, but the domestic sector is so large, with 20 million-odd dwellings in England alone, that it has to form a part of the economy. What people use in their homes in terms of fuel, insulation and lighting is an enormous part of our economy. It may not be the productive economy in terms of energy utilities, transport or manufacturing, but it is a part of it. I will take advice on this; I am not putting forward amendments that stop the Committee on Climate Change looking at the domestic sector.

Excellent!

My Lords, before the Minister finally sits down, will he answer my question of whether the analysis of the committee, when it looks at this sector by sector, will be publicly available?

My Lords, I think the answer is yes. We are talking here about matters that go way beyond freedom of information. The principles have to be clarity and transparency simply because, for these brave decisions that some Minister will have to come forward with to change the way that we live, you will need all the information that you can get. That has to be the case.

My Lords, we have had an interesting debate around this subject. As the noble Lord, Lord Teverson, said, we must thank the noble Lord, Lord Dearing, for bringing things down to the personal level. If the whole policy that we are pursuing is to have success at all, we will have to be able to enlist the whole population as we go along. The question is whether we can enlist them by tying this down in the Bill, or whether we are going to be challenged in a different way to keep their enthusiasm going.

I confess to it springing up in my mind—this shows how far back I go—that as a very small boy when the war effort was on, suddenly there was a great flap in the house and we had to gather up all the spare aluminium saucepans and send them to some Minister, because they were going to help build aeroplanes. I do not think that they did build very many aeroplanes, but everyone suddenly felt very involved, as if this was to be our great contribution. In some ways, that is the type of thing that we will have to keep going. How we go about it is still a very big question.

I feel from the Minister’s reply that the Government have perhaps not fully evaluated the introduction of the element of competition. Business understands the element of competition, and the population understand football matches and the competition there. We have even seen that our Armed Forces have benefited greatly from being in competition with each other. Whenever there is a juxtaposition of one or two of the services or regiments, they love to compete. If sectors are given targets, they could compare through their five years how each sector is doing on meeting its target and find some incentive in that way.

The Minister’s reply did not quite take into account that we are banking on the climate change committee being made up of intelligent beings, and we are merely introducing enabling measures. We are not saying in the Bill what the sector should be. We are not saying that the sectors and their targets should be defined between now and 2050. Presumably, they would be reviewed at least on a five-year basis, allowing for updates, or there may be other ways in which they can be updated. We are just interested in producing enabling measures, leaving it up to climate change scientists to lay down exactly what use they want to make of them. In the light of the Minister’s reply, we will take this amendment away and may come back to it later. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn

[Amendment No. 21 not moved.]

moved Amendment No. 22:

My Lords, we support the amendment tabled by my noble friend and, indeed, we are pleased to see that the Government have taken this matter on board and tabled another amendment to a similar effect.

Both amendments provide for corrective action if targets are not met. However, Amendment No. 22 has the benefit of requiring action as soon as it appears that things are slipping and refers to what should be done if,

“it appears from the annual statement”

that targets will not be met. So, if things are going wrong after year 2 or 3, corrective action can be put in place immediately, rather than, as in the Government’s Amendment No. 81, corrective action taking place only after the five-year budget period. My noble friend Lord Caithness said that the date in the Bill was 31 May in the second year following. That seems a long time before anything can actually happen. That is an unfortunate aspect of the Government’s amendment. I would be grateful if the Minister would have another look at this and see if he can combine the best parts of both amendments, so that corrective action can take place anyway at an earlier stage than that proposed in the Government’s amendment.

My Lords, for this legislation to be successful, it must require the Government to set the right policies to meet the targets, which the Bill does not do. We have been concerned about five-year budgetary periods purely regarding targets, and it takes a long time for policy measures to make a difference in this area. It is rather worse than when a supertanker changes direction. There have to be requirements in the legislation for the Secretary of State to start to take action if it looks like targets will be missed. That is precisely what the noble Earl’s amendment would do.

It is absolutely right that it should not be a historic reaction. The leads and lags are so long in this area. If we are waiting for 18 months before we know what the score is and it takes us perhaps another two years—perhaps six months to work out the policy change and probably another two years for that to make a difference—we are talking about a huge lag in time. If there is one message that has come through on climate change from the Stern review or the IPCC, it is that action now saves much greater and further action, cost and distress. Less bravery and courage are needed to take early decisions now than will be needed in the future. That is why the amendment is so important. It may not be perfectly worded, but it means that, when there is a judgment that targets are not going to be met, there has to be a reaction then. That is the only way in which the legislation can start to be effective.

Like the noble Earl, I welcome the Government’s change towards this policy; but, for us on these Benches, the key thing is not what targets and enabling powers are in the Bill but what government policy is in it to meet the targets and change the nature and degree of carbonisation of the UK economy.

My Lords, in order to understand the implications of the amendment and others in relation to carbon budgets, we need to remind ourselves what we mean by the “net UK carbon account” because that is another phrase meaning the budgets. The noble Lord, Lord Teverson, in a couple of interesting papers that he has not referred to—I am sure that he will—makes a useful point, although I am not entirely in agreement with the rest of his analysis, which is that sectors within the EU Emissions Trading Scheme cannot possibly exceed their net carbon account, because that is the allocation given to sectors that can make up for that allocation by buying credits or, if they exceed targets, selling credits. So the net carbon account for sectors in the UK that trade in the European trading scheme have a net carbon account that is set in discussions with the European Commission and the European trading scheme.

Therefore, when we are considering whether there is a shortfall or an excess of a net carbon account, we are talking about sectors that do not come under the EU Emissions Trading Scheme; we are not talking about all sectors. My noble friend may correct me on that, either now or later, but it is an important matter. Noble Lords may think that this might apply to the energy production industry—electricity, gas, nuclear or whatever—but by definition it cannot, nor will aviation, once it is included in the EU Emissions Trading Scheme. The net carbon account figure cannot be exceeded because it is simply the amount emitted minus or plus the amount of credits borrowed. It is important that noble Lords recognise that they are not talking about the whole economy, but certain selected sectors—for example, I imagine, the automobile industry and emissions from vehicles or emissions from households.

We are talking about a particular part of the economy. When noble Lords talk about remedial action, we are talking not about the whole economy but about the sectors that do not fall within the EU Emissions Trading Scheme. If, as I hope—I am sure other noble Lords do too—over the next 50 years the EU ETS is expanded and other countries agree to join, the net carbon account will become less and less, if the UK Government do something about it once they have negotiated agreed targets. The implication is that over time it would diminish as trading schemes expanded.

My Lords, that relies on the Bill staying as it is and international trading being limitlessly allowed towards the UK carbon account, which at this point we do not necessarily accept.

My Lords, at the moment—for ever, as far as I can see—we have no alternative in the EU Emissions Trading Scheme. We cannot tell companies in this country that they cannot buy unit credits from elsewhere in Europe. The noble Lord, Lord Teverson, is shaking his head. In the EU ETS the Government cannot prevent companies buying credits if they are exceeding the budget that they are allocated. If the scheme expands beyond Europe, that will become an issue. My expectation is that any such agreements will be negotiated by the European Union, not by this country. The terms on which credits can be bought or sold would depend entirely on those international agreements. It is inconceivable that if an agreement were made to expand the EU ETS to include say, America or Australia, it would be on the same terms. It is difficult to imagine that it would be otherwise.

My Lords, let me make it clear at the outset on Amendments Nos. 22 and 81 that I fully accept that we are aiming at the same goal to strengthen the Bill’s framework. I hope that I can put some meat on to that in my brief remarks.

We have discussed previously how the targets and budgets under the Bill will bite on the Government. As we have already said, we believe that by putting the duties into law we are giving them constitutional significance that will inform every level of decision-making. It remains the case that any failure would carry the risk of judicial review with a remedy at the discretion of the court.

The Bill’s existing provisions ensure maximum transparency on whether a budget or target has been met, which means that there would be a considerable penalty in terms of parliamentary opinion—and in the court of public opinion—if it had not been met. However, we have carefully considered the suggestions made in Committee that the Bill itself should prescribe an automatic penalty in the event that the Government miss a budget. I do not wish to undermine the Bill’s existing framework, so the transparency provisions and the option for judicial review remain, but I am proposing a more specific addition to that armoury.

Government Amendment No. 81 therefore requires that in the event of the net UK carbon account for a budgetary period exceeding the carbon budget, the Secretary of State must lay before Parliament a plan setting out proposals and policies for making up the shortfall in the carbon budget. The plan must be published as soon as reasonably practicable after the final statement for the budgetary period is published. Moreover, as with the existing proposals and policies for meeting budgets, if the plan refers or relates to policies or proposals of any of the other national authorities, it must be prepared in consultation with that authority. This amendment—I shall discuss Amendment No. 22 in a moment—draws heavily on an amendment tabled by the noble Lords, Lord Crickhowell and Lord Teverson, and the noble Earl, Lord Caithness, in Committee. We believe that this new requirement will focus still further the mind of every Government on practical matters: the need to meet each budget and what they will have to do in the unlikely event that the budget is not met.

Before I come to Amendment No. 22, it is worth responding to a couple of points made by the noble Earl when he asked about the timetable for taking action required by the government amendment. Under the Government’s proposals, we obviously hope that the budget will not be missed but, if it is, the Government of the day will be under enormous public and parliamentary pressure to make up the shortfall as soon as possible. We must leave it to the Government of the day to take those decisions.

The noble Earl also asked why the Clause 14 report will not be published until 17 months later. It appears that this is the earliest that the information will be available. The emissions figures for the last year of the budget period will not be available until 15 months later, which leaves only two more months for the Government to buy credits and so on to meet their targets. That is the reason for the 17 months.

Both noble Earls asked about things going badly during the budget period. This is the whole point of our proposal for an annual indicative range, backed by the annual progress report of the Committee on Climate Change to Parliament. There will be full transparency about progress during the budget period.

Amendment No. 22 clearly has much in common with government Amendment No. 81, but government Amendment No. 81 is a better way forward in a number of ways. First, proposed subsection (1) in Amendment No. 22 seems to duplicate the existing reporting provisions of the Bill. The Bill already has a clear, transparent mechanism for an annual assessment of progress through the Committee on Climate Change’s report to Parliament under Clause 28. As I said, we have also proposed amendments, which we will come to later, that will strengthen this annual reporting progress, including ensuring that the Government respond to the points that the Committee on Climate Change makes. Proposed subsection (1) in Amendment No. 22 seems to repeat much of this but with no role for the Committee on Climate Change and we ask how this would sit alongside the committee’s annual progress report under Clause 28.

Proposed subsection (2) in Amendment No. 22 clearly has, as I said, a lot in common with both the amendment that we discussed in Committee and government Amendment No. 81. However, a number of issues still need to be addressed. Amendment No. 22 does not, for instance, address the role of the devolved Administrations if a budget is missed. Will they have a role? Obviously government Amendment No. 81 sets out a process for consulting the devolved Administrations.

As I said in my opening remarks, the amendments aim at the same goal—to strengthen the Bill’s framework—but we think that government Amendment No. 81 is the better approach. Like the noble Earl that, too be much more relaxed if the groups of amendments were such that I could present the Government’s response to Committee to kick off the debate, but there is a procedure for dealing with amendments. I can kick off the debate on some—the next group, for example—but I have not been able to do that so far. I understand that that would be more convenient and make the debate flow better. Effectively, I am technically reporting back to Parliament at Report stage with suggestions from the Government, having listened to what was said in Committee and not trying to do a Committee stage again.

My Lords, I am grateful to all noble Lords who have taken part in the debate and for the support for Amendment No. 22. Again, I thank the Minister for his reply. As he rightly said, there is not a great deal between us, because we are still heading in the direction that is common to everyone. He is right to say that this budgeting compliance mechanism, whether it is his or ours, will focus the mind of the Government.

I totally accept the Minister’s point about the devolved Administrations. When I was a Minister, I was told that you must never criticise—or, at least, criticise too much—the wording of an opposition amendment. If the gist of the amendment is acceptable to the House, it is the Government’s duty to put it in the right order. If the right format includes devolved Administrations, I shall happily accept that.

On the bone of contention between us—proposed subsection (1) in Amendment No. 22—I listened with great care to what the Minister said. I am not sure that he is totally correct. I want to look at this again in view of the amendments coming along, but we have a real problem in the delay caused through Clause 14. It will be a long time before the final result is known to Parliament. We need a mechanism that is not just the annual report or the stepping stones, although, again, we are grateful for that, as it was recommended by the Joint Committee. However, every Secretary of State should say, “Whoa, something is happening here. Even on a precautionary principle, we ought to be prepared to act”. The Minister said that there is no role for the committee under subsection (1), but there is a big role for the committee, which is to provide the information to the Secretary of State. The whole point of subsection (1) is that it is for the Secretary of State to act on that information from the committee.

However, I am grateful to the Minister. I will read with care what he said and will take account of future amendments to decide whether we should come back to this at a later stage. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 [Level of carbon budgets]:

moved Amendment No. 23:

My Lords, in speaking to the government amendment, I will also cover the amendments on targets in this group. We are very pleased that the Government have seen sense with regard to the top margin of their targets. We fully support their amendment to remove 32 per cent. It did not make sense to provide a range of targets that would legally penalise a successful Secretary of State for doing better than expected. Thus, we have tabled an identical amendment, which sits within the government amendments.

Other amendments within this group deal with interim targets. These are designed to strengthen the role of the Committee on Climate Change by ensuring that they are in charge of setting the framework of goals to be met. A substantial development in our knowledge of climate change is likely to occur. The Minister acknowledged this. This is why we have been arguing for a dual approach to targets, focusing on both the short and long term. We do not seek to dictate the trajectory to the 2050 target from the start, and nor do the Government, as I understand it. These targets can be amended with the advance in knowledge, as recommended by the committee. However, in terms of business and government planning, these interim targets provide the important scaffolding that will ensure that we reach our ultimate goal in 2050, whatever that may be.

My Lords, we support these amendments because the upper limit of the target seemed rather arbitrary. Could the Minister say, in summing up, how 32 per cent was arrived at? Is it 32 per cent of the carbon budget itself? The Minister has mentioned brave decisions a few times. I used the expression advisedly because it was first used at Second Reading by the noble Baroness, Lady Billingham, from the Minister’s own Benches, in discussing the Government’s view on bringing forward this Bill. I thought it was an apt expression to use again, and I see that the Minister has now taken it up.

However, the word “brave” is particularly interesting when considering these targets. Many noble Lords have talked about electricity production in meeting the 2020 targets, but that will form only 30 per cent of the target to be looked at. Another 30 per cent is to come from transport, 30 per cent from the domestic sector and 10 per cent from agriculture. However, I have seen different proportions assigned depending on the report you read. What is important is that a 26 per cent reduction needs to be made across the board, and that means a 26 per cent reduction in transport, which is one of the larger areas. The Mayor of London has had problems recently with Porsche over his proposal for a £25 congestion charge for high-emission vehicles. The fact is that he may face judicial review. Such examples prove that meeting the target will be an issue. Whether budgets and the decision-making function of the climate change committee on setting those targets will act as a lever in any judicial review of curtailing certain aspects of transport is one of the issues that may form the basis of other Bills. I do not believe that this is going to be the only Bill for 10 years; I am quite prepared to see further legislation if not next year, then certainly the year after.

We support these amendments and we thank the Government for listening to the concerns expressed.

My Lords, I promise not to use the word “brave” again tonight. The source of the 32 per cent upper limit comes from the 26 to 32 per cent range arising out of the energy White Paper published in 2003. I do not think there is anything further I need to say in response to what has been said during the debate, and I am grateful for the support which has been expressed for the amendment.

On Question, amendment agreed to.

[Amendments Nos. 24 and 25 not moved.]

moved Amendment No. 26:

My Lords, I apologise if I have not understood the noble Duke entirely. From these Benches, we welcome making all budgetary periods and everything to do with them last for five years. The post-2012 settlement will be beyond five years, but we should keep this at five. When I read the amendment, I did not understand why it fitted into this part of the Bill rather than an earlier part. Perhaps the noble Duke will explain that further in his reply to the Minister. However, a decision that we should go for five years would be a positive contribution at this stage.

My Lords, I am delighted to respond to the amendment again at Report stage. I am hoping for a little bit of inspiration, which may be coming my way.

As the noble Duke pointed out, I explained in Committee why we have an issue with the amendment. We have not changed our view. He asked how the devolved authorities play into changes to the length of carbon budgets. I am advised that the carbon budgets are UK-wide and therefore all the questions that we had before about how the Bill, as a UK Bill, affects the devolved authorities would apply in this situation. It is therefore the Secretary of State’s decision to take following consultation with the devolved authorities. That is set out in Clause 9. The noble Duke also asked which other areas of the Bill will be affected by changing carbon budget lengths. The answer that I am given is none. The periods for consulting devolved Administrations will remain the same.

I shall be happy to review the noble Duke’s questions to ensure that we have picked up his concerns—I will follow up in writing if I have missed anything—but perhaps I may summarise our arguments for the record. It may be necessary to amend the length of a budgetary period in order to maintain consistency within commitment periods at EU level and under any post-2012 international agreement. In the event that we do so, specific requirements that the annual equivalent emissions should be measured in terms of the overall budget divided by five would mean that the term “annual equivalent” was applied to a period different from a year. As noble Lords will be aware, this was the point that we made in Committee. In this context, since the Committee stage, the European Commission has proposed an eight-year budget period from 2013 to 2020. Although this is still being discussed at a European level, clearly if it was to be agreed we would want the ability to reflect it domestically. The amendment would add significant complexity to the situation for what we see as no gain. I therefore hope that the noble Duke will consider withdrawing his amendment.

My Lords, it is useful to be discussing this subject. I hope that I can provide some clarification. The noble Lord, Lord Teverson, asked why we tabled the amendment at this point in the Bill. The answer is that this, so far as I can see, is the first moment in the Bill where the number of years in the period is mentioned. It is about the length of the budgets.

The Minister’s reply did not quite take up our point. We are talking about any changes in international agreements. Those agreements affect the type of units that are looked on as carbon units, the length of the budget period, the trading and all sorts of things. We were interested to know how the changes, which the Government, having signed up to Kyoto and having passed this Bill, will be legally bound to reflect, will be passed on to the devolved Administrations. I think that there is a little more to be found on this topic, but in the mean time I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 [Amendment of target percentages]:

moved Amendment No. 27:

moved Amendment No. 31:

moved Amendment No. 32:

moved Amendments Nos. 34 and 35:

moved Amendment No. 36:

My Lords, I intervene briefly to congratulate the opposition Front Bench on introducing a series of amendments with which I completely agree, for reasons that I have laboured at length at all stages. I hope that the Minister will respond positively to the amendments. I can only repeat the speech just made by the noble Lord. I agree with every single word that he spoke.

My Lords, I shall take a leaf out of my noble friend’s book. Given that we have had this discussion more than once, I do not propose to repeat everything that I said in the previous debate. We had a similar discussion on the previous amendments, which would have transferred a number of functions from the Government to the Committee on Climate Change. We have also discussed the government amendments to increase transparency and the publication provisions relating to the committee. I agree that this group of amendments concerns the budget while the previous group concerned the targets. Frankly, however, they are not any less important and our view remains the same. That is why I am not going over the same ground.

Our view is that these functions should remain with the Government and not be transferred to the committee. We do not want the committee to be carrying an executive role. This is not in my briefing, but I will say that the politicisation of all these decisions ought to be here in Parliament from the Dispatch Box—Ministers to the Opposition, Back-Benchers to the Government. That is where it should be. Doing this on the basis of advice from the Committee on Climate Change is a much better way than having rigid proposals. The advice would, in the main, be accepted, as I have said before—I do not dissent from that. Now I have spoken for twice as long as I intended. We hope that these amendments will not be pressed.

My Lords, I apologise that I was slow in getting up and failed to do so before the Minister rose. I wanted to say the same thing. Although I agree that this is a closer case, we believe that, at the end of the day, the Secretary of State has to make the executive and political decision whether to accept a recommendation, however strong that recommendation should and must be from the Committee on Climate Change. It may concern a finer point, but the decision still needs to be taken by an elected body. Comparisons were made earlier with the Monetary Policy Committee and decisions on interest rates. The point on that, which I do not think quite came out, is that the decisions about interest rates, however much they affect the rest of the economy, are tactical ones and relatively short term. All decisions to do with this Bill are strategic decisions that affect the whole of the economy. That is why they need to be political decisions, not ones taken by the committee.

My Lords, I agree entirely with the noble Lord, Lord Teverson, and I should like to make one other point. The amendment, supported by my noble friend Lord Campbell-Savours, implies that the Government can never reflect carefully and reasonably disagree with a recommendation of the committee after publishing their views and putting them to both Houses; but that either House could, without any explanation at all, reject the committee's recommendation. In other words, the supremacy of Parliament would rightly be permitted—there would be no reasoned amendments or need for reasons to be given. However, as we all know, people vote for or against Motions for myriad reasons. You would be hard put to write down on a single piece of paper why people voted in a particular way. As I said earlier, it is not at all clear who would discuss this matter with the climate change committee if either House rejected a recommendation. We would have to try to explain the almost inexplicable: what could be done to overcome this?

I urge my noble friend—we are becoming good friends across the Chamber on this occasion—the noble Lord, Lord Taylor, to reflect on this. This is not a triangular relationship at all, nor is it a relationship of government in relation to the legislature in relation to advice, however expert. I make the point again: either House, even under this amendment, could reject the committee’s recommendation. It would be quite extraordinary if they were able to do so without any explanation, whereas the Government would not be allowed to reflect and just occasionally disagree in detail or otherwise with the committee after publishing their reasons before a vote of both Houses. The latter seems a much better way to do it.

My Lords, before the noble Lord, Lord Taylor, replies, perhaps he will not mind if I ask the Minister to clarify something for me. I believe that we are drifting into an area of ambiguity that could trap us later. As I understand it—and I am very happy with it—the Minister said that matters which affect the behaviour of people in this country must remain issues of primary legislation and should not be devolved to decisions made by the climate change committee or to secondary legislation. Is that what he said?

My Lords, the point I made was that the decisions have to be for the Government and accountable to Parliament. We do not want the decision to be made by the climate change committee—we want its advice. The decision will then be made by the Government subject to parliamentary scrutiny. That is the answer to my noble friend. I cannot say that every policy implementing the myriad decisions that will flow will be in primary legislation; statutory instruments may be needed to implement decisions on climate change. This Bill is the main legislation and everything will flow from it, but the decisions have to be taken in a democratic way so that the Government are accountable to Parliament. But perhaps I have misunderstood my noble friend.

My Lords, perhaps I may pursue this because it is very important. As I understand it, my noble friend is saying that the key political decisions that relate to this legislation and that will affect people’s lives in years to come should be made during the passage of this Bill as primary legislation.

My Lords, what I said, as I said in a previous debate, is that if we pushed these decisions, the climate change committee would have an almost executive function. The Government’s only role then would be to put those decisions to Parliament, not to take advice or, if you like, to offer the Government’s view. That would not be good enough. We are saying that these decisions have to be taken by Ministers and then brought to Parliament for its approval. That is why I say that politicisation of these decisions—I promised not to use the B word again, so I won’t—and the practical implications for business and how we live, work and play ought to be dealt with in the democratic forum. That was my point about the politicisation: I did not mean it in a party-political sense, but that the democratic process and decision-making forum is here and in the place down the Corridor, not in the climate change committee. It will adjudicate on those issues in order to give its advice, but the decisions will have to be made in Parliament.

My Lords, before my noble friend responds to this debate, I want to add—with a rather heavy heart—that I cannot quite follow him on this amendment. He poses the question: is it conceivable that the Secretary of State might have to overrule the committee? It is just conceivable.

I would accept, along with everyone else, that science should definitely be in the driving seat—it must be the overall consideration. However, he said himself that there might be changes in international law or obligations, or changes posed in ways where the Secretary of State might be much better informed than the committee. The Bill as drafted, which requires the Secretary of State to publish a statement setting out his reasons for not conforming to the advice of the committee, must, on reflection, be considered reasonable.

My Lords, each time that we return to this topic—and I make no real apology for rehearsing arguments not only from Committee but from today’s discussions—we come to the heart of governance that is left within this Bill. There are important issues involved, and when I listen to the arguments I can appreciate the exact positions that other noble Lords are taking up, including the Minister. I understand why Governments are reluctant to give executive authority to a committee, however well qualified or authorised.

One thing seeping through, however, is the notion that the process can, in the end, only become fully satisfactory by making sure that Parliament has every opportunity to discuss these things properly. I believe that is what lay behind the comments of the noble Lord, Lord Puttnam. Parliament should indeed be informed about differences of opinion that may occur between the climate change committee and the Secretary of State; that is why we have welcomed the moves that the Minister has made on these grounds. I only hope that, as this Bill passes to its Third Reading, we will bear all of this in mind when we come across similar issues. Meanwhile, I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

Clause 9 [Consultation on carbon budgets]:

moved Amendments Nos. 37 and 38:

moved Amendment No. 42:

As the noble Lord said, all these amendments were discussed in Committee and I emphasised that the factors in Clause 10 are broad and comprehensive.

The Government agree that climate change will have wide-reaching effects on both the environment and on populations, as proposed in Amendment No. 42. However, we still consider that it would already be adequately covered by the words in the Bill,

“scientific knowledge about climate change”.

I am happy to put it on record that it is the Government’s firm view, and intention, that the duty to have regard to,

“scientific knowledge about climate change”

in advising and setting budgets requires the Committee on Climate Change and the Government to consider both the causes of climate change and its likely impacts.

I hope that offers all the reassurance your Lordships’ House is looking for on this issue. We do not believe that Amendment No. 42 will add anything to what is already in Clause 10(2)(a).

Amendments Nos. 43 to 46 would require the Secretary of State and the committee to have regard to the impact of climate change on various factors rather than the effects of budgets on various factors. I know that the intention is, as the noble Duke put it in Committee,

“that the changing climate should be the primary factor in our decision-making”.—[Official Report, 8/1/08; col. 757.]

But these amendments seem to show a slight misunderstanding of the budget-setting process and how the Bill will work.

The whole idea of Clause 10 is to set out the factors that are relevant in setting carbon budgets. Of course, the Secretary of State and the climate change committee will have to think about the causes and effects of climate change. I have discussed that in the context of Amendment No. 42. I remind your Lordships that Clause 8(2) requires budgets to be set with a view to meeting the 2050 target, so the core aim of the Bill is already embedded in the process.

It is also vital that the Secretary of State and the committee think about the effect of the budgets on economic, fiscal and social circumstances and on our energy supplies and businesses. Before taking a decision, you need to think what the impacts of that decision are going to be. It seems extraordinary to me that anyone could disagree with that proposition.

I was asked to give an example of how this might work. I give an example on biodiversity, which is covered in my question and answer briefing. As regards how the Government are considering biodiversity in policy-making, I refer to the Severn barrage, as this was raised during the Committee debate on Clause 10.

This is an example of a government policy decision where it is appropriate that we fully consider the impact on biodiversity to ensure that we can accommodate both of our aims: to tackle climate change and to protect our wildlife. That is why we have launched a feasibility study looking at the potential costs and benefits of the barrage that will look at all relevant issues. The Severn barrage is an example of a government policy designed to help meet the carbon budgets where it is right that we look at biodiversity. I fear that trying to assess the impact of the budget, with little knowledge of what policies are going to be implemented to meet it, could be meaningless and could distract the committee from its core tasks. I have picked out one example, but if I were pushed I could find others. That is an example where I am linking the two together so that you do not lose sight of your main goal, but I am trying to convince your Lordships that the broad scope of the phrase in the Bill that I have relied on,

“scientific knowledge about climate change”,

covers and encompasses these areas.

My Lords, I thank the Minister for the way he has answered the debate on the amendment. It seems strange that we are on Report and we are still in seminar mode, but it is in the nature of the legislation. It is unique. This is untrodden territory and we will continue to learn and to seek to understand the Government’s intentions, to be satisfied that they have taken on board our anxieties. I hope that the Minister is grateful to us presenting the amendments and for giving him the opportunity of explaining the Government’s position. I beg leave withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 43 to 46 not moved.]

My Lords, I beg to move that consideration on Report be now adjourned.

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

House adjourned at 10.02 pm.