Further consideration of amendments on Report resumed on Clause 12.
moved Amendment No. 71:
71: Clause 12, page 7, line 16, leave out “March in the second” and insert “December in the”
The noble Lord said: My Lords, we move on to the part of the Bill about the annual report. An area critical for the credibility and future operation of the Bill when it becomes an Act, as I am sure it will, is reasonably timely reporting. If we do not have that, it is difficult, not just in this place but for the public at large, to keep in touch with some feeling of real time on where we are on national targets and emissions.
The timescale in the Bill is currently very long indeed. If the Bill was in operation now, we would not know what the emissions for 2008 were until May 2010. That is a difficulty on two counts. First, the information is very much out of date in the public’s perception and for the debate that will, we hope, follow in this House and the other place. Secondly, there is a considerable lag in action that can be taken—adjustments, actions and policies—to address deviations and difficulties in meeting those targets. With the amendment, we are therefore saying that surely one year is sufficient to collect data. I remember saying in Committee, although I will not go through those arguments, that complex multinational businesses manage to—indeed, legally must—report within a year of their financial year end. Surely this is not impossible for a nation state in reporting its greenhouse gas emissions.
This is an important area for management action, for the Government’s action and policy, and for keeping decision-makers and the public up to date and fully involved in the outcome of those reports and that emission reporting. I beg to move.
My Lords, the amendment shortens the timeframe within which the annual report must be laid. Instead of waiting until March of next year, the amendment brings it back to December and we support it.
I am sure that the Minister understands our concerns. Two years is a long time, and it seems absurd that the Government cannot get the figures together in a more timely fashion. March is now upon us. Had this Bill come into effect years before, we would this month be debating the annual report for 2006. Since then, there have been three different Secretaries of State for Defra, as well as a new Prime Minister. If we are to have real government accountability, the Government need seriously to consider the amendment.
There is always a risk with the measures under this Bill that we will find out about what is happening long after it has been done. The effectiveness of accountability is inversely proportionate to the length of time between the end of a period and the report on that period. Shortening the timeframe necessarily strengthens the accountability. We do not want the report to become overshadowed by political spin. Having a report published in the second year would allow Ministers the chance to claim that the problems of the previous two years were no longer important or germane. It is thus extremely important that the timeframe is shortened.
Will the Minister explain the circumstances that might lead to such a delay? Will he be specific about the sorts of things that need to be carried out to assemble the report and outline how long each aspect is anticipated to take? I expect there will be much discussion about the collection of data. I ask the Minister for some examples. Can he explain the nature of the data collection with regard to time periods? Is it a matter of calculations? Will surveys need to be done and collected? Is this an administrative problem? Does he feel that if there were to be more resources in Defra, he would be able to do it quicker or is it simply that the data can only be gathered in an historical perspective? There might be some problems with data collection; however, I hope that the Minister shares our concern about the timeframe of the reports. In an ideal world, we would like to see it reduced. What has been done to research streamlining the collection process? What specific ways have the Government considered in this regard? Is there any way to improve on it?
My Lords, we have considered this matter since Committee to see whether we can accelerate the timetable. However, I fear that we have not been able to move as far as noble Lords would want. The question of the timing of the Clause 12 emissions statement came up in Committee, and following that I wrote to noble colleagues involved in the debate, basically giving background. Essentially, the timetables in the Bill are based on international practice. Under the UN Framework Convention on Climate Change, the UK must submit an annual emissions inventory by 15 April in the second year after the year to which it relates.
There are also good, practical reasons for this timetable, which is necessary to ensure the quality of the UK’s emissions data. Compiling the UK’s emissions inventory to the highest international standards requires data collection from a wide variety of sources. It is a difficult, time-consuming and labour-intensive task, but it is one that needs to be got right. Some 30 or more experts both inside and outside government are involved in the process at various points during the year. To bring forward the date of publication of the full inventory, even by a matter of weeks, would be an extremely difficult challenge.
Since our previous debates, together with the independent team of external consultants who actually deliver the UK’s emissions inventory, we have looked to see whether the timetable can be accelerated. This is not being done by Defra alone. I realise there is a degree of suspicion about the first-class civil servants in my department, but they did not do this on their own. They did it along with the external consultants. They concluded that bringing it forward could not be done without compromising the accuracy and integrity of the United Kingdom’s emissions figures. I remind the House that the most recent UK emissions inventory was accepted without any adjustment by the United Nations, so there is international recognition that the quality and accuracy of our emissions figures are very high; indeed, they are among the best in the world. I would not think that anybody would want to put that at risk. It is therefore for these reasons—the UK’s existing international commitments and the time needed to ensure the quality of the emissions figures—that the final emissions report is not available until March of the second year following that to which it relates.
However, I take this opportunity to reassure the House that the Government are committed to ensuring that as much information as possible on the UK’s emissions is made publicly available as quickly as possible. We will not delay unnecessarily. If the emissions figures are available, we will publish them.
I shall answer some of the specific questions. I may be repeating myself in Committee, but it is worth putting on the record. Compiling the UK emissions inventory requires the collection of data from a wide variety of sources; for instance, fossil fuel combustion is the major source of UK carbon dioxide emissions. These are based on BERR’s digest of UK energy statistics—I think that for BERR, I would read DTI, but you know what I mean—which is published annually seven months after the end of the reporting year in question; that is, at the end of July.
The inventory also covers the other Kyoto greenhouse gases and requires the collection of emissions data from other sources, including industrial installations, the Department for Transport, trade bodies, the Institute of Grassland and Environmental Research, the Centre for Ecology and Hydrology and the Environment Agency. Each step in the calculation process requires stringent quality control and assurance processes to ensure accurate reporting. This takes several months to complete the results for the many thousands of pieces of data produced. As I said, the UK emissions figures are then subject to rigorous crosschecking, quality assurance and quality control procedures, including verification and external peer review, before being finalised.
Just in case anyone raises with me the fact that in January 2008, we have just published the United Kingdom’s 2006 emission figures, only 13 months after the year in question, we recognise the considerable interest in these figures, which is why we seek to publish as soon as possible and as soon as they are available. Headline figures are available a short while before the full UK emissions inventory is published. We therefore recently published the headline figures for the UK's 2006 emissions. However, the full emissions inventory is not available until March. That is a much fuller analysis, which sets out the UK emissions in more detail.
For instance, the data released in March contains a full breakdown of UK emissions by sector and by greenhouse gas and sets out the underlying data on what activity gave rise to the emissions. A full uncertainty analysis is also presented, together with details of the improvements in the inventory made from the previous year, so the information provided in March is much more useful when assessing the overall programme in terms of the different sectors and trade emissions.
The Government provide annual emission figures to Parliament under Section 2 of the Climate Change and Sustainable Energy Act 2006. Those figures are compiled on exactly the same basis as our emissions statement under Clause 12 will be. There have never been any complaints or questions raised about the accuracy of the figures that we already provide to Parliament. The accuracy and reliability of what we provide is very important; we should not put it at risk.
I think that I have covered much of the detail; if I have missed anything, I will gladly come back to it.
My Lords, in view of the Minister’s wish to bring the date forward—he was talking about the early headline figures—could he indicate how far they might be brought forward with some reliability? Are we likely to get to December, or whatever?
No, my Lords. I have come here to boast about the fact that we did it in January 2008, only 13 months after the year. The point is that those headline figures are available and were published as soon as they were available. Obviously, the headline figures can be made available only on an accurate basis, bearing in mind the enormous amount of detailed work that has been done, but there is enough information to do that before publishing the full emissions inventory in March. We will produce them as early as possible. If that could be done in December, no doubt we would do that. We have no reason to hold them back. Once they are available for publication, we will publish them.
My Lords, I thank the Minister for his understanding of the issues here and for trying to bring this information forward. It is to everyone's advantage if that can be done. I thank him for the briefing note that he sent round a couple of weeks ago, which I found most interesting. The difficulty on our side is that I, like many of us, are used to organisations saying that things cannot be done, and it is always difficult to evaluate that. I understand that the international reporting must be done within a certain time, but clearly there is nothing to stop it being done earlier than the date laid down under the international conventions. I fully accept the Minister’s good will and wish to get this right. The sole motivation behind the amendment is to seek to enable the Government to take policy decisions about the future in a suitable period of time. That is a weakness of the timescales, which we might be stuck with, but for the moment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 13 [Powers to carry amounts from one budgetary period to another]:
moved Amendment No. 72:
72: Clause 13, page 7, line 24, leave out “1%” and insert “0.5%”
The noble Earl said: My Lords, you might be surprised that we bring this amendment back on Report, but we do so in the light of some of the changes that have been made to the Bill thus far and because we do not feel that all our questions about banking and borrowing have quite been answered. We understand some of the benefits of having a banking and borrowing system. We recognise that the provisions for overachievement are reflected in the Kyoto Protocol, and we appreciate that the United States’ acid rain programme, cited in the Stern review and by the Minister in Committee, has shown the advantages of such a system. We appreciate that banking can also help with the cost of mitigation. Further still, we appreciate the function of banking and borrowing mechanisms with regard to the price of carbon. We certainly would not want to see price hikes or sharp declines towards the end of the budget periods if there were some way of easing the transition to the next period.
The Minister agreed in his response that the 1 per cent figure reflects the likely situation when an unexpected shock occurs towards the end of the budget period. He mentioned the,
“borrowing of emissions from the next budget, but only in strictly limited circumstances”,
and the weather, population growth and the uncertainty of timing in delivering policies. However, he went on to say that,
“the current limit of 1 per cent in the Bill is not a number plucked from thin air. It reflects the likely situation when an unexpected shock towards the end of a budget period would otherwise lead to a risk of missing the budget”.
In other words, he said that it provides,
“flexibility to smooth emissions across budget periods”.—[Official Report, 8/1/08; col. 826.]
Surely the whole point of the five-year period was to take into account the fact that unexpected shocks happen throughout the period and that we should be going into the last year with enough leeway to absorb that shock, should it come.
This leads me to my next point, which is linked to Amendment No. 16 in the name of my noble friend Lord Taylor, which was moved on the first day of Report and dealt with annual rolling targets, and the government amendment on indicative annual ranges, which won the day. Does the Minister think that the new addition of indicative annual ranges relates to banking and borrowing? If the Government are happy to bank or borrow 1 per cent of the emissions for a budget period, could this be used as a sort of template for the indicative annual ranges? I expect the Minister to tell me that the two things are not as closely related as I might think, but I would like to press this issue further.
The noble Lord, Lord Puttnam, argued that,
“the term ‘indicative annual range’ is a little broad. It would help enormously if that range could be narrowed to a point where people could have some confidence”.—[Official Report, 25/2/08; col. 495.]
However, the Minister did not want to put a definitive figure on how wide that range would need to be. But if 1 per cent is the right figure for the end of the five-year budgetary period—as the noble Lord said, it is not a number plucked from thin air—surely, 1 per cent might be appropriate for his indicative annual range.
In a sense, the indicative annual range is operated in a manner similar to banking and borrowing; that is, if I understood it correctly, an appropriate amount by which we can fall short or go beyond a certain target would be specified. I understand that there is no precise target per se in the indicative annual ranges, but the maximum and minimum bounds operate in a manner similar to the 1 per cent above or below that can be carried over from one budget period to the next. Should the indicative annual targets have some relation to the banking and borrowing range? I beg to move.
My Lords, I support these amendments; we have, basically, only a question mark. Obviously, this is more of a probing amendment. We were pushing for three-year targets. Therefore, the 1 per cent would be more easily worked out. The Minister was very helpful with some of the points that he brought forward at an earlier stage. At what point will the civil servants declare that they need to use the 1 per cent? Over a five-year target, obviously, year on year, it could be difficult to make sure that the 1 per cent is achieved. I agree that it is just in case there is a major variation from the figure year on year, but that takes account of a very stable environment. If there is a bad harvest one year, followed by bad harvests in the second and third years, will that lead to a major problem or is there a process to deal with that variation in relation to the 1 per cent? If a number of disasters affect the aim of the 1 per cent, it gives the impression that there will be a sliding scale. The 1 per cent might not be met, which would therefore lead to a failure to meet the target set up.
My Lords, I thought that the Liberal Democrat question was about taking the clause out altogether. This is Report stage; it is not Committee stage. I probably cannot answer the noble Lord’s question because unexpected events are unexpected events. The Committee on Climate Change will be a can-do committee and we are a can-do, open, transparent Government. As soon as there is a need to make a move, it will be announced. Scrutiny, clarity and transparency are crucial to this Bill, but I cannot begin to think on the unexpected. As the noble Earl said, this amendment was tabled in Committee. I am happy to repeat part of my explanation on why 1 per cent was suitable to be borrowed from a future budget.
It is true that the banking provisions reward good behaviour by providing an incentive to overachieve against the carbon budget and the borrowing provisions allow the Government, in strictly limited circumstances, to borrow a small amount from the next budget. As I explained in Committee, the 1 per cent figure is not a number plucked from thin air. It simply reflects the likely situation when there is an unexpected shock or an event towards the end of a budget period. It may be that, with the ebbs and flows of a budget period over five years, there is nothing in the bank. But if it is towards the end of the budget period and would lead to the risk that the budget was being missed, obviously that would be a good opportunity.
The 1 per cent was chosen because analysis suggested that allowing up to 1 per cent of a future budget would be consistent with the rise in emissions that may result from an unexpectedly cold winter or uncertainty surrounding emission data. It is based on evidence which shows that since 1990 there have been large emission rises due to three unexpectedly cold winters over the period, the coldest of which led to emissions being in the order of 3 to 4 per cent higher than the preceding year. This effectively means that if 0.8 per cent of the subsequent budget was borrowed—that is, 4 per cent divided by the five years of the budget period—the shock could be absorbed with a 1 per cent limit on borrowing, and the budget would still be met. This would not be the case if the limit was set at 0.5 per cent.
The 1 per cent borrowing limit is based on looking at what has happened since 1990, which is a fair time to go back. In the period, three winters were much colder than in the preceding years, and that gave us emission rises of between 3 and 4 per cent. The overall figure was not higher, but the range showed that a 1 per cent borrowing would mean that consistently we would be able to cope with it.
The noble Earl, Lord Cathcart, asked me some questions going back to Amendment No. 16 which I did not really understand. I shall take advice and, if need be, I shall write to him because I do not have anything I can use to answer him now.
My Lords, I was trying to tie the 1 per cent allowance with the indicative annual ranges to see whether banking/borrowing at 1 per cent ties in with the annual ranges. Would the annual range be up to 1 per cent or more than that? When we discussed this previously, the noble Lord, Lord Puttnam, tried to tie the Minister down to not providing too wide a range in the annual allowance.
My Lords, I am speaking purely from memory so I may get it in the neck. I think I answered by saying that the range would be in single figures, but I cannot say whether the single figure would be 1 per cent. However, it would not be 10 per cent.
My Lords, I think I was trying to tie the Minister down more than that because it could be 1 per cent to 9 per cent, which is quite a big range. That was my aim. If, having thought about it, the Minister is able to suggest a more suitable range, I would be very grateful. At this stage, however, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 73 and 74 not moved.]
[Amendment No. 75 had been withdrawn from the Marshalled List.]
Clause 14 [Final statement for budgetary period]:
[Amendments Nos. 76 to 78 not moved.]
moved Amendment No. 79:
79: Clause 14, page 8, line 15, at end insert—
“( ) It must—
(a) state the final amount of carbon units that have been credited to or debited from the net carbon account for each of the national authorities for the period; and(b) give details of the number and type of those carbon units.”
The noble Duke said: My Lords, I shall speak to Amendment No. 79 before dealing with the others in the group. This amendment would require that the final statement for the budgetary period that reports on the UK net carbon account must also outline the final number of carbon units that have been credited or debited from the net carbon accounts of the national authorities. The Minister stated in Committee that there are no net carbon accounts as such for the national authorities; that is, there are no formal accounts. However, there would be de facto carbon accounts as each of the national authorities drive through their policies to reduce climate change.
Of course, many of the programmes and policies will come from Whitehall, but the very nature of the battle to reduce carbon emissions is that it affects all levels of society and every type of organisation. As a consequence, it also affects all levels of government, and thus we on this side of the House think that it would be particularly useful to understand what each of the national authorities is contributing to the net UK carbon account, so how much of the reduction takes place in the regions is important information to have reported. Having as much information on these matters reported to Parliament as we can would improve transparency and ensure that everyone is on the same page. It would also offer further advantages because different schemes may be operating at different levels throughout the devolved administrations, so it would allow for a substantial amount of comparison. If the Scottish de facto carbon account was faring much better than the overall UK budget, for example, it would provide an opportunity to explore Scotland’s local proposals in an effort to implement them more widely.
This also brings in questions about the UK carbon account more generally and the actual logistics of the calculation. Can the Minister take us through the process of verification of compliance with the carbon budgets? Surely this will involve knowing the status of the accounts, with some degree of accuracy, of the devolved Administrations. Of course there will be circumstances in which the contribution to meeting the UK carbon budget will be difficult to assign to a particular region, but there will certainly be others that will be easy to assign.
Would this information in itself be valuable? Would it be useful to know to what degree emission reductions are occurring by virtue of companies that span across the borders and what are being accomplished on a much more local level? Can the Minister explain how the carbon accounts are put together and what logistical difficulties, if any, would there be in having a delineation based upon region?
Amendment No. 115, which is grouped with Amendment No. 79, concerns the national authorities but in a different way. It shares some overlapping concerns—namely, on transparency—but it would place a duty to publish the consultations with the national authorities when laying regulations regarding the carbon account. First, as a matter of principle, we cannot see why these consultations should not be published. It is important to know where the national authorities stand in relation to UK policy and which of their concerns have been incorporated into UK policymaking.
There are also particular instances with regard to carbon accounting and their relation to national authorities that it might be important to publicise. One example is the burgeoning industry of hydroelectric power in Scotland which might eventually qualify as a way of generating carbon credits. That possibility is still to be debated in the Bill and I am sure that we will debate it in other forms at great length. Regulation affecting the definition of a carbon unit and how they are counted could be crucial to the industry and thus any consultation should be published. It is important to investigate the degree to which the Government are taking on board the concerns of the national authorities and whether or not some of these concerns might warrant parliamentary attention.
I found with some shock that Amendment No. 233 was also in this group. I had not realised that, having had the amendments separated, they had been happily coupled together again by the Government Whips’ Office. However, in the mean time, for the sake of convenience, I shall deal with all three as that is what everyone expects should happen.
The amendment ensures that the national authorities should set out the procedure to be used in reaching agreement in those circumstances where they are required to act jointly in terms of the Act. Clause 76(1) defines the national authority and Clause 76(2) states that functions conferred on the national authorities are to be exercised by all of them jointly. These relate specifically to functions in respect of appointments to the Committee on Climate Change and various activities detailed in Schedule 1.
However, the Bill makes no provision for the mechanism which is to be employed for the national authorities to act jointly. There is no provision for what happens if they do not act jointly. In Committee, the noble Baroness, Lady Morgan of Drefelin, said about the clause:
“It will be important to ensure that its application to the devolved Administrations is set out very clearly and to ensure a joined-up approach between Administrations as far as possible, as the noble Duke and the noble Lord have already highlighted. We will be agreeing a concordat with the devolved Administrations about how we will work together on implementing the detailed elements of the Bill”.—[Official Report, 4/2/08; col. 910.]
However, the Bill does not provide any detail about the nature of this concordat and the amendment is designed to set out the procedure to be used for reaching agreement and also to provide that the agreement shall make provision for the consequences of failure to reach an agreement and what alternative actions may be pursued by the national authorities.
It is of great regret that my noble friend Lady Carnegy of Lour has not been able to stay on because she has already addressed this question tangentially on one or two other areas during the evening. I beg to move.
My Lords, we on these Benches generally welcome what we think is a useful set of amendments to clarify and increase the co-operation with the other national authorities. This should not be too much of a difficulty for the commercial sector. Within the EU ETS, everything is plant-based—that is “plant” in terms of “site”, rather than of vegetation—not company-based, so about half of emissions are already there within the reporting systems. If that were the case in every other area as well, it would be possible to divide out carbon emissions in terms of energy consumption by area. The difficulty of that might be transport.
My Lords, that is true to a degree, but of course aviation is not plant-based. Is the noble Lord suggesting that we should try to split down aviation emissions even further into what comes from Wales, from Scotland and from Ireland? If so, does he anticipate that Scotland will refuse to have any international flights in and out for English residents?
My Lords, that is a good question. As I have said, it should be quite straightforward to write rules for this area; no rule is perfect and you have to choose the best. Given that airports in particular are in specific geographical locations and, on the whole, are not movable—unlike the planes that go in and out of them—I should have thought that it would be no more difficult than for any other area. I do not disagree that there could be issues with that, but the point is that it would be useful from a policy point of view, and to the national authorities and the UK as a whole, to be able to see that level of split with regard to emissions. That would be useful to the national authorities, which will have their own climate change programmes.
On the whole we welcome this. There are questions about how disagreement by one of the national authorities will be resolved. To me, this is a fascinating area. There will be other policy areas where there has to be some sort of federal agreement by unanimity. I should be interested to hear from the Minister of other areas of policy at the moment that require agreement by all national authorities, what operates there, how that is dealt with and how that might be used in relation to the Bill.
My Lords, at this time of night, with the Bill progressing excellently, I do not want to strike a note of dissent, but I have to say that I will be watching with interest when the Bill goes down the other end, where Members of the Scottish Executive will be looking at it. Although everything here has been done in a positive way, the underlying tone, both here and in Committee, is of failure; that is, we will never get agreement on this, they do it differently north of the border, and what are we going to do if it does not work? It is nitpicking and expects failure. Since it was introduced, we have been trying to make devolution work. There are lots of issues in Whitehall where even today we are at the edge and we have discussions. Sometimes we agree; other times we do not.
The noble Lord, Lord Teverson, asked me for an example. I will give him one. Tomorrow, although I have now forgotten the long title, the new farm animal genetics advisory committee will meet. It is a new non-departmental UK-wide public body that was set up without the slightest difficulty after discussions between Defra, Scotland, Wales and Northern Ireland. That was done under the concordat and under our normal procedures for taking the Government forward with devolution when UK issues are involved. That is a good example. It was only today that we announced the membership. It will have its first meeting tomorrow. I have got that off my chest and I feel better about it now.
Issues have been raised to which I want to respond. In the other place, there are representatives of the Scottish Executive, because of the results of the elections last year. There will therefore be a different debate there. I say in answer to the noble Baroness, Lady Carnegy, who I understand cannot be with us at this time of day, that the draft Climate Change Bill was published in March last year before the elections in Wales, Scotland and Northern Ireland. For that reason, it made no provision on devolution, but a disclaimer stated that these issues were still to be agreed. Following the elections, the devolution aspects were agreed between June and September. The Scottish Parliament and the Northern Ireland Assembly passed legislative consent Motions in the autumn. It has been hinted that the Bill is not meeting with their approval. I am not putting words in their mouth or saying that they agree with every dot and comma, but they buy the package and the procedures in it.
This group of amendments looks at various aspects of how the national authorities are involved in processes under the Bill. We discussed the overall issues in Committee. The provisions of the Bill have been agreed with the devolved Administrations and consent Motions have been passed. As I have mentioned previously, we are developing a detailed concordat with the devolved Administrations which will set out how we work with them to meet the Bill’s requirements. This is the best way to ensure that our efforts are properly co-ordinated.
When we discussed the issue in Committee, one of the big questions raised was what the devolved Administrations were doing to tackle climate change. I hope that I can reassure your Lordships that all three are strongly committed to contributing to emissions reductions. For example, the Scottish Executive have recently launched consultation on a proposed Scottish climate change Bill and a target to reduce emissions by 80 per cent by 2050.
Within the One Wales agreement, Welsh Ministers have committed to a number of actions to address climate change, including an annual 3 per cent carbon-equivalent emission reduction in areas of devolved competence. The Assembly Government have also established a Climate Change Commission for Wales that will work towards building consensus on climate change in Wales and assist the development of new policies.
The key driver for action on climate change in Northern Ireland is the Northern Ireland sustainable development strategy, which includes strategic objectives and targets to reduce greenhouse gas emissions by 25 per cent by 2025. Specific actions include reducing electricity consumption by 1 per cent annually to 2012, making the government estate carbon neutral by 2015, improving energy efficiency in buildings and encouraging renewable energy sources. Perhaps I may give a little plug: virtually all that work in Northern Ireland was initiated and driven forward when Peter Hain became the Secretary of State. When we were direct rule Ministers, he made it a top priority to get cracking on it. It has been accepted and embraced by business and politicians in Northern Ireland. The Northern Ireland Environment Minister has also made a commitment to reconsider a Northern Ireland emission reduction target once the certainty of the Northern Ireland emissions baseline has been established. So we think the Bill takes the right approach in working with the other authorities.
Amendment No. 115, along with Amendment No. 95, would require the UK Government to publish the results of consultation with the devolved Administrations. It would not be right for the UK Government to be given that responsibility. It will be for each devolved Administration to decide whether they wish to publish their representations. We have devolved: we have to let go from Westminster. If devolution is to work, those Administrations have to make that decision. In any case, the Secretary of State is under a duty to say how he has taken the representations into account. That would be difficult to do without broadly indicating what was in those representations in the first place. I hope that is the clarification and reassurance that the noble Lord is seeking.
There are well established procedures for resolving differences between the UK Government and the devolved Administrations, as set out in the 2001 Memorandum of Understanding (Command Paper 5240). This Memorandum of Understanding established the Joint Ministerial Committee, consisting of UK Government, Scottish, Welsh and Northern Ireland Ministers, which has as one of its functions a role in resolving disputes. As I mentioned earlier, we will draw up a detailed concordat with the other national authorities in relation to the Bill. In the interests of transparency and continued constructive relations between the UK Government and the devolved Administrations, we expect to publish the concordat when finalised. That will have to be after Royal Assent, since the precise detail of the concordat depends on the final provisions of what is included in the Climate Change Act. That is the reality of the situation.
Amendment No. 233 would require that we legislate for an agreement that sets out what happens if national authorities are unable to agree on an issue under the Bill. That is exactly what is already provided for—albeit not in legislation—in broad terms under the 2001 Memorandum of Understanding. We do not want to be heavy-handed about this.
I was asked a specific question about the carbon units themselves. The department has prepared a briefing paper on carbon accounting, which I am happy to share with interested colleagues. I shall ensure that it is sent to the normal circulation list without noble Lords having to apply for it. The UK already has a well established system for tracking carbon units under the EU Emissions Trading Scheme. That system has an excellent track record and has so far been licensed to 16 countries in addition to the UK. The UK Emissions Trading Registry is administered by the Environment Agency. It is a web-based system developed by Defra which facilitates the distribution, trade and surrender of emissions allowances, but it is a UK-wide system. The devolved Administrations do not have carbon accounts under the Bill.
I hope that that is considered to be a positive response. I understand why questions have been asked and I am not saying that they are all negative, but we are trying to make devolution work and procedures are in place, not just for the Climate Change Bill but for a whole range of issues where there are a mixture of devolved and non-devolved issues. My day job deals with farming, which is an EU issue and a devolved issue, so it is one that I am familiar with.
My Lords, I have listened with some care to what the Minister said because this is a difficult technical issue. I appreciate his difficulty in that we cannot have a concordat on the Bill until we have the Bill. Equally, it is difficult for us in drafting the Bill to know what we have to put into it until we know the contents of the concordat. There is an awful danger that we will start to go round in a whirlpool and get nowhere and that is the last thing that we want to happen.
I can give my noble friend one marginal assurance. He asked a very similar question to mine at the end of Committee. The noble Baroness, Lady Morgan of Drefelin, answered as best she could at the time about how all the Ministers in Scotland in particular would work together with the other devolved Administrations and the Secretary of State. Although she gave as competent an answer as she could, subsequently, one of the officials came across and said that the answer lay in the devolution Bills and quoted the relevant paragraphs. I am somewhat surprised that they did not put that into the Minister’s brief tonight. It still leaves us with a dilemma. Will the Minister assure us that the concordat, when it is finally arrived at, will contain sufficient requirements to report the actual details of the carbon budget for Scotland, so that the Secretary of State will have enough information to provide a sufficiently accurate carbon statement budget when he has to do so? Without that assurance we are in great difficulty.
My Lords, I am happy to give that assurance as regards the noble Lord’s question but he expressed the matter the wrong way round. The concordat will follow the Bill. We are not drafting the Bill in order to write a concordat. We are legislating through the Bill—that is the key issue—with as much co-operation as possible from the devolved Administrations. At the end of that stage the concordat will be agreed, based on the Bill. As I say, it is not necessary to draft the Bill in order to write the concordat. That is the wrong way round. However, there must be sufficient information to provide as much transparency as possible and I am sure that is exactly what the Scottish Administration want.
My Lords, I thank the Minister most sincerely for taking this whole issue a good stage further. I cannot say that we have necessarily got to the end of it but I think that we all have a great deal more understanding.
Amendment No. 79 does not lay down the exact detail of what the devolved Administrations might have to contribute. The advice of the climate change committee could be sought if we are trying to separate out the measure. However, we are clear that devolution means that the devolved Administrations will each decide what they are going to do. They will have full rein to decide by how much they wish to reduce their carbon footprint. That will form the basis on which the UK carbon budget is set and the balance will be picked up by Westminster. But will we look at how the measure has been fulfilled and at how the different Administrations have carried out what they promised to do? As we said, if some of the policies have been more successful than others, it would be good to review them.
As the Minister said, the draft Bill was published before the March election and the devolved Administrations agreed to the Bill that came before your Lordships’ House. However, in passing the legislative consent Motion the devolved Administrations do not go into the Bill in quite the same detail as we do here. Therefore, we should consider whether certain phrases and elements should be changed. I do not think that we have tried to change the direction of the Bill in any way. I like to think that the changes we propose seek to improve it and make it more understandable.
The Minister is on record as saying that the concordat will be published. That does not happen with all concordats and it will be very useful to see it. The carbon accounting system developed in London will be used for the national management of carbon accounts. Presumably, the devolved Administrations will either have to buy into that system or develop their own. It would be useful to have feedback on how they manage their accounts and consider the effect that has on the overall UK position. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 80 not moved.]
moved Amendment No. 81:
81: After Clause 14, insert the following new Clause—
“Duty to report on proposals and policies for compensating for budget excess
(1) As soon as is reasonably practicable after laying a statement before Parliament under section 14 in respect of a period for which the net UK carbon account exceeds the carbon budget, the Secretary of State must lay before Parliament a report setting out proposals and policies to compensate in future periods for the excess emissions.
(2) So far as the report relates to proposals and policies of the Scottish Ministers, the Welsh Ministers or a Northern Ireland department, it must be prepared in consultation with that authority.
(3) The Secretary of State must send a copy of the report to those authorities.”
On Question, amendment agreed to.
[Amendment No. 82 had been withdrawn from the Marshalled List.]
Clause 15 [Final statement for 2050]:
[Amendments Nos. 83 to 86 not moved.]
Clause 16 [Alteration of carbon budgets]:
moved Amendment No. 87:
87: Clause 16, page 9, line 16, at end insert—
“( ) An order setting the carbon budget for a period may not be amended after the period has ended.”
The noble Lord said: My Lords, this amendment is in response to the recommendations of the Delegated Powers Committee. We accept its recommendation that the Bill should explicitly rule out the possibility of amending carbon budgets after they have finished. One of the underlying aims of the carbon budgeting system is to provide certainty for investors and the public about the Government’s ambitions for reducing emissions.
The Bill allows for carbon budgets to be amended, but only in limited circumstances, following advice from the Committee on Climate Change and a vote in both Houses of Parliament. We believe that this provides the right balance between providing certainty for investors and the public and the flexibility to respond to significant changes since the budget was set.
As it stands, the Bill is ambiguous about whether a budget may be amended after the end of the period. As the Delegated Powers Committee and others have pointed out, the option to do so could undermine the investor confidence that the Bill is specifically designed to provide. The amendment therefore accepts the Delegated Powers Committee’s recommendation and would make it explicit that a budget cannot be amended after the period has finished. I beg to move.
My Lords, we thank the Minister for introducing the amendment, which would restrict the order-making power for amending carbon budgets by preventing the Secretary of State amending the budget once that period has ended. This is a sensible amendment, which is in line with the sort of thinking that has motivated many of our amendments.
We are pleased to see that the Government are finally starting to table amendments that limit the ability of the Secretary of State to tinker with the rules to make his life easier. The scenario was perfectly possible before the amendment, especially considering the provisions for banking and borrowing, that a Secretary of State could have amended a previous period such that the actual emissions reduction was 1 per cent over the limit and then could have banked that reduction to ease his burden later on. That is the sort of thing that we certainly hope Ministers in future will not engage in. None the less, we have tried to ensure that it does not happen.
Thus, when the Government come forward to close up a potential loophole such as this one, we should be thankful. It shows that although we might disagree on a number of points, our attitudes might be converging on issues such as tightening the accountability and responsibility of the Secretary of State. In short, it is good to see that the Government, at least in this instance, are keen not to give the Secretary of State a way to let himself off the hook. We welcome the amendment.
My Lords, after that ringing endorsement, I would love to be able to argue the other way, but on this occasion I will not do so. This reminds me of my favourite novel, 1984 by George Orwell, in which after a period was finished they would revise history to fit the circumstances at the time. I am pleased to say that the amendment prevents that, and therefore I welcome it.
It also struck me that I have to be careful not to be hypocritical here. I was a corporate economist for part of my career, and I spent a lot of time forgetting certain of my forecasts and moving on to my more recent ones. I am glad that will not happen for the carbon budgets in the Bill.
My Lords, I am grateful for the warm welcome from both opposition parties for this extremely sensible amendment. I only slightly cavilled at the suggestion that any Secretary of State would tinker with the budget; a useful amendment might have crossed his or her mind. As the House will see, we have followed the Delegated Powers Committee’s recommendation.
On Question, amendment agreed to.
[Amendment No. 88 not moved.]
Clause 17 [Consultation on alteration of carbon budgets]:
moved Amendment No. 89:
89: Clause 17, page 9, line 28, at end insert—
“( ) As soon as is reasonably practicable after giving its advice to the Secretary of State, the Committee must publish that advice in such manner as it considers appropriate.”
On Question, amendment agreed to.
moved Amendment No. 90:
90: Clause 17, page 9, line 34, leave out paragraphs (a) and (b) and insert “three months from the date the Committee’s advice was sent to the authority”
The noble Duke said: My Lords, in moving the amendment I shall speak also to Amendments Nos. 91 and 95. They concern the order-making provisions for the alteration of budget periods and the necessary consultations that must take place before such an order is laid. I shall speak to each of the amendments in turn.
Amendment No. 90 is an attempt to standardise the timing constraint on the consultation period and to allow slightly more time for consultation to take place. In the Bill as it stands, an order to amend the budgetary period must be made within one month of the advice of the Committee on Climate Change being sent to the relevant national authority if the order is to amend that budgetary period, and within three months if it is to amend the future budgetary period.
We understand the importance of sending a clear signal to business and industry and, thus, we appreciate the fact that, if a budgetary period has already started, it would be important to have the change made as quickly as possible to allow the industry and government departments to accommodate the new budgetary constraints. Because of this, we understand the short time limit that the Government have placed on the consultation period when the budget period has already begun. However, we have some slight reservation that this might not give the national authorities enough time for a full and proper consultation. We do not want this to be a situation in which the national authorities are not given adequate time or, to take a very cynical view, we do not want this to be an opportunity for the Secretary of State to push through a change in the budget that might be hugely unpopular without giving the authorities adequate time to prepare a thorough response.
We do not feel that three months is too long in terms of industry and business. There might be considerations, depending on how close to the end of a budgetary period the order is being laid, but standardising this timeframe to three months would give everyone involved adequate time to be consulted on the alteration, as well as to prepare for its effects.
Amendment No. 91 would place a duty on the Secretary of State to publish a statement setting out why the order ignored particular representations of the national authorities. This is an important way of ensuring that the national authorities are not left out to dry. We want to avoid the Secretary of State altering a budget for reasons of political expedience; we think that having a positive duty to summarise what has been ignored would strengthen this aspect of the Bill and prevent, if only to a mild degree, political expedience from creeping into the equation. This would seem to provide a straightforward mechanism to increase accountability.
I know that the Bill seems to create a huge amount of reports and responses to reports but, given the gravity of the matter, it is essential that Parliament and the public are kept constantly informed. Does the Minister think it inappropriate for the Secretary of State to outline his reasons for disagreeing with the national authority before making an order? Surely not. Indeed, on what might be considered more major issues, the Government have produced amendments similar to this one. Consider the requirement for the Secretary of State to respond to the Committee on Climate Change’s assessment on progress, for example. I know that this concerns the reputations of the national authorities, but the logic is similar.
The fact remains that an alteration of a carbon budget would not be a small thing. We envisage it happening only in the most extraordinary circumstances. Could the Minister explain the circumstances in which he would envisage the Secretary of State altering the carbon budget? Would he expect it to happen for every budget? This brings us to more philosophical issues about the nature of budgets. My understanding has always been that these were relatively fixed things and would not be altered or changed much. Would the Minister be willing to give us this assurance? Surely the national authorities’ role in the consultation process will be crucial.
I know that the Bill as it stands requires the publication of the representations that are to be taken into account, but we simply want a brief summary of those that are not being taken into account when the order is made. Although this might be the intention of the Government and, indeed, any sensible Secretary of State who want to provide the reasons, we would like to ensure that that is enshrined in the Bill.
The final amendment in this group, Amendment No. 95, simply affects the timing of the publication of the consultation. We hope that there is not too much objection to placing in the Bill the requirement for the Secretary of State to publish the result of the consultation once the order is made. I beg to move.
My Lords, I hope it is accepted that many of the principal issues on devolution were broadly covered by the previous debates. I shall not repeat many of the points there but will stick to the narrow issue of the amendments and answer a couple of specific questions that the noble Duke asked me.
With regard to Amendment No. 90, Clause 17 requires the Secretary of State, before amending the level of a budget, to obtain the views of the Committee on Climate Change and consider the views that the devolved Administrations may have regarding this advice. If the budget has yet to begin, the devolved Administrations will have a minimum of three months to consider the advice of the Committee on Climate Change and make their representations to the Secretary of State. If the budget in question has already begun, they will have a minimum of one month to feed their views into the Government.
The difference here is simply to account for the fact that, if the budget has already begun, the decision on whether to amend it will need to be taken far more quickly. Amendment No. 90 would give the devolved Administrations at least three months to put forward their views, whether the budget had begun or not. That would limit the flexibility provided for in the Bill.
We consider it right to require a decision to amend an ongoing budget to be taken more quickly, which is why the devolved Administrations are given less time to submit their views if the budget period has already begun. However, if at the time the circumstances dictated that the devolved Administrations could be given longer, it would be open to the Government to give them more time. This approach has already been agreed with the devolved Administrations, who, I am pleased to report, are perfectly happy with these timetables.
Regarding Amendment No. 91, Clause 17 as drafted requires that the Secretary of State must publish a statement setting out whether and how the amendment of the budget takes into account any representations by the devolved Administrations. The important point here is that in legal terms “whether” means “whether or not” and “how” means “how or how not”—it looks better when it is written down. The Secretary of State is already obliged to say what he disagrees with and the reasons why, so we believe that the Bill already addresses the legitimate concerns behind the amendment.
I was asked specifically what the reasons might be for changing a budget. There could be a number. I cannot set them out in detail but they might include the following: changes to the international context—for example, a new multilateral agreement that required the UK to adopt a reduction target that was not envisaged when the budget was set—or that set new requirements for the UK under EU or international law. Another example would be if progress in developing or deploying a particular technology was faster or slower than expected. Another would be changes to the 2020 and 2050 targets, meaning that budgets needed to be revised—perhaps to incorporate other greenhouse gases. A final example would be a significant and possibly unforeseen shift in fuel prices which changed the basis of emissions forecasts on which the budget had initially been set. All those are substantial possible reasons for change but would not be used as a backdoor method of changing a budget just because we could not meet it for some reason.
Amendment No. 95 requires the UK to publish the results of the consultation with the devolved Administrations. It would not be right for the UK Government to be given that responsibility. I shall repeat the phrase: we have to let go. The devolved Administrations must decide whether to publish their representations. They are free to do so; there is nothing to stop them. In any case, the Secretary of State is under a duty to say how he has taken the representations into account. That will be difficult to do—one could put it more forcefully than that—without broadly indicating what was in those representations. I hope that that list of possible reasons why a budget might be amended and the other answers meet the concerns of the noble Lord.
My Lords, the House should be very grateful for having that much detail filled in on what is obviously a very open question about what might cause changes. As this is a skeleton type of Bill, we are very anxious to have some feeling of what is supposed to be within its remit and what is likely to happen. One presumes the devolved Administrations will understand the necessity of a short period for alterations within the period of a budget, although it will be a great challenge to them to get their heads round why the changes have taken place and how much of the changes they wish to implement themselves. In the mean time, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 91 not moved.]
moved Amendments Nos. 92 and 93:
92: Clause 17, page 9, line 41, at end insert—
“( ) If the order makes provision different from that recommended by the Committee, the Secretary of State must also publish a statement setting out the reasons for that decision.”
93: Clause 17, page 9, line 42, leave out “The statement” and insert “A statement under this section”
On Question, amendments agreed to.
Clause 18 [Alteration of budgetary periods]:
[Amendments Nos. 94 and 95 not moved.]
My Lords, I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.
House adjourned at 10.02 pm.