My Lords, I beg to move that the Bill be now further considered on Report.

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

Clause 36 [Trading Schemes]:

moved Amendment No. 183A:

Clause 36, page 18, line 13, at end insert—

"( ) No regulations under this section may make provision for individuals to be allocated, or deemed to have, a personal carbon allowance."

My Lords, it is agreed on all sides of the House that the Bill as it stands would permit the introduction of personal carbon allowances and trading on those or similar schemes, if the Government of the day were so minded, without fresh primary legislation. My proposition in summary is as follows: personal carbon trading allowances could be introduced under the Bill. The Government would not consider so introducing them because the implications of personal carbon allowances would be so great. However, so far they have not explained how else they would introduce personal carbon allowances. The Liberal Democrats have said, as I understand it, that not only are they in favour of personal carbon allowances but they would use this legislation to introduce them, were they ever in a position so to do. The Conservatives were silent, on balance, on where they stood. So the Front Benches of all three main political parties in this Chamber have talked about whether to use this legislation to introduce such schemes. My proposal is that the nature of a scheme based on personal carbon allowances would be so substantial in its ramifications, so significant, that fresh primary legislation should be introduced rather than introducing it on the back of this Bill with the enabling provisions that it permits.

I do not wish to enter at all into the argument for or against personal carbon allowances. That is not the burden of my argument. Your Lordships may be in favour or against personal carbon allowances or trading in them. My argument is solely that the implications are so substantial, whether you are in favour or against those schemes, that primary legislation is required. First, and very briefly because these matters were discussed in Committee, I will touch on some of the issues involved in personal carbon allowances.

Essentially these are allowances of carbon emissions—rations, quotas, permits, call them what you will—that would be allocated in some way to individuals. Would it be to all individuals, or just adults? Would children have more or less than adults? Would people get more or less in rural or urban areas, in the north of Scotland or the south of England? Who would get what? Would they be allocated free or would people have to in some way bid for them at auction? An independent body would need to be established to set the cap for the total amount of emissions that people were allowed to buy and to take the important decision about the emissions allowance allocated to each individual.

The question arises of what goods and services would be included. If you bought a gallon of petrol, presumably you would have to hand over some of your carbon allowance, at least in theory and principle. Presumably, that would apply also to the purchase of gas, electricity, oil, coal, diesel and flights. Which flights would be caught? If you go from London to Dubai to Delhi and back again, would you hand over emissions allowances just for the London to Dubai leg, or for London to Dubai to Delhi, or all the way back again? How many carbon emissions allowances would each purchase use up? Would everybody get the same allocation? Would they be allocated to everybody just the same? If that were the case, what would be the effect on the distribution of income and living standards between people? How would we treat visitors to this country? How would we treat people who are here for a few months, weeks, days, or people who leave halfway through the year?

How would these allowances be traded? Would people be able to trade and to buy and sell them? The presumption is that they would. I have seen a proposal that people would have something like a bank card or a debit card and a trading account like a bank account, and that when they bought and sold things their account would be credited or debited. How would this relate to the 15 per cent to 20 per cent of people who are known to have problems thinking ahead about how to use their money and handle their finances? People would have to think ahead very carefully about how much of their carbon allowance they wanted to use over the following 12 months. How would people work this out? I am not talking about the sophisticated Members of your Lordships' House but people who demonstrably have problems thinking ahead and budgeting.

How secure would such accounts or debit cards be? How would you prevent fraud and scams occurring, particularly if people are buying and selling? How would you know that you were buying an accredited emissions allowance and that it was not a scam? Every purchase of a qualifying commodity, good or service made by an individual would be recorded and the records would be substantial. Many people are concerned about identity cards and this would raise many of the same issues.

What would be the position of illegal immigrants—people in the black economy? How would they obtain these cards so that they could buy fuel? It would not be a question just of whether you can pay for your gas and electricity; you would have to hand over a ration or quota, which would have been allocated to you. You have to own that in some way.

Defra commissioned a study, referred to by the noble Baroness, Lady Miller, by the Centre for Sustainable Energy to look at many of these matters. Pages 25 to 27 of the report consider the issues that would arise if these schemes were introduced. The relevant passage is headed:

"The questions that need answers".

I shall not read them all out because there are so many, but the relevant headings are:

"Political acceptability ... Political/institutional viability ... Public reaction and 'acceptability' ... Market reaction ... Technical and operational feasibility".

That is, would it actually work? What would it cost? What would be the effect on equity and justice? What would be the distributional impacts? The study states:

"It is reasonable to say that, beyond some detailed assessment of the technical feasibility of individual carbon trading ... most of these questions remain unanswered (and, in much of the literature, unasked)".

There is no doubt that if the Government of the day were minded to introduce personal carbon allowances it would raise an enormous range of issues which, I am sure, both Houses would want to debate fully, and not as regulations but as primary legislation. It might be said, "Don't worry, no Government would ever do this". The Government's answer so far is that the Bill has those powers but they think it inconceivable that the powers would be so used. I suggest that that is not a very good basis on which to conduct legislation. The Government have for some time been conducting a careful examination of whether to pursue personal carbon allowances and trading. This is not a hypothetical possibility; even the present Government are actively looking at it

If the Government are looking so carefully at personal carbon allowances and a trading system based upon them and say that it is inconceivable that they would use this legislation to introduce them if their studies suggested it, what would they do? Do we have an assurance that they would introduce primary legislation? If that is the case, there should be no difficulty in accepting my amendment, which ensures that this Bill could not be used to introduce personal carbon allowances? However, if the Government say that they would still prefer to keep provision for this in the Bill, I suggest that that confirms my concern.

I say again: I do not argue for or against personal carbon allowances and trading on them, but simply that they should not be enabled under this Bill. The Liberal Democrats said in Committee with, it is fair to say, a degree of vigour, that they were in favour. However, looking back at the record, it is not entirely clear whether they are in favour of personal carbon allowances in principle or whether they would use this legislation to introduce them if they had the opportunity. It is a very important distinction. The Conservatives were not, it is fair to say, prepared to be led by the Liberal Democrats. I think that the noble Lord, Lord Taylor, said that he did not want to lead us anywhere in particular on that evening.

You could argue that the amendment is unnecessary because the Bill does not already facilitate this. Yes it does. You could argue that the amendment is unnecessary because no Government would ever use the legislation to do introduce such schemes—that is the Government's proposition—but that is not a very good basis for undertaking legislation, particularly when the Government are actively investigating the possibility and one of the Opposition parties is saying enthusiastically that it would do so. You could argue, as I do, that the issues are so substantial that the potential for bringing in personal carbon allowances and trading under the powers in this Bill should not be there. I ask your Lordships to reflect upon those matters. I beg to move.

My Lords, it seems to me, having listened carefully to the noble Lord, Lord Woolmer, that the nightmare world that he has described as possible, should personal carbon allowances be introduced—whether by the Liberal Democrats or anybody else—makes the amendment essential. I hope that your Lordships will accept it.

My Lords, in Committee I spoke from the Back Benches to my amendment on this interesting issue. I said that I welcomed the fact that Defra was funding a study into it and that the RSA and another think tank, the IPPR, were also doing studies into it. There is a lot of interest in whether some form of personal carbon allowance would be one of the mechanisms that could help us in the fight against climate change.

I fully recognise that there will be difficult issues to be addressed, which is exactly why in-depth studies are being undertaken, but I do not agree with the picture painted by the noble Lord, Lord Woolmer of Leeds, which he has clearly transmitted to the noble Baroness, that it would be a nightmare. He is shaking his head because he agrees with me, I think, that it would not be a nightmare world, but that there are substantial difficulties to overcome.

I do not want to go over all the arguments again this afternoon that I made in Committee in favour of at least looking seriously at personal carbon allowances and saying to the Government that there are communities, particularly transition towns, which are committed as communities to lowering their carbon usage. There are places that would really welcome being able to trial this when the current studies are complete. I am sure that there would be difficulties, but it is possible that this would actually be welcomed not by the people that the noble Lord, Lord Woolmer, envisages—perhaps most of us in your Lordships' House fly more than we should so we would be very badly off under personal carbon allowances—but by the very people who he said would have difficulty in coming to grips with them. I do not think that they would have difficulty, because if such allowances were introduced, it would need to be in a very simple form.

It would be a very bad move to go through legislation such as this, which is aimed at enabling things to happen, with a red pen, removing all the things that the Bill would make possible. The Government are right in not bringing forward their own amendment specifically to exclude personal carbon allowances, but I fully accept that far more studies need to be undertaken before any pilots such as those that I mentioned are undertaken. I ask the House not to agree with the noble Lord, Lord Woolmer, and delete what may be a useful tool in the future.

My Lords, I have sympathy with the arguments put by the noble Lord, Lord Woolmer, but on the other hand, as I have said before, this is a Bill for the long term. In World War 2 we had rationing—or, rather, you had; I was an infant in Australia—and I am sure it was difficult, but at the time it was necessary. It is not clear, as we approach the middle of the century—which is what the Bill is looking at—that we will not be in a position where something of wartime immediacy and urgency will be needed. For that reason I am certainly not urging that we put in the Bill something that says, "We will do this", but I find it odd that we should put in the Bill something that says, "We won't do this". That is why I hope that the amendment will not end up in the Bill.

My Lords, I shall take a similar line to the noble Lord, Lord May. At a conceptual level, there is nothing wrong with the idea of a ration book. In the Stern report, the global carbon account conceptually gives us one tonne each around the world. Therefore, in some conceptual sense, we can buy the 90 per cent of the African units that Africa does not need at the moment. It is a redistribution from the rich to the poor, which is a point that I will make on my later amendment. When it comes to a personal allocation that is administered by ration book, like during the Second World War—I remember the sweet ration—it is a leap into a totally different sphere. It would be counterproductive to lose sight of the value conceptually of everyone being entitled to one tonne of carbon and going down the road of the amendment, but I am very pleased that my noble friend Lord Woolmer has enabled us all to clarify the position.

My Lords, I support the noble Lord, Lord Woolmer. We are talking about something that operates like a carbon tax at consumer level, a CAT rather than a VAT. If you are going to do that you have to integrate it into the rest of the tax system. The feature of VAT is that it is a cascade tax in which you net off all the tax you paid at previous stages. With this arrangement we have no safeguard, so when you buy your litre of road fuel tax will already have been paid on it. On the subject of flights, we have passed an amendment bringing aviation within the scope of the ETS and so levying a charge on aviation. Are we then going to have something on top of that? It then has to be integrated into the social security system. I see no logic in paying my elderly mother-in-law a heating allowance and then requiring her to pay something on top of that. Conceptually, you could do all this at the consumer level, but what you cannot do is have hybrid systems.

Why on earth does this need to come anywhere near this House? The Bill is for the longer term and it does not have to include everything we might possibly want to do over the next 50 years. There is plenty of time for people to develop the scheme, study it further, publish a White Paper, Green Paper or whatever, and then to come forward with legislation. I cannot understand why there needs to be anything at all which says whether you do it or not. There needs to be no mention whatever of this possibility. This possibility can arise by all sorts of other schemes in the course of the next 42 years and I think that is the way we should deal with it.

My Lords, I am in favour of the noble Lord's amendment. It would be extremely difficult to produce a fair system of allowances. Take, for instance, two identical houses next door to each other, both with exactly the same insulation value. One is occupied by a single individual and the other is occupied by a family of two parents and, say, three children. The family with the two parents and three children could well have five times the allowance of the single person, assuming that the children get the allowance as well as adults. There is also the case of the allowances that will be required by people who are ill—chronically sick—who need additional heating and people who are disabled who need additional heating. There is also the fact that as one gets older, one feels the cold a great deal more. I am sure Members of the House will have noticed that. Elderly people will also need a greater carbon allowance. There is also the fact of travel to work and travel to buy one's daily necessities. If you live in a town, very often your work is close at hand and you can walk there. You do not need a carbon allowance for it. You may need a shoe leather allowance, but no Government are going to bring that forward. If you live in the country a mile and a half from any public transport, as I do, you need your own vehicle to go to get food and to go to work. Even though I attended your Lordships' House today using the train—public transport—I did need the car to get to the station and on to the public transport. It is going to be virtually impossible to produce a fair system of individual carbon allowances even if one takes no notice of airline flights divided between pleasure and business. I support the noble Lord and will support him in the Lobbies should he divide the House.

My Lords, we should remember here that the amendment of the noble Lord, Lord Woolmer, is about whether personal carbon allowances should be allocated under this Bill. It is not about the question of whether personal carbon allowances are a good or bad thing. From the Liberal Democrat point of view, getting more decision-making on climate change down to individual level—whether it be through smart meters, education or other means—has to be a good thing. As individuals we must take part of the responsibility for a planetary problem.

We are not saying that personal carbon allowances are Liberal Democrat policy. I was interested that the leader of the Official Opposition, I believe, raised this for public discussion in relation to aircraft and air miles—that is where it really became a public debate. I assure the House that the next Liberal Democrat Government will not introduce personal carbon allowances through this legislation. The amendment of the noble Lord, Lord Woolmer, is correct. The proposal would be such a change to the way in which we operate in this country and it should not be done through this legislation. This whole area is being looked at and personal carbon allowances should be explored further. The policy should not be implemented through this Bill.

My Lords, what came into my vision was the inability at one general election of the Liberal Democrats to explain their policy on local income tax; the idea of them trying to explain their policy on this at an election before the Liberal Government come in almost borders on preposterousness; but there we are.

I am grateful to my noble friend for returning to this matter. It is not straightforward. My view is that it would be a rash and brave Minister who sought to introduce personal carbon allowances through this Bill at any time. I can imagine the debates and difficulties of doing so through secondary legislation; that is a complete non-starter. I say that as a parliamentarian rather than as a Minister.

My noble friend asked a key question: if we are not going to do this through the Bill, why do we not use specific exclusion? There is an answer to that. When we dealt with this in Committee, my noble friend Lady Morgan of Drefelin set out the Government's position: that we do not envisage using the powers in this Bill to introduce a personal carbon trading scheme, but we are, as is known, in the process of gathering evidence better to inform us on the whole issue of personal carbon trading. One can see how complex that would be if one wants to go down that road; all the issues raised by my noble friend and others would have to be covered.

We would prefer not explicitly to rule out personal carbon trading for now—in relation to this Bill—for two main reasons. The first is that the initial pre-feasibility work has not yet reported; and the long-term framework of the Bill means that personal carbon trading in future may represent a useful tool. That involves the Bill's long-term framework. In no way do I imply that the Bill will be used to do that but that long-term framework may give birth to other bits of primary legislation; there is no question about that.

The second concern with this amendment—or any other amendment that is intended to rule out personal carbon trading—is that it might inadvertently have a broader effect. Personal carbon trading is a difficult concept to pin down, as we discovered in our short debate, and doing so in legislative terms would be incredibly complicated. If we tried in the Bill explicitly to exclude it we might in addition mistakenly exclude something else that we would not want to exclude. For example, the focus on individuals in this amendment may result in a business, which happened to be trading as a sole trader, being excluded from a trading scheme that was not in fact a personal carbon trading scheme. In the proposed carbon reduction commitment, participants will be identified on the basis of their electricity consumption. If this amendment were accepted, there is a risk that a sole trader could be exempted from the carbon reduction commitment.

We also understand the concern in many quarters about the potential for personal carbon trading to be introduced through secondary legislation. It is a major concern but, as far as I am concerned, it will not happen. As I said, it would be a brave and also a rash Minister who sought to do that. That is not to say, because of the long-term nature of this Bill, that there cannot be a connection. The framework of the Bill goes to 2050 and therefore these issues will have to be debated. However, we have stated consistently that we do not intend to use the powers in the Bill to introduce personal carbon trading. I make it absolutely clear that personal carbon trading will not be introduced through the Bill. In addition, the Bill contains significant checks before a new trading scheme can be introduced—obviously the provision is there for trading schemes. These include the thorough parliamentary scrutiny and the affirmative procedure required for every new scheme, as well as consideration of the advice from the Committee on Climate Change.

The pre-feasibility study is a concern for some noble Lords. This study aims to answer some key questions surrounding personal carbon trading and is expected by Ministers in the spring. Decisions will be taken then on the next steps. At any time, if this became a question to be seriously addressed, the Government would not envisage the introduction of such a scheme without a comprehensive period of public engagement, debate and consultation. As we have heard in the debate, in the examples given by noble Lords, this goes beyond anything that is actually in this Bill. That is why we do not want to exclude it, particularly in the way it is drafted. I am not nit-picking about the technicalities of the amendment. If you are going to do anything about personal carbon trading in the context of this Bill, it may have consequential side effects that would be unfortunate and that we do not envisage. I have given a clear commitment that personal carbon trading, in the sense understood by my noble friend, will not be introduced as a result of this Bill.

My Lords, some helpful remarks have been made in this brief discussion and debate. The issues are substantial and real, whether one is for or against them in the end. They are issues that go to the heart of politics, issues of public and personal concern—and of course of media concern. I would be amazed if MPs in the House of Commons did not think very carefully about the wording of the Bill and its implications. I hope that our discussions are taken careful note of there.

I do not wish to go into the points that were raised about pros and cons, although I do have a great deal of sympathy with many of them, not least that of the noble Lord, Lord Turnbull, about double counting and double costs. People who were asked to pay a carbon price on top of the price of their petrol and the current tax on it would be pretty fed up with the Government of the day. These are real issues. I was delighted to hear the Liberal Democrat Front Bench saying very firmly that, regardless of the pros and cons of carbon trading allowances, the Liberal Democrats would not use the powers of the Bill, when it is enacted, for that purpose. The Minister was equally forthright from the Government Front Bench. It is a pity for the future, however distant, that the Conservative Front Bench did not seem able to give the same assurance today. I hope that that can be put right elsewhere.

The Minister said, in effect, that there is a drafting problem with the amendment. He was concerned that it might be drafted in a way that excluded things not of this nature that one might ultimately want to exclude. I will look carefully at that argument and see whether it might nevertheless be possible to draft something that deals with that problem. I think it is fair to say that there is overwhelming concern on all sides of the House that this legislation should not be used for introducing personal carbon allowances. I shall take this away and consider it carefully. With that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 2 [Trading schemes]:

moved Amendment No. 184:

Schedule 2, page 44, line 18, after "Part" insert "of this Schedule"

My Lords, I move government Amendment No. 184 in the name of my noble friend Lord Rooker, and shall speak to government Amendments Nos. 185, 186 and 188 to 190. The amendments simply improve the drafting of Schedule 2 to make it clear whether references to "This Part" are references to the relevant part of the schedule or to Part 3 of the Bill. This is a straightforward tidying-up exercise, on which I hope I need not detain the House. I beg to move.

On Question, amendment agreed to.

moved Amendments Nos. 185 and 186:

Schedule 2, page 48, line 10, at end insert "of this Act"

Schedule 2, page 48, line 24, after "Part" insert "of this Schedule"

On Question, amendments agreed to.

moved Amendment No. 186A:

Schedule 2, page 49, line 18, leave out sub-paragraph (1) and insert—

"(1) The regulations must identify the process to which persons undertaking activities to which the trading scheme may apply (the "participants") may submit to become authorised to carry out an approved activity."

My Lords, in moving Amendment No. 186A, I shall also speak to Amendments Nos. 186B to 186D, which are grouped with it. A member of my family is involved in carbon trading, but I have no financial interest in that.

Just a week ago today, on the previous day on Report, we heard differing views from all sides of the House on what would produce the most effective and rapid increase in carbon emission savings, and on what was likely to be the best approach to show the way in our own economy. In the course of that argument, I listened with great fascination to the approach of the Minister, who emphasised:

"It would be quite wrong to come along with a whole list of regulations now to snuff out innovation and ideas".—[Hansard, 11/3/08; col. 1426.]

Earlier, he expressed his worries when he said that,

"uncertainty comes about if there is to be regulation, covering everybody, as opposed to hundreds of private sector companies making decisions at any time in a framework of their choosing".—[Hansard, 11/3/08; col. 1424.]

I think we all recognise that the Government have had huge ambitions to be seen as pace setters in making the world a less carbon-dependent place. In its paper, Consultation on the Recommendations of the Climate Change Simplification Project, Defra talks of the need,

"to unlock the potential for cost effective carbon savings".

The question today is: have the Government found all the opportunities that could be employed?

I was interested to hear the Chancellor of the Exchequer in his Budget speech in another place being full of how Britain is already the leading financial centre for carbon markets. Private initiative has meant that London is now the biggest global hub for the international trading of emissions. I am told that the UK is the leading country in the world on the approval of projects under the clean development mechanism, which is one of the Kyoto Protocol mechanisms to which the Minister referred on a previous occasion. The UK is also a global leader in the burgeoning industry for service providers in this arena. However, unlike at least 11 of our European neighbours, when faced with the challenge of the process for project-based mechanisms under joint implementation it has flatly refused to take on board what is likely to be one of the most innovative processes promoted under Kyoto and will still be under its successor agreement.

We all know that cap and trade is still the prime mechanism being used to achieve carbon savings, but it is the ultimate in a top-down regulation mechanism. Under the Kyoto Protocol, an important role was given to bottom-up initiatives, where the market would be one of the forces providing a process of identifying and delivering cost-effective emission reduction opportunities.

With these amendments we are trying to fill in that other part of the picture to which the Minister referred, but, in this case, where a lack of powers that are offered under the Bill could tend to snuff out innovation and ideas. The amendments are put forward in such a way as to give the Government scope to draw up a project-based mechanism which would operate solely within the United Kingdom. I have some detailed suggestions as to what application this could have, but I do not think that I shall bore the House with them now. These amendments would leave the choice entirely in the Government's hands.

The Minister is probably aware that just two weeks ago the German Government launched a pilot project under the Kyoto joint implementation scheme within the state of North Rhine-Westphalia. This will encourage small and medium industrial sites and public buildings, many of which will be much smaller than those targeted under the carbon reduction commitment, to replace obsolete heating and steam producing boilers. The Government will issue the carbon credits that can be verified and sell them. They will then pay the money received to each facility in proportion to the savings that they have generated. Having seen the enthusiasm with which the present London administration embraces carbon saving policies, one can imagine that whoever finally wins the mayoral election could be eager for such an opportunity to embrace this kind of innovation for London.

Will the Minister explain the Government's thinking on joint implementation? Under the Kyoto Protocol joint implementation, any sale of achieved carbon credits requires a surrender of the assigned amount units for what constituted the host country's initial allocation. Is the Government's reluctance driven by the fact that, in their initial calculations under the Kyoto Protocol, they tried to pitch the quantity of our existing carbon emissions so low that they are now terrified that any surrender of these assigned amount units would completely derail their efforts to reach the target that has been set out? It surely cannot be their anxiety because the verification under joint implementation is so much more rigorous than it is under the EU ETS. Or is it simply that because it is a bottom-up process, it produces an unquantifiable outcome? Anyway, the Treasury perhaps has been far too busy with the Budget to produce a considered opinion.

Perhaps I am in some ways producing the same approach as the noble Lord, Lord Woolmer, did on his scheme. But, as I mentioned earlier, the wording of these amendments should give the Government, under advice from the climate change committee, scope to design and implement a UK limited project-based mechanism, which is similar to joint implementation. Verification would be exactly the same as is likely to be required under the carbon reduction commitment and some rule would be required to ensure that it complied with the regulations on supplementarity.

This could have three advantages. First, it would give scope for the innovative talents of British business to assess what they could do with the type of financial incentive that this would offer and thereby make up an area of the ground that the UK Government have lost in leading the international community in domestic climate policy and measures. Secondly, it would drive greater activity in cost-effective greenhouse saving within the UK economy, without involving the loss of credits to overseas. Thirdly, it would give the Government some idea of what the appetite and ability of British industry would be if they decided that participation in the fully fledged joint implementation process, or its successor, was desirable.

Amendments Nos. 186A to 186C would amend paragraph 15 of Part 2 for the schemes encouraging activities to allow the Government to regulate both possible kinds of participants that are in mind. Amendment No. 186D would add a similar paragraph to Part 2, defining what will constitute a carbon credit to parallel paragraph 7, which exists under Part 1, for schemes limiting activities. I beg to move.

My Lords, I accept that this is a complicated part of the Bill. I shall stick to my notes and will deal with it in two parts. Amendments Nos. 186A to 186D would amend the powers to make trading schemes under Part 2 of Schedule 2. This part is defined broadly in paragraph 12. Schemes can encourage any activities which reduce greenhouse gas emissions or which lead to the removal of greenhouse gases from the atmosphere. If the noble Duke's concern is that a particular type of beneficial activity could inadvertently be excluded from a trading scheme, I hope that I can offer him that reassurance. An example of such a scheme is the renewables obligation, and this scheme places obligations on electricity suppliers to supply a certain amount of their power—currently 6.7 per cent of total supply, rising to 7.9 per cent from 1 April—from renewable sources, such as wind or hydro-electricity generation.

Part 2 of Schedule 2 is designed to allow schemes like the renewables obligation to be made in secondary legislation. These schemes encourage an activity by setting an overall target and enabling it to be met at least cost by allowing participants to trade with one another to meet their obligations. Paragraph 15(1) requires that the regulations directly or indirectly identify the scheme participants. It is, of course, vital that the participants are identified in the scheme rules to ensure that all those to whom it applies are aware of the requirements it places upon them; they may be included in the consultation process required by Clause 40. Amendment No. 186A would remove this basic but important element of the powers, and for that reason, the Government cannot accept it.

Together, the effect of Amendments Nos. 186A to 186C would be that a scheme would have to contain details of a procedure by which participants would be authorised to carry out approved activities. Given that schemes under Part 2 of Schedule 2 are meant to encourage certain activities, we are not sure why separate authorisation and approval processes are required. I have listened carefully to what the noble Duke is seeking to achieve with these amendments, but Schedule 2 as drafted already provides the flexibility for the provisions that he is looking for.

Paragraph 15(2) provides that participants may be identified by reference to any, or any combination of, criteria, so again this leaves it open for particular activities to be included in trading schemes, if that is desired. Paragraphs 17 and 19 of Schedule 2 already allow the relevant national authority to control what activities qualify for certificates and set out the circumstances in which trading is permitted. For example, this could be a process like that in place to determine the types of renewables that are eligible under the renewables obligation. We believe that these paragraphs will enable suitable safeguards to be put in place to ensure that participants and activities are controlled appropriately, while maintaining the flexible approach in these powers overall. If it is felt to be beneficial to include particular types of activity in a trading scheme, the Bill as drafted provides sufficient scope to allow this. On that basis, we cannot support the amendments.

The noble Duke made a point about the Government being opposed to bottom-up schemes similar to joint implementation. The UK Emissions Trading Scheme, which ran from 2002 to 2006, was a voluntary domestic emissions trading scheme. Thirty-two direct participants opted into the scheme, representing a variety of organisations from energy intensive industries to the service sector, and encompassing both public and private sector companies, including the likes of BP, British Airways, Lafarge, Marks & Spencer and the Natural History Museum. By committing to reduce emissions, organisations were able to bid at auction for a proportion of the £215 million available as an incentive payment over the lifetime of the scheme. Together, direct participants agreed to reduce emissions by £3.96 million tonnes of carbon dioxide equivalent by 2006.

However, the results in 2006 show that direct participants achieved emission reductions of more than 7 million tonnes of carbon dioxide against the baseline since the start of the scheme in 2002. This shows that opt-in schemes do work, which is why we have included Part 2 of Schedule 2. I hope that reassures the noble Lord that we are keen to provide appropriate incentives to reduce emissions.

Amendment No. 186D would add a new paragraph to Schedule 2 to allow the regulations to make provision for participants who undertake activities which reduce emissions or remove greenhouse gases from the atmosphere to receive credits that they can count towards their trading scheme obligations. I can assure the noble Lord that Part 2 of Schedule 2 will already allow that kind of provision to be made. In addition, paragraph 19 allows a suitable level of control over trading, while paragraph 20 allows interchange with other schemes where that is appropriate.

I hope that, with those reassurances, the noble Duke will see that the objectives of these amendments are already provided for in the Bill as drafted, and I hope that he will not press his amendment.

My Lords, I thank the Minister for that detailed and complicated answer, which will take a little studying to see how it all fits together. I was rather worried when I thought I understood the Minister to say that the regulations would not require participants to be approved, which might open the door to all sorts of things. It is certainly true that the UK Emissions Trading Scheme was a bottom-up scheme simply financed by the Government, and had nothing to do with the generation of carbon credits and allowing people to participate in a carbon credit scheme. If I am not mistaken, it was taken up by some very large interests. The joint implementation scheme I am talking about could encompass a lot of small programmes and small participants.

I am reassured to learn that Part 2 allows for the generation of carbon credits if one of the schemes were to come in. I shall take this amendment away and see whether I need to bring it back at a later stage. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 186B to 186D not moved.]

[Amendment No. 187 had been withdrawn from the Marshalled List.]

moved Amendments Nos. 188 to 190:

Schedule 2, page 51, line 7, at end insert "of this Act"

Schedule 2, page 52, line 42, after "Part" insert "of this Act"

Schedule 2, page 53, line 10, after "Part" insert "of this Act"

On Question, amendments agreed to.

Clause 40 [Procedure for making regulations]:

moved Amendment No. 191:

Clause 40, page 20, line 4, at end insert—

"( ) imposing or providing for the imposition of new financial or other penalties or increasing the amount of existing financial penalties,"

My Lords, Amendments Nos. 191 and 192 provide for a further rebalancing of the relationship between the Government, Parliament and the Committee on Climate Change. These amendments make two changes from the negative to the affirmative resolution procedure and will ensure that the role of Parliament is expanded. They also respond to recommendations made by the Delegated Powers and Regulatory Reform Committee of your Lordships' House. Amendment No. 191 will ensure that trading scheme regulations which introduce new or increased civil penalties are subject to the affirmative procedure under the list of matters set out in subsection (3). Amendment No. 192 will ensure that the first use of the appeal provision in the trading scheme regulations is also subject to the affirmative resolution procedure. Again, this follows a recommendation to this effect from the Delegated Powers and Regulatory Reform Committee. I beg to move.

My Lords, these amendments give new order-making powers which sound like they should be welcomed. However, I feel that we need further clarification before the full support of this side of the House can be offered. The amendments allow the Secretary of State to make regulations that would impose new financial penalties or increase the existing penalties under trading schemes. In the first instance, this seems an improvement. Indeed, fees and penalties may be necessary tools in ensuring that trading schemes are taken seriously and not simply ignored. We do not want to be in a situation where businesses think it worth while to pollute as normal because the penalties are not robust enough to make them change their ways. However, I think that such a scenario is unlikely, as cost savings and competitor and consumer pressures are all drivers for responsible businesses to take carbon emissions seriously.

Notwithstanding, I welcome the fact that these regulatory orders will be subject to affirmative procedure. Any time the Government start discussing charging individuals or businesses, there needs to be a mechanism for thorough scrutiny. We need to ensure that any order that might create through regulation new fees for business is examined as closely as possible.

Can the Minister clarify his position towards imposing penalties? In what circumstances does he see these powers being exercised? Does he feel that there will be a need initially to increase the penalties on businesses for missing targets? Essentially, what is the purpose of inserting this new power? It would be helpful for everyone to understand more clearly how the imposition of fines will work in relation to the trading schemes. Does he foresee a substantial shift in the amount of fines that will be levied? What measures will have been taken to inform the business community about the Government's position on the future of fees and emissions?

This also brings to mind the way in which business's commitment will be calculated. If there is not a robust mechanism for measuring and reporting on emissions, how can business be asked to be held to account in a proper fashion? The National Audit Office review on UK greenhouse gas emissions, published this week, noted that the Government currently use two different methods of calculating our national emissions, one which includes the pollution from aviation, and the other, which does not. Unsurprisingly, each method produces considerably different results. The NAO report rightly criticises the Government for then using both sets of data interchangeably, even within the same document, to produce a statistic favourable to their current argument. Surely such an a la carte approach to emissions accounting is anathema to responsible business, which needs consistency and market clarity above all else. How are business emissions to be calculated? Will the Government specify the ways in which emissions must be calculated before they decide on the mechanism for levying fees? That seems essential. Will the ground continually be moving under the feet of responsible business?

Before many of the orders to be made under this Bill are carried out—and it seems that most of what will happen under the Bill will have to come through orders—a firm system should be in place to address the issues in the NAO review. The issue of financial penalties is a choice example of how unclear reporting procedures will lead to a bungled application of the measures intended to curb emissions. Though it might sound a bit tangential, it is very important to this amendment that we have clear assurances on how the Government intend to handle the issues presented in the NAO report. In general terms, how do the Government plan to make regulations to reduce emissions when it is unclear what those emissions are?

My Lords, I apologise if I overstepped the mark here, but I have simply moved two government amendments the only purpose of which is to change the procedure under the Bill, at the point when action is taken, from the negative procedure to the affirmative procedure. I have not changed any powers whatever in the Bill. Nothing has changed. That is all that has happened. In these two amendments we have simply changed Parliament's voting powers so that Parliament can deal with these issues under the affirmative resolution.

The issues which the noble Lord raised go way beyond these two amendments. If we were in Committee I would probably have a wad of notes saying how we might operate this. On the other hand I might be advised that we will not know until the situation arises. But all I have done here is to ensure—on the very issues which the noble Lord raised—that Parliament has the opportunity of a debate under the affirmative procedure when these powers are used, rather than it being slipped through under the negative procedure. I say "under the negative procedure" as though that does not matter, but the Merits of Statutory Instruments Committee will always look at these issues and draw the House's attention to them if it thinks that we have got them wrong. All the issues that the noble Lord raised would rightly be raised in such a debate and in a vote under the affirmative procedure. I cannot go into any other detail on the issues he raised.

On Question, amendment agreed to.

moved Amendment No. 192:

Clause 40, page 20, line 7, at end insert—

"( ) Regulations under this Part are subject to affirmative resolution procedure if they are the first such regulations to contain provision under paragraph 31 of Schedule 2 (appeals)."

On Question, amendment agreed to.

Clause 48 [Report on impact of climate change]:

moved Amendment No. 193:

Clause 48, page 21, line 30, leave out from "lay" to "containing" in line 31 and insert "reports before Parliament"

Government Amendments Nos. 193, 198 and 204 delete the words "from time to time" in Clauses 48, 49 and 50 and then tidy up the grammar. We are making these amendments to reassure noble Lords that we understand the urgency of adapting to climate change, and I hope this will clear up some of the confusion over the reporting timetable set out in Clause 48(2) and (3).

On government Amendment No. 202, as I set out during our earlier debates, the Government believe that Parliament is the body best placed to scrutinise progress on adaptation to climate change. To ensure that there can be proper scrutiny, we need to ensure that regular progress updates are provided to Parliament on how we are doing in addressing the impacts of climate change.

We have listened to concerns raised in Committee and therefore have tabled government Amendment No. 202, which requires mid-term reporting on progress in implementing the adaptation programme—that is, no later than 30 months after the last programme was laid before Parliament. These new mid-term reports will contain an assessment of the progress made towards implementing the objectives, proposals and policies set out in the five-yearly programme. We believe that the mid-term report is an appropriate response as it will provide more regular updates to Parliament. It also ensures that we can maintain a long-term approach to adaptation, balancing reporting needs with efforts on delivery.

I turn now to the other amendments in this group, Amendments Nos. 194, 196 and 199. While I appreciate the concerns that we need to ensure that we can quickly identify and respond to the more immediate climate tasks, we do not believe that these amendments are the correct way to achieve that. Amendment No. 199, calling for yearly updates on the programme, is unnecessary. The Government's amendments to the Bill, and the usual departmental reporting processes, will ensure that Parliament receives regular updates on progress of the programme.

There must be policy continuity. The national programme for action is unlikely to be overhauled on a yearly basis, and we need to allow sufficient time for the measures to take effect. Reporting fully every 30 months, as in the Government's amendments, is therefore a more measured approach.

I thank the noble Lord, Lord Crickhowell, for raising in our previous discussions the possibility of using departmental reports to provide further information to Parliament and strengthen its ability to hold the Government to account on progress. We have considered this, and can reassure your Lordships' House that Defra's annual departmental report will provide updates to Parliament on the government-wide adaptation programme. Across government, where the impacts of climate change are likely to affect the delivery of the departmental public service agreement targets, other departments would be expected to report on this issue as part of standard reporting practice.

I am unable to accept the proposals for yearly risk reporting under Clause 48 as set out in Amendment No. 194. That would compromise the need to build an accurate evidence base on which we can develop policies. As I explained in Committee, we firmly believe that it will not be possible to produce a comprehensive risk assessment more frequently than every five years. This is an immensely complicated and comprehensive piece of work and the scientific data and computing capacity are not available to provide meaningful updates to the climate models more regularly than every five years.

Adaptation requires a long-term approach. However, we recognise that there is a need to asses more immediate risks and to manage emergency responses. To inform medium-term planning, the Cabinet Office already undertakes a yearly national risk assessment process looking at all major risks to the United Kingdom, such as outbreak of pandemic flu or chemical spills and so on. This is focused on a five-year timeframe and is not so heavily reliant on the climate change science. The risks from flooding, for example, are currently routinely considered as part of the UK's risk management processes. A programme of work to address some of the risks at national level is detailed on the UK Resilience website. A separate process of annual risk reporting would duplicate this process and is therefore unnecessary. We will of course ensure that the Cabinet Office process is informed by the longer-term risk assessment and national programme under Clauses 48 and 49, and vice versa.

We also need to maintain flexibility on reporting in order to respond to other work being done internationally or to major events, and to align national reporting with our international commitments, which is likely to be every four or five years. That is why we cannot accept Amendment No. 196, which would remove our ability to respond to new developments, events or advances in science. As I said in Committee, we want to reassure noble Lords that the Government have plans in place to fully meet the reporting requirements and we do not expect to have to extend the reporting period.

On that basis we feel that the Bill's existing provisions for risk reporting, coupled with our proposed new amendments, are appropriate, will provide the best information and will allow for a comprehensive response. It would be futile, self-defeating and a waste of taxpayers' money to produce the risk assessment more regularly.

I therefore hope that noble Lords will accept that we listened to what was said in Committee, and that they will take on board the assurance about departmental reports to Parliament and the fact that the Defra report will cover the government-wide approach. Taken together as a package, the Cabinet Office national risk assessment process, picking up the short-term risks, and the government amendment on mid-term reporting will provide robust scrutiny of how well we are dealing with the impacts of climate change. I beg to move.

I have to tell your Lordships that if Amendment No. 193 is agreed, I cannot call Amendment No. 194 because of pre-emption.

My Lords, we welcome the Government's willingness to report on the efforts they are making to mitigate the impacts of climate change; as the Minister pointed out, that is largely the effect of these amendments. The necessity of such a programme now seems finally to have been met with the equal necessity of informing Parliament about the progress of its implementation. We welcome that.

There is still a curious feature in the government amendments in this group. There is no real time constraint on these reports. The government amendments require successive reports to be laid before Parliament at least every 30 months—two and a half years—after a programme has been created. For the report to be meaningful, it must come some time after the programme has been implemented. However, there is no timeframe for the programme. Is two years long enough? Surely the progress could be tracked in a shorter timeframe. Can the Minister explain how, for example, he arrived at 30 months?

These amendments refer also to the section on reports on the impact of climate change. What will be the frequency of the reports? Our amendments propose yearly reports. In introducing his amendments, the Minister said that one year on data collection is not long enough for reportable differences to be noticed. But the government amendments remove the timeframe altogether. The Secretary of State also has in the Bill the power to delay the report for as long as he likes provided he publishes a statement saying why. That is unacceptable. There is a need for stronger provisions to ensure that this information is regularly and thoroughly reported on. The government amendments do not seem to go quite far enough.

My Lords, before the Minister responds to my noble friend, will he clarify his initial contribution? I understand that the Government clearly accept that they will come forward with something every 30 months. The Minster then spoke of other departments feeding into the system, headed up by the Cabinet review every five years. I do not quite understand how you could get those two views together, when one is on a 30-month basis and the other, if I understand the Minister correctly, is on a five-year rotation. I would be glad if the Minister could clarify that.

My Lords, following what my noble friend has just said, when the Minister talks about the input from government departments—which is obviously extremely important—does that include the devolved Administrations? As we have been saying constantly at various stages of the Bill, so many of the matters being referred to are devolved. Will those Administrations be required to feed in to these reports in the way that government departments have? Have they agreed to do that already? Will it work all right? Can the Minister clarify that as well?

My Lords, in Committee we proposed that these reports should be annual. From that discussion, that is not the best way forward and 30 months is the right period for adaptation reports. I therefore welcome the government amendments.

My Lords, I, too, think that 30 months would be the right reporting period, for the reasons given. Can the Minister assure the House that the Government will receive information in sufficient detail for these reports to be significant? On flooding, for example, the responsibilities for the management of drains and waterways are dispersed around the country, ranging from individual landowners, farmers and city councils to river authorities and what have you. Only one has to fail in its responsibilities for the whole system to come apart. I would be grateful for assurance and advice on that.

My Lords, I hope that I can be brief. The noble Lord, Lord Taylor, asked why it was 30 months. Basically, that is half of five years. Annually is too frequent; the noble Lord, Lord Teverson, has accepted that. We thought that we could come up with a sufficient review mid-term.

The noble Baroness, Lady Byford, asked about the Cabinet. The Cabinet Office undertakes these risk assessments already. That is part of the ongoing process of resilience and preparation for all kinds of issues, some of which it would probably be quite wrong to read out for serious reasons. I gave the examples of pandemic flu and flooding or chemical spills. These are major issues which are ongoing as part of the government operation for the public good, to be as prepared as possible for all these issues. However, that is more short-term in the sense that it is looked at annually, in the context of the five years we have worked on, the two-and-a-half year interim reports and the annual checks as a package. That is almost my last paragraph about the departmental reports.

I say to the noble Baroness, Lady Carnegy, that the Bill is approved by the devolved Administrations. In the departmental reports, I therefore take it that I am covering that acceptance—in the departmental reports of the Scottish Executive or the Welsh Assembly Government, or the Scottish Office in terms of Whitehall—and that this information will be covered and put in the public domain.

My earlier point was that Defra's annual report will cover all the government departments so that everything is in one area, except for where the public service agreement targets have to be looked at. It is much better for one report to cover everything. Although Defra may be leading on this, this is a government-wide Bill. My only answer to the noble Lord, Lord Oxburgh, is that the Government will be responding to the report on last year's flooding by Sir Michael Pitt. There were two excellent reports and the interim report certainly went into great detail. He mentioned how all the various bodies involved in potential flooding have to be clarified and how failure by one, whether it is the Environment Agency, local authority drainage, the water companies or the internal drainage boards, throws the effect on the others. The protection of towns against flood risk causes flooding elsewhere. One has to be aware of that and prepared for it before one starts the flood risk process. Those matters will be fully covered in the Government's response to that flooding report which will probably lead to a redivision of responsibilities in due course.

My Lords, with regard to this information being collected, the Scottish Parliament has its own departments. They will all have to collect information before the Scottish Parliament can feed into this Defra report. That is all going to take time and be quite complicated. Have the Government faced up to that? I am just trying to be practical; I am not trying to put a spoke in the wheel. But collecting this information is not just about government departments sitting around the Cabinet table. Departments in Scotland will all have to feed in. Do the Government recognise that?

My Lords, I cannot speak in great detail on this but the reality of devolution is devolution. There is a Parliament in Scotland holding the Executive to account. This Bill will affect the devolved Administrations and the national authorities, but the Parliament in Scotland is the body to hold the Scottish Executive to account, not this House. All I have said is that this is a package Bill agreed with the devolved Administrations. The appropriate procedures as to how the departments of the Scottish Executive report to the Scottish Parliament are for them. But the information will be collected and it will have to be published at some point.

On Question, amendment agreed to.

My Lords, I cannot call Amendment No. 194.

moved Amendment No. 194A:

Clause 48, page 21, line 31, leave out from "Kingdom" to end of line 32 and insert "including the risks of damage to or deterioration of the environment including biodiversity, living organisms and the ecological systems of which they form part, and nature resources; and of the current and predicted impact of climate change"

My Lords, we discussed at some length in Committee the areas of biodiversity, ecology and the environment. These areas are not often mentioned in the Bill as a whole and we feel strongly still that they need to be specifically mentioned. Having listened to the debate in Committee, we have been very modest in our ambitions to include, under the section on reporting and adaptation, the environment, biodiversity, in particular, and ecological systems. We feel that it is vital that these areas are introduced into the Bill and we are disappointed that the Government have not fielded their own amendments on this. I am also speaking to Amendments Nos. 200 and 201. I beg to move.

My Lords, this amendment is very similar to one that we tabled in Committee. We are thus happy to support the ideas behind it. It is absolutely essential to take account of the broad range of impacts of climate change and, indeed, the impacts of the policies which combat it. This broader sense must include the impact on the actual environment and its inhabitants; that is, the report should include the impact on society and on the health and well-being of populations—in other words, biodiversity.

Climate change has far-reaching effects, and the wider our understanding, the better the proposals. Thus, appreciating the impacts on ecosystems and the environment should be a fundamental consideration in the development of policy. We want to ensure that we are preserving the very thing we are trying to protect.

Our amendment that was debated in Committee differs from the Liberal Democrat amendment in that the latter has a significant omission—the economy. Including economic considerations is an important aspect if we are to appreciate the full extent of the impacts of policy. Our relationship with the environment and, indeed, that of populations all over the world, is very closely entwined with economic concerns, or perhaps more aptly, there is always an economic context which, understood and properly reported, could play an enormously beneficial role in the preservation of the environment and our fight against climate change. We cannot ignore a substantial factor that covers decision-making and we feel that this report should recognise that fact. Thus, we are immensely sympathetic to the concerns of this amendment and the arguments expressed by the noble Lord, Lord Teverson, but we believe that its scope could have been slightly wider. Will the Minister explain his approach to biodiversity? Does he feel that it should be part of the report?

My Lords, I support the amendment. Like the noble Lord, Lord Teverson, I feel that biodiversity is not sufficiently recognised in the Bill. It is an aspect of climate change on which there is great public interest and therefore I believe that an amendment of this kind would have widespread public support. As I say, I support the amendment.

My Lords, it is incredibly unfair that the noble Lord, Lord Teverson, spoke to these amendments for less than a minute, whereas my response will make me sound like an old windbag as it will be considerably longer. These are amendments of substance. I am not criticising his response, but it is a shame that it took less than a minute because it will make me look as though I am speaking for too long. I shall deal with them in—

My Lords, I did not add to my speech as we discussed this issue thoroughly in Committee. Consequently, I was trying to be brief.

My Lords, my response will probably be briefer than in Committee, but it must be read out for the purposes of people outside your Lordships' House as well as the other place.

On Amendment No. 194A, I reassure the House once again, as I hope I did in Committee, that the Government develop their policies and deliver their services within the overarching concept of sustainable development. As your Lordships know, we define "sustainable development" as living within environmental limits and achieving a just society by means of a sustainable economy, good governance and sound science. This is why Clause 49(2) already requires the adaptation programme to contribute to sustainable development.

Amendment No. 194A would insert a reference to the environment in relation to the risk report under Clause 48. As I have said, the report will be thorough and comprehensive. It will look at the risks from climate change, and the associated vulnerabilities to these risks for the United Kingdom, including risks to the environment, the economy and society. Amendment No. 194A focuses exclusively on the environment and does not give due consideration to social or economic impacts in the risk assessment.

We recognise that the natural environment provides economic and welfare benefits for human beings, as well as having an intrinsic value in itself. The natural environment will change as a result of climate change, and your Lordships can be reassured that adequate protection for the natural environment will underpin our efforts on both adaptation and mitigation. In developing the risk report in particular, we will draw on the environmental experts from the Environment Agency and Natural England, among others.

We think that it is better that the Secretary of State has a duty to assess all the risks for the United Kingdom, rather than having specific risks listed. As it stands, Clause 48(1) already requires an assessment of,

"the risks for the United Kingdom", arising from climate change. That covers all potential risks, including those factors proposed in the amendments, and therefore the provision is already as wide as it could possibly be. For example, where would the risks to the built environment fit within Amendment No. 194A, and what about the wider important issues, such as the opportunities from climate change and the roles and responsibilities of organisations? If we list some factors, we leave ourselves open to having to list everything, which is not possible given the wide-ranging effects. Under Amendment No. 194A, we might end up focusing too much on some things at the expense of others. I do not know what the amendment adds to existing powers.

I shall jump to Amendment No. 200. The amendment would not have any notable effect as it asks that the objectives of the Government's adaptation programme take into account the risks identified under Clause 48. But the last line of Clause 49(1) already requires that the programme, as a whole, addresses,

"the risks identified in the most recent report under section 48".

So that amendment does not stand the test to be added to the Bill.

I was asked specifically about biodiversity. The Government have already established an adaptation workstream, as part of the England biodiversity strategy, to promote adaptation of relevant policies and programmes in all relevant sectors, including agriculture, forestry, water management and land use planning. The workstream is developing a set of adaptation principles, which will be adopted across all sectors where those implementing conservation management will use them to plan what actions they wish to take to help the natural world adapt to climate change.

We seek win-win situations that deliver benefits for biodiversity as well as allowing for mitigation and enabling adaptation in other sectors. Where those solutions are not possible we need to minimise negative impacts on biodiversity, so we are aware of that where we cannot get the win-win solutions. On behalf of the UK Biodiversity Partnership, Defra published practical guidance on adaptation for nature conservation in a changing climate in May last year, entitled Conserving Biodiversity in a Changing Climate. That sets out six guiding principles for those who plan and deliver conservation of terrestrial biodiversity. We are aware of the issue and, we hope, are on the case.

Amendment No. 201 suggests including a more detailed definition of "adaptation" in the Bill. The Intergovernmental Panel on Climate Change currently uses the definition suggested. As I said in Committee, we have not defined "adaptation" within the Bill because we do not think it necessary to do so. The Oxford English Dictionary defines "adaptation" as,

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

That seems to us to be perfectly adequate. The Government also believe that the ordinary meaning of "adaptation" is clear and simple and see no need to introduce new definitions within a legislative context.

Although the IPCC—I hate saying that—the Intergovernmental Panel on Climate Change's definition is a recognisable definition, and we are not disputing its validity, the danger of having more than one definition of an ordinary word is that it can change the focus in ways which are not necessarily helpful. Taking into account both the threats and opportunities presented by climate change is already covered by the ordinary meaning of "adaptation". If we include this extra definition in the Bill, how do we know that the intergovernmental panel will not update its definition of "adaptation" between now and 2050, although it beggars belief that we will not come to amend this Bill before 2050 for other reasons? I say that but I do not place great weight on that point.

We are, however, prepared to offer as a political commitment that we will refer to the IPCC's definition of adaptation within the statutory guidance under Clause 51. We intend to consult on the guidance when the UK Climate Impacts Programme scenarios are released later this year, and following that process we will have a better idea of what organisations will be using the guidance that we will be seeking and what would be most useful for them. So it would be used in the context of the guidance, but it does not make sense to transpose it into the Bill.

My Lords, the Minister referred to the adaptation report, which came out in May 2007. Presumably, much of that work was done before the climate changes that we experienced last year. I think the Minister will accept that there is enormous pressure on the balance between being able to produce enough food and having food security and the interests of biodiversity and the longer term. I wonder whether the Government have had a review of that document since then, reflecting on the changes that have taken place since last May when the report came out. Clearly, in our country, we are under huge pressures to balance what we need to do to have a vibrant economy and a society that can fulfil itself and our responsibility to the wider nature of wildlife and biodiversity.

My Lords, I do not know, but I suspect and hope that the answer is no; otherwise we are spending loads of time in committees on Whitehall. That document was published last May, which is less than 12 months ago. It set out guiding principles for those who plan and deliver conservation of terrestrial biodiversity. It summarised the current thinking on how to reduce the impacts of climate change on biodiversity and how to adapt existing plans and projects in the light of climate change. With less than 12 months since the publication of those guiding principles, I suspect that it has not been reviewed because it has not been found necessary to do so.

My Lords, I thank the Minister for his reply. I was quite persuaded by his reply on Amendment No. 201; I was positively impressed by it. I will not move that amendment.

Biodiversity and ecology are different from the social and economic issues. Clearly, they all have to be taken into consideration. There are huge lobbies and huge areas of government policy on the economy and the social infrastructure of the country for those to be taken fully into account without writing them into the legislation. I do not think that is the case for biodiversity. That is not in any way a criticism of the Government's awareness and continued efforts in that area, but it is something that needs to be in the Bill, and it needs to be emphasised in this area. We have cut down all the other references to it and therefore it is essential that an area such as biodiversity, which is very much under the radar screen in public understanding and probably in general administrative understanding, should be there. On that basis, I should like to test the opinion of the House.

On Question, Whether the said amendment (No. 194A) shall be agreed to?

Their Lordships divided: Contents, 78; Not-Contents, 145.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendment No. 195 had been withdrawn from the Marshalled List.]

[Amendment No. 196 not moved.]

moved Amendment No. 197:

Clause 48, page 22, line 2, at end insert—

"( ) The Secretary of State must invite the House of Commons Environmental Audit Committee to review every report laid before Parliament under this section."

On Question, amendment agreed to.

Clause 49 [Programme for adaptation to climate change]:

moved Amendment No. 198:

Clause 49, page 22, line 4, leave out from "lay" to "setting" in line 5 and insert "programmes before Parliament"

My Lords, I beg to move.

My Lords, if this amendment is agreed to, I will not be able to call Amendment No. 199 owing to pre-emption.

On Question, amendment agreed to.

[Amendments Nos. 199 to 201 not moved.]

moved Amendment No. 202:

After Clause 49, insert the following new Clause—

"Report on progress in connection with adaptation

(1) It is the duty of the Secretary of State to lay reports before Parliament containing an assessment of the progress made towards implementing the objectives, proposals and policies set out in the programmes laid before Parliament under section 49.

(2) Each report under this section must be laid before Parliament no later than 30 months after the last programme under that section was so laid.

(3) The Secretary of State must send a copy of each report under this section to the other national authorities."

On Question, amendment agreed to.

moved Amendment No. 203:

After Clause 49, insert the following new Clause—

"The Carbon Tax Industrial and Consumer Impact Forum

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

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

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

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

(5) The forum must give due regard to—

(a) increases in the taxation of carbon,(b) changes in relative costs and prices between different sectors of the economy, and(c) the role of the European Globalisation Adjustment Fund.

(6) For each budgetary period, the forum must produce its report not later than six months after the carbon budget for that period has been set."

My Lords, this Bill, for reasons that I will adduce, is like Hamlet without the Prince of Denmark. Filling the gap, which I believe is well within the Bill's scope, would link the carbon budget to budgets in the more usual sense of that word. My amendment concerns the price tag and the means of delivery of these carbon targets. Ministers have two options. One is to deploy whatever arguments are necessary to prove to their satisfaction that it is the wrong amendment, on the wrong Bill, at the wrong time. But as events unfold, I am more and more certain that it is only a matter of time before the principle is accepted as an essential, umbilically linked part of the carbon budgeting at the heart of this Bill.

The second alternative, which I would prefer, is to accept it as an idea whose time has come. This leads to my second main point, which follows inexorably from the first. It is the case for a degree of hypothecation. In other words, a system whereby people can see how carbon taxation money—when I say carbon taxation money, I am referring here and throughout my speech to taxation and related instruments—is being spent successfully, passing carbon reduction milestones on the road map at the right time. Politically, in my opinion, this is a no-brainer—but there has been some temporary switching off of brains in HMG on this so far. However, it is only a matter of time before it is brought forward and I would rather a Labour Government did it properly than someone else tried to do it after acrimonious discussion.

Hypothecation can also be useful in revealing the degree to which the programme can be budget-neutral overall. In other words, taxes in area A could be offset by taxes in area B. This is subject to the qualification that the overseas account, which is the net balance of receipts or payments on overseas credits from the EU Emissions Trading Scheme and so on, will need to be slotted into the UK budget, where the ultimate incidence will lie. Of course there will be the question of what will be in and what will be out of this financial carbon accounting.

One or two examples are very familiar to us. Money from the London congestion charge is going into improvements in public transport. Earlier, the Labour Party objected to it: was it okay for the driver of a Rolls Royce to scatter £50 notes along Piccadilly, pricing the Ford Escort full of lesser breeds off the road? On due reflection, it started to appreciate that, with hypothecation, all those £50 notes would be pushed into public transport. That was the argument of John Prescott and Ken Livingstone—bless them both—among others. It therefore had a socially progressive, redistributive element to it. We are now seeing the increased use of differential taxation rates for motor cars being adopted more widely, not necessarily via congestion charging but, as in last week's Budget, nationwide, with road tax biting differentially on different sizes of engine.

In transport more generally, we have the taxation of road versus rail freight. Such a non-transparent set of taxation arrangements needs to be set out in a proper accounting system. I welcome the consultation exercise on this at the present time, and I think the results will be conducive to a further step forward in the share of rail freight in our freight transport system.

One could go from home heating to aviation, shipping and so on, not to mention plastic bags, but the central point about the consolidation and transparency of carbon tax accounting as a whole is that now is the time for government to step up to the plate before others do. If we are to treat the public as adults, we need an adult transparent accounting system for the income and expenditure on the carbon account. That and the straightforward questions and answers that will flow from it will go part of the way to winning hearts and minds. Otherwise, we will not have a cat in hell's chance of achieving this vast shift from a positive growth coefficient of carbon as the economy goes forward to a negative one. The first thing to avoid, therefore, is being accused of selling a pig in a poke.

Ministers may be nervous about a full-frontal approach to presenting this, but let me distinguish first the technical level and secondly the level of the man and the woman in the pub in Burton-on-Trent. This sort of two-legged approach to looking at public policy was a very useful idea that we always bore in mind when we wrote policy papers at the TUC—of course, the TUC was and remains a paragon of all administrative virtues.

At the first level, I assume that Ministers are paying a lot of regard to the Stern report's implied hypothesis—it might have been helpful if the Minister had been a little more explicit, but it is there in all the research papers—that choking off demand is largely to do with price, which in turn can be effected in a number of ways through taxes and subsidies, which are on the same Treasury balance sheet.

I was interested in the remarks of the noble Lord, Lord Turnbull, on the amendment tabled by the noble Lord, Lord Woolmer, in that the examples that he immediately touched on related to taxation. There can be no doubt that taxation will be at the centre of the stage and that the statistical conventions will be hard to determine. Taxation will not do the whole job, but will do a large part of it—I would say more than 50 per cent of it—but I will be interested to hear whether the Minister thinks that I am in the wrong ball park. The carbon tax forum would be able to commission studies about the price elasticities in different markets. The price elasticity for domestic heating may well be different from the price elasticity of carbon for air travel. I am still a bit of a sceptic about this, until more evidence is available to compare apples with apples. The example of doubling of demand for air travel after halving an air fare can be the same elasticity as putting up petrol by 10p a litre and seeing a slight reduction in growth. The scale of the price is different, and that is all. I should like to see that examined. At the second level, the forum would perhaps need to have something like a road show visiting Burton-on-Trent. I remember doing that in 1965 on the retrospectively, much-derided national plan, but it was a highly productive exercise.

I need to say something about how my amendment fits into the Bill as far as Whitehall is concerned. A few days ago, I rang the Treasury to find out whether it would be briefing a Minister to reply to my amendment. But it said that all these matters were with Defra. I pressed the point and said, "Do you mean that all these taxation and subsidy questions are being decided by Defra?". The man concerned obviously wanted to get me off the phone and said, "All these matters are being dealt with by Defra", and that was the end of the conversation. No one believes that, and I sympathise with the Minister, for whom I have the very highest regard, as he knows, and who has been in the wars recently on so many fronts. Having to respect this line is another cross that he has to bear, but it is one which all of us would have to take up if we were Ministers.

In that connection, I know that some noble Lords have thought that the answer to all this is for the Prime Minister or the Chancellor to chair the Committee on Climate Change. I think that that is the wrong question and certainly is not the rationale of my amendment. The climate change committee has a big job on its hands and I largely agree with the Government's line about not overloading it. But there is another big job to do on what might be called the executive action side, which is for the Government.

If our discussions are to be successful, we must turn to taxation, which raises its ugly head at every turn. No one will want to pay these taxes with great enthusiasm and there will be all sorts of stealth taxes. But that is precisely why we should take the initiative to demonstrate that these are not stealth taxes. They are open taxes, which are openly arrived at after very clear discussion, including with those who will be affected; that is, business and workers' representatives, as well as consumers and so on. That is where the Prime Minister and the Chancellor indubitably have a great responsibility. As we saw last week—this also concerns the Prime Minister—there will be the European dimension: hence, my inclusion in the amendment a reference to the European Globalisation Adjustment Fund. It is in everyone's interests to work closely with colleagues in the EU on this.

But there is the bigger picture of the European dimension in trading and taxation. In 1999, my maiden speech was on the need for a common approach to European energy taxation. Only this past week, as confirmed by the Prime Minister's Statement to Parliament, yesterday, we have seen in effect the beginnings of a British Government shift towards the acceptance that,

"economic instruments, including VAT rates",—[Hansard, 17/3/08; col. 21.]

should be used on a common basis and be deployed as one of the weapons in our armoury. This will fit into a wider jigsaw and I look forward to the analysis of the famous Brussels bureaucrats recognising, as they do, that there is competition between European industries, and competition between European industries and the industries of the rest of the world. On competition between European industries, a level playing field is very desirable and will enable us all to look the rest of the world in the face on a united basis.

We have to put the VAT arithmetic into the whole carbon tax jigsaw puzzle with the emissions trading scheme and the estimate by the European Commission on 23 January that €50 billion a year will be transferred through the scheme to the developing countries by 2020. That is not in 50 years' time but in 12 years, which means starting now, to quote the Chinese proverb. I assume that we in Britain will be paying the best part of €7 billion or €8 billion of that €50 billion, which also needs to be budgeted for. In that connection, the remit that President Barroso has been given by the Council of Ministers is side by side with the review of the energy taxation directive to bring it more into line with climate change objectives, as concluded by the Council yesterday.

It will look into the question of a common European approach entailed in VAT discounts for certain sorts of carbon-reducing products. This is clearly part of a complex exercise of how member states do their carbon budgeting—in the proper use of that term—and it would be useful if President Barroso, in carrying out that remit, were to collect information on how 27 member states are carrying out their carbon budgeting, and how in the financial sense they will present their accounts. The European statistical services will have to raise their game professionally as time goes by on the rather difficult statistical rules on how this should proceed.

There is a paradox in that at the global level the idea of carbon credits is based on the implicit precept in Stern that everyone in the world is entitled to a notional ration card of 1 tonne per annum of carbon. That does not mean that every Nigerian has a ration book, any more than it means that everyone in Burton-on-Trent has one. On a global basis, undoubtedly heavy users will buy the units that the lighter users do not need, which is some sort of redistribution from the rich to the poor. It would be entirely contradictory if the poor were redistributing to the rich in the United Kingdom through regressive taxation. It is rapidly becoming less unfashionable—certainly in the Labour Party—to discuss income inequality in this country. I cannot see how it can be a function of the Committee on Climate Change to take this matter very far. I am not of course averse to it discussing the issue, but it could become a dog's breakfast if everything was piled on to its agenda. We need to find a mechanism, which I believe my amendment to be, for making sure that there is a clear road map for achieving social equity.

Treasury instinct, of course, is to guard every item of information as if it were the secret of how to make an atom bomb. Yet, in adopting that line now it is rapidly becoming its own worst enemy. This hugely ambitious exercise will be largely down to it in an operational sense. As it will take the flak, it had better learn how to win hearts and minds, which means going up and down the country—even north of Watford.

I will listen carefully to what my noble friend has to say and then decide how to pursue the matter this evening and at Third Reading. I gratefully acknowledge the assistance and arguments put forward on parallel lines, publicly and at other levels, by my noble friends Lord Puttnam, who I am glad to see in his place this afternoon, and Lord Whitty, who is unable to be here but who wished me well with the amendment. I know—or at least hope and believe—that such support has been a factor in persuading the Government to pay attention to this analysis and its conclusions.

I know that Rome was not built in a day, but I trust that my noble friend will be able to analyse my points. Even if he cannot say yes today, and accept the amendment at the second time of asking, he might indicate where he has found some constructive points that members of the Cabinet can take on board before the Bill gets to the Commons in a month's time. I beg to move.

My Lords, I support entirely the principle of the amendment moved by my noble friend Lord Lea and I certainly recognise his frustration because I feel it myself from time to time. In a speech made in Japan last week, the former Prime Minister Tony Blair said the following:

"We have reached the critical moment of decision on climate change ... failure to act on climate change now would be deeply and unforgivably irresponsible ... the scale of what is needed is so great that the purpose of any global action is not to ameliorate or to make better our carbon dependence; it is to transform the nature of economies and societies in terms of carbon consumption and emissions".

He finished by saying,

"we're not talking of adjustment, we're talking about a revolution".

Revolutions are not best dealt with by adopting an attitude of business as usual, and there is a sense that much of this Bill has drifted through in such an atmosphere. My noble friend makes a very good point by saying that the party that has failed to come to the table here is the Treasury. From time to time during the passage of the Bill I have felt that in discussions relating to Treasury matters, we are dealing with a small town bank manager who is looking at the bottom line from a very narrow perspective rather than as something that we all agree is urgent and of real global importance.

I hope that when the Minister comes to respond, he will accept the fact that many people, not just in this Chamber but outside it as well, sincerely believe that the degree of urgency running across Government—I am not talking about individual departments because I happen to have the highest regard for Defra—and the sense of a possible revolution in the air are not as palpable as some of us would wish.

My Lords, I shall do my best to answer my noble friend's points. First, however, I want to respond to my noble friend Lord Puttnam on what Tony Blair said. We are doing what he said because that is what is encompassed in this Bill. It will lead to action. Moreover, I share the frustration of my noble friend that this Bill has sailed through your Lordships' House as though the outside world does not exist. I did warn a Member of the other place who I passed on the escalator this morning that they have no idea of what is coming down the corridor. The Bill is incredibly complex and technical, and they will have to dig deep to get at the politics if that is what they seek to dig for—I should add that I was not talking to a member of the Labour Party. That is not to say that we do not do politics in the other place—I do not want to be misunderstood—but the fact is that when the Bill arrives in the other place, it will get reported as though it has not been through your Lordships' House. I share my noble friend's frustration over that, but it is a fact of life. A big success in this place is not getting something reported. We are an unelected Chamber. We are dealing with this Bill, and some issues will be raised in the other place where it is quite right to raise them. However, I think that we have done an absolutely first class job on the Bill, not by revising it because we have dealt with it in the first instance, and we have performed our role. I am convinced that, save for one or two technical adjustments in the voting Lobbies, this Bill will leave the House a much better piece of legislation than it was when it came in.

My noble friend has pre-empted one of my problems with his amendment, which is that using the Bill to set up a new stakeholder forum is not the right way to address his real concerns. I shall explain that in more detail shortly. The point is that the Government are sympathetic to the underlying point. It is absolutely crucial that parts of society understand the challenge that we face and are engaged in the debate. On the other hand, the people of England let alone GB do not want a revolution. They do not want the language of revolution used because it is completely misunderstood. People want to get on with their lives, bring up their families, go to work, have their bread on the table and basically lead a peaceful life. Where the change has to occur, they have to be convinced of it. They have to be convinced of the connection between their daily existence and these planetary issues. It is our job to seek to make that connection—this Bill is a part of that. If we can make that connection we will get changes of behaviour in individuals, families and companies. They do not want it done in a revolutionary way.

When the Government bring forward measures for reducing greenhouse gas emissions it is important that full consideration is given to the economic and social impacts and their distribution over society. I am absolutely four square with that. We work hard to ensure that any new measures, taxes or otherwise, do not have a disproportionate impact. You can have some unintended consequences if you are not careful about these things, the most important being having the electorate turn on you. We need to take people along with what we are doing.

Creating a carbon price through appropriate measures has a number of effects. It ensures that the environmental cost of carbon emissions is taken into account in decision-making, motivating behaviour change and energy-efficient behaviour. That part of the message is slowly getting across. While we do not intend or expect it to encourage firms and households to switch their spending towards other, less emission-intensive goods and services, our policy approach is not a simplistic attempt to choke off demand. We are not seeking to do that. It also provides a financial incentive to deploy and research new technologies which reduce carbon emissions.

To tackle climate change at the lowest cost to individuals in the economy, we need to address the other market failures that prevent businesses and households responding efficiently to a carbon price, particularly in installing energy-efficient measures that will save them money as well as reduce emissions. The carbon emissions reduction target obligations on energy companies represent a doubling of our ambition on carbon savings to be achieved from the household sector through energy efficiency and will be supported by resources for a green homes service to give people the advice and support they need.

My noble friend argues that we should hypothecate tax revenues from climate change-related policies to spending on climate change. This is not as simple as it might sound for a number of reasons. Hypothecation is against widely accepted principles of sound public finance. It is an inefficient means of determining relative prioritisation of competing public expenditure programmes. It links funding for a particular programme to the revenue stream used to finance it rather than to need and increases the risk of unpredictable funding.

My noble friend also made it abundantly clear that he was concerned that the Treasury is not sufficiently engaged in these important questions which, as he rightly identified, have significant implications for the economy, households and government policies and revenues. I assure him that for exactly those reasons the Treasury is closely involved. The Chancellor announced that, recognising the important economic and fiscal implications of the decisions required, the Government would set out their first carbon budgets arising from the Bill and their plans to meet them alongside the Budget of 2009. I am not the spokesman for the Treasury in your Lordships' House but my noble friend Lord Davies is. He dealt with the issue in Committee as we are dividing up issues. The Treasury is intimately involved in all the discussions of the Bill and all the amendments the Government have brought to your Lordships' House. None of those has been brought forward just by Defra Ministers, as noble Lords will appreciate; they have been brought forward on behalf of the Government. Indeed, some amendments have not been brought forward because of governmental discussions, even though I have been pressured to do so. Sometimes that has been because of the financial implications of the measures where, as I have said before on some issues, we want to maintain the maximum possible flexibility when we are seeking to change the behaviour of businesses and individuals. We do not want to get caught by the unintended consequences of what looks like a quick fix.

As my noble friend Lord Davies said in Committee, the Government are working with the public and business to raise awareness of climate change and the challenges to come, to a greater or level degree of success. Last June we launched a web-based calculator that enables people to calculate their own individual or household CO2 footprint from their use of home energy, appliances and personal transport, and recommends steps users could take to cut their own emissions. We Defra Ministers used that calculator, and I have to say it was not always a happy story. I do not know how many hits the website has had, but we encouraged people to use it and lots of them have.

We are targeting substantial funds to help support disadvantaged households and tackle the effects of increased energy prices, which are primarily the result of changes in international energy prices rather than environmental policy or the EU emissions trading system. For instance, since the year 2000 the Government have spent in the region of £20 billion on tackling fuel poverty across the UK. That includes funding for fuel poverty programmes and benefits such as Warm Front, the decent homes programme and the winter fuel payments. In addition, Defra has funded a range of grant schemes that have helped to support environmental objectives in tandem with social justice.

As well as specific policies already being in place to address social justice issues, it is crucial that future policies are also designed the right way. As my noble friend Lord Davies explained in Committee, a rigorous impact assessment process is already in place to ensure that the wider impacts of all government policies are taken into consideration from the start of their development.

My noble friend Lord Lea mentioned the Stern report. The report's executive summary makes the following helpful point:

"With strong, deliberate policy choices, it is possible to 'decarbonise' both developed and developing economies on the scale required for climate stabilisation, while maintaining economic growth in both".

The overlying message of the report of the noble Lord, Lord Stern, who was not then a noble Lord, was that if we start now we can do it at virtually no cost to the economy; leave it 10 or 20 years and it will be a major cost to the economy and individuals. So we are starting now.

The global policy framework to tackle climate change is the pro-growth strategy for the longer term. The economy will continue to grow but at a slightly lower rate, in the order of 1 per cent slower than if there had been no other constraints including climate change. For those reasons we cannot see the need for a specific forum as proposed by my noble friend Lord Lea, but I hope he is reassured that social justice and equity are at the heart of government policymaking in total and will be given full attention as we work towards meeting our carbon budgets. I have no doubt that when the Bill get to the other place—that needs to be as soon as possible, otherwise we are going to miss out on all the budgetary deadlines set for later this year—these issues will be raised by the elected Members, but they will get the same answer about the way the Government are operating.

There is a large degree of consensus—although I am not claiming support from anywhere in particular—about the way we are trying to do this. It is not revolutionary; it is evolutionary, but with all haste. The Bill is here, we have made the necessary preparations for the climate change committee and we have set out our stall. That is why the former Prime Minister can justifiably go around making speeches on the basis that the UK is giving a lead. If we were not doing this it would be much more difficult for Tony Blair to make those speeches, but he knows that we are on our way to giving a lead to Europe and the world, even though we are relatively small emitters of greenhouse gases. I hope that, on that basis, my noble friend will be reassured that we are taking on board social justice and equity, and will not push his amendment.

My Lords, I am grateful to my noble friend for being so constructive in his response and to my noble friend Lord Puttnam for his remarks. One point that was made en passant was new to me: in 2009 there will be what I shall describe as the financial carbon budgets side by side with the quantitative carbon budgets. That is certainly a step forward.

I agree with the noble Lord, Lord Stern, that we can grow the GDP. What concerns me is not the theory that we can but that, to use a variation on the word "revolution", there could be a revolt. People will find that they are being hit by taxes to choke off demand. We need to have more discussion at some level or other about whether the argument made by Oxford Economics, which was the economic basis of some of the review's analysis, is true, as I am saying. The argument is that the 30 per cent reduction from trend over the next 20 years will be from choking off demand through price. That is where ballpark numbers are quite important; my guess is that taxation will be responsible for at least half of that. This is the sort of thing we need to get nearer to, and I do not think this is the climate change committee's area of expertise.

I know that hypothecation is unfashionable. When I did my economics at Cambridge many years ago I did a special paper on public finance, and I remember all the arguments that were stacked up to say, "It is a very bad thing!". As we have seen with the congestion charge and the £50 notes going to buses or something, the issue is about winning hearts and minds. It is a question not just of economic theory but of how you get people to see that this is where their money is going and that is what it is being spent on. This is a revolution in terms of a huge change of economic structure. I have not even mentioned anything about employment structure and workers' representation, but all of those things are affected.

I shall not push this further today, naturally, but something like a carbon tax forum—I do not mind what we call it—is an idea whose time has come now. It will be overdue when it is finally introduced because those people in Burton-on-Trent will not know what has hit them. Helping them understand it is a job that, at present, the Treasury is not supremely good at.

I look forward to these issues being further debated in the Labour Party and all the other political parties. Before the Bill gets to the House of Commons, the Government may wish to reflect on whether they can clarify what my noble friend asserted was going to happen—what the Government will and will not do. I think he said half an hour ago on a different amendment that he thought there might be one or two amendments to the Bill in the next 50 years. I hope he has clearance in Whitehall for saying that; I would not like anything bad to happen to him. Anyway, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 50 [Programme for adaptation to climate change: Northern Ireland]:

moved Amendment No. 204:

Clause 50, page 22, line 23, leave out from "lay" to "setting" in line 24 and insert "programmes before the Northern Ireland Assembly"

On Question, amendment agreed to.

Clause 52 [Directions by Secretary of State to prepare reports]:

moved Amendment No. 205:

Clause 52, page 23, line 11, after "authority" insert "(and shall direct all priority reporting authorities)"

My Lords, I shall speak to Amendments Nos. 206, 208 and 210 as well. This group of amendments would, once again, strengthen the adaptation roles of the Bill. We are trying to ensure that only the most important public authorities are directed to make reports about adaptation and plans issues. It is important that this happens because we need to get on and do this, but only with respect to certain authorities. We believe that public authorities and critical infrastructure providers must assess the risk posed by climate change and take action to address it.

One reason why the amendment is needed is illustrated best by the Government's Amendment No. 209, whose drafting almost gives politics a bad name. It states:

"It is the duty of the Secretary of State to lay reports before Parliament setting out how the Secretary of State intends to exercise the powers under section 52".

This is a direction to think about something that one should perhaps direct, but it seems a highly indirect approach. Our amendment states that this is important, and that priority authorities should have a duty to do it. Amendment No. 210 provides that the priority reporting authorities should only be category 1 and category 2 responders, which includes emergency services, National Health Service providers, utilities, local authorities and the Environment Agency.

The amendment is very selective—it imposes a duty. If we are right about the threat of climate change and adaptation is as important as we say it is, then this is a measured, but firm, response to make sure that, as a nation—locally and regionally—we are prepared. I beg to move.

My Lords, we are grateful for the arguments presented by the noble Lord, Lord Teverson. We have put our names to the amendment to highlight our desire to alleviate the confusion regarding the duties on public bodies for reporting on adaptation to climate change. Who will this duty fall upon? On what size of body will it fall? Will every school be required to produce a report, or every local authority? There needs to be much greater clarity about who will be responsible for reporting.

Government Amendment No. 209 requires a report to be laid after 12 months outlining how they intend to exercise the power to give directions to local authorities. However this is simply deferring the issue. The Minister noted in Committee that the Government should wait until the results of voluntary action by local authorities under the new local government performance framework had been collected. Can the Minister give us any indication of the success of these programmes? Does he think that voluntary action is sufficient? If the Minister intends to place a duty to report, we feel that it is very important that the scope of the type and number of institutions that will be reporting and the nature of their reports is completely clear and explained.

My Lords, when we last addressed these issues I spoke of my experience as chairman of the National Rivers Authority for more than eight years, dealing with flood protection and flood emergencies. I followed immediately on from the noble Baroness, Lady Young of Old Scone, chief executive of the Environment Agency. She spoke of her experience and of her responsibilities in exactly the same field in recent months and years. I suggested to the Government that, in the light of the absolutely united views of her people, who have been responsible for those bodies over many years, they should take very seriously what was being said to them.

In a debate on a previous amendment, the Minister said that we are starting now. But, as the noble Lord, Lord Teverson, rightly pointed out, the government amendment on this issue hardly involves starting now: it tells us that in 12 months' time the Government will report on how they intend to exercise the powers of giving direction. Yet, if the noble Baroness, Lady Young of Old Scone, were here—I understand that she is attending a board meeting today—she would point out that this is a matter of great urgency. We are dealing with these emergency situations now. We are likely to be dealing with them in the near future. However, a number of the organisations which are most involved and where it is most likely that urgent action needs to be taken are not showing many signs of urgency at present.

My noble friend Lord Taylor referred to the new local government performance framework. My information is that the results so far show that only about a third of local authorities have adopted the climate change adaptation performance measures as important for them. It does not suggest that they are showing great urgency.

We have heard from the Environment Agency that a number of the key players in this game, such as the water supply and sewerage services, are not showing great signs of giving these issues the priority that is needed. We heard the excuse provided by the Minister on a previous occasion that if we had a wide-ranging requirement, there might be as many as 25,000 bodies receiving instruction. However this amendment deliberately bases the duty on the category 1 and category 2 organisations defined in the Civil Contingencies Act. They are the emergency services, National Health Service providers, utilities, local authorities and the Environment Agency. Surely there can be no question that those organisations should be getting on with it as a matter of urgency. The Government should be making it clear to those organisations now, or as soon as the Bill is enacted, that they will want to know how those clear duties are being addressed.

It is no good putting this off. The Government will look foolish if, while the Secretary of State is considering what report he should lay before Parliament about what action he may take at some date in the future, there is a major emergency such as a flood disaster or another east coast flood of the kind that we have experienced in the past. If we find that the electricity utilities, for example, have not taken effective action or that other bodies which might be disastrously hit in such a flood have not taken preliminary measures, the Government will rightly be blamed for not giving this priority and for a lack of urgency.

All we are urging the Government to do is take this issue as seriously as it needs to be taken, not to delay and to get on with it. I therefore strongly support these amendments and urge the Government to take them more seriously than they appear to have done so far.

My Lords, the noble Lord, Lord Crickhowell, has made many of the points that I would have made. It is a question of small, local bodies putting this matter sufficiently high on their priority list. This should not be seen as an imposition on those bodies, but as a help in so far as, on an everyday basis, the people allocating resources—money, time or what have you—have 1,000 immediate short-term pressures on them. It is difficult for them to say, "These matters which may impact us in four, five or 10 years' time must be worked on now". However, if they can answer their local electorates, officials or councils and say, "The Government require us to do this", they can do it. It is a matter of getting inside that mentality, and giving them the support they need to give this important area the priority it must have.

My Lords, I sometimes wonder whether, when we talk about priorities, we remember that all these clauses mean that Britain is trying to be an exemplar to the rest of the world. I wonder whether we fail to see the wood for the green trees.

The world population will increase by 3 billion people over the next 30 years. That totally overwhelms anything we could do to alleviate climate change. There is a big selling job to be done to get the British public on board as to the realities of the sort of measures we are suggesting. Although I totally accept that so many of these measures are proposed for the best possible motives, we must remember that they will not make the slightest difference to the climate change we are so worried about.

There are measures we can take, but they are on a much more international stage. I agree that measures such as these will help us to show what good world citizens we are, but the point will come when the British public will get fed up with being good world citizens and look to the rest of the world to do its stuff. We should paint all our endeavours against the world situation and, as I repeat, try to see the wood for the green trees that are preventing us seeing the world situation more clearly.

My Lords, I rise to support the amendment. I have little to add to the terrific speeches of the noble Lords, Lord Crickhowell and Lord Oxburgh. However, I want to make one additional point; the noble Baroness, Lady Young of Old Scone, is not here and I suspect it is something that she would have wished to say. Maybe, because of the difficulty she may have as chief executive of the Environment Agency, I can put it a little more plainly.

The Government, as the noble Lord, Lord Crickhowell, has rightly said, will get the blame if, as and when there is a disaster. They will quite likely seek to lay the blame and responsibility on the Environment Agency. Is it reasonable or sensible, politically or morally, not to take the firm advice of the Environment Agency on this matter, and allow this amendment to stand?

My Lords, I will in due course speak to government Amendments Nos. 209 and 229 in this group. In doing so, I hope to reassure your Lordships' House that the Government have taken on board the debate we had in Committee. I want to reassure your Lordships that the Government have a commitment to ensure that vital services, critical infrastructure and the natural environment are protected through appropriate action to adapt to climate change.

The government amendments will ensure that there is greater transparency over, and an early report to Parliament on, the authorities which are a priority for adapting to a changing climate. But they also set out a flexible and proportionate approach, now and into the future, which will ensure that we can respond to the impacts of climate change quickly, without the need for future primary legislation. They would place a new duty on the Secretary of State to lay reports before Parliament, setting out how he intends to exercise the power to give directions to reporting authorities to prepare adaptation reports under Clause 52. These reports by the Secretary of State will outline the circumstances in which such directions will be given, and those reporting authorities that are a priority. Before laying the report before Parliament, the appropriate persons or bodies will be consulted. Government Amendment No. 229 also lays out a similar arrangement for Wales.

We are determined to provide this information as soon as practically possible, taking on board the points made in Committee about the timescale for government action. Amendment No. 209 therefore proposes that the first report under this new clause is laid before Parliament no later than 12 months after this Bill is enacted. In order to meet this deadline, we expect the public consultation to be held before the end of the year, so we are taking action as quickly as we possibly can. Subsequent reports will be laid no later than the next adaptation programme under Clause 49. In this way, we will create a robust mechanism for regular and ongoing reviews of those organisations that need to be acting on adaptation, as our knowledge grows.

I hope that these amendments will provide sufficient confidence in the decision-making process and help provide clarity to reporting authorities as to which of them are considered to be priorities. I hope that it also reassures the House that the Government expect public bodies to assess risk and take action. There is also a small set of technical amendments in my name: Amendments Nos. 234 to 239 make some amendments to the table of definitions in Clause 79 to reflect the changes made to the Bill in Committee.

Turning to Amendments Nos. 205 to 208 and 210, I have seriously considered the points made in Committee about the merits of placing a blanket duty on those bodies listed in Schedule 1 to the Civil Contingencies Act. However, we remain convinced that a power to request reports from these or other organisations, as set out in Clauses 51 to 59 and reinforced by the government amendments, is more appropriate—and, indeed, more effective—than placing a blanket duty on all organisations in the civil contingencies list, for the following key reasons.

First, identifying a particular group of bodies now is too prescriptive and inflexible. Under government Amendment No. 209, we will be able to identify those bodies that are a priority, not just now but in the future, without the need for further legislation. This is because the list of reporting authorities referred to in Amendment No. 210 has been set in primary legislation and cannot be updated except through further primary legislation. In addition, specifying bodies under the Civil Contingencies Act signals that adapting to climate change is solely about emergency response. We recognise that this is an important issue, and those organisations with responsibilities under the Civil Contingencies Act will, in any case, need to be planning for risks to human welfare, the environment and security under their existing statutory duties.

However, we also want to send a strong signal that climate change can impact on any public body, not just those identified as responding to national emergencies. Impacts can be gradual—heat, water stress—as well as sudden, and will impact different bodies in different ways. In some sectors there may well be opportunities as well as risks, such as some potential benefits for health and agriculture.

Furthermore, the Government's approach has the potential scope to cover up to 20 times more bodies than the civil contingencies list. For instance, organisations such as drainage boards, which may be identified as vital in responding to emergencies, are not covered by the list referred to in Amendment No. 210 but will be very important in our long-term response to climate change. This example highlights the inconsistency in the proposed approach. In fact the noble Lord, Lord Crickhowell, used a figure that I had given previously of some 25,000 authorities covered by the definition. In fact, we are now up to 28,000—

My Lords, I do not interrupt the Minister lightly. Maybe I misunderstand our own amendment, but it does not stop the Secretary of State having that discretion in the Bill. It says that the Secretary of State "must" in terms of the priority authorities. He still has all the authority to ask others to as well, so I do not understand that argument. The Secretary of State can ask those bodies without any change in primary legislation. All we are saying is that, for priority 1 and priority 2, he must; for the rest, he can.

My Lords, if I have misunderstood that, I apologise and I will come back to the noble Lord before the debate is finished.

The Civil Contingencies Act covers about 1,400 bodies whereas the definition we propose includes about 28,000 statutory undertakers. These are bodies such as schools, higher and further education institutions, public bodies sponsored by government departments, the Prison Service, probation boards and inspectorates, and royal colleges. Although we will apply a risk-based approach to targeting specific organisations, we do not envisage requiring all the 28,000 bodies to report. The definition we are using has not changed but we have now conducted some further work and believe the number covered to be closer to 28,000 and not the 25,000 that the noble Lord, Lord Crickhowell, used. That is the reason for the figure. I am trying to update as we go along.

Secondly, a blanket duty would be overly burdensome and counter to the principles of better regulation that the Government are committed to and that your Lordships' House has supported. The Better Regulation Commission's report on risk and climate change noted that the Government should keep administrative burdens to a minimum. We have accepted all the recommendations from the commission's report and fully intend to adhere to them. As I have already noted, category 1 and 2 responders under the Civil Contingencies Act will already be assessing climate change risks where appropriate, so an additional duty specifically on this group will be particularly unnecessary and burdensome. That may go some way to answering the noble Lord.

Thirdly, our approach of using a power would also offer more flexibility and autonomy to local and regional government. We do not seek to micromanage local services and place new unnecessary burdens on local authorities. We should let the experts on the ground who understand their areas and their risks have a chance to take responsibility for action. This approach is broadly shared by the Local Government Association, whose views we discussed in Committee. I want to take this opportunity to thank Councillor Paul Bettison, chairman of the Local Government Association Environment Board, for his letter clarifying the position of the Local Government Association and the LGA's climate change commission on this issue. His letter states:

"The LGA believes that the imposition of a specific statutory duty on councils to report on adaptation before the new performance indicators or comprehensive area assessments have been given a chance to bed in represents a disappointing step back towards centralism".

We believe that the proposals in Amendments Nos. 205 to 208 and 210 are not targeted at all the right bodies and do not take account of the changes in priorities which may take place between now and 2050. We also believe that they are burdensome and disproportionate and that they run counter to the expressed wishes of local government representatives for a more flexible approach which devolves more responsibility to them. For these reasons we cannot accept the amendments and we think that the Government's amendments offer a better package.

I will make a couple of points in answer to the noble Lord, Lord Taylor. He asked how successful the local government performance indicator is. It started only this year so we cannot answer that yet. The success will be reviewed through the existing local government performance management process. He asked how the power would be used and who will apply it. In a way that is the point of the strategy. It will outline who needs to act, why and when. Any decision by the Secretary of State or Welsh Ministers to require a report will be made primarily in the light of, first, the level of progress being made on adaptation by that reporting authority and, secondly, how important that organisation is to the UK's ability to adapt. These factors will of course be underpinned by scientific knowledge, evidence from specific events—for example, the hot summer of 2003—the risk assessment in Clause 48 or the adaptation programme in Clause 49. We will not, and indeed should not, wait for the national risk assessments to be completed to use the power. There is already some evidence to say broadly which types of organisation need to be factoring in climate change to their plans.

The new report required by government Amendment No. 209 will require us to set out our strategy for using the power within 12 months of the Royal Assent. To do this we will supplement our existing knowledge with a survey of our capability to deal with climate impacts and look at the mechanisms which already exist to ensure key organisations consider and manage their risks; for example, the new local authority performance indicator on adaptation to ensure local authorities are taking action, or a duty on energy suppliers to ensure the continuity of supply. The power is designed to mesh with, and not duplicate, other activities to mainstream adaptation into ongoing work; for example, the new local government performance framework and the water strategy, Future Water, which was published in February. In future the regular Clause 48 risk assessment will give us a more informed understanding of the risk faced and who needs to act.

I apologise to noble Lords for the length of the reply. I hope I am not asked to read out all the other bodies that might be affected. One can look them up. By rule of thumb England alone probably has 20,000 primary schools and 4,000 secondary schools but they do not all necessarily have to report. That is why the number of bodies is much greater than the number covered by the Civil Contingencies Act. I hope I have satisfied noble Lords. I have not received any further and better particulars to answer the noble Lord, Lord Teverson, but I may have answered him in the further points I came to in my speech.

My Lords, I thank the Minister for his reply. I still think our amendment has the best of both worlds in that it allows for organisations to be specifically targeted by the Secretary of State but demands, in terms of long-term national security, that certain organisations have a duty to bring plans. From that point of view this amendment is far superior to the Government's amendment. I recognise that the Government have a timescale for the process. I should be delighted if the Minister could withdraw his amendment and think about it again but I am sure that will not happen. I find it very difficult to know where to go from here.

In terms of the devolution of power, even as a Liberal Democrat I think there are certain areas where the Government have responsibilities. The drawing up of adaptation plans will be naturally devolved. They will be local plans or plans by individual national bodies under categories 1 and 2. I am sorry I cannot convince the Minister. There is a real issue here which I would certainly wish to think about further. I say to the Minister that the solution he has at the moment is genuinely not the best one. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 206 to 208 not moved.]

moved Amendment No. 209:

After Clause 54, insert the following new Clause—

"Report on exercise of power to give directions

(1) It is the duty of the Secretary of State to lay reports before Parliament setting out how the Secretary of State intends to exercise the power under section 52 to give directions to reporting authorities.

(2) The reports must, in particular, identify—

(a) the circumstances in which directions are likely to be given, and(b) the authorities or kinds of authority to whom the Secretary of State considers directions should be given as a matter of priority.

(3) Nothing in a report under this section affects the exercise of the Secretary of State's power under section 52.

(4) Before laying a report under this section before Parliament the Secretary of State must consult such persons likely to be affected by the report as the Secretary of State considers appropriate.

(5) The first report under this section must be laid before Parliament no later than 12 months after this Act is passed.

(6) Subsequent reports must be laid before Parliament no later than the time when the next programme under section 49 is so laid.

(7) The Secretary of State must send a copy of each report under this section to the other national authorities."

On Question, amendment agreed to.

Clause 59 [Interpretation of sections 51 to 58]:

[Amendment No. 210 not moved.]

Schedule 5 [Waste reduction schemes]:

moved Amendment No. 211:

Schedule 5, page 62, leave out line 8

My Lords, in moving government Amendment No. 211 in the name of my noble friend Lord Rooker I shall speak also to government Amendment No. 220.

These are drafting amendments designed to improve the quality and consistency of the drafting. The two amendments, in combination, move the definition of "specified" in paragraph 1(3) from the main body of provisions in Schedule 5 to the "interpretation" section. This "interpretation" section contains all the other definitions of terms used in that schedule and is therefore a more logical home for the definition of "specified". I assure the House that the amendments have no further effect beyond improving the quality of the drafting. I beg to move.

My Lords, having looked at this group, there is nothing to which we wish to object. It seems to put all the meanings in one place for easier reference, which is always helpful.

On Question, amendment agreed to.

moved Amendment No. 212:

Schedule 5, page 62, line 35, leave out "or 5"

My Lords, when we discussed the waste provisions in Committee a few weeks ago, I mentioned that, as set out in the consultation paper, we would give local authorities powers to be able to charge according to how often residents have their waste collected and in relation to tags or other identifiers which residents must attach to their waste receptacles. I said then that we might bring forward amendments to clarify that these charging methods are available as well as those already provided for in paragraphs 4 and 5 of Schedule 2AA, which is to be inserted into the Environmental Protection Act 1990.

These types of schemes are straightforward and have operated successfully overseas. For example, Shell Harbour in the United States introduced a frequency-based scheme which led to a 45 per cent reduction in waste sent to landfill. Meanwhile, a combined frequency and volume-based scheme in Ludwigshafen—I should have considered how to pronounce that name before I said it—in Germany reduced waste levels by around 15 per cent. If an authority thinks it is appropriate for its area, it is right that such a model should also be tested in England.

A frequency-based scheme could work by residents choosing how often they wish to have their waste collected. Those opting for a more frequent collection than the standard service offered by the local authority would pay extra. Rebates could then be redistributed to those whose waste is collected less frequently. Alternatively, residents could decide from week to week whether to leave their bin out and then be charged or rebated according to how many times their waste had, in fact, been collected.

Under a tag-based scheme, residents would pay for identifying tags or stickers which they must place on their waste receptacles each time their waste is collected. Rebates would then be paid back to residents on a flat-rate basis, with the effect that some households make a net gain—in other words, pay less—and others end up paying more overall. Again, such schemes are already operating successfully overseas. For example, tag-based schemes in other towns in Germany have led to reductions in waste of around 37 per cent. I am now bringing forward government Amendment No. 213, which replaces paragraphs 4 and 5 of the schedule with a new paragraph 4. New paragraph 4 would allow local authorities to charge in any of the ways just mentioned, or any combination of these methods.

The other amendments in this group, government Amendments Nos. 212, 214, 215, 216, 217, 218 and 222 are all consequential on government Amendment No. 213. Government Amendment No. 215 is a drafting improvement. It makes it clear that a failure to pay a waste charge under paragraph 4 would not affect the authority's duty to arrange for waste to be collected. It confirms that powers to run waste reduction schemes are consistent with existing powers relating to a local authority's duty to collect waste.

Finally, to enable tag-based schemes to operate, it is important that the existing powers for local authorities to make sure that residents put their waste in the specified receptacles are extended to these types of scheme. So that this can happen, government Amendment No. 222 builds slightly on Section 46 of the Environmental Protection Act 1990. In the same way that an authority can specify whether waste should be collected in bins or bags, this amendment now allows authorities, if necessary, to require residents to attach a specified identifier—a tag or sticker, say—to their waste receptacles.

We are also considering proposing a further amendment to make it clearer that once a local authority has asked residents to place their waste in a particular receptacle, normally a bin, the authority need not collect any waste lying outside that bin—so-called "side waste". These side waste policies have been successfully operated by a significant number of authorities, with the support of their community, using powers given by the Environmental Protection Act 1990, so this is not new. As part of a good overall service, they have helped householders to reduce the waste they throw away and to increase the amount they recycle. We think that it would be beneficial for local authorities, and for residents, to have a single clear point of reference in legislation. That is why we will be considering bringing forward an amendment at a later stage. I cannot say whether that will be at Third Reading or when the Bill reaches the other place.

I should also mention here that we plan to bring forward an amendment at a later stage which will enable the Secretary of State to require certain large retailers to apply a minimum charge when distributing single-use carrier bags. This requirement to charge will come into force next year, unless retailers have by that time already managed to achieve a significant reduction in the number of bags in circulation. The Government are keen to see these measures extend across the whole of the United Kingdom. We will work with the devolved Administrations to establish the most appropriate way to achieve this.

Amendments Nos. 213A, 213B and 213C relate to the administration of charges under a waste reduction scheme. I shall take each in turn. Amendment No. 213A would remove local authorities' ability to ask residents to pay in advance their waste charge for a certain period according to an evidence-based assessment of how much waste they are likely to produce during that period. We have to remember that local authorities will be the bodies running these schemes and they are not going to do that if they do not have the powers and flexibilities they need to make them work well. Being able to charge in advance is a good example. It is a small thing but it could make the world of difference to authorities being able to administer schemes effectively and efficiently.

Moreover, it is only fair to give people an idea from the outset of roughly what they can expect to pay or earn under a waste incentive scheme. The existing provisions allow us to do that. Local authorities would be able to issue people with a provisional charge or rebate for the period ahead and make any necessary tweaks or adjustments in the next period. This is a standard approach and people are familiar with it as it is how most utility payments work. For those reasons, we do not think that Amendment No. 213A is a good idea.

Amendment No. 213B would prevent local authorities from requiring that charges under a waste reduction scheme are paid on account or by instalment. Instead, it would permit residents to pay in these ways, if they wished to do so. We have been clear that there would never be a case of an authority imposing a waste reduction scheme, or any aspect of that scheme, on residents. Instead, they will need to work closely with their communities in developing proposals which are responsive to local needs and wishes. This would include how charges should be paid.

Once a decision has been made on payment methods, though, it is right that local authorities should be able to make that a requirement under the scheme. That authorities can run schemes effectively and efficiently is of the utmost importance. Nobody wants to see a scheme where administration is bureaucratic and costly. Taking away this right to require payment by instalment also potentially undermines the link to council tax, which itself can be paid by instalment. Given the importance of realising efficiencies through linking to council tax—something authorities themselves have asked for—removing this requirement would be a retrograde step.

It is also important to remember that paying or rebating by instalment does not make anyone worse off. We are talking about people paying or receiving the same rebate regardless of whether it is once a year, once a quarter or once a month. Removing that requirement, therefore, does not achieve anything besides making the link to council tax more difficult. I want to assure noble Lords that there is no attempt to impose waste incentive schemes on local residents. We want to strive for systems that are embraced by the community work to the benefit of all.

Amendment No. 213C would require, first, that charges under a waste reduction scheme were payable exclusively by occupiers of premises included in the scheme. Secondly, it would require that, where people owe outstanding charges, they still have to pay them even if they move house. I can understand why, on the first part, the noble Lord, Lord Greaves, would consider it logical for only occupiers to pay charges relating to how much waste they throw away. In most if not all instances, that will be the case. However, we have left it open to local authorities themselves to determine who is liable to pay the charge. We think it important that they have flexibility. If, for example, the authority wishes to integrate charges and rebates with the council tax system, the occupier is not always the council tax payer. As I said in previous debates, we think that local authorities could realise important efficiencies by making a link to council tax should they wish to do so. In doing so, they may wish to reflect the liability structure that exists for council tax. In general, however, the rule of thumb would always be that the charge should be paid by the person or persons producing the waste. That is what underpins a successful incentivising scheme.

On sub-paragraph (7)(b) of the amendment, I appreciate the noble Lord's concern that people should pay the charges they owe even if they move to a different house and that the outstanding charges should not be transferred to those who move in. That is the situation we would strive to achieve. We would want to encourage local authorities to use their powers to recover outstanding debt regardless of whether people move out of the area. Requiring local authorities to make these precise calculations every time someone moves house is saddling them with an unnecessary burden. Therefore, it should be up to the local authorities, in collaboration with their communities, to decide how they manage people moving in or out. I therefore cannot accept this amendment.

Amendment No. 217A proposes to remove our ability to amend the requirement that all revenue raised by local authorities through charges under a waste reduction scheme be returned to residents through rebates. I understand the noble Lord's concerns and should like to reassure him straight away on two points. First, we do not currently envisage needing to amend the requirement. Secondly, if we did want to amend it at some point in the future, the proposal would be subject to the comprehensive parliamentary scrutiny implied by the affirmative procedure. However, we think it makes sense now to have the scope in the provisions to make any necessary changes in the future. This avoids our having to produce new primary legislation to make small changes which may arise in the longer term as waste incentive schemes progress and evolve. That is simply a prudent and sensible approach which we think strikes the right balance.

The Delegated Powers Committee looked at this issue and was content with our proposals. It is the same approach we are taking to other requirements under a waste incentive scheme, including providing a good recycling service and having in place a fly-tipping prevention strategy. All those are prerequisites for being able to have the schemes in the first place. The noble Lord, Lord Greaves, will speak to his amendments, but I hope I have given him a positive view of the Government's approach. We can largely see where he is coming from, and we sympathise with some of the approaches. But—this is the big "but"—we genuinely want local government to have as much power and flexibility as possible. I think that that is right. I beg to move.

My Lords, I rise to speak to Amendments Nos. 213A to 213C, which amend government Amendments Nos. 213 and 217A. I think that I thank the Minister for systematically rubbishing my amendments before I got to speak to them. At least I know where he is coming from and what he is going to say.

My Lords, as my noble friend Lord Davies suggested, and I think he is right, we are uncomfortable doing it this way round. When there is another such group, and there is at least one more, I will not refer to the opposition amendments when moving the government amendment but deal with them in the wind-up. I apologise. I am uncomfortable with this procedure but it is the one we were working with.

My Lords, I was thanking the Minister for doing it. I also thank him for being uncomfortable. And the pronunciation—if I can help him—is something like Ludwigshafen.

The Minister raised two issues, the first of which was side waste. He said a later amendment is planned to clarify the position in various legislation and to put all the provisions in one place. Local authorities will welcome that, because there is a lot of argument about side waste in recycling schemes. Secondly, he suggested that the Government will come forward at some stage with an amendment in relation to certain large retailers—an interesting phrase—and single-use bags. We would very much welcome that. We will be interested to see what that amendment says whenever and wherever it appears. We welcome the Government taking the issue seriously. We raised it in Committee on this Bill.

I also welcome government Amendment No. 213—which, as the Minister said, is generally the substantive amendment in this group—not least because it makes the whole presentation of the proposals much clearer and it shortens the Bill, something which is unusual for a government amendment but is to be welcomed. The amendment sets out much more clearly for anyone interested the different options for the pilots and for looking at waste reduction schemes: based on the weight of residual waste; volume—the big bins or the little bins; and type of receptacle—bins, sacks or anything else that people might invent. The question of frequency is much clearer here than it was in the original wording. The reference to types of receptacle and identification of receptacles is also much clearer. Although Amendment No. 213 does not change in any way the Government's intentions towards the options, it is a good amendment. I understand this provision much better than the previous, rather convoluted one.

Amendment No. 213A, which is in my name and that of my noble friend Lord Teverson, goes back to the issue we discussed in Committee. We gave all these charging provisions and systems a pretty good scrubbing down in Committee. The fact that we did so means that at least some of us are not revisiting those issues here. The issues will undoubtedly be considered again in the House of Commons, and we have very much helped them to do so. However, one issue that was not dealt with is advanced payments and payments on account and in instalments. Both Liberal Democrat Members and Conservative Members tabled amendments in Committee on the issue, and I remember some very useful contributions by the noble Baroness, Lady Byford, on the subject. We were not given proper answers in Committee, and I am not sure that the Minister has given us proper answers in advance today.

In Committee, the noble Baroness, Lady Morgan, said that,

"there must be a link between cause and effect. If people have to wait a very long time to see the cause and effect on charging, local authorities would benefit from the option of handling the charging differently".—[Hansard, 30/1/08; col. 703.]

The problem is that if you send out estimated bills in advance and give people estimated rewards or estimated penalties in advance, how is that responding to a change in their behaviour? Surely it is clear whether people change their behaviour in a certain way or not, and they are then rewarded or penalised afterwards for doing so. It seems totally illogical to say to people: "We are going to penalise you or reward you on the basis of your historic behaviour before the system comes in". I do not think that the Government have faced up to that properly.

Some payments in advance will take place, because if people want a big bin they will have to pay more for it, and they will get a bill for that. If there is a sack system and people have to buy the number of sacks that they require, they will pay for those in advance. That is not at issue. What is at issue is where the refuse is going to be weighed and people are then going to get rewards or penalties, and the size of their bill will depend on how much they throw away. Surely, that has to come afterwards.

In Committee, the noble Baroness, Lady Morgan, referred to utility companies, and the Minister has done so again today. That reference really is not the case. As I said in Committee, if you have an electricity bill or a gas bill that you think is too great, you can read the meter and ring the company to get an amended bill. There is no way that you can do that in relation to your waste; you are lumbered with the estimate, however it has been carried out. I do not know how they will possibly make these estimates in the first place. There is a real problem here in terms of advance estimates and advance payments in the weight-based type of scheme.

As far as "on account or by instalments" is concerned, the point of my amendment on instalments is the opposite of what the Minister suggested. He suggested that it is like council tax, which you are able to pay in instalments. That is true, but it is not a requirement to pay council tax in instalments. If you are sufficiently soft in the head, as I was earlier this week, to write a cheque out for the whole of your council tax and pay it all at the beginning of the year, you are entitled to do that. Council tax becomes payable at the beginning of the year. You have a right to pay in instalments if you want to, but you pay those instalments in arrears, because the council tax is due on 1 April, and if you wish, as most people do, you pay by direct debit, cash or cheque each month subsequently over 10 months. You are doing it in arrears, though, because the council tax is due on 1 April. You have a right to pay quarterly or monthly, because a lot of people cannot afford to pay up front, or they are not daft enough to do it like I am.

This is the opposite. What is being said here is that people will be forced to pay by instalments. The purpose of my amendment is to say that if they want to pay up front and get the whole thing out of the way, they should be able to. We are talking about quite a small amount of money here; £30 or £40. The idea of being forced to pay that by instalment through the year in £5 direct debits is crackers. That is the purpose of the amendment, and I hope that the Government will look again at that issue.

My final amendment in this group is on revenue neutrality. I really do not understand why the Government want to put into legislation the ability to abolish the requirement for revenue neutrality when they cannot come up with any circumstances whatever in which they might do it. In Committee, the noble Lord, Lord Rooker, said that it would be an "unforeseen event", and that is all we got. He said:

"We want the flexibility to amend the revenue-neutrality condition. In the unforeseen event that we need to make an amendment ... it would come back to Parliament".—[Hansard, 30/1/08; col. 711.]

I accept what the Minister said this afternoon, that it would be an affirmative order, but to say that an affirmative order amounts to comprehensive parliamentary scrutiny, as he said, is pushing it a little bit. It is better than none, but it is the old take it or leave it system. It does not really provide us with the opportunity to scrutinise it as if it were primary legislation, although the system is getting better slowly, year by year.

I press the Minister again on what circumstances he thinks might change what he is saying is a cast-iron guarantee of revenue neutrality—that they will not make money out of it and it is not a stealth tax or any other type of tax, except that it is a redistribution from those whose behaviour is thought to be not good to those whose behaviour is thought to be good in recycling. That is the whole principle of it: redistribution from goodies to baddies as far as recycling behaviour is concerned. Yet the Government want it in the legislation that they can change it, so that revenue neutrality can be abolished in the future and they could raise revenue. Under what possible circumstances do the Government think that they might want to do this? Until they come clean and tell us, this should not be in the legislation.

My Lords, I cannot help seeing a very slight element of irony in that, as we pat ourselves on the back for being at the head of climate change, we keep referring to how Germany is doing it better. I had an easier job talking about North Rhine-Westphalia; whereas the Minister was landed with something rather dreadful to pronounce, which may have been Ludwigshafen.

Amendment No. 213 is the main amendment in this group, the remainder being consequential. We feel that the revised wording makes clearer what the Government intend. In particular, it allows receptacles—for example sacks, plastic or otherwise—to be identified by tags for which a charge would be made. One has visions of a new level of neighbourliness from A, who has five tags and only needs four, and B who is running one short and borrows a tag. Or there may be a back-door trade set up in which someone will try to put a price on it. The only remaining concern is that I would be glad for the Minister's confirmation that no householder will be forced to pay for a service that he or she does not require. There surely cannot be many, but I am told that there are people who live during the week in rented accommodation, doing no more than sleeping and showering there, and removing their rubbish with their laundry on a Friday morning. This avoids their having to put the rubbish out, or move a wheelie bin onto the pavement.

The consequential amendments do not affect the requirement for revenue neutrality. I well remember the Minister's robust defence of this provision. I should be grateful, however, if he would respond to a further probe on the Government's intentions in this area. We understand that the costs of running a waste reduction scheme will be met from the savings that the council will accrue through providing materials for recycling. Does this mean that when the Secretary of State considers a scheme for piloting he will expect to see proof of a contract between the piloting authority and the waste reclamation company that it proposes to use? Furthermore, will any rollout be dependent on there being sufficient reclamation capacity of the kind needed for the scheme in question to function with sufficient financial payback to cover the administration costs? The phrase "a good recycling service" does not seem to us necessarily to cover this point.

My Lords, I welcome the Government's commitment to look at retail plastic bags, because they deface our countryside in many ways. I say that with a slight smile because I suspect that most of us who acquire them new from the retailer go on to use them again. The bags are therefore used more than once, although they come from their original source only once. I do not mean this in a childish way, but that needs a bit of thought.

I also wonder what research has been done on producing a receptacle—apart from a paper one—which is biodegradable. Presumably, research is ongoing. If the Minister has information on that, it would be helpful if it was shared with us today.

As regards the collections in these trial areas, most of us will have a regular amount of rubbish that goes each week to be recycled and is put in its proper bags. But from time to time, when one has an invasion of family or friends, the weekly amount may well be doubled. I wonder, in the constraints of what is being proposed, how that will be dealt with as well. We do not want to jeopardise people who are doing their best, but at certain times of year they may well have more than they would otherwise have.

The Minister mentioned Germany, which is doing better. In many ways, that is not surprising, because, as the Minister knows, Germany already has biodigesters that are in use. I wondered whether the Government have done any research on how much wasted is wasted and is not used to produce electricity or energy. Have the Government thought what might possibly be gained from particular schemes? Have local authorities been asked how much of their original waste could be used in a constructive way? Might they, as a result of that, look at having biodigesters within their own authority? On the question of unpaid moneys, has any figure been thought about or anticipated? Is any in the public domain? In other words, are the councils having to take more than they expected? That would give us an idea how much extra would be involved. I am sorry, I am not explaining myself very well. Let me try again.

At the moment, the rubbish that a person puts out goes into the normal system which the councils run. In these schemes, the councils want to impose a limit so that the person who uses more than they should will be charged extra. Has the additional amount—that in addition to what they normally would have in just one wheelie-bin— been anticipated? I am sorry to be so specific, but it would be helpful to know. I welcome the Government's amendment because I think it does help us to identify future projects. I wish them well. I think there was one other thing that the Minister mentioned—it was to come before us but will now be put to the Commons later. Could he perhaps clarify that to me? The point on retail and plastic bags I accepted, but the other one I slightly missed.

My Lords, your Lordships certainly are very good when it comes to rubbish. It is a great subject for us all and we seem to be very interested in discussing it. It is most important. Looking at the average supermarket trolley—this week I had a good look at my own and at some others—one sees that it contains far more rubbish in plastic and paper wrapping than the plastic bags into which that is put as one goes away. A very good move would be to look carefully at packaging and see whether something can be done, perhaps through the standards authority, to reduce it. I am not sure whether this was said in Committee, but it would be far more useful than limiting plastic bags—although plastic bags are a very good advertisement for the cause and I entirely support it. The packaging in a full supermarket trolley is enormous. The rubbish that one puts into the plastic bag, after one has used the things one has bought—the plastic bag that it originally came in—is far more than the plastic bag itself. I think there are not many people who operate their kitchen who would disagree with that.

The other point—I am not sure whether it has been made—is the increase in fly-tipping which is going to happen as a result of this. In Germany, they have been very disciplined about the whole subject for many years. They are used to it. I do not think there is a lot of fly-tipping—I may be wrong. My impression is that the system works rather well. In this country, people in cities close to the countryside or to a park are going to resent having to pay enormous amounts, so they are going to just put their rubbish into the back of a car and dump it somewhere. As someone who lives not terribly far from the city—where people are already not very tidy about what they do with their old beds, prams and so on—and on a farm where one is constantly having to remove rubbish, I fear that fly-tipping will become very much worse. I wonder whether the Government have considered strengthening the legislation about that alongside the legislation about charging for rubbish, because I think it would be very helpful. Incidentally, it is not only city people who fly-tip. Fly-tipping happens from villages and small towns, too, but particularly from the edges of cities, where the countryside is not too far away.

My Lords, the noble Baroness, Lady Byford, asked me about an issue I raised in my speech. We proposed to bring forward an amendment in the Commons. I know it is in the Q & A and I cannot put my finger on it. Now I have lost the page in my notes and I do apologise. The noble Lord, Lord Greaves, asked me about the people charged. What we want is for the local authorities to have the opportunity if they wish—and it is up to them—to merge the scheme under the pilots with the council tax collection. As he said, we are not talking about large sums of money here. I think we estimated £30, £40 or £50, at the most, either as a rebate or as a charge. Linking it with the council tax, if they have a system for that, should actually be efficient for everybody, so I do not see that as the problem. I have made notes on everyone's speech and I cannot find them. I do apologise.

From that point of view, we are not saying how local authorities should actually deal with the rebate. I would like to think of the rebate first and the charge second, and try to make it revenue neutral anyway. It is up to them how they do it. We do not know which local authorities they are going to be. As we said in Committee, we do not know which parts of which local authorities they are going to be. We have got to leave it to the local authorities. That is not saying we are not interested; we sure are interested. In this respect—I understand why the noble Lord raises it—we have to trust local government. We may be able to elucidate on this in the other place.

I realise that revenue neutrality is controversial. The noble Lord asked me in what circumstances we would abolish it. We think that revenue-neutral schemes are the right way forward and the work to date supports the view. But these are pilots and that is the whole point about piloting. This is a classic case from schools of government. If you are going to do something national, roll it out a bit at a time. Whatever you do, if it is major, pilot it first to see whether it works. This is normally what we have done. The old social security department and the DWP used pilots to operate. We cannot therefore give the answers; to a large extent, they depend on how the pilots go. We want to learn the lessons, including, I suppose—I do not know—some negative lessons. We should look at all the good criteria; a good recycling service is crucial. As the noble Baroness said, there must be provisions dealing with fly-tipping. We will look again at all of those issues if the evidence points that way. We must learn lessons. We do not have other motives; we simply do not know. This is a question of trying it out with local government as a partner. We do not have all the answers.

The noble Baroness rightly said that I had referred to Germany on two occasions. I have warned inside Defra that we should not talk about giving a lead, particularly on anaerobic digestion. Farmers in this country—particularly farmers from England who have seen what has been going on in Germany for years—would laugh at me if I said to them that we are giving a lead; I wrote this in a note a couple of days ago. We are way behind. It is no good saying that we are a leader; we are not. People will not believe us if we tell porkies like that.

Virtually every scheme that it is possible to pilot in this area is operating somewhere in the world. We made that clear in the original consultation. We are not inventing the wheel. We are a small island and we are running out of landfill, and landfill is bad anyway. We must therefore make reductions and encourage people to recycle more. We can give a lead on many things but on that we are taking evidence from other areas. The evidence from some of the examples I gave shows that this can work; there have been big reductions in what goes into landfill and there are huge advantages in terms of what is recycled.

The noble Lord asked about instalments; I have answered that: it is up to the local authority. We tested that in the pilots. One local authority may want to take the charges one way and another may want to go another way; that is the whole point of the pilots.

The noble Lord said that if awards or penalties were made in advance, there would be no behavioural incentive, but there is—it is in the next round. The process operates on an annual basis and the pilots, if I recall correctly, can run for up to three years. Local authorities will have the data on the levels of waste produced; they will relate to bins and be weight-based or volume-based. That can be built into the next round. People's behaviour would be affected.

I have specifically not used the P-word. I have referred to single-use carrier bags, and I am sticking to that because that is what I have been instructed to do. This will be dealt with in the other place. Somewhere in my speech there is something about a specific amendment that we intend to move in the Commons; I shall find it before the evening is over. When I discussed it earlier, I said that I thought it would be introduced not at Third Reading but in the Commons. In about 50 pages of Q and A, I saw a specific reference to it being introduced in the Commons. The noble Baroness asked me about that. I am a bit surprised that I have not had a copy of the page whizzed along to me. I will try to find it myself.

My Lords, does the Minister not understand that there is a great deal of cynicism and scepticism out there about this being intended as a money-raising and tax-raising process? Simply taking out of the Bill the ability to make it such would make it much easier for the Government to sell this scheme to the cynics and the sceptics.

While I am on my feet, I forgot to ask the Minister a question; I hope that he will be kind and let me ask it now. Is it fair that someone who is moving into a house, as a new tenant or new occupier, should be penalised for the behaviour of the people who were in the house previously? Surely that is not fair; if there is a charge or penalty, that should surely go with the people who lived there previously.

My Lords, my experience—I have not moved that often—is that local authorities and the utilities providers are meticulous about, for example, reading the meter; your liabilities start on the day you move. The people who have moved out are under a legal obligation about all that they need to do—to leave the place clean and to have got rid of all the rubbish; that is also in the sales contract. There is not an issue there. Of course it would be unfair if people were saddled with the liabilities of others but that is dealt with in the moving process—in the tenancy agreement or the lease and deeds—and the normal rules for utilities and local government apply. You pay council tax and the rubbish tax from the day that you go in; you do not pay anybody else's council tax or rubbish tax.

On Question, amendment agreed to.

moved Amendment No. 213:

Schedule 5, page 62, line 37, leave out from beginning to end of line 24 on page 63 and insert—

"Charges in respect of residual domestic waste

4 (1) A waste reduction scheme may include provision for charging by reference to—

(a) the amount of residual domestic waste collected from premises,(b) the size of receptacles used for the purposes of the collection of residual domestic waste from premises,(c) the number of receptacles used for such purposes, or(d) the frequency with which residual domestic waste is collected from premises,or by reference to any combination of those factors.

(2) The scheme may, in particular, make provision for occupiers of premises—

(a) to be required (by notice under section 46) to place residual domestic waste for collection in receptacles of a specified kind,(b) to be required (by such notice) to place such waste in receptacles that are identified by such means as may be specified, or(c) to be required to do both,and for a charge to be made by the authority in respect of the receptacles, the means of identifying them or both.

(3) A charge under this paragraph in respect of a receptacle is in addition to any charge under section 46 in respect of the cost of providing the receptacle.

(4) The amount of any charge under this paragraph need not be related to the authority's costs.

(5) The scheme may make provision as to the person or persons by whom any charge is payable.

(6) The scheme may—

(a) require any charge to be paid in advance on the basis of an estimate of the amount that is likely to be payable in respect of any premises; or(b) require payments in respect of any charge to be made on account or by instalments."

My Lords, I beg to move.

[Amendments Nos. 213A to 213C, as amendments to Amendment No. 213, not moved.]

On Question, Amendment No. 213 agreed to.

moved Amendments Nos. 214 to 217:

Schedule 5, page 63, line 27, leave out "or 5"

Schedule 5, page 63, line 29, leave out from "to" to "does" in line 30 and insert "pay a charge under paragraph 4"

Schedule 5, page 63, line 33, leave out "paragraphs 4 and 5" and insert "paragraph 4"

Schedule 5, page 63, line 36, leave out "paragraph 4 or 5" and insert "a waste reduction scheme"

On Question, amendments agreed to.

[Amendment No. 217A not moved.]

moved Amendment No. 218:

Schedule 5, page 63, line 41, leave out "4(2) or 5(2)" and insert "4(4)"

On Question, amendment agreed to.

moved Amendment No. 219:

Schedule 5, page 65, line 11, at end insert—

"( ) The regulations may in particular provide—

(a) for appeals against determinations or any failure to make a determination,(b) for the appointment of persons or bodies to hear appeals, and(c) for charges to be recoverable, if a county court so orders, as if they were payable under a county court order."

My Lords, even though charges under a waste reduction scheme are likely to be relatively small, it is important that local authorities have the tools to collect them where people fail to pay. That is why I am bringing forward government Amendment No. 219; it would allow the Secretary of State to make regulations allowing authorities to collect charges owed more efficiently, through the county court system. This is an accepted, standard approach that has been used many times over. Some useful comparisons include the Traffic Management Act 2004, the Social Security Administration Act 1992, the National Minimum Wage Act 1998 and the Health and Social Care (Community Health and Standards) Act 2003.

If the Secretary of State were to exercise this power, Amendment No. 219 would allow the local authority, having followed a fair and appropriate appeals process, to collect the debt by registering the outstanding waste charge with the county court as if it were a court order. Standard county court enforcement mechanisms, such as attachment of earnings orders, could then be used.

Without this amendment, the local authority would first have to commence a new claim in the county court and obtain a county court judgment before it could enforce the debt. The amendment therefore allows an authority to use a fair but more efficient debt collection process, thereby saving time and money for authorities and taxpayers. This is a considered approach. While removing unnecessary duplication of work, it still ensures that residents have ample opportunity to appeal if they do not think that they should be paying the charge for whatever reason.

Paragraph 9 of Schedule 2AA already requires waste-reduction schemes to have an appeals process in place and we intend to provide further best-practice guidance to local authorities on this aspect. This is a key requirement. That is why we are also proposing, via Amendment No. 219, to make it clear that regulations made by the Secretary of State under the schedule may include provision concerning appeals against determinations or any failure to make a determination, and for the appointment of persons or bodies to hear appeals. This reinforces the seriousness that we attach to making sure that the right systems are in place. In particular, if in future, following pilots and any decision to roll out, there is widespread take-up of waste reduction schemes, it may make sense to set up an appeals body to deal specifically with appeals by residents against their waste charges and rebates. I beg to move.

had given notice of his intention to move, as an amendment to Amendment No. 219, Amendment No. 219A.

Schedule 5, leave out lines 6 and 7

My Lords, I welcome sub-paragraphs (a) and (b) of Amendment No. 219, which sets up an appeals system. We discussed this issue in Committee and I am glad that the Government have responded to the idea that an appeals system is required. That is to be welcomed. Amendment No. 219A is moved for clarification, to find out why the Government thought it was necessary. The Minister has explained that well and satisfactorily. Presumably this means that, as well as steps such as attachment of earnings, bailiffs could be sent in to recover this sort of charge. I can see all sorts of interesting local press publicity at the idea of sending in the bailiffs to sort out the rubbish. Nevertheless, if these schemes are going to operate, this is a sensible way to proceed. Therefore I do not wish to move the amendment.

[Amendment No. 219A, as an amendment to Amendment No. 219, not moved.]

My Lords, from this Dispatch Box, we welcome the amendment. It puts in place a mechanism that several noble Lords considered would be needed. Like the noble Lord, Lord Greaves, I wonder whether the Minister can explain the procedure by which a ruling from the appeals panel would turn up in the county court. Is it not possible for the appeals panel to order that charges be recovered, and for that to be treated as though it came from the county court?

My Lords, I will explain how we envisage an appeals body working. There are already many appeals bodies—the best example is the valuation tribunal, which considers council tax appeals. If residents consider that they are not liable to pay council tax, or disagree with the amount they are being billed, they can appeal first to a valuation tribunal. Following this, they generally have four weeks to appeal to the High Court in relation to a valuation tribunal's decision. In setting up an appeals body, we would look to draw on these experiences, as well as the lessons learnt specifically from the pilots. Any regulations would be subject to wide consultation. We would otherwise ensure that they were human rights-compliant. In other words, with five pilots, we could have five different financial collection appeal systems. That is the point of doing the pilots and we need to learn the lessons from them.

The enforcement options would be the same as for a civil debt and would have broadly similar sanctions to those for non-payment of council tax—but without the sanction of imprisonment. That gives the noble Lord, Lord Greaves, no opportunity to raise another one. He has already had the bailiffs knocking down the door to get the money for the waste. No one is going to prison. Nor would we envisage bankruptcy or charges on property as a sanction for non-payment of the waste charge alone. Before these hares start running, we can make it absolutely clear—no imprisonment, no bankruptcy and no charges on property for non-payment of the waste charge alone.

On Question, amendment agreed to.

moved Amendment No. 220:

Schedule 5, page 66, line 42, at end insert ";

"specified" means specified in the waste reduction scheme."

On Question, amendment agreed to.

moved Amendment No. 221:

Schedule 5, page 66, line 46, at end insert—

"Orders and regulations

(1) An order under paragraph 2(3), 7(2) or 16(2) is subject to affirmative resolution procedure.

(2) Section 161(3) (negative resolution procedure: orders) applies in relation to an order under paragraph 6(1), subject as follows.

(3) An order under that paragraph is subject to affirmative resolution procedure if—

(a) it is the first order to be made under that paragraph, or(b) it increases the limit for the time being set by an order under that paragraph by more than is necessary to reflect changes in the value of money since that limit was set.

(4) Section 161(2) (negative resolution procedure: regulations) applies in relation to regulations under paragraph 12, subject as follows.

(5) Regulations under that paragraph are subject to affirmative resolution procedure if they modify an enactment contained in an Act of Parliament.

(6) Where an order or regulations are subject to "affirmative resolution procedure" the Secretary of State must not make the order or regulations unless a draft of the statutory instrument containing them has been laid before and approved by resolution of each House of Parliament."."

My Lords, I shall speak also to government Amendments Nos. 223 and 226. These amendments are in direct response to the Delegated Powers and Regulatory Reform Committee. We are seeking to ensure full and proper parliamentary scrutiny of any statutory instruments that the Secretary of State may make in relation to waste reduction schemes. It is important that we get this right. Parliament has a key role to play throughout the piloting and subsequent consideration of waste reduction schemes. We are grateful to the committee for its advice on how to establish the right relationship here.

Under Amendment No. 221, any order that set a cap on the amount that any household can be charged in a single year would become subject to the affirmative resolution procedure in two circumstances—the first time a cap is set, and if ever the level of the cap is increased by more than inflation. In all other cases, the setting of a cap would be subject to the negative resolution procedure. I reassure the House that we are taking the power to cap charges only as a final reserve measure. We trust local authorities to work with their residents to come up with a reasonable level of charge. We do not actually anticipate needing to use the power. Amendment No. 221 would also strengthen the procedure where the Secretary of State made regulations amending an Act of Parliament. In this instance, the regulations would need to be approved by affirmative resolution. In all other cases, a negative resolution would apply. This is a sensible strengthening of Parliament's role.

Amendment No. 221 also makes technical improvements to the way in which the provisions are drafted. It moves the explanation of which parliamentary procedures apply to which statutory instruments into the new Schedule 2AA to the Environmental Protection Act. For clarity, we have added an explanation of what the affirmative resolution procedure involves.

Amendment No. 223 is consequential to the substantive changes made by Amendment No. 221. It amends the Environmental Protection Act 1990 to reflect which parliamentary procedures would now apply to which statutory instruments in Schedule 2AA, as per paragraph 17 of that schedule.

Taking on board the last of the Delegated Powers and Regulatory Reform Committee's recommendations on waste provisions, government Amendment No. 226 also seeks to give Parliament a stronger role in scrutinising subordinate legislation. This time we are talking about subordinate legislation that the Secretary of State might make in the hypothetical situation where waste provisions were changed prior to rollout. We agree with the Delegated Powers and Regulatory Reform Committee that any such subordinate legislation should be subject to some kind of parliamentary procedure. Again, this ensures that Parliament has a full role in taking forward this policy. We envisage that we might need to make subordinate legislation to deal with technical matters regarding schemes; for example, what a scheme's accounts should detail.

I hope that the House will be reassured by this strengthening of parliamentary scrutiny of the waste provisions in the Bill and will recognise that the Government have followed the recommendations of the Delegated Powers and Regulatory Reform Committee. I beg to move.

My Lords, I see that we have three amendments that are substantial in length if not in content. From this Dispatch Box, we welcome the principle of these amendments, but we would be glad of the Minister's response to a number of questions. Schedule 5 applies both to pilots and to rollout. It does not, however, distinguish between them. When sub-paragraph (3) of Amendment No. 221 refers to the first order to be made, does that mean the first order for the first pilot, the first order for the first pilot and then for the first rollout or the first order for each scheme, pilot or rollout, for each participating waste collection authority? If it means the first order for the first pilot, is there an implication that the Secretary of State, in deciding to give permission for a pilot, will already have in mind the approximate charging levels that he will approve? Will it also mean that he anticipates no difference across the country in the levels that will be charged by different authorities in different circumstances?

My Lords, I thank the Government for responding to the Delegated Powers and Regulatory Reform Committee, for tabling these amendments and, indeed, for responding to the discussions in Committee on these same matters. This is one area in which this House might have had something to say had the Government not tabled their amendments, but they have done so entirely sensibly and, I am sure, entirely on the balance of the arguments. They are to be congratulated on that.

The noble Duke, the Duke of Montrose, touched on one of the difficulties that we have had with Schedule 5 in that it covers both the pilots and the rollout. The Government's argument is that because there will have been substantial scrutiny of the schedule as part of the discussions on the Bill, that will suffice for any national rollout. Some of us have difficulties with that, as there is all the difference in the world between setting up what can happen in various pilots and deciding which of those schemes will be adopted or totally amended in the rollouts. The scrutiny is not terribly satisfactory, which is why we spent quite a lot of time in Committee probing how the decisions about the results of the pilots and the way in which the schemes will be rolled out nationally will be taken. This and subsequent government amendments improve this a little, but there are still problems, and there really must be a way in which Parliament can look at this properly after the pilots have taken place. However, this part of the Bill is a great deal better now than it was, and on that basis I am happy to support the amendments on behalf of the Liberal Democrats.

My Lords, I am grateful to both noble Lords who have spoken in this short debate. I am rather more grateful to the noble Lord, Lord Greaves, who did not ask me a specific question, as the noble Lord, the Earl of Montrose, did. As the noble Lord, Lord Greaves, generously indicated, we sought through the amendments to follow the clear indications and recommendations of the Delegated Powers and Regulatory Reform Committee on how we should improve the Bill. We all recognise that consideration of the pilots and the rollouts is important.

The noble Lord, the Duke of Montrose, asked quite a specific question about the cap on the charge to be made during the pilots or the rollouts. The first order, whether made during the piloting or after rollout, will contain this provision. It is up to local authorities to set the level of the charge and not for the Secretary of State to have a particular charge in mind. There is no reason why the charge would be the same across the country. In fact, I think we will recognise that there will be differences among local authorities in this. It goes without saying that we hope those differences will be within an acceptable range, otherwise the local authorities are likely to find that residents will be outraged if they discover that some local authorities are charging enormously greater sums than others. Nevertheless, variations will occur, as they do in the services that local authorities currently offer.

Why is not the decision to roll out powers to all local authorities in England subject to the affirmative procedure? The Bill requires us to report finally on at least one of the pilots before deciding to roll out powers—the point made by the noble Lord, Lord Greaves. In reality, it is likely that we will need to report on most, if not all, of the pilots before having enough evidence to decide on rollouts. We therefore accept the point emphasised by the noble Lord, the Duke of Montrose, that this needs to be subject to careful scrutiny. We also hope to have a further debate in Parliament prior to any decision to roll out. This will be in addition to the careful scrutiny that the waste provisions will receive—indeed, have already received—as part of the Bill, and as they undoubtedly will receive at the other end.

My Lords, this will save me asking the question later. When the Government say, as they do in various documents, that they expect to have a debate in Parliament, can they guarantee that that will include a debate in this House?

My Lords, I do not have a note on the actual process that we will follow, so I cannot give that guarantee. I will have to write to the noble Lord and send the same letter to other noble Lords who are greatly interested in this area. I have no decision on this. The House will recognise that the Bill started in this House, but that we must have due regard to the position on all matters in the Bill that will be adopted in the other place perhaps with even greater emphasis on local authorities, given the symbiotic relationships between any effective and hard-working Member of Parliament and his or her local authority. I do not want the noble Lord to press me too far on this, but we accept that we will certainly need further consideration in Parliament beyond consideration of the Bill itself. I at least give that undertaking.

My Lords, I sympathise with Minister over the problems that arise over titles. Even last night, when I sat at the long table, the waitress came up behind me and said, "Now what would you like to have this evening, my Lady?". I have learnt to respond to a great many titles in this place. I have the title of Lord, and I have the title of Earl, but I am afraid that the official title that I go by here is Duke.

My Lords, I must apologise to the noble Duke. The note from the Box was as ever entirely accurate in that respect. The fault was entirely mine.

On Question, amendment agreed to.

moved Amendments Nos. 222 and 223:

Schedule 5, page 66, line 46, at end insert—

"In section 46 of that Act (receptacles for household waste), in subsection (1) (requirement for occupier to use receptacles specified by waste collection authority), for the words from "to place" to the end of the subsection substitute "—

(a) to place the waste for collection in receptacles of a kind and number specified,(b) to place it in receptacles identified by such means as may be specified, or (c) to do both."."

Schedule 5, page 67, line 1, leave out paragraph 3 and insert—

"3 (1) Section 161 of that Act (regulations, orders and directions) is amended as follows.

(2) After subsection (2) (negative resolution procedure: regulations) insert—

"(2ZA) Subsection (2) does not apply to a statutory instrument containing regulations under paragraph 12 of Schedule 2AA to this Act to which paragraph 17(5) of that Schedule applies."

(3) In subsection (4) (instruments not subject to negative resolution procedure), after paragraph (a) insert—

"(aa) which contains—(i) an order under paragraph 2(3), 7(2) or 16(2) of Schedule 2AA to this Act, or(ii) an order under paragraph 6(1) of that Schedule to which paragraph 17(3) of that Schedule applies, or"."

On Question, amendments agreed to.

Clause 61 [Waste reduction provisions: piloting]:

moved Amendment No. 223A:

Clause 61, page 28, line 20, leave out subsection (2)

My Lords, the amendment seeks to take out of the Bill the provision that there can be a maximum of only five pilots for the waste management provisions. This matter has raised eyebrows among everyone who has been involved in the discussions on this in Committee, in the House of Commons and outside Parliament. No one quite understands why the Government have come up with the figure of five. It has been suggested that it is because finance for only five has been made available in the Defra budget. We know that the finance is £4,500 over three years, unless it has changed from what the Minister told us in Committee. Surely, however, even that depends on the scale and size of the pilots; there could be 10 little pilots or five big ones. A pilot is defined as a waste collection authority taking part in the scheme. It has also been suggested, cynically, that only five local authorities may want to do it and that the Government cannot find any more. We will find out later when the Government make formal requests to the local authorities to put themselves forward.

In Committee, we had long discussions about the nature of the pilots and the importance of having as many of the options and sub-options that the Government are putting forward piloted. We want genuine comparisons, so there must be a sack-based scheme, a volume-based scheme and a weight-based scheme, et cetera. The Government and Parliament would then have a proper basis on which to make decisions, which, as the Minister said, would be evidence-based.

In addition to the different types of schemes, there are different types of areas. I shall not go through the long list of about a dozen that I rolled off in Committee. You do not have to think for long to realise that there are a large number of different collection authorities in different areas, and that the areas can differ in terms of the nature of housing, the local society, the local community and so on. The more that people discuss this, the more it seems to be understood that five collection authorities will make it very difficult.

I want to call in evidence an excellent report published since the Committee stage by the House of Commons Communities and Local Government Select Committee, entitled, Refuse Collection: Waste Reduction Pilots, Sixth Report of Session 2007-08. Cynics might think that I agree with a great deal in it, and I do. It is clear that when these provisions go to the House of Commons there will be some very interesting and vigorous debates.

Paragraph 7 of the report states:

"We do not believe that allowing only five of England's waste collection authorities to introduce schemes, covering four different collection methods, in a mixture of rural and urban settings, and across the whole country, will provide significant additional evidence on which to judge whether all authorities should be able to offer such schemes".

That says what I was trying to say, but rather better.

Paragraph 11 states:

"We repeat what we said six months ago: it is hard to see why any council will want to set up a complicated charging scheme that earns it no money and risks widespread public disapproval. The Government's decision to seek only five councils appears to reflect the understandable reluctance of local authorities to do so".

That is the House of Commons committee being cynical.

Paragraph 14 states:

"The decision to limit the number of schemes to just five, none starting before April 2009, all running for three years before Parliament is asked to decide on a national roll-out, means that financial incentive schemes will have no discernible effect on local authorities' duty to meet European Union landfill diversion targets before penalties fall due in 2010 and 2013".

The Government may speed that up a little with their amendment on the rollout provisions.

Finally, paragraph 27 states:

"The Government's retreat has resulted in a messy compromise that achieves the worst of both worlds—maximum hostile media coverage for a set of pilot schemes that will have only limited impact before EU fines fall due in 2010 and 2013 ... We recommend that the Government withdraw its financial incentive pilot proposals from the Climate Change Bill and reconsider devolving the power to introduce schemes to local authorities themselves".

That is pretty strong stuff, and is a bit stronger than I would say. I was quite surprised when I read it. Clearly, there will be some interesting discussions in the House of Commons. If that is what an all-party group of Members of Parliament is saying, surely the Government should be thinking seriously about whether they have got this figure of only five wrong. I would suggest that they have. I beg to move.

My Lords, I can only add from this Dispatch Box my confusion as to why the number of pilots has been capped and capped at only five. Given the enormous scope of this Bill, we are looking at issues that some people have said will require cutbacks similar to those in Britain during the Second World War. Why is the entire waste section limited to five schemes? Does the Minister think that five schemes are sufficient to test adequately all available alternatives?

My Lords, why do you want to know? It is five. Why do you want to know where that number came from? I have nothing else to say. The full intellectual might of the Cabinet—of the Government—has arrived at a decision of five. If the House of Commons, where the elected people's representatives are, want another figure, it can change it: but the number is five.

My Lords, why do I want to know? We want to know why all the legislation that comes to this House is as it is. We assume that there is a sensible, rational reason behind it. In order to pass legislation, we should know what that reason is. The Minister referred to the "full intellectual might" of pretty well everyone in the country—I thought that he was going to list the chancellor of Oxford University and goodness knows who else.

People say that irony has gone out of fashion. I congratulate the Minister on his irony, which is better than mine. I think that his will come forward in Hansard better than mine normally does. If this Bill had not originated in this House, I think that we would have wanted to divide the House on this. It is silly and illogical, but it is so silly and illogical that the House of Commons perhaps will be able to do something with it. If someone of the Minister's calibre—he is rightly thought to be one of the best Ministers in this House—

Noble Lords:

Hear, hear.

My Lords, if he can come up with this answer, the Government have to think again. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

My Lords, I beg to move that further consideration on Report be now adjourned. In moving the Motion, I suggest that Report stage begins again not before 8.30 pm.

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