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Lords Chamber

Volume 721: debated on Tuesday 2 November 2010

House of Lords

Tuesday, 2 November 2010.

Prayers—read by the Lord Bishop of Gloucester.

Government: Role of the State


Asked By

My Lords, the big society is about putting more power into people’s hands—a massive transfer from Whitehall to local communities. What we have announced in the spending review will help communities and individuals to take on more responsibility through community empowerment, through opening up opportunities to deliver public services to other organisations, and through social action such as the national citizen service, enabling young people to play a more active role in society.

My Lords, I am grateful to my noble friend for that reply. Is it not absolutely clear from the alarmingly high structural deficit that this Government have inherited and the inevitable reductions in spending after the spending review that the state has become hyperactive and has overreached itself to an unaffordable, unsustainable extent, as it has done before under Labour? Some of us remember 1975-76 and the IMF marching in. Is it not clear that there must be a change of approach and that, among other things, the private and voluntary sectors in their broadest sense must be strongly encouraged and empowered, as my noble friend said, to take up more of the responsibilities currently foisted on the state?

My noble friend makes a valuable point. That is why we are working to open up public services to small businesses, voluntary organisations and social enterprises and to enable those currently in the public sector to spin out from the state through mutualisation. The Government are also providing support for the voluntary, community and social enterprise sectors via a £100 million transition fund and the establishment of a big society bank, which will provide new resources of finance.

My Lords, in acknowledging that this Government believe in a less ambitious state, do they, however, accept that it is the irreducible responsibility of the state to do what it can to ensure that the poor and the vulnerable are sheltered from the storm? If they do, how is it consistent with that responsibility to introduce policies that are bound to increase homelessness?

The noble Lord will be aware that this side of the House is very conscious of its responsibilities in government and, indeed, to protect the vulnerable. I acknowledge that this is a difficult time for the country as we take necessary action to reduce the deficit. The voluntary and community sector has always been there for vulnerable people in tough times, and I know that it will be there again. That is why we are looking to support it.

Does my noble friend agree that successive Governments have in fact been reducing the role of the state for years and years by farming out difficult decisions, such as whether there should be a law of privacy or whether prisoners should have votes, to bodies such as the European Court of Human Rights, and farming out virtually all their other powers to the bureaucracy in Brussels? Is it not about time that we went for the repatriation of some of our powers?

We have plenty of opportunity to discuss European matters on other occasions, and it is certainly beyond my brief to comment on my noble friend’s contribution.

My Lords, instead of creating all these new organisations and societies, would it not be better to support existing organisations, such as the citizens advice bureaux, which are suffering a great deal because of the cuts?

We are indeed supporting the citizens advice bureaux and we are hoping to strengthen them under proposals that the Public Bodies Bill will bring forward. The truth of the matter is that there is enormous scope to provide for community action and decision-making at local level. This Government believe in that and are prepared to introduce policies that take it forward.

My Lords, in this age of chronic insecurity, do the Government not recognise that, while assistance to individuals to help localities and sectoral interests is important, we need, above all, strong, central and communally trusted government that is capable of reinstating the security that we lack?

I hope that the way in which this Government have tackled the deficit issue indicates that this is a confident and competent Government. Indeed, that is the leadership which Governments exist to provide, but it is important to stimulate local communities and make them feel empowered so that they, too, have a role to play in the governance of the country.

My Lords, in the light of his earlier responses, will the noble Lord tell us how many new state organisations the Government envisage will be created if the ambitions of the health White Paper are realised?

I am not in a position to answer that question definitively, but I will ask my noble friend, the Minister responsible, to write to the noble Baroness on that issue. However, we do not see the bodies that are being created under the proposals that I have been talking about as state bodies. They will be community governed and community empowered.

My Lords, has not the role of the state many aspects, one of which is to retain our residual sovereignty?

Yes; I suppose each to his own. Government centrally certainly has fundamental responsibilities for the security and stability of the society in which we live. However, the policy direction of the Question was about the devolution to local communities of responsibilities that are not necessarily matters for the security and establishment of the state. I was able to give an affirmative answer to my noble friend Lord Roberts of Conwy’s request that that is government policy.

Finance: Fiscal and Monetary Policy


Asked By

To ask Her Majesty’s Government how the Chancellor of the Exchequer is co-ordinating fiscal and monetary policy.

My Lords, the Monetary Policy Committee of the Bank of England takes into account the path for fiscal policy in judging the outlook for growth and inflation, and hence in its monetary policy decisions. As provided for in the Bank of England Act 1998, a Treasury representative attends, and may speak at, the monthly MPC meetings. The non-voting representative plays a key role in ensuring appropriate co-ordination of fiscal and monetary policy, including by briefing the MPC on the Budget.

I thank the Minister very much for that Answer. Did he notice a recent speech by Dr Posen, a new member of the Monetary Policy Committee who presumably was appointed by the new Government, in which he said that we should not get too excited about the welcoming figures on growth that we saw last week—which of course did not come from the present Government’s responsibilities? I would never seek to accuse the noble Lord of getting overexcited about anything, but perhaps I could refer to a Written Answer he gave me on the question of the non-voting senior Treasury official who attends the Monetary Policy Committee. He said that he,

“plays a key role in liaison between the Treasury and the Bank to ensure appropriate co-ordination of fiscal and monetary policy”.—[Official Report, 27/9/10; col. WA 493.]

It would be interesting to know what the Government mean by “appropriate”. Would that include telling the Bank that the Treasury wanted to see something done to help growth, for example by increasing capital investment, which is desperately needed and would also help considerably with unemployment?

My Lords, first, since the noble Lord, Lord Barnett, draws attention to the fact that we did have a strong third quarter of growth at 0.8 per cent, we should celebrate the fact that we have had a third consecutive quarter of growth. The recovery will no doubt be choppy, and I am sure that at certain points what happens will suddenly become our responsibility, not theirs. That aside, the responsibility of the Treasury official who attends the Monetary Policy Committee is essentially to bring to the attention of committee members matters of which they ought to be aware in coming to their independent conclusions on monetary policy judgments. That includes briefing them, for example, on the judgments that have been made in the Treasury’s Budget so that they can factor them into account in their deliberations.

My Lords, has my noble friend seen the reports today on the mid-term elections in America, which state that President Obama's deficit reduction council is set to recommend that the best way to reduce the deficit is to cut the burden of taxation on the private sector in order to create wealth?

My Lords, in the judgments that my right honourable friend the Chancellor of the Exchequer made about how to achieve the huge and very necessary consolidation of the fiscal position here, by the end of the consolidation period, 77 per cent of the burden will have been taken by expenditure cuts and only 23 per cent by taxation, because it is precisely by not raising taxes and choking off growth that we will get the economy growing again in a balanced way. I am grateful to my noble friend for bringing our attention to that matter.

My Lords, the Minister rightly reminded us of the legislation under which the Monetary Policy Committee operates, which obliges it to hit an inflation target. There is also a “subject to” clause that has troubled all of us for years. Will the Minister interpret for us the Government’s present view of “subject to”? In particular, where do the Government stand on the restoration of full employment as an aim in our economy and as an achievement?

My Lords, the Chancellor writes a very clear mandate letter to the Governor of the Bank of England for the Monetary Policy Committee to hit a target of 2 per cent for the 12-month rise in the CPI. Of course, that is the same target that was set under the previous Government. It is up to the governor and the MPC to interpret the Act in the appropriate way. As far as concerns employment, we must think about the OBR forecast which says that on the Government's policies laid out in the Budget, unemployment will fall and employment will rise in every period considered by the forecast.

Does my noble friend accept that, if we are to see a revival in the economy, it is going to come from the private sector and from low interest rates, and that those interest rates would be very much higher if this Government were not addressing the appalling structural deficit that we inherited from the previous Government?

I completely agree and am grateful to my noble friend for drawing our attention to that. Indeed, only 10 days ago, after the spending review, Standard and Poor’s, one of the leading rating agencies, moved our rating from negative to stable. It is that confidence that keeps interest rates low and enables businesses to invest.

First, I thank the Minister for what I think was the first open acknowledgement, and the clearest indication yet, that the last three quarters’ growth has been down to the previous Government, not this Government. Secondly, going back to his first Answer, how much importance do the Government attach to the growth of the economy? After all, on many occasions over the past 200 years national debt in the United Kingdom has been far higher than it is now, and it has always been primarily growth that has got us out of it. Therefore, should we not put growth at the very top of the agenda and should not the Government start saying that?

My Lords, first, I made no admission. I do not think that we have time today to apportion credit and blame but I merely note that I look forward to seeing when the party opposite decides that something relating to the economy is its fault. As to the size of the debt, as a Government we inherited the largest peacetime deficit in our history—indeed, the largest deficit in Europe—and there are all sorts of measures of this. We have needed to engage in an £81 billion consolidation of the fiscal situation in order to retain, as we have done, the confidence of the market to enable growth policies to be underpinned.

Intellectual Assets: Crime


Asked By

To ask Her Majesty’s Government what assessment they have made of the threat posed to United Kingdom corporate interests by illicit attempts to acquire proprietary technology and other intellectual capital.

My Lords, this Government recognise the risk to the prosperity of the United Kingdom from the loss of intellectual assets, and work is afoot to obtain accurate information as to the size and nature of that loss. The Government provide advice to private sector companies on defending their systems against cyberthreats. The transformative cybersecurity strategy, which the Government are now developing, will strengthen our collective ability to tackle cyberespionage and cyberattacks that target UK intellectual capital.

My Lords, I thank my noble friend for that reassuring and informative Answer. Does she accept that the protection of proprietary, valuable technology is absolutely critical to companies’ ability, and indeed willingness, to invest in long-term research and development, and indeed to our ability as a country to attract inward investment?

My Lords, I think that the whole House will endorse the view that an economy such as ours depends crucially for its advance and future prosperity on its capacity to innovate and the intellectual capital on which that depends. Therefore, a central part of the Government’s strategy is very much concern not just with national security but with developing, with the private sector, a secure cyberplatform on which investment in this country from both domestic companies and companies abroad can be based.

Bearing in mind the increasing threat posed by the type of crime raised in this Question and the importance of developing still further links and levels of co-operation with other countries on this issue, can the Minister give a categorical assurance that the Government’s intention to merge the Serious Organised Crime Agency with the new national crime agency will not result in any diminution of personnel and resources directed at fighting crime of this kind? Furthermore, will the Government’s recently announced review of intellectual property and its value to the UK economy also address the threat posed by intellectual property crime?

My Lords, of course many sorts of crime are involved. The original Question was clearly about espionage but there is also theft, to which the noble Lord referred—that is, crime of a more straightforward kind—and both those aspects of our intellectual underpinning in this country need to be addressed. I can give the assurance that there will be no change in the status of SOCA, which will remain central—and I mean central—to crime-fighting in this country, so there will be no diminution in our efforts on that front. As those on the Benches opposite may know, we will produce a strategy for cybercrime by the end of the year. Therefore, I can give that assurance, and we agree with those on the Benches opposite that this is a matter of high national importance.

My Lords, will the Minister tell the House of any work that is being undertaken internationally since it seems that work with other countries should be central to management of the ware?

Yes, I can give several instances but two in particular. First, the UK is developing a vision for our handling of cyber issues in the future which we will share with close allies. Secondly, noble Lords may have observed that it was announced today that we and the Government of France are seeking to co-operate on cyber matters. I believe, as the noble Baroness says, that we will not succeed in producing a secure cyberrealm in the absence of international co-operation.

My Lords, the Minister and the Government were correct in identifying cyber as a major new priority in the strategic security review, but does she accept that if we are to counter the use of malware, industrial espionage, or, God forbid, cyberattacks from terrorists, possibly in our emergency systems or in the financial sector, we will require above all a new cadre of well-developed, trained and selected young people who are at the very frontiers of thinking in this direction? Can she tell the House what measures have been taken to encourage and identify such a cadre?

The noble Lord puts his finger on a very important issue, and one that will be a concrete and identified part of the strategy that the Government are developing. Clearly we need to have proper competences in government and co-operation with the private sector, and to build skills in this country, which means enhancing the necessary studies at our universities. We must also encourage best practice and good behaviour among all cyberusers—individuals as well as companies.

My Lords, I know that the noble Baroness shares my view about the importance of cyber, and I welcome the extended work on that. However, her initial Answer did not quite give the right impression that we are still looking at the problem. Am I not right in saying that whole areas—for example, whole engines and their entire design specification, and whole aircraft and their design specification have been taken from companies in this country and America? We know that that has happened. That information is already there and it is important that it is acknowledged by the Government—it was certainly acknowledged by the previous one.

This might be more difficult, but I would be interested to know the answer. Mr Jonathan Evans, head of the Security Service, mentioned China as a specific country. Would the noble Baroness be willing to agree with that, or is it too sensitive to talk about?

I think that I will refrain from rising to that one. The noble Lord is quite right that this is one of the reasons why we have fixed our eyes on this threat. It is real. There is evidence that theft has taken place and it must be stopped, so there is no dispute between us. In my original Answer I was saying that we are trying to put a value on the losses. In other words, we are doing some historical work but also looking at the trend lines to be able to know more than we do at the moment about both the volume and the nature of the threat we face.

My Lords, the Government very sensibly in the spending review announced an increase of expenditure on cybertechnology and cybercrime. Is the Minister confident that there is sufficient co-ordination within Whitehall to ensure that that money is spent correctly, and will she advise the House which is the lead department in Whitehall on this issue?

My Lords, the lead department is the Cabinet Office and I am the Minister responsible in that department. The answer to the noble Lord’s question is that we are extraordinarily aware, as I am sure the previous Administration were, of the need for co-ordination. We are building on what the preceding Administration did to strengthen the co-ordination, but we want rather more than that. We want a single strategy that all the departments follow, and do not want simply to co-ordinate existing efforts but to have everybody involved in an overall strategy in which they each pursue their delegated part.

Immigration: Deportation


Asked By

To ask Her Majesty’s Government what restraint methods are now used in deportations; and whether there has been any change of practice recently.

My Lords, the vast majority of people who are being removed from this country depart voluntarily. There is a small category of people who resist. It is known policy that escorts may be used to control and restrain such individuals and that these techniques are accredited by the National Offender Management Service.

Following the death of Mr Mubenga, the UK Border Agency temporarily suspended the use of control and restraint on scheduled flights for a 10-day period between 15 and 25 October. That was for the purpose of carrying out an immediate review to see whether the techniques used on the aircraft were appropriate.

The use has been reinstated. The National Offender Management Service, which conducted this review, has said that there is no substantiation to the claims that have been made that the restraints being used were inherently dangerous. We are now going on to conduct more investigation of the appropriateness and utility of restraint. We do not believe that we have anything like achieved the last word. So I can assure the House that this issue, which I know is a matter of anxiety to us all, will be taken forward and that we are examining what needs to be done very thoroughly.

I thank my noble friend the Minister for her reply. It is very reassuring to hear what she said. Given the news that we are now to have a new contractor, Reliance, conducting these deportations, perhaps I may ask whether its contract will spell out in greater detail than hitherto what control can be used, and, indeed, whether the individual staff members will have to sign up to a code of practice. I think that that would give the House considerable reassurance.

The noble Baroness raises some of the absolutely pertinent issues which our further review needs to take into account. I cannot comment precisely on the contract of the company that will be employed in addition to G4S but I think it fair to say that the Government feel they need to look at all aspects of the services provided. They need to start with the contract and go right through to what happens on the aircraft.

My Lords, what checks will the Government be making to ensure that the new private security firm involved in deportations carries them out in accordance with the laid-down practices and procedures, including, in particular, the use of force?

My Lords, as the House may know, there are several control and monitoring systems in place. Contrary, perhaps, to some of the prevalent views, they are in fact very active. The Chief Inspector of Prisons has oversight of all the detention facilities, which includes the escorts, and he conducts inspection visits on an unannounced basis. The independent monitoring board is based at Heathrow. After the last Question that I was asked on this subject I inquired how active that independent monitoring board was, and I was told that it is very active. It has produced critical comment on some of the practices it has observed, although not in this area, and it has said specifically that it does not think that there is a systemic problem, which I know is one of the anxieties in the House. Furthermore, detainees themselves have the right to make complaints. Those go to the Prisons and Probation Ombudsman and he reviews them. There are many controls trying to ensure that there is both a good system and proper practice.

My Lords, voluntary departures are clearly much more humane and give much better value to the taxpayer. Are the Government convinced that there are enough incentives available for people who depart voluntarily?

We are trying to increase the number of people who are willing to depart voluntarily. Nevertheless, we also encourage people, when we have to oblige them to go, to do so in a compliant fashion. We are making very great efforts to ensure two things: first, that the maximum number of people who are not entitled to stay do depart this country; and, secondly, that when they have to be escorted, it is done in a proper, humane fashion.

My Lord, can the Minister tell us what alternative methods to the distraction techniques that are used by detention officers exist? Can she tell us, possibly at a later date, what distraction techniques are used in other parts of these islands by the various detention services? Does she agree that the use of pain-induced compliance requires much more stringent management and that such management will inevitably incur further cost?

I hope the noble Baroness will forgive me, but I did not hear all her question, although I heard the last part. One of our objectives is not to be put in a position where any pain-induced compliance technique has to be used. As a result of this latest incident, not only have we gone through with all escorting officers their duties and the methods of restraint they use, but we have taken them all the way through in detail with particular emphasis on the health and safety aspects of the job, including positional asphyxia, which is a particular source of attention at the moment. We clearly need to have extremely well informed and educated guards on duty.

May I express to the Minister our appreciation for the energetic way in which she has followed up the concerns of the House? Will she consider allowing the guidance offered by the UK Border Agency to private companies, which is currently not in the public domain, to be made available in the Library to Members of both Houses? That would help us in sustaining the very high standards that she wants to see.

Business of the House


My Lords, I rise to inform the House about the publication tomorrow of an interim report from the Leader’s Group appointed to identify options for allowing Members to leave the House of Lords permanently. The group, ably chaired by my noble friend Lord Hunt of Wirral, has produced the interim report summarising the views presented to it by a number of Members of your Lordships’ House and inviting further comment by 23 November. In order to facilitate the next stage of consultation, the usual channels have agreed that the House will be given the opportunity to debate the interim report on Tuesday 16 November. The group’s interim report will be available from 10 o’clock tomorrow morning in the Printed Paper Office and online.

Arrangement of Business


My Lords, my noble friend Lord Strathclyde will now repeat a Statement on the European Council. There will then follow the debate in the name of my noble friend Lord Marland and then, at a convenient point very shortly after 4.30 pm, my noble friend Lord Astor of Hever will repeat an Urgent Question as a Statement on the proposed treaties with France.

European Council


My Lords, I hope that it is now convenient to repeat a Statement that was made in another place by the Prime Minister yesterday afternoon. The reason for the delay was to give this House the maximum amount of time to discuss the comprehensive spending review, an opportunity that was taken up by many of your Lordships.

“With Permission, Mr Speaker, I would like to make a Statement. Clearly the whole country has been focused this weekend on the terrorist threat, and the Home Secretary will make a full Statement after this, but I want to put on record my thanks for all those involved in the international police and intelligence operation, whose efforts clearly prevented the terrorists from killing and maiming many innocent people, whether here or elsewhere in the world.

The fact that the device was being carried from Yemen to the UAE to Germany to Britain en route to America shows the interest of the whole world in coming together to deal with this and, while we are rightly engaged in Afghanistan to deny the terrorists there, the threat from the Arabian peninsula, and from Yemen in particular, has grown, so as well as the immediate steps that the Home Secretary will outline it is clear that we must take every possible step to work with our partners in the Arab world to cut out the terrorist cancer that lurks in the Arabian peninsula.

Let me turn to last week’s European Council. This Council’s main business was going to be economic governance in the light of the serious problems that the eurozone has faced. But I was clear that we would not talk about the need for fiscal rigour in the EU’s member states without also talking about the need for fiscal rigour in the EU budget—both next year and for the future. So we ensured that the EU budget was also on the agenda.

Let me go through both issues. The first is the budget for 2011. From the outset in May, we wanted a freeze. We pressed for a freeze. In July, we voted for a freeze seeking to block the 2.9 per cent proposed by the presidency. Finland, Sweden, Denmark, the Netherlands, the Czech Republic and Austria all voted with us. Unfortunately, together we were just short of the numbers needed for a blocking minority. So, in August, the Council agreed a 2.9 per cent increase.

In October, that went to the European Parliament, which voted for around a 6 per cent increase. This was the frankly outrageous proposal with which we were confronted at this European Council. What normally happens in these situations is that you take the position of the EU Council and the position of the EU Parliament and negotiate, which ends in splitting the difference. Indeed, that is precisely what happened last year.

So before the Council started we began building an alliance to take a different approach and insist on 2.9 per cent. I made phone calls to my counterparts in Sweden, France and Germany, among others, and continued to press the case during the Council. Twelve other heads of government agreed with me. We issued a joint letter, which makes it clear that a 6 per cent increase is,

‘especially unacceptable at a time when we are having to take difficult decisions at national level to control public expenditure’.

Furthermore, the joint letter goes on to say that,

‘we are clear that we cannot accept any more than’,

the 2.9 per cent increase being proposed by the Council.

Let me explain what this means. Either the Council and Parliament now have to agree to 2.9 per cent or there will be deadlock, in which case the EU will have to live on a repeat of last year’s budget settlement handed out in twelfths over the next 12 months, an outcome with which we would be perfectly content.

Next, and more important, Britain secured a significant breakthrough on a fundamental principle for the longer term. As well as the individual budget negotiations for 2011, 2012 and 2013, there is also a big negotiation about to happen for the future funding of the EU over the period between 2014 and 2020. We clearly want to make sure that all these negotiations go the right way and what we agreed at the Council was a big step forward. The European Commission was wholly opposed to it, but the Council agreed that,

‘at the same time as fiscal discipline is reinforced in the European Union, it is essential that the European Union budget and the forthcoming multi-annual Financial Framework reflect the consolidation efforts being made by Member States to bring deficit and debt onto a more sustainable path’.

From now on, the EU budget must reflect what we are doing in our own countries and it is quite apparent that almost every country in Europe is seeing very tough spending settlements. This new principle applies to the 2012 and 2013 budgets and the crucial 2014 to 2020 EU spending framework. Just as countries have had to change their financial plans because of the crisis, so the EU must change its financial plans, too.

If you look at the published conclusions, you see that language on the budget formed a very prominent part, even though it was never originally on the agenda. I think that this is an important step forward. In my discussion with Chancellor Merkel at the weekend, we agreed to take forward some joint work to bring some transparency to the EU budget—salaries, allowances and grants. This work has just not been done properly. It is about time that the citizens of the EU knew what the EU spends its money on. This is the spotlight that needs to be shone and that is exactly what we are going to do.

On economic governance, there are two issues. First, there is Herman van Rompuy’s report from the task force on economic governance, which was set up after the sovereign debt crisis. My right honourable friend the Chancellor and the Treasury have been fully involved. Secondly, there is the additional proposal made by the Germans and in principle agreed by the Council for a treaty amendment focusing on putting the EU’s temporary bailout mechanism on to a permanent basis. Let me take each in turn.

On van Rompuy’s report, there are some sensible proposals. For example, the eurozone clearly needs reinforced fiscal discipline to ensure its stability. The crisis has shown that in a global economy you need early warning about imbalances between different countries. Let me be clear on one point about which there has been some debate: the question of surveillance. All member states, including the UK, have participated in surveillance for more than a decade. This is not a new framework. The report is clear that the current framework remains broadly valid but needs to be applied in a better and more consistent way. The report proposes new sanctions, but we have ensured that no sanctions, either existing or new, will apply to the UK. The report could not be clearer. It says that,

‘strengthened enforcement measures need to be implemented for all EU Member States, except the UK as a consequence of Protocol 15 of the Treaty’.

That is our opt-out. It kept us out of the single currency. It kept us out of sanctions under the Maastricht treaty and we have ensured that it keeps us out of any sanctions in the future.

In addition to the issue of sanctions, a number of concerns have been raised. Let me address each of them head on. First, will we have to present our Budget to Europe before this House? No. Secondly, will we have to give Europe access to information for budgetary surveillance that is not similarly shared with organisations such as the IMF or publicly available on the internet? No. Thirdly, will powers over our Budget be transferred from Westminster to Brussels? No.

Turning to the proposal mentioned in the Council conclusions for limited treaty amendment, we have established that any possible future treaty change, should it occur, would not affect the UK and I will not agree to it if it does. The proposal to put the temporary bailout mechanism on a permanent footing is important for the eurozone. Eurozone stability is important for the UK; nearly half our trade is with the eurozone and London is Europe’s international financial centre.

Let me be clear. Throughout this process, I have been focused on our national interest. It is in our national interest that the eurozone sorts itself out. It is in our national interest that Europe avoids being paralysed by another debt crisis, as it was with Greece in May, and it is absolutely in our national interest that Britain is not drawn into having to help with any future bailout. This is what we have secured.

Let me turn briefly to the other business of the Council. On the G20, the Council discussed its priorities for the upcoming summit in Seoul. Again, our interests are clear. We are an open trading nation and we want progress on Doha. This has been going for nearly a decade and 2011 is the year when we must try to achieve a deal. We believe that the world has suffered from economic imbalances. We want countries with fiscal deficits to deal with them and countries with trade surpluses over time to look at structural and currency reforms. We recognise the importance of strengthening global financial stability and that is why we support the recent Basel agreement on stronger banking regulations. We also want global institutions reformed to reflect the growth of emerging powers, so we will see through the work that my right honourable friend the Chancellor has led on reform of IMF votes and board seats. Finally, on Cancun, we are committed to making progress towards a legally binding UN agreement.

This Council demonstrates that it is perfectly possible to deliver for our national interest while protecting our national sovereignty. Tomorrow, the British and French Governments will sign new defence and security co-operation treaties, which will be laid before Parliament in the usual way. These follow the same principle: partnership, yes, but giving away sovereignty, no. At this Council, Britain helped Europe to take the first vital steps in bringing its finances under control. We prevented a crazy 6 per cent rise in the EU budget next year. We made sure that the budget reflects domestic spending cuts in all future years and we protected the UK taxpayer from having to bail out eurozone countries that get themselves into trouble. There is a long way to go, but we have made a strong start. I commend this Statement to the House”.

My Lords, that concludes the Statement.

My Lords, I thank the Leader of the House for repeating the Statement made yesterday by the Prime Minister in the other place on the conclusions of the European summit last week. Europe is indeed an important issue for this country and we know how vital it is for our economy, for trade and for jobs. But we on this side of the House recognise that it is a difficult issue for the Benches opposite because not only are they divided on the issue itself, they are doubly divided. On Europe, the Liberal Democrats are fundamentally opposed to the formal position of the Conservative Party, as the debates in this House showed so clearly when we took through the Bill to put in place the Lisbon treaty. The Liberal Democrats stood shoulder to shoulder with this party on the Bill and on Europe, to the fury of the Conservative Party, now their partners in government. However, the splitting does not end there because Europe is still a fault line within the Conservative Party itself—a party which can combine the noble Lord, Lord Tebbit, at one end of the spectrum on Europe, and in the other House the Member for Rushcliffe, the right honourable Ken Clarke, at the other end of the spectrum. It is, indeed, a remarkable containment, even if the party has to keep them in separate Houses of Parliament to do it.

I pay tribute to the skill of the Prime Minister in keeping the lid on these divisions by the simple stratagem of not talking about the issue of Europe at all. Strange, then, that the Prime Minister should so carelessly abandon this tactic in the way he dealt with last week’s European Council, especially on the question of the EU budget. Far from remaining silent he talked. Indeed, he talked and he talked and he talked. He talked about how outrageous some proposals were and about what needed to be done—clearly much to the puzzlement of other European leaders. They had not realised that they were there to debate the EU budget, principally because they, like the Prime Minster, knew that it had all been settled in August and that therefore there was nothing else to talk about. However, that did not stop the Prime Minister because he mostly talked about the historic triumph he had managed to bring about.

When people talk quite as much as the Prime Minister did about what he, and he alone, had achieved, it tends to make most people count the political spoons. We, on these Benches, do not think that the Prime Minister came back from the summit with quite as full a canteen of cutlery as he implied. Can the Leader of the House confirm that, rather than his being instrumental in holding down the EU Council to a budget increase of 2.9 per cent as the Prime Minister in effect claimed, the Council of Ministers had agreed this increase back in August? I ask the Leader of the House to address this question specifically. Can he confirm that at that time some 20 EU countries voted for that level of increase and that the letter on the budget, about which the Prime Minister showed off so fulsomely, was signed by fewer countries than had voted for the budget in August—13 in all as opposed to the original 20—and that the Prime Minister lost support rather than gained it? Can the Leader of the House confirm that, having voted to oppose the increase of 2.9 per cent in August, the Prime Minister now supports an increase in the EU budget of 2.9 per cent and that this is a clear U-turn? Many in this House, including those on the Benches opposite, know that in trying to talk up as his own achievement something that had already been long agreed, the Prime Minister was transparently and inadequately attempting to appease the Eurosceptic right in the Conservative Party. They know, too, that such posturing not only fools no one but is ultimately damaging to Britain’s credibility in Europe.

I turn now to the question of treaty amendments. The Conservative Party tried in vain during the passage of the Lisbon treaty Bill to attack this party on the issue of a referendum. However much it tries to scream and shout about it, this party’s position on a referendum was clear: we said that we would hold a referendum on a new constitution for the EU and that, because Lisbon was a further treaty like Amsterdam and Maastricht, it was not a constitution and so it was appropriate for Parliament to consider it just as it had done with Amsterdam and Maastricht. Indeed, when we debated this matter and voted on it, a majority in this House understood that point clearly.

In response, the Conservative Party made two promises: it promised to hold a referendum on Lisbon and it promised to hold a referendum if there were, as it likes to put it, any further transfers of power from Britain to Brussels. We know that the Conservative Party has already explicitly broken its promise on Lisbon because there was no referendum. We now see the Conservative Government—I am sorry, the coalition Government—apparently in the process of breaking that second promise by walking away from the pledge to hold a referendum on any so-called transfer of powers. Can the Leader of the House confirm that proposals for change to the Lisbon treaty are likely? Can he confirm that proposals for treaty change will flow from the conclusions of this summit? Can he confirm that if such proposals are made for treaty change, the Government will put these proposals to a referendum of the British people? Can he confirm that if it does not, the Conservative Party will indeed have broken the second promise it has made to the British people on these issues?

I suspect that the EU leaders who attended last week’s summit would be astonished at these being the issues debated in your Lordships' House today and the other place yesterday. They will have thought that they were at a very different summit, one which was about economic governance, sustainable growth and climate change. All are hugely important issues which were almost entirely eclipsed by the rhetoric which the Prime Minister indulged in. I recognise that the Leader of the House touched on them in the Statement repeated today, but they were not the issues about which the Prime Minister was boasting last week.

On the first issue, economic governance, we welcome sensible proposals for greater co-operation to secure economic stability across Europe. In principle, we also welcome the idea of putting in place clear arrangements for providing help to eurozone countries which get into difficulty, rather than relying on a more informal, ad hoc approach. However, we also believe that the right balance needs to be struck between the need for stability and the need for growth in the eurozone.

With regard to the forthcoming G20 summit in Seoul, on the prospects for the world economy, the Leader of the House will know that an increase in trade accounts for almost half the growth that the Office for Budgetary Responsibility forecasts for the UK next year. We shall see whether that prediction is maintained when the OBR brings forward its updated forecast on 29 November. In advance of that, will the Leader inform the House what discussions were had at the European Council on uncertainty in the world economy and what part Europe can play in helping ensure that economic demand is sustained?

Thirdly, on the forthcoming Cancun conference on climate change, the prospects do not look bright for completing the unfinished work of the Copenhagen conference. Will the Leader set out in greater detail than was given in the cursory mention of Cancun in the Statement what the Government will do to advance a deal on finance, which is both a precondition of progress and an essential objective for Cancun?

For the Benches opposite, Europe remains an awkward and embarrassing issue in different ways and for different reasons. But that awkwardness cannot be brushed aside by the bluster which the Prime Minister so unfortunately engaged in last week. Everyone in this country whose job, contract or business depends on Europe knows how important an issue Europe is. It is too important for the political posturing that we saw from the Government last week. We need sensible discussion and proper engagement on Europe from this Government for the benefit of Britain and of Europe. On these Benches, we all hope that the posture on Europe that the Prime Minister tried to strike last week will be a singular folly rather than a sustained strategy. Once is more than enough. The parties opposite cannot heal their divisions on Europe, but no one will be convinced by their attempts to camouflage them. Distraction is not a strategy; proper engagement is. We look to the Government in future to pursue it.

My Lords, I must congratulate the Leader of the Opposition on having almost comprehensively misunderstood everything that the Prime Minister was trying to do and the way that he went about doing it. I would have hoped, with 24 hours to read the Statement and the exchanges in another place, that she might have made rather a different speech, congratulating my right honourable friend on his achievements.

The noble Baroness teases us for being divided and strives to put a wedge between the Conservative Party—indeed, within the Conservative Party—and our coalition partners, the Liberal Democrats. I assure her that we of course have healthy discussions about a variety of matters to do with Europe, but there is no difference of opinion on this Statement and the direction of travel that the United Kingdom is taking on Europe.

I shall try to answer some of the noble Baroness’s specific questions about the Statement. It is true that the Council agreed in August that there should be an increase of 2.9 per cent in the EU budget. I have to say to the House that this was not our preferred option; we believe that there should have been a freeze. Given that we are not only freezing but seeking a reduction in public expenditure in the United Kingdom, we thought that it was wrong that Europe should spend more money and that 2.9 per cent was too much. However, between August and now, the European Parliament, supported by the noble Baroness’s friends—Labour MEPs did not seek to oppose it—voted for a 6 per cent increase. Therefore, we were very keen to ensure that if we could not rest at nil increase, we could agree at no increase above 2.9 per cent. That is the achievement and the agreement that we have struck with many of our partners—enough of our partners to make sure that that is what will happen.

On the treaty change, I was impressed that the noble Baroness should mention Labour's broken promise on the referendum on the Lisbon treaty. We have only to re-examine the manifesto of 2005, promising to the British people a referendum—a promise which was cruelly broken—to see what was undoubtedly one of the reasons why Labour did so badly in May 2010. The Conservative Party promised a referendum on Lisbon if it were not ratified, but it was ratified, and therefore there would be no referendum.

The noble Baroness asked a really good question—and I do not mean that patronisingly; it was a good question, because it goes to the heart of our position on Europe. It was about the transfer of power. We have a strongly held view and policy that any future transfer of power from the United Kingdom Parliament to Europe should be subject to a referendum. The noble Baroness asked if we believe that the current position is that there is a state transfer of power. We do not. If there were to be a treaty change which meant that there was a transfer of power from the United Kingdom to the European Union then, yes, we would seek a referendum.

The noble Baroness also asked questions about debates on uncertainty in the world economy and on the Doha trade round. I have nothing to add to what was mentioned in the Statement. A series of international meetings is taking place over the next few weeks—in the G20, for instance—where all those matters will no doubt be discussed, and I shall report back in due course to the House.

My Lords, I thank my noble friend for repeating the Statement made in the other place by the Prime Minister and wish to associate myself and those on these Benches with the words of appreciation to the security services for the protection of the people of this country and elsewhere from the terrorist attack launched from the Yemen.

Turning to Europe, does my noble friend accept that the outcome of the important European Council meeting held early in this coalition Government has demonstrated that those of us in the coalition who are Euro-enthusiasts—I count myself one of them—are not so starry eyed about the European Union that we do not believe that it must be held firmly to account, especially on spending, and that it must share in the relative austerity being experienced by member states and their citizens? The Prime Minister has striven to do that. Does my noble friend also agree that those in the coalition who are more Eurosceptic—the Prime Minister declared himself one of those—also see that a successful European Union and an economically secure eurozone are strongly in the national interest of this country? They are not a matter of disinterest, still less of a threat, but a matter of vital national interest to this country, and so to be followed through with enthusiasm and positive engagement—which, again, I believe that the Prime Minister did on this occasion.

Does my noble friend further agree that not only in the context of the European Union but otherwise directly—we will come to this later in the afternoon— there are opportunities for direct co-operation on a bilateral basis between European Union countries, such as the proposed co-operation between Britain and France, which we on these Benches also strongly welcome?

I think that the whole House will agree—and if not, they should do—that he spoke with tremendous good sense in support of the Statement and of the Prime Minister. Of course, there are others in this House—in both Houses—who have a division of view between Euro-enthusiasts and Eurosceptics. However, that need not divide us on the broad direction that we should remain part of the European Union and that we should argue for change internally, which is what we have been doing in the past week in laying out a very clear framework for budgetary change over the next 10 years. We will be at the forefront of making those arguments. Following on from what my noble friend said, we are not alone in this or isolated in Europe in wanting a proper budgetary discipline. The noble Lords opposite had an opportunity, over the past 10 years, to get this right and spectacularly failed to do so.

My Lords, on the EU budget for 2011, I thank the noble Lord the Leader of the House for making it clear in the Statement not only that the European Council will not accept more than 2.9 per cent but that if the Parliament and the Council do not agree, there will be no increase at all. I think that would apply not only to EU policies but to the expense rates, travel allowances and things of that kind in the European institutions. Under the provisional twelfths regime, money at this year’s level—but no more—will be available on a month-by-month basis. In view of this, will the noble Lord the Leader of the House keep the House informed on the discussions between the Council and the European Parliament so that we know whether, from 1 January, there will be an increase of 2.9 per cent or a zero increase?

My Lords, the noble Lord, Lord Williamson, brings a wealth of experience to the House and real knowledge of the workings of the European Commission and European Parliament. What he outlined is entirely correct; if there is no agreement to the 2.9 per cent then there is agreement on no increase at all. The current spending pattern would be rolled over to next year and it would be paid on a monthly basis—it would be divided by 12 and paid out on those terms. It also includes all expenditure: expenses, allowances, salaries and so forth. We would greatly welcome that result and it would be very nice to hear from the noble Lords opposite whether they would welcome it too.

My Lords, is my noble friend aware that I had the pleasure of being seated at dinner last week next to our right honourable friend Mr Kenneth Clarke but that he did not talk to me, whereas the Chancellor of the Exchequer, who was opposite, was quite chatty? I particularly enjoyed a long conversation with our coalition partner the Viscount Thurso, who is of course a Member of the House of Commons.

It is immensely interesting to hear of my noble friend’s dining partners and the conversations that he had. I hope that he will update us regularly.

My Lords, the Statement is in two parts. Might I ask a question about each? On the terrorist incident, perhaps the noble Lord could explain why the Prime Minister was not informed about the terrorist threat at East Midlands Airport until lunchtime on Saturday, when it became quite clear yesterday, in the answers given by the noble Baroness, Lady Neville-Jones, that other Ministers in the Cabinet knew some hours earlier. I hope that he can explain that to us.

Turning to the European Council, I noticed with great interest that the noble Lord read over it very quickly, without his customary emphasis. He was, of course, trying to divert us from some of its content. First, we have it quite clearly in the Statement that,

“we voted for a freeze seeking to block the 2.9 per cent”.

But then a few sentences later, it says:

“So before the Council started we began building an alliance to take a different approach and insist on 2.9”.

We had the spectacle of our Prime Minister almost trying to deceive the people of this country by standing on the steps of the Council and claiming that he was going in there to fight for a zero increase when, as we now know from his Statement, he had before going into the Council meeting tried to build an alliance for 2.9 per cent. Does he think it an honest way of dealing with Parliament and the British people to try to pretend that he was fighting for a freeze on the one hand when, before he went in to fight for it, he was already seeking an alliance to support 2.9 per cent?

Will the noble Lord concede that if he really wants to get to grips with budget discipline, he should not be arguing just about the size of the budget? It would be helpful if he and his Government took a lead in supporting some of the ideas that came from members of the budgetary control committee—including me when I was there—to start introducing a serious attempt at zero-based budgeting, so that you look at budget lines afresh each year rather than just looking at the budget as it was and adding a bit more to it. That would be a serious attempt at budget discipline.

My Lords, I cannot help the noble Lord on his question about the terrorist incident. I am sorry that he did not have the opportunity to ask my noble friend yesterday when she made the Statement.

I do not know what the noble Lord has been dreaming about on the role of the Prime Minister, the 2.9 per cent, when it was agreed and so on. I am utterly clear that unless the Prime Minister had taken a firm stand on the 2.9 per cent, we could well have seen what happened before—it happened last year when the Labour Government were in charge—where the negotiation between the Council and the Parliament ended up with a middle way, a sort of halfway house between the two figures. We wanted to avoid that; we wanted to ensure that not one extra pound should be spent, and that is what has happened. I also note that the noble Lord would have been perfectly happy to have signed up to 6 per cent. That is what most of his colleagues did in the European Council, and it is of course the cost that has increased exponentially over the past few years.

As for the question on budget discipline, we are trying to give direction and budget discipline to the European Union by sticking out for the agreement of 2.9 per cent.

My Lords, does my noble friend the Leader of the House recall that almost the last act performed by Mr Blair before he stepped down as Prime Minister was to sell this country down the river by surrendering, for nothing in return, a large and growing part of the UK rebate that had been negotiated by my noble friend Lady Thatcher? There were unworthy thoughts that he may have been interested in the job as president of the European Union at the time; I am sure that could not have been the reason, but certainly he got nothing whatever in return. Will my noble friend, who is such an ornament of the present Government, give an undertaking that this Government will not surrender any of what remains of the British rebate?

My Lords, anyone would think that I had planted that question with my noble friend, but he will readily confirm that I did not. He is correct on both counts: not only did the former Prime Minister, Mr Blair, surrender a large part of our rebate—worth, I think, some £8 billion—and get absolutely nothing in return, but I can give a firm commitment that under this Government no more of the rebate will be handed back.

My Lords, mention is made in the Statement of a military treaty between France and our country. When will we be likely to get the detail of such a treaty? My thoughts go to the fact that every service man and woman in this country gives allegiance to Her Majesty the Queen, but it could be that those commanding them do not give such an oath of allegiance.

My Lords, the noble Lord, Lord Martin, asks a good question. It is not that I am trying to duck out of it, but my noble friend Lord Astor of Hever will be repeating a Statement at a convenient moment after 4.30 pm, and I am sure that he will be able to give the noble Lord an answer.

My Lords, I put two brief questions to the noble Lord the Leader of the House. We now know that from now on the EU budget must reflect what we are doing in our own countries. Let us suppose that the debt and deficit position in this country and others in Europe is put back on a sustainable path. Would that mean that a Conservative or a Conservative/Liberal Democrat Government would continue to oppose any increase in the budget, although the situation had changed?

My second question concerns the bailout. We are told that it is,

“absolutely in our national interest that Britain is not drawn into having to help with any future bailout”.

You do not have to be outside the eurozone to share that ambition, but is it not inconsistent with the preceding sentence, which is:

“It is in our national interest that Europe avoids being paralysed by another debt crisis as it was with Greece in May”?

God forbid that the United Kingdom should ever find itself in the same position as Greece, but if it did would it mean that the Government would be ideologically and firmly opposed to anybody helping us out?

My Lords, on the second question, if a tragedy occurred and we needed to be bailed out—as we have been in the past, sometimes—there is no reason why we should not go to the IMF. That is what the IMF is for. I think the point behind the noble Lord’s first question was that if we were in a different position and budgetary environment, would we be ideologically opposed ever to seeing an increase in the budget? Some of us would be very opposed to seeing an increase in the EU budget when there are still so many uncertainties and inefficiencies built into the process of budget-making, grant-making and handing out money. We would like to see a comprehensive review of how this money is spent so that there is firm control by member states and the Commission over how it is all done.

My Lords, an undertaking was given that the setting up of the European External Action Service would be revenue-neutral. Have the strongest representations been made to the noble Baroness, Lady Ashton, that the overall overrun that has been announced is quite unacceptable and, if one looks at some of the expenses now contemplated by the European External Action Service, clearly avoidable? If representations are not made about this clear breach of faith, I shall be very disappointed in Her Majesty’s Government.

My Lords, my noble friend is right that certain considerations were discussed at the passage of the Lisbon treaty. Indeed, as a party, we rather opposed the setting up of the External Action Service. However, it is a fact that it is being set up. The noble Baroness, Lady Ashton, is in charge. It needs to be supported. As part of our general opposition to increase in expenditure, we have made several points about the EU budget. I am not aware that we have specifically raised the EAS annual budget, which will be £5.8 billion—a substantial amount of money. However, we hope that as it is rolled out it will be to the benefit of not just the European Commission but the member states of the European Union.

My Lords, there is a connection between the first and second parts of the Prime Minister’s Statement. While any genuine attempt to reduce waste and inefficiency in the European Union’s institutions will be welcomed by all of us, can the Government guarantee that the work of the European Union in development activity, peacebuilding and peacekeeping—which will contribute to our security as well as that of the developing world—will not be affected by the decisions that were made last week in Brussels?

My Lords, I think I can give the noble Lord that assurance. He knows that the Government have given an absolute priority to meeting the target of spending 0.7 per cent of gross national income on overseas aid by 2013. We remain committed to that. We wish to work closely with our European partners so that they also achieve that target. Therefore, I see no reason why there should be any slippage in that aim.

My Lords, this is a very short question. The House will be aware that the EU budget has not been approved by the Court of Auditors for 14 years. With the help of the noble Lord, Lord Tomlinson, who knows more about this than I, we raised this matter with the Government in May. I have not, alas, seen the paperwork. That is not the fault of the Government; they have to negotiate with other powers. I have tabled a Question for Short Debate on whether the grounds on which the Court of Auditors has not approved the budget for 14 years should be examined. That will be a matter for the House in due course.

My Lords, my noble friend said he had a short question, but it is a huge subject. I look forward to his debate. It is completely unacceptable that the European Court of Auditors has not been able to sign off the EU accounts. I understand that the majority of the errors are not due to fraud but to the sheer complexity of the rules and regulations. We need to address the root cause and press for simplification of EU financial management alongside reform of the budget itself.

My Lords, I wish to ask the noble Lord about economic governance and the German Chancellor’s proposal to revise the treaty. Why are the Government agreeing to that? Can any country now propose changes to the treaty? Will he assure me that the Government will indeed have a referendum if there is any change in the treaty at all?

My Lords, on economic governance, we take very seriously the stability of the eurozone. Some 40 per cent of our exports go into the eurozone and 50 per cent of our exports go to the EU, so it is a massively important market to us and financial stability is important. However, we maintain two things: first, we would rather not see a change in the treaty; and, secondly, we would rather not see any change involving a transfer of powers from the UK to the EU. We are not certain that a treaty amendment is required, but if it is and we are assured that there is no such transfer of powers, a referendum in this country would be unnecessary. If there were a transfer of powers, we would not agree to it.

Energy: Climate Change

Motion to Take Note

Moved By

That this House takes note of the future of energy policy in the light of the climate change challenge.

My Lords, I should like to thank the House and all noble Lords in advance for joining this debate today. I should also like to thank the noble Lord, Lord Smith of Finsbury, for giving the debate its name.

The future of energy policy is a question absolutely at the heart of the coalition. Our central theme is twofold: energy security and the low-carbon economy, with value for money for the taxpayer. For years we have relied on the bounty of North Sea oil and not invested in the new energy sources that we will need in the future, or invested the proceeds of North Sea oil to meet our future demands. That must change, and we need to get on with it fast.

I have said in the House many times that the delivery of energy supply transcends many government periods. It is incumbent on us to be part of a broad coalition for the benefit of Britain. Later this year, we in this House will have it in our power to provide a clear pathway to the future, with legislation in the form of the next energy Bill to make that happen.

Since May, many noble Lords have asked recurring questions. Are we serious about nuclear? Will the first cut be CCS? Are we serious about the growth agenda? There are some who think that we should not be serious about the green agenda. Let me emphatically provide noble Lords with the coalition’s response. On Monday 18 October, we announced the key government deliverables that will help pave the way for the building of our new nuclear power. Following the spending review announcement of up to £1 billion for the first CCS demonstration project, last week I started the process of detailed negotiations with Scottish Power on its proposals for that project.

My Lords, whether you like it or not, we intend to be the greenest Government ever. This will require showing leadership and setting an example. Therefore, we will reduce the carbon footprint of central government by 10 per cent this year. Our green agenda will launch the green deal, implement the green investment bank and—through RHI and FITs—encourage renewable development. All of those equal moving to a secure energy supply, new jobs and vital investment.

However, we must do more, and we will. It has been said that we are not providing enough stability to the energy market, so we are pursuing an ambitious energy market reform programme that will support the delivery of a secure, low-carbon, affordable energy mix for the 2020s and beyond. A framework to give a solid carbon price is the first step in providing the incentives for the investment that we so urgently need. Last week, 144 licences were granted to extract oil and gas from UK waters in the 26th licensing round.

My Lords, I could go on, and I will. We have already extended the carbon emissions reduction target—CERT—whereby 3.5 million more homes will be lagged. We have also introduced proposals to accelerate smart meter rollout by comparison with previously published targets. Our wind, biomass, wave and tidal resources make us a natural world leader for renewable energy, but Britain has not realised its potential. We have the highest tidal reach, 40 per cent of Europe’s wind and 11,000 miles of coastline to take advantage of. That is why we committed £200 million in funding for low-carbon technologies, including offshore wind technology. We are providing up to £60 million to meet the needs of offshore wind infrastructure at our ports. We have boosted the UK’s gas storage capability by 15 per cent already, by giving consent for a new facility in Lincolnshire. The renewable heat incentive is the first scheme to provide long-term support for renewable heat technologies and will drive a more than tenfold increase in renewable heat in the UK over the coming decade.

Even with the most laborious of economic circumstances in which to start governing, we have shown that we are open for business and there is a clear pathway. Investors now have certainty about the environment in which they are investing. We must look to build a new kind of economy to ensure global competitiveness and protect ourselves from price shocks.

On our nuclear legacy, public safety is paramount. The funding of nuclear decommissioning will therefore increase by £2.5 billion in 2014-15, so that we really get to grips with our waste legacy issues. I have also commissioned a strategy on how we can further develop our expertise in waste management in the nuclear field.

This debate, though, is our opportunity as the Government to hear your Lordships’ views. We have in this House the greatest brains and experience on this subject covering all sides of the spectrum. All these views will be respected and I hope that I can count on your support to deliver a secure energy supply for generations to come.

There is now general consent that climate change is happening and that human activity is contributing to the change. While there has been debate in the scientific community on this point, and some people continue hotly to contest it, the weight of scientific evidence now firmly supports the analysis. As a result, we as a country urgently need to develop an energy system for an affordable, secure and low-carbon future. This can mean only a clear focus on renewable energy, away from dependence on the finite resources of fossil fuels. I thank Leonie Greene of the Renewable Energy Association and Oliver Harwood of the Country Land & Business Association for their assistance in preparing for the debate today.

Europe currently produces more than 10 per cent of its energy from renewables. In the UK, the figure is just 3 per cent. This country must continue and intensify the progress initiated by the previous Administration. We must push forward to reach the accepted targets and press on with policies to get us there. The coalition Government have confirmed a commitment to 15 per cent renewables by 2020, but this is still behind the EU-wide target of 20 per cent, with several countries exceeding the target, most notably Sweden, which shortly will hit 50 per cent. The coalition Government will have to seriously consider raising their game if they are to earn the title of the greenest Government ever.

Everyone recognises the dynamic advances made in communications over the past few years. In the energy sector we need no less of a step change in our thinking. We need to move away from thinking that energy flow is one-way down pipes and wires from a big industrial complex somewhere over the hills and beyond our influence. The energy sector is regulated by government, and this Government need to make wise choices to ensure that we meet our climate change commitments. These must include public education so that everyone understands the contributions necessary in the home and in the workplace.

I declare my interest as a food producer when I say that the risks of unrestrained carbon emissions are significant for three key reasons. First, the country's food supply is at risk from rising sea levels. Eighty per cent of the best grade 1 agricultural land lies at or below current sea levels. Secondly, rural businesses rely on a secure and steady energy supply. Because of greater distances and vulnerability of supply, these businesses are at an increased risk of interruption from storm events. Thirdly, the agricultural industry is likely to suffer because of the increased risk of water shortage. Recently the University of Reading released a report entitled Water for Agriculture, commissioned by the Royal Agricultural Society of England. Scientists found that climate extremes such as droughts and flooding are likely to reduce the amount of water for agriculture and water culture, which will pose a major challenge to farmers, researchers, plant breeders and policy advisers. Given that agriculture and the food sector are recognisably responsible for a disproportionate amount of greenhouse gases when compared with the value of their production, they have challenged the conventional mindset of being seen as the problem. Instead, they can help to show the change that is necessary by being part of the solution. I am greatly interested in the Government's response to the findings of the University of Reading report, and in how they plan to interact with farmers and food producers to address their concerns, both immediate and long-term.

In the broader economy, energy historically has been a major driver of inflation. A major characteristic of renewables is a stable price, as much renewable energy is ambient and therefore free. The bigger implication of low-inflation energy for economic stability is a huge opportunity to be grasped, especially against the recent background of rises in energy prices of 125 per cent. The need to ensure national strategic objectives can be met by means of an effective planning system, particularly in relation to wind power.

The suspension of the coming into force of the planning infrastructure legislation puts the country back into delay and uncertainty. In addition, many of the renewable projects are under 50 megawatts and are therefore decided at local level. It is unclear how the local planning framework will work. Can the Minister say how this country will be able to meet its targets? The regional spatial strategies are vital for getting approvals granted but these have now gone.

Can the Minister confirm when he will bring into reality the extension of permitted development rights for small-scale renewables—a matter that I understand is on his desk? Will this also ensure planning presumption in favour of renewables outside nationally protected areas and for small-scale—up to 5 megawatt—schemes in national parks and the green belt? This will demonstrate increased ambition for PV, helping to provide clarity for the UK PV industry, where there is a need to address urgently what is meant by “higher than expected deployment” requiring an “early review”. When will this start? Will the Minister also confirm that the coalition Government will not act on the Conservative proposal to bring in a third-party right of appeal to planning consent, which will only increase delay and frustrate investment?

The introduction of feed-in tariffs from 1 April under the previous Administration has provided the opportunity to make a step change in renewable energy. The renewables obligation has supported only the cheapest, very large-scale projects. This feed-in tariff extends support to projects of any scale up to 5 megawatts where individual local co-operatives and developers can get on with their own investments at the small, local level. The benefit that this can bring to renewable supply is best demonstrated by Germany, which has operated in this way for 15 years. There, 80 per cent of renewable power is from small-scale sources and only 20 per cent from major infrastructure schemes. In contrast, in the UK 96 per cent of renewables is provided by the large power companies. This opportunity must not be frustrated by the planning regime of local authorities operating under the present severe financial restraint. The Minister can free up a huge surge in activity.

The feed-in tariff pays different rates to differing project scales and sources of supply, and, generally speaking, pays the correct amount to guarantee a return on investment of between 6 and 8 per cent. First, will the Minister ensure that this support is protected under any future review, that it extends well beyond 2013 and that it will not be subjected to meddling and cuts? Secondly, he is urgently required to review the regime regarding small-scale waste plants, particularly on farm anaerobic digestion schemes. Regrettably, although the price is correct for commercial operations, where plants receive income from waste from commercial sources such as restaurants, this rate is insufficient for on-farm waste plants, where no income is received from farm-generated waste. The industry does not want to wait until next spring. The potential for on-farm AD needs to be realised. Will the Minister say today that he will look immediately at the rate for on-farm AD and biomass, and introduce a higher 23.5p commercial rate?

The Government recently committed £1 billion for the green investment bank. This bank was a policy idea first raised by the previous Labour Administration and it is therefore one that we are happy, in principle, to see adopted. Is the Minister able to clarify the specifics of this policy? How does he see the functions of the green investment bank? Will it be able to raise money on the financial markets? Has the department made any forecasts of the total funding that will be available in each of the next five years, and what leverage will this have with the private sector? Our vision was to have the green bank supported by both public and private funding—a dynamic partnership to champion social and environmental change.

On the carbon reduction commitment, there is the bizarre situation where, if a company claims feed-in tariffs or renewable obligation certificates as a company for on-site renewables, it has to count these renewables as producing carbon in the same way as average grid-mix electricity. The shake-up to the CRC announced in the CSR means that the Treasury will keep all this revenue. If this rule is not changed, we will be in the position of the Treasury taking money from companies investing in renewables for carbon that they did not emit. The situation needs urgent attention as it is vital that the commercial sector also invests in renewables.

Under the Labour Administration, the department instigated a marine energy action plan to which industry contributed enthusiastically. Much valuable data and many useful suggestions were assembled within the four work streams of finance, infrastructure, planning and technology, but the impetus was lost during the general election. The department now faces the challenge of utilising that work with the new policies of the coalition Government, who state that they will introduce measures to encourage marine energy. In the July annual energy statement the department promised to consider how the development of marine energy parks around the British coast can help to support marine energy in the UK. Detailed proposals are expected by the end of the year. The UK cannot afford to lose its lead on marine. We need to see five renewable obligation certificates for wave and tide. Once again we need to catch up on lost momentum.

On the RTFO, we need the mandatory EU sustainability standards to be implemented as soon as possible for both renewable transport fuels and liquids for power generation. They should be implemented by the end of this year but the Government are waiting until 1 April. We would like to see good-quality biofuels, as the UK biofuel industry has risen superbly to the sustainability challenge and has, since the beginning of the scheme, been producing biofuels that perform acceptably well against the RTFO sustainability criteria. The reports from the Renewable Fuels Agency on the first two years of the RTFO 2008-10 show that UK biofuels have consistently delivered carbon savings of 70 per cent and more compared to fossil fuels, and have produced the highest sustainability scores of any biofuels sold in the UK.

Within my sub-region of Cheshire, there have been many projects that can be identified as examples of best practice. Envirolink Northwest is doing excellent work with smaller projects, both on farms and in businesses, supporting the installation of renewable energy technologies. This momentum is in serious danger of being lost with the abolition of the NWDA. It remains to be seen what resources and commitment will be given to the new area local enterprise partnerships. Once again, momentum is being lost. It is important not to take our foot off the accelerator. The department under the Labour Government made some real strides forward. It remains to be seen whether many of the projects and policies mentioned will come to fruition under the coalition Government. It is positive to see that the renewable heat incentive and plugged-in places funding survived the cuts, albeit in depleted form. I think that Envirolink would argue that grid connection and finance are the two real sticking points at the moment. For example, even with the arrival of feed-in tariffs for solar panels, for many people the up-front capital costs mean that they will remain prohibitively expensive. Our loss of the co-ordination role from the North West Development Agency is a real blow as there is no other organisation to take up effectively the mantle of sub-national climate change. The LEPs will struggle to really deliver a low-carbon agenda on the ground without any funding or co-ordination and support.

Developing renewable energies is an integral part of our fight against climate change. Notwithstanding the Government’s slogan of wanting to be the greenest Government ever, it remains behind Scotland’s challenge of 80 per cent renewables and behind the comparatively modest European target of 20 per cent renewables by 2020.

There is not enough urgency in the Government's policies compared with what was in train and proposed under the previous Labour Administration. They are missing a major injection of funding for infrastructure and research. One related planning policy that will undoubtedly impact the future of renewable energies in this country is the Government's plans for the Infrastructure Planning Commission. The commission is proposed to be replaced by the major infrastructure planning unit—a policy that we are anticipating to see in more detail when this House considers the decentralisation and localism Bill. Through this change the Government are promising to continue a fast-track approach to planning applications, for example for wind farms, while at the same time promising the public a greater opportunity for influencing these decisions. We look forward to seeing how they plan to reconcile these two competing parts of the process when the Bill reaches this House.

My Lords, I very much welcome this debate. This House has had great debates about climate change and energy and I am glad to see that we will focus on it in this Parliament as well. I would say that it is one of the most important subjects—even more important than the UK budget rebate in Europe, which we were discussing earlier, although I am sure that the noble Lord who follows me will probably disagree. Anyway, let us move on with energy and climate change.

One thing that I want to do in my introductory remarks is to say how much I appreciated the work of the noble Lord, Lord Hunt of Kings Heath, in the latter part of the Labour Government. I appreciate his commitment to these issues and what he worked hard to achieve. However, I remind the noble Lord, Lord Grantchester, that the previous Government’s successes in this area are perhaps rather more measured than he might think.

Let us take something as important as the Climate Change Act, a great milestone in addressing climate change for this Parliament and the UK. The previous Government were good at setting out targets and their aspirations for what they wanted to do, but it was rather more difficult to achieve those targets and aspirations. The Labour Party had its own manifesto targets on the carbon footprint, which it failed to meet. From 1997 to just prior to the last year of the previous Government, the United Kingdom’s carbon footprint very much flat-lined and we did not achieve the targets. We met them in the last year, but that was due more to international economic meltdown than to anything else. We had a lot of talk about renewables and some investment in the latter stages, but all we have done so far in relation to the 27 member states is to progress from overtaking Malta to moving ahead of Luxembourg as well. As for carbon capture and storage, we had tenders, we talked about it and we were enthusiastic about it, but we still do not have any commitments on it. Smart meters and feed-in tariffs were delivered in the last Energy Act, which was a great move forward, but it was rather beyond the 11th hour in terms of making the changes that are required for this agenda.

I want to spend my time today looking at the poor relation in energy and climate change—energy savings. I am not saying for a moment that the other areas are not important but I want to concentrate on this one. It is a Cinderella subject that is left out too regularly. Energy prices are currently higher than they have ever been. In fact, retail prices seem to be moving further than they have ever been from wholesale prices, perhaps due to a lack of reform in the way in which the industry was regulated over the past few years. I was speaking two weeks ago with some representatives of the industry, who told me that energy costs in most of industry are still a sufficiently small percentage of the overall costs that the management does not really concentrate on them. That is true of a number of households—though not all households—as well. I will come back to that issue.

The fact is that buildings account for some 40 per cent of our electricity and energy costs. It is one of the biggest challenges that we have. I absolutely agree with one thing that I read in the previous Government’s White Papers—that energy savings are the most efficient and economic way of tackling climate change. Investment in this area produces a bigger return than any other tool for meeting the strategy of decarbonising our economy.

I was in India last month and in China last year. Energy savings are the big headline in climate change there and what people are trying to do. It is an exciting subject. In the previous five-year plan, China had a 20 per cent reduction target from energy efficiency, which I believe it is just about to achieve. Under the Copenhagen accord, the decarbonisation of its economy is largely met through energy efficiency and there is a target of 40 per cent savings by 2020. In the global context, that is a big deal and a major way of moving forward. I think that in the UK and Europe we sometimes understate it. If we look at Europe, under the 2020 package, we had a target of 20 per cent renewables and a 20 per cent reduction in carbon footprint. Both are statutory European targets, but the third 20 per cent— 20 per cent energy reduction by 2020—is only an indicative target. Again, even within the European context, that shows that it is the poor relation.

Here in the UK, we had the important Warm Front scheme, which we debated briefly last week, and the carbon reduction commitment, which was a strange way of moving around what was originally an energy target. I congratulate the Government because over the summer they rather contentiously started to stop the free issue of units under the CRC scheme. That is an important move forward. We had the CERT scheme, under which several years ago we used to receive 10 energy-saving light bulbs in our post nearly every day. We put the energy companies in charge of saving energy, which was rather like putting Dracula in charge of the blood bank or perhaps the bishops in charge of Lords reform. It seemed quite inappropriate and something that would not work. I hope that there will be changes in that area.

To me, energy saving is not just a virtuous circle; it is a virtuous spiral. Let me explain why. We have estimates from Ofgem that we need £230 billion-worth of investment in our generating and electricity supply industry over the next few years to meet our energy gap. It is obvious that the more we meet our energy savings targets and go beyond them, the less we need of that investment. In terms of energy savings, we have the planning system, which was mentioned earlier. We do not have to ask for planning permission for energy saving. It can go ahead without delays. In fact, energy saving is one of the ways in which we can meet targets without the great changes that we need otherwise.

Let me take one or two other issues. One of the ironies about carbon leakage is that, although we are about to meet our Kyoto targets at the end of 2012, as measured by carbon production, we will increase our carbon consumption by some 19 per cent over that time in comparison with 1990 levels. By saving energy, we do not have that conflict; indeed, we reduce it. On renewables, I am in favour of them, but we have a problem with intermittence in wind power. Yet with energy saving, we have a completely non-intermittent way of meeting our energy requirements.

However, there are two other much more important areas. The first is fuel poverty. One of the great problems in the past two years was that, with energy prices rising, more people were entering fuel poverty. I know that these figures have been quoted before, but something like 4.5 million households are now in energy poverty. By energy saving, we can tackle that problem head on. Perhaps an even more important question than that in terms of a strategic view and energy security, which the Minister rightly emphasised, is this: what is more secure than not needing energy, or needing less of it and so having to import less of it?

I say to the Minister that the Government should not ignore this poor relation but make sure that they keep focused on it, as well as on the many other technological solutions. I look forward very much to the energy Bill that will be coming through this House, the green deal, which I know is targeted to meet a number of these issues, and the green investment bank, which could provide investment in the right sectors. Energy saving is not a very sexy subject, but it could really help us to meet our climate change targets. It is one area where perhaps we could follow the developing world rather than trying to lead it.

My Lords, I congratulate the Government on one of the decisions that they have taken, one which was criticised by the noble Lord who spoke for the Labour Front Bench; that is, the decision to take the £1 billion taxation in effect from the carbon-reduction scheme and apply it to reducing the appalling deficit with which this Government are landed, rather than keep with the idea of the previous Government. The purpose of taxation is to give money to the Treasury for the needs that it has in order to finance necessary public expenditure and to maintain public finances in good order. I congratulate the Government on that.

There is little else on which I feel that I can congratulate the Government. But I begin by declaring an interest as the founder and chairman of the Global Warming Policy Foundation, which celebrates its first anniversary later this month. As its name implies, it is concerned above all with the policy aspects, which we are discussing in this debate, of this whole multidimensional climate change issue. I speak, incidentally, for myself and not for the foundation, which does not have a corporate view.

Because various remarks have been made, I should say that the foundation is financed by a range of generous donors. But one thing is absolute: in order to show that there is no possibility of our not being independent, we do not accept a penny of money from the energy industry or anyone who has a significant interest in it. I am glad to say that this is monitored by my excellent board of trustees, most of whom are Members of this House. All the Benches are represented. I am the only Tory. There are two from the Labour Benches, who I am glad to say are in their places. There is one from Liberal Democrat Benches. There are two from the Cross Benches and one from the Bench of Bishops. It is fully monitored that we do not raise any money from the energy industry.

In his admirably brief opening speech, the Minister mentioned two things which the Government generally—I do not want to single my noble friend out because he was just speaking the Government’s policy—are trying to make out. They say that there is a real energy security problem, which we have to meet by decarbonising our economy, and that there are great economic benefits in our decarbonising our economy. Both those things are absolute nonsense. I have some knowledge of the energy scene, having been Secretary of State for Energy in the distant past, but these things do not change completely.

Carbon-based energy has never been more abundant than now. It is commercially extractable because, not least, of the exciting recent technological development of the commercial extraction of gas from shale. This not only increases enormously the commercially winnable carbon energy resources of the world, but it is fortunate that shale is abundant throughout the world—in North America, Europe, South America and so on. We do not have to feel that we are dependent on the Middle East, which may be unstable, or on Mr Putin, who may be unreliable. The development of the liquid natural gas business has also increased security on the gas front very significantly. So there is no energy security problem. In so far as there is an energy security problem, it is because we may come to rely too much on intermittent wind power, when the lights might indeed go out, but that is the only problem we have.

I turn to the idea of raising substantially the price of carbon. It is the essence of the Government’s policy because it is only way you can shift to so-called green energy, which is much more expensive. Somehow, it is claimed that this will produce an economic benefit and create jobs. I am reminded of the distinguished 19th-century French economist, Frederic Bastiat. He pointed out that if you went around breaking windows everywhere, you could create an enormous number of jobs for glaziers, but that did not mean that it was a sensible thing to do. That is a parable of the Government’s policy. When we debated this issue just before the Summer Recess, the noble Lord, Lord Giddens, who I respect and am glad to see will be speaking later, pointed out that the creation of jobs argument is complete nonsense and rubbish.

On this front, I want to mention two of the economic consequences of the Climate Change Act 2008, to which this Government, like the previous Government, are wedded. Perhaps I may quote from an interesting article on energy in the current issue of the Economist. It begins:

“Many factors were responsible for the industrial revolution. But the use of fossil fuels was clearly vital in driving a step change in rates of economic and population growth. So the current rise in the cost of extracting such fuels should be the subject of considerable concern”.

The article concludes with:

“That is a headwind the global economy could do without”.

The increase in the cost of extraction will be nothing compared with the increase in the cost of energy if we go from carbon-based energy to non-carbon energy. We in the United Kingdom do not use carbon-based energy because we have a love affair with or addiction to carbon, and we do not use it because the oil companies are so powerful that they force us to do so. We and the rest of the world use it, quite simply, because it is by far and away the cheapest source of energy. Anything else is more expensive. It may not be so for ever, but for the foreseeable future that is the case.

Despite energy savings, there will be a huge increase in fuel poverty in this country, something I do not want to see, as well as in costs generally. The Minister mentioned the green investment bank. This is what the chairman of the green investment bank commission had to say in an interview published in the Daily Telegraph on 3 July:

“The total estimated cost of meeting our current climate change carbon reduction targets is between £800bn and £1 trillion … There’s really been nothing like this since the post-World War Two reconstruction programme”.

That is the appalling burden we are saddling ourselves with, and what for? The purpose is to decarbonise, as it were, the world economy. My noble friend referred to the objective, which is to reach a global agreement in Cancun in December at the United Nations climate change conference to decarbonise the world’s economies, faster for the developed world, of course, than for the developing world, but it is accepted that it makes sense only if every country—China and India as well as the developed countries—takes its share. This is not going to happen. The lessons of the Copenhagen conference last December should have been clear. Why is that? The reason why the Copenhagen conference was a fiasco and no global agreement could be secured was because of the position of the developing countries, with which I have considerable sympathy. There was, incidentally, a prior meeting between the so-called BASIC countries—Brazil, South Africa, India and China—in Beijing on the eve of the Copenhagen conference, and they agreed that none of them would agree to a binding global carbon-reduction agreement in which they were participants. They were very happy for the developed world to cut back its carbon but they were not going to take part.

Why? Because they have a real problem with poverty and its consequences. Hundreds of millions of their people still suffer from preventable disease, malnutrition and premature death and they know that to get these people out of poverty as quickly as possible they need the fastest rate of economic development. That requires among other things—it is not the only thing—using the cheapest available form of energy, and that is carbon-based energy. That is why they would not agree at Cancun either, and they are absolutely right. That is why China is building a new massive coal-fired power station every week, and why it is the new imperial power in sub-Saharan Africa and is getting its hands on all the raw material resources it can, including gas, oil and coal. It is not making this great diplomatic, financial, economic and political expenditure because it does not mean to use them—it will use them. That is how it sees the future and it is absolutely right. So the idea that there will be a global agreement on this is unwarranted. There may be a global agreement on adaptation aid to the poor countries should that be needed—I would be content with that—but there is not going to be a decarbonisation agreement. As to us going it alone, the total amount of emissions that we are responsible for is less than the growth in emissions from China in one year.

Another reason the global agreement will not happen is because after China the biggest emitter of carbon dioxides is the United States. Unlike George Bush Jr, President Obama came in saying that he was going to get to grips with this issue. What has happened? Nothing. There is a Bill in the House of Representatives which is like a beached whale. After the mid-term elections today, the beached whale will be a dead duck. It is quite clear that if President Obama cannot get legislation through Congress when the Democrats have a majority in both Houses, there is no earthly possibility of it being agreed when the Republicans control at least one of the Houses and, with their friends the coal-state Democrats, effectively control the Senate as well.

There is no way this is going happen. It is complete madness; it does not make sense. As their predecessors did, the Government trumpet that we are the only country in the world to have a Climate Change Act which binds us legally to an 80 per cent reduction by 2050, when some of your Lordships—not me—might even be alive. They say that no other country has this commitment. Of course no other country has this: no other country is so stupid. The policy simply does not add up.

What is it all in aid of anyway? It is a fear that global warming, which has paused for the past 10 years, may resume. I do not know if it will—no one knows—and I am certainly prepared to confess that I do not know. I am one of the few people in this business who does not know what the temperature of the globe is going to be in 100 years. It may be warmer than it is today, but so what? We can adapt, which is what people do in different parts of the world where temperature varies enormously. As economic development takes place, capacity to adapt is greater than ever; as technology develops, the capacity to adapt is greater than ever.

The Intergovernmental Panel on Climate Change, which makes the projections on which the Government ostensibly base their policies, gives certain warnings for the next 100 years. It thinks that the temperature will go up between 1.8 degrees Celsius and 4 degrees Celsius. It says that a rise at the upper end, of 4 degrees Celsius, would mean a loss of global GDP of somewhere between 1 per cent and 5 per cent. We in this country will benefit from global warming, as most of us instinctively and intuitively sense, but there will be parts of the developing world which will not. Let us assume for the developing world a loss not of 5 per cent but of 10 per cent. That would still mean on the panel’s growth projections that living standards in the developing world in 100 years would be only eight times rather than nine times as high as they are today.

I draw to the noble Lord’s attention the clause in the Companion which says that it is best to limit speeches to 15 minutes.

I speak very seldom in this House and I hope that I will be allowed a little bit of a margin on this issue, but I am so grateful to the noble Lord opposite for the reminder. I have often wondered what he spends his time doing. It is obviously reading the Companion, which is a very sensible thing to do. I shall conclude soon.

Noble Lords may say, “Well, surely the panel is being a little bit optimistic in projecting that this century is going to be far and away the best century economically that the world has ever seen”. Perhaps the panel is being optimistic in assuming great rates of growth in China, India and so on. It is perfectly plausible, but it may not happen. If the growth being projected does not take place, you will not get the growth in emissions, and if you do not get the growth in emissions—on the panel’s model—you will not get the warming either. You cannot have one without the other. The huge rise in living standards is an integral part of the projections that the panel makes.

I could say more, but I shall not. The only conclusion that I can reach about the Government’s policy, which is no different from the Opposition’s policy, is that it is both intellectually incoherent and economically illiterate.

Defence: Treaties with France


My Lords, with the permission of the House, I shall now repeat a Statement made earlier today in the other place by my right honourable friend the Secretary of State for Defence.

“First, I am sure that the whole House will wish to join me in paying tribute to Sapper William Blanchard from 101 (City of London) Engineer Regiment (Explosive Ordnance Disposal), who died on operations in Afghanistan on Saturday. Our thoughts and prayers are with his family and friends at this dreadful time.

The Prime Minister and President Sarkozy this afternoon signed two treaties that mark a deepening of the UK-France bilateral relationship. The two treaties will next be laid before Parliament, allowing honourable Members the opportunity to consider them as part of the process towards ratification. Separately, the texts of both treaties will be placed in the Libraries of both Houses today.

The UK-France relationship is a strategic partnership of sovereign nations working together to tackle the biggest challenges facing our two countries at a new level of co-operation. The treaties do not diminish in any way our ability to act independently when the national interest decides. They provide us with greater capability when we do decide to act together.

The UK has welcomed the recent French decision to rejoin NATO’s integrated military structure. We believe that this is good for NATO, good for the UK and good for France. It makes sense for us now to achieve maximum interoperability, greater commonality of doctrine and more efficient use of equipment. Closer co-operation with France will also provide better value for money for the British taxpayer.

Let me give the House a sense of the scope of both treaties. First, the Defence and Security Co-operation Treaty will develop closer co-operation between our Armed Forces, the sharing and pooling of materials and equipment, the building of joint facilities, mutual access to each other’s defence markets, and industrial and technological co-operation. The treaty provides the framework; details will emerge over time as more detailed work is done.

The second treaty covers collaboration in the technology associated with nuclear stockpile stewardship in support of our respective independent nuclear deterrent capabilities, in full compliance with our international obligations. The treaty provides for the joint construction and operation of a new hydrodynamics facility at Valduc in France and technology development centre at the Atomic Weapons Establishment in the UK. The facilities will be operational from 2015. This programme, named Teutates, will assist both countries in maintaining the safety and reliability of their respective nuclear stockpiles and improve expertise in countering nuclear terrorism.

The facilities will enable each country to undertake hydrodynamic experiments in a secure environment. The hydrodynamics facilities use radiography to measure the performance of materials at extremes of temperature and pressure. This enables us to model the performance and safety of the nuclear weapons in our stockpile without undertaking nuclear explosive tests.

The UK will maintain its independent nuclear deterrent, and will continue to work towards the long-term objective of a world without nuclear weapons.

Today’s summit is only the start of long-term deepening of the UK-France bilateral relationship. France is the UK’s natural partner in Europe for defence co-operation. France and the UK have some of the most capable and experienced Armed Forces and the largest defence industry. We are by a long way Europe’s two biggest defence spenders.

Achieving the envisaged level of co-operation will take time and will require changes to long-established ways of working. We will put in place measures to deliver long-term commitment to joint projects, and we expect to announce new areas of work at regular intervals.

A stronger defence relationship with France does not mean a weaker relationship with the United States, Germany, or any other partner but quite the reverse, as the increased capability and effectiveness that we will achieve through this co-operation will make us stronger partners. In the multilateral context also, our NATO allies and EU partners want UK and French forces, as well as those of other nations, to be as capable and interoperable as possible, which is exactly what the new programme of co-operation is intended to achieve.”

My Lords, I thank the Minister for repeating to this House as a Statement the Answer given in another place. I start by associating myself and those on these Benches with the tribute paid to Sapper William Blanchard of the 101 (City of London) Engineer Regiment. I see once again the words in brackets “explosive ordnance disposal”. The bravery displayed by those who do that job is, frankly, beyond my comprehension, and I greatly admire them.

Turning to the Statement, I protest once again that we in this House and in Parliament in general are the last to hear about this treaty being signed. The media, the French public, our allies and enemies and, I understand, the French Parliament have heard about it first. Everybody has. I will not go on about it, but we must get to a situation where we and the other place are the first to hear these things. Having said that, we welcome the general direction of what we hear so far. Co-operation with the French is the only practical co-operation that can make a significant impact on our defence capability. Taken intelligently and effectively, it has the capacity significantly to increase the ability of us both to make an impact, particularly in co-operating on defence equipment and its research and development.

Having said that, because of its suddenness and brevity this Statement raises an awful lot of questions. First, there is the very ratification process. The processes for ratifying treaties in Parliament—international treaties which have no impact on domestic legislation—are extremely poor. The previous Government brought forward proposals to improve that, as the present Ponsonby convention is extremely weak, and I see some hint that we are going to do something more. I see that although two treaties have been signed, we are to have an opportunity to consider them as part of the process towards ratification. That seems rather fuller than the convention and I invite the Minister to write to me—or, indeed, to produce a Written Statement—setting out exactly how we are going to have the opportunity to debate this extremely important convention or treaty, whatever the right term for it is, because so many important matters are opened up by the very concept.

The words flowing around in the media are of a 50-year “binding agreement”. Now, what does a binding agreement with the French mean? How are we going to adjudicate when we disagree? Is there going to be some supreme court for us? The history of the French nation over the past few centuries shows a chequered record on binding agreements. Indeed, there is a somewhat dark side to some of it. Of course, that will not be the case in future, but any concept of “binding agreement” has to have behind it some meaningful process otherwise, sadly, it will be just words. It is particularly difficult to envisage—I am not saying that it is impossible—how a binding agreement will survive the five-yearly defence reviews that we support. We think they are a good idea, but what will be the mechanism for those reviews?

Finally, can the Minister explain how this will change our relationship with our allies? We have this complex relationship in NATO; we are developing another complex relationship within the EU. We support those, but in among all of that we are going to have some special relationship with the French. How will that be achieved and not weaken those important relationships, particularly the NATO relationship? People—even, I dare say, of our generation—forget just how important that NATO relationship has been over the decades and how important it is that we do nothing to weaken it.

Turning to the nuclear stockpile, I found this somewhat surprising. I do not mean that it is not right but that I was not privy to the extent of this development. My understanding is that the 1958 mutual defence agreement with the US was special and complex, and that the extent of the co-operation between the two countries was extremely different. The French had to work a lot harder on the outside of that agreement. Since we are told that our American allies are content with this agreement, are we to understand that the French, in terms of support for their weapons, are going to receive the same support that we enjoy from the Americans? Are we going to have some sort of trinational bomb?

We are talking about sharing a nuclear facility with the French. I think that I understand what those words mean, but how can we share that facility without sharing nuclear secrets? Do we accept that the French will have effective full access to our nuclear secrets?

The document seems to imply—once again, I am sorry that I have not read it over and over, but I have had very little time to study it—that we are making a financial commitment to the nuclear facility. This is very interesting. Does it mean that the Government, almost as an aside in this Statement, are affirming beyond all reasonable doubt that we are going to have a deterrent? The facility will not open until 2015; if we have a financial commitment to it, we are clearly going to spend substantial money on the nuclear deterrent over and above anything that we understood from the SDSR.

If this is a Statement about the deterrent, does this co-operation in any way reduce the independence of our deterrent? In simple terms, will we continue to be able to target our weapon and fire it unconstrained by any other nation? I should value the Minister’s confirmation of that.

I turn to the more conventional side. To what extent does this weaken our ability to work alone? Mutual co-operation, almost by definition, ends up meaning mutual dependence. Will that dependence mean that we cannot act by ourselves? Will we, in a sense, only ever go to war again—this may be a good or a bad thing; on balance, I think the House would say that it was a bad thing—if we are in agreement with the French? They are lovely people but, over 50 years, will we always have to have their agreement to go to war, and indeed will they have to have ours? Are we in fact going to have a genuine capability for independent operation?

One cannot in these circumstances do other than reflect on the carrier. If I understand the way that the carrier decisions have gone, we are to lose our Harrier capabilities and fixed-wing strike capability, but we are going to build a carrier on which French aircraft can operate until we get our own. That is great if you say it quickly. Does that mean that, when this carrier is in the vicinity of a place where we want to take independent action, the French fixed-wing aircraft on board will go and bomb the targets that we ask them to, or will they have to call Paris first?

I have questions about the whole picture of the interdependence around the carrier. What happens when it is in refit? What happens when we lend the carrier—do we take all our secret bits out or rub all the symbols of Britishness off? It is very complicated.

We feel that the generality of this effort is a good idea, but we will want to hear a lot more about the detail before the treaty is properly ratified.

My Lords, I am grateful for the noble Lord’s general support. With regard to his opening comments about the sapper who, sadly, was killed and his observation on the bravery of the soldiers of that regiment, I was honorary colonel of that regiment until May this year and I agree with everything that he said about the bravery of those men and women.

The noble Lord asked me about the meaning of “binding”. I confirm that all treaties are binding and that as a country we are fully committed. I will write to him about the opportunity to have a debate in order to look into this matter in greater detail. I agree that it is an important issue; indeed, it is close to my heart, so I would welcome that.

The noble Lord asked why Parliament was the last to hear. I point out that the Prime Minister made a Statement in the other place yesterday, in which he said:

“Tomorrow, the British and French Governments will sign new defence and security co-operation treaties, which will be laid before Parliament in the usual way. This follows the same principle: partnership, yes; giving away sovereignty, no”.—[Official Report, Commons, 1/11/10; col. 615.]

Furthermore, the Prime Minister has also laid a Written Statement on the Anglo-French treaties at 12.30 pm today, which will appear in both Houses.

I understood that the noble Lord asked whether the United Kingdom is now giving priority to France over other EU member states. We are working more closely with all our allies; that was obviously one of the key arguments of the SDSR. We are collaborating closely with France because, with the UK, France has some of the most capable forces in Europe and it shares the UK’s level of defence spending and ambition. However, co-operation with our other European allies and partners is also vital and will remain a fundamental part of our approach. Existing co-operation will continue. For example, the UK/Netherlands amphibious force will remain in operation. We are also looking to increase bilateral co-operation with EU partners such as Germany, Italy, the Netherlands and Spain, with which we have a history of close equipment or other defence co-operation. We will also increase our engagement with smaller and newer states in the EU.

The noble Lord asked about the UK/France nuclear collaboration and how it might affect the United States. We are satisfied that our proposals are fully compliant with our obligations under the mutual defence agreement and Polaris sales agreement with the United States. The Prime Minister and the Secretary of State have both made a commitment to renew the deterrent. It does not in any way reduce the independence of use of our deterrent.

The noble Lord asked whether the UK would have to join France if it decided to invade another country. The answer is no. Only a UK Government will ever decide when to deploy British troops, with whom and under what conditions. Article 5 of the treaty confirms that deployment and employment of the armed forces of each party remains a national responsibility at all times. Both France and the United Kingdom will continue to maintain a full spectrum of capabilities. This will allow us to deploy independently, should France choose not to be involved, and vice versa. Decisions by either country to support the other in an operation where only one is engaged will be taken nationally on a case-by-case basis.

I hope that I have answered most of the noble Lord’s questions. If not, I undertake to write to him.

My Lords, I join these Benches in the earlier tribute. My noble friend will know that on many occasions I have argued for greater co-operation between Britain and France. Thus, I am very encouraged by the defence treaties signed today. According to media reports, the chief executives of BAE Systems and Dassault have written to their respective Governments, making the point that greater collaboration in the production of future combat aircraft and UAVs is absolutely vital. Does my noble friend not agree that, to make collaboration easier, there has to be greater consolidation between defence industries and, particularly, between British and French defence companies?

My Lords, I am well aware of my noble friend’s views on greater co-operation with the French, which I share. When we were in opposition, I went to France with the Secretary of State. We had a fruitful day’s discussion with French leaders, military and civilian, at the highest level. As far as the unmanned air systems are concerned, these have become central to both our armed forces. We have agreed to work together on the next generation of medium-altitude long-endurance unmanned air surveillance systems. Co-operation will enable the potential sharing of development, support and training costs and ensure that our forces can work together. We will launch a jointly funded competitive assessment phase in 2011 with a view to new equipment delivery between 2015 and 2020. In the longer term, we will jointly assess requirements and options for the next generation of unmanned combat air systems from 2030 onwards, building on work already started under the direction of the UK/France high-level working group. Over the next two years, we will develop a joint technological and industrial road map, which could lead to a decision in 2012 to launch a joint technology and operational demonstration programme from 2013 to 2018.

My Lords, does the Minister understand some of the risks involved in what he has just been talking about? It is clear to everybody that our relationship with the United States makes what he has been talking about pale into insignificance. I have two questions. First, President Obama recently fired his Director of National Intelligence because he recommended that the United States should create with France the arrangements that have existed between us and the Americans for many years, whereby neither country engages in intelligence activities on the soil of its partner. Is it contemplated that we will engage in such an agreement with the French? Secondly, will the Minister be so kind as to tell us exactly what arrangements are being made with respect to our access to the research establishments of the American defence industry? This in my view is by far the most important element in the special relationship. I hope that I can have his assurance that nothing at all will be done to weaken that and therefore that the French will have to be told—will they not?—that we are going to share a whole lot of things with the Americans that we are not going to share with them.

My Lords, I say to the noble Lord that there are obviously risks in everything. The Opposition when they were in government had similar discussions with the French and I am sure that they would have come up with a similar arrangement to what we have come up with. I share the noble Lord’s views on relations with the United States. I have always expressed those views. In fact, I have just come back from Qatar. I spent all of yesterday with United States forces out there and admire absolutely everything that they do. I give the noble Lord the assurance that we will do nothing to weaken our relationship with the United States. There is nothing here that will weaken that relationship.

My Lords, I wholly welcome the Statement. If the European arm of NATO is to mean anything, enhanced co-operation between France and the United Kingdom is very important, but the big problem that we both have is over procurement. We cannot afford the equipment that we want and neither of us has a good system for managing procurement projects. The history of this is not very encouraging. The French did not participate in Tornado or Typhoon, while the Horizon joint project to build a frigate—one of the simpler naval vessels—collapsed about 10 years ago because we could not agree on the shape of the hull. The acid test of this agreement will be whether we can make a joint procurement project work. The noble Lord has mentioned UAVs, but that seems to be a research project. Can he say when the first effort between the two of us to develop a major piece of military hardware together will occur?

My Lords, it is far too early to be that specific; the treaties were signed only this afternoon. However, all our weapons will need to be replaced at some point. The Typhoon and the Rafale will need to be replaced. There are huge areas where we can co-operate with the French. We start off with the UAVs.

My Lords, I entirely endorse the comments by my noble friend on the Front Bench that Parliament should be the first body to be told of an important matter such as this, and it is not sufficient for the Minister simply to say that it was trailed by the Prime Minister in the other place yesterday.

However, I certainly welcome the progress that is being made in closer co-operation with our French neighbours. They are our closest neighbour, a good ally and, now that they have rejoined NATO, there is a great opportunity for us to work more closely together. In President Sarkozy we have the first President at the Elysée palace in my lifetime who does not have a problem with the British-American special relationship, and that is good. However, if closer co-operation with our French neighbours is to succeed, three elements are necessary. There must be political buy-in, military buy-in and a buy-in from the defence industries. There will certainly be a political buy-in, and I know that my colleague on the other side, the noble Lord, Lord Lee of Trafford, with whom I was recently at a meeting in Paris, agrees. I am also certain that there will be a buy-in from the defence industries. However, after St Malo, we saw that there was not always buy-in from the military. What steps will be taken to ensure that we get a military buy-in to this progress?

My Lords, a big effort will be made to get a lot more of our troops to learn French, which will be a good start. I meet a lot of French officers, sailors and air men and women in a lot of different ways, and they tend to speak brilliant English. I welcome anything that gets France back closer into NATO. As the noble Lord said, President Sarkozy has been very brave in bringing France back to the centre of NATO and I will encourage anything to see that that continues.

My Lords, I asked a question earlier and I ask it again. My concern is on the military chain of command. For example, every officer in command and all troops in the British Army give an oath of allegiance to Her Majesty the Queen. Given these new circumstances, can the Minister put information in the Library as to how this will work? There could be commanding officers who have not made that allegiance to Her Majesty. In this day and age, we have to protect our soldiers to ensure that they never face a court martial because they understood that they were entitled to reject an order from someone from another country.

My Lords, I am quite happy to put that in the Library. This concern can be exaggerated. France and the United Kingdom have been in NATO together for many years, we have served happily together, and I remind the noble Lord that the French and the British fought successfully together in World War 1 and World War 2. In World War 1, we served under General Foch. My grandfather was a British commander-in-chief and he was very happy to take his orders from him.

My Lords, can the Minister say a little more about the implications of strategic co-operation with France on maritime reconnaissance? Can he confirm that there will be a sufficiency of European sea and air resources to combat piracy off Somalia, and that, in particular, when the Nimrods come off the supply line, they will for the time being be mothballed, not dismantled?

My Lords, I cannot give my noble friend the assurance on his last point regarding the MRA4, but I can assure him that we are working closely with the French on maritime reconnaissance and on how we can help each other on that. As regards piracy, we are part of the EU’s Operation Atalanta, which also involves other nations.

My Lords, like the noble Lord, Lord Lee, I have long been a strong promoter of the idea of greater defence co-operation with our European allies, particularly the French. When I was in government I started a number of initiatives along those lines, including the Mantis UAV programme, which I insisted on putting to the French. We made some progress on that before the election and I am glad that it is going forward.

Will the Minister confirm that as the deployment of the Armed Forces under this treaty will be a matter for national decision on a case-by-case basis, the treaty will do nothing to fill the enormous gaps created in our defence capability by the Government's strategic defence review? For example, the fact that we are not going to have any aircraft on our carriers for 10 years will not be compensated for by the fact that the French might be able to fly off the carriers, because they might decide not to take part in an operation that might arise, for example, to defend the Falklands, where purely British national interests are at stake.

My Lords, I am sorry that the noble Lord was not here when I read out the Statement. Having said that, I am aware of the part that he played in securing greater co-operation with the French. The noble Lord said that we would have carriers with no aircraft flying off them. The idea is that the aircraft and carrier will come in at the same time. We will put the cats and traps on the carrier when the JSF comes in, in 2019 or 2020.

My Lords, I recall that, when I was a Minister for Defence a long time ago, the United Kingdom had a certain degree of dependence on the United States, and we were governed by fairly tight treaty arrangements for the maintenance of our so-called independent nuclear deterrent. There were limitations in particular on the sharing of knowledge. What happens to knowledge or material that the United States is prepared to share with us but with no one else?

My Lords, that is a very good question. I have reams of briefing on this and it would probably be better if I wrote to the noble and learned Lord in reply, because it is a technical question.

Is there not a danger of misunderstanding with the French on two matters? First, the French are notoriously nationalistic in their defence procurement. How will that square with what the Statement says about mutual access to each other's defence markets? Will the French alter their position, as they clearly have not done, for example, on rolling stock for the Channel Tunnel? Secondly, is there not a danger of a misunderstanding in terms of British and French attitudes? Throughout, the British have stressed independence and sovereignty and have not dared to whisper the name of the European Union. The French, of course, share a brigade with Germany, and will do nothing to stand in the way of closer co-operation within the European Union. Therefore, is there not a danger of misunderstanding, given our Defence Secretary's rather narrow, nationalistic views and the French view of how this will develop?

My Lords, in answer to the noble Lord’s first question, we are committed to improving access to each other's defence markets. This commitment is clear in the defence and security co-operation treaty. That includes opening up the French market. As for the French being nationalistic, we are aiming to deploy a combined joint expeditionary force, with UK and French forces operating side by side and with both countries engaged in the same theatre. However, a commitment to deploy UK forces will remain a decision for the British Government alone.

My Lords, I declare an interest as a non-executive director of WS Atkins. Does the Minister agree that there has been a certain amount of overreaction and hype with regard to some aspects of this initiative, especially naval co-operation? Does he agree that we have provided escorts with great success to the French carrier battle group, and vice versa, over the past 15 years or so? However, will he also acknowledge that he has been somewhat complacent when he says that we will maintain a full spectrum of capability to allow independent operations? This simply will not be the case with carrier strike when only one carrier is available. Does he agree that this will be an area of high risk in our ability to operate independently, and in the ability of the French to operate independently, when we are in a one-carrier situation? Does he agree that it is difficult to imagine how we will mitigate the risk in the years to come?

My Lords, I agree with the noble and gallant Lord about the overreaction and hype. There are a lot of successes. I have been on a number of Royal Navy ships and have witnessed our personnel exercising very successfully with the French and indeed socialising with them afterwards. I have seen warm relations between the two navies; it is the same with the Royal Air Force and increasingly so with the Army. I am looking forward to witnessing Operation Flanders next spring, when our two armies will be exercising together in northern Europe. There are obviously risks in everything that we do, but we have considered this matter carefully and believe that the risk is manageable.

My Lords, I am reassured by my noble friend saying that none of this will in any way jeopardise our close links with our allies in the United States. He talked about achieving better value for money for the British taxpayer. Does he believe that there will be any savings and, if there are, will they be retained by the Ministry of Defence? Furthermore, will some of those savings be used to retain our Harrier aircraft, which are vital to our defence capability?

My Lords, I wish that I could give my noble friend the answer that he is looking for but, sadly, I cannot give him that assurance. As I said last week, this was a difficult decision. We looked at the matter very carefully. The decision to retire the Harrier fleet from next April was taken with the greatest reluctance and only because that was the military advice. As politicians, we have to accept military advice.

I think that it is the turn of this side—my patience is being rewarded. I welcome the Statement and the two agreements, but I really do not like the spin on this and I should like the Minister to address that. The Statement goes on about our national interests and it is all put decoratively. However, the reality is that we are giving up some of our national individuality and we know it. If we look at this matter in the context of what has been happening in recent times, with far greater co-operation and involvement between British forces and European Union states, and indeed with the deployment for the first time this week of the armed European security police force on the borders of the European Union with full British support, there is an indication that we are moving, however slowly—perhaps over 10, 20 or 30 years—towards a European security defence movement. That is what is happening. This is just like the Tory party of the past when it said that the Single European Act and so on were nothing to do with European emergence. Will the Minister kindly drop the spin and recognise that that is the direction in which he is taking us?

My Lords, I do not accept the premise that the noble Lord makes and I did not feel that I was putting any spin on the matter. I was simply trying to point out the reality of the situation.

My Lords, can my noble friend tell the House whether the Government have any aspirations to extend this new relationship between the United Kingdom and France to any other countries in the world, be it the United States or other members of the European Union?

My Lords, we have always had excellent relations with the United States and I know that those will continue. We talk to other countries in the European Union and to our NATO allies at all times, but this Statement was about relations with France, which I very much welcome.

Energy: Climate Change

Motion to Take Note (Continued)

My Lords, I, too, am all in favour of Anglo-French co-operation and I should like to see some on the climate change agenda, so perhaps we can revert to that. I should be grateful for the break in the debate, otherwise I might have been tempted to respond in detail to the tour de force by the noble Lord, Lord Lawson, and the last time I did that I got completely slaughtered. However, the House should recognise that the difference between the noble Lord and most of us here is that he does not accept, even with the usual caveats, the burden of evidence of man’s contribution to global warming. I do and I am glad to say that the Government do. I therefore thank the noble Lord, Lord Lawson, for differentiating himself so clearly from the Government and I congratulate the Government on differentiating themselves so clearly from the noble Lord on this matter.

I accept that there is a possibility and a probability that manmade carbon dioxide emissions have had some impact on the very slight rise in the temperature in the 20th century. I do not deny that. I keep an open mind on the science. Even if that is accepted, the policy decisions do not follow; they do not add up. That was my point.

I thank the noble Lord for that clarification. Behind his scepticism about the policy, however, there is a doubt about the science. The noble Lord often makes good political and economic points but essentially his assessment of the science and the challenge that the science presents us with is different from the view taken by both the previous Government and this one.

Despite the climate sceptics’ view, there is largely cross-party consensus on the importance of climate change and the present Government’s commitment on the road to 2050 via 2020. There is largely consensus that we need a mix of energy sources from nuclear to renewables, which means nuclear and renewables, not nuclear or renewables. That is a positive sign for this country at a time when, as has been said, there is a danger that in the United States a political veto will shortly be handed to the climate change deniers and when China insists on playing such a dangerous geopolitical game on this most serious of subjects. As a result, any progress at Cancun is seriously in doubt. The fact that I am on the same page as the Government on this does not necessarily mean that I agree with everything that they are attempting to do.

Before getting on to that, I should probably declare a few interests. I am the chair—shortly to retire—of Consumer Focus, which, along with our predecessor organisation Energywatch, has often expressed consumer interests in energy policy. Even a few weeks ago, we managed to gain for consumers about £70 million from one of the major energy companies, only to find out two weeks later that we were about to be abolished. It is important that the consumer interest in this debate should be reflected. I also declare an interest as honorary president of CHPA and chair of a CHP company. As we will refer to Warm Front in a moment, I should say that I have a past interest as an adviser to Eaga, but that is no longer so. I am a member of the Environment Agency board, which reminds me that some departments did not do quite as well as the noble Lord’s department out of the CSR settlement. Measures to adapt to climate change—principally flood defences—failed to get adequate resources in the outcome of the CSR. The noble Lord and his colleagues in DECC are to be congratulated to an extent.

My main concerns in this debate are threefold. Like the noble Lord, Lord Teverson, I think that the drive on energy efficiency is still insufficient, not just in the household sense but more broadly. Secondly, there is a serious social and distributional dimension about the issue of who pays for the cost of adapting and mitigating climate change. Thirdly, there is not yet any clarity on the Government’s review of the role of Ofgem.

Energy efficiency applies not only to end use but in the generation system. We have some pretty inefficient generators in the distribution system, in which there is major leakage, and, of course, in homes, factories and offices. I was grateful, I think, to see a commitment by the new Government to increase decentralised energy, which helps to bring energy nearer to its point of use, but in general there has not been a lot of emphasis on the totality of the system and on the improvements in energy efficiency that we should be able to see.

At the household end, the Government are committed to the green deal. I welcome the concept of the green deal, but we need a lot more detail. Who will deliver it? How will householders be persuaded to go for it? Are supply companies to be involved in the delivery? Unfortunately, they are not the most trusted by householders and consumers. The banks clearly have to be involved, but I do not think that they should be the major agent either. There has been talk of Tesco and the other major supermarkets delivering. I am not sure whether that is on the Government’s agenda. There could be specialist managers—indeed, the installers and manufacturers of improved energy-efficiency and insulation materials and gadgets could be the actual deliverers.

The key thing to remember is that the whole concept of the green deal is for an individual householder voluntarily to enter into a deal to make some expenditure on the basis of a loan that will be paid back through lower energy bills. That is key, but it requires trust—trust in the initial audit of the energy efficiency or otherwise of the house; trust in the terms of payback; and trust in how the customer service to that householder is carried out, because it can all be spoilt if a wall is unnecessarily knocked down or even if a carpet is messed up and the installer fails to recognise the interests of the consumer in the household.

There is also a lack of clarity about who potentially benefits from the green deal. Owner-occupiers, in one sense, clearly would if they were in the building for a significant time. Theoretically, at least, they could benefit if they sold the building, because the value of the house should at least reflect its future energy consumption bills. It is not so clear when it comes to tenants and landlords. The question of who benefits depends on who pays the bill and it is not at all clear how this will apply in social housing in local government and housing association properties.

That brings me to the nub of the problem so far as the distributional aspects are concerned. There is an increase in fuel poverty. I was once the Minister who set the targets for fuel poverty and for the first few years we made significant progress on that front. We are now miles off achieving those targets and I think that a realistic reassessment of the targets is necessary. However, we must reiterate and back up a commitment to eliminating, so far as possible, fuel poverty from our society. The Government’s major move on this front has been effectively to run down and abolish Warm Front. There was some criticism of Warm Front and no doubt its delivery and scope could have been improved, but it was a major contributor not only to reducing fuel poverty but also to improving the energy efficiency of some of our least energy-efficient buildings. It is not replaced by the green deal. It is not clear how the green deal applies to those who are fuel poor and would not wish to take out that loan or do not own the property in which they live. Nor is it replaced by the price support system that the Government say will operate within the tariff structure—in other words, there will in effect be some subsidy to the supply companies, bringing on what we might previously have called a social tariff, although I do not think that that terminology is of interest to the Government. That helps—it helps to lower the current price—but it does nothing to improve the energy efficiency of the building and therefore the future bills.

Fuel poverty is growing. In the medium term, it is almost certain that energy prices will rise. They will rise because of world market conditions and they will rise because of government policy in, effectively, placing the cost of greening and decarbonising our energy supply on the consumer. On one level, I do not dissent from that policy, but it has consequences. In particular, it has distributional consequences on the very poor. It is not clear whether the green deal will do anything significant on that front.

The central problem is that this is a regulated industry—a very heavily regulated industry, according to some—and the net effect of the regulation is counterproductive. I would be interested to hear from the Minister what the Government expect from the current review of Ofgem. I have often been critical of Ofgem. The noble Lord, Lord Mogg, who is not in his place, sometimes gets very sensitive about it. However, I am not in favour of the abolition of Ofgem, nor am I in favour of limiting its remit. It has been improving on both the social and the environmental fronts. However, there needs to be a radical if not revolutionary approach to the way in which tariffs are structured in this country. It remains the case that the more energy you use, the lower the unit cost of energy. It also remains the case, either because of the tariff or because of the way in which you pay, that, by and large, poorer households pay more per unit of energy than better-off households. Both on social and environmental grounds, that is counterproductive.

The objectives of energy policy—on security, decarbonisation and affordability, including reducing fuel poverty—must depend on us delivering a step increase in energy efficiency. Unless the Government and Ofgem and the remit that this Government give to Ofgem are directed at producing a tariff structure that encourages energy conservation and energy efficiency and removes the disproportionate burden of energy costs on the poorer households in our society, we will not achieve any of those objectives. I hope that, in the review of Ofgem, the Government will bear in mind that the combination of the noble Lord’s department and Ofgem can deliver a radical change of strategy for us. I hope that they do deliver it.

My Lords, I, too, should begin by declaring a couple of interests. I am the honorary president of two organisations connected with the energy industries—one is the National Skills Academy for Nuclear, and the other is the Energy Industries Council—but I do not think that anything that I am going to say will impinge on their valuable work.

I agreed with the noble Lord, Lord Grantchester, on one thing—here I must challenge the view put forward by my noble friend Lord Lawson—which is that I do not think that anybody can now seriously doubt the weight of the scientific evidence about global warming. What I think my noble friend Lord Lawson leaves out of account is the huge cost and damage of the effects of that. If he doubts that, perhaps I may suggest that he read the report of the Adaptation Sub-Committee of the Committee on Climate Change, which is a sub-committee presided over by the noble Lord, Lord Krebs, who without doubt is one of the most distinguished scientists in this House and indeed in the country.

I do not want to talk about adaptation; I want to talk about mitigation—the measures necessary to try to reduce the human input of carbon into the atmosphere. I think it right that one should be seeking to aim to make the energy industries as carbon free as possible, however difficult that may be. It will take a long time, I have no doubt on that, but I support the view that policy should move in that direction.

Today's debate could cover a very large canvas but I have time in this short speech only to touch on a very few points. The first point that I would like to make and put to my noble friend on the Front Bench is that I hugely welcome the emphasis in 2050 Pathways Analysis—on which my noble friend organised a very useful briefing for a number of us before the Recess—and, in particular, its emphasis on 2050. As my noble friend will recognise, in the past I have argued that energy policy, and indeed even more climate change policy, has to have a very long perspective. It takes a very long time, to use a hackneyed phrase, to turn the tanker round. I therefore very much welcome that.

However, when one looks at the national policy statement for nuclear, which is one of the documents published with the pathways document and contains a large number of changes from the original draft statement, one sees that it concentrates only on the period up to 2025. What is the logic of setting a framework that takes us to 2050 if on one of the most important parts of the whole effort you are only going up to 2025? I am reinforced in this view by a very interesting paper that was published in the journal Science and headed “Generating the Option of a Two-Stage Nuclear Renaissance”. In that paper, Robin Grimes and Bill Nuttall say:

“We suggest that the first stage of this process will include replacing or extending the life of existing nuclear power plants, with continued incremental improvements in efficiency and reliability”—

and that is happening. They continue:

“After 2030, a large-scale second period of construction would allow nuclear energy to contribute substantially to the decarbonization of electricity generation”.

Is it not already implicit in the 2050 pathways paper that there will be more nuclear generation? Nuclear generation is low-carbon, an established technology and highly reliable, unlike wind power, which is intermittent. It cannot possibly be right to be planning on the basis of nuclear only up to 2025. I wonder whether my noble friend will comment on that, particularly if there is to be any chance of achieving the purposes of the longer-term analysis.

I very much welcomed the Statement by the right honourable Chris Huhne on 18 October, which set out the Government’s policy very clearly and has been widely welcomed by the nuclear industry. The Statement makes it perfectly clear that nuclear will be taken forward and must be a major contributor to low-carbon energy production. However, I have one question on this for the Minister. In the Statement, Mr Huhne said that there will be no subsidy for nuclear,

“unless similar support is also made available more widely to other types of generation”.

I am not sure that I quite understand the implications of that.

We are already promised a floor price for carbon, which will help all low-carbon energy sources—in particular, new renewable sources—but I would welcome an indication of what might be done in support of that. There is a growing view that a carbon floor price will by itself not be enough to attract the huge sums of investment that will be necessary. In one representation that I have had, what is being called for is,

“a suite of energy or capacity signals or payments that reward the characteristics required in new generation investment, for example low carbon energy or secure and predictable energy supply”.

Will my noble friend say whether the Government are considering capacity payments? They would be very useful not only in nuclear but, for instance, if we are going to have standby generation to supplement wind power when the wind is not blowing.

That takes me to wind power, on which I want to be brief. I read in the Independent the other day that, for every completed onshore wind farm, no fewer than 18 have been abandoned or turned down. They are hugely unpopular and very expensive. When I look at offshore wind farms, where the costs are several times higher, I seriously begin to doubt whether the huge emphasis placed on wind power by the previous Government and by the coalition Government is wise policy. There are other forms of renewable energy that are every bit as environmentally acceptable but that can operate at a substantially lower cost. One of them is nuclear, but there are others; for example, the use of biomass. I have had a representation from one of the companies complaining bitterly that so much subsidy is going in the direction of wind power. It is subsidy paid by the consumer, as I am sure the noble Lord, Lord Whitty, recognises. One of the problems of the pricing is that the fuel-poor pay the subsidy on wind power whereas other sources based on biomass and so on are a good deal cheaper. I hope that the Government will look at this because I do not believe that it is viable in the long term.

We suffer from a plethora of different incentives and support mechanisms covering widely different forms of energy generation. In a complaint that was reported in the Times the other day, people were saying that it may be that the big companies can steer their way through the complexity of the system, but the increasing number of small and medium-sized companies that are coming into this world find it intensely confusing. As I have asked before, is there not a case for trying to simplify the system? If one is going to provide support, subsidy or incentive—I much prefer the word “incentive”—to encourage the kind of generation you want, it should be as simple as possible and apply so far as possible across the board. I hope that my noble friend will be able to give us some assurances about that.

Finally, I shall say a word about carbon capture and storage. There was disappointment on the part of the CCSA about the comprehensive spending review. My noble friend will recognise that as a whole the department has done rather well out of the spending review and has secured a number of really important targets and policy statements. The one I particularly welcome is the recognition of the longer-term nature of the spending by the Nuclear Decommissioning Authority in decommissioning and preparing for the handling of waste. That is something that I have argued for in the past, and I welcome it. It is interesting that not only does it reinforce confidence in the new nuclear programme, which is very necessary, but a recent report by the University of Cumbria has drawn attention to the regional and national significance of this huge programme of decommissioning in which we lead the world. There has been a lot of hype about that in other areas, but in this one we can point to that. The setting up of the NDA by the previous Government was an important step in this direction and it is important for all the supply industries that are based on it.

We are now going to have only one CCS demonstration project. There will be another four but, without funding, what will become of them? I hope that the Minister will be able to say something about that. We need a clear statement of the Government’s longer-term policy intentions in the area of carbon capture and storage. As my noble friend Lord Lawson rightly said, there are huge supplies of coal and gas around the world. The other day, I learnt that most of our coal is now imported from huge open-cast mines in Russia. The coal is shipped to Murmansk and then comes here by sea, but that is only part of it. There are enormous supplies. If they are going to be used, and if one is going to try to tackle the problem of carbon, carbon capture and storage seems to be enormously important. I hope that at some stage soon my noble friends will be able to say something about this as their general policy. There was a lot of hype from the previous Government about us leading the world in this field. That is not true. There is carbon capture and storage in America, north Africa, India and China. Unless we get on with it, we will not play a part in it. This is something that Ministers need to take into account.

I have said more than enough. We will have plenty of time and other debates in future on the new statements of national policy that will come before us in due course and on the proposed energy security and green economy Bill, but I have made a number of points to which I hope my noble friend will respond.

My Lords, I welcome this opportunity to debate government policies about the critical issues of the UK’s future energy supplies and use in relation to climate change. The Statement set out by Chris Huhne, the Secretary of State, is very helpful. Without urgent action, the supply of reliable and economic electrical energy is in some doubt, although we have been hearing that perhaps with extra fossil fuels the doubt is postponed more into the future. But what is in doubt is the UK’s commitment to reduce its greenhouse gas emissions as part of the general international programme in this direction. I declare an interest as emeritus professor at University College London and chairman of an environmental consulting company.

As other noble Lords have emphasised, energy and climate mitigation policies are linked to other equally important policies—health, economic growth and equity, the preservation of the environment, biodiversity, and safety against natural disasters and accidents. Joined-up policies are not just an aspiration with economic incentives, subsidies and endless interdepartmental committees. A systematic approach showing transparently how the critical issues are connected together with uncertainties and timelines is required.

As many noble Lords will remember, the effectiveness of such an approach was first demonstrated in the United States engineering programmes in submarine building and space of the 1950s and 1960s. But in 1964, the House of Lords caught up and sadly noted that the Trend report on the future of UK science, which has not been looked at again in that depth, recommended the synthesis of cybernetics, model systems and computer methods. The Lords noted that they were not given very high priority. Lord Shackleton noted that the degree of co-ordination in science—and, he could have added, government policies—was completely lacking.

Since then, however, the value of these methods of dealing with complex and wide policies has been used extensively by large companies. Now, research is being pushed by the European Community and, finally, the UK research council, the EPSRC. This new aspect, which is being considered in project co-ordination at UCL, is not just about how to construct a monstrous computer programme that includes everything, but about how to construct model systems that are designed to help decision-making on particular policies and how to make use of all the relevant science and technology. I was impressed, for example, by the methodology in the recent report by the climate change Adaptation Sub-Committee, which used the idea of a ladder of measures in its critical examination of the threats to the UK of climate change, such as flooding, heat waves, sea-level rise and changes to the natural environment.

But the most important development in the politics of UK energy has been the acceptance by the Liberal Democrats of the need for nuclear energy as part of the mix of energy supplies. I am sure that EDF Energy—I sat on its advisory committee—and other major suppliers will now be able to build power stations on time and on budget, as EDF is doing in Normandy, provided that all the regulatory arrangements are agreed and provided that they do not change during construction. That was the reason for the delays in the Finnish power station. In the past year or two, when I have addressed meetings in the UK, the United States and Japan, there has been a growing understanding of the need for nuclear power and it has grown in popularity.

The Government should now mount a campaign to explain their policies and how they have a long-term vision of how nuclear policies and science and technology will evolve. A hesitant start will not encourage the best engineers and scientists to specialise in nuclear technology and science. As one sees in France, exciting connections are made between this area of science and technology and solid state physics, applied mathematics and environmental science.

In the old days in the House of Lords, Lord Marshall, former head of the Atomic Energy Authority, and Lord Hinton, former head of the CEGB, were great champions of every aspect of nuclear science and technology. I suggest to the Minister that DECC should encourage its leading civil servants and the chief scientist, Professor MacKay, to have this role again both within the UK and internationally. The only really strong international spokesman is Mr Sokolov, the deputy director-general of the International Atomic Energy Agency, whom I have met this year. The UK should be much more prominent in the scientific and technical meetings of the IAEA, perhaps holding one of its conferences in London and not leaving it all to France—a reference to this afternoon.

With 20 to 30 new countries about to launch into nuclear energy, there is a real opportunity for the UK nuclear industry, which I understand from DECC has some promising niche areas. One hopes that Sheffield Forgemasters will still be viable to participate in this, despite the damaging withdrawal of the government ban soon after they came to power.

There are two main concerns about nuclear power that the Government should understand. It is essential that the monitoring of nuclear radiation and its effects on human health, even if it is very small, must be open and trusted. The UK had the world-respected, quasi-independent National Radiological Protection Board, which then became the Health Protection Agency, first led by the former chief scientist, Bill Stewart. This was an excellent example of hiving off the policy of dealing with government through semi-independent bodies, endorsed by the Wilson Government and carried forward by the Thatcher Government.

Will the Minister explain how the Government’s decision to merge the Health Protection Agency into the Ministry of Health will not lead to some loss of confidence in the reliability and independence of radiological data and prediction? Professionals are not at all happy about this situation. One asks why, if it is necessary to have a semi-independent body for monitoring economic data and forecasts, and for the effectiveness of clinical treatment, as we heard yesterday, the same does not apply to the activities of the Health Protection Agency. A clear statement is necessary for reassuring the public on this controversial aspect of the environment.

The second issue emphasised by the Government’s Statement is the long-term storage of nuclear waste, which, as is currently planned, will be buried in underground storage. So far there are no explicit plans to ensure that this waste will be able to be retrieved when the technology develops to reprocess the waste. A lot of people will have a different view of nuclear energy if there is some commitment to use technology for this purpose.

Large teams in China are working on combined fusion and fission technology, which could use lower-grade nuclear materials, such as thorium, but could also process existing wastes. It could also be more flexible than pure fission in order to combine with other kinds of renewable energy. I am glad to say that there is now a growing interest in this in the UK. I declare an interest as a member of an advisory committee of Tokamak Solutions, which is aiming to develop this technology.

This and the previous Government’s low-carbon energy policy is to encourage a wide range of methods and to ensure where possible that they are complementary to each other. In the development of offshore wind energy, the UK’s area of international excellence lies in the economic engineering and planning by leading consultancies, and in the great testing facility in the north-east where there is considerable concern that this facility, which is being copied in Japan, is in danger because it was largely funded by the regional development agency. Will the Minister comment on this?

However, there are many other areas, especially manufacturing, where Germany and Denmark are more in the lead. Surely, the rational policy for Europe, just as we heard this afternoon, is to have a network of top-class energy centres that collaborate in pre-competitive research. We have a number in the UK, as do Denmark, the Netherlands and so on. These centres could contribute to better progress in energy efficiency, low-carbon technologies for carbon sequestration, electric cars, large electric batteries for communities and so on. This would not be new. Europe has established extensive collaboration between world-class centres in aeronautical engineering that underpin the great success of Airbus and its adventurous plans for the future. I helped to set up ERCOFTAC, which was one of the European communities supported by industry and universities. We should have the same for energy.

The use of biomass, bioreactors and afforestation, as mentioned by the noble Lord, Lord Grantchester, are all equally important contributors, particularly at a local level, but connections to these policies are proving very difficult and different parts of Whitehall deal with them. For example, will DfID contribute to the poor communities and local governments worldwide that are preserving their forests, as one sees in the Amazon? We also have to think of our poorer communities in the UK, as the noble Lord, Lord Whitty, mentioned, in the low-carbon energy policy.

Much UK housing has very poor insulation, which is much worse than in social housing in Germany. I was a city councillor and I visited German council housing. German representatives came to Cambridge and were really shocked at our poor council house insulation, which has not got a great deal better. It is clear that significant progress will be made as a result of recent measures, but will the Minister tell us what will happen when insulation and better heating are installed, and if rents increase? Will this lead to families in houses at the upper limit of housing benefit being moved, which would be a very serious matter?

I return to human-induced climate change, which only economists seem incapable of understanding, although the noble Lord, Lord Stern, is a notable exception. Its increase and its impacts on the poorest communities in India and Africa can be reduced most effectively by limiting emissions, albeit over many decades. I understand that the noble Lord, Lord Lawson, wants to allow emissions to increase unchecked, and therefore I assume ultimately to spend funds on saving these communities from the most damaging effects of climate change. That could be very expensive indeed. The only country that is really following this is the Netherlands, which published a report a couple of years ago. It expects its dykes to rise to six metres, but it has a coastline and an economy that makes it feel that it can afford that. In other parts of the world, areas will simply be abandoned.

The noble Lord, Lord Lawson, was not correct to imply that China is doing nothing. In fact its forest coverage is increasing, it is developing many new areas of technology and it has five or six carbon trading centres to push its industries to greater efficiency. China does not want to follow the rules, as it were, or international agreements, but it is certainly making progress.

I welcome the Government’s commitment to climate change mitigation and adaptation, and their wide-ranging energy policy. I hope that the Minister will emphasise the importance of greater European collaboration in energy technology, again building on what we have heard this afternoon. At the Cancun climate conference, will the Government emphasise the importance of all types of low-carbon energy—including nuclear energy, which was overtly omitted from Copenhagen—and will they also emphasise the importance of integrating energy mitigation and adaptation policies with those of afforestation and the preservation of biodiversity?

My Lords, like other noble Lords, I welcome the opportunity to take part in this important debate and have a couple of interests to declare. I am a vice-president of National Energy Action, a charity that works to eliminate fuel poverty, and president of the Micropower Council. Given what most of us in the Chamber today believe about climate change, reducing energy consumption and moving to sustainable sources of energy must be two of the key strands of our energy policy. For far too long we have been profligate in our use of energy and have failed to build energy-efficient buildings to high standards. If we had been doing this over the past 40 years, we certainly would not find ourselves facing many of the problems that we face today. This point was well made by my noble friend Lord Teverson.

It is amazing that British households still use more energy for heating than Swedish households. For too long, we have taken up measures on a rather small scale and have not been clear enough about the long-term direction of our policy. This has meant that many in the energy business and individuals have not always been willing to invest in technologies. This is the case with microgeneration, an area that I want to cover in the rest of my remarks in order to highlight some of the issues preventing the mass take-up of these technologies.

Microgeneration is the small-scale generation of low-carbon heat and electricity by householders, small businesses and community organisations such as churches and schools. By generating their own heat and power, the microgenerator can save money on bills and help to protect the environment at the same time. According to a government-backed report, microgeneration has the potential to produce as much electricity in a year as five nuclear power stations. The report was commissioned by the former Department for Business, Enterprise and Regulatory Reform in 2008. It also states that with the right incentives, some 10 million microgeneration systems could be installed by 2020. This would provide nearly 5 per cent of the UK’s electricity, saving 30 million tonnes of carbon dioxide. So it is clear that microgeneration can play an important role in making progress towards our renewable energy targets, as well as in job creation throughout the United Kingdom. Indeed, the noble Lord, Lord Grantchester, mentioned this in his speech opening comments.

By supporting the microgeneration sector, the Government can create new jobs, revitalise manufacturing industries, help the UK export market, and of course improve our energy security. Microgeneration also has the unusual benefit of engaging citizens directly in their energy supply. This often heightens their awareness of the UK’s renewable energy targets and encourages surrounding neighbours to consider microgeneration technologies of some sort. Microgeneration would be only part of ensuring Britain’s energy security, but I believe that it does have a place, after energy efficiency measures, to heighten consumer awareness and engage citizens in a way that no other energy supply option does.

What is stopping the potential uptake of microgeneration? The issue of permitted development is a major barrier to both air source heat pumps and micro wind turbines. This was supposed to have been resolved by July this year, but the Government failed to comply with a statutory deadline to introduce micro wind and air source heat pumps into the planning system. At the time, a spokesman from the Department for Communities and Local Government stated that the Government were absolutely committed to laying this right before Parliament and that it would be laid before Parliament before the Summer Recess. However, it was not. This is a major barrier to air source heat pumps and micro wind as it means that those who want to install these products have to seek planning permission first. I would be grateful to hear from the Minister, when he winds up the debate, exactly when this issue can be resolved. It has been going on for a long time, not only with this Government but with the previous Government.

Another barrier to the mass uptake of microgeneration is the uncertainty surrounding financial incentives, although some of this has improved. Before the comprehensive spending review announcement, there was much speculation about feed-in tariff levels and what might happen before the review date in 2013. That speculation arose from the lack of government certainty, and it causes crises for investors, manufacturers and consumers, especially if consumers fear that they will not get the tariffs they were promised. I hope the Government recognise that they need to learn from the past. They must set the post-2013 tariff levels with much thought, and sooner rather than later, because creating certainty is important in that it will allow those affected to adjust what they are doing accordingly.

Clarity around the renewable heat incentive, mentioned by other noble Lords today, is also key. Although the renewable heat incentive announcements were very much welcomed by the microgeneration sector, the detail is yet to come. I do not know whether the Minister is in a position to give us a little more detail on this today. I see that he is shaking his head.

A large barrier to microgeneration uptake is the lack of capital among consumers, especially among the more vulnerable fuel-poor ones. It is important that all citizens should have the opportunity to access these technologies, but to achieve this, capital is key. The Government have announced the phasing out of the Warm Front scheme, also mentioned by other noble Lords. I understand that it is largely to be replaced by the green deal, so again we await further information on the details of the policy.

It is clear that energy efficiency will be key, but it is still unclear whether microgeneration will be included in the green deal as the step on from energy efficiency. Given the consumer behaviour-changing characteristics of microgeneration, the opportunity would be lost if it were left out of the green deal entirely. Again, I hope that the Minister can say something about this when he winds up the debate.

The final barrier to microgeneration that I am going to touch on today is the lack of public awareness of the various microgeneration technologies, and of course the benefits of them. This is something that needs to be addressed both by the Government and by the industry. I know that the Micropower Council is working closely with its members to formulate a plan of action in order to reach consumers and demonstrate to them how microgeneration naturally follows on from energy efficiency.

I hope the Minister will agree that microgeneration has an important part to play in an energy strategy designed to combat climate change. It certainly fits in well with his opening comments about the security of supply and a low-carbon economy. I hope when he winds up the debate that he will have time to address some of the issues I have raised.

My Lords, I thank the noble Lord, Lord Marland, for initiating the debate and for the commendable brevity of his introduction—it was short and to the point. I also commend him for his commitment to his work in his post as Minister.

I enjoyed the intervention of the noble Lord, Lord Lawson, who is not in his place. I would go so far as to call it a tour de force—if one can have a tour de force where most of what one says, if he will forgive me, is wrong or questionable. The noble Lord seems to question the authenticity of the science. He thinks that climate change has levelled off and most of his subsequent points and claims stem from that view. However, he is definitively mistaken. The most thoroughgoing climate and weather monitoring organisation in the world, in some part based on space and satellite technology—the National Oceanic and Atmospheric Administration of the United States—has shown that 2010 will be the warmest year in sea and land temperatures since reliable records began. It has analysed data from scientists in 40 different countries, using 10 different indices. All show that climate change is happening and is almost certainly caused by human intervention. It is important to recognise that these studies are based not on modelling but on direct observations.

The risks posed by climate change are all too real and, unlike most other global risks, are irreversible. That is an important point because, once the greenhouse gas emissions are in the air, we know of no way of getting them out again. Because of its implacable nature, this problem is quite different from most of the other global problems that we face.

The coalition is absolutely right to seek to institute measures to reduce our carbon emissions and to call on other industrial countries to lead the way in doing the same. The noble Lord, Lord Lawson, pointed out that on a federal level the United States has been unable to supply the leadership that the world needs. Fortunately, an enormous amount is going on below federal level in the United States, at a regional level, in cities and in individual states—for example, Colorado has an entirely commendable zero carbon plan that is both realistic and interesting.

Climate change should be seen as much as an economic and security issue as an environmental one. Innovation is going to be at least as important as regulation, and countries and businesses that are in the vanguard will prosper in economic competition. This is one of the points on which I disagree fundamentally with the noble Lord, Lord Lawson, as he knows. There is an entire new frontier of economic competition in which the UK must attempt to be at the forefront. The transformations that will occur in the energy industry—not only in renewables but in other areas—will be far reaching and we must not be left behind.

At the moment, this country is absolutely not in the vanguard of these innovations. Even though I sit on the Labour Benches, I have to say that Labour achieved very little in practical change. Of course, the party set up a framework for the future—the Climate Change Act and the Energy Act are important—but in terms of practical achievement there is not a great deal. The UK is currently next to bottom in the proportion of energy mix delivered by renewables.

I applaud the Minister for his determination to change the situation and the coalition for adopting a non-partisan policy. I hope that my party will do the same. It is highly important that climate change should be a non-partisan issue. In the United States, policy has been paralysed by an almost complete politicisation of the issue. Noble Lords will perhaps have seen reported in the Guardian yesterday that only approximately 14 per cent of Republicans accept that climate change is real and caused by human activity, compared to almost 60 per cent of Democrats. We must avoid that political polarisation here. I am pleased that so far we have done so and that the coalition has contributed actively to that. Unlike the noble Lord, Lord Lawson, I support the overall themes and thrust of the coalition’s policy.

However, there are plenty of problems around and I ask the Minister to comment on a few of them. First, it is distressing—to me anyway—that the budgets of the DECC and Defra have been slashed so radically. How is that compatible with dealing with what, in the introduction to the Government’s report on climate change, is said to be the most fundamental global problem that we face? How is such a devastating cut there and elsewhere compatible with the thrust and commitment that we need, as well as the labour power, from these two key departments?

Secondly, in its letter to Chris Huhne of 9 September 2010 the climate change committee strongly reaffirmed that a step change in policy is necessary. In this document and in its previous report, especially, it calls for a revolutionary change in policy if the country is to reach its 2020 target of 15 per cent of UK energy generation from renewables. I ask the Minister whether the current policies are radical enough. Where is this step change going to come from? I would be grateful if he could identify for me the combination of policies that will produce the step change that the climate change committee has several times restated is necessary.

The Severn barrage, with which the Government have decided not to go ahead, was an area of radical policy that would have contributed to such a step change. In response to a Starred Question in the House on 19 October, the Minister said that the reason for the Government’s decision was the cost, which amounted to £30 billion, but I am not sure that that is the case. I would like him to comment further on that, because there is the upfront cost and the overall cost implication for the country of not going ahead with the project. Cost cannot be measured only in terms of what you pay now; it also has to be measured in terms of potential benefits—and the benefits would have been formidable from this single project. I would like the Minister to explain what the cost benefit showed, because it does not appear in his response to the Question.

Thirdly, how much progress has been made with reforming the climate change levy? As I understand it, the relevant legislation will be in the projected Finance Bill 2011. However, as the noble Lord hinted in his introduction, do not energy companies and investors need clear signposts before this? There are plenty of signs that companies are not proceeding with the kinds of innovations that they might otherwise develop because of the fairly long lapse in the introduction of these changes and because they do not know what the context of their business in the future will be.

Fourthly, how much attention are the Minister and the Government giving to lessons that can be learnt from other countries? I have in mind especially Portugal’s E4 programme, which was launched in 2001 with the aim of creating a consistent, integrated approach to energy. It has been amazingly successful. Portugal is, of course, a small country and it has a little more sunshine than we do, but it now gets 40 per cent of its electricity from renewables. That is an increase of 28 per cent in five years. This is interesting because in the pre-existing cases of countries that get a high proportion of their electricity mix from renewables, such as Denmark and Sweden—they were driven by energy security considerations in response to the oil crisis of the late 1970s—it took something like 25 years for their policies to unfold. Many have drawn the inference that this is difficult to do and that we are therefore talking about a long-term project, but the case of Portugal shows that that is definitively wrong. It is possible to make very large changes in a short time. We should be ambitious. We have a 15 per cent target, which the climate change committee has recently reiterated, but let us look at what Portugal has achieved and what it is planning, which is to source 80 per cent of its electricity from renewables within the next six or seven years. It shows that it can be done.

This being the second time that I have crossed swords with the noble Lord, Lord Lawson, on these issues today, he will know that there are many areas where I disagree with him. One is China, on which he is absolutely wrong. China has a developed climate change plan, initiated by its Government. The Chinese Government are very worried about the consequences of climate change, pointing to the melting of the glaciers from which the main rivers of China come, which will affect hundreds of millions of people. It is not right to say that the Chinese are simply blind to this issue—very much the opposite is the case. It is not right to say that China is building one coal-fired power station every week and is simply on a fossil-fuel trajectory. As was mentioned in our earlier discussion, the Chinese are closing down a lot of their older coal-fired power stations because they want to contribute to decarbonising their economy. China is taking the lead in wind power and solar power, not simply, I think, because that is where it sees a competitive advantage—although it certainly does—but because the Chinese Government are conscious of the need to transform their energy mix out of concern for both energy security and climate change issues.

This country has to be in the lead in technological innovation in respect of our energy mix. If we are not, we are likely to be the beached whale or the dead duck in the global competition that is now developing.

My Lords, I am grateful to my noble friend for enabling us to have this debate. He does not shrink from listening to views that are at variance with those which he as a responsible member of the Government has to advance—as he again made clear today.

I first refer to some good news that has recently come from my noble friend’s department. It really does look at last as though we are likely to see eight new nuclear power stations in operation starting from about 2018. The previous Government, of course, had already started down this road, after having lost 10 years when, despite enormous parliamentary majorities, Tony Blair made no attempt at leadership on the subject. I therefore congratulate the Government on taking us a step further down the road towards energy security and, if one has been persuaded that it is important, towards further carbon emission reduction. I hope that we will one day go further still down the nuclear road.

I was also pleased that the Secretary of State modified the usual mantra of “no subsidies for nuclear power” by acknowledging that a cap would have to be considered for clean-up liabilities, due in part to international treaty obligations. But the Government continue to gloss over the subsidies which wind power, in particular, has enjoyed and, without which, no investment in it would be taking place. The Secretary of State for Energy and Climate Change even said in the other place that studies had shown that there had been,

“a dramatic reduction in the cost of onshore wind. The result is that it is competitive in a free market with other sources of energy”.—[Official Report, Commons, 27/7/10; col. 875.]

In that case, one might ask, why subsidise it? Perhaps my noble friend could tell us when the Government intend to reduce the subsidies for wind power if it is now becoming so efficient.

So-called wind farms are not wind farms; they are subsidy farms. Developers are promised that they can sell all the electricity that they can produce at about twice the market rate and, if they are offshore producers, at three times the market rate. That is what the ROC system is paying for, or rather what the electricity consumer is paying for, at an annual cost of well over £1 billion. That cost is expected to rise to £6 billion by 2020 or until the Treasury intervenes, whichever moment comes first. Why should the Treasury intervene? It is because those subsidies are effectively a tax on the electricity consumer, both business and private, the proceeds of which go not to the Treasury but to developers, including energy companies, to enable them to carry on an otherwise uneconomic activity. From them, they go to landlords, including the Crown Estate. They remove a taxable opportunity from the Treasury and, in time, will reduce the tax base by making industry less profitable. They will undoubtedly drive parts of it out of the country altogether.

The Government are also fond of saying that wind power contributes to our energy security. The logic of this claim is equally incomprehensible since, as wind is not available on demand, there will always have to be sufficient power available from other sources to meet peak demand, just as there would have to be if we had no wind power.

Apart from disingenuously trying to give the impression that the market will choose between nuclear and wind power on a level-playing-field basis, the Government are insinuating, equally unconvincingly, that a level playing field operates within the planning system. Replying to a debate on onshore wind farms in Westminster Hall last month, the Minister of State at the department, Mr Charles Hendry, said:

“In the spirit of fairness, we all believe that it is right that if an application is turned down at one level, people should continue to have a right to appeal for a redetermination”.—[Official Report, Commons, 13/10/10; col. 138WH.]

This seems very misleading. In the first place, it is not people, in the sense of local communities, who have the right to appeal against local authority planning decisions. If the application by the developer is granted, there is no appeal against that decision. It is only the developer who has the right of appeal if his application is turned down. That might be thought not unreasonable, but any idea of fairness is made a complete mockery of by the subsidy system. If a local planning authority’s rejection of a planning application is appealed against, the issue normally goes to a public inquiry before a planning inspector. That is a very expensive procedure. The inquiry typically goes on for several weeks, with legal representation on all sides. The developer, very likely to be a large foreign-owned energy company, has the comfort of knowing that, if he wins, he will earn in the order of £0.25 million per year per 2 megawatt turbine in subsidy alone, and that, if he loses this appeal, he may win the next. Local objectors, if they organise themselves to oppose the appeal, will have to find in the order of £50,000 to £60,000 to meet the cost of expert witnesses and the very cheapest of lawyers. The local authority will have to find even more, perhaps in the order of £100,000, to fight the appeal. This is an incentive to local authorities to allow applications in the first place.

Nevertheless, despite this pressure applied by the Government through the subsidy system, and despite the pressure applied directly on local planning authorities to get them to accept responsibility for achieving the Government's renewable energy targets, there has recently been a most heartening tendency across the country for wind farm applications to be rejected at one stage or another in the process.

An unpublished report, apparently produced by the Renewable Energy Association, which is the trade association for the wind industry, was referred to in several newspapers last week. It apparently declared that in the face of increasingly organised opposition throughout the country by what amounted now to more than 230 local campaign groups, planning approvals for onshore wind farms had fallen to an all-time low, with only one in three applications getting the go-ahead from councils.

I live in a beautiful part of the country in the north-west, the Lune Valley, in a corridor between areas of outstanding natural beauty and two national parks, an area celebrated by Ruskin and Turner, which has been targeted by wind farm developers. In the past year or so, four applications have been turned down, one of them at a public inquiry, yet still the developers keep coming back. Most recently, an application was made for 20 monstrous turbines on high ground six kilometres inside the area of outstanding natural beauty of the Trough of Bowland. It was emphatically—indeed unanimously—turned down by the planning committee of Lancaster City Council, despite there being two members of the Green Party on it, following a strong recommendation to do so by their planning officer and strong pleas to do so by various statutory consultees, including Natural England.

However, the developers, who have no experience in the business but deep pockets, have appealed. Have they calculated that the local authority, at a time of cuts in local authority grants, will not have the stomach for an expensive full-blown public inquiry and may offer them a compromise? Most probably.

It is a sad sight to see Mammon subverting democracy—in this case, local democracy—and the Government cheering on the sidelines. As yesterday's White Paper on local growth reveals, the Government are proposing to bribe local authorities to grant more approvals by allowing them to keep the business rates so generated. As the campaign groups are for the most part not motivated by money, unlike the developers, they will certainly not disappear, so the effect will simply be to sow even more discord than there is already in local communities.

It will be taxpayers' money thrown with the deliberate purpose of overwhelming those who are trying to protect not simply the value of their homes but our finest landscapes, famous throughout the world, a magnet for tourists, one of our precious national assets. What is that great sacrifice for—of the living standards of ordinary families, of the competitive health of our industries, of our future prosperity, of our scenic fame? It is supposedly in the cause of reducing our carbon emissions, but once you have taken account of all the emissions produced in the manufacture, installation and maintenance of the turbines, and then of the same with regard to the fossil-fuelled power stations, which are being inefficiently ramped up and down in response to the fitful generation of wind power, it is highly unlikely that we will get any carbon emission savings at all.

The wind industry is a subsidy-driven farce, a distraction from the serious pursuit of energy security and a complete negation of what the Government insist is another of their priorities—the promotion of economic growth. The subsidies will cost far more jobs in the rest of the economy by raising the cost of energy than they will ever produce in the wind power industry itself. It is deeply depressing to see the Government still feeling obliged to keep in existence this green albatross.

My Lords, I put my name down to speak in this debate because climate change seems to have taken a back seat recently—a back seat to the economics of the comprehensive spending review. I welcome this debate to re-emphasise its importance. I also broadly welcome the Minister's opening remarks about continuing the non-partisan work on the security of supply and the green economy.

The Minister also spoke about value for money. I am not sure what he means by that. Incidentally, I wonder whether he has consulted the 100-page book in the Treasury which lays out the value-for-money rules in public expenditure. To plan future energy policy, it seems to me that there are four things for the Government to do: first, win the climate change argument; secondly, plan a future supply of low-carbon energy; thirdly, forecast the way that we will use it; and, fourthly, learn how to influence our behaviour so that points two and three will work.

The Minister had nothing to say about winning the argument. My noble friend Lord Grantchester hinted at it, and the noble Lord, Lord Lawson, explained exactly why winning the argument is urgent and never-ending. It is difficult, and changing economic conditions encourage scepticism. The noble Lord, Lord Lawson, spoke of the USA. I agree that the midterm election in the United States does not bode well for the climate change argument. It is difficult to know how scientists can win the argument in America when the other side claims that it is acting on God's will.

However, the Royal Society, in its helpful document summarising the science, lists those aspects of climate change on which there seems to be wide agreement: how surface temperature has changed; how concentrations of CO2 have increased; and how those effects are related to human activity. The Government have to stick to those basic arguments and make the case that unless we act, this trend will continue. The sceptics argue over by exactly how much the earth's temperature will change, but I do not think that that is an argument for government. The argument for government is the effect that all this will have on sea level, on agriculture, as my noble friend explained, on communities, on ecology, and that it is irreversible, as my noble friend Lord Giddens explained. I know that we already have laws about carbon reduction, but even so, it is necessary to engage with and keep winning the argument.

I agree with my noble friend Lord Whitty. Planning the supply of energy over the next 40 years means having a mix: coal and gas, bioenergy and renewables, nuclear, and anything else that comes along. Despite what the noble Lord, Lord Lawson, said, decarbonising the energy supply will require a substantial and sustained investment in research and in equipment, and investment in a smarter and more efficient distribution method. We need to rethink our whole network to accommodate the electrification of sectors which do not use electricity at present, such as delivering electricity to fuel car cells from offshore wind farms. Does that mean a bigger network or a more local network? Probably, a more local one.

The noble Baroness, Lady Maddock, spoke of microgeneration. I was speaking to people at NASA recently, who are talking about supplying small nuclear generators buried in the ground which will supply a cluster of buildings for 20 years without servicing. The noble Baroness is right. Such green technology is an important area for growth.

Several noble Lords have reminded us how much of our energy is imported, and the security and source of those imports is a matter of constant concern. That and climate change enormously influence our future energy policy. Planning the supply of energy is intimately tied up with our forecast of how we use energy. Most expect a substantial increase in the electrification of heating and transport, but the production has to be decarbonised. At the same time, we must reduce our use of energy and use it more efficiently, which means lifestyle changes and changes in our behaviour. Perhaps the most important sector for decarbonisation is transport—electrification of road transport and, at the same time, getting people off the road and on to rail—but the message in the CSR is mixed. We are promised more rail electrification but, at the same time, fares are going up. Some parliamentarians are campaigning against the proposed new high-speed rail scheme to Birmingham while the Mayor of London, instead of increasing the charge for road use, is reducing the congestion charge area.

Changing and influencing behaviour are most easily done by pricing. It seems to me that the Government are not only missing an opportunity in the CSR but sending out a mixed message which will only make things worse. Influencing lifestyle and changing behaviour are certainly part of energy policy. Downing Street has a special unit studying behaviour change and it will be interesting to hear from the Minister about how that unit anticipates influencing our behaviour so that we use less energy. The acronym it uses for the elements that have been found to impact on our behaviour is MINDSPACE. The Minister will have to be careful with this acronym, as it is going to be easily misinterpreted because there is something rather sinister about it. There is probably somebody blogging about it as we speak.

To influence behaviour, you have to make value judgments and those values are open to all kinds of political interpretations. Is it appropriate for the state to influence behaviour and set the limits of personal responsibility in this way? This is a very controversial area. However, when limited to the effects of climate change, to the use of less energy and to the acceptance of new technologies and the necessary change in lifestyles involved, MINDSPACE could be on pretty safe ground. I hope that the Minister will continue to champion climate change and security of supply as a driver for energy policy and I wish him every success in this important work.

My Lords, I begin by declaring an interest as chairman of the Environment Agency. It is a pleasure to follow the noble Lord, Lord Haskel, because the starting point of this debate has to be recognition of the reality of climate change. In a way, it is also a pleasure to follow on from the earlier remarks of the noble Lord, Lord Lawson, because he highlighted some of the essential issues that we need to address. He appeared from his remarks to accept that there has been some warming over the course of the past 100 or 200 years. He appears to think that that process has stalled over the past 10 years or so—and with that analysis I am afraid I cannot agree. He also says that he has an open mind on whether the science tells us that there is going to be much more climate change to come. I find the science much more compelling than he does, but the problem I find with his argument is that he says, “Even if that is going to happen, it doesn’t matter”. I am afraid that it does matter.

In the Environment Agency, we are at the very point where environmental and climate change has its greatest impacts on people’s lives. We try and cope with flooding and flood risk. We try and cope with eroding coasts in Lincolnshire, Yorkshire and East Anglia and with the difficulties that are going to face farmers, industry and households in the east and south of the country in 20 years, when river flows are 50 per cent lower in summer months than they are now. These are going to be the realities of climate change. One does not have to look just at the dangers that face people in Bangladesh or the Maldives, or in Kenya or central Australia to see what climate change is likely to bring. We look at what is going to have an impact here, so I am afraid that to stand up and say, “We in this country will benefit from climate change”, profoundly misunderstands the nature of the threat and the impact that climate change is going to have.

There have of course been huge disappointments in the global response to climate change, especially at Copenhagen last year. I fear that the political disaster which I suspect is unfolding in the United States as we speak will make that challenge even worse; on that point, at least, the noble Lord was right. Yet that does not mean that we should simply walk away from the issue here in the UK or ignore our responsibility to continue to do what we can—not just to prepare to adapt to the challenge that climate change will bring us but to do everything that we possibly can, here in this country, to try and contribute to combating the causes of climate change in the first place. That is where energy policy becomes so important.

Any sensible energy policy in the light of this challenge has to be based on the triumvirate of renewables, nuclear and abated fossil-fuel technology. We do not particularly have time on our side in this. If we do not get a move on with renewables, do not develop the carbon capture and storage technologies that we need if we are to abate fossil fuel production and do not get ahead with building a new generation of nuclear power stations, we will end up with an energy gap in between 10 and 15 years that will, I suspect, prompt a dash for unabated gas in the same way that we responded a few decades ago. We do not have that much time to get this right, but we need to do so and the Government, I know, have the right intentions in this.

I want to touch briefly on three crucial issues. First, on nuclear I have to confess that I used to be a nuclear sceptic, but climate change has made a realist of me and I recognise that nuclear has to be part of the answer. However, there is one crucial issue to which we do not yet have the answer; what to do with the high-level, highly radioactive and very long-lasting waste that nuclear fission produces. There are proposals for the creation of a deep, secure repository for high-level nuclear waste, but the Government have been talking about the possibility of that not happening until 2040. That is far too long a timescale for us to be looking at. We need to get a move on, with a much greater sense of urgency, in securing the future safety and safeguarding of that high-level nuclear waste.

Secondly, on renewables we are not doing nearly enough at the moment on tidal and wave power development. The Government made absolutely the right decision not to go ahead with the original proposals for the barrage on the Severn estuary. This is the one point on which I find myself in disagreement with the noble Lord, Lord Giddens. Building a wall across the estuary from Weston-super-Mare to Cardiff would have caused untold damage to the ecology of not just the Severn itself but the Wye and the Usk as well. Not just the bird life but the fish life and the entire ecological stability of that river basin would have been affected. We have to make sure, however, that we can tap in to the extraordinary power of the Severn Estuary along with other estuaries, and more generally the waves and tides that surround our island. We are almost uniquely blessed with this potential resource of energy generation, and putting in place the research for the reefs, fences and underwater turbines that could be providing us with solutions in this respect is something to which we need to devote much more attention and energy.

Thirdly, there is the development of carbon capture and storage technology for traditional fossil-fuel power stations. We were, of course, going to have four demonstration projects—that is still the Government’s stated intention—but RWE has now pulled out of its development of a coal-fired power station at Tilbury, E.ON has pulled out of a coal-fired power station at Kingsnorth and Powerfuel has postponed its proposal for Hatfield in South Yorkshire, all of them saying that economic and financial considerations have made them either pause or abandon their proposals for abated coal technology. We are left with a small but rather important pilot that Scottish and Southern is putting in place at Ferrybridge and the one large-scale proposal, which is for a retrofit by ScottishPower at Longannet in Fife, adding CCS to an existing and relatively old power station. It is important that that proposal goes ahead, but one project on its own is not enough.

So what will happen now? Have we abandoned the principle of a levy in order to fund carbon capture and storage projects? Are we going to see any other coal-fired power stations with full-scale CCS attached? Heaven forbid that we should see any coal-fired power stations unabated, with no CCS attached. What does this mean for the potential economic wealth-providing export opportunities that the development of CCS technology could bring us as a country?

Perhaps most importantly of all, are we going to see carbon capture and storage developed and supported by the Government for new gas-fired power stations? If gas is indeed going to be the preferred energy source coming forward from the industry, and there appear to be indications that that may well be the case, then the need for CCS for gas to be tested, trialled and put into operation at scale will become essential.

Over the next 10 to 15 years in this country, we face a potential energy crisis if we do not do the right things over the next few years. We face a climate crisis over the next 40 years. There are some solutions to both of these crises, and a synergy is possible between those solutions. The Government must rededicate themselves to achieving them.

My Lords, it is a pleasure to follow the noble Lord, Lord Smith. I must say that I disagree with much of what he said, particularly at the beginning of his speech, but we agree on the need for nuclear, if perhaps not for quite the same reasons.

I do not share the view that the consensus on climate change is the last answer on the science, particularly with regard to the causes of any global warming. I am not a scientist, but I have seen enough alternative analysis posing challenges to the prevailing view to be clear that the consensus is not an absolute one. I do not buy the inevitability of the consequences and therefore the need to act now. I have been heartened that institutions such as the Royal Society are now open to wider debate, and if the IPCC follows the recommendations of the InterAcademy Council—that is a big “if”—its next assessment should be a more balanced one.

In my contribution to today’s debate, I shall not rehearse the arguments that go to the heart of the science. Instead I should like to focus on costs of the policies that are being introduced to combat climate change and on the impact of those costs. Most of the policies that we are implementing today were developed at a time of economic plenty when many, including the previous Government, were convinced that growth and prosperity would carry on indefinitely. Today’s economic circumstances are quite different. We live in an age of budget cuts, rising government debt and expenditure cuts. Businesses are struggling to survive, and the outlook for household incomes is uncertain. There is, I submit, a legitimate debate to be had about whether the costs of action on climate change are affordable in today’s environment.

The previous Government estimated that their Climate Change Act target of reducing CO2 emissions by 80 per cent by 2050 would cost £18.3 billion every year for the next 40 years. That is, our country will spend three-quarters of £1 trillion by 2050. To put that in context, that is roughly equivalent to the whole of the public sector debt that we inherited from Labour when we came to power earlier this year. Of course, the costs are not being picked up by the Government. We will not see them as higher taxes; rather, they are being absorbed elsewhere in the economy and will end up with consumers.

I shall take the example of feed-in tariffs. These tariffs benefit those who invest in various forms of favoured small-scale renewable energy by providing a non-market price for that energy. It is certain that these tariffs have skewed investment decisions. The mere fact that a whole industry has grown up around third-party installation, designed to milk the tariffs, is a testament to the effectiveness of the policy of encouraging investment in small-scale renewables. However, the cost of those feed-in tariffs is not borne by the energy companies—they simply pass them to energy users. I applaud the Government’s spending review for acknowledging that the tariffs will be changed from 2013 to make the scheme more affordable. I hope that the Government will take the opportunity to return those tariffs to something much closer to market pricing principles.

Of far greater economic importance are the subsidies that are paid to large-scale renewable energy. In particular, the operators of offshore wind farms are rewarded at double the rate of those of onshore wind farms through the renewables obligation certificate system. This clever system pumps subsidy into favoured forms of renewable generation, almost invisibly. The cost, though, is very real and lies hidden within the energy bills of consumers.

Another hidden cost comes from facilitating the use of renewable energy sources. The plain fact is that the wind does not blow all the time—indeed, the Department of Energy and Climate Change’s own figures show that wind turbines achieve only 26 per cent of their capacity. It is normal for our country to have extremely cold days that have no wind during the winter. That means that power from conventional power stations will have to be available, on a highly inefficient basis, to meet peak demand, regardless of how much renewable capacity is installed in the country, so the system bears the cost of capacity twice over.

As my noble friend Lord Reay has said, all of this finds its way into higher fuel bills, which have a direct impact on both businesses and domestic consumers. DECC’s own figures suggest that, by 2020, domestic energy prices could be one-third higher than they would have been without climate change policies. The picture is even worse for businesses, where the figure could be as high as 70 per cent. Businesses currently have to bear the climate change levy. In future they can look forward to the carbon reduction commitment, which the spending review has turned into another carbon tax, raising £3.5 billion over the next four years.

What will all of this do to our economic competitiveness? The UK does not have many natural cost advantages and it can do without being loaded with significant cost disadvantages. It might be okay if businesses around the world were bearing the same costs, but this is manifestly not the case. Are the developing economies adding this degree of burden to their businesses? Are the US or Russia doing so? Is even the whole of Europe so enthusiastic? Of course not. Copenhagen failed to achieve common action and I agree with my noble friend Lord Lawson that Cancun is also likely to achieve no agreement. I cannot blame any country for choosing not to burden its economy today with avoidable costs.

It is already the case that some businesses are ceasing to operate in the UK because of environmental taxes. To take one example, Britain is now a net importer of cement; it used to be a net exporter. Another example is data centres, which are high energy users. Even if they can achieve state-of-the-art energy efficiency, the carbon-related burden of high energy prices in this country, along with other levies, makes the UK an uncompetitive location. The Government are rightly emphasising the need to stimulate growth in the economy, alongside the necessary public expenditure reductions that were set out in the spending review. We will not achieve that growth if the UK is perceived as a high-cost location. We will also not achieve that growth if the regulatory ratchet is not set to reverse. Another regulatory burden comes with the CRC reporting and assurance requirements. Is the Minister aware that dealing with CRC compliance is a new growth employment sector? If that is what green jobs are, I do not think that we want them.

I turn to the impact of these policies on individuals. They will of course be hit by rising prices of goods and services, which will come as high energy costs hit producers. Individuals will also bear direct hits in their energy bills from the costs that the energy companies pick up. As I noted, these could rise by 33 per cent by 2020, and that is without any other real energy price effects in the economy. One impact may well be that domestic consumers are incentivised to use less energy, which would be a very good outcome. I agree with the noble Lord, Lord Teverson, that energy savings are desirable in their own right. However, it is unlikely that this will be enough to avoid a further increase in fuel poverty.

At present, it is estimated that around 6.6 million households in the whole of the UK are living in fuel poverty—more than a quarter of all households. The noble Lord, Lord Teverson, quoted the figure of 4.5 million households but that is for England alone. Fuel poverty increased hugely during the last decade as energy costs rose. The impact of climate change costs is regressive because energy costs form a disproportionately large portion of the income of poorer households. The money going into energy efficiency schemes for the poor was reduced in the spending review, with energy companies being told to pick up even more of these costs, for example on tariff subsidy and insulation. That may be convenient for the Government in public expenditure terms but there has to be a limit to how far energy companies can shift costs from one set of consumers to another. It seems implausible that these measures will make a significant dent in the 6.6 million fuel poor that we have in this country.

The Minister will recall that the previous Government were very fond of publishing targets with a great fanfare and then pretending that the job was done. They said that they would end fuel poverty for vulnerable groups by 2010 and completely eradicate fuel poverty by 2016. The 2010 target was missed and general fuel poverty was moving in the wrong direction. What is our new Government’s attitude to reducing fuel poverty, and by when do they think it will be eliminated?

I do not expect an instant conversion from my Front Bench on the imposition of costs in the name of climate change. However, I urge my noble friend to look again at whether wearing a climate-change hair shirt serves the real interests of our nation.

My Lords, I thank the Government for staging this debate today; it is certainly timely. Last week I had the privilege of attending a very interesting seminar in London, organised by the Westminster Energy, Environment and Transport Forum, with the title “Nuclear Energy: Moving Closer to New Build”. We may be moving closer but the rate of progress seems glacially slow. Indeed, one might say the glaciers are melting rather faster than we are making progress. The keynote speaker at the conference was Keith Parker, chief executive of the Nuclear Industry Association. He rightly identified the speech made by Tony Blair to the CBI in 2006 as the turning point in the chequered history of nuclear power in this country and as,

“the moment which historians will recognize as the crucial signal of a change of policy after two decades of gradual decline, after Chernobyl and after the denationalization of the energy utilities”.

Unlike the noble Lord, Lord Reay, who was rather curmudgeonly on this point, I think that announcement remains one of the bravest, boldest and best decisions taken by that Labour Government.

Two years later, in January 2008, after the lengthy process of the energy review, the White Paper on nuclear power was published. It set the seal on Tony Blair’s far-sighted vision and gave new impetus to the nuclear industry. We are now, however, almost five years on and the best we can say—with last week’s announcement from the Secretary of State for Climate Change—is that eight sites have been formally identified as suitable for the next generation of nuclear stations. It is progress but it is painfully slow. Meanwhile, we are heading rather faster towards something of a cliff edge, with the closing down of substantial generating capacity—starting within the next five years—of old coal-fired power stations and old life-expired nuclear capacity.

I welcome the publication of the whole suite of revised draft national policy statements on energy, which accompanied the Minister’s Statement last week, as I welcome this debate. I am glad that we are getting on with it and I have no wish to pour cold water over welcome progress towards the new nuclear build. However, the conference I attended also raised a major question about the long-term sustainability of nuclear power on the basis of present policy.

The forum heard a presentation from Professor Colin Boxall of Lancaster University. He occupies the chair in nuclear engineering and decommissioning in the engineering department. His talk centred on the availability of uranium worldwide, and how long this finite resource will realistically last. It is not just us who have taken a key decision to develop a new generation of nuclear reactors. Last year, worldwide, there were 436 reactors in 31 countries, providing some 370 gigawatts of capacity. Rather more importantly, there are 50 reactors under construction in countries such as Japan, Korea, Finland, India and China. In addition to that, 137 more are on order or planned and a further 295 proposed—a total of 482 new reactors, which will more than double present capacity. It somewhat dwarfs our proposals for our eight sites. This is a major projected uplift in nuclear capacity worldwide and has big implications for uranium supply. The known resource of uranium in the ground is 5.5 million tonnes. It may well be that there is approximately twice that undiscovered—another 10.5 million tonnes—based on the geological characteristics of known deposits. More than 1 million tonnes of this had already been used up by the turn of the century, way before the great leap forward for nuclear.

I am sure that the House does not want to hear a long string of alarming figures from me based on possible projections of the rate of consumption of uranium. I could do so as I have a lot of figures here in my notes, but let me summarise them very crudely, though I hope without any unfairness or exaggeration. The 4.5 million tonnes remaining equate to about 70 years at the current rate of consumption and burn-up. At the historical growth rate of 1 per cent per annum, even the speculative resource will be exhausted in just over 100 years. At a modest future growth rate of 1.4 per cent per annum, the known reserves will be exhausted within 40 years and, at a wholly plausible growth rate of a little greater than that but still less than 2 per cent per annum, exhaustion of the known reserves will come as soon as 2045 and exhaustion of the speculative reserves before the end of the present century. I am happy to provide the Minister with these figures, but I am sure that they are available to his department and are unlikely to be seriously disputed. Indeed, a number of senior civil servants from both the Department for Business, Innovation and Skills and the Department of Energy and Climate Change heard the same presentation as me last week.

For the future of nuclear worldwide, not just in the UK, this is a serious issue of sustainability. Our nuclear programme, going forward, is based on the presumption that,

“any new nuclear power stations that might be built in the UK should proceed on the basis that spent fuel will not be reprocessed and that plans for, and financing of, waste management should proceed on that basis”.

That quotation is taken from the 2008 White Paper, Meeting the Energy Challenge. The consultation document published around the same time by BERR states that the,

“base case for decommissioning and waste management costs associated with new reactor construction assumes that there will be no reprocessing of the uranium fuel, and spent fuel will be disposed of after it has been used”.

In other words, “once through” is the preferred option. This was underlined again in the revised Draft National Policy Statement for Nuclear Power Generation (EN6) at section 2.11 dealing with radioactive waste management. This was published the other day.

On the basis of current policy we are going to run out of uranium rather quickly, probably before we run out of oil. Climate change and future energy policy are long-term issues. The effects will be felt long after we who are discussing these matters and taking decisions now are all dead, but we surely owe it to future generations to use our finite resources as sustainably as possible.

I am not in any way suggesting that the next generation of nuclear stations—the ones just around the corner—should be delayed while other ways of dealing with the uranium issue are investigated. That would be a sure way to see the lights go out in my lifetime. However, I hope that further consideration of issues relating to reprocessing and/or fast breeder technology will come under active consideration for the next generation after that, for stations which might be planned to come on stream after 2030. Fast breeders are likely to be something like 40 times more fuel efficient and would extend the lifetime of uranium fuel perhaps by—again, this is an estimate—3,000 years. Even at higher growth rates for nuclear than previously discussed, this avoids exhaustion. Such technology does something else as well: it significantly reduces the heavy metal residues and the radiotoxic burden which would need to be sent for final disposal in the proposed geological disposal facility. It would be a win-win situation. I do not begin to suggest that fast breeders would not be without associated problems. There is the question of cost, impact on the environment, the issues relating to nuclear proliferation—because of the separated plutonium—and other safety concerns, including transport. However, such technology would extend energy availability from uranium from maybe 80 years to more than 3,000 years. There would be a huge reduction of the waste heat load and radiotoxicity in the proposed repository from a quarter of a million years to 120 years and a reduced dependence on foreign oil, LNG and coal.

In the context of climate change and the long-term use of sustainable non-carbon energy sources, these are surely considerations on which the Government should have an open mind and an active and inquiring mind. I look forward to the Minister’s response.

My Lords, the scientific findings about humanly induced climate change and the damage that it poses are widely acknowledged, although clearly not by all in this House. It is therefore right that the Government should have stated that they intend to be the greenest Government ever. This ambition is a global necessity.

The record to date on delivering on that ambition is to be applauded and not just by those on this side of the House. Prior to the release of the comprehensive spending review, Michael Jacobs, a visiting fellow on climate change at the LSE and a former adviser to Gordon Brown, posed three tests for the Government. The three tests were: a green investment bank; the development of carbon capture and storage technology; and stimulating a British wind turbine manufacturing sector. We know that on all three the Government gave the green light.

However, with the UK responsible for only 2 per cent of the world’s emissions, greater urgency is required on the international front. The Foreign Secretary recently called on foreign policy practitioners to,

“up our game in building a credible and effective response to climate change”.

The Secretary of State for Energy and Climate Change is working with European partners to secure a 30 per cent reduction target in carbon emissions. I am grateful to my noble friend the Minister for his reply to my question in the House last week about the Government’s efforts to ensure that China and the United States demonstrate the necessary leadership on this issue at Cancun later this year. As the noble Lord, Lord Giddens, said, trying to engender a greater sense of urgency on the international front will be as critical as delivering a sustainable energy policy within the UK.

Many barriers remain to delivering such a sustainable energy policy. I want to focus on just one: public acceptance of new energy infrastructure such as power stations and wind farms. Now is the time to address this issue. If we do not address it at an early stage, we know only too well that we will face public opposition at the last stage when energy infrastructure proposals appear to be dropped on local communities.

We need to move away from debates that pitch respective sides as zealots and reactionaries. As we at last become serious about tackling climate change, we need to find ways in which to bring the public with us on the journey of transition to a low-energy Britain. To that end, I respectfully ask my noble friend the Minister to reflect on two things. The first is to start talking to the public about the choices that we face in a way that people understand. Bluntly, the communication strategy of the Department of Energy and Climate Change can be summed up as one of graphs, charts and gigawatts. We need to give people a positive vision of what a low-energy economy could look like and what the options are in terms of the intensity of land use and the changes that we will make to our natural and built environment. Landscape is the lens through which we see how our country is changing.

Other groups are trying to engage the public in this way, giving options of how Britain might look in the future. One such attempt is that by the Centre for Alternative Technology with its Zero Carbon Britain 2030. Its picture is of a British landscape very different from that which we have now. Now is the time for the Government to give their vision and engage with the public in a debate about what Britain could look like. A 2050 energy pathways calculator may help some to understand the scale of the challenge of decarbonisation, but, frankly, the department needs to do much more, using language and images that the people of our country understand and can relate to.

Secondly, by creating the right planning framework for land use decisions, people can be appropriately engaged while investors are given the certainty that they need to bring forward the right proposals in the right locations. The Government have made a welcome first step, as the noble Lord, Lord Grantchester, said, in abolishing the previous Government’s Infrastructure Planning Commission, but we now need certainty—and soon—about a reformed planning system. I hope that the Minister will work closely with his colleagues to ensure that the decentralisation and localism Bill gives local communities the ability to shape the places in which they live and work, respecting the value of the country’s best landscapes and natural and historic environments while delivering a renewable energy revolution.

As part of that, continuing support is vital for innovative ways of engaging people in the planning process and for renewable technology capacity assessments at geographic levels to which the public can relate. Good examples of these are PlanLoCal, a programme of the Centre for Sustainable Energy, currently financed by the Department for Communities and Local Government, to encourage greater public access and participation in the planning process. Another example is Herefordshire’s 2026 renewables capacity study. These examples give people a real sense of the physical impact on their communities and landscapes early in the planning process and help them to accept necessary change.

The scientific case is clear for ensuring that our energy policy responds to the challenge of climate change. The Government have shown their commitment to dispensing their international responsibilities and unlocking the infrastructure to deliver low-carbon energy. The time is now to engage the public in delivering the necessary energy changes to ensure that global warming does not change our country for the worse.

My Lords, I should declare an interest in that I was employed by the Central Electricity Generating Board for 19 years in a power station and I enjoy, if I may put it that way, a very small pension administered by British Energy.

It was welcome to hear the Minister say that he was going to listen to the debate. I hope that he takes heed of what is said and that his Secretary of State will do likewise. The Minister made one of the shortest speeches that I have heard from the Front Bench, which proves that he wanted time for other people to say what they felt about the Government’s policy.

I and many other people are getting fed up—sick and tired—of being described as climate change deniers. That term has a serious connotation and we do not like it. It is associated with Nazism and the Holocaust and I hope that others, including my ex-noble friend, the noble Lord, Lord Whitty, will cease to use that insulting term.

The people who are described as climate change deniers do not deny climate change at all. That would of course be absurd, because there has been climate change for the past 4.8 billion years. Indeed, without climate change, we would not be sitting here, nor would there be many mammals about—if any other life on earth at all. No one is denying that there is climate change. What we say is that, although there will be climate change and some of it may well be manmade, in our view it is not exclusively caused by CO2 emissions. This is the problem that ought to be discussed.

The noble Lord, Lord Smith, said that he disagreed with the noble Lord, Lord Lawson, who made a magnificent speech, and criticised him for saying that there were some benefits from global warming. Of course there are benefits; after all, since the ice age, the global temperature has increased by 16 degrees Fahrenheit. If that had not happened, we would not be sitting here; we would be way down at the equator, because this country was uninhabitable.

Perhaps I may comment. The Met Office in its computer modelling has certainly studied what would happen if no CO2 was produced by industry. When you take the CO2 out of industry, you find none of the climate change observed over the past 150 years. People have considered the noble Lord’s point seriously; they have looked at it in great detail and that is their conclusion.

Yes, I understand that perfectly and I accept that scientists are serious and knowledgeable people. However, they can be wrong and they have been wrong. In 1970, the same sorts of scientists were saying that we were going to have a new ice age. Suppose that we had then pumped lots of CO2 into the atmosphere so that we did not have an ice age. What then? The same scientists were predicting that glaciers in the Himalayas would disappear within 50 years. They had to revise that prediction to 250 years. Not all that scientists say can be taken as gospel. That is why there should always be people who study these things and are able to challenge them. Therefore, I hope that the term “climate change deniers” will be dropped from the vocabulary on this question.

The Government have tried to get to grips with the problems that we face, but whether they are dealing with them correctly I do not know. I believe that there is far too much concentration on wind power, for example, because wind is the least viable option on practically every test. As the noble Baroness, Lady Noakes, pointed out, wind power will be expensive for electricity consumers—very expensive indeed. Wind turbines, offshore and onshore, are environmentally destructive. Do not make any mistake: the disturbance to the marine environment from building these monsters out at sea is serious. They affect fish life and the environment of various species and may well affect the industry. I do not know what will happen when the first oil tanker crashes into a wind turbine. I hope that it will not happen, but it may do so.

We have already heard that there is intermittent supply from wind turbines and that they do not usually supply energy when we most need it—when it is cold and in the winter. As regards maintenance at sea, especially in winter and the gale season, it will be difficult to get out there to maintain them when they break down, as they surely will. What is more, we also have to duplicate the power from the wind turbines, because we cannot guarantee that they will meet maximum demand. This happens in January or February, so that when we need them most, they are not available. The savings in CO2 must be balanced against the costs of their construction and of the construction of the backing power that must be provided.

Finally, wind turbines have a short working life. A power station such as Sizewell B provides the same output as 600 wind turbines. It provides a 92 per cent load factor and it has a working life of 60 years. I am glad to say that the Government are embarking on a nuclear programme, but it must be speeded up because, if we are not careful, we will find that by 2016 to 2020 we will be very short of power. As the noble Lord, Lord Jenkin, said, we need to have a programme beyond 2025 and we must solve the problem of the long-term storage of nuclear materials in safe sites and be prepared to meet decommissioning costs that will be very high.

I have not been greatly in favour of nuclear power. When I was a member of the Select Committee on energy, we visited Three Mile Island, and what we found was very frightening. However, times have changed and in this country the housekeeping of all our power stations, not just the nuclear ones, is very good indeed. I have revised my views and believe that, if we are going to solve our short, medium and long-term problems, we need a programme of nuclear energy.

We are contributing to experimental programmes on nuclear fusion. I wonder whether we are wasting our money. Lord Marshall always told me in our conversations that it was impossible. We might instead, as the noble Lord, Lord Haworth, pointed out, think again about fast-breeder reactors. It was unfortunate that the one at Dounreay was a failure. That was due to circumstances that could have been avoided. However, the matter needs to be looked at.

Finally, I welcome the aim of the Government to increase combined heat and power to 10,000 megawatts. That is altogether good and I hope that it comes about. However, when I was a member of the Select Committee on energy in 1983, we recommended a large increase in combined heat and power. The Government, instead of accepting what we said, set up the WS Atkins committee, which took 10 years to report. The result at the moment is that we have 3,000 megawatts of CHP. Of course, that is a very energy-saving system, which I hope the Government will proceed with quickly. We must understand that that will mean smaller power stations near the urban environment.

Overall, I welcome the Government’s statement. There are some defects in it, but I hope that they have listened to what has been said in this debate, in particular by the noble Lord, Lord Lawson.

My Lords, today we have a chance to debate two vitally linked issues. An advantage when considering the energy element of policy is that the area can be reviewed and considered statistically and scientifically. Recently, the International Energy Agency estimated that global energy use will triple by 2050. A potential consequence of this is that the energy that we need to buy may become scarcer and even more expensive. Many noble Lords have spoken about the technology of new generating capacity. The noble Lord, Lord Haworth, touched on the question of our existing generating capacity that is becoming increasingly antique. Somewhere in the region of 12 gigawatts that comes from coal and oil-fired generating plants will become obsolete by 2015. Nine out of 10 of our nuclear plants are due to be decommissioned by 2023.

As we heard, the challenge of constructing a policy around the other element, which is climate change, is that the science and statistics move into a much more speculative field. How do we predict from historical and current records how an increase in greenhouse gases will affect the climate in which we live? One element that concerns me is that we are told that currently about half the CO2 that is emitted into the atmosphere is reabsorbed by the oceans, presumably producing a balance between the CO2 in the atmosphere and that in the oceans. It would seem that one of the inevitabilities of an increase of CO2 in the atmosphere, let alone an increase in temperature, is an increased amount of absorption, and because of that an increase in the acidity of the oceans. This throws up a great many worrying aspects before we even consider whether it will have an effect on changing the climate. My noble friend Lord Lawson was curtailed in his remarks on what he foresees for the world, but that was one element that he did not touch on.

Noble Lords will be aware that consideration that international action might be needed to address this issue led to the 1997 Kyoto Protocol, which contained definitions of a batch of greenhouse gases. Most Governments, including our own, signed up eventually. Following this, the most obvious approach to a remedy, which most countries grabbed hold of, was to increase the production of energy from renewable resources. In the UK, as we have heard from various noble Lords, we now have renewables obligation certificates, the climate change levy and the EU Emissions Trading Scheme, and we are also beginning on the carbon reduction commitment. The trouble, as noble Lords such as my noble friend Lady Noakes pointed out, is that these all add to the cost of our energy. A paper from Civitas that I saw recently reckons that they will add anything from 33 per cent to 43 per cent to our energy bills. I ask the Minister to analyse where we stand in relation to the costs imposed on other countries. If we thought that we should just go on using energy in our traditional profligate manner, this would be a very severe imposition. A number of our competitors are tied to similar schemes, but the other challenge that it gives us is to use our energy even more efficiently than our competitors, if the market that they are working in does not have those charges.

The key purpose of the Kyoto Protocol was to tie countries to a certifiable reduction in their gas emissions by 2012. It envisaged that many countries would meet their targets through national measures, as we have attempted to do. The recently published The Hartwell Paper from Oxford characterises this approach as trying to convince the world that the industrial revolution was sinful and that we must therefore atone, and it says that humanity is unlikely to find this an attractive form of motivation. At a global level, such an interpretation is possible, but that is not where the proposals in Kyoto stopped. First, by linking nations and thereby individual industries into a market mechanism, it added the most fundamental motivation that economics can provide. It added a financial incentive to the simple attraction of a more efficient use of energy through a system of emissions trading. Along with that, it offered two other instruments, in the form of the clean development mechanism and joint implementation, which incentivised countries in the developing world to consider reducing emissions without tying down their future industrial development to actual quotas.

In the event, as noble Lords will be aware, the biggest greenhouse gas-emitting nation in the world— the US—refused to ratify the Kyoto protocol, but the signs are that this is changing. The noble Lord, Lord Giddens, might be interested to know that there are a growing number of state-led initiatives in the US—he mentioned one—which culminated last Friday when the California Air Resources Board published the final draft of a market-based system to cut the state’s emissions to 1990 levels by 2020. As the saying goes, where California leads, perhaps the rest of the US will follow.

In the rest of the world generally, the mechanisms provided by Kyoto did receive implementation. In accordance with the United Nations Framework Convention on Climate Change principle of “common but differentiated responsibilities”, the developing nations, which happen to include three of the world’s larger economies, were not obliged to take on emissions reduction targets during the Kyoto period. They were, however, granted the right to participate in the clean development mechanism and they were encouraged to reduce emissions through payments for certified emissions reductions. My noble friend Lord Teverson and the noble Lord, Lord Hunt, were praising China for its energy-saving activities; as things stand, according to the UN framework convention, China has registered projects that will reduce emissions by 239 million tonnes of CO2 equivalent per annum. The figure for India is 44 million tonnes per annum. These efforts are not insignificant and in themselves are equivalent to half the UK’s annual emissions. Of course, this is not an excuse for us to do nothing but it is already 30 per cent greater than the reduction that we are committed to achieve by 2020.

This is not just an issue involving the developing countries. As my noble friend on the Front Bench has done this afternoon, my right honourable friend in another place, in his speech on the comprehensive spending review, made clear his purpose for,

“Britain to be a leader of the new green economy”. —[Official Report, Commons, 20/10/10; col. 962.]

By the efforts of the UK enterprise and financial sector, London is now the foremost world centre for trading within a global carbon market. The value of this market in 2009 was reported to be $144 billion, and it is capable of earning valuable finance for the UK.

Given that there was failure to reach any kind of replacement agreement at Copenhagen in December 2009, there is every chance that the architecture for these promising international markets could lapse. Further, since Copenhagen, speculation about the future of this market has been rising and there are signs that the enterprise and enthusiasm are beginning to drain away.

It was most reassuring this afternoon to hear my noble friend state the Government’s commitment to look for a framework for a solid carbon price. Can the Minister tell the House whether one of the Government’s priorities at Cancun will be to put in place some successor to those market mechanisms? Further, will the Government push to ensure that Cancun provides an immediate message to stakeholders in this market that private sector financial and entrepreneurial resources will be further harnessed under any post-Kyoto agreement? The stance taken by Her Majesty’s Government will be critical for injecting some much-needed confidence into those who participate and for continuing to ensure that the UK remains at the forefront of global carbon markets.

My Lords, we seem to have reached the point in this debate where everything that could be said has been said but not everyone who could say it has already said it, so I am going to offer a few more points.

There are always three guiding rules in energy policy: first, security of supply; secondly, affordability; and, thirdly, environmental sustainability. It is significant that the last of these three has assumed the almost overarching significance that it currently enjoys. However, it would be wrong to suggest that this is something of a novelty. In the past, we have had clean air Acts and the fiscal triumph of taking lead out of petrol, which was achieved by the Labour Government in the late 1970s, when Denis Healey—the noble Lord, Lord Healey—imposed taxes to make it inconvenient and expensive to have lead—

I think that it was started by Denis Healey, as well as by the noble Lord. That of course gives some credibility, at least in part, to the environmental credentials of the noble Lord, Lord Lawson, although some of the points that he made earlier today might draw that comment into question. However, we will move on from there.

Certainly, British Gas’s great programme of changing from town gas to North Sea gas and linking up all the households was in some ways far more ambitious than the metering programmes that we have been talking about this afternoon. Opportunities have consistently been taken by Governments, state enterprises and others to take account of opportunities, some of them environmental. However, now we do not have the luxury of taking advantage of opportunities, and I think that we are required to be socially and environmentally responsible in taking account of changes in our climatic conditions.

It is certainly true that in the past we have been rather complacent in the UK. Nye Bevan once said that Britain was self-sufficient because it was an island built on coal and surrounded by fish. The common fisheries policy put an end to one, and the other was the demise of the coal-mining industry—for reasons that we do not need to go into tonight, but some of us still carry the scars from personal and constituency experiences. The coal industry in the UK is not currently in a position to re-emerge. It may at some stage if new technologies are properly developed to take advantage of the stocks that remain, but we are dependent on coal imports and at the moment the prices are relatively reasonable. However, by 2015 we will have to confront the large plant directive requirements and put to one side a number of the coal-fired stations. Alternatively, if we keep them going, we will do so at considerable expense because of the charges that will be imposed.

Certainly, our oil and gas supplies from the North Sea, which are often forgotten, will continue to make a sizeable contribution. They will not so much add to self-sufficiency but they will put us in a relatively better position than a number of the countries, particularly on the continent, that we hold up, sometimes unrealistically, as the whited sepulchres of renewables and the like. They had to go for renewables in the way that the French had to go for nuclear in the 1970s when they realised that they were going to be dependent on neighbours on whom they could not always depend for oil and gas. At the end of the Cold War, Germany had the industrial imperative to find something to fill that gap in its economy, which had been filled hitherto by the need to defend the country and to service the troops.

Therefore, while to an extent the UK can be accused of a degree of complacency, I think it is fair to say that, at least in part, our exploitation of our North Sea oil resources, perhaps rather foolishly in the late 1980s and early 1990s when we had the dash for gas, was understandable. However, we have to take account of the fact that we will not have as much oil and gas as we had before and that it will be difficult for us to secure those commodities in the world market in the way that we have been able to do in the recent past. The jury must still be out on the optimism of some people in relation to the significance of the Shell reserves and whether they will be exploited, and with regard to the attitudes of some of the countries that have them.

Certainly it is fair to say that we need to address the issue of gas storage in the UK. In his commendably short speech the Minister referred to the fact that permissions have been granted for new exploration, usually in areas of the North Sea that are a bit less hospitable. We have gone for the low-hanging fruit. It will be more expensive and more difficult, and it may not necessarily give us what we want. Equally, we have to recognise that while we do not need the 90-day supply that the Federal Republic might require in terms of gas storage, we need more than we have at present. We are getting to the stage where the Government have to make a choice. Will they stick with a market-driven solution or will they try to set a target for the amount of storage facilities that we require? Frankly, the market cannot be left to work this out on its own and I do not think that Ofgem has done us a great deal of good in that area. It has not been sufficiently robust or rigorous in its thinking. The Minister could come back to us on that in his reply.

I speak as the chair of the Nuclear Industry Association and I welcome the Government’s commitment to the programme of replacement build. I realise that there are some problems and we will have to agree to disagree at this stage on the uncertainties of the planning regime. There are some questions about the national policy statement but that will be for another day when we can have a detailed debate. I am a little disappointed that at present at least two of the 10 stations have been put into the long grass. I realise that there were problems. It was a greenfield site and there were planning considerations, but there could have been a bit more boldness on the Government’s part in relation to these two stations, which were relatively short distances from one of the hubs of the north-west nuclear industry at Sellafield.

At the weekend at the Scottish Labour Party conference, Iain Gray MSP, leader of the Scottish Labour Party, who may well be the First Minister after the next election in May, made it perfectly clear that he wanted Scotland to continue to generate nuclear power in the foreseeable future. Will the Minister talk to his coalition colleagues in the Scottish Office and tell them that there are sites at Hunterston and Torness which should be considered? I am not arguing for both of them as we could probably have too much nuclear power in Scotland, but if both of them close we will not have enough. Certainly, the optimistic noises that come out of the Scottish Government relating to renewables are fanciful, to say the least. We know that there are tremendous opportunities for wind, provided that we can secure planning permission and provided that we can get the infrastructure and supply chains organised to get into the North Sea. I do not think that they have been properly addressed or studied with the rigour that such challenges will require. Nevertheless, they are important, and tidal power could be as well. The idea that Scotland could somehow provide 80 per cent of its energy requirements from what are at best maturing technologies is fanciful.

At the same time, I recognise the contribution that Longannet, for which I have a great affection, has made. It was the power station to which the miners in my constituency delivered the coal 24 hours a day, just about 365 days a year. It has been the powerhouse of Scottish electricity generation—2,400 megawatts. It is a massive station which at the moment has flue gas desulphurisation equipment installed. That was very important when we were dealing with acid rain considerations, as we were 20 years ago. That reduced the thermal efficiency and output of the station. We have to remember that, whatever form of carbon abatement or carbon capture and storage kit that we install, it will be expensive and reduce the efficiency of the station. Therefore, it will make the electricity coming out of that station ever more expensive. It will have fairly long payback times as well. We have to be a wee bit cautious when we look at the economics of CCS. The consensus is that this technology will become available around 2020 or 2022. That is perhaps only one of the forms because of the way in which the Government have structured the competition. I am a little cautious about the CCS option there.

Anything that involves massive capital expenditure in utilities requires a stable regulatory framework. As yet I do not think that investors have confidence that the Government have it right—they have not got it right because they have said very little. I know that in future we will get it but, for the investment to be achieved at the scale we want, we will need to get a degree of investor confidence that will come only from clear regulatory intentions that will give us the stability for peace of mind.

I realise that I am almost out of time but I want to make one last point as a national office bearer of fuel poverty charities. At present, we see that £80 is accounted for in every domestic bill by subsidies to renewables. That is imposed in a rough and ready fashion and it is not fair to disadvantaged households. The Government need to look again at the question of social tariffs and how they will be provided in future. Equally, when we consider the green deal, as we will when the legislation is introduced, the devil will be in the detail. A lot of reassurance needs to be given and the Government have gone part of the way by announcing that they will be rigorous in their approach to private landlords in the implementation of certain aspects of this policy. The Australian experience is helpful in indicating what not to do. There is a lot of worry and anxiety among the fuel poverty lobbies and the most disadvantaged about what will happen to their fuel bills. They think, with some justification, that it is not fair that they should have to pay a disproportionate price for the recognition that we all have to accept of climate change and the need for carbon abatement.

My Lords, I suspect that I am not alone when I say that I have enjoyed today’s debate. I have greatly appreciated the expertise, experience and the huge amount of knowledge and commitment from noble Lords from all sides of the House. I am grateful to the Minister for bringing this debate forward today. I suspect that it is a bit of a taster for the debates to come on the energy security and green economy Bill.

The debate has made clear the widespread and overwhelming evidence of the man-made impact on climate change. It is one of the most challenging problems facing us and has the potential to devastate nations and reshape the world as we know it. It is clear that we must determine energy policy in light of these challenges. Notwithstanding the views and comments of the noble Lords, Lord Lawson and Lord Stoddart, and the noble Baroness, Lady Noakes, we cannot see energy policy just in terms of the financial costs. There are social and environmental costs which bring with them different financial costs.

Tempting as it is to respond on each and every point of the observations made by the noble Lord, Lord Lawson, I believe that other noble Lords, particularly the noble Lords, Lord Hunt, Lord Giddens and Lord Smith, have already addressed them with ample scientific evidence. I will, however, challenge one point. If we take no action on climate change, who will pay the highest price? It will be the poorest and the least able to cope and respond, whether at home or abroad. Extreme impacts will take the greatest toll on the poorest in the world. If we do nothing, the worst scenarios will come true. People around the world will be displaced by freak weather conditions and floods and then it will impact on everyone across the world. We should bear that in mind.

The noble Baroness, Lady Parminter, commented on having to persuade the public and to bring home to people the message about what we are facing. We should take the opportunity to thank the individuals and organisations that are working tirelessly in seeking to educate the public and lobby governments and other organisations about climate change and related issues. This is a continuing process. We do not have all the answers and it requires a proper assessment by Government of both the national and international interests. Governments must be prepared to work with everyone to meet our international commitments, and to step up and take a leadership role when required.

Despite scepticism in some quarters, we support the Government in trying to make progress at the Cancun climate change talks. The Government will need to have the courage of their convictions. I know that the Leader of the Opposition, Ed Miliband, has offered Chris Huhne, the Secretary of State, the benefit of his experience and expertise—indeed, he says, of the scars he received from the previous talks in Copenhagen.

I was rather surprised at one of the Minister’s comments—when he said that the Government have stated their aim to be the greenest Government ever “whether you like it or not”. Can I assure him that we do like it and that we hope they achieve it? In our role as an Opposition we will support measures that seek to achieve it, and scrutinise and press for action where the Government fall short of that objective. I would also add that resources must follow promises, otherwise those promises are worthless. So we look forward to seeing and scrutinising the energy security and green economy Bill which will seek to address some of the issues raised today. However, we on this side of the House find it reassuring that many of the Government’s policies in the coalition agreement were first undertaken, initiated or planned by the Labour Government. For example, the targets that have been set for moving to a low-carbon economy have remained. The commitment to smart grids and smart meters, the need for an energy mix, the commitment to zero-carbon homes by 2016, the creation of the green investment bank, the renewable heat incentive and feed-in tariffs and substantial investment in the development of low-carbon technologies, including offshore wind and manufacturing at port sites—all these and other commitments remain, and we welcome that.

However, as has been highlighted in the debate today, there are some areas that remain unclear and give us cause for concern about either policy or implementation. Where we have concerns, we will press the Government to address them. I hope that the Minister will be able to be address the points raised in today’s debate, and I am sure that we will return to them when the Bill comes before us.

The noble Lord, Lord Haskel, and the noble Baroness, Lady Parminter, emphasised that we have to win over hearts and minds in order to change behaviour. The noble Lord, Lord Haskel, pointed out some contradictions in government policy in this regard. I think that there is a far greater awareness of the issue, but it is still very difficult for the individual to appreciate that their individual actions can and do have an impact. I hope my noble friend Lord Giddens will not mind me mentioning that in his book The Politics of Climate Change he describes what he very modestly calls the Giddens paradox. This paradox is that for most people the dangers posed by climate change are not visible or tangible in normal everyday life—but if we wait until they are, it will be too late. Both he and my noble friend Lord Hunt of Chesterton succinctly and eloquently spoke of the scientific evidence and the economic implications of the opportunities.

As my noble friend Lord Giddens made clear, that makes it even more imperative that Governments take action and take the lead. There has to be a policy thread that runs through Government and not just through the actions of one department. For example, when Ministers in DECC are working with the energy companies on the green deal, I hope that they are at the same time talking to their colleagues in DCLG about building regulations and about the private rented sector. When DECC is developing proposals for increasing renewable energy, there needs to be—as we have heard from a number of noble Lords tonight—ongoing discussions with the DCLG about planning issues and consultation. If the Government are to have any measure of success in their stated aim of being the greenest Government ever, policy development in DECC cannot be taken in isolation.

I want to touch on two of the key issues raised today by a number of noble Lords—security of energy supplies and the cost of energy for consumers. There are twin goals to secure the nation's energy supplies, as the noble Lords, Lord Jenkin and Lord O’Neill, pointed out. We need to ensure new investment for a low-carbon future in both renewables and nuclear and we have to maximise the potential of our remaining coal, oil and gas resources in a way that meets the renewable targets set by the Labour Government and supported by this Government. We need to remove carbon from our electricity supplies. Our response to that challenge when we were in government was the mix—the trinity of clean coal, renewables and nuclear. I agree with the noble Lord, Lord Whitty, that we are pleased to see the continuing support for this principle from the coalition. As always, however, the devil is in the detail, and there are some matters on which we seek further clarification.

On coal, there are great advantages to coal-fired power stations and the role they play in electricity generation, but only as part of the mix of a low-carbon economy. That is why the investment in carbon capture and storage is so important. My noble friend Lord Smith of Finsbury raised a number of questions. It would be helpful if the Minister could also update the House on a couple of other matters as well: the details of the levy to fund CCS and also whether he intends to deliver more than one commercial-scale CCS demonstration project. It would also be very helpful if he could tell us what progress there has been on the energy performance standard. We will want to scrutinise this because the Government have to ensure that they do not impede investment by creating uncertainty.

The noble Lord, Lord Grantchester, also raised the changes made to the carbon reduction commitment which are of great concern to industry. This is due to start next year and was intended to be a self-financing fund designed to reward companies with high energy consumption that reduce their energy use. Under the CSR the estimated £3.5 billion raised will go directly to the Treasury. The Minister will understand the concerns about this. We would welcome his assurance that this amount will not be swallowed up by the Treasury—which the noble Lord, Lord Lawson, indicated would be a good thing—but that the full amount will be used for its intended purpose. This was not meant to do anything other than pay to reduce carbon.

The nuclear issue has featured high in our debate today and has been welcomed by noble Lords across the House. It has been a difficult issue for the coalition, but the Government have confirmed their support for the nuclear power industry. It is clear that very powerful arguments were made to overturn the entrenched opposition expressed by the Secretary of State, Chris Huhne, before he was in Government. On 9 May he said,

“Our message is clear. No to nuclear, as it is not a short cut, but a dead end",

but everyone is entitled to change their mind, and that is to be welcomed rather than criticised. Where I remain puzzled is on the position on nuclear subsidy, which was raised by the noble Lord, Lord Jenkin of Roding. It would be helpful if the Minister could bring clarity on this issue.

In May, the Secretary of State, Chris Huhne, wrote that:

“No private sector investor has built a nuclear power station in anywhere in the world without lashings of government subsidy, since Three Mile Island and Chernobyl”.

However, on 18 October, when announcing the potential sites for new nuclear power stations, he said on subsidies:

“To be clear, this means that there will be no levy, direct payment or market support”.—[Official Report, 18/10/10; col. WA 56.]

Then Charles Hendry, the Minister of State at DECC, said in a speech last week:

“We published what we mean by subsidy because we've been absolutely clear that there will be no subsidy and we want to set out now what that means".

If it is so clear, why does the Minister need to explain what it means? Given the Secretary of State's previous statement that it is not possible to build nuclear power stations without lashings—his word—of government subsidy, the Minister will understand the confusion being created on this issue. It would be helpful if he would clarify what no subsidy means. Does it mean no subsidy or does it mean some subsidy at some point? I encourage the Minister to take on board the comments and suggestions made by my noble friend Lord Hunt of Chesterton about promoting and explaining nuclear energy to a wider public and taking an international lead on this.

There are two other crucial areas—reforming the electricity markets and regulating carbon emissions from coal-fired power stations—that are unlikely to be in the Bill, but to be subject to consultations. Can the Minister confirm whether that is the case and, if so, how long they will take?

My noble friend Lord Grantchester used his experience and expertise on renewables and emphasised the investment required and the wider commitment of government that is needed. He particularly referred to small-scale projects, as did the noble Baroness, Lady Maddock. The target is that renewables should provide 15 per cent of energy supplies by 2020, yet it was reported in the Independent that there are 230 separate groups against wind farms and that only one-third of applications get consent. I understand that part of the Government’s answer to this is a cash incentive for councils that give planning permission, but the impact may be on the residents of another council area. I understand concerns about this, so I ask the Minister: what other action is being taken to address the concerns of those who have raised objections? It would also be helpful if the Minister could address the issues around planning consents and planning issues for small-scale generation.

Other issues that have been raised several times in the debate, particularly by my noble friend Lord Whitty and the noble Lord, Lord Teverson, were the cost of energy for consumers, energy efficiency and energy savings. Unlike the Government’s welfare reform plan, we are very clear that the poor should not pay the most. Pay-as-you-save through the green deal is generally welcomed, but the Minister will know from our debate on Warm Front last week that we would like greater clarity on how this will operate. One of the observations about Warm Front was that more needs to be done to reach the poorest and those in the least fuel-efficient homes. Warm Front has helped over 2 million households but now, following government cuts, the money for this year will run out in December and the next two years will see the budget cut by two-thirds. I think we all agree that further measures are needed to protect the fuel poor. Given that the green deal will be consumer-led, what plans are there to ensure that it will be taken up by those in greatest need and in the least fuel-efficient homes? We also want to be reassured on the financial arrangements which will need to be in place before the green deal gets under way. For consumers to engage, they will need some certainty and guarantees about the costs, the savings and the payback period.

We also look forward to progress on smart grid and smart meters. They are already being brought in by British Gas, but is the Minister aware that, although the technology is available, the meters are not interchangeable between energy companies? Without legislation to ensure that meters can be made interchangeable, there will be no competition between companies because people will not be able to switch suppliers. I know that the Government will not want to bring in an anticompetitive measure, and I hope that this will be addressed in the forthcoming Bill.

Finally on consumer issues, can I express the very real concern from this side that Consumer Focus is being lost in the cull of quangos? The work of this organisation is invaluable. Since its inception, it has recovered £1.4 million for energy consumers, npower has had to repay a total of £70 million to 1.8 million customers who had overpaid in 2007, many consumers have saved money by using the accredited price comparison sites and many vulnerable consumers have been protected from having their energy supply cut off. I understand that Ministers intend Consumer Focus’s responsibilities to be transferred to Citizens Advice. As a former Third Sector Minister and a strong supporter of Citizens Advice, I am well aware of the invaluable work it undertakes, but there are serious questions to be answered about how this will work in practice. Consumer Focus is a statutory body with a board and a chair appointed by the Secretary of State. It is answerable to Parliament and audited by the NAO. It has legal powers contained in statute. Citizens Advice is a charity. As such, does the Minister intend that Consumer Focus’s legal powers should be transferred to Citizens Advice? Was any other way sought or consulted on for funding the invaluable work that CF undertakes? What discussions did departments have with Citizens Advice regarding the financing and expertise required?

While I am sure that Citizens Advice will be able to advise on individual consumer issues, it is a lot to expect for it, on top of its existing work, which is increasing, to understand the intricacies of how the energy market works. The Minister may recall that, at the time of British Gas privatisation in 1986, in the “Tell Sid” adverts, there was a commitment from the then Conservative Government that there would be a consumer watchdog. I urge the Minister to discuss this with his ministerial colleagues and to think again. I do not require an answer this evening, but it would helpful for a considered reply at another time because we feel strongly about the role of the organisation.

In conclusion, the new energy security and green economy Bill to come forward shortly will seek to address many of the questions and issues that have been raised today. I welcome the annual energy statement in which the coalition seeks to be measured and held to account on the actions promised in the statement. We share objectives with the Government on this and where they set out actions to improve energy security, we want to test the effect and efficiency of those policies, the environmental impact, and the social and economic impact. The poor must not pay the highest price for actions that need to be taken.

We will not seek to oppose for opposition’s sake. We will seek to be constructive at all stages. It is in the interests of everyone in the country that the Government meet the energy and environmental challenges that face us. We will support the objective of the Government to be the greenest government. We will use our role—for now—as the Official Opposition to challenge, to test and to evaluate in order to make progress and to make improvements. Climate change is real. It is a huge challenge. But if we get this right, there are huge rewards. There will not be just a cleaner and more stable environment, but also a cleaner and more stable economy. That is a challenge we want to meet.

My Lords, I am most grateful to noble Lords for their excellent speeches. I believe that the House is at its best in a debate like this. Any outsider who might ask about the purpose of the House of Lords need look no further than this Chamber where we have heard some of the finest speeches in the past few hours. I should like to thank my noble friend Lord Taylor of Holbeach, who has had to sit through the debate and assist me at every corner, which is a great support. At one point, I thought that he was going to lose the will to live.

I said that I wanted to hear from noble Lords and I have. I grasped one or two remarks very closely to my bosom because they were complimentary. One or two were not, which was not so pleasant. We have all listened to this debate and we can draw our own conclusions on the rights and wrongs of the subject matter and the views of noble Lords.

Many questions have been asked which I will not be able to cover tonight. Noble Lords would not expect me to because they will form part of our energy Bill. They are part of the research and consultation being carried out at the moment. I am afraid that I cannot address those points, and I will not. This debate is to give noble Lords the opportunity to tell me of the issues that concern them, and for us to address them. We should be prepared to work together on the energy Bill when it passes through this House first, which is fantastic. I consider this debate to be a card-marking exercise.

The noble Lord, Lord Grantchester, obviously has a great knowledge on the farming front. He quite naturally is interested in small-scale anaerobic digesters and biomass. We in the Government share his interest in this area and in supporting it. But many of the issues, such as localised planning and some of the noble Lord’s farming issues, are not subjects for our department. They are subjects for Defra and CLG, particularly the small planning issues, which were also raised by the noble Baroness, Lady Maddock. Noble Lords will have to address those to the relevant Minister at a separate time and debate.

Without any question, the noble Lord, Lord Lawson, was a tour de force. Animals and mammals were mentioned. I was very interested in the remarks made by Bastiat, who was not someone of whom I had heard. The noble Lord is on very home territory when he reasonably says that CRC is money for the Treasury. The Treasury will make decisions about that money as it so wishes. It has been left with a substantial hole in its resources. There is no point in the opposite Benches tut-tutting because we cannot live on bread alone. The noble Lord, Lord Lawson of Blaby, also mentioned the development of shale gas. He is right, but shale gas is not in the UK, so it does not give us a secure energy supply.

I have to chastise my noble friend Lord Jenkin a little bit for his scepticism about carbon capture and storage, a subject also raised by the noble Lord, Lord Smith of Finsbury, in what was a superb speech. The point about CCS in a climate of economic hardship is this. We have negotiated with the Treasury some £1 billion of national funding, taxpayers’ money, to develop what is considered by some to be a high-risk technology. If that technology pays off, it means substantial jobs and opportunities that will lead to further CCS endeavours and to CCS on gas because it has become a proven technology. Personally, I am happy to say that I am leading the negotiations with ScottishPower, and the initial reactions are very positive.

I am grateful to the noble Lord, Lord Whitty, or I would be if he was in his place, for his comments on cross-party support. He raised, as did the noble Baroness, Lady Smith of Basildon, the subject of Warm Front and the impact on fuel poverty. The fact is that fuel poverty has gone up under the support of Warm Front. The figures have risen from 3 million to 3.5 million in fuel poverty, so it is not working. That does not mean that it was a wrong endeavour. It was a genuine effort to try to improve fuel poverty, but it has not worked and therefore we have to improve on it. In our view, the green deal is an improvement. We will have the benefit of noble Lords’ advice on this subject over the next few weeks, and it is incumbent on us all to work to improve the numbers in fuel poverty, which have gone out of control.

My noble friend Lady Maddock quite rightly talked about microgeneration, and we welcome her views on the renewable heat incentive. Again, we will discuss this in the coming months as the energy Bill makes its passage. I was disappointed that the noble Lord, Lord Giddens, a man I admire enormously, said in his excellent speech that he felt that we had not negotiated a good deal with the Treasury on our spending review. I do not think there are many in government who would share that view. We are keeping our heads low at the moment because in fact we have had an increase of over 30 per cent in capital expenditure and a very modest reduction to our budget. I would draw his attention to the government figures on this.

In the debate we have heard two views on the benefits or not of the Severn barrier, and I am afraid that the Government have sided with the noble Lord, Lord Smith of Finsbury, in thinking that it will cause untold damage to the environment, and at a huge cost. We are grateful to have heard from the noble Lord, Lord Stoddart, about his first-hand experience and are delighted to learn that even now he is earning a pension from his former toiling. My noble friend Lord Reay raised his concerns about the proliferation of onshore windmills, but as he said himself, he must be gratified that it is very much down to local planners who listen to local people and communities. These are issues for local communities, and as he pointed out, the conditions have been tightened.

The noble Lord, Lord Haskel, made a learned speech. Normally he says “Get on your bike” to me, but today he was more generous in his comments and made the valid point, along with other noble Lords, that we have to have lifestyle changes in order to bring about a reduction in energy use. That is the easiest way to reduce the risk of climate change. We intend to push out smart meters and to accelerate the programme quite dramatically.

I return to the contribution of the noble Lord, Lord Smith of Finsbury. He is right about tidal and wave power, of which he has first-hand knowledge better than that of anyone else in the Chamber. This is another area that we should be pushing hard, and we will do so. We also intend to grapple with nuclear waste. I have been out to see a MOX plant in France to see whether it is suitable for purpose in Sellafield, and we are doing a lot of cost-benefit analysis on that to see whether it makes sense to reprocess the huge amount of waste.

My noble friend Lady Noakes took a measured approach to this debate. She rightly talked about costs to the taxpayer and whether that is being considered. It is of absolutely primary concern to this Government.

The noble Baroness, Lady Parminter, quite rightly said that we should consider the choices and educate people. We do, indeed, educate them. As I go round schools—probably not to the same extent as other noble Lords—I find that people are fundamentally educated about climate change and about not using electricity. Smart meters will educate them further. I have been given something by E.ON, which I should probably declare but they have been given to quite a lot of people, which shows how much electricity we are using in our house. It is shocking. We now have a penalty system where my children have to cough up some money if they leave their lights on.

My noble friend the Duke of Montrose made some excellent points about China and India. We must continue to progress our discussions with them in Cancun. I do not consider that Cancun will be a conclusive event, but it will continue the soft negotiation that is required to achieve all our ends.

The noble Lord, Lord O’Neill of Clackmannan, whom I consider to be Lord Nuclear, has quite rightly been gratified by some of the steps that we have taken on nuclear. I hope they have sent out strong language to the industry. On gas storage, I personally signed the planning permission for a 15 per cent increase in gas storage at a new facility in East Anglia, as I mentioned earlier.

I am not dealing with every point as perhaps I should because time is running out. I thank the noble Baroness, Lady Smith of Basildon, and welcome her to her task. Her involvement in this her first debate has been a pleasure. As she said, it will be one of many more.

A good many questions have been asked which I hope I have answered. I continue to be available to the House to answer questions at any juncture as we make progress through the winter months on the energy Bill, which I hope will be a triumph for the House.

I hope noble Lords will agree that we have moved at speed to deal with many of the issues with which we are confronted. I am concerned that some noble Lords do not understand the enormity of the task in front of us: we have an antiquated network; there has been a lack of investment in the good times and an overreliance on fossil fuels; and the increase in the price of oil by 80 per cent between 2004 and 2008 was outside our control. However, we must not be moaners; we must think positively. It is incumbent on us to all work together to provide a secure energy supply for a low-carbon economy in the future.

We must also be mindful of the fact that we are custodians for future generations. We must not look at this issue in isolation and by ourselves. I am heartened that those on all sides of the House indicate a testament to our collective doctrine and demonstrate a passion for getting our energy policy right. For our part, we intend to deal with the huge infrastructure issues that confront us and look forward to working with noble Lords during the winter months to progress and conclude the energy Bill.

My Lords, an enormous amount of questions have been put to my noble friend. Will he write to noble Lords with the answer to any point he may not have covered?

My Lords, I thank my noble friend the Duke of Montrose, but I have answered a lot of questions. However, if any are unanswered that I can answer, as I pointed out earlier, I will answer them. However, I do not see the point when we are about to have a considerable lock-in on the energy Bill and various debates, which will provide answers to these questions. However, if noble Lords feel that their questions have not been adequately answered in this exhaustive debate, I shall be happy to write to them.

I apologise for delaying the House. A number of questions were asked and not all were answered. I appreciate that some questions will have to wait for the Bill, but there were others that related to measures that will come into force before the Bill takes effect. It would be helpful if he could look at those—I am happy to remind the Minister if he is unclear as to which they are—and provide answers that could go in the Library.

As I said earlier, I am happy to answer questions that noble Lords feel have not been answered and that are within my remit. The noble Baroness asked several questions that were not within my department’s remit: for example, about Consumer Focus. I answered her questions on smart meters, but I am very happy to respond further if she or any noble Lord wishes to write to me.

Motion agreed.

Transport: Bus Industry

Question for Short Debate

Tabled By

My Lords, I should declare two interests: I am a concessionary bus pass holder and a regular bus user—I come 13 miles each day to the station to catch my train.

The issue that currently concerns bus operators the most is receiving fair compensation for the costs of concessionary fares. Any consideration of this issue must take account of the fact that, in 2012, the bus service operator grant will start to fall. Also, the reduction in local authority bus budgets will take effect next year, at the same time as the new arrangements for concessionary fares come into effect.

The consultation document about the future funding of concessionary travel, which the Government published in September, asks for very prompt responses, by 11 November, with a view to guidance being issued to local authorities by 1 December for implementation in April. That is going some, given that guidance often takes something like a year and a half to emerge.

The research was carried out by the Institute for Transport Studies at Leeds and is extremely theoretical. Understanding the consultation document and the supporting paper is well beyond the capability of the smaller bus operator. The report is based on survey data collected in August—not the best month for a survey. I shall give your Lordships a few extracts from it, because, in my view and that of the bus industry, they are almost incredible. For example, on the impact on bus passengers, it states:

“No direct impact from changes in reimbursement guidance or regulations. Potential disbenefit from small reduction in services and/or higher fares if operators respond to lower reimbursement rates”.

Well, operators are bound to respond to lower reimbursement rates. It continues:

“The assessment of the impact of the preferred option is particularly sensitive to assumptions about how the new guidance is applied and the reaction of operators (in relation to fares and service levels)”.

Well, obviously. If you reduce the money going into the bus industry by the amount proposed, there will be a reduction in service levels.

The research talks about the ongoing effect of the reduction in bus service operator grants. I shall quote one more paragraph—there are 35 pages of it, and it is in very small type:

“As noted in the main body of the impact assessment, it has not been possible to model the impact of changes to the concessionary travel guidance on service levels and fares”.

That is in the paragraph headed “Rural proofing”. I really believe that the changes have not been rural-proofed.

If the proposals as outlined in the document go ahead, bus fares will rise and, more importantly, services will be reduced, hitting both concessionary travel and fare-paying passengers. The scope of services—the length of the day or the length of the week that they cover—will be reduced. Jobs will be lost both within and outside the bus industry.

Mr Iain Duncan Smith was reported recently as saying, “Get on a bus and get a job”. That would be all right if there was a bus to get on. In 10 years, one rural bus operator has created 280 jobs in his area of operation, which has little other local employment. There will be real and lasting job losses as services are withdrawn. How much practical consultation has taken place with smaller, independent operators? Does this really matter to the Department for Transport? One might say that the documents are considering the formula isolated, comfortingly, from the real world. However, the TPPs published for rural areas call, as we heard during the previous debate, for greener travel arrangements and less congestion. Most of the people with whom I travel on the bus, as I do regularly, would rather see a good service maintained and make a contribution themselves to the concessionary fare support—say, a flat rate of £1 a journey. They would rather do that than have a worse service or no buses at all, because if there is no bus to take you where you want to go, what is the use of a free bus pass?

The bus service operator grant has been reduced because the Treasury believes that that will lead to people buying more fuel-efficient buses. I have been involved in the operation of the bus service and I know of no operator that buys vehicles that are not fuel efficient. However, we have to bear in mind that air conditioning, disabled access and emission controls add to the weight of a bus and lead to higher fuel consumption. Soon, local authorities will have more discretion over how they disburse the reduced funds. How do we ensure that buses get their fair share of that money? There will be many other pressures on local authorities which they may consider to be more important.

I turn to the burden of regulation. The OFT and the Competition Commission are the two bodies involved with the bus industry. I ask the Minister how many inquiries each has held into the bus industry since deregulation. It will amount to tens, if not hundreds. Do those bodies appreciate the huge amount of work that they cause to the industry? The remedies that they propose are often ineffective. I cite an example where Arriva was told to sell off two of its garages in Liverpool to an outfit called Glenvale, which went bust after having run some pretty rotten buses in the mean time. The simple remedy of a traffic commissioner who is able not to accept registration of services that are predatory in nature is the obvious answer to all this interference from competition authorities.

I turn to the EC regulations. The working time directive was forced on the bus industry by the previous Government. Can the Minister give us any assurance that the United Kingdom Government will continue to resist the extension of the proposed passenger rights objective to local bus services? This matter is very active in Brussels and needs a great deal of push.

In the past five years, the bus operators have invested £1.6 billion in the bus building industry, yet orders now are scarce, as operators are not ordering buses because they believe that they will have to cut services severely—obviously, they have enough buses. The effect of this on the bus building industry is quite awful. We have to remember that this is one of the British manufacturing industries that we want to preserve.

In conclusion, I implore the Government to take serious notice of the representations of the bus industry. They still have time, particularly for those bus operators that serve rural areas, before they go ahead with the proposals for the reimbursement of concessionary fares.

My Lords, local bus services have three essential economic and social functions: they get people to work and education in support of economic growth; they help to reduce congestion and carbon emissions; and they improve social inclusion for those without a car by providing them with links to local services and access to work and leisure. However, there is a conflict today between the important role that bus services play and the unregulated way in which they are operated outside London.

Bus services here in London are wonderful. I am impressed by their frequency, the reasonableness of the fares, the newness of the vehicle fleet and the wide range of routes which extend access and availability. While commercial operators do a good job in some other parts of the country, the overall picture is nevertheless mixed. Investment in modern, cleaner and more accessible vehicles varies from region to region, as does the extent of networks, reliability of services and maintenance standards. I regret in particular that there is no public service obligation on bus operators as there is on other public utilities. Unlike a domestic electricity or gas supply, a neighbourhood’s bus service can be cut off at 56 days’ notice, without consultation, by its commercial operator.

The context today is one in which bus services will come under greater strain in the years ahead as a result of the reductions in public spending, as 47 per cent of bus company income is derived from national and local government in various grants and subsidies that now amount to some £2 billion. As this is reduced, there is a real danger that services will decline in some areas. This is already the case with shire counties cutting the number of routes that they subsidise. As examples of cuts to bus services starting to take effect, North Yorkshire County Council is consulting on plans to save £600,000 by withdrawing its subsidy for evening and weekend bus services, and Durham County Council has been consulting residents on which of the bus services that it subsidises—20 per cent of all routes in the county—it should cut as it seeks to reduce spending.

According to Spending Review 2010, the 20 per cent reduction in bus subsidies paid directly to operators will save over £300 million by 2014-15. That, coupled with a reduction of 28 per cent in overall local authority funding over the next four years, will inevitably put pressure on to the subsidy system. In addition, the special grant top-up for concessionary travel funding is being withdrawn and, from next April, that funding will be subsumed into the formula grant alongside the rest of the funding for concessionary travel.

It is interesting to note that the total cost of subsidising bus services has grown since 1986 from £850 million to around £2 billion. This subsidy includes bus service operators grant, public transport support and concessionary fare reimbursement by local authorities. There is now a very real danger of a salami effect on bus services, with bus companies withdrawing their own marginal routes as the bus service operators grant is reduced at the very same time as councils are forced to reduce subsidised routes. This attrition of an essential public service must be curtailed, given that in the UK the total number of bus trips today is still twice the number of rail and underground trips.

So, what should we do? Local authorities need to be encouraged to look at new models of service delivery, including forming strategic partnerships with operators and introducing quality contract arrangements with local franchises offered to a single operator in a particular area. As part of that, the Government should ensure that local authorities and passenger transport executives retain the powers to determine how bus services are delivered in their communities, using the full powers of the Transport Act 2009, and are incentivised to do so, where possible, by secondary legislation and government guidance.

Under quality contract franchising, private sector companies would be invited to bid to operate a specified network. Once a company was appointed, it would face no on-road competition and would be free to concentrate on developing the local market for bus travel. With franchising, you get what you are prepared to pay for, but a market testing exercise by passenger transport executives has shown that, even with the existing level of public subsidy to the industry, franchising should provide a better network than currently exists. At a minimum, those networks would be: more stable, with less frequent changes to fares, times and frequencies; possibly more reliable, because services would be monitored and good performance would be incentivised; better integrated, with one brand, one network, one ticket and simpler fares; and cleaner, because dirty old buses would be sent to the scrapyard and contracts would require bus operators to provide newer, cleaner buses and to maintain them to a high standard.

If in time more resources became available, whether from national government or from the local authorities themselves, quality contracts could be used to make a further step change with more state-of-the-art low-emission or no-emission buses. Fares could be simplified and held at current levels, or even reduced. The network could be made more accessible more quickly by making every bus low-floor, with easy access for wheelchair users. New services could be added to help link people to vital destinations like jobs and hospitals. More buses could be provided in rush hours to help reduce traffic congestion. This would all help reduce car dependency, improve air quality and contribute to the quality of the environment.

We should note that franchising of services, with the public sector specifying and regulating and the private sector delivering, is now the norm in the rest of public transport provision in Britain and across Europe. It is time that it became the norm with our bus services. Indeed, a growing number of bus operators, particularly those who have forged a good reputation in providing franchised public services at home and abroad, are supportive of franchising proposals. For the private sector, the advantage of franchising is an open, competitive framework and a long-term and stable return on investment with which they can invest in new vehicles and build customer numbers. Those in the private sector know that bus ridership can be increased because latent demand exists, and that is what has to be generated.

We can see from Transport for London how ridership can be increased. First, in the 20 years from 1986 when bus services outside London were deregulated, bus patronage in urban areas has declined by 46 per cent, while London has seen bus patronage increase by 81 per cent. In the past year, while ridership dropped 3 per cent outside London, London’s buses saw 0.5 per cent growth. Secondly, in the same period bus fares in urban areas have increased by 94 per cent in real terms, but in London fares have risen by just 54 per cent over the same period. Thirdly, even though local bus service vehicle kilometres fell by 13 per cent in the 10 years to 2008 in urban areas, they rose 31 per cent in London. Crucially, the higher load factors achieved in London have led to a significant fall in operating costs per passenger journey, by 22 per cent in real terms since 1985 compared with an increase of 7 per cent outside London.

It is all about generating new customers on our bus services. London has shown what can be achieved, and the rest of the UK must be empowered to follow.

My Lords, I am grateful to both noble Lords who have contributed so much to this debate already, especially the noble Lord, Lord Bradshaw, for initiating it and bringing to the issue his customary expertise and trenchant questions. I am sure that the Minister noted them carefully and will respond to them accurately in his speech, which we await in a few moments. The noble Lords, Lord Bradshaw and Lord Shipley, have identified key issues that affect and face the industry at present. I particularly liked the points that the noble Lord, Lord Shipley, made. His optimistic and constructive perspective was that ridership could increase and that, if the correct strategies were followed, we could improve bus services and see more people using them.

Like the noble Lord, Lord Bradshaw, I use a bus daily, but I am afraid that mine is a London bus. As the noble Lord, Lord Shipley, indicated, London is atypical in these terms, although I hope that it points to what can be achieved if there is sufficient commitment to increasing bus ridership and making the service efficient. In terms of efficiency, of course the quality of the buses and the hours that they run are important. We all know what dogs people when it comes to bus services. Without punctuality, people feel forlorn. They feel exposed to a position over which they have little control and one that is severely disappointing.

We all recognise why London’s experience cannot be readily translated, certainly to our rural areas, although in our major cities a great deal from London could be followed. There is no doubt that, in the example that London offers, the great success is the frequency and regularity of the buses and the knowledge that, when people go to catch a bus, one will arrive. That is important. That is why investment in the information that is available to bus passengers is of the greatest significance. After all, none of us expects to try to catch a train without some accurate information. However, people often wait for buses in much more inclement positions than they ever do at railway stations. Not even the most derelict of our railway stations fails to offer some shelter, but people using buses are often exposed to the weather conditions and wait for buses in very inclement circumstances.

The point that we need to emphasise—I hope that the Minister takes this on board—is that we are concerned with fairness, as far as support for buses is concerned, because buses are used by the less well-off in our population. It is people who cannot afford cars who travel by bus. We all remember the famous statement in the 1980s that, as far as one Prime Minister was concerned, it was only those who had failed who travelled on buses. That caused some resentment in the wider population. I am sure that that sentiment is not held by this Government today. They will be judged on the kind of services that are provided by the Department for Transport for those who are least well-off in our society and most dependent on effective public transport. The bus is of great importance in those terms. That is why the 20 per cent cut to the bus subsidy that is to be introduced by the Government is of great significance.

I have no doubt that the Minister has erected his defences well and no doubt that one of those defences is that we must wait for the Competition Commission’s report. The Competition Commission has many virtues and I am sure that we will learn a great deal from its report, but the question that we are asking the Minister is: can we wait that long? If cuts are coming that will affect bus services dramatically, significantly and early, waiting for the Competition Commission will, I am afraid, mean waiting for advice on how to plug a gap that will already, by then, be a great, tearing hole in the quality of our bus services. Therefore, I hope that the noble Earl will not erect that defence and that he will appreciate that the noble Lord, Lord Bradshaw, introduced the debate this evening because of his sense of urgency and concern about bus services, which is shared across the industry and, of course, by passengers and the wider public.

We note that Iain Duncan Smith—a Minister with significant responsibilities given present circumstances—thought that getting a job involved merely taking a bus ride from Merthyr Tydfil to Cardiff. That journey lasts an hour and the service is not particularly frequent, although it is regular. However, an unemployed fellow was featured in a television programme taking a bus to Cardiff only to find that the most desperate circumstances prevailed in terms of the likelihood of being able to land a job, given that the jobs available were so few and the number of applicants so great. If employers have a choice between employing a local person who can come in and meet their demands at short notice and someone who has an hour’s travel to get to work and an hour’s journey home, the latter has a pronounced disadvantage. Therefore, it will not do to give glib answers about unemployed people using buses to travel to get a job. The Government should think seriously about the nature of the support for the industry. I am sure that the Minister is seriously considering the proposals of the Local Government Association as regards the necessity of providing a single grant for buses. It identified where the weaknesses lie in the present situation. Indeed, the noble Lord, Lord Bradshaw, identified a very important dimension of that with regard to concessionary fares.

The LGA argues that reform is necessary. After all, we have seen the subsidy increase over the past decade by a very substantial amount. The LGA knows that money is scarce. Before the Government carry out their full depredations on the grant, the money is already pretty scarce. However, the LGA is concerned that the Government should look at the nature of the grant in different terms and think of it as a model for a single pot. I know that that proposal poses all sorts of challenges for the Minister and that it will require serious consideration. However, I make a plea from this Dispatch Box that unless he thinks radically about the way in which we organise our support for buses in circumstances where resources are so scarce, and unless clear reforms are carried through, we will see a deterioration in a service which in many parts of the country is already not good enough to meet the public’s needs, and certainly will not be good enough for those several hundred thousand of our fellow citizens who will need to be mobile in order to get a job.

My Lords, I am grateful to my noble friend Lord Bradshaw for introducing this Question for Short Debate. He made his points very well with his usual expert style, as all noble Lords would expect.

Buses provide an essential public service and improve the quality of many people’s lives, providing cost-effective gateways to work, shopping, education and leisure. The best bus networks are built on partnership. Local government needs to work closely with operators, community organisations and the travelling public to ensure a local transport network that works for everyone. Transport operators need to listen and respond to the views of their passengers.

Central government needs to provide an appropriate legislative framework that enables innovation and creativity from bus companies and provides local authorities with the flexibility to use their local knowledge to support their bus networks in a fair and logical way. The traditional bus service with a fixed timetable is not always the right answer. Flexible, demand-responsive solutions, often provided by communities themselves, can be the better, more efficient and cost-effective option.

As I am sure your Lordships will be aware, the Competition Commission is currently investigating the bus market. As an independent organisation, and thanks to its information-gathering powers, the Competition Commission is best placed to come to a decision as to whether there are features of the local bus market that prevent, restrict or distort competition. During the inquiry, the Competition Commission is looking at a wide variety of issues and evidence relevant to the assessment of competition, including the profitability of bus operators. The Government will await the outcome of that inquiry with interest and subsequently decide on whether any changes to the legislative framework for buses are needed. In answer to the question asked by the noble Lord, Lord Davies of Oldham, the Competition Commission is due to report next summer, so it is sensible to wait before deciding whether changes to legislation need to be made.

My noble friend Lord Shipley talked about the future benefits of new technology. He speaks with great authority and I will certainly study Hansard carefully tomorrow in order to pick up all his points.

One of the first things that the Government announced was an additional £15 million investment in low-carbon buses though a second round of the green bus fund. This will help bus operators and local authorities to buy around 170 new hybrid and electric vehicles. This builds on the success of the first round of the green bus fund where, in 2009, £30 million was allocated to help to buy around 350 new low-carbon buses. As a result of both rounds, by April 2012, there will be around 500 new low-carbon buses on the streets of England and we hope that this will encourage other operators to make the switch.

Contrary to some predictions, we are not calling time on the concessionary travel scheme. Instead, concessionary bus travel will remain, so that older people can continue to enjoy the greater freedom and independence that the scheme gives them. However, we are looking at ways of ensuring that we get the best value for money from the scheme. We are currently consulting on reforms that lead to simplified and more efficient reimbursement arrangements and reduce the scope for disputes between local authorities and bus operators. This will ensure that the scheme remains sustainable in the future.

The Government have consistently said that reducing the country’s deficit is our main priority. Reductions in public spending will have to form part of this. The Chancellor announced that from 2012-13 bus subsidy will be reduced by 20 per cent. While I appreciate that any cuts will be unwelcome, it is only right that bus subsidy takes a share of the cuts—and this cut is lower than for most other local transport revenue grants. However, I fully accept the point made by the noble Lord, Lord Davies, about the need for buses for the less well-off. That is precisely why we have left the BSOG in place. Following the Chancellor’s announcement of 20 October, my honourable friend Norman Baker spoke to the Confederation of Passenger Transport UK, which represents the bus industry. It was hopeful that, in general, the small reduction in BSOG could be absorbed without fares having to increase.

The Chancellor also announced that the majority of local transport resource funding will now be paid through formula grant. This will simplify funding by moving from around 26 grant streams to just four.

The noble Lord, Lord Davies, touched on the administration of funding. It is for local authorities to decide how this funding is spent according to their priorities. We have also established a Local Sustainable Transport Fund worth £560 million to help local authorities support economic growth and reduce carbon emissions. Even after the spending review, the public funding allocated to buses will remain at significant levels.

The noble Lord, Lord Davies, made important points about the importance of punctuality. He was absolutely right in his explanation. Today's passengers demand and deserve a public transport system that is efficient and modern, and that meets the challenge of using new technology. Some operators have invested in technology that can tell them the location of their buses at any given time. This gives operators a wealth of data to help deliver a good service to passengers, and sharing data brings other benefits. Sharing data with local authorities will help to identify traffic management issues that are making it difficult for buses to run to time, both on a day-to-day basis and in the long term, by benchmarking punctuality and enabling agreement on joint actions to help deliver the punctual services that passengers want. We know that real-time information can make a big difference in encouraging potential passengers to choose the bus. It certainly does for me. That is why we are supporting operators who share data with local authorities so that they can provide real-time information systems, by paying them a higher rate of bus service operators grant.

A further example of technology offering real improvements for passengers is TfL's Countdown system. This provides real-time bus arrival information for passengers throughout London, using electronic signs at bus shelters. From 2011, a new, improved Countdown will be introduced that will show bus arrival predictions for every one of London's 19,000 bus stops. As well as using electronic signs at bus shelters, it will take advantage of a range of information channels, including text messages and the web.

One of the most important technological advances towards a more joined-up transport network is smart and integrated ticketing. We want this new technology to be rolled out more widely across England, so we have provided £20 million of grant funding to the nine biggest English urban areas outside London, and have offered a higher level of bus service operators grant payment to support this. I am pleased to say that some major bus operators are in the process of rolling out smart ticketing across their fleet, but we are eager to see even more achieved, particularly in terms of integration between modes and services. The vision of my honourable friend Norman Baker is for seamless travel on one card throughout the country, whether on the bus in Bristol, the Tube in London or the Metro in Newcastle—a card that lets you hire a bike or join a car club, that can be topped up in shops, online or by phone, and that makes travel easier and cheaper.

I have several questions to answer. The noble Lord, Lord Bradshaw, asked why cuts to bus subsidies are being made. I have talked about the need to reduce the budget deficit, but the saving is 28 per cent lower than that being made from other transport revenue grants, reflecting the benefits that bus services bring to the economy and the environment, as well as the fact that many people rely on bus services to reach education and healthcare.

The noble Lord, Lord Bradshaw, also asked about consultation with small operators. Representatives of local government and the bus industry in the Reimbursement Working Group were actively consulted throughout the research process and the development of the draft DfT reimbursement guidance. The Confederation of Passenger Transport, the trade organisation for the bus industry that represents both small and large operators, was a member of the working group.

The noble Lord, Lord Bradshaw, also asked about the Competition Commission's inquiry. The commission is a public body, entirely independent of government, and all of its inquiries are undertaken following a referral by another authority, most often the Office of Fair Trading, which referred this market inquiry in January of this year. It is important to note that the commission's legal role is clearly focused on competition issues rather than on the wider public interest.

I wonder whether the Minister will pause there for a moment. The Competition Commission is very much concerned with the definition of a market in any field. The commission’s approach to the bus industry has been very narrow indeed—for example, it excludes consideration of the fact that the car is a competitor with the bus. However, I do not believe that that is logical because people often have the choice of using a car or a bus, and not bringing the two together is perverse.

My Lords, I think that I touched on the point that the Competition Commission is looking at the profitability of the bus industry. However, I will draw all the noble Lord’s points to the attention of my honourable friend Mr Norman Baker.

I return to my answer. On the other hand, this Government are committed to getting the best deal for bus passengers and taxpayers alike. With around £2.5 billion of taxpayers’ money spent on bus services and passengers each year, it is only right, as in every other area of public spending, that we should question whether the bus market is delivering the best service for bus passengers and the best value for the taxpayer.

The noble Lord, Lord Shipley, asked about quality contracts. He will know that the legislation is still in place and that local authorities are free to use quality contracts when they wish to do so. We are already seeing plans in west and south Yorkshire. We think that partnership is a better approach but, ultimately, it is a matter for the local authorities to make a decision based on their circumstances.

I acknowledge that there are big challenges confronting the industry. Beyond any question, these are testing times for an industry that matters and that makes a difference, but it is an industry that, with our support, can grow and flourish.

House adjourned at 9.12 pm.