House of Lords
Tuesday, 11 March 2008.
The House met at half-past two: the LORD SPEAKER on the Woolsack.
Prayers—Read by the Lord Bishop of Rochester.
EU: Constitutional Treaty
My Lords, a constitution is a founding document of an organisation. The constitutional treaty would have repealed the existing European Union treaties and refounded the EU under a new, single constitutional order. The Lisbon treaty amends the existing treaties, as did the single European Act, Maastricht, Nice and Amsterdam.
My Lords, I am very grateful for and fascinated by the noble Baroness’s Answer, but will she be kind enough to enlighten me on why the Foreign Affairs Committee of another place pointed out to people such as me that there is no material difference between the constitutional treaty and the Lisbon treaty? The Foreign Secretary, no less, thought there should be a referendum to approve the first, but on the second he has apparently changed his mind. What caused him to change his mind?
My Lords, I am delighted to fascinate the noble Lord. I shall make clear what was said in another place, by quoting the chairman of the committee in another place, who said that what was in the report was different from what the noble Lord said—that what matters is whether the new treaty produces an effect which is substantially different from the constitutional treaty.
My Lords, will my noble friend the Lord President agree that the report that came from the House of Commons is empirical proof that democratic elections do not necessarily produce all the wisdom that is available in a Parliament? Furthermore, will she have great confidence in the report being produced by your Lordships’ European Union Select Committee, which I am sure all Members of the House, including the noble Lord, Lord Lyell, will find of great value when it is published?
My Lords, I very much look forward to the publication of the report and hesitate to pre-empt it, for I have no idea what will be in it. I am quite sure that the debates in your Lordships’ House thus far and to come will demonstrate the expertise and experience of your Lordships.
My Lords, does the Minister not agree that there is a perfectly common-sense answer to the Question, which is that the only treaty that has ever, on the face of it, been called a constitutional treaty was defeated in the French and Dutch referendums? That is surely the answer.
My Lords, does the Minister recall the words of Aneurin Bevan: “Why look into the crystal ball when you can read the book?”? Would it not be better if the noble Lord, Lord Lyell, talked to the noble Lord, Lord Forsyth, or another of the many former Conservative Ministers who saw the treaty of Maastricht through the Commons and sat in their places in government? They could explain to him why Maastricht—a far more powerful transfer of power than the Lisbon treaty—was handled by Parliament. Would he not think that good advice?
My Lords, I trust all noble Lords will have the benefit, as indeed I have, of talking to former Ministers who had the privilege of steering through an important piece of legislation to put the Maastricht treaty on the statute book. I hope noble Lords will take advantage of that in the same way.
My Lords, did not the Foreign Secretary say in the other place the other day that a referendum was promised, not because of the constitutional nature of the constitutional treaty but because there was a need to clear the air? If there was a need to clear the air before the 2005 general election, why is there not a similar need now?
My Lords, we need to be very clear. The other place has now passed the treaty. The reform treaty comes to your Lordships’ House. We will have great opportunities to do some air-clearing ourselves, as we debate and deliberate, but I am very clear on what the role and function of Parliament should be. It is absolutely right and proper that this comes before both Houses of Parliament to be debated and ratified appropriately.
My Lords, the noble Lord, Lord Tomlinson, cast great doubt on the wisdom of the Select Committee of the House of Commons which declared that the Lisbon treaty was virtually the same as the constitution. If he is so concerned and has so little confidence in the House of Commons, would it not perhaps be better to test the wisdom of the people by going for a referendum?
My Lords, we will all be trading quotations frequently in the coming weeks as to whether the Lisbon treaty is the same as the constitutional treaty or different and therefore whether it should have, as promised in the Government’s manifesto, a referendum to decide whether the British people want it. Since the Times tells us this morning that 70 per cent of the population want a referendum, since another poll tells us that 89 per cent of those polled believe that the Lisbon treaty is the constitution, since it contains 240 out of 242 of the provisions which were in the constitutional treaty, and since every European leader bar the leaders in the other place in Britain say that it is identical to the constitutional treaty—including the father of the whole thing, Valéry Giscard D’Estaing—would it not be much better to save ourselves enormous trouble and have a referendum straightaway on it? If it is such a marvellous thing for the British people, surely the Government can trust the British people to come to the right answer on it.
No, my Lords, you cannot have it both ways. I will not have figures bandied around about referendums. I am sure that the noble Lord has studied the figures, as I did. If he looks at the 88.8 per cent from the referendums that took place in the 10 marginals, he will know that of those voting less than one-fifth of the electorate—19.8 per cent of people—were actually in favour of a referendum. That is a substantial difference from the 88.8 per cent being bandied around. Equally, I will be able to quote—indeed, I look forward to it—figures about referendums over the past 20, 30 and 40 years. When invited, the population indeed enjoy the opportunity to talk about the use of referendums, but we are absolutely crystal clear that this is a reform treaty and, as with other reform treaties, it is Parliament’s job to ratify it. That is what we are here to do.
My Lords, will the noble Baroness the Lord President of the Council explain, as a result of the large majorities in the Commons, why the Eurosceptics and the anti-Europeans—mainly on these Benches, I suppose—are so nervous and apprehensive about these matters? Would she not agree that two of the principal benefits of the reform treaty are that it enhances the working-together of the national Governments in the European Council and the scrutiny functions of the national parliaments?
My Lords, if one examines the reform treaty—or what Giscard d’Estaing said about the nine points he specifically refers to as similar or the same in the constitution and the treaty—it is obvious that one of its great benefits is the opportunity for greater scrutiny by Parliament. Noble Lords should welcome that.
Construction Industry: Capacity and Skills
My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as a fellow of the Institution of Civil Engineers.
The Question was as follows:
What is their response to the assessment in the Institution of Civil Engineers’ report The State of the Nation: Capacity and Skills of the impact of the shortfall in capacity and skills on the gap between projected and actual construction costs.
My Lords, the skills challenges facing engineering are well known. The Government support the drive to encourage students to take up engineering careers, working with the sector skills councils and professional institutions. Programmes include Science and Engineering Ambassadors, the UK Resource Centre for Women in Science, Engineering and Technology and other activities. The Office of Government Commerce has established systems providing information about future government demand and the interrelationship of major programmes. Departments undertake assessments of demand and capacity to inform their budget decisions and their risk analyses.
My Lords, I thank the Minister for that reply. As he is probably aware, however, the stop-start approach to infrastructure projects cost the country £1.8 billion last year, and with the skills and capacity shortages driving construction inflation rates even higher, that figure could reach £8 billion a year by 2015. That means that by 2015 we will need each year an extra 12,000 or so engineering professionals to cope with the increasing demand and to bridge the skills gap. It also means that we need thousands more engineering undergraduates to be enrolling and starting their courses now, whereas admissions are falling.
Will the Government commit to working closely with industry leaders to create the conditions that will attract the investment levels we need to create the skills innovations that are essential to achieving stability and dampening down spiralling construction costs? Finally, will the Government support the institution’s call for a strategic infrastructure planning body to work alongside the planning commission to achieve the sort of efficiencies that we need now?
My Lords, I pay tribute to the noble Lord, who has a lifetime’s experience and expertise in this industry both at home and abroad. The Government work very closely with the industry. It is the most exciting time for the industry in a very long time because of the large number of projects in the pipeline. Years and years ago there was stop-start all the while but things have got much better. Indeed, the document from the institution of which the noble Lord is a distinguished director said:
“The outlook for the industry has rarely been more buoyant and exciting”.
The Government want to play their part in ensuring that these construction projects are a success.
My Lords, I declare an interest as an honorary fellow of the Institution of Civil Engineers and also as the patron of the WISE campaign. The Minister mentioned the UK Resource Centre for Women but I hope that he will also back the WISE campaign. More than anything, we need more scientists and engineers as careers advisers. Does the Minister agree?
My Lords, the noble Baroness also speaks with huge knowledge of the subject. We certainly do need many more scientists and engineers. One rather depressing figure is that women currently make up only 10 per cent of those going into civil engineering whereas they make up 49 per cent of the workforce. The Government are working very hard, with help from organisations such as ICE, to try to break that particular tradition.
My Lords, does the Minister applaud the work of the department of engineering science at Oxford University—I declare an interest as the patron of its centenary celebrations—which is making a very determined effort to increase the number of postgraduate studentships in all branches of engineering, which is one of the things that this report specifically calls for?
My Lords, I certainly praise Oxford University in that respect because this is very important for the country’s future. Earlier it was said that applications for civil engineering graduate courses were on a downward path. In fact, at the moment they are on an upward path. However, I am the first to concede that they need to go on an upward path faster than they are at the moment.
My Lords, is my noble friend aware that Cambridge University is pressing for more engineering students? I declare an interest as an honorary fellow of Clare College, which is pressing particularly hard in that direction subsequent to the noble Baroness’s great campaign and honourable life in pressing for women engineers.
My Lords, I am delighted to praise both Oxford and Cambridge universities, although I have a slight preference for one of them. Having said that, I must also say that many other universities in this country do sterling work in this field, as do many schools and colleges of further education.
My Lords, does the Minister think it would be a good thing for the Government to turn more to the learned bodies—the Royal Society, the Royal Academy of Engineering and the institutions—when matters of science and technology face the nation, to get the collective wisdom of the nation’s experts rather than turning to individuals to prepare these reports? I declare my interests as a fellow of the Royal Society, the Royal Academy and the institution.
My Lords, many are indeed public infrastructure projects. Infrastructure is due to grow by 5.8 per cent annually between now and 2012. I cannot answer the noble Baroness’s question directly, but I am pretty certain that the skills pledge will have been signed. However, I shall of course write to her.
EU: Parliamentary Scrutiny
My Lords, the Government work closely with the European Union Committee to ensure that the scrutiny process continues to develop and meets the needs of Parliament. While it is up to both Houses to decide how to scrutinise EU legislation, the Government are also committed to ensuring that the new provisions in relation to national parliaments in the Lisbon treaty operate effectively, and will work with both Houses of Parliament and scrutiny committees to achieve this.
My Lords, does the noble Baroness accept that I mean absolutely no criticism whatever of the EU scrutiny committees in either House, having been chairman of the one in the other place, and that I recognise what is well known throughout Europe; that is, the quality and standing of our own scrutiny committee in this House? But why, having promised full and detailed examination of the Lisbon treaty, did the Government contrive to curtail debates in the other place? In that way they reneged on that undertaking in the same way that they broke their promise to hold a referendum on the Lisbon treaty.
My Lords, it is completely wrong to say that we tried to curtail debate. Noble Lords can see the statistics for themselves if they look at the comparators between the different treaties. They can look at the number of interventions, which was more than 1,000, and the number of amendments, of which I think 274 were tabled by representatives of the opposition parties. There was a lot of debate. It was interesting that the debate in the other place concerned what the treaty would do on issues such as climate change. For the first time children were discussed within a treaty. That is to the benefit of the House.
My Lords, surely the noble Baroness must concede that it is a matter of record that the Government pushed through a Motion preventing proper scrutiny, demanding that most of each day should be taken up with what was described by a journalist recently as vapid debates on subjects such as climate change, some of which were hardly touched on in the treaty. Is it not correct that no time at all was allowed for any discussion on asylum or immigration, and only half a day for the whole of justice and home affairs? How on earth can the noble Baroness say with a straight face that the Government allowed proper scrutiny?
My Lords, the programme Motions of the other place are for the other place. I am in absolutely no doubt that Members of the other place had the opportunity to discuss the issues before them. The noble Lord need worry not, for I am sure that we in your Lordships’ House will have the opportunity to debate and discuss issues such as asylum, immigration, justice and home affairs and other issues of great concern. I do not always listen to what journalists say in relation to debates; I believe that the quality of some of the debates in the other place was extremely high.
My Lords, will my noble friend ignore the selective memory of those who forget the precedent of Maastricht in the Single European Act and look instead at the fact that we in the UK are held as a model by our European partners in terms of scrutiny of EU legislation? Now there are new opportunities under the Lisbon treaty in terms of the necessary consultation of national parliaments, the right to be consulted and the right to comment. Given these new, exciting challenges, is my noble friend confident that we are ready to meet them and remain a model for our partner parliaments?
My Lords, I completely agree with my noble friend about the opportunity that is now presented. There are seven sub-committees in your Lordships’ House, involving 75 Members. As my noble friend has said and as other noble Lords have commented, they are renowned across Europe for the work that they do. What is important both in your Lordships’ House and in the other place is the opportunity that Parliament will have to review and look at further opportunities in the light of the exciting and challenging opportunities to consider further European legislation.
My Lords, I declare an interest as a member of one of the sub-committees of the European Union Scrutiny Committee. The Question on the Order Paper asks about changing the parliamentary scrutiny of European Union legislation. Is it not the case that the protocols of the Lisbon treaty will strengthen the power of national parliaments, including this Parliament, by allowing this Parliament for the first time to have access to the European Court of Justice if it is considered that EU legislation breaches the principle of subsidiarity? Is that not a way of enhancing our democratic system of government?
My Lords, as the noble Lord, Lord Lester, says, the Lisbon treaty gives national parliaments a direct say in EU law-making procedures and a direct role in deciding whether EU legislation is necessary. Where there are votes of one-third of national parliaments against a proposal, it has to be reviewed and considered. If there are further votes, it is possible to make sure that the proposal is dropped. This is new. It is extremely important that parliaments take the opportunities that have been given to look at EU legislation and scrutiny. The noble Lord is correct that one is able to take this to court.
My Lords, I have been very clear that the proposals that come forward from the European Commission can be debated and discussed in Parliament. I know that is not what the noble Lord asked me; he asked me about vetoing what national Governments have put forward. The national Government, in collaboration with the other 26 members, will debate and discuss issues of concern and will represent this country appropriately in the national interest of this country.
We are also clear, as we will say when we debate the legislation, that we have the red lines, the opt-ins and the opt-outs that will ensure that where there are particular issues of concern they are dealt with effectively. The noble Lord can smile; the noble Lord was part of a Government who did more to enhance the cause of Europe than probably any other.
My Lords, does my noble friend recognise that the institution of the yellow and orange card systems, giving a greater role to this national Parliament, will extend the opportunities for us to speak on these issues? Is it not high time that we showed the red card to the Opposition, who are against the Lisbon treaty as a whole?
My Lords, I will not get into my own football analogies. We have to be clear in your Lordships’ House about the debate we are having. It is about the ratification of a treaty that is an important part of the development of the European Union, in which this country should be very proud to play a prominent role. One has only to look at the agenda coming forward for the informal council this weekend to recognise that all the issues before the 27 nations need to be addressed from a position of working together, not one of isolation.
Asylum: Mehdi Kazemi
My Lords, I cannot comment on the details of individual cases. However, I can assure the noble Lord that the United Kingdom Government are committed to providing protection for those individuals found to be genuinely in need, in accordance with our commitments under international law. Asylum applicants have access to the independent appeals process through the courts.
My Lords, I thank the Minister for his reply, but it is not quite as full as I would expect and hope. He will be aware that, since the ayatollahs came to reign in Iran, humanitarian organisations tell us that 4,000 lesbians and gay men have been executed in that country. What representations have Her Majesty’s Government made and what representations do they continue to make about that policy? Secondly, will he assure us on behalf of the Government that no one, gay or otherwise, will be deported to any country where they will be persecuted, tortured or executed?
My Lords, I have read with serious concern the human rights figures that the noble Lord refers to. The Foreign and Commonwealth Office regularly raises concerns with Iran in the context of individual cases, most often around methods of punishment used by that regime. Representations are also made through the EU, as this has been found to be the most effective way of making such representations. The Border and Immigration Agency enforces the return of Iranian gay men only when we are satisfied that they are not in need of protection. We do not seek to enforce returns to Iran unless our decision-making processes and the independent courts are satisfied that it is entirely safe to do so.
My Lords, three specific issues relate to this case. First, homosexuality is illegal in Iran and punishable by death. Secondly, this young man’s partner was hanged at an early age simply for being gay. Thirdly, the Home Office’s position is that gay people can return to Iran safely, provided that they are “discreet”. Heaven knows what that means. Does the Minister agree with his department’s advice that it is safe to send gay men to Iran if they are discreet? What action will the Minister take if that advice proves wrong and this young man is executed for being gay? If I or any Member of this House was in that position, I hope that the Minister would have a good answer to that question.
My Lords, the noble Lord raises this issue with absolute seriousness, and rightly so. The answer is that I cannot speak hypothetically. Yes, we make returns when we feel that it is safe to do so. We do not believe, however, that it would be right to make returns where it is unsafe to do so. I would argue that we are extremely cautious in how we operate returns and that that approach has proven to be very effective in the past.
My Lords, do the Government think that it is safe to return to Iran anyone who is a known gay, including not only the individual whom we are talking about but Miss Pegah Emambakhsh, whose case was also reported in the Independent the other day? Does not the noble Lord think that it would be a good example to generalise the policy followed by the Netherlands and Germany and put a moratorium on the return of all gay people throughout the whole of the European Union?
My Lords, I repeat what I said earlier. We are extremely cautious about the way in which we treat these cases. The noble Lord makes an important point about human rights in so far as gay men and women are concerned and clearly we follow that very carefully when we give detailed consideration to these cases. They go through a rigorous appeals and court process. Obviously we have to follow and respect the integrity of that process.
My Lords, did my noble friend see the report in today’s newspapers of an increased incidence of homophobic insults in our schools and colleges? Does he agree that the stance that the Government take as a matter of principle on how we treat people such as this young man and take account of their human rights gives a very important message and in the long term will help to decrease the incidence of this kind of abuse?
My Lords, the noble Baroness makes a very good point. It is obviously right that we should take measures to tackle homophobia in schools and I think that this Government have an extremely good track record in that regard. We have done a great deal over the past 10 years. We could not have had this debate 10 years ago, talking about protecting gay men and women and ensuring that their human rights are properly upheld.
My Lords, while the Government are spending time looking after the human rights of foreign citizens in countries overseas, will they also find time to protect the human rights of young British-born Asian girls who disappear without explanation from school rolls and in whom no one seems to take any interest, when it is clear to almost everyone except the Government that they are being exported to overseas countries for forced marriage?
My Lords, we have been very active on issues such as forced marriage. I am grateful that the noble Lord now supports the Government’s more aggressive approach in these policy areas. I do not recall the Conservatives being so assiduous during their time in government.
Climate Change Bill [HL]
My Lords, I beg to move that the Bill be now further considered on Report.
Moved accordingly, and, on Question, Motion agreed to.
Clause 19 [Targeted greenhouse gases]:
96: Clause 19, page 10, line 20, leave out paragraphs (a) and (b) and insert “a greenhouse gas as defined by section 73(1)”
The noble Lord said: My Lords, I shall speak also to Amendment No. 98, which stands in my name and that of my noble friend Lord Teverson. We find this issue puzzling. I am not sure whether at the previous stage of the Bill we fully took on board the Minister’s argument as to why we should discuss just carbon dioxide and any other gas specified by the Secretary of State rather than talk about greenhouse gases as a whole. We have talked about international agreements, especially in relation to aviation and shipping, and it seems unusual to take a separate line here, just targeting carbon dioxide and setting out other greenhouse gases, rather than taking the IPCC’s line and talking about all greenhouse gases.
By volume, carbon dioxide is one of the most important greenhouse gases, although methane has 32 times more effect on the atmosphere. As a greenhouse gas, methane lasts in the atmosphere for a far shorter time than carbon dioxide. There has been lobbying in the agricultural industry for certain gases; certain HFCs used for agricultural purposes have much greater effects on the atmosphere, while others are used in the power-generating sector. However, we have not been able to eliminate those and replace them with less damaging gases. I believe that it should still be the role of the committee to look closely at all greenhouse gases. One of the major greenhouse gases is methane escaping from the thawing of the tundra in Siberia. That will have a major effect in this country because very large amounts of carbon and methane are locked up in the uphill bogs of this country. Therefore, we think it is unacceptable not to take those into account in a primary situation. I beg to move.
My Lords, these amendments focus on a crucial area of the Bill: namely, exactly what gases we will count and when. Amendment No. 96 in the name of the noble Lord, Lord Redesdale, seeks to define all greenhouse gases listed in Clause 73. The government’s amendments go some way to solving the problem.
We welcome the fact that the scientific nature of this problem has been recognised by the Government and we appreciate that the committee has been taken into a more central role in this process. However, going about the issue in this way seems slightly wrong. The process, as per the government amendment, must begin with the Secretary of State wanting to make an order and then seeking out the advice of the committee. We really had hoped that there would be more of a positive duty on the committee to research and determine what gases should be targeted and that it would recommend to the Secretary of State that an order was needed. Perhaps I have misread the government amendment, but could the Minister assure us that the committee will be able to consider this and make recommendations to the Government? The scientists should determine what is to be targeted in the first instance and not be used as a sort of approval process for the Secretary of State’s statutory instrument.
My Lords, I hope I can dispel doubts about this. First, I shall comment on Amendments Nos. 96 and 98 and then speak to the government amendments in the group. Amendments Nos. 96 and 98 would include the basket of Kyoto greenhouse gases in the Bill’s targets and budgets from the start. We discussed these same proposals in Committee and touched on the issues they raise when discussing the Committee on Climate Change’s review of the long-term target, which will also consider including greenhouse gases.
Although we consider that there are strong arguments, which we set out in Committee, about why a CO2-only focus is the right approach initially, we understand that there are good arguments for moving away from that. It is for that reason that we are asking the Committee on Climate Change to consider the impact of including all greenhouse gases in its review of the long-term target.
Our key concern with these amendments is that they would pre-empt the outcome of the review. As with the proposals to move the 2050 target to 80 per cent now, these amendments propose making a decision now and getting the evidence later, or rather, making a decision now that is not based on any evidence. We consider a much more appropriate method is to address the issue the other way round, asking the independent, expert Committee on Climate Change to consider the evidence and provide us with a robust basis on which to make these important decisions. The government amendments are predicated on that view.
Amendment No. 101 would mean that an order including other greenhouse gases could only make amendments to the Act that were completely necessary to the Act’s operation rather than ones that are merely convenient. For instance, if other greenhouse gases were included in our budgets a future Government might want to rename them “greenhouse gas budgets” for clarity, rather than “carbon budgets”. This kind of simple change would be prevented by Amendment No. 101, which we feel is far too restrictive.
Government Amendments Nos. 97 and 104 go with government Amendment No. 102, which we have already discussed. They do two things. First, they allow us to include other greenhouse gases in a budget period which has already started. This could include the very first budget period, for 2008-12. Secondly, they increase the robustness and transparency of the process for taking decisions on whether and how to include other greenhouse gases. As I have said, the Committee on Climate Change will be required to consider the implications of including other greenhouse gases—the six gases covered by the Kyoto Protocol, set out in Clause 73—in the targets and budgets when conducting its review of the 2050 target. The committee’s review will report, and the Government will set the level of the first three budgets after the first budget period has begun. However, Clauses 19(2) and 20(3) would prevent us including other greenhouse gases in a budget period which has already begun. Government Amendments Nos. 97 and 104 remove these constraints by deleting those two subsections. Taken together, their effect would make it possible to include further greenhouse gases, using an appropriate baseline year in the very first budget period under the Bill of 2008-12.
Today I can go further; I want to put on the record our commitment to include other greenhouse gases in our targets and budgets if the Committee on Climate Change advises in favour of this in its review of the 2050 target. If the committee advises that we should include these emissions in our targets, we will do so. Government Amendments Nos. 97 and 104 will allow us to do so right from the very first budget period. This is a new step forward, which I hope will reassure noble Lords of the Government’s commitment to taking action on greenhouse gases, once we have the right evidence base on which to do so—that is, advice from the experts.
The amendments would also improve the robustness and transparency of decisions on including other greenhouse gases. In Committee I agreed to look again at whether the scrutiny arrangements in Clause 20 could be strengthened to ensure that this power is exercised appropriately. Government Amendment No. 104 addresses this point by requiring the Government to consult both the Committee on Climate Change and the devolved Administrations before using the power in Clause 20 to amend the base year of a greenhouse gas. As before, this power will be subject to the affirmative resolution procedure. As elsewhere, the Government are committed to ensuring that the Bill’s framework is transparent. Amendment No. 104 would achieve this, together with Amendment No. 102, which has already been discussed but not yet agreed. Together, the government amendments significantly strengthen the Bill. At the appropriate time I will seek leave to move them.
My Lords, may I say how welcome the government amendments are? We welcome the way in which the Minister has tried extremely hard to meet some of the concerns. On this issue the government amendments have proved far superior to our own, and on that basis, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
97: Clause 19, page 10, line 23, leave out subsection (2)
On Question, amendment agreed to.
[Amendments Nos. 98 to 101 not moved.]
102: Clause 19, page 10, line 30, 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.
( ) If the order makes provision different from that recommended by the Committee, the Secretary of State must publish a statement setting out the reasons for that decision.
( ) The statement may be published in such manner as the Secretary of State thinks fit.”
On Question, amendment agreed to.
[Amendment No. 103 not moved.]
Clause 20 [Base years for targeted greenhouse gases other than CO2]:
104: Clause 20, page 11, line 4, leave out subsection (3) and insert—
“(3) Before making an order under this section, the Secretary of State must—
(a) consult the other national authorities, and(b) obtain, and take into account, the advice of the Committee on Climate Change.(3A) 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.
(3B) If the order makes provision different from that recommended by the Committee, the Secretary of State must publish a statement setting out the reasons for that decision.
(3C) The statement may be published in such manner as the Secretary of State thinks fit.”
On Question, amendment agreed to.
[Amendment No. 105 not moved.]
106: Before Clause 21, insert the following new Clause—
“UK domestic effort
(1) The Secretary of State must ensure that at least 70% of the effort undertaken for compliance with section 4(1) is achieved by domestic emissions reductions and domestic removal by sinks.
(2) In this section “effort” means the difference between the present UK carbon budget and the verified emissions for the previous budgetary period.”
The noble Lord said: My Lords, we come to an important principle in the Bill: the Government’s concept of the UK carbon account. As noble Lords will know, that does not target actual UK emissions but UK net emissions plus or minus the trade in carbon permits from abroad, whether through the European system or some of the other Kyoto mechanisms. The amendment is intended to put a limit on the number of those foreign credits included in the UK carbon account.
I want to make it quite clear, as I did in Committee, that all noble Lords on all sides of the House are absolutely committed to emissions trading systems. In no way does the amendment inhibit the actual trading of permits internationally, particularly within the European Emissions Trading Scheme. All of that continues, company to company, in the current and post-2012 regimes, if the amendment is passed. As proof that this type of amendment does not affect how emissions trading schemes work, I remind your Lordships’ House that the Government already have a carbon dioxide emissions target for 2010 which does not allow any trading to be counted towards it. Yet that that has in no way inhibited the EU ETS and Kyoto mechanisms from working very effectively and efficiently despite that national target already being in place.
An important thing for all of us is that the Bill gives the United Kingdom the chance to show global leadership. That is what we all, on all sides of the House, welcomed when the Bill was announced. We all have our individual criticism of clauses and various bits of the Bill, which we are now considering. On the whole, however, it is right for the Government to bring the Bill before the House, for it to be approved and for us to show the international leadership that the Government wish. However, that can only be the case if the United Kingdom makes part of that effort itself. If, on the other hand, it decides to subcontract all its effort to meet its carbon targets to the rest of the world, that would not show a great deal of leadership and would completely undermine the ethos, motivation and practical importance of the Bill. None of us—and I am sure this is true of the Government—wants that to be the case.
The amendment does not go as far as existing government targets and say that no international credits shall be counted towards the UK carbon account and the targets in the Bill. However, we are saying that they should be reasonably limited. The amendment says in a sober and reasonable way that 70 per cent of the effort to decarbonise our economy and meet those targets must be met within the United Kingdom. That is fundamental to the understanding of the Bill in the country and within the global community, and reflects what the Government and Ministers themselves wish to do.
Because this is such an important principle, it needs to be in the Bill. It has to be clear in the Bill that there is a limit to the amount of decarbonisation of the UK economy that can take place by subcontracting it to the rest of the world while we carry on emitting carbon dioxide and the other greenhouse gases to our heart's content, to any degree that we want, as long as, somehow, by the end of the budget period, we fix that by purchasing credits from abroad. That is not what the Bill is about.
We recognise that international effort is important; our contribution towards that is important. That is why there is no prohibition in the amendment. The amendment would not stop the Government purchasing as many international credits as they want to assist developing countries or other parts of the world to decarbonise their economies; it means that after a certain limit, they would not be counted towards the targets. That is all that the amendment does.
When I was preparing for the debate and thinking about the issue, I looked through some government pronouncements. One that was absolutely right was by Phil Woolas, a Minister in the other place, when he spoke to the Renewable Energy Association at the end of last year. What he said encapsulates what we all want. He said:
“The UK is also showing strong leadership through being the first country in the world to propose a Climate Change Bill, with targets to reduce CO2 by 2050”—
that relates to the UK. He said that although the reduction,
“was the primary intention of the Bill, it was not the only one. The fact that we have a Climate Change Bill provides us with a vital lever in international discussion by committing us to taking real action at home”.
I could not disagree with that statement at all. In fact, that sums up what the Bill is about. The amendment would help the Government achieve their goals. I beg to move.
My Lords, I see this as a fundamental amendment with wide support across the House. I will not further extol the virtues of trading schemes and their importance to the fight against climate change, but only because that has been sufficiently covered by the noble Lord, Lord Teverson, and in previous debates, and because I believe that there is a strong convergence of opinion on the vital role that they can play.
However, how the schemes are to be included in the Bill is still the subject of much controversy. It is to that that I will direct most of my attention. The Government have come a long way since the Bill was first debated. I was pleased to see many of the amendments that the Minister tabled for Report, as they showed that the Government really seemed to have listened to the concerns expressed by noble Lords in the debates. The Government have been particularly good at strengthening the role of the committee and on beefing up some of the reporting mechanisms.
However, that willingness did not seem to extend to capping overseas carbon credits. Simply not enough has been done to send out a sufficiently strong signal that the Government are truly committed to decarbonisation. The noble Lord said in Committee:
“We will take that aspect away to see how we can modify the Bill to make it absolutely clear that we are committed to that decarbonisation”.—[Official Report, 17/12/07; col. 532.]
I simply do not feel that such a modification has been made. We certainly appreciate the Minister’s averred commitment, but assurances in Hansard are, in our eyes, insufficient. We want something in the Bill that shows that the Government are committed to addressing the issues of overseas credits, to ensure that the Bill is truly focused on domestic decarbonisation and will not allow the widespread buying of indulgences that will lock our economy into its dependence on carbon.
A fixed percentage in the Bill may not be the best way of going about that. We understand the difficulties in placing such a precise figure in the Bill, which range from the constraints of the international negotiation tables to the fact that the carbon market will look a lot different in 42 years. However, a 30 per cent limit on the contribution to the reduction commitment is fairly broad and it is the best course of action in the absence of anything from the Government. The Minister said that he envisaged the Committee on Climate Change addressing these issues. That fits into our general approach towards the Bill and the role of the committee. However, we would like the committee to have a specific duty under the Bill to set a figure capping overseas credits. Should the Government bring something to that effect forward at Third Reading, we would be willing to reconsider our position on the amendment.
My Lords, I do not intend to be shot down by the noble Lord, but I do intend to continue my speech.
Should the Government bring something to this effect forward at Third Reading, we would be willing to reconsider our position on the amendment. That is the important point that I wanted to get across to the Minister. Simply put, we want something in the Bill. Current thinking is that, following Kyoto, overseas credits can be supplemental to a country’s reduction effort. However, the strength of the supplementarity doctrine depends on how the reduction is calculated.
I hope that the Minister will be able to clarify the concept. What is supplemental to what? Is it supplemental to the reduction effort in terms of how far we have to go to meet the reduction in relation to the baseline year or is it supplemental to the reduction of the projected increase if we continued with business as usual? Those create very different figures. For example, let us say that we are currently emitting 100 million tonnes, which must be reduced by 10 per cent in the coming five-year budget. Is the reduction effort 10 million tonnes, of which a supplemental portion would be about 5 million tonnes, or is the reduction calculated based on what we might be emitting in five years if we carried on with business as usual—say 125 million tonnes—which would make the reduction effort 35 million tonnes? This would mean that a supplemental percentage would be, say, 17.5 million tonnes, which would allow us to buy more than the entirety of our 10 per cent reduction. The way in which this is calculated has a substantial bearing on what caps mean. Can the Minister explain the calculation method that he envisages being used?
We understand that carbon markets need a certain amount of freedom. Indeed, we understand that many of the credits purchased in the European Union could come from overseas or be the result of joint implementation initiatives and the like. The amendment would restrict not how many credits can be purchased but simply how many of the credits purchased could be counted towards the Government’s emissions targets. In essence, we support the amendment, which would fill what we believe is a serious hole in the Bill. The issues of offsetting need to be addressed and, as adequate provision has been not made, placing a cap might go some way towards addressing the problem.
My Lords, to sponsor an amendment against one’s own Government is a very serious business. In more than 10 years in this House, I have done so only once before, when I moved an amendment adding a public interest test to the Communications Act 2003. For that reason, I shall speak at a little greater length than has been my practice.
This is, as noble Lords have heard, a very important debate. For me, it happens to be the most important debate, because it goes to the heart of the overall rationale for the Bill. The noble Lord, Lord Crickhowell, put his finger on this in one of our committee deliberations when he observed that this is not a carbon trading Bill; it is the Climate Change Bill, which happens to include a provision on carbon trading. The Joint Committee probably spent more time discussing the trading of carbon credits than any other single issue.
On domestic versus purchased credits, we were reassured by the wording and what we assumed to be the intent of the Kyoto protocols, which have the very clear requirement that purchased carbon credits are supplemental to domestic carbon reductions—paragraphs 92 to 94 on page 34 of our report set it all out. There is no ambiguity in this unless you actively look for it. This resulted in my original concept, which was supported by an observation by the noble Lord, Lord Turner, on the radio the other day. He made the point that the 2020 target was the real challenge, which reinforced the suggestion that I have been making for a while of a 50 per cent cap, with a taper every five years from 2020 onwards, falling to around 15 per cent in 2050, by which time one would hope that the whole thing will have become academic. I am afraid that I find myself sponsoring the amendment because I had no response whatever from the Government.
Leaving the whole thing to the climate change committee is an attractive option but, as the Minister has reminded us on any number of occasions, these essentially political decisions should remain with Parliament. This is a defensibly consistent and principled position, but it results in the need to clarify to the greatest degree possible an appropriate cap and to put it into the Bill. Surely there can be no decision more political in effect than constraining the way in which people live their lives. In essence, given the Bill’s present form, the Government are seeking to persuade us simply to trust them to do the right thing. That indicates that those who drafted the Bill do not get out too much.
The present clause amounts to not much more than a “get out of jail free” card. I am sure that that is not what was intended, but it is certainly how any objective observer will inevitably see it. Why should we suffer this lack of faith in politicians to be trusted to work things out on our behalf? Why will the committee of the noble Lord, Lord Turner, despite our best intentions, inevitably struggle for legitimacy, working off the back of years and years of governmental compromise, inactivity and dithering in this area? How, as the Environmental Audit Committee reported last week, can green taxes, as a proportion of all taxes, have declined from a peak of 9.7 per cent in 1999 to 7.6 per cent in 2006? Why is this lack of trust so complete that the requirement to have a specific figure in the Bill becomes absolutely compelling?
I think that I found at least part of the answer recently in a book entitled Blessed Unrest by the American environmental architect Paul Hawken. He wrote:
“We live in a faith-based economy, and by that I do not refer to religious practice. People are asked to place their faith in economic and political systems that have polluted water, air, and sea; that have despoiled communities, sacked workforces, reduced incomes for most people in the world for the past three decades, and created a stratosphere sufficiently permeated with industrial gases that we are in effect playing dice with the planet … As that faith begins to seem more and more misplaced, the way to change the world is to change one’s own practices, including one’s home, source of energy, method of agriculture, diet, transport patterns, and communities. Not that Kyoto Protocols shouldn’t be signed or adopted … Efforts must continue to be directed to bring about institutional change, but such efforts cannot succeed unless people reexamine how they behave and consume in their own lives”.
Later today, we are likely to hear arguments from those who feel strongly that in purchasing carbon offsets you are in effect helping to kick-start the benign development of what we used to call the third world. Anticipating these arguments from Peers for whom I have the greatest respect, perhaps I may offer a few counter-arguments. The first is eloquently expressed by Kevin Smith in this month’s issue of Resurgence. He states:
“The concept underpinning the whole system of carbon trading and offsetting is that a ton of carbon here is exactly the same as a ton of carbon there. That is, if it’s cheaper to reduce emissions in India than it is in the UK, then you can achieve the same climate benefit in a more cost-effective manner by making the reduction in India.
But the seductive simplicity of this concept is based on collapsing a whole series of important considerations, such as land rights, North-South inequalities, local struggles, corporate power and colonial history, into the single question of cost-effectiveness. The mechanisms of emissions trading and offsetting represent a reductionist approach to climate change that negates”,
any number of,
“complex variables in favour of cost-effectiveness”.
The difference in argumentation between myself and those who will speak after me may simply reflect a difference in background and personal experience. The cost-effectiveness case, with its attractive development underpinning, is advanced in the main by economists, whereas my arguments stem from my background as a film producer and, for the past six years, as president of UNICEF. My raw material is people—people at their best and people at their worst. Commodify them and they tend to behave badly. Explain what needs to be done, the reasons that lie behind it and what can be done to improve things and, as often as not, they will surprise and perhaps even amaze you. We need this amendment or something very like it to force the hand of the Government, whichever Government that might be, to allow the people of this country to be good instead of simply being given the opportunity to look good. As Paul Hawken put it, to,
“reexamine how they behave and consume in their own lives”.
The Prime Minister continually reminds us that we have to face some tough choices. Unfortunately, these are seldom spelt out. This amendment would help unambiguously to set out the implications of where we have got to and what will be required of all of us if we are to start putting things right. I can only urge my colleagues on the Labour Benches to support what I believe to be a very important amendment.
My Lords, I agree with one thing that the noble Lord, Lord Puttnam, who so admirably chaired the Joint Committee, had to say, which is that this is an extremely important issue. I also agree with him that the Bill is not adequate, but I cannot go the whole way with the argument that he advanced. In earlier stages of the Bill, I spoke about the importance of getting cost-effective action, including effective action in other countries, and about relating properly and effectively to the international trading mechanisms.
Under the Kyoto rules, the practice effectively has been to place a 50 per cent limit, which has happened in the past. I do not have any difficulty about the proposal that that limit is too high and should be lowered. However, I have a good deal of sympathy with some of the arguments advanced by the Minister in papers that he circulated to those who have taken part in our debates in which he expressed doubts about setting a binding limit, which risks being seen internationally as undermining our continued commitment to maintaining low-carbon investment flows to developing countries.
I did not have the faintest idea what my noble friend would say from the Front Bench before I heard him speak. I will confess to him now that I had some anxieties about the wording of the amendment that we are debating, as moved by the spokesman for the Liberal Democrats. There are difficulties in having a fixed, once-and-for-all limit, but half way through his speech my noble friend came to my rescue and said that a fixed percentage in the Bill may not be the best way of dealing with this. He suggested that perhaps we needed in the Bill a specific obligation on the Committee on Climate Change to advise on this matter. If I had not heard those remarks, I would have said something like, “I can go along with 30 per cent—it may be about right at the start—but this is going to be a continually changing situation as international trading schemes and the whole climate in which we are dealing develop”. I would have then said, “Okay, if we accept a 30 per cent amendment, I hope that at a later stage in the passage of the Bill we can have a provision that that figure could be amended after advice from the Committee on Climate Change”. So we are not very far apart. My noble friend made a powerful case that we should put a specific obligation on the climate change committee to address this important issue.
I should say to the noble Lord, Lord Puttnam, for whom I have the utmost respect and under whose chairmanship I have now served on two Joint Committees of the House, that to fix a very low percentage and then to say that it has to go lower still in later years is anticipating the future in a way that I am not happy to do. I hope that the Minister will say, “I understand exactly what is being said here”. If the Government feel that they cannot accept this fixed 30 per cent but will come along with proposals that will give a strong role—indeed, an inevitable and necessary role—to the Committee on Climate Change so that the figure can be altered as events change, we would have a mechanism that we in all parts of the House could support.
We heard evidence—I have to declare an interest in some of this—from those involved in emissions trading that something like 30 per cent might emerge as a very sensible figure. Indeed, for a period it may be a sensible figure, but, for goodness’ sake, as we are dealing with events up to 2050, let us not lock ourselves into a position that could prove extremely damaging. I support the general thrust of the Bill as long as we have some kind of mechanism of the type proposed by my noble friend on the Front Bench.
My Lords, I have a great deal of sympathy with the aims of the amendment but I will nevertheless argue that it would not be appropriate to include it on the face of the Bill.
My sympathy is based on the fact that it is essential that the UK achieves cuts in its own emissions and does not rely on what the noble Lord, Lord Puttnam, has called the delusion of a get-out-of-jail-free card. That is important because it is vital that developing countries in total illustrate to the world what a low carbon economy is and what changes in behaviour, energy efficiency and the lower carbon sources of energy will be required for the whole world to achieve a low carbon economy and thus emission reductions.
Indeed, the fact that we need to demonstrate that supports the argument of the noble Lord, Lord Puttnam, that it is not absolutely the case that a tonne of carbon saved in every country of the world is precisely the same. There is a value in hard emission reductions targets in developed countries because they will drive the changes in behaviour, energy efficiency and technology which will then be required across the whole world.
It is important to realise that in the long term, when we look at the 2050 target, we probably have to work on the assumption that all of the emission reductions we will aim to achieve by 2050 will have to be achieved through domestic effort—not 90 per cent, not 95 per cent, but all. That is because by that time, all countries in the world, including those that are currently still at a low-income developing stage, will have to be on a strong downward emissions path.
Although it will make perfect sense to allow trading between ourselves and other countries if the whole world is in cap and trade systems, we have no basis for assuming that we will necessarily be a logical net buyer of emissions credits at that time rather than emissions seller. We therefore have to design our long-term climate change programme on the assumption that we must drive changes in behaviour, energy efficiency and the source of our energy such that it will be possible by 2050 to achieve the reduction target—be it 60 per cent or 80 per cent—entirely through domestic effort. That may not be how we do it, but we have to design our policy on the assumption that that may be what occurs.
While it is the long-term reality that that is what we have to achieve, there is a potentially significant role to be played through emissions trading in the shorter term. Where there are opportunities to reduce emissions at much lower costs elsewhere than in the developed countries, it makes sense for us to take advantage of those opportunities. There is a vital need to help spur the development of low-carbon economies in developing countries. That needs resources; and a flow of finance from trading is one of the potential ways that those financial resources will be achieved. There is therefore a role for trading, and the appropriate extent to which the UK relies on the buy-in of credits is therefore a subject that requires detailed attention.
It is also an issue which becomes more complex the more one thinks about it. For example, there are several different categories of buy-in of credits to which it would be possible to have a different attitude. Under the EU ETS, there are buy-ins of credits entirely between private players within Europe. We cannot set that as a policy variable because it is the product of a set of private decisions. One could argue—although I am not necessarily doing so—that we should be more relaxed about that sort of buy-in because it is entirely within Europe and is therefore part of an overall developed economy which is achieving reductions somewhere and which is therefore driving the technologies that we need.
There is also the possibility of purchases of clean development mechanism emission credits on a direct Government-to-Government basis. However, those are not “get out of jail free” cards because they have a cost attached to them. Given that they would cost the Treasury real money, we have to believe that there would be some Government unwillingness to sanction a large number of them.
Finally, there is the complexity that the EU ETS will probably allow some purchase of credits from outside the European Union in phase 3. This suggests that one of the most important things we have to influence is not necessarily our own targets for buy-in from outside, but the buy-in rules which exist from the EU ETS.
All of that indicates that this is an appropriate issue to be handed to the Committee on Climate Change for detailed consideration and the provision of a robustly independent recommendation on the issue. However, I realise that my own confidence in the robust independence of the committee is based on insider information and that other noble Lords cannot, by nature, be so confident. I also recognise that even if the committee recommends a certain approach, government could choose not to accept that recommendation. I therefore recognise that noble Lords may wish to ensure that there is something in the Bill which makes sure that the level of domestic effort is significant.
However, I am concerned that, as written, the specific form of the amendment is not the best. It could have some unintended consequences, because it does not set a minimum level of UK domestic effort—it sets a minimum percentage. That could mean the following. Imagine two recommendations that the climate change committee might choose to make. In one, we recommend that there should be a 19 per cent domestic cut in emissions and in addition a 7 per cent buy-in of credits from the rest of the world. In another, we recommend a 20 per cent cut in domestic emissions and a 10 per cent buy-in from the rest of the world, for an overall reduction of 30 per cent. Under the rules of the Bill if amended by Amendment No. 106, the first, 19 per cent plus 7 per cent, would be legal. It meets the 26 per cent total amount and the 70 per cent constraint. The second recommendation, 30 per cent—that is, 20 plus 10 per cent—would be illegal, because although it meets the 20 per cent minimum constraint, it does not meet the 70 per cent minimum from domestic effort. But anybody who is concerned about the success of the Bill for the climate would have to prefer, in percentage terms, 20 plus 10 as a reduction to 19 plus 7. The problem has arisen from writing the amendment by reference to Clause 4(1) rather than to Clause 5(1). If it defined an absolute minimum reduction in the domestic amount, rather than a percentage of the total reduction, it would be more effective.
It would, my Lords, but I would not want the Committee on Climate Change to be constrained from arguing that, while it believed that the maximum feasible UK reduction was 20 or 21 per cent, the UK’s international effort ought to be 30 or 35 per cent, given what we believe is essential for the 2050 target. It would be odd if we were constrained from advocating that upper figure by the Bill. My concern is that the amendment could constrain the amount of credit buy-in, when the real objective of its proposers is to set a minimum domestic reduction target. I am quite happy with the Government’s proposal that this matter is handed to the Committee on Climate Change, which I am confident will make a well argued and robustly independent proposal. If noble Lords wish to proceed with the amendment, it should be expressed in terms of a minimum domestic reduction rather than a minimum percentage of the total reduction.
My Lords, it is understandable that the noble Lord, Lord Turner, given his position as chairman of the committee, would like a completely free hand. I am sure that he will do a very good job of chairing the committee. However, if the amendment is passed, I think that the Government and noble Lords on all sides of the House would welcome his advice on how to reword the Bill between now and Third Reading to meet the objectives that he stated. We heard the noble Lord, Lord Puttnam, say most eloquently why this is a planetary imperative, and my noble friend said in moving the amendment that we cannot leave the Bill with nothing in it.
I have two amendments grouped with Amendment No. 106, the second of which, Amendment No. 137, suggests, as the noble Lord, Lord Crickhowell, will appreciate, that the climate change committee be able to alter the level of the cap if it seems appropriate—perhaps it should not be fixed for all time until 2050. The amendment proposes that the climate change committee has a duty to advise the Secretary of State on whether the level of the cap is sufficient. I hope that, in the event of Amendment No. 106 being passed, we might consider also the necessity of my amendment.
There has been much discussion today about whether the amendment is necessary from an overseas point of view. I remind the House of what the Minister actually said:
“We are committed to the international principle of supplementarity, which states that the use of international mechanisms should be supplemental to domestic action. The latter should, therefore, probably constitute the significant element in our efforts to meet our targets”.—[Official Report, 17/12/07; col. 532.]
I ask him again this afternoon why he has that doubt that it “probably” should. We heard so much evidence in the Joint Committee on climate change and subsequently about how this Bill should set us on the right trajectory. It should set us on the trajectory that Sir Nicholas Stern talked about—fast to a low carbon economy. I believe that that low carbon economy will also deliver all sorts of energy security gains, which I am not going to go into now. Those energy security gains, driving us to a point where we are importing far less of our fuel, is something that we should all be aiming at towards 2050.
I also had Amendment No. 110 grouped with the amendment, but I believe that my noble friend’s amendment is far more effective than mine in addressing this issue, so I am very pleased to support it. We have discovered from various speeches this afternoon how hard it is to express this issue in term of percentages. I think that I, along with many Members of the House, get slightly lost. Indeed, I tried in Committee to express it all numerically, and I think I did a good job of losing myself. The fact is that we understand the extremely important principles behind the amendment. Although there is a small argument as to what exactly the percentage should be, as laid out by the noble Lord, Lord Turner, I believe that there is a chance to amend that by the Government bringing forward an amendment at Third Reading to deal with which part of the Bill it should be in. We feel very strongly about the principle, and I believe that the amendment should be supported from all sides of the House.
My Lords, I have not spoken previously in the debate, so I apologise to the House for speaking. First, I consider that if we have a global target, as in Kyoto, we start with the assumption that one tonne of carbon emitted here or elsewhere has the same price. For various reasons, with which I agree, noble Lords want to fix a different price so that a tonne of carbon not emitted here can be a tonne of carbon not emitted there. From what the noble Lord, Lord Turner, has told us, given what the EEC arrangements are, there is a further consideration—that price within the EEC may be different from the price outside the EEC.
This takes me back to the glorious days of multiple exchange rates that we used to have in developing countries, which were I am afraid not a very good way of allocating resources. My mind is open on this. All I want to say is that the best way to set multiple shadow prices is not in a Bill. Secondly, even if you set them, they will have to be flexible, as the noble Lord, Lord Crickhowell, said. We have to find a mechanism whereby we have a wording that allows us to achieve what the noble Lords want to achieve, which I quite agree with—that we have to change our behaviour, but at the same time not put in such a rigid framework that it will lead to misallocation, rather than a correct allocation, of resources.
My Lords, I had not intended to speak on the amendment, but will do so briefly. The noble Lord, Lord Puttnam, argued that the UK should aim to be good rather than simply appear to be good. That brought a resonance to my mind of the sale of indulgences 500 years ago by which the rich could escape the wrath to come—not do their duty—by using the purse. If we are going to have a moral influence in the world, we must be seen working hard to reduce our own emissions.
However, I am very much persuaded by the arguments of the noble Lords, Lord Crickhowell, Lord Turner and Lord Desai, of the dangers of trying to state a figure in this Bill without a research base for it. But it goes too far to leave it entirely to the committee. It needs a framework within which to develop its thinking. The Government need to give a clear steer on how they see us having a duty to reduce our emissions rather than indulgences.
My Lords, I should declare an interest in that I advise HSBC and the IDEAglobal Group on emissions reductions and carbon markets. I should also apologise to the House because I have not been able to intervene on this subject before. It is difficult to find moments when one can give a maiden speech. My noble friend Lady Afshar and I found such a moment about three weeks ago with a debate on inequality, on an interesting Motion tabled by the noble and right reverend Lord, Lord Harries, but it was promptly bumped by the Northern Rock legislation and we were part of the collateral damage.
I see the role of all the arrangements we are discussing as a crucial part of a global deal. We have to ask about our relationships with other countries and how we will promote a decent global deal as a result of our own actions. In that context, I fully respect the motivation for this amendment. We have to show that strong low-carbon growth is possible. Without that demonstration, we and other rich countries will not bring India, China, Indonesia, Brazil and other countries with us, and you can understand why we would not. I have been very involved in policy discussions in a number of countries, particularly in India, and my friends in India tell me, “Look, Nick, just as soon as that carbon capture and storage for coal plant is working on a commercial scale in the UK, you’ve got my cell phone number—give me a call. I’ll come over and have a look and we can discuss its role in India”. We have to demonstrate, clearly and here, what is possible.
We also have to recognise that there are very powerful arguments on trading—not only on lowering cost, although that is important, but on creating a flow of carbon finance and greenhouse gas finance that can help other countries in making their own roads towards a low-carbon economy, and I think here particularly of India, Indonesia, Brazil, China and so on. It is not simply a cost-cutting mechanism; it is also a crucial element—a crucial bit of the glue, if you will—in a global deal. Carbon trading has a very powerful role not only through cost but in that much broader and deeper context of putting a global deal together. As we think about trading, the verification and regulation side of carbon markets is—just as in financial markets more generally—crucial. We have to think hard about how to improve that.
My concern is that the amendment as expressed is, for the reasons which my noble friend Lord Turner described, likely to constrain ambition, when ambition is of the essence here. As he argued, it could result in the setting of overall targets that are too low. In the context of a global deal and the negotiations towards the end of a global deal, it could constrain us in upping the kind of percentage reduction we are looking for because we would understand that a particular reduction domestically would be just too difficult for to us make over the next five or 10 years. So we might not be able to go, say, to 40 per cent reductions by 2020 in the negotiation, aware of the constraint that this percentage would put on us and the amount we could actually do ourselves. It could—not necessarily would—constrain us in our ambition and in putting together what is crucial, the big prize: the global deal.
This issue requires careful technical analysis of the kind that, as I understand it, the climate change committee has been established to do. I recommend that instead of imposing a particular form of constraint now, we ask the Government to refer this to the climate change committee, as is indeed included in Clause 27. I do so in the confidence that the climate change committee under my noble friend Lord Turner will give clear and strong answers on the role of trading. I trust that the committee will give those answers in the context of making 2020 recommendations that are consistent with a minimum of 80 per cent reductions by 2050. I hope that the House can follow the advice of my noble friend Lord Turner, but do it in the context of looking for strong ambition—80 per cent reductions by 2050—and in the context of enabling what is fundamental: a good, strong, equitable global deal.
My Lords, this is the first opportunity I have had to congratulate the noble Lord, Lord Stern, on his report. Its findings on this important issue affect many in this House and around the country and may be one of the reasons that the Bill is before your Lordships’ House. However, I suggest to him that the amendment does not constitute a restriction on trading. It would not affect trading one way or the other. Trading could still take place. The amendment looks at ways of reducing our carbon dioxide emissions.
I am speaking to this amendment because I was lobbied from a most unusual source, the CEO of a large energy company in this country, who said that it is vital if we are to tackle climate change. He is behind the amendment because this matter constitutes a circular argument. If we are not prepared to invest in very expensive kit to reduce the carbon dioxide emitted from our power stations, and to have a let-out clause to enable us to buy in from other countries, we will never tackle this matter. If we never do that, with our technical expertise, it is absolutely certain that no other country will do it. We have to take the lead on this, but if we do not we should be able to offset by buying credits from overseas. The necessary money will simply not be spent on this issue. I take noble Lords back to the whole argument about carbon storage and capture which many of us fought for over a long period. We are talking about the Government putting money into one pilot project. We could have had a pilot project up and running if the money had been available. What we are actually saying here is, “It’s too expensive for us to do it in this country. Therefore, we shall just wait until it becomes cheaper or we’ll buy the relevant carbon dioxide from somewhere else”.
Perhaps I am the only trading-scheme sceptic in the House this evening. However, if we are looking at financial models, it is always interesting to read the small print which states, “Past performance may not be a good indicator of future performance”. I hope that is the case with trading because, if you look at the European trading scheme up until this point, you would not hold it as a great model for reducing carbon dioxide. I have the same concern as regards percentages.
The noble Lord, Lord Turner, mentioned being constrained about buying credits from overseas. I have a real issue with that. The amendment does not talk about trading schemes at all. It talks about reducing emissions of carbon dioxide and the development of carbon sinks. Carbon sinks are a particularly worrying matter if you listen to the National Trust’s view of what will happen to our peat carbon sinks over the next 20 years, which may become emitters as they dry out. If we are buying carbon credits, we should be very wary of them. The Government have already had their fingers burnt over offsets and have had to introduce measures on that. A tonne of carbon dioxide in this country and a tonne of carbon dioxide in any other country in the world is the same. However, I am concerned that buying a tonne of carbon dioxide in another country may be used as a financial tool and that that does not really equate to the reduction of a tonne of carbon dioxide.
On that basis, I very much hope that noble Lords will look at the terms of the amendment. I agree that the noble Lord, Lord Turner, and the carbon committee can deal with this issue but we should not fall into the traps we have fallen into before. If we are to deal with climate change, as everybody in this House is concerned to do, we should be talking about genuine reductions. Fossil fuels that have been underground for millions of years should not be released into the atmosphere. We should not introduce financial mechanisms that make us feel good about this. Therefore, I very much hope that the Minister will confirm that this measure will not affect trading and could have a real effect on our ability to reduce our own emissions, which we have a moral obligation to do.
My Lords, I support the spirit of the amendment, but perhaps not its exact words. I declare an interest as the administrator of the UK part of the European emissions trading system and, I hope, the future administrator of the carbon reduction commitment, should your Lordships deign to pass it. It seems clear that the mood of the House is that there needs to be something more powerful in the Bill than currently, in terms of the domestic commitment to decarbonise the UK economy. I do not want to wax lyrical, as the noble Lord, Lord Puttnam, did, about our global obligations and moral commitment; I want to be fairly practical, domestic and dirty about this.
I have two points. First, let us clarify whether it gets in the way of trading if you have a bigger proportion of the carbon reduction coming from the UK economy. The reality is that it does not. At the moment, as an economy we are still grossly inefficient in energy use, hardly off the starting blocks on renewable energy and well behind in the development of a domestic set of industries in the new, decarbonised global economy, and eventually that will turn around and bite us.
The reality is that there is bags of scope here in the UK for our energy to be decarbonised and for there to be in fact very little need to resort to the mechanism of the trading system, which is really a mechanism put in place to allow people to choose to buy credits for emissions rather than reducing their own emissions. What we want is people buckling down and tackling the job of reducing their own emissions, not simply because it will be important for climate change but because, frankly, it will get embarrassing, globally, if many countries across the world are beginning to develop a head of steam in the new carbon reduction technologies and we are failing to do so. In the interests of our domestic industry in opening up innovative products and creating new global markets that we are there in front of, not straggling along behind, it is pretty important that we get the initiative to decarbonise the UK economy moving far faster than it has done so far.
This does not get in the way of trading. It will help our global position. I recognise the concern of the noble Lord, Lord Turner, that we do not get the balance wrong in the opposite direction. At the moment, if we are not careful, the balance will very much be to help our international partners in the developing world to reduce their carbon. We need to make sure that we do not get the balance wrong in the opposite direction, fail in our obligations and do not provide the glue that the noble Lord, Lord Stern, indicated was necessary to keep the global deal going.
That, for me, says one thing: the Bill is not sufficiently strong because the default position will be for trading rather than for domestic reduction. Although I would not want to see a number placed in the Bill for the proportion of reductions coming from UK action, I very much want to see a real commitment in the Bill for a fast movement towards the decarbonising of the UK economy. Before the next stage of the Bill, we ought to urge the Minister to explore how that can be worded in a way that does not take away from the very real need for the Committee on Climate Change to give specific advice on this. We certainly need to strengthen the Bill in this way.
My Lords, I, too, welcome the fact that the noble Lord, Lord Stern, has joined our discussions. As well as reading his report, I commend to noble Lords his Ely lecture to the American Economic Association. The middle third is pretty difficult for people without a PhD in economics, but the first and final thirds make excellent reading. It also explains very clearly why the amendment passed in this House to set a 2 degree limit is flawed. We will come to that on another occasion.
On Second Reading I expressed concern about the use of credits. There are two possible reasons for this. Was I endorsing the moral view, expressed by the noble Lords, Lord Teverson and Lord Puttnam, that we should set a minimum effort that had to be achieved domestically? Or was I taking the view that the theory of a tonne of carbon being a tonne of carbon is basically sound, but its implementation is flawed? I was expressing the second view. If it really were the case that, for significantly less than it would cost in the UK, we could achieve a global impact by the use of credits, I do not see why we should prevent ourselves doing so. Incidentally, I do not believe that this is a real problem. If we are going to reduce our use of carbon, per unit of GDP, not by 60 but by 80 per cent or 90 per cent, there is no way that we will be able to do it simply by buying credits. In the end, the whole thing will go away. We will never get to per capita emissions of 2 or 2.5 tonnes per head simply by buying our way out.
There is a kind of fallacy running through some of this debate, which is that the use of credits is a “get out of jail” card, a costless, rather immoral, way of sliding out of our obligations. These things cost money. Enterprises that buy them will find themselves at a strategic disadvantage. An enterprise that is heavily dependent on the purchase of credits will be under tremendous pressure to reduce its use of credits over time. It can use this only as a temporary measure. The use of credits has just as much impact and is just as much of an incentive to improve energy efficiency as not using them and doing it oneself. It is a powerful mechanism in its own right.
There are two approaches. One is to set a minimum amount for domestic effort; the other is to allow credits to be used freely. If we do that, there is the whole question of validation, which has not yet come up. We have to make sure that the credits being purchased are genuine in two senses. First, they must reduce CO2. Secondly, they must be genuinely additional. Suppose we set up a scheme that incentivises loggers to reduce logging and an area is designated. This will be useless if they simply go outside that area and continue logging.
I believe that the better course is not to have a limit of this kind. There is no evidence that 70 is the right figure, or that 60 or 80 are right. We have no idea. To set a figure at this stage would be a serious mistake. This is clearly what the climate change committee is being established to deal with. At the same time, we need to make a much greater effort to ensure that the quality of the credits being traded represent, a genuine reduction in CO2 emissions. Again, that is an area where we could look to the Committee on Climate Change for advice.
My Lords, I hesitate to take part in this debate at all. Noble Lords who have taken part have been enormously knowledgeable and erudite on the subject. I am neither, but one thing has haunted me the whole way through, and I hope the Minister will say that I am completely wrong. We have been concerned about controlling CO2 emissions per head and carbon reduction, but carbon credit trading and checking on emissions credits will mean a huge increase in cost and bureaucracy. I do not see how you can trade in carbon credits without setting up something like the Stock Exchange in a minor way to deal with the trading. Someone has to pay for buying these things and the structure for that to be done has to be put in place—at expense. Firms will have to check all their carbon emissions and then work out whether they should buy or sell and what they should put on the forms that will be sent to them.
Irrespective of the reasoning—and very good reasoning it is too—for the objective behind this, I should like the Minister to say, “Don’t worry. You’re completely wrong. This will not involve an increase in bureaucracy or in costs to business”. However, it looks to me as though it will.
My Lords, we have had a fascinating debate and I am very grateful for the contributions that have been made. I am particularly grateful for the fact that, unlike some of the debates last week, I do not feel completely and utterly alone at the Dispatch Box.
We discussed these issues in Committee and I gave a commitment to go away and have the matter studied further. I did that and I bring back the collective view of the Government. I repeat: it is not the view of Defra but the collective view of the Government. Having considered the matter in substantial detail over the past couple of weeks, our view remains that setting limits in national legislation on the purchase of credits would be wrong because it would send the wrong signal regarding our confidence in the market and would be damaging domestically in relation to flexibility and our ability to engage in international and EU debates on the shape of the future carbon market. As such, we cannot accept any of the amendments, and I shall set out our four main reasons for that. I shall attempt to respond to the detail of some of the points that have been made but, first, I want to put the more formal position on record.
The first reason is that we are already committed, through action at both a domestic and a European level, to decarbonise the UK economy. We do not need limits on the use of overseas credits to achieve this.
Secondly, we must not lose sight of the fact that the Bill represents the United Kingdom’s contribution to what must ultimately be a global response to climate change. I emphasise that international emissions trading under binding caps plays a vital role within that, and this is also in line with the conclusions of the valuable work carried out by the noble Lord, Lord Stern.
We are already seeing significant flows in low-carbon investment to developing countries through the clean development mechanism, which is estimated to be worth $17.5 billion at present. However, these flows will need to be massively scaled up if the world is to tackle climate change. The UN Climate Change Secretariat recently estimated that $200 billion to $210 billion of investment and financial flows would be needed in 2030 as part of a global effort to return greenhouse gas emissions to current levels. To achieve this, the UN believes that the global carbon market, driven by demand for overseas credits and deeper commitments by rich countries would have to be “significantly expanded” and could provide up to $100 billion of the flows needed. Therefore, we need to massively scale up—not scale down—the current international flows in low-carbon investment.
As we know, emissions trading also reduces costs, making it possible to reduce emissions by a greater amount. Early modelling by the Office of Climate Change suggests that the global costs of mitigation can be reduced by 50 per cent to 70 per cent in 2020 by expanding international trading in emissions permits. As I mentioned in Committee, our own analysis, and that of the European Commission, arrives at the same conclusion: emissions trading reduces costs. In other words, for the same costs, international trading allows you to reduce emissions by more.
Thirdly, the EU Emissions Trading Scheme is the cornerstone of the European Union’s efforts to tackle climate change and covers around 50 per cent of the UK’s carbon dioxide emissions. Under EU law, United Kingdom companies can freely trade in EU allowances across national boundaries. For the purposes of the EU Emissions Trading Scheme, it does not matter whether United Kingdom companies reduce their own emissions or buy allowances from another EU country where the same emissions reductions might be made more cheaply. We must not do anything in this Bill that would interfere with the legal right of UK companies to trade freely in EU allowances.
Fourthly, we are already bound by limits on overseas credits under the Kyoto Protocol and, since the Bill was first tabled, the European Commission has come forward with a comprehensive package of proposals on climate and energy. While these are still subject to negotiation, the Commission has proposed binding European Union-level limits on the use of project credits from uncapped schemes outside the European Union. So we do not need further limits to apply at a domestic level.
Looking in detail at the amendments in this group, we are unable to accept any of them, although they have been carefully considered across government. We need to think carefully about the signal that we are sending out internationally to the countries that we need to persuade to join us if we are to have an effective post-2012 international framework to tackle climate change. This Bill is partly about demonstrating to the rest of the world that we in the UK are serious both about reducing emissions domestically and about supporting action to reduce international emissions.
The need for increased low-carbon investment will be a key part of the global negotiations on the action plan agreed at the Bali conference last year, which we hope will lead to international agreement—the ultimate prize in tackling global climate change. In those negotiations, we will need to show emerging economies that finance will be available to them to pursue sustainable development. We cannot do this credibly if we have tied our hands in domestic legislation with strict limits on buying international credits. We would also need to be able to explain to UK companies how these amendments take account of the EU Emissions Trading Scheme, to avoid cutting across their legitimate ability to meet their obligations by trading in EU allowances.
Amendments Nos. 110 and 137, in the name of the noble Baroness, Lady Miller of Chilthorne Domer, would require a limit to be set on the use of overseas credits through secondary legislation, following advice from the Committee on Climate Change. I agree that the committee’s view on this subject is vital. That is why the approach taken in the Bill ensures not only the provision of expert and independent advice from the Committee on Climate Change on the balance between domestic and international action, but maximum transparency about the Government’s plans to meet budgets. It will therefore provide improved certainty for business, while at the same time ensuring that we can take the most cost-effective approach to reducing the UK carbon account.
While the committee’s view on the balance of effort will be valuable in informing government policy making, I do not believe that this should extend to advice on a limit. This is because a requirement to set a binding limit, as in Amendment No. 110, risks being seen internationally as undermining our continued commitment to maintaining low-carbon investment flows to developing countries.
Amendment No. 106 goes even further. It would set a legally binding limit now, in primary legislation, on our ability to use overseas credits to meet our budgets. I agree that this proposal would provide the greatest certainty about the balance between international and domestic action, but it would also be a completely inflexible option. Not only would the same problems with our international signals apply as under the noble Baroness’s amendments, but the limit of 70 per cent would remain in force indefinitely regardless of any changes in the European or international context, unless of course further primary legislation was introduced to change the situation. Those are the reasons and I cannot gloss over them any further. I am in no position to say that we can get this all redrafted for Third Reading.
In the debate, some points of substance were made that deserve a response. The noble Lords, Lord Teverson and Lord Redesdale, said that the proposal does not get in the way of trading, particularly under the EU Emissions Trading Scheme. We disagree with that. I am sticking carefully to the notes that I have from officials who have thought about the issue. Trying to explain verbally at the Dispatch Box without overhead projectors or PowerPoint presentations how these things work is incredibly difficult. The other morning—I think that it was yesterday—I heard on the “Today” programme two professional communicators explaining these issues. I got a bit lost—and I thought that I knew a little about what was being talked about—so I am sticking to the brief on this. The issue is very complicated, but the points that have been made are valuable and deserve a response.
We cannot predict the extent to which companies will reduce their emissions in the UK and the extent to which they will buy in allowances from abroad. This will depend on the level of the carbon price and on many individual private commercial decisions, as I think the noble Lord, Lord Turner, indicated. If we were to limit the number of units bought by companies within the emissions trading system that we can count towards the net UK carbon account, we risk the problem that in some years UK companies will decide to buy more than this limit. We cannot and would not want to interfere with their freedom to do so under the EU Emissions Trading Scheme rules. However, this would mean that we could not count all these units towards meeting the overall UK budget. To comply with that overall UK budget, the Government would need to find additional emissions reductions, which could have perverse consequences.
Either we would have to introduce additional regulation on top of the emissions trading system to reduce our emissions—in which case, why bother having the EU Emissions Trading Scheme at all?—or we could ask the rest of the economy to make up the difference. That would create massive uncertainty. How would we know in advance whether companies would choose to buy credits—
My Lords, may I finish this response? Then I will gladly give way to the noble Lord.
How would we know in advance whether companies would choose to buy credits, as they are allowed to do under EU law, or reduce their own emissions? How could we plan sensibly so that the practical effect would either be extra regulation or uncertainty? I am sure that the noble Lord does not want that.
My Lords, I am astounded by the statement that the Minister made. Neither Europe nor the Government are saying that they rely entirely on emissions trading systems, whether they are from the EU or the CRC. The European Union itself has renewable targets and it is introducing regulations on emissions from cars. There is a whole other area of EU policies, which are part of the mix; the Government, too, have such policies as part of their mix. The Minister seemed to be saying that the emissions trading schemes operate in isolation, which is how carbon targets will be met. However, the Government have a whole range of other policies—unless they are telling us different now—as do the EU. Of course those other policies have to be used. The Government clearly have them as active, alternative, complementary policies. I do not understand how the Government can say that they will rely only on trading systems.
My Lords, I am not saying that. Let me go back to what I have just referred to. The practical effect would be either extra regulation or uncertainty. I am not familiar with all the points that the noble Lord raised about what is coming down the EU system, but uncertainty comes about if there is to be regulation, covering everybody, as opposed to hundreds of private sector companies making decisions at any time in a framework of their choosing.
The noble Lord, Lord Taylor, asked about the definition of “supplemental”. The UK has intentionally not defined supplementarity in numerical terms. We are in the middle of international discussions following Bali, at which we are seeking to launch the negotiations for a global and comprehensive agreement on climate change. It would be unhelpful to define supplementarity at domestic level at this point, given the risk of biasing these carefully balanced discussions.
The noble Lord, Lord Teverson, said that, if we carry on as we are now, there is a risk of doing nothing at home. I realise that there is a degree of trust here. No one is saying that they do not believe what I or the Government are saying, but there is pressure and a demand, the implication and undertone of which is that we cannot be trusted—I use that term loosely—to do this. However, the Government are committed to taking significant action at home. We have shown that we can. UK emissions of greenhouse gases, even without the impact of the EU Emissions Trading Scheme, were down over 15 per cent in 2005 from 1990 levels. We have reduced our non-CO2 emissions by around 44 per cent since 1990. The measures set out in the 2007 energy White Paper will already reduce our CO2 emissions by around 20 to 26 per cent by 2020 through domestic action and the EU Emissions Trading Scheme. The idea that we will not do anything at home does not stand the test of practical experience.
The noble Lord, Lord Teverson, said that the Government’s 2010 target does not include carbon credits. This is not the case. I clearly set this out on 7 February in one of my many letters to noble Lords—I apologise for the length of some of them. I said:
“The Government has always made it clear that we would count carbon units purchased from overseas towards our domestic targets. This was set out in both the 2000 Climate Change Programme and its 2006 Review”.
We made that absolutely clear. The Bill simply continues that approach. There is no change to what has been said.
The noble Lords, Lord Crickhowell and Lord Taylor, asked whether we should place an obligation on the climate change committee to recommend a limit. As other noble Lords, such as the noble Lord, Lord Stern, have said, Clause 27 already requires that. The Committee on Climate Change is required to advise on the extent to which the carbon budget should be met by domestic action and by the use of carbon units, and the Government must publish a plan setting out how we will meet the budgets. There is absolute transparency on this.
I regret that the Government’s position has not advanced since Committee, although we have advanced in as far as, in government, we have gone right over this again from scratch, not just in Defra but across all the relevant government departments. As I said, moving on this would create massive uncertainty. The fact is that we have covered the central objective, which concerns the lack of trust—with a small “t”—in the Government’s position, by ensuring in Clause 27 that we will listen and take advice from the expert independent committee that is being set up under the Bill. I sincerely hope that the House agrees with that as a way forward.
My Lords, I hope that my noble friend accepts that I listened carefully to what he said. There was a dog that did not bark—a matter that I very much hoped that he would raise. He talked about not wanting to damage the confidence of the market. Have the Government considered how they might successfully regulate this entirely new and relatively untried trading concept? One can be sure that for every legitimate trader there are likely to be a dozen illegitimate ones out there waiting to take advantage of this untested situation. If the World Bank, with all its resources and all its experience, is forced to concede that as much as half its aid fails to reach the beneficiaries for whom it was intended, what chance does this fledgling scheme have of not becoming a brand-new black hole down which billions of well intended pounds, dollars, euros and yen are poured?
While I am on my feet, perhaps I may respond to the noble Baroness, Lady Young, who suggested that I have been somewhat lyrical. I took my tone entirely from the Prime Minister’s speech on 19 November, which could hardly have been more lyrical. In it, he said that overcoming climate change must be one of the great projects of this generation. I deliberately elided the concept of trust with the amendment. At the end of the Prime Minister’s speech, he said that he wanted the post-2012 agreement to include,
“binding emission caps for all developed countries”.
I assure the Minister that 99 per cent of the population of this country listening to that remark believed that he meant domestic carbon savings. That is what I mean by trust. If he did not mean domestic savings, he could easily have said so.
My Lords, I cannot comment on the interpretation of the Prime Minister’s speech. To answer the first part of my noble friend’s question, I have been answering Questions at Question Time about what has happened with the current arrangements. There have been difficulties with some of the arrangements and the clean development mechanism. That is one reason why we want flexibility.
At the end of the day, there will probably have to be regulation, but people will use new techniques and new instruments on a global scale. It would be quite wrong to come along with a whole list of regulations now to snuff out innovation and ideas, but we must bear in mind, as my noble friend said, that we must not lose billions of dollars, yen and euros down a black hole. That means that we may have to consider long-term regulation only when we know that we have not snuffed out innovative practices and new instruments that can help the planet to deal with the issue.
My Lords, I cannot in the detail that the noble Earl asks me for; I can do so only in the sense that such trades already take place. I understand that London is probably doing 40 to 50 per cent of the trading from around the world. The noble Baroness said that the Environment Agency is the mechanism for dealing with certain aspects of that. In other words, we are not inventing the wheel as a result of the Bill. Such arrangements already take place. As far as I know, no one has come along complaining about the thousands of extra bureaucrats and massive extra costs that the noble Earl referred to because the system is new. It will not start with a clean sheet after the passage of the Bill. Such instruments, such mechanisms and such trading already take place and there has not been a massive call that it is an extra cost and lots of red tape.
My Lords, this has been an interesting and passionate debate, for which I thank your Lordships. I am interested that we have returned so much to the area of emissions trading schemes. As the noble Baroness, Lady Young of Old Scone, said, the amendment would not affect trading schemes, which mostly take place between national and international corporations. That would absolutely continue if the amendment were passed. The amendment would not affect trading schemes in any way; legally, it could not and would not be allowed to affect trading schemes.
All that the amendment would do is put a cap on the number of those schemes introduced into the accounting, not into the trading. Indeed, internationally, it would put no limit on the Government investing in foreign and developing countries’ emission reductions; the Government could carry on doing that. All that would happen is that, after a certain number, those reductions would not be included in the bean counting. The amendment would ensure that the Bill met its billing and the advertising that the Government and we, proudly, within the UK want it to meet in terms of UK leadership.
The Minister gave four reasons why the Government do not like the amendment. Funnily enough, I agree with them absolutely. I will not go through them all, but the amendment would not affect any of them. As the Minister said, there are limits on the number of CDM credits that can be included in the EU ETS. We already have those restrictions in certain areas. The Minister suggested that I was wrong about the Government’s present CO2 targets, which the amendment would actually loosen. He mentioned 2005, but the government commitment was made in 1997 and it was a domestic commitment. I do not know whether the Government changed the position in 2005-06, but it was a 1997 commitment, which made no difference to trading.
The one area on which I disagree with the Minister relates to giving faith. That is not because I do not believe in the Government’s excellent intentions in this area, because I do. He mentioned figures. The United Kingdom’s CO2 emissions since 1997-98 have stayed more or less the same, despite the good intentions of all of us to reduce them. I looked at the information from Defra at the end of last week. The last two bars on the graph for 2005-06 show a decrease, but the only reason for that is the inclusion of EU ETS credits. That is why we cannot just have faith.
The final matter that I will comment on is whether this should all be sent back to the Committee on Climate Change. The decision needs to be equally political and technical. I am disappointed that the Government have not moved at all since the Committee stage and, on that basis, I would like to test the opinion of the House.
Clause 21 [Carbon units and carbon accounting]:
107: Clause 21, page 11, line 14, at end insert—
“( ) Regulations specifying a carbon unit must employ a definition which accords with international carbon reporting practice.”
The noble Lord said: My Lords, I shall speak also to the other amendments in the group, which includes government amendments.
The amendments concern the definition of a carbon unit and the procedures for changing this definition through regulation. Amendment No. 107 seeks to ensure that the definition of a carbon unit coincides with international practice. It was brought forward to bring greater precision to what is meant by a carbon unit and to ensure that the international context was taken into account.
Government Amendment No. 114 seems to cover our concern by placing a duty on the Secretary of State to take into account the committee’s recommendation with regard to changing the definition of carbon units. This seems to be sufficient as it is unlikely that the committee would suggest a definition which is wildly inconsistent with international practice. It is an example of a situation in which the Government have heeded the calls from this side of the House to put the committee in a more prominent role.
The two other amendments in the group add further circumstances which would require the affirmative procedure should these changes be made. We welcome the chance to scrutinise any changes to the amount a carbon unit will be worth, as it were, in terms of the net UK carbon account. Therefore we are grateful for the Government’s concession here to allow more transparency and parliamentary accountability.
Considering the importance of administering the carbon accounts, will the Minister comment as to why any changes to the scheme of administration would not also be subject to the affirmative procedure? I beg to move.
My Lords, as the noble Lord said, this group of amendments deals with the carbon accounting system established under the Bill and how to ensure it will be robust, transparent and subject to proper parliamentary scrutiny. We are all trying to achieve the same thing.
Amendment No. 107 would create a link between the carbon accounting system and international carbon reporting practice, but we are not sure that it is the best way to ensure that we have a robust and credible system. The concept of international carbon reporting practice is defined in Clause 75 more in terms of the protocols for measuring greenhouse gas emissions than in accounting for carbon units, credits or allowances. We think there are better ways to design the necessary safeguards, to which I shall come later.
The Bill already limits what could be recognised as a carbon unit. In order to be recognised it must meet one of the three criteria set out in Clause 21(1). It must represent a reduction in greenhouse gases which has taken place; the removal of greenhouse gas from the atmosphere; or form part of a scheme which caps the amount of permitted greenhouse gas emissions.
Amendment No. 113 would add to the list of situations in which the affirmative resolution procedure was required relating to changes in the body administering the carbon accounting system. We do not think this is justified, nor do we believe it is necessarily the most important issue when looking at the robustness of the scheme as a whole. The body appointed as the scheme administrator is only one aspect of the way in which we will manage our carbon accounts and, while it is an important issue, we do not see why it should be given greater priority.
Instead, we feel the priority to ensure a robust carbon accounting system is to ensure that any carbon units used under the Bill are of the right standing and environmental rigour. Government Amendments Nos. 112 and 114 will ensure this by providing for independent advice and proper parliamentary scrutiny before any new types of carbon units are recognised under the Bill. I shall speak to and move these two amendments in due course.
Clause 23 already provides that the first set of carbon accounting regulations should only be made following advice from the Committee on Climate Change and a vote in both Houses under the affirmative resolution procedure. The two amendments provide that where new types of carbon unit are recognised as being valid for compliance purposes, or where the value of existing carbon units has been changed, the same safeguards will apply. Any such changes could only be made following advice from the Committee on Climate Change and a vote in both Houses. The two government amendments are intended to provide further safeguards, on an ongoing basis, to ensure the environmental rigour of the rules on carbon accounting. They will ensure that, every time a new carbon unit is recognised as counting towards the UK’s targets, and every time the value of a carbon unit is changed, the Government must seek expert independent advice from the Committee on Climate Change, and be subject to full parliamentary scrutiny in both Houses through the affirmative procedure.
These amendments go beyond the recommendations of the Delegated Powers Committee, which recommended that the first set of carbon accounting regulations should be subject to the affirmative procedure,
“so that the House may be assured that the basic framework for the credits and debits regime is satisfactory”.
We have accepted this recommendation already, in Clause 23, and now propose to go even further. The question of which carbon units are used, and how much they are worth, is more important in terms of the overall robustness of the system than a change in the body administering the scheme, which is proposed in Amendment No. 113.
This touches on the concerns raised by my noble friend Lord Puttnam in our previous debate about the quality of the carbon units that we can count towards our targets. Amendments Nos. 112 and 114 would prevent any Government from seeking, in some way, to smuggle through fundamental changes to the rules on carbon accounting, without proper advice or scrutiny. I hope that the amendments provide noble Lords with confidence about the Government’s commitment to the robustness of the system we are establishing under the Bill.
My Lords, I thank the Minister for his response. It is agreeable to note that the Government have listened to the Committee debates and brought their own amendments which address largely the issues that our amendments were looking at. I am disappointed with his view on Amendment No. 113. However, given the substantial movement that the Government have made in this area, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 108 to 110 not moved.]
Clause 22 [Net UK carbon account]:
[Amendment No. 111 not moved.]
Clause 23 [Consultation and parliamentary procedure for regulations]:
112: Clause 23, page 12, line 27, leave out “or” and insert—
“(aa) they specify a carbon unit of a kind not previously specified in regulations made under those sections,(ab) they alter the amount by which—(i) a carbon unit that is credited to the net UK carbon account for a period reduces the net UK carbon account for that period, or(ii) a carbon unit that is debited from the net UK carbon account for a period increases the net UK carbon account for that period, or”
On Question, amendment agreed to.
[Amendment No. 113 not moved.]
114: Clause 23, page 12, line 37, leave out subsection (5) and insert—
“(5) The Secretary of State must obtain, and take into account, the advice of the Committee on Climate Change before laying before Parliament a draft of a statutory instrument containing—
(a) the first regulations to be made under those sections, or(b) regulations making provision of the kind described in paragraph (aa) or (ab) of subsection (2).”
On Question, amendment agreed to.
[Amendment No. 115 not moved.]
Clause 25 [Emissions from international aviation or international shipping]:
116: Clause 25, page 13, line 13, leave out subsections (1) to (4) and insert—
“(1) Emissions from international passenger travel do not count as emissions from sources in the United Kingdom for the purposes of this Part, except as provided by regulations under this section.
(2) Emissions from imports or exports of goods do not count as emissions from sources in the United Kingdom for the purposes of this Part, except as provided by regulations under this section.
(3) The Secretary of State must make provisions by regulations as to the circumstances in which, and the extent to which, emissions from international passenger travel from the United Kingdom are to be regarded for the purposes of this Part as emissions from sources in the United Kingdom.
(4) The Secretary of State must make provisions by regulations as to the circumstances in which, and the extent to which, emissions from imports of goods to the United Kingdom are to be regarded for the purposes of this Part as emissions from sources in the United Kingdom.
(5) The Secretary of State must—
(a) lay the regulations referred to in subsections (3) and (4) within the period of five years beginning with the day the Act is passed, or(b) lay before both Houses of Parliament a report explaining why the regulations have not been laid within that period.
On Question, amendment agreed to.
119: Clause 25, page 13, line 39, leave out subsection (7)
The noble Lord said: My Lords, I say for the record that Amendment No. 118 related to the definition of international aviation and shipping under Clause 25, but, as a result of Amendment No. 116, which we debated last week, being accepted, Clause 25 no longer contains any provision relating to the definition of international aviation and shipping and the parliamentary process for making such definitions by order.
Amendment No. 120 provides that, before making regulations to include international aviation or international shipping emissions, the Secretary of State must seek, and take account of, advice from the Committee on Climate Change. Any such regulations would be subject to the affirmative resolution procedure to ensure full scrutiny. To avoid duplication, Amendment No. 119 therefore deletes Clause 25(7) as it is now covered by Amendment No. 120. The amendments will ensure that this process is fully transparent so that the committee’s advice is made available, subject to the usual exemptions set out elsewhere in the Bill, and so that the Government have to explain if they propose a course of action which departs from the committee’s advice. They will ensure also that decisions on international aviation and shipping emissions are based on the best possible evidence and on independent analysis. The amendments strengthen the Bill’s framework and make it more robust. I beg to move.
My Lords, we have had many fruitful debates on Clause 25. We recognise that securing appropriate regulations under this section will be an arduous task. We welcome the amendments, which strengthen parliamentary accountability and place a duty on the Secretary of State to take into account the view of the Committee on Climate Change. It is certainly a matter in which it should play a central role.
On Question, amendment agreed to.
120: After Clause 25, insert the following new Clause—
“Consultation and parliamentary procedure for regulations under section 25
(1) Before making regulations under section 25, the Secretary of State must obtain, and take into account, the advice of the Committee on Climate Change.
(2) 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.
(3) If the regulations make provision different from that recommended by the Committee, the Secretary of State must publish a statement setting out the reasons for that decision.
(4) The statement may be published in such manner as the Secretary of State thinks fit.
(5) Regulations under section 25 are subject to affirmative resolution procedure.”
121: After Clause 26, insert the following new Clause—
“Advice on level of 2050 target
(1) It is the duty of the Committee to advise the Secretary of State on—
(a) whether the percentage specified in section 1(1) (the target for 2050) should be amended, and(b) if so, what the amended percentage should be.(2) Advice given by the Committee under this section must also contain the reasons for that advice.
(3) The Committee must give its advice under this section before 1st December 2008.
(4) The Committee must, at the time it gives its advice under this section to the Secretary of State, send a copy to the other national authorities.
(5) 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, amendments agreed to.
Schedule 1 [The Committee on Climate Change]:
122: Schedule 1, page 38, line 16, after “policy” insert “at national and international level”
The noble Lord said: My Lords, we had a long and constructive debate in Committee on the types of expertise that would be desirable in the composition of the committee. Having reflected on the discussions, I move two amendments which I hope will help to clarify the types of expertise that we believe are needed.
Amendment No. 122 will make it clear that the committee should have expertise in climate policy at both national and international level. During our debate in Committee, I noted that while Clause 10 requires the committee to take,
“circumstances at European and international level”
into account, expertise of an international nature was not present in the list of desirable expertise for the committee as set out in paragraph 1 of Schedule 1. The amendment is intended to address this discrepancy. It is important as the UK’s approach to tackling climate change must be considered in the context of wider international effort and impacts, and a range of international issues will be relevant to the committee’s advice on budgets. It is therefore right that the committee has an appropriate awareness of the European and international context.
Amendment No. 123 is intended to clarify that it would be desirable for the committee to have expertise not only in climate science but also in other branches of environmental science. Having reflected on our discussions in Committee, we are sympathetic to the arguments put forward in support of the Committee on Climate Change having some expertise in a wider range of areas than is implied by the term “climate science”. By including “other branches of environmental science”, we make it explicit in the Bill that national authorities must have regard to the desirability of securing that the committee as a whole has this expertise.
Like the other areas of expertise covered in the list, “environmental science” is of course a broad category. This is important as it provides the flexibility for the national authorities and the chair to appoint members with specific expertise within this broad area, as the committee’s work demands.
For the record, I say once again that the list is neither exclusive nor exhaustive and that the national authorities could choose to appoint a member with expertise in an area not listed, if the national authorities and the chair thought it desirable. Furthermore, I reiterate that the Government continue to consider climate science to be the most important aspect of environmental science for the committee. However, by including “environmental science” on the list, we are demonstrating that it will be important for the committee as a whole to have an understanding of the impacts of climate change on the natural environment. I beg to move.
My Lords, Amendment No. 122 is very significant. There is much appreciation on these Benches for the Minister’s decision to introduce the amendment and for the inclusion of the words “at national and international level”. The Bill will now read that,
“the Committee … has experience in or knowledge of … climate change policy, at national and international level and in particular social impacts of such policy”.
On issues of climate change no nation is an island, not even this island nation. The national and international cannot be divorced. What happens in one country has an impact on another, and the choices of one people are the consequences for another. That is why tackling climate change is a global issue and why international agreements are the only way forward. It is vital to recognise this in the Bill, and the Government are to be congratulated on recognising that at Committee stage.
It is of major significance that the amendment links the phrase “at international level” to the phrase “social impact”. The Bill on climate change now recognises the reality of what is happening in other parts of the world—places that are already devastated by the changes in climate for which people were not prepared.
Last week, the Minister resisted the amendment on poverty reduction, saying—and I paraphrase—that this point is implicit in other parts of the Bill. He is right, and here it is—“the social impacts” at “international level”. This draws attention to issues of poverty in other parts of the world.
Like other Members of your Lordships’ House, I welcome the Government’s speed in announcing the six members of the Committee on Climate Change. It has been good to have the noble Lord, Lord Turner, in his place this afternoon. The Minister said that he would do this by Report, and he has. However, the final paragraph of the press release announcing the membership of the committee states:
“We are very committed to ensuring that all areas of expertise set out in the Bill are represented within the Committee”.
The press release then lists these as,
“climate science and policy, economics, business competitiveness and financial management”.
There is no mention in the press release of social impacts at international level. Will the Minister assure us that, with the passing of this amendment, this area of expertise—namely, social impacts at an international level—will be explicitly added to the committee?
Before I sit down, perhaps I may draw attention to the new strategic framework from the Foreign and Commonwealth Office, which, in a section headed “Promote a low carbon, high growth, global economy”, says that its intention is to,
“increase international commitment to an open economy and achieving the Millennium Development Goals”.
That is in a section on the low-carbon global economy.
We on these Benches welcome this strategic framework published by the Foreign and Commonwealth Office. We believe that this government amendment to the Bill will indeed give the committee the opportunity to have before it this strategic framework and to advise the Government further on how the millennium development goals can be achieved as they pursue issues of the social impacts at an international level. I support the amendment.
My Lords, we, too, welcome the amendments, with perhaps two and a half cheers, for much the same reasons as the right reverend Prelate has given. However, while what the Government have done appears to follow fairly closely what the noble Lord and my noble friend Lady Northover tried to say on an earlier occasion, what we were talking about was expertise in international development, and those words do not appear in the Bill. The right reverend Prelate has also rightly welcomed the speed with which the Government have announced the names of those being appointed to the climate change committee. Some of them—such as Dr Fankhauser, with his knowledge and experience on the World Bank—could be said to have the requisite experience of international development.
I so agree with what the right reverend Prelate said—that we need to have regard to the official government objective of helping developing countries to realise the millennium development goals to which the international community is heavily committed—although we see now, for example from the recent UNICEF report on State of the World's Children, that in many regions of the world those goals are unlikely to be attained within the timescales set. So although we welcome the Government's proposed additional words, we are concerned that there is not apparently a person with particular expertise on international development nominated to the committee. We hope that the words that the right reverend Prelate quoted do not exclude the appointment of additional persons in the future with that particular expertise.
My Lords, I thank the Minister for bringing forward these two amendments. I shall not repeat what the right reverend Prelate said, but I entirely support his comments. Amendment No. 122, which will include “national and international level”, speaks for itself and I welcome it.
Amendment No. 123 will add,
“and other branches of environmental science”.
It is an important amendment. Food production, both domestically and abroad, is an issue that has changed rapidly over the past year. Paragraph 1(3)(g) of the schedule mentions “energy production and supply”. I am sure that there will be conflicting interests as a result of how we address climate change, how we produce and supply energy and how we supply food, because the three are totally linked.
Earlier yesterday the Minister attended and spoke at a meeting of the Wildlife Link group. Environmental and wildlife protection issues need to be considered at the same time as we consider food and energy supply. I am grateful that the Government have introduced this amendment to include environmental science. Its voice should be there and it should be heard. Although the other committee members covered by paragraph 1(3)(a) to (i) will have these issues in mind, Amendment No. 123 will not go amiss because of the clear challenges we will face in coming years to round the circle of the many demands made on our planet. I welcome Amendment No. 122 and particularly Amendment No. 123, and I thank the Minister for them.
My Lords, we thank the Government for bringing these amendments forward. They address a concern that we raised in Committee on the anomaly between Clause 10 and the part that we are dealing with; namely, that other branches of environmental science were not among those areas of experience listed as necessary for the membership of the Committee on Climate Change.
We also support the idea of further anchoring our efforts in an international framework by having the committee’s membership reflect expertise in international as well as national climate change policy.
My Lords, I am most grateful for the welcome given to these amendments. I say to the right reverend Prelate the Bishop of Liverpool that the answer to his question is yes. The press release is simply a summary. Some things are included, some are not. The press release would have been improved if it had been more explicit. The fact that the issue the right reverend Prelate mentioned is not included does not mean that it is not covered.
The relevant wording encompasses a wide range of expertise. Only the first group of members have been appointed to the committee. There is a maximum but other members will be appointed in due course. However, the devolved Administrations and the chair will consider what expertise is needed.
On Question, amendment agreed to.
123: Schedule 1, page 38, line 18, after “science” insert “, and other branches of environmental science”
On Question, amendment agreed to.
[Amendments Nos. 124 to 130 not moved.]
131: Schedule 1, page 40, line 16, at end insert—
“The Climate Change Adaptation Sub-Committee15A (1) The Committee must establish a sub-committee to be known as the Climate Change Adaptation Sub-Committee (referred to in this Part as “the Adaptation Sub-Committee”).
(2) The Adaptation Sub-Committee shall be chaired by a member of the Climate Change Committee and shall otherwise consist of persons who are not members of the Committee.
(3) In appointing a member of the Adaptation Sub-Committee, the Secretary of State must have regard to the desirability of securing that the Adaptation Sub-Committee (taken as a whole) has expert experience in or knowledge of the following—
(a) climate change science and other branches of environmental science;(b) contingency planning;(c) ecology and biodiversity;(d) economics;(e) flood risk;(f) infrastructure asset management;(g) public health;(h) risk management;(i) international development; and(j) any other significant adaptations required to address the risks identified in the most recent report under section 48.”
The noble Lord said: My Lords, I wish to speak to Amendments Nos. 131, 152, 165 and 197. The Joint Committee identified at an early stage that the original draft Bill was heavily concerned with mitigation targets and devoted little attention to adaptation. That situation has improved to a certain extent. However, people in the environmental movement are clear that adaptation to climate change is as important as mitigation. It is a regrettable fact that many of the consequences of climate change would continue to be felt even if we ceased emitting carbon dioxide and other greenhouse gases immediately—hence the urgency to introduce mitigating measures. There is a time lag of between 100 and 200 years in that regard. Therefore, adaptation is incredibly important and is the reason these amendments were tabled. They stand in my name and those of other noble Lords from other sides of the House. The United Kingdom needs to focus on adaptation through this Bill.
I listened carefully to the debate we had on this issue in Committee and redrafted the amendments as a result. At that stage we wanted to have an ad hoc adaptation committee entirely separate from the rest of the machinery in the Bill. On reflection, we decided that our proposal was flawed and have therefore redrafted the amendment to place even greater emphasis on adaptation. Clearly, the best way to do that is to include it in one of the Bill’s main structures; namely, the Committee on Climate Change. The Bill provides for sub-committees of the climate change committee but is not specific about them, nor about who should be on them or what subjects they should tackle. We think that there should be a sub-committee specifically concerned with adaptation and that it needs to be separate from the committee because the subjects that it will tackle, its goals and the assessments it will need to make require very different skills than those required to tackle mitigation. Therefore, while we adopt a holistic approach in bringing mitigation and adaptation together under the climate change committee, it is very important to have a separate sub-committee to tackle adaptation. The amendment states very clearly the skills and expertise that members of that sub-committee will require. Amendment No. 152 sets out the important roles that the sub-committee would perform.
Amendment No. 165 states that the committee’s report must assess the Government’s programme for adaptation to climate change, consider its implementation and, most importantly, look at,
“any further action required as part of the programme”.
So this is a very important and powerful committee.
Amendment No. 197 would strengthen the parliamentary response to climate change as it would require the Secretary of State to,
“invite the House of Commons Environmental Audit Committee to review every report laid before Parliament under this section”.
We believe that would help ensure that the Government would be held fully accountable to Parliament for their policies and programmes on adaptation, as they are for those on mitigation. I beg to move.
My Lords, we appreciate the fact that the Government have gone a long way to try to address our concerns regarding their commitment to adaptation, but in our view they have not gone far enough. For this reason we support these amendments to which we have put our names.
As we have said before, it is important that in our efforts to stop climate change we do not lose sight of the things we are trying to effect. We must ensure that policies and proposals aimed at reducing carbon emissions are also sustainable and that adequate policies are put in place to adapt to the unavoidable changes in the climate that are taking place.
We will not be able to escape the effects of some aspects of climate change but we can be prepared by continually monitoring what adaptive measures we are taking and what needs to be done. The whole goal of the Bill is to provide ways to tackle the challenges of a changing climate and to stop that change through reducing carbon emissions.
The primary aim is to stop the change by cutting down emissions but this goes hand in hand with the impact on the environment that climate change brings. Thus, recognising the immense burden placed on the Committee on Climate Change as well as the importance of programmes and measures to adapt to climate change, these amendments create a sub-committee to focus on these issues. Its duties would include assessing the risks of climate change and providing proposals to mitigate these risks. By having a sub-committee devoted to adaptation, we can be sure that these issues do not become exiled from climate change proposals.
Another of these amendments places a duty on the Environmental Audit Committee to examine the Secretary of State's report on the impact of climate change. We believe that this added level of scrutiny would provide another useful resource on the road to determining precisely what the impacts of climate change have been and what needs to be done to address them. Essentially, the amendments strengthen the mechanisms for assessing the context of our efforts to reduce emissions. I hope that they will receive wide support in the House.
My Lords, I support the amendment. One of the hallmarks of any successful organisation—the Government are no different—is to build on experience and success, and in this respect I think I have something to offer.
Despite some people’s early reservations, in my judgment the success of Ofcom is in no small part due to the work of its excellent content sub-committee. Adequately resourced and ably chaired by Ofcom’s deputy chair, originally Richard Hooper and now Philip Graf, the content sub-committee of Ofcom has managed to allay all those early fears that an essentially economically focused organisation would somehow allow matters relating to programmes to become marginalised or even reduced to a kind of second-order business. With its own board structure, the availability of independent expertise and a designated section in the Ofcom annual report, an enormous amount has been achieved in establishing an atmosphere of trust among content creators across the whole of the sectors that Ofcom regulates.
Were he able to be present in the House this afternoon, the noble Lord, Lord Currie, assures me that he would have been happy to have confirmed his enthusiasm for the type of committee structure that is suggested by the amendment. In fact, the similarities between the issues of content and adaptation are really quite remarkable. Both require a type of specialist knowledge that would need to be accommodated in a single significantly larger climate change committee, which none of us wishes to see happen. To seriously address measures of adaptation in the UK, any statutory sub-committee would have to be very much actions-based, working within the broad policy parameters and addressing the consequences—that is the key word—whatever has been thrashed out and agreed between the committee of the noble Lord, Lord Turner, and the Government of the day. I personally have no doubt whatever that this is the right way to go forward. Frankly, the Government would be wilfully myopic not to talk to Ofcom, study its annual report and take advantage of what has become a real success story for this Government.
My Lords, last week we had a very interesting debate on the overseas territories in respect of the National Audit Office’s report on risks to the overseas territories, one of which is the risk of climate change, which particularly affects many of them. That is detailed in the report, so I will not go over it again now. I would like to be assured by the Minister when he replies that those particular risks can be properly considered by the Committee on Climate Change and that there is a good reason, if he is going to oppose the amendment, for saying that the adaptation that is needed to respond to those risks to the overseas territories can be properly considered by the parent committee.
My Lords, I am always hesitant to stand up in your Lordships’ House and talk about adaptation, because every time I do we appear to be in the middle of some manifestation of the sorts of extreme events that we are likely to see increasingly with climate change. There was a report on the news this morning saying that last summer’s floods were not the result of climate change, with which I entirely agree. Nevertheless, here we are tonight facing some of the strongest storms and gales since the hurricane in 1980-odd. That sets the tone for the fact that adaptation to climate change is going to become an increasingly important issue.
I, too, welcome the Government’s changes to strengthen the adaptation elements of the Bill. I was rather buoyed up in Committee by what I took to be the assurances of the noble Lord, Lord Rooker, that he saw the merits of an adaptation sub-committee, or at least a mechanism for independent scrutiny and advice. I was a bit disappointed that that assurance did not seem to manifest itself into a government amendment. I support Amendments Nos. 131 and 152, which would set up an adaptation sub-committee with very different skills from those people on the main climate change committee. It needs to be there to allow the two legs of climate change—mitigation and adaptation—to be properly represented at that level of expert advice. This is not a committee the function of which could be performed by parliamentary scrutiny, which is very much general scrutiny in the public interest. It is a committee similar to the climate change committee that gives expert advice and comments from an expert perspective on the Government’s programmes and progress towards adaptation.
I am hesitant in standing up because I cannot make up my mind whether every time I talk about this we get visited by some manifestation of climate change, or the way that it might be with climate change in the future. If we do not resolve this here in your Lordships’ House and it has to go to the other place, by then we could be into the period when droughts and heat waves would be the manifestations, and I hesitate to wish those on the country this summer. I know that the Minister is anxious about the setting up of an adaptation sub-committee and feels that parliamentary scrutiny is sufficient. I do not believe that it is a substitute; this would be an expert committee.
I was also buoyed up—optimist that I am—when I visited the noble Lord, Lord Turner, last week. I regret that he is not in his place. Having laid out the arguments to him—he has been in the past a notorious sceptic about an adaptation sub-committee—he seemed to get pretty frisky in favour of it. If we have been able to persuade the noble Lord, Lord Turner, perhaps we can persuade the Minister.
My Lords, I apologise to the noble Lord, Lord Teverson, for missing the first couple of minutes of his speech. I was delayed just outside the door by someone who spoke to me. I am particularly delighted to follow the noble Baroness because, as chairman of the National Rivers Authority, I had the responsibilities that she now has in the successor body, the Environment Agency, for dealing with the storms that she has referred to and the droughts that almost immediately follow. Our experience is identical. I could not support the amendment more strongly than I do, based on both my experience and her experience.
It is particularly important that we have a separate committee with the time and the expertise to deal with what are really a quite separate set of issues from those that will mainly be drawing the attention of the main committee. That is particularly so because I understand that the main committee will be smaller than I think is wise, and certainly smaller than the very effective committee that I chaired in the National Rivers Authority. With all the responsibilities that it has, it is extraordinary that anyone can conceive that it will have the time that is needed to deal with these specific and very different issues—I refer to the organisations that it will have to deal with, local authorities and others in the countryside—and that it will have the time to make sure that what needs to be done is done.
I know that if I had the responsibilities of the noble Lord, Lord Turner, I would be thankful if there was a separate committee to take on this separate and highly important task. I agree with what the noble Lord, Lord Puttnam, said on this, but I do not think that we have to go to Ofcom; all we have to do is go to the relevant bodies that have dealt with those problems and are dealing with them now. The fact that the chief executive of the Environment Agency and the former chairman of the National Rivers Authority are in total agreement on this point ought to be considered by Ministers as having some significance.
My Lords, I take that last point personally, to be honest. The Minister for Climate Change, Phil Woolas, who has been referred to today and whose day job is in the other place, fully considered these matters. I am simply the man on earth in the Lords; that is the reality of this. This is an important point, and I will speak to the amendments as though my heart was fully in it. I thank noble Lords for another excellent debate on a very important subject.
The Government have tabled some amendments, which we will come to later—they are not in this group—on reporting on adaptation, which will increase the ability of Parliament and the public to monitor progress. That is important to ensure proper scrutiny. Currently, the Climate Change Ministers and the Government are not minded to accept these amendments, particularly Amendments Nos. 131, 152 and 165. I am quite happy to accept Amendment No. 197 if anybody wants to push it, but it does not alter the position at all. It is useless to put it in the Bill, but we will do it because that can be done at any time. I would quite like to do a deal and say that we will accept that one if noble Lords do not push the others, but I realise that I am in no position to say that.
The Bill includes completely new duties and powers on adaptation, so we are doing things about adaptation. It is not as though the Government are not taking any action. These new duties and powers in the Bill show that the Government take incredibly seriously the need to adapt to climate change. These provisions have been strengthened by the amendments that we have tabled.
The scrutiny of the risk assessment and adaptation programme is very important; we are all completely agreed on this. I want to set out why we think arrangements different from those for mitigation are justified for adaptation. I accept, of course, that there are links between adaptation policy and mitigation policy, but there are some important differences. One is about controlling pollution, the other about managing the changing risks. The people who will need to take action are often different. Mitigation policy focuses on power, heat, transport and consumers. Adaptation policy is definitely much broader and the issues vary more by location. The expertise for reducing carbon emissions and the expertise for managing new risks are different.
I fully accept that what has been said in one or more of the speeches implies different or additional people, but I am speaking about the Committee on Climate Change as set out in the name and numbers in the Bill. Amendments Nos. 131, 152 and 165 propose a new sub-committee of the Committee on Climate Change, designed to focus on mitigation issues and provide expert advice to government on what reductions in emissions the UK will make. It will report annually to Parliament on progress towards the targets and budgets set under the Bill. Although I fully agree with all that my noble friend said about Ofcom, although I do not know the details, I understand that that committee effectively reports to the regulator of Ofcom, whereas this committee is effectively reporting to Parliament and the Government. I would not go to the wall on that, but the parallel of that sub-committee reporting to regulator is not exactly the same.
All noble Lords agree that these are important tasks, and it is therefore vital that the climate change committee is properly resourced and has the right skills. There are several reasons why the committee or any sub-committees are not the right bodies to deal with adaptation. First, it is wrong to assume that a body with one type of scrutiny function should naturally be given another. Secondly, the committee could become unwieldy and unfocused if its remit were significantly expanded to take on adaptation responsibilities. The amendment proposes a new sub-committee with a whole new set of members. That is the point I am making: we are talking about additional groups of people. Proposed new sub-paragraph (3)(j) in Amendment No. 131 says that the sub-committee should include expertise in “any other … adaptations required”. This, of course, could cover every sector of society and the economy. It could become quite unwieldy.
Thirdly, we have discussed on a number of occasions whether the Committee on Climate Change should have a role in policy. The Government have argued strongly that it should not, as this would damage its impartiality and credibility as a technical-expertise independent body in its role of advising on targets and tracking progress against those targets. I quote from one of our debates on 8 January:
“I will have a great concern if the Committee on Climate Change starts making major policy recommendations to government … it would not depoliticise the decisions but would utterly politicise the Committee on Climate Change. It would be like many other bodies”,
“make all kinds of recommendations and are therefore seen as part of the political scenery and not as part of the scientific scenery”.—[Official Report, 8/1/08; col. 802.]
When I first read that in my brief I remember thinking that I had not said it, and I had not; it was the noble Lord, Lord Teverson. I remember responding, because I put it the other way around. We did not want it to be politicised. We are now discussing amendments which would require the Committee on Climate Change to assess the adequacy of government programmes and the contribution of government policies. There is a contradiction here and I have no doubt that the noble Lord will explain that in due course. He could, of course, explain it by withdrawing the amendment. Our view is that, whatever happens, we must not undermine the credibility of the Committee on Climate Change as a body focused on the science. We emphasise that. It is focused on the science, rather than on any of the political aspects.
Finally, I note in passing that noble Lords opposite have also tabled Amendment No. 134, which seems implicitly to criticise the value of sub-committees. We are not sure how that amendment fits with the amendments we are discussing here, which would set up a whole new sub-committee. We will come to that in due course. Mainstreaming adaptation into normal business will be critical to successful adaptation. There is no question about that. It is a big, big programme. I do not seek to undervalue that in any way. The most effective scrutiny of whether each sector is adapting to climate change would be a matter for the relevant parliamentary Select Committees. This issue will dominate work in Parliament in the years ahead.
As I have said, I would be quite happy to accept Amendment No. 197. The audit committee already has the right to scrutinise the national risk assessment, so the amendment merely reflects the current position, but we are quite happy to put it in the Bill. It is true that I have not come back with anything. We have thought about it and it has been discussed in government. The fact that I have not come back with anything is not to say that we have not had quite vigorous discussions in government. I hope the totality of government amendments tabled on Report, following Committee, shows that we have genuinely discussed these issues. Where we have been able to move collectively, we have done so. There are some issues, however, where the position set out in the Bill is one we wish to maintain in this House. It will then, of course, be subject to scrutiny in the other place.
My Lords, there may be a misunderstanding here on which I may help the Minister. It was certainly not my intention, as one of the people who put their name to this amendment, that the sub-committee would report to Parliament. The sub-committee, in my mind, reports to a sovereign climate change committee and, only through the climate change committee, to Parliament. That is a very important distinction.
My Lords, could I ask the Minister to respond to what I said about the national audit committee’s report on the overseas territories, which we debated last week? Will the risks from climate change that the overseas territories are said to incur in that report be subject to examination by the Committee on Climate Change?
My Lords, I do not criticise the noble Lord for not being present but I have said repeatedly that the agenda and role of the Committee on Climate Change and what it looks at are not prescribed in the Bill. The committee can go much wider than what is in the Bill. I make it abundantly clear that if the committee chooses to look at climate change issues and at the science with a view to giving advice, there will be no no-go areas. In a way, that is one of our criticisms, because on the one hand we have to give an idea in the Bill of the nature of the committee’s work, but on the other we do not want to prescribe its functions and curtail it because changes will occur. Other information, other reports, science from around the world and the effect of climate change on other parts of the world are bound to be taken into account by the committee, and it does not need the permission of government or, indeed, the permission of the Bill to do so. The Bill does not curtail the committee; it gives a list in a subsection that states that the above is not the totality of the work of the Committee on Climate Change. It is free to look at other issues.
My Lords, it is difficult because the Minister did not respond to the noble Lord, Lord Puttnam, on the question that I was going to raise. I think that my point is relevant and I hope that my intervention will be acceptable to the House. Following what the noble Lord, Lord Puttnam, said, did the Government consider the amendment in the light of the information being reported to the new Committee on Climate Change rather than, as the Minister implied, it being reported to the House? They are two totally different issues. That was simply the point on which I sought clarification.
My Lords, as I said, I do not want to make a big thing about this. The example that my noble friend gave was a good one, although I am not familiar with the inner workings. It is wholly right that a committee which is to represent viewers’ rights and maintain broadcasting integrity should advise a communications regulator, but it does not follow that a sub-committee scrutinising a government programme should advise a committee established to set carbon budgets. My point was that there is a parallel to be drawn because of the success of what has happened in Ofcom, but it is not necessarily exactly a dead square fit with what we are debating here.
My Lords, I thank the Minister for his response. Given the very positive view that he gave in Committee of this type of move, I am disappointed that there has been no further movement and that the Government have not been able to come up with anything more substantial.
I absolutely stand by the depoliticisation quote, which was in the context of the Committee on Climate Change bypassing the Secretary of State and effectively implementing policy, whereas here—and I have tabled amendments on exactly this basis—I am saying that the committee should assess government programmes to see whether they will meet the objectives.
Therefore, I am disappointed by the Minister’s response. I think that adaptation must be brought up one or two more leagues in the Bill due to its importance. I am a convert to that but I think that the Government remain to be converted, and I wish to test the opinion of the House.
132: Schedule 1, page 40, line 29, leave out sub-paragraph (2)
On Question, amendment agreed to.
133: Schedule 1, page 40, line 38, at end insert “apart from the taking of decisions on behalf of the Committee on Climate Change”
The noble Lord said: My Lords, I shall be very brief. The Bill states:
“The Committee may authorise a sub-committee, member or employee to exercise any of the Committee’s functions”,
and my amendment would add at the end,
“apart from the taking of decisions on behalf of the Committee on Climate Change”.
With regard to the functions of the committee, Clause 27 refers to,
“Advice in connection with carbon budgets”,
“Reports on progress”.
Substantial functions are set out for the committee in Clauses 27 and 28. Bearing in mind how substantial they are, I am trying to establish clearly in my mind which of the functions could be given to an individual member or, indeed, an individual employee of the committee. I beg to move.
My Lords, I shall speak to both amendments, as they seem to address the same issue. They attempt to ensure that important decisions remain in the hands of the committee members. We want the Committee on Climate Change to have the power to create sub-committees to investigate areas that it deems appropriate. Notwithstanding the vote on the last issue, however, we do not want the sub-committees to be making decisions on the most vital and high-profile issues listed in Part 1, such as the 2050 target, the carbon budgets or the determination of whether the Government are meeting their objectives. I do not expect the committee to shy away from those responsibilities nor do I want to give the impression that we on this side of the House want to manage, in a pejorative sense, the committee.
We welcome the fact that the committee will have a large degree of autonomy. However, we still feel that it should be the responsibility of the committee members to make the big decisions, if only for the sake of the decisions themselves. The report assessing the Government’s progress, to take one example, would have more public resonance and more of an impact across Whitehall if it came from the committee itself. The Minister said:
“It would be surprising if the committee were to delegate a principal function or a sensitive issue and we think that that is most unlikely to happen”.—[Official Report, 14/1/08; col. 1111.]
It seems that the Minister agrees with us about the importance of the committee taking the mantle of the decisions. Why, then, is he opposed to giving us an assurance on that? We do not intend to meddle in the operations of the committee; we simply want to ensure that the tasks that the Bill places on its shoulders are clearly defined. With this amendment we simply want to ensure that the responsibilities of the committee are crystal clear.
My Lords, before I respond to the amendment, I want to say to the noble Lord, Lord Avebury, who is not in his place, that, for completeness in relation to the previous debate, I draw his attention to Clause 10(3), which states that nothing in that clause or in that list is to be read as restricting the matters that the Committee on Climate Change or the Secretary of State may take into account. I draw that to his attention, as it saves having to wing letters around Whitehall.
These amendments would restrict the ability of the Committee on Climate Change to delegate any function, no matter how minor, to a sub-committee, employee or individual member. While we understand that there is concern, which we discussed in Committee, that any advice or reports made by the committee should come with its full authority and not be delegated, we do not consider the amendment to be appropriate or proportionate. In practice—I am sure that this is not what is intended—the amendment would mean that, for example, the chief executive could not take a decision about appointing a junior member of staff to the secretariat or the secretariat could not decide to commission research from a particular organisation. All decisions, including those relating to perhaps relatively insignificant operational tasks, would need to be taken by the committee as a whole. That does not seem sensible and I cannot believe that that was what was intended, as it would hinder the running of the organisation.
As I said in Committee, we consider it very unlikely that the committee would ever delegate in full one of its core functions. The committee’s members will be, and indeed are, distinguished and respected experts in their areas, some of whom have considerable experience of working in similar bodies. I do not believe that any of them would wish to risk their credibility by allowing a sub-committee to offer advice to the Government or to report to Parliament on the committee’s behalf without having played a significant role in the development of that advice. While the committee may well choose to establish a sub-committee to look at specific issues and ask secretariat members to write sections of its reports, we are confident that it will take responsibility for the discharge of its functions under the Bill, as the committee members themselves will ultimately have to take responsibility for the quality of its output.
Since Committee stage, we have looked again at the wording of paragraph 19 of Schedule 1, as I agreed to do, to see whether there is a need to clarify that all advice or reports made by the committee must have the authority of the committee as a whole. However, we do not believe that there is a case for amending it or for accepting the amendment tabled by my noble friend Lord Campbell-Savours. The ability to delegate some functions to a sub-committee, an individual member or an employee is a perfectly standard provision for non-departmental public bodies, so we do not consider that it poses any risk to the robustness of the authority or the credibility of the committee’s advice. I hope that that explanation satisfies noble Lords.
My Lords, the amendment was essentially a probing one to establish whether the Government had any concerns about how the committee would carry out its functions. My noble friend said that it is unlikely that the committee would delegate a core function. The question is whether that is sufficient to ensure that it never happens. I wonder whether my noble friend would consider further tinkering with the wording prior to Third Reading. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 134 not moved.]
135: Schedule 1, page 40, line 38, at end insert—
“The Committee must take all reasonable steps to ensure effective public participation in the exercise of its functions.”
The noble Lord said: This group of amendments concerns public participation and the functions of the Committee on Climate Change. I shall speak to the group as a whole before addressing individual amendments. The idea of including the public was well received on all sides in Committee. It was understood that the intention was not to water down the scientific objectivity of the committee but simply to recognise that these decisions are not made in a vacuum. The benefits of great public confidence in the committee and its decisions could be the difference between meeting the targets and not meeting them, given that the public have a very large role to play in mitigating climate change.
I was pleased to hear in Committee that the Minister was willing to consider including a mechanism to ensure public participation. However, I was slightly disappointed when I saw what had been brought forward, which seems to me to be perhaps the weakest duty that can be written into law. There is no duty at all to engage with the public in the government amendment. There is merely a duty to think about whether public participation is a good idea. The government amendment states:
“The Committee must have regard to the desirability of involving the public in the exercise of its functions”.
That is almost like having no duty at all. Under this construction, the committee could conclude that it was a good idea to have public participation and even think that it was very important, but then, having satisfied the legal requirements, do nothing at all.
That amendment places a duty to discover whether it is a good idea to involve the public. Our amendments begin with that idea as their foundation. Why are the Government being so timid? We say that it is desirable to have some element of public participation. We are not trying to dictate what form this should take; that is up to the committee. However, we simply feel that the government amendment is far too weak. The goal was perhaps to say something like, “The committee must have regard to the fact that public involvement is desirable”, but that is manifestly not what is in the amendment. The text places a duty to “have regard to” the idea of “desirability”—or at least it could very easily be interpreted as such. This is entirely insufficient. Even if the amendment were phrased as I have just suggested, it would not amount to much of a duty. Simply taking note that public participation is something that people might want is not enough.
If this House feels that there is a need for some form of public involvement, I hope that it recognises that the government amendment does not provide that. Our wording is stronger. It would place a duty on public participation without binding the hands of the committee. It would simply place a duty on the committee to take all reasonable steps to ensure effective public participation. Does the Minister think that this is too inclusive? Is his aim to provide a way for the committee to avoid public engagement? Does he feel that taking steps to ensure that there is effective public participation would be too burdensome? What is the reason for the weakness of the government amendment? It seems to me that the wording of the government amendment effectively means that there will be no public participation in practice, whereas under our construction public participation would be guaranteed. There is a world of difference. I beg to move.
My Lords, when I first read the amendments, the one tabled by the noble Lord, Lord Taylor, looked much stronger. I thought, as he has expressed so eloquently, that the duty in government Amendment No. 178 was quite weak. I am particularly concerned about this issue because we are talking about the importance of the decision-making of the Committee on Climate Change. That committee will have incredible powers and its recommendations will have real influence on the business, commercial and domestic communities. Each area will find that different recommendations of the committee will have financial and ethical implications on how it conducts its duty.
I do not know about the legal definition in Amendment No. 135, but “effective public participation” worries me, as a whole industry could be built up around lobbying the committee. Each of us receives vast amounts of unsolicited mail and, indeed, a large amount of targeted mail. That will also be the case for the Committee on Climate Change. In talking about “effective public participation”, we may also be giving the lobbyists interesting access, although they, too, will have an important role to play. Although the government amendment seems too weak, it is the one that I prefer and it will probably be carried. My problem with it is that, if the committee takes a strong view and rejects public opinion, it will alienate sections of the public who feel strongly about certain other issues.
My Lords, if I were in a belligerent mood I would say that we are coming close to trying to micromanage the operation of the Committee on Climate Change. That could be perceived outside. We are not going to give lobbyists or NGOs ownership of the Committee on Climate Change. Nobody in their right mind would want to do that. However, the committee must be open and transparent and it must have a reaction or interaction and dialogue with the public in the same way as all other non-departmental public bodies have. That is just good practice and what normally happens. It is not as if we have never put together a non-departmental public body. This is not just some committee—the term “committee” sends the wrong signal—it is a non-departmental public body that will operate in the same way as others.
I realise that in our previous debate a recurring theme was the importance of the relationships between the Committee on Climate Change, the Government, Parliament and the public. We emphasised the importance of ensuring democratic accountability within the framework of setting carbon budgets. I said that for the public to hold the Government to account the carbon budgeting framework must be transparent and accessible.
Government Amendment No. 178 is intended to ensure that where appropriate the committee will take steps to offer the public opportunities to engage in and understand its work. It will be for the committee, as an independent body, to decide how best to do this. It does not matter whether it is a roadshow, open meetings or modern technology; it is up to the committee to decide. The committee has already been taking steps to ensure appropriate public engagement. In November last year, the shadow secretariat to the committee issued a call for evidence, explaining its proposed work programme and inviting feedback and further evidence. This month, it will be holding a series of introductory workshops where it will set out its role to stakeholders and explain its proposed approach to the 2050 review and the carbon budgets.
By tabling our amendment, we are seeking to ensure that the committee has regard to the desirability of engaging with others and to encourage it, where appropriate, to take steps to do so. It just has to be mindful of the benefits of engaging the public in its work. Our amendment is an effective part of our package of amendments to maximise openness and transparency in the climate change committee’s work within the wider legislative framework. In turn, this will increase the credibility and acceptability to the public of the committee’s advice. Given the potential impact on the general public of climate change and actions to mitigate it, it is right that the committee should be asked to consider how the public might be appropriately involved in its work. Our amendment results from the same intentions as Amendment No. 135 tabled by the noble Lord. Both are intended to ensure that the committee takes steps to engage with the public.
Amendment No. 138 would introduce a new clause that would give the committee a duty to make timely recommendations to the Secretary of State in relation to Part 1 of the Bill, and require it to consult the public on what recommendations should be made. It seems to repeat a lot of the issues that we have already discussed, so we are unclear about where it would add value. The Government have tabled amendments on public engagement and transparency, which that amendment also covers. Subsection (1) in the new clause introduced by Amendment No. 138 would place a new duty on the Committee on Climate Change to make timely recommendations. However, Clause 30 already places a duty on the committee to provide advice, analysis, information or other assistance when requested by a national authority in connection with the authority’s functions under the Act or climate change generally. We cannot see how that amendment would enhance the provisions already in the Bill.
I plead with the House to give the committee a fair wind. We should set it up as an independent non-departmental public body, with all its duties, following the good practice of other non-departmental public bodies. We do not get a lot of complaints about them not wanting to interact with the public; they do it on a regular basis.
My Lords, I thank the noble Lord for that response. We have been debating these issues for a number of weeks now. I hope that the Minister knows my attitude to the Bill; I think that I understand his. However, I hope that he agrees that government Amendment No. 178 can be read in a rather negative way. Our amendments were specifically designed to address the issue, which has come up before, of the need to have public opinion and engagement to make a success of the Bill and the mission to affect climate change through carbon emissions. I hope that the Minister’s words reinforce his view, and will reinforce the view of the climate change committee, that it is desirable to engage with the public. On that assurance, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
136: Schedule 1, page 42, line 29, at end insert—
“Publication of advice etcA requirement under this Act for the Committee to publish anything does not oblige it to publish—
(a) information it could refuse to disclose in response to a request under—(i) the Freedom of Information Act 2000 (c.36), or(ii) the Environmental Information Regulations 2004 (S.I. 2004/3391) or any regulations replacing those regulations;(b) information whose disclosure is prohibited by any enactment.”
On Question, amendment agreed to.
[Amendments Nos. 137 and 138 not moved.]
Clause 27 [Advice in connection with carbon budgets]:
139: Clause 27, page 14, line 11, leave out “advise the Secretary of State” and insert “decide upon”
The noble Lord said: My Lords, I have kept my powder dry throughout the proceedings this evening so that I can concentrate on this amendment.
My noble friend referred to “giving a fair wind” to this non-departmental public body. That is what lies behind my amendments. I want to shift the emphasis of work from advice to Ministers to decision-taking. I regard the thrust of my amendments as being at the very heart of the Bill. I have a clear difference of opinion with the Government as to how that committee should operate and what its powers should be.
My noble friend will recall that I set out my preliminary views on 14 January—Hansard, cols. 1064-66—of how the committee would function, on the back of someone else’s amendment. I do not want to repeat my arguments from that occasion. However, Amendment No. 175, one of the amendments I shall concentrate on this evening, sets out the need for the Government to agree reports with the committee. Apart from Amendment No. 176, my amendments are consequential.
In Committee, I set out to show that there was a precedent for the concept of agreeing reports between departments and NGOs—in that case the National Audit Office’s Comptroller and Auditor-General and departmental officials on value-for-money reports from the NAO, and on appropriation account reports from the NAO. I quoted from a Joint Committee of the DES and the NAO, which the NAO had provided to the PAC on 23 April 1986, which dealt with the arrangements for agreeing reports. The minutes stated that, in agreeing reports, the Comptroller and Auditor-General’s intention was to establish, first, that all material and relevant facts have been included; secondly, that the facts were not in dispute; thirdly, that the presentation of the facts was fair; and, fourthly, where the report stated any NAO view or conclusions with which the departments were unable to agree, that would be made clear and the NAO and departments’ reasons properly represented with all necessary balance. The House will note tonight that my Amendment No. 175 is almost a straight lift from the minute of the Public Accounts Committee of 1986.
Amendment No. 176 deals with the circumstances in which the committee and Government could not agree, and where the difference of opinion had to be referred to Parliament. In those circumstances, the Government would put their proposal to Parliament under the affirmative procedure. If defeated, they would then be required to put the committee’s proposal under similar procedural arrangements. To sum up, we have a mechanism here for seeking agreement, taking decisions, making recommendations and, where irreconcilable differences exist, referring them to Parliament for resolution of the dispute. While the committee could exercise a right to take decisions, it could also make recommendations—these things being distinctly different. The whole process could be further improved by a reference in Parliament to a Joint Committee which could refer its views to Parliament to aid resolution of the dispute. In my view, there will be many, many disputes.
Governments of all persuasions will inevitably be tempted to duck big decisions; that is what concerns me. A whole generation of young people out there are interested in climate change and look to Parliament now, in this Bill, to introduce mechanisms which will avoid such conflicts. They are reliant on us, now, at the beginning of this millennium, to influence climate change over the rest of this century.
Many of the decisions will be very controversial. To give an example, only yesterday, we had the Kingsnorth announcement, which was immediately opposed by many environmental groups on the basis that we were not dealing with the issue of carbon and CO2 emissions. We will be ever confronted with those kinds of problems in government. Very often, because of the power of outside lobbying organisations, Governments will be forced to back down.
Another example is the decision taken by the Mayor of London on the Porsche congestion charge. Porsche is now going to judicial review. That is a further example of the kind of pressure that can be exerted on government—in this case, the Mayor—where very controversial decisions have to be taken. I want a mechanism that the Government can hold responsible for those decisions and, to use a phrase that I used before, on occasion, perhaps even hide behind that body, so that the public understand that we have given others a responsibility to take major decisions. I have previously cited the Monetary Policy Committee of the Bank of England. It is far easier for it to handle decisions of that magnitude than it was for the Chancellor when he or she knew that he or she would inevitably be confronted by electoral and other political considerations in the taking of decisions on interest rates.
We need a committee with a dynamic tension in its relationship with government, in which the committee recognises the utmost seriousness with which it has to take its decisions. What is most important is that a chasm is not allowed to develop between the committee, the Government and public opinion: a chasm in which the public and the committee blame the Government for failing to act; in which successive Governments blame their predecessors for failing to act; and in which successive Secretaries of State blame their predecessors for failing to meet targets recommended by the Climate Change Committee. That would be the blame game at its worst, and I am fearful that that is what will happen, inevitably with an exasperated public looking on. We all know about drifts in public policy and in government decision-taking. My amendment is intended to stop that.
Finally, I turn to an issue raised by the noble Lord, Lord Teverson, when we were originally discussing these issues in Committee. He referred to politicisation of the committee. I think that we have completely misunderstood what the internal dynamics of that committee will be in the circumstances to which I am referring. I think that you get politicisation where individuals have only influence. The moment that you give them real power to take decisions, you will not get politics. You will find that the committee combines in those conditions to avoid political argument and to come out with a consensus view with which it can carry government with it. The danger is that the less responsibility you give the committee, the more likely it is that you will bring in to its deliberations political considerations.
I listened very carefully to the analysis of the noble Lord, Lord Teverson—he referred to it again this evening in response to my noble friend Lord Rooker. I think that he should reconsider the issue of politicisation before the Bill goes to the House of Commons, because, as I have said, a major misjudgment is taking place on this issue. I beg to move.
My Lords, the amendments empower the committee to make decisions on budgets. They lift the committee above its advisory role and place a duty on it to make decisions on budget-setting. We certainly welcome the amendments. The budget periods are scientific demarcations. Budget periods should not be set based on what a Government think that they could achieve, but because that is what we must achieve to stop climate change.
I do not know whether this is the perfect place in the Bill to bring about this shift. In the process of amending the Bill, we have made progress towards the Conservative goal of putting the committee centre stage. In order to preserve the balance—or, as I have referred to it, the triangular relationship—between the committee, the Government and Parliament, it may be necessary to preserve some power in the hands of the Secretary of State.
However, to my mind, the amendments seem, by and large, to get it right. The Government's role in this process is to make policy and programmes to meet the budgets. Obliging the committee to decide on those budgets enshrines the assessment of the success or failure of a Government in an essential mantle of objectivity. If the committee decides on the amount that we must reduce in five years, that amount will be based on scientific necessity. That should be the end of the story. Politicising budget periods would be a dangerous way to miss our overall target.
Amendment No. 175, regarding the duty of the Secretary of State and the committee to agree the reports, is interesting. We certainly welcome its spirit, as it goes a long way to further the strength of the committee. However, it is difficult to know precisely how that would work in practice. We certainly welcome the idea that if the Secretary of State diverges from the opinion of the committee and does not take its advice, it will be necessary for him to publish a report outlining why and in what circumstances there has been disagreement. To have a duty to agree seems to go a bit far—or, perhaps, misses the point. The dialogue between the Secretary of State and the committee should be open, constant and publicly reported on. If there is disagreement, that should be just as open and public.
That is where Parliament steps in as the third point of the triangle to scrutinise the actions of the Secretary of State and to evaluate whether there are justifiable reasons for ignoring the experts. That is also a way in which the public and Parliament can scrutinise a Government's approach to climate change, and get rid of that Government if they have been ignoring the expert advice on the future of the environment too often.
Placing a duty to agree seems to cut out that aspect of the balance—although perhaps I misunderstand the intention behind that duty. None the less, I look forward to hearing the Minister's response about how he sees the precise relationship between the committee, the Government and Parliament.
My Lords, this is indeed an interesting set of amendments. Since the noble Lord, Lord Campbell-Savours, laid down the challenge to me, I have been trying to think through my rationale on this. This is a more intermediate issue. I was especially concerned that the climate change committee should not itself decide policy, because policy is inevitably political. You can meet individual targets by a number of routes by different policy mixes. In our mind, that was clearly the duty and responsibility of the Secretary of State and the Government, rather than of a committee that is largely unaccountable. When it comes to setting the budgets, I am not sure that the problem goes away. Just to decide what particular budget periods are, the committee has to look at the policy options required. I agree that there might be a number of those.
There is a difference between politicisation in the way I am describing it and the way in which the noble Lord, Lord Campbell-Savours, described it. He said that if a body can only give advice, corporate politics begin to try to get the ear of people in putting across particular arguments so that the other side accepts that solution. I understand that, and I think that it is almost inevitable in any organisation. However, the politicisation that I am talking about is that as soon as a body is able to make decisions, which, effectively, the Government have to work around, the lobbying that goes into it is immense. It is all concentrated on the body rather than on the democratic institutions of the state. I differ from noble Lords on a number of things.
We talk about the science being correct. I take the New Scientist every week—that is not a brag, it is just to get out of the groove of politics. The scientific community will always say that there is no one answer to everything, that nearly everything is a hypothesis and that the science will move on. The rigour of science is peer review, different opinions and assessment. A single solution appears very infrequently. We need to ensure that we do not fall into that fallacy in the way that we look at the Bill.
On my way in this morning, I was reading an article about the different theories of dark matter. I will not go into any of those, except to say that science has at least a dozen different opinions on the missing matter in the universe that cause constant expansion rather than a big crunch. A perfect solution for the whole area is indeterminate.
In this area, there is still that risk of politicisation that the Minister quoted back at me earlier. It is still a step too far for an effectively unaccountable and appointed body. Once the body has executive powers, the way that people are appointed will suddenly become far more political. We want types of decisions and appointments similar to those on the present shadow committee, on which I have congratulated the Government. I agree that is not a big step, with these amendments, to have executive powers, but it is still a step too far. I believe that the Secretary of State and the Government need to be accountable for this level of decision and, in that way, to be responsible to Parliament.
My Lords, my noble friend Lord Campbell-Savours gave the analogy of the Monetary Policy Committee, but that is not applicable. Before the Monetary Policy Committee was set up there was a public debate, not just here but across the world, about central bank independence. A lot of us did not agree with it but there was a debate at least for 20 years. Inflation was a danger, and a central bank had an instrument to control inflation—a dubious one perhaps, but it had an instrument. The analogy does not apply because the committee has no instrument to control carbon emissions. It can set a budget but it cannot enforce anything. I would rather we leave it to the Government, although it is imperfect, because you cannot avoid politicisation and I would rather the Government be politicised than an expert committee.
My Lords, I am grateful to noble friend Lord Campbell-Savours. He has taken time to consider this and to refer to his previous experience on the Public Accounts Committee, which we shared for a period in the other place, so I can see where he is coming from. I take the point of noble Lord, Lord Teverson, about the science moving and constantly evolving. I am one of the few people that I know who read the whole of A Brief History of Time. In what is a very small but significant book, I remember a paragraph in which there is a discussion on the theory of the universe, and Stephen Hawking concluded that there was nothing for the creator to do because it was there all the while. Others have challenged that view.
The Government have given serious thought to the amendments. We have looked at them in some depth, and our view is that while they may appear at first sight to strengthen the role of the Committee on Climate Change, its independence and accountability, in reality they are likely to have a different effect from that intended. They may reduce the transparency and independence of the process for taking decisions on carbon budgets. Perhaps I may take some time setting out the reasons for that view, because it is important that we are clear about the effect of the amendments, for my noble friend Lord Campbell-Savours as much as for Third Reading and Members of the other place.
The amendments give the committee responsibility for deciding on the level of the carbon budgets, but also include a requirement for the committee to agree the contents of its reports with the Secretary of State. Where agreement cannot be reached, the committee must omit the relevant fact, decision or recommendation from its report and the Secretary of State must then report to Parliament explaining the omission and why agreement was not reached. Taken at face value, that appears to increase transparency by highlighting any differences in opinion, until one considers that all the discussions about whether to agree the committee’s report and decisions will take place behind closed doors.
If the committee and the Secretary of State agree the committee’s report, neither Parliament nor the public will have any insight into the discussions that took place prior to publication. They will have no way of knowing whether one party modified its original view on an issue in order to reach agreement or the evidence that persuaded them to change their view.
Let us compare this with the system proposed by the Bill. The Committee on Climate Change will provide advice to Government on the level of the budgets, and include the reasons for its advice. The advice will be published and it will be out in the open for everyone to look at for up to six months before the Secretary of State sets the budgets. There will be a public debate and, no doubt, parliamentary debate as well: has the committee got it right; do we agree with the analysis; is there an alternative view? If, having considered the committee’s advice, the Secretary of State decides to set the budget at a different level, under the Bill he must publish a statement setting out the reasons for the decision. That ensures that any disagreement, and the reasons for it, will be transparent open and seen by the public.
The amendments of my noble friend Lord Campbell-Savours also appear to increase the role of Parliament, but we do not believe that they do. Under the system in the Bill, an order setting the carbon budget will be subject to affirmative procedure. Therefore, Parliament will have the opportunity to debate the level of the budget fully, having had the opportunity to consider at length the committee’s advice, as well as any statement published by the Secretary of State explaining why he disagrees with the advice.
Of course, Parliament has the right to reject the order if it believes that the Secretary of State has made the wrong decision. That is why we have made the process subject to affirmative procedure. Therefore, I cannot see that the amendments add to Parliament’s role in scrutinising the setting of the carbon budgets.
My Lords, on that very matter, Parliament would have the right to the affirmative procedure, but it would not be in a position to consider and vote on the recommendation of the climate change committee if it wanted to support that as against the Government’s position.
My Lords, it depends. If the climate change committee gives advice and the Secretary of State agrees with it, it must still come to Parliament. Parliament could decide to throw both out. It is true that the orders are unamendable—almost like the nuclear option—so I understand the difficulty, but the group of amendments tabled by my noble friend do not add to Parliament’s role in scrutinising the setting of the carbon budgets. They may appear to increase the role of Parliament, but they do not.
Finally, there is another reason why the model of the National Audit Office’s relationship with departments is inappropriate for the committee. I understand my noble friend, and see that his amendments are seductive, as the system is tried and tested and works extremely well. However, the NAO’s reports tend in the main to be backward-looking—a study in some detail about what has happened to taxpayers’ pounds. This is why so much emphasis is placed on agreeing that the facts of the case are accurate and not in dispute, so that no permanent Secretary of State or accounting officer can ever say when the reports are published that the facts and figures are wrong. That gets that completely out of the way at the beginning. The Public Accounts Committee’s inquiries can then get straight to the nub of the issue, and the facts are agreed.
In contrast, the climate change committee’s advice on budgets is definitely forward-looking and based on projections of what might happen. There is therefore more uncertainty, and there could be a range of interpretations about what might happen. It is therefore not possible in the main to agree the facts in the same way as the National Audit Office agrees with departments. I will illustrate this with an example.
In December 2010—this is a futuristic example—the climate change committee will publish its advice on the budget for the years 2023 to 2027. In other words, it will look up to 17 years ahead, so it is simply not possible to say what the facts are so far in advance. However, requiring the committee to agree the facts of the matter with the Government so that they were not in dispute would in essence require the committee to agree all its analysis with the Government. This could undermine its independence. Given that we will be looking up to 17 years ahead, the committee might take a different approach from the Government to its projections for the future. That is a practical view of the difference between the committee and the NAO. I am not saying that the model that my noble friend has used is incorrect, but it does not fit the purposes of the climate change committee.
We agreed in Committee that the climate change committee, with Parliament, will help to hold the Government, and for that matter the country as a whole, accountable for the progress that we are making towards our 2050 target. That is why it is important that the committee can provide independent, expert, transparent and credible analysis, unfettered by any need for prior agreement with the Government or Ministers. It is vital that that is maintained, and that we get the balance of power between the different institutions exactly right, or certainly right from a practical, workable point of view.
My noble friend’s amendments do not do this. They risk concealing discussions between government and the committee, which could undermine the credibility of the committee’s advice. In contrast, the system proposed in the Bill will be stronger and more robust and with a stronger role for Parliament in holding the Government to account. I am grateful to my noble friend for raising the issue and for the detail and the care with which he did so, but I hope that he does not proceed with the amendments.
My Lords, I am indebted to my noble friend for his comprehensive response. I am sure that it will be pored over by those in the other place who will want to consider this issue further on the back of amendments moved there.
I recognise what my noble friend said about looking forward as against looking back, but the Monetary Policy Committee looks forward. Indeed, there are circumstances in which we accept the decisions of an independent committee whose function is to look forward. My noble friend said that Parliament’s influence would be reduced. I dispute that, because in the event that Parliament did not approve the decisions of the Government or their recommendations to Parliament, Parliament would have the right to vote on the climate change committee’s recommendation or decision. That is a substantial additional power. My noble friend referred to the procedural limitations, but the reality is that it is wrong, and if officials in the department thought that, they would look more closely at my amendment, which would give substantially more power to Parliament to decide.
My noble friend raised the very interesting issue of the debate behind closed doors, which I had not thought about and which needs further consideration. My preliminary view of that is that there is a suggestion that people on the climate change committee would compromise on what they really believed in behind closed doors with government in the knowledge that their acceptance of a consensus view might not stand the test of time and might turn out to be an error. They might as a committee be completely convinced by a position, but my noble friend is suggesting that they might be inclined to compromise with government behind closed doors. The credibility and integrity of people on that committee are such that it is far more likely that they will stand their ground on issues on which they believe that their personal credibility as scientists evaluating the science in this area is involved.
I have listened to my noble friend and heard what he has to say. I know that others will pursue this debate further, I am indebted to my noble friend and to the House for putting up with me referring to this issue repeatedly throughout the stages of the Bill, and on that basis I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 140 not moved.]
141: Clause 27, page 14, line 19, leave out “and”
On Question, amendment agreed to.
142: Clause 27, page 14, line 19, at end insert—
“( ) whether Government policies and programmes will result in the meeting of current and future carbon budgets,”
The noble Lord said: My Lords, in moving Amendment No. 142, I shall also speak to Amendment No. 159. Both amendments deal with the boundary between what the climate change committee should do, advise or have executive power over and what the domain of government should be. There is an important role for the climate change committee, as an independent advisory body, in looking forward and making a technical assessment of whether government policies and programmes of the time will meet proposed carbon budgets of the current period in its annual reports. This is a particularly important area for the climate change committee, because in many ways all that it does under the Bill is to advise on carbon budgets and now, we hope, on adaptation as well.
But there is the very important, independent audit role—not a political role—of assessing whether government programmes and policies as they are will mean that those budgets and future targets will be met. That is not a politicised issue because it is not up to the Committee on Climate Change to decide on those budgets, because that has already been decided. Nor is it the role of the committee to decide what policy adjustments are needed to get to those targets. It is an early-warning, objective look by an important body to see and to report—it is open to the public and to Parliament—and to assess whether the Government’s policies are likely to be successful in meeting the targets that they have agreed should be set.
We feel strongly that these amendments are still important. I note with some satisfaction that government Amendment No. 157 gets pretty close to my amendment. I was very pleased to see that they have moved in this direction. However, these amendments are significantly better and I hope that the Government will respond to them positively. I beg to move.
My Lords, we have tabled our own amendments to a similar effect, which we think provide a slightly better way of achieving a similar goal. While having the utmost sympathy with the spirit of these amendments, we cannot support them as wholeheartedly as perhaps the noble Lord, Lord Teverson, had hoped. None the less, I look forward to the Minister’s response because these amendments touch on important issues.
My Lords, it is fair to say that we have sympathy with the comments made by the noble Lord, Lord Teverson. The Government have tabled a number of amendments to strengthen the Bill’s accountability framework and the role of the committee. We have already discussed a number of these and we will come to government Amendments Nos. 157 and 171 shortly, which I believe are forward looking as well as reviewing progress.
Amendment No. 142 seems to ask the committee, at the same time as providing its advice on budgets, to assess whether the Government are on track to meet them. Amendment No. 159 proposes an identical requirement through the committee’s annual progress report. I am not sure why the committee is being asked to provide this assessment twice, although I understand the noble Lord’s motivation. We are talking about doing this, possibly, within six months. We therefore think that under Clause 27 the committee should focus on advising on the most appropriate level of carbon budgets needed to achieve the long-term targets. We should remember that this advice is to be given at least 11 years before the beginning of the relevant budget period. The committee’s annual progress report is the best place for these assessments to be made.
In any case, I believe that government Amendments Nos. 157 and 171, to be discussed shortly, provide the reassurance that is sought through Amendments Nos. 142 and 159. I think that the noble Lord recognises that we are listening to his concerns and I hope that he will consider withdrawing his amendment on that basis.
My Lords, I thank the Minister for her response and I welcome her back to the Climate Change Bill. I am very pleased to see her. Obviously, she is extremely persuasive because I believe that this area is of great importance and I certainly would have wanted to take the opinion of the House. Given the significant movement represented by the Government’s amendments—I also look forward to hearing the noble Lord, Lord Taylor of Holbeach, on the Conservative amendments—I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
143: Clause 27, page 14, line 23, at beginning insert “individually and”
The noble Lord said: My Lords, this amendment is very simple and I do not believe that it will find much opposition as the Government have tabled their own amendment with a similar intention. Indeed, I am surprised that the Government did not adopt this amendment and I shall be interested to know why. This amendment changes the section regarding the advice given to the Secretary of State by the committee on sectors of the economy.
The Bill places a duty on the committee to advise on the respective contributions towards meeting the carbon budget made by sectors covered by trading schemes. But for some reason, the Bill includes the caveat, “as a whole”. Why does the Minister want sectors of the economy taken as a whole? Would he elucidate on what form this advice is supposed to take? Our amendment changes this caveat to say,
“individually and as a whole”,
because the only real benefit of looking at sectoral contributions is if they can be viewed individually and as a whole. Thus I hope that the Minister will explain the reason for including his amendment and will consider, perhaps at Third Reading, revising this clause to reflect that the committee should give advice, if it deems it necessary, on the contributions of sectors to the budget, both individually and as a whole. I beg to move.
My Lords, this amendment makes complete sense, as the noble Lord, Lord Taylor, has said. Whether we are the fourth or the sixth largest economy in the world—it depends on how one counts comparative purchase power—the non-EU ETS sector is some 48 per cent of our economy. I remind the House that everyone is very clear that we do not want a rigid, five-year sectoral planning system that harks back to the failed days of the Soviet Union. We are talking about greater transparency in how the Committee on Climate Change and the Government will make their decisions, and how they might affect individual sectors, which is useful for tracking progress and whether the targets are being met. It is much too large to do that in just two sectors—the EU ETS and, I presume, the carbon reduction commitment sector, and the rest of the economy. I am assuming here also, and I shall be interested in the Minister’s response, that due to the detailed level of reporting in emissions trading schemes—both the European one and the proposed CRC—there will be a natural breakdown available of that 52 per cent to 60 per cent of the economy. Certainly, as the noble Lord, Lord Taylor, has said, it would be very strange if we had one figure just for the remaining 40 per cent. We are talking about understanding these issues and movements in a great deal more detail.
My Lords, we discussed Amendment No. 143 in Committee and I have not got a lot more to add to what was said then. We had a discussion on sectoral targets on the first day of Report, including on government Amendment No. 144. It would ensure that the Committee on Climate Change’s advice to the Secretary of State on the level of each carbon budget considers the sectors of the economy in which there are particular opportunities for contributions to be made towards meeting the carbon budget.
Let me put it on the record that we consider that, in providing its advice under Clause 27 concerning the contribution of trading schemes taken as a whole, it is highly likely that the Committee on Climate Change will need to consider the contribution that should be made in each sector covered by the individual trading schemes. Clause 27 requires the committee to publish its advice on budgets, including its reasons for this advice, but we think it would be overly restrictive to specifically require the committee to recommend the cap for each individual trading scheme as part of its advice on carbon budgets, which would be the result of this amendment. That is a policy-making role and, as we have discussed previously, we do not believe the committee should have a role on individual policies. For the reasons we have set out previously, we think this would politicise the committee’s work.
The danger with Amendment No. 143 is that it comes very close to a situation where the Committee on Climate Change would be given a mandatory role in considering individual policies. For its advice to be credible the committee has got to work outside the political arena and, therefore, outside decision-making on particular policy mechanisms. We do not want the committee to become involved in the nitty-gritty of policy decisions on ranges of issues in different sectors, whether home insulation, domestic boilers, wind farms and so on. All these are matters for the Government, who are held accountable by Parliament and the people for their decisions.
My Lords, I thank the Minister for that reply. To some degree our amendments arise out of a belief that the sectors are going to be important contributors to our success on climate change, so to be able to include them fully in the process is extremely important. I take some comfort from the fact that government Amendment No. 144 recognises this. Given that situation, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
144: Clause 27, page 14, line 24, at end insert “, and
( ) the sectors of the economy in which there are particular opportunities for contributions to be made towards meeting the carbon budget for the period through reductions in emissions of targeted greenhouse gases.”
On Question, amendment agreed to.
[Amendments Nos. 145 to 150 not moved.]
151: Clause 27, page 14, line 35, leave out “September” and insert “December”
On Question, amendment agreed to.
152: Clause 27, page 14, line 37, at end insert—
“(4A) It is the duty of the Committee, acting through the Adaptation Sub-Committee, to provide expert advice to the Secretary of State in relation to—
(a) the preparation of, and the adequacy of, any programme under section 49 to address the risks identified in the most recent report under section 48;(b) the contribution of the objectives, proposals and policies mentioned in section 49(1) to sustainable development;(c) any assessment for the second and each subsequent programme of the progress made towards implementing those objectives, proposals and policies set out in earlier programmes as required by section 49(3); and(d) the need for directions by the Secretary of State to a reporting authority under section 52.”
On Question, amendment agreed to.
[Amendments Nos. 153 to 155 not moved.]
156: Clause 27, page 15, line 4, leave out subsection (7)
On Question, amendment agreed to.
Clause 28 [Reports on progress]:
157: Clause 28, page 15, line 13, leave out from “on” to end of line 15 and insert “—
(a) the progress that has been made towards meeting the carbon budgets that have been set under Part 1 and the target in section 1 (the target for 2050),(b) the further progress that is needed to meet those budgets and that target, and(c) whether those budgets and that target are likely to be met.”
The noble Baroness said: My Lords, we have already discussed similar issues in relation to Amendments Nos. 142 and 159. As I said then, Amendments Nos. 157 and 171 provide the reassurances sought here. They also address the concerns behind Amendments Nos. 160 and 163, which we will discuss next.
I am also mindful of our discussion of Amendment No. 22, which was proposed by the noble Earl, Lord Caithness, and the noble Lord, Lord Crickhowell, for a compliance mechanism to be included in the Bill. At the time we explained why we believed that government Amendment No. 81 would work better. Part of the reason for this is that the Bill’s other provisions for annual accountability, with the addition of government Amendments Nos. 157 and 171, remove the need for yet another layer of annual processes as proposed in Amendment No. 22.
It may be helpful if I can briefly recap on the Bill’s relevant provisions as context for the amendments in this group and in further illustration of why we do not think that Amendment No. 21 is needed. Before I explain the approach we have taken in government Amendments Nos. 157 and 171, it would be useful to get this on the record at this stage.
For each budget period the Secretary of State must publish proposals and policies for meeting each budget. Government amendments now agreed by this House also require the Secretary of State to publish an indicative annual statement setting out the progress expected in each year of the budgetary period, together with the timescales over which policies are expected to take effect. There will be maximum transparency about the progress expected, both on policies and on our emission reduction trajectory, throughout the budgetary period. I honestly do not see what further information could be provided on this. That is looking forward.
Clause 12 requires the Government to publish, for every year of the budget period, a detailed emissions statement. This will set out the facts on how much progress is being made. Every year the Committee on Climate Change will lay a progress report before Parliament under Clause 28 which will give the committee’s views on the progress being made towards meeting the budgets and the 2050 target, and then the Government must respond under Clause 29. So if there are any concerns about progress during the budget period, there are already extremely strong mechanisms to make sure that they are identified at an early stage and reported quickly and transparently to the public and to Parliament.
I turn to government Amendments Nos. 157 and 171. Amendment No. 157 adds further specifications to what must be included in the committee’s annual report under Clause 28. If the amendment is agreed to, the report must refer to progress made so far towards meeting the targets and budgets, to progress that remains to be made and whether, in the committee’s view, the targets and budgets are likely to be met. In making this assessment the committee will of course be able to use the information provided in the Government’s plan for meeting budgets and the timescale for expected progress.
Amendment No. 157 builds on this by requiring that the Government’s annual response to the committee’s progress report under Clause 29 would be specifically required to respond to the points made by the committee. That is very important from the noble Lord’s point of view. This will ensure that Parliament is better able to hold the Government to account for progress. Therefore, if the Government are off-track in any particular year towards meeting the overall budget, it will be quite clear from both the emissions figures and the committee’s assessment, and the Government’s response to the committee’s assessment will need to be comprehensive.
Government Amendments Nos. 157 and 171 substantially strengthen this part of the Bill. An additional requirement to publish a preliminary action plan, as proposed in Amendment No. 22, would be an unnecessary duplication of the Bill’s existing provisions, particularly with the addition of these government amendments. I beg to move.
My Lords, it is pleasing that the Government have recognised the need to make changes to the Bill’s reporting provisions. Prior to these amendments, the Bill did not have a dynamic and thorough reporting procedure. By this I mean that it did not have a mechanism to take into account the nature of the progress made. Although the Government seem to have finally diagnosed the problem, to some degree their solutions are unsatisfactory.
It is good to have an explicit recognition in the Bill that the report will include what needs to be done and a statement on whether the targets will be met. Indeed, we hope that this will include an assessment of the effectiveness of the action; it implies such an assessment in any case. However, we think it important that the report on progress should examine not only the likelihood of meeting the targets but also the actions that have been, and are being, taken to meet them. That is a crucial difference.
As it stands, the Government’s amendments offer an improvement to the Bill. Can the Minister explain what Amendment No. 157 means by the words,
“whether those budgets and that target are likely to be met”?
Does this involve an investigation of government policy? Is it merely a forecast? It seems to me that it could be interpreted as a forecast. Essentially, these amendments are welcome in that they show that the Government are taking an interest in fixing one of the holes in the Bill. I just wish that they had gone one step further.
My Lords, perhaps I may quickly respond. We need to be clear that when we are asking the Committee on Climate Change—as we have all agreed, an extremely important and high-profile committee—to make an assessment of whether the government targets are likely to be met, we are asking that committee to use all its expertise, and we have debated in great detail what that expertise should be, to make that assessment. That is clear in the Bill—if these amendments are agreed to. It will be a very strong measure and I hope that noble Lords will support the amendment.
Northern Rock plc Compensation Scheme Order 2008
rose to move, That the draft order laid before the House on 22 February be approved.
The noble Lord said: My Lords, the draft order is made under Section 5 of the Banking (Special Provisions) Act 2008, which was passed last month. Under the provisions of that Act and of the Northern Rock plc Transfer Order 2008, Northern Rock was brought into a period of temporary public ownership on 22 February this year, with shares transferred to the Treasury Solicitor as nominee for the Treasury. Section 5 of the Act requires the Treasury to establish a scheme to determine the amount of any compensation payable to shareholders or to holders of share options.
The House will recognise the need for a fair and proper way of assessing the amount of any compensation that should be paid in those circumstances. The crucial point is that any compensation must be fair, which means that it should be based on a realistic assessment of the shares’ value without public support. Taxpayers should not be expected to pay compensation for value that would not exist without their support.
The Act therefore makes it clear that, in the assessment of the amount of any compensation, two assumptions must be made: first, that all financial assistance provided by the Bank of England or the Treasury is withdrawn; and, secondly, that no further public assistance, beyond ordinary market assistance from the Bank of England, would be provided. In addition, and as provided for by Section 9 of the Act, the order that we are considering today specifies that it should also be assumed that Northern Rock would be unable to continue as a going concern and would be in administration.
It is clear that, if it was not for the financial support from the Government and the Bank of England, not only would Northern Rock not have been able to continue as a going concern but it would have been placed in administration at best. As has been shown by the extensive search undertaken by Northern Rock’s management, with the support of the tripartite authorities, it was not possible to find a private sector solution that met our three principles, particularly that of protecting the taxpayer. If the financial assistance provided by the Government and the Bank of England had been withdrawn, it is clear that Northern Rock would not have been able to secure the substantial amount of alternative funding that would have been required. As a result, it is only fair to make the assumption, when determining the amount of any compensation, not only that public support has been withdrawn but that without that support Northern Rock plc would not be a going concern and would have been placed in administration.
As well as those assumptions, the order sets out that the amount of any compensation payable will be determined by an independent valuer appointed by the Treasury. We intend to advertise for expressions of interest in that position shortly, if the House agrees to the order. The Treasury will then make an appointment in consultation with the Institute of Chartered Accountants in England and Wales. We will of course be looking for someone who is independent of all interested parties, with extensive company valuation skills and the ability to handle the range of relevant stakeholders.
Once an independent valuer has been appointed, they will need to appoint staff and decide on the process to be followed. The valuer will then come to a decision on the amount of any compensation payable, based, of course, on the assumptions that I spoke about a moment ago. Once that assessment has been made, anybody who is affected will be able to ask the valuer to reconsider his or her determination and a revised assessment will then be made. Anyone affected who is dissatisfied with that revised assessment will then be able to refer the matter to the Financial Services and Markets Tribunal.
I hope that I have explained clearly the background to the order and its purpose. As I said, it is right that we should establish a fair way of assessing the amount of any compensation payable to people who have lost their shares or had their share options or certain other rights extinguished as a result of the transfer. Any compensation must be fair and must not overvalue Northern Rock on the basis of public support. Without that support, Northern Rock would not be able to continue as a going concern and would be in administration. If it had not been for the Government’s support since September, that would have been the case long ago and it would certainly have been the case when the transfer was made.
I therefore believe that this order is the fairest way forward. It is fair that the value of any compensation should be determined by an independent valuer, but only on the assumption that public support was no longer available. This order allows for that to happen in a clear way, with opportunities to seek review of the valuer’s decision, and I hope that the House will support it. I beg to move.
Moved, That the draft order laid before the House on 22 February be approved. 12th Report from the Joint Committee on Statutory Instruments, 11th Report from the Merits Committee.—(Lord Davies of Oldham.)
My Lords, I thank the Minister for introducing this order. We are not allowed to debate the main order which took Northern Rock into public ownership because the Government rejected the wise advice of the Delegated Powers Committee and insisted on the use of the negative procedure which means that even if a prayer to annul that Order were passed, it would be of no legal effect.
The Government did accept that the compensation orders which could be made under various sections of the Banking (Special Provisions) Act 2008 would be subject to the affirmative procedure, which is why we are here this evening.
The Merits of Statutory Instruments Committee of your Lordships’ House has drawn the attention of the House to the orders on the grounds that they give rise to issues of public policy likely to be of interest to the House. We are always grateful for the observations of the excellent Merits Committee, but I think that in this instance we were fully alive to the fact that this is not an order merely to be nodded through.
I will focus my remarks on Article 6 of the order which lays down the valuation assumptions that the valuer is to use and restricts the valuer quite considerably. I would like to probe with the Minister why the Government chose to include Article 6, as well as what the Government intend to be the meaning of the Article.
Section 5 of the Act makes it clear that in determining compensation it must be assumed that all financial assistance provided by the Bank of England or the Treasury has been withdrawn and that no future assistance would be provided—apart from ordinary market assistance. The Minister has already referred to that. If that were the only guidance available, a valuer would then have to see whether and to what extent any alternative sources of funds would have been available.
From what little the Government have chosen to put in the public arena about the prolonged and abortive sale negotiations, it appears that there was no deal on offer which could have seen Northern Rock going forward without special financial assistance from the Bank of England or the Government. Therefore, if Treasury or Bank financial support were withdrawn, the likely next step would have been for Northern Rock to be placed in administration. It is not clear beyond peradventure, however, that Northern Rock is not a going concern in some form. Indeed, we must assume that the Government’s rationale for installing the expensive team led by Mr Sandler was to deliver an ongoing viable business. In that light, will the Minister say why the Government put Article 6 in the order, which requires the valuer to assume that the company is in administration and is not a going concern, rather than leaving the valuer to reach a judgment on the basis of the facts as they found them? Is the paragraph concealing some facts about the financial position of Northern Rock that would be relevant to a valuer but which the Government do not want in the public domain, in particular in relation to the “going concern” nature of the business?
I turn to the detail of Article 6. I could not find a definition of the term “in administration” in the order, though I assume that the Government intend this to mean an administration within the Insolvency Act 1986 as amended by the Enterprise Act 2002. Perhaps the Minister could confirm that or indicate what the phrase is intended to mean.
As I am sure the Minister is aware, an administrator is required by the 2002 Act to perform his functions with the objective of,
“rescuing the company as a going concern, or ... achieving a better result for the company's creditors as a whole than would be likely if the company were wound up (without first being in administration), or ... realising property in order to make a distribution to one or more secured or preferential creditors”.
Will the Minister explain how this definition of administration fits with Article 6 of the order? Does Article 6(a), which requires the valuer to assume that Northern Rock,
“is unable to continue as a going concern”,
mean that our hypothetical administration must ignore any possibility of,
“rescuing the company as a going concern”,
as set out in the 2002 Act?
If the valuer must focus only on the second two legs of the 2002 Act—namely, achieving a better result for creditors as a whole or realising property for secured or preferential creditors—will the Minister say what this means in practice? I presume that achieving a better result for creditors might involve some corporate restructuring and creating positive value, which could in turn be sold as a going concern. That may be what Mr Sandler is now working on. I hope that the Minister can shed some light on this, both for the House tonight and for the benefit of the valuer when he or she is appointed and starts work.
Whenever we in this House or my honourable or right honourable friends in another place raised the possibility of administration as an alternative to nationalisation, government Ministers always characterised administration as equivalent to a fire sale—the Minister has used those terms. We never believed that insolvency law provisions relating to administration could or should be seen in such a simplistic light, and I hope that the Minister will tonight confirm that the Government’s use of the assumption of administration in Article 6 is not intended as an instruction to the valuer to perform a fire sale valuation.
I hope that the Minister can also answer a question which is relevant to any valuer and to your Lordships’ understanding of the company, which is now in public ownership. When will we be allowed to see the business plan of Northern Rock? I understand that the plan must be submitted to Brussels by next Monday, and so it must be ready or very nearly so. During the passage of the Act, the Minister referred to:
“The bank’s business plan, which will be developed in the coming weeks and must be agreed with the Government”.
He went on:
“I can commit to keep the House fully informed as that planning work reaches a conclusion … a strategic plan will be communicated to the House in due course … there certainly will be no delay”.—[Official Report, 21/2/08; cols. 301-02.]
We have not yet seen the business plan.
While we are on the subject of commitments made during the passage of the Act, perhaps the Minister will also tell the House when noble Lords may see the framework agreement which is to set out the Government’s relationships as both shareholder in and lender to Northern Rock. On 21 February, the Minister told my noble friend Lord De Mauley that the framework agreement would be published “as rapidly as possible”, but I believe that, three weeks later, it has not yet seen the light of day.
The Minister will know that the small shareholders, many of whom will have acquired their shares as members of the demutualised Northern Rock Building Society, feel aggrieved by Article 6. They have been confused by repeated assertions by the Government that Northern Rock was a going concern, with a good-quality loan book, and that it was solvent. The shares in Northern Rock continued to be traded on the London Stock Exchange until the Government finally announced their intention to nationalise it. The closing price before that announcement was 90p. Will the Minister put on the record for those small shareholders why the Government are taking away their shares on the basis of assumptions which are at odds with their repeated statements about Northern Rock during the autumn? Will the Minister explain to them how 90p compares with the valuation that they expect to be produced by their Article 6 assumptions?
The Government showed disdain for small shareholders when they nationalised Network Rail—the Minister’s noble friend Lady Vadera famously referred to them as “grannies in blouses”. I hope that the Minister will tonight eschew that disdain and set out fully and for the record why their chosen valuation process is fair and reasonable for small shareholders.
At the other end of the investor spectrum are sophisticated international investors, including hedge funds, and they are equally unhappy about the valuation basis. All of us doubtless read in the weekend newspapers about the legal actions that they are contemplating, including human rights challenges and judicial review. I would not expect the Minister to be able to comment substantively on that today.
However, I would like him to deal with a rather more generic issue which may have a bearing on the compensation settlements. Will he confirm that the UK has entered into a number of bilateral treaties with the aim of protecting investors from the effects of expropriation? Many of these treaties—I believe that there are about 85 in total—are with developing countries, and I expect that the driving force behind them was the desire to protect UK investors from foreign expropriation. But the treaties are bilateral and hence protect foreign investors in the UK in the same way. For example, one of the treaties is with the Hong Kong Special Administrative Region, which still has a dynamic financial community and is home to many hedge funds. Investors who bought Northern Rock shares through Hong Kong entities may well be able to use the bilateral treaty compensation principles which provide, in Article 5, for compensation based on,
“the real value immediately before the deprivation or before the impending deprivation became public knowledge whichever is the earlier”.
That seems to set at 90p a compensation floor for any investors who can take advantage of such a treaty, but there will be a lot of scope for arguing that the “real value” referred to in Article 5 has to eliminate the extent to which the threat of nationalisation was already embedded in that price. A figure of £4 per share has been talked about in the press, but there are other plausible values—perhaps a pre-credit crunch value of £8 or £9 might be argued for. I do not expect the Minister to comment on these values.
The crucial point about these bilateral treaties, on which I should value the Minister’s comments, is that disputes about compensation bypass the UK courts completely. For example, Article 8 of the Hong Kong treaty to which I have referred states that, if no settlement is reached, there is to be arbitration under the arbitration rules of the United Nations Commission on International Trade Law.
Have the Government considered the impact of these bilateral treaties? Do they believe that it would be tenable to have two or more incompatible valuations proceeding in respect of the same class of shares? Or, perhaps more pertinently, do the Government believe that they can get away with an internationally arbitrated value for powerful institutional shareholders while paying a smaller sum to a small shareholder in the north-east, resulting from Article 6 valuation assumptions?
I would now like to ask the Minister about the appointment of an independent valuer. As a member of the Institute of Chartered Accountants in England and Wales, I suppose that I should be flattered that that institute should be consulted. But, actually, I can see little point in this bit of the process, though it has been suggested that the Government needed the help of the institute to persuade people of quality to consider the job because of the reputation risk involved.
Of much more importance is how the valuer will be selected. I hope that the Government will not think about making this appointment without a competitive tender. That is not the same as an “expression of interest”, which is the phrase the Minister used when introducing the order. This contract will be valuable to the person appointed and his or her firm. The valuation process will doubtless drag on for years as all appeal avenues are exhausted—and time costs money . How will the Treasury determine value for money if it has not carried out a competitive tender?
The Minister would not expect any debate on Northern Rock to take place without some reference to Granite. The Government have not explicitly included Granite within the nationalisation order, as has been debated at some length. The Chancellor asserted in his letter to Mr Vince Cable that:
“Granite and only Granite is liable to its bondholders under any scenario. The Government have not provided any guarantee arrangements to Granite's bondholders”.
It now appears that the Government were being economical with the truth. The analysis by the Office for National Statistics given last week to the Treasury Select Committee in another place is as follows:
“The securitisation structure leads ... to the financial risks and rewards associated with [Granite's] assets remaining with Northern Rock plc”.
Since Northern Rock plc is owned by the Government, Granite’s liabilities are now de facto those of the Government. Will the Minister confirm that this valuation process cannot ignore Granite, and, indeed, will have to reflect the full amount of Granite’s assets and liabilities?
Since we are talking about the liabilities of Northern Rock, will the Minister confirm—what has been widely reported in the press—that the Chancellor in his Budget statement tomorrow will try to ignore or footnote Northern Rock's liabilities? The Minister may try to wriggle out of this and tell me to wait until tomorrow. But the Minister will know that if the Chancellor does try to ignore the fact that Northern Rock’s liabilities are those of the public sector, as the ONS has already determined, he will be unmasked as the biggest fiddler of figures of all time. His predecessor, the Prime Minister, was adept at cooking the books but never on such a large scale.
Our party’s plans are for independent auditing of fiscal rules which would stop any such cynical manipulation. We look forward to the day when we can restore decency in government reporting.
My Lords, the discussion so far has rightly concentrated on paragraph 6 of the order before us. I cannot match the erudition of the noble Baroness, Lady Noakes, on the definitions used in that paragraph, but surely the reality those words reflect is that without government intervention Northern Rock would have gone bust in September of last year. Therefore, is not the effect of that, and of those assumptions, to value the shares at zero? If that, as it appears, is the case, I would be grateful if the Minister could say a bit more about what he envisages the valuer doing. Why does he need staff to do it? How long is it going to take to do it? And how much is the process likely to cost?
The Minister may recall that my colleague Vince Cable pointed out at an early stage that if the Government had only taken his advice on nationalisation, they would have saved millions of pounds in fees for Goldman Sachs. In order not to make the same mistake again, will the Government accept an offer from my noble friend Lord Oakeshott to value Northern Rock shares for nothing, and to do so extremely quickly?
There has been much speculation about legal action. Shareholders, both small and large, have contemplated legal action. I suspect that for the hedge funds they have to proceed with legal action to cover the fact that they made a huge bet and lost. For small shareholders, it seems to me that legal action poses a number of risks. First, they are, understandably, very frustrated at the situation in which they find themselves. Whether or not the shares are valued at nothing, they are clearly going to be valued at virtually nothing. They quite understandably are, first, looking to see who to blame, and, secondly, against whom they have a course of ac