moved Amendment No. 1:
Clause 2, page 2, line 3, leave out from "to" to end of line 4 and insert "prepare such proposals and policies (including the setting of five year budgets) as the Secretary of State reasonably considers will—
(a) ensure that the net UK carbon account for the year 2050 is at least 60% lower than the 1990 baseline, and(b) enable the carbon budgets that have been set under this Act to be met"
My Lords, Amendments Nos. 2 and 3 are grouped with this amendment. All three amendments have the same objective. When I read the draft Bill for the first time last summer—it seems almost a lifetime ago—my immediate reaction was that Clause 1 as it then was imposed a meaningless duty that was almost certainly unenforceable and that if we had any respect for the legislative process something better had to be put in its place. It seemed to me self-evidently absurd that any Secretary of State could be held responsible for the delivery of a target 20, 30 or 40 years into the future, particularly when its successful delivery would depend not just on the actions of government but also on the reactions of a host of individuals and organisations, not to speak of events beyond the control of government.
The view that the clause would be unenforceable in the courts was widely held by those far better qualified than I am, and the joint pre-legislative scrutiny committee, of which I was a member, shared my scepticism. As the noble Lord, Lord Puttnam, its chairman, told the House on Report, the committee probably spent more time discussing this issue than any other. He was charitable about my responsibility for that fact.
During that same debate at Report, the noble and learned Lord, Lord Lloyd of Berwick, gave to the argument an authority that I cannot match when he observed that,
"it is meaningless to impose a duty on the Secretary of State that cannot be enforced ... It could not be said that the Secretary of State who happens to be in office in 2050 was in breach of the duty imposed by Clause 1 until the very last moment of 2050, by which time it would be far too late for anybody to do anything about it. In the mean time, there is nothing that anybody can do—and certainly nothing on which the courts could possibly adjudicate. That applies to all Secretaries of State between now and then. So Clause 1 is what Roman law—it is a very long time since I studied Roman law—called lex imperfecta. It has no force and it has no place in this Bill".—[Hansard, 25/2/08; cols. 463-4.]
I pursued the issue in the debate on the Queen's Speech, at Second Reading and in Committee, when I tabled an amendment that was admirably argued by my noble friend Lord Caithness during my absence abroad on the business of a Lords committee. By then, the Government had begun to give ground. In response to my Second Reading speech, the noble Lord, Lord Rooker, observed:
"It is not just about the punishment in the event of failure; it is about trying to change institutional behaviour".—[Hansard, 27/11/07; col. 1209.]
In Committee, he added to a similar comment about institutional behaviour the words:
Later in the proceedings, the noble Lord told the Committee that the clause was drafted so as to send a signal to the Civil Service. It has always seemed to me wildly improbable that civil servants, if they even remember the wording of Clause 1, would say to themselves, "Gosh, I may be held responsible in 30 or 40 years' time if the target is not delivered". It is surely much more likely that they will say, "There is not a cat's chance in hell that I or my Minister, if we are still alive, will be blamed". In any case, the courts are never going to get involved in making judgments about those extremely complex issues, which may well be totally outside the control of any particular Secretary of State.
On that occasion in Committee, the amendment was not pressed and we decided to have another go at Report. I seem to be fated. Once again, I was out of the country on day one of the debate and, once again, my noble friend Lord Caithness powerfully moved an amendment in which we attempted to overcome all the objections that Ministers had raised on the previous occasion. If we had succeeded, the original Clause 1 would have been replaced with the following clause:
"It is the duty of the Secretary of State to promote policies and to take measures, including the setting of targets and five year budgets, best calculated to ensure that the net UK carbon account for the year 2050 is at least 60 per cent lower than the 1990 baseline".
The words "promote policies" were taken from the National Health Service Act 1946 and "best calculated to" from the Coal Industry Nationalisation Act 1946, precedents that I thought might appeal even to Ministers in a new Labour Government.
Among those who supported the amendment were the noble Lord, Lord Turnbull—I am very glad to see him in his place—who said that he found the logic of the amendment compelling, the noble and learned Lord, Lord Lloyd of Berwick, for the reasons that I have already cited, and the noble Lord, Lord Puttnam, who chaired the Joint Committee with such distinction.
Rather unexpectedly, the amendment was grouped with government Amendment No. 50, which introduced into the Bill for the first time what is now Clause 13. Although the noble Lord, Lord Rooker, stood alone among those who spoke in defending Clause 1—the score was one against nine—my noble friend Lord Caithness felt that we should carefully consider the effect of new Clause 13, which moves things a little further in the right direction, and come back at the next stage. Because an amendment about the principal aim of the Bill was carried, the original Clause 1 has now become Clause 2.
I am extremely grateful for the help that I have received since the conclusion of Report from the noble Lord, Lord Turnbull—the former Cabinet Secretary and head of the Home Civil Service—the noble and learned Lord, Lord Lloyd of Berwick, and the noble Lord, Lord Puttnam, in arriving at an elegant solution that would strengthen the Bill and bring together in one place and very early on the most crucial duties of the Secretary of State. We have combined the provisions of Clause 13 on the preparation of proposals and policies to enable carbon budgets to be met with the requirement of Clause 2 to ensure that the 2050 target is met. If my amendments were accepted, the crucial part of Clause 2 would read that it is the duty of the Secretary of State to,
"prepare such proposals and policies (including the setting of five year budgets) as the Secretary of State reasonably considers will—
(a) ensure that the net UK carbon account for the year 2050 is at least 60% lower than the 1990 baseline, and
(b) enable the carbon budgets that have been set under this Act to be met".
The clause would then continue with existing subsection (2), which defines the 1990 baseline, and with the remaining components of Clause 13, which cover sustainable development and the role of our national authorities.
One noble Lord has told me that he has a doubt about the amendment, as the clause would still provide that the account for 2050 was at least 60 per cent lower than the 1990 baseline. He would like it to be higher. If, however, I had been minded to attempt to merge yet another amendment into the clause, I am certain that I would be out of order at Third Reading because it would reopen an issue that had already been voted on and decided at an earlier stage.
The word "reasonably" has been included in the amendment at the suggestion of the noble and learned Lord, Lord Lloyd of Berwick, who like me had initially been tempted to stick to the words "best calculated", which were used in my amendment on Report. We judged it wiser to stick to the basic formula that the Government had used and therefore approved in Clause 13.
The noble Lord, Lord Turnbull, pressed the case for the amendment in a very helpful letter that he sent to the Minister and copied to those who took part in the debate on Report, in which he argued that,
"it relates to what civil servants actually do, ie give policy advice, develop trading frameworks, advise on tax rates, and draw up and enforce regulations etc. These responsibilities will be reflected in departmental objectives and can be cascaded down into individual job descriptions in a way a national CO2 target cannot".
In other words, as he argued on Report, instead of trying to pin everything on the nation reaching its target in 2050, the amendment would create a duty to deliver everything that makes the objective possible.
While a civil servant or a Minister is never likely to be held responsible for the non-achievement of the 2050 target, one can envisage Parliament and even the courts holding them responsible for the production of policies that are clearly in conflict with that objective. I offer a perhaps exaggerated example. Let us assume that, a short time ahead, we are faced with an energy supply crisis. Gas has been cut off by Russia to Europe and the nuclear programme is running years behind schedule. The Minister announces that we are to build a large number of coal-fired power stations without the necessary cleaning equipment and that we are to import large quantities of heavily polluted coal from some other part of the world because that is where the supplies are economic and available. There can be no question but that Parliament and, I suspect, the courts would argue that that could not be held to be in line with the objectives that our clause sets the Secretary of State.
Perhaps even more important is the requirement to prepare policies that reasonably can be judged to achieve the interim targets and budgets. During our debates, there has been widespread agreement that the 2050 target will be achieved only if prompt and effective action is taken to achieve the 2020 target and the interim budgets along the way. My amendments would not only ensure that civil servants and Ministers had to prepare policies likely to achieve what we all want—the 2050 target—but guarantee continuous, political pressure if the five-year targets were missed or looked like being missed.
The existing clause is little more than a spoof. The Government are pretending to the world that we are the first country to impose a statutory, legally enforceable duty to achieve such a major environmental target, but it will not take long for the rest of the world to realise that the Bill does nothing of the kind. Thanks to the combined efforts of noble Lords sitting in different parts of this House, the Government have been given the opportunity to give much greater strength and clarity to the Bill. I hope that the Minister will accept that opportunity. If he does not, I shall seek the support of the House to achieve this important improvement. I beg to move.
My Lords, I support my noble friend, having put my name to a variation of this amendment for the third time. As my noble friend has said, we worked on this at Second Reading, in Committee and on Report. Although, I feel that we could have won a Division had I tested the opinion of the House on Report, it would have been wrong to do so in view of government Amendment No. 50, which I needed to consider. The Government's only argument, which the noble Lord, Lord Rooker, has used on every occasion, is that this amendment would weaken the Bill. I dispute that. This amendment strengthens the Bill. It makes it a realistic proposition rather than a fanciful idea, which the original Clause 1 did by imposing a duty on the Secretary of State that could not be upheld in the courts.
As has been said, we discussed this in the Joint Committee at great length. Without doubt, this is one of the key amendments now left to be agreed by the House in order to put this Bill into the right shape to send to another place. If we do not alter it in this way, there is little chance that the other place will have even the opportunity to consider such an important matter. For that reason, and everything I have said at previous stages, I support my noble friend Lord Crickhowell.
My Lords, when an amendment to Clause 1 was debated on Report, the Minister was rather dismissive of it. He argued that it would weaken the Bill. We now have a new amendment, tabled by the noble Lord, Lord Crickhowell, and the noble Earl, Lord Caithness. I shall make another attempt to persuade the Minister of its merits. First, the amendment has the merit of elegance and clarity in its drafting. In relation to the targets, it brings together in one place at the beginning of the Bill the things that the Secretary of State has a duty to do from the original Clause 1 and the things that the Secretary of State must do under new Clauses 13 and 14. That will make the Bill's purpose much clearer and the way it operates more logical.
Secondly, the Minister argued on Report that the amendment would weaken the Bill. It could be said that the Government draft is stronger because it relates the duty directly to the final objective set for 2050, but in my view this is illusory. The link with the 2050 target is an indirect one, depending not only on what the Secretary of State does, but also on how society responds. As a result many legal experts, some of them in this House, have cast doubt on whether the Secretary of State could successfully be challenged in law. The amendment is superior, in the view of many, because it relates the duty to those things a Secretary of State actually does—developing policies and implementing them—and not to something that a Secretary of State does not actually do, which is emit CO2. The test then becomes one of whether the actions or omissions of the Secretary of State are reasonable in relation to the objective. That looks to me like a proposition that a court could handle.
The Minister also argued that one of the purposes of the Bill is to require departments and their civil servants to look continuously at whether their actions could be challenged in law, thereby evoking the famous JOYS booklet, The Judge Over Your Shoulder, first published in 1987 and now in its fourth edition. Again, this would be more effective if it related to what civil servants actually do in terms of giving policy advice, enforcing regulations and so forth, as the noble Lord, Lord Crickhowell, explained. The purpose must be connected to the objectives of the department and those of individual civil servants.
Thirdly, the new Clause 2 brings greater and more continuous pressure of enforcement. At present there are to be two channels, the first of which is political accountability. If any of the targets for the five-year carbon accounts are missed or look like being missed, the Government must report to Parliament on why and what they are going to do about them. The second channel is the threat of legal challenge for failure to meet the duty to deliver the objective for 2050. But this really begins to bite only when 2050 comes into sight and it becomes undeniable that the target will be missed. The advantage of the amendment is that the duty will apply to the quinquennial targets as well as to that for 2050, so bringing the political and legal enforcement processes into line.
The defect in the Bill which this amendment addresses has not just come to light. It was identified last year by the Joint Committee on which many of your Lordships served, and while the introduction by the Government of what are now Clauses 13 and 14 go some way to rectifying the fault, in my view they do not go far enough. Therefore I hope very much that the Government will complete the process by agreeing to adopt this amendment and refining it if necessary during the Bill's passage through the Commons.
My Lords, I congratulate the noble Lord, Lord Crickhowell, on his tenacity in pursuing this important issue. Certainly one of the big messages from the Government has been that this Bill leads globally in the fight against climate change because there are statutory targets, yet there are two fundamental problems with the claim, one of which this amendment would begin to put right. The statutory targets do not apply strongly enough to the five-year budgets that frame the short-term areas of action and count rather more than the target for 2050. We also have a statutory obligation on Ministers which concerns the 2050 target, but in the Bill is set at 60 per cent. We are therefore in the strange position of having the Prime Minister expecting the climate change committee to come back with a reduction of around 80 per cent, but the target set out in primary legislation remaining at 60 per cent. The legal obligation in 2050 remains at 60 per cent rather than 80 per cent. The amendment goes a long way towards solving the interim issue.
We on these Benches have a particular problem because we believe that it is absolutely wrong for the incorrect target to be on the face of the Bill that passes from this House. This matter was voted on and the opinion of these Benches was rejected. I do not agree with that but I accept the will of the House. We will fight for our target in the other place when the Bill goes there.
Again I congratulate the noble Lord on this approach. The amendment would strengthen the Bill considerably. As the House has already expressed its will on the 60/80 argument, we on these Benches support this strengthening of government accountability.
My Lords, I, too, support the amendment. In a sense, I have been involved in shuttle diplomacy on this subject for 10 months now, and two things have happened during that time. First, my journey has taken me from thinking that the noble Lord, Lord Crickhowell, was on to something to becoming convinced that he is more than on to something and is absolutely correct. Secondly, during those 10 months I had an opportunity to talk to a great number of people with a great deal more expertise in this area than I will ever have, and 100 per cent of them have, in one form or another, confirmed that the amendment is correct.
On the other hand, all I have heard from the Government is something I can only sum up as "not invented here". I have not heard a single cogent argument offered in support of the position the Government are currently taking. Therefore, I unequivocally support the amendment.
My Lords, I congratulate my noble friend Lord Crickhowell most warmly on the assiduousness with which he has pursued this issue over, I dare say, the 10 months to which the noble Lord, Lord Puttnam, referred a moment ago, but certainly through all the proceedings in the House.
I am not a veteran of the pre-legislative scrutiny but, as I said on Report, I was the only parliamentarian from this Parliament who sat through the entire CPA conference on global warming which took place in the last week of November last year. In the context of the claim which the Government properly and reasonably make that we are setting an example and are the first Government to legislate—an issue to which my noble friend Lord Crickhowell referred—exactly that claim was made by the government spokesman early in the conference. Its global universality is one of the virtues of the Commonwealth and, after he had left, some of us smiled as a series of Ministers from what I will call the smaller island territories said that the situation was so threatening and so imminent for them that they had already carried through such legislation as was required, and at least 10 had full-scale plans at a much higher state of advancement than anything we can claim. It is therefore important that the example the Government set out to give should be as good as possible. If my noble friend's amendment improves it still further, that is all to the good.
I do not propose—I said I would not do it on Report and I shall not do it now—to go through the British Library experience to which I alluded in Committee. However, it still remains with me. The test of any Secretary of State during the 20 years that the British Library was being constructed was that he or she would be held responsible for the exact state of the business. However, in view of the fact that the Government's insistence on the wording which is currently in the Bill prior to my noble friend's amendment has so concentrated Whitehall's mind, I will say—I did not say this in Committee—that when the construction had been going on for 15 years and book cases were being installed in the cellar of the British Library, the book cases developed a habit of ejecting the books and putting them on the floor, which in the concept of a flagship library is not a wholly satisfactory development. I was sent into battle armed with a happy Q & A: Question: "Secretary of State, why is it that the shelves are throwing the books on the floor?" Answer: "Shelves, being inanimate objects, cannot throw anything".
Anything that can be done to reinforce the Government's position is good. I am a warm supporter of my noble friend's amendment.
I speak on this issue for the opposite reason from the noble Lord, Lord Teverson. The Bill enables the Secretary of State to amend the 60 per cent target to 80 per cent. It is a red herring to suggest that the target in the Bill is only 60 per cent. My concern would increase even more if the figure were set at 80 per cent; if the Secretary of State had a duty, as under the current Bill, to ensure that that target were met, I would be deeply concerned. The Government would find it difficult, if the climate change committee recommended 80 per cent, not to be seen to be setting challenging targets. It would be almost a game of chicken. If the Government say they have a duty to meet a target, they have to be pretty sure they can meet it; otherwise it is a pointless duty to set.
The target can be amended. If a duty were placed on the Secretary of State to ensure that a figure was met, he or she simply could not guarantee to meet it. The other reasons that the noble Lord, Lord Turnbull, gave on the process issues are equally strong and are another reason to accept the amendment. As in the Joint Committee, I find that on this occasion I agree with the amendment of the noble Lord, Lord Crickhowell.
My Lords, as has been made clear, the basic intentions and the philosophy behind the amendments have already been debated in your Lordships' House. However, along with other noble Lords, I thank my noble friend Lord Crickhowell for his persistence in tabling these amendments. In addition, the amendments in their present incarnation, as my noble friend has said, are an improvement based on the debates we have had, and he has indicated the joint effort that lies behind them. I am pleased to see this set of amendments tabled at this stage. We have heard from across the House noble Lords' support for them.
As has been said, the amendments seek to address some problems with the Bill's most important duty: that of the Secretary of State to ensure emission reductions. We want to stress as ardently as possible that our intention is to strengthen that duty, not to weaken it. Despite first appearances, the amendments strengthen the Bill. The Minister claimed that the Bill, which places a duty on the Secretary of State to ensure that emissions are reduced by 2050, is the stronger. However, the Government still have not adequately responded to the argument that the link between the Secretary of State and the final objective for 2050 is an indirect one.
Yes, the Secretary of State should be at the helm of policy, the responsibility of reducing emissions should be driven across all departments and it is of vital importance that the targets are reached. Those issues are not under dispute. What is being debated is the best way of ensuring that those things happen. Yet the first duty placed on the Secretary of State has little to do with the way that they happen—it is merely to guarantee results. I understand that the Bill then breaks down the individual duties of the Secretary of State and outlines, to a degree, the path to be taken, with the aim of achieving the 2050 target.
What, then, does a duty to ensure outcomes add to the Bill? Does it imply that after the Secretary of State has prepared proposals and policies to meet 2050 targets and has failed, he is further empowered to do anything necessary to meet that target? Or is it the intention to bring the Secretary of State to court in 2049, after four decades of Secretaries of State who have tried to reduce emissions, because the numbers are not adding up? Surely the point of this duty is to ensure that the effect of the Bill is felt across all departments. Having a duty that is tethered to a target 40 years away will make it more difficult to hold any Secretary of State to account. He could always claim that he is on track to reduce the emissions by 2050, though he knows that he might not even be around to see that date.
The amendments tidy up the language of duties and obligate the Secretary of State to do his job in a way that will ensure results. It places a duty on the Secretary of State to do what Secretaries of State do: to make proposals and to implement policy. It would strengthen the duty placed on him because he would have to justify how each policy fitted into the overall framework of reducing emissions. If that is what is going to happen in practice as the Bill stands, why are the Government reluctant to accept it and put it in the Bill? Why are they willing to risk setting the threshold for compliance too high, thereby negating it? Do they think that the Secretary of State will do anything other than make proposals and policies under the Bill as it stands? Is this not the way in which he will go about ensuring a reduction?
Essentially, we support the amendment because it scores a direct hit on something with which any legislator should be uncomfortable; namely, legislating for the result and not the process.
My Lords, I hesitate to rise because I am eight-to-one down. I thought that I might be nine-to-one down by way of repetition. Although I fear that my answers will be very much the same as previously, I take on board the points that the noble Lord, Lord Crickhowell, made and I agree with many of his sentiments.
I shall go through a little of the chronology of this part of the Bill, with which the amendments deal in isolation. It is as though nothing else is in the Bill. We have just heard that no legal requirement is placed on the Secretary of State other than the 2050 target but that is not true. The 2020 target is a legal duty; it is set out in Clause 5. All I ask is that noble Lords look at the facts of the Bill as it stands, rather than what it might have been or some of the early rhetoric of our debates. There is even a duty to publish a compliance action plan if one of the five-yearly budgets is missed. The idea that we have legislated for 2050 and ignored everything else is just not true. It is there in the Bill. If we are getting such inaccuracies the fourth time we debate the Bill following Second Reading, all I can say is that I am at a disadvantage.
I have responded to the letter of the noble Lord, Lord Turnbull, but fully accept that one cannot always be sure where the post goes. A load of letters went into the internal system earlier today. However, part of my speech is based on the letter, and the letter is based on the speech. In other words, the message is exactly the same.
The noble Lords' amendment addresses the strength and enforceability of the Secretary of State's existing duty in what is now Clause 2 and used to be Clause 1, and the need for that duty to place the Government under continuous pressure. In some ways we welcome that, as I hope I have made clear throughout the Bill's passage. We welcome scrutiny in both Houses and from outside bodies. We want to be as transparent and accountable as possible.
Clause 2 provides the Bill's overarching purpose and requires a specific outcome, and that should be maintained in the Bill. If we removed that duty it would place the focus on the process rather than on a clear outcome. The amendment's effect would be that the Government could fail to meet the 2050 target but still comply with their duty so long as they had developed what they thought at the time were the right policies. Without the clause, the Government would still be held to account on whether they had taken forward the right processes, but there would be no legally binding long-term target which placed pressure on the Secretary of State to achieve the final outcome as opposed to just going through the process. One has to separate those two functions. We genuinely believe that doing it that way would dilute the Bill rather than strengthen it.
On the other hand, as I hope I made clear in several of our debates, I agree with the noble Lord, Lord Crickhowell, about the importance of placing continuous pressure on Governments. Although we are debating amendments to this clause, it is worth putting the issue in the context of what happens in other parts of the Bill, including Clause 13. Clause 2 is only part of the picture outlined in Part 1. I have just referred to Clause 5, which places a duty on the Secretary of State to meet the 2050 target. It requires the Secretary of State to set the carbon budgets and,
"to ensure that the net UK carbon account for a budgetary period does not exceed the carbon budget".
Under Clause 18, the Secretary of State must publish a compliance plan if the budget is missed. Clause 9 requires that budgets be set with a view to meeting the 2050 target as well as the 2020 target and any post-2050 target. Clause 5—which I will come back to—also requires the Secretary of State to ensure that carbon budgets are met. The Bill therefore provides an ongoing duty on the Secretary of State to reduce the net UK carbon account. My point is that those are all in addition to Clause 2. Clause 13, which the Government added to the Bill after debate and scrutiny in this House, places a duty on the Secretary of State to,
"prepare such proposals and policies as the Secretary of State considers will enable the carbon budgets ... to be met ... The proposals and policies must be prepared with a view to meeting", the 2050 target.
The Bill's existing structure already provides a series of complementary duties. There is a clear outcome-focused duty to meet the 2050 target complemented by duties to make emission reductions on an ongoing five-yearly basis, and there are ongoing duties to develop policies. Taken together, that is a strong package of duties which focuses on the process while maintaining the outcome in the Bill. The amendment would remove elements of the existing structure in Clause 2 and the outcome-focused duty that the clause currently provides. It does not add to the existing requirements. We do not see how that could be a desirable outcome in either legal or policy terms.
The noble Lord, Lord Teverson, originally made the point about the duty covering the 2050 target and not the intervening budgets, but it is not correct. The intervening budgets are just the same, as I set out on Clause 5. The noble Lord, Lord Crickhowell, said that the Secretary of State had no ability to influence the UK net carbon account, but we do not think that that is correct. The Secretary of State does not have direct control over emissions levels, in the sense that he does not have his finger on the switch, but he can employ many methods to reduce the UK's emissions through regulation, incentives, encouragement and persuasion. The Bill also allows the purchase of credits from overseas, a subject we have debated and will return to, including government purchases if necessary and for those to be counted towards meeting our targets. So in a sense the Government do have an ability directly to influence the UK's net carbon account—which is made up of both emissions and the credits purchased overseas.
As I said, the ratio among noble Lords who have spoken is about eight to one, but that does not mean that I stand alone. It does not mean that I am wrong or necessarily that I have got it right. However, I will not do as the noble Lord, Lord Brooke, suggested. I will not make extravagant claims that I cannot back up when questioned. I have not done that on this Bill. On the first occasion when these claims were adduced, perhaps on Second Reading, I pointed out that Australia had legislated on some aspects of this matter. I am therefore not saying that we are the only ones doing this, that we are the world leader and No. 1 and that no one else has ever done anything remotely like this. I am talking about what is in the Bill, not what people think should be in it or thought was in it.
With our changes, Part 1 taken as a whole—I am not looking just at the narrow aspect of Clause 2, or Clause 1 as it was originally—constitutes a package that meets the objective that everyone is concerned about while not diluting it. We strongly believe that to approve these amendments would dilute the package in Part 1, as I have sought to explain. I therefore hope that, contrary to what he said, the noble Lord, Lord Crickhowell, will not press the amendment.
My Lords, one of the great advantages I have in responding to the Minister at this stage is that he has said absolutely nothing that he has not said in all the earlier debates. In almost every case those points have been addressed this afternoon by me or by the noble Lord, Lord Turnbull. It is always rather bad luck on a Minister to be given all these helpful papers from his civil servants before the debate as he feels that he has to do justice to them. However, we are so fond of the Minister partly because of these wonderful revelatory moments when he gives away just a little of his own thinking. He did it this afternoon when he said, "I agree with the sentiments of much of it". That gave us a clue about what had been going on in those conclaves with his colleagues at the other end of the House.
I must challenge two of his observations. He said that I had removed the focus from the 2050 objective. That is a curious remark when the very opening sentence of my amendment sets the Secretary of State to,
"prepare such proposals and policies ... as the Secretary of State reasonably considers will—ensure".
If that does not direct the Secretary of State to focus on something, I do not know what does.
The Minister also asserted that I had claimed that the Secretary of State had no power to influence. However, the whole of my argument was that, by the preparation of policies, the five-year budget process and so on, he does have the ability to influence. What he does not have is the ability to ensure.
The Minister kept calling in aid Clause 5, which apparently is going to bail him out of the mess that his department has put him in. However, Clause 5 states:
"It is the duty of the Secretary of State ... to ensure".
We are back to that word "ensure", which is exactly the word we are criticising in what is now Clause 2.
We have gone over this many times. All I would like to do at this stage, before the crucial final words I should utter, is to thank all those who have supported my amendments at this and earlier stages, particularly those who helped to draft this amendment and who supported it today. As this is the last occasion on which I will speak on the Bill in this House until it is sent back to us from another place, as I suppose it will be, I thank the Ministers for the courteous way in which they dealt with all the points we made. As I say, I also thank the Minister for those wonderful revelatory moments with which he has endeared himself to the House. If only his colleagues at the other end of the House really understood how this House works and how to influence it, they would not get into the mess in which they have got themselves on this occasion. I ask the House to vote for the amendment. I wish to test the opinion of the House.
My Lords, in moving the amendment, I shall speak also to Amendments Nos. 5 and 10. These are minor technical changes to the Bill. Amendments Nos. 4 and 5 are intended to provide greater consistency in the use of the terms "emissions" and "amount of emissions" in Clause 24(2). Similar wording is included elsewhere, for example in Clause 15 and earlier in Clause 24.
Amendment No. 5 also makes clear that if we are to treat emissions of a greenhouse gas for a particular year as if they were emissions of that gas for 1990, then that applies to the Climate Change Act as a whole, not just for that clause.
Amendment No. 10 includes reference in paragraph 25 of Schedule 1 to the Committee on Climate Change's review of the 2050 target required under Clause 33. This amendment is simply to make sure that the list of the committee's functions in Clause 33 is comprehensive, so that if any information is needed on any of the committee's activities, it can be obtained. A similar amendment has already been made to the second subsections of Clauses 40 and 41, regarding powers to give guidance and directions respectively. I beg to move.
My Lords, the amendment has been tabled in the interests of further clarification on an issue that, although it has been debated in depth, demands further scrutiny. The issue is of such importance that addressing it again at Third Reading is as important as debating it for the first time. I will be brief, but I want to explain what the amendment does and our intentions in tabling it.
It offers further clarity to a provision that is already in the clause—we understand that—which is that the duty to secure a 70 per cent reduction in domestic emissions exists only in so far as the budget is concerned. There is nothing to stop a Government buying more and more credits after that to secure further reductions. This was motivated by the evidence that the noble Lord, Lord Turner, gave to the Environment, Food and Rural Affairs Committee last week. We appreciate that our amendment does not entirely address the noble Lord's concern.
However, we bring this issue before the House again today because of some of the concerns that he did express—namely, that there is a chance that the current 70/30 split might result in the Government having to set less ambitious targets. That would be a sad repercussion for a well intentioned amendment. We want to make sure that this does not result in fewer emissions reductions and we hope that there would be some way of making the amendment workable, while maintaining the integrity of its intention.
Let us make no mistake: your Lordships have spoken. This House resoundingly affirmed its commitment to a 70 per cent domestic reduction; but, as we noted in our speech to that amendment, we would be willing to consider other ways of going about this, should it not be workable. The important point was to get a firm commitment, beyond a few general ministerial comments, that domestic reduction was of primary importance. It might be that economic circumstances and the sheer time it takes to fit new technologies into existing frameworks conspire together to mean that in one budget a 69 per cent domestic reduction may be better than a reduction of 70 per cent if the total reduction can be higher by virtue of the ratio being different. I simply do not know. What I do know is that the most important part of our fight against climate change must occur within these shores, and your Lordships have voted to recognise that fact.
The Government seemed to think that there were problems with the structure of the amendment and that somehow it was unworkable. It was with disappointment, then, that I saw that they had not tried to address this issue themselves. Can the Minister give any details about conversations that he has had with the Treasury regarding overseas caps? Will he give the House an assurance that he is working to find a way to cap overseas credits that reflects the will and opinion of this House, or is he simply content to let this stand in the Bill in its current form? Essentially, we hope that with this amendment the Government will be able to give us assurances about their plans regarding overseas caps now that the Bill has been amended. I beg to move.
My Lords, with respect to the noble Lord, Lord Taylor—I know the work that he has done on this—I still do not really understand why the amendment is necessary. Clause 25(1) refers to a figure of at least 70 per cent. Throughout our discussions on this subject, we have stated that this relates purely to the targets and does not affect any trading systems; nor does it affect the Government's ability to purchase external credits under the clean development mechanism, the Kyoto mechanisms or the ETS, although the latter is primarily a commercial scheme. If they wish to do so, that is completely within their powers. The clause simply uses the words "at least" with an accounting target in the UK carbon account. It does not need to reflect any other actions by government or commercial companies. Therefore, from these Benches we would find it strange if the amendment were needed. The fact that Clause 25 is clear and simple is what commends it most. Having said that, I agree with the clarification, although I do not think it is necessary to put it in the Bill.
My Lords, I fear that I shall disappoint the noble Lord, Lord Taylor, on the specific questions that he asked. We had good debates on this issue in Committee and on Report, but your Lordships' House spoke clearly on the question. We now have Clause 25 in the Bill and we think it is right to leave it to the other place to consider it.
Amendment No. 6 has come late in the day and there has been no time to consider it across government. Unlike in the other place, starred amendments in this place are debated the day after they are tabled. In the other place, this amendment would not even have been selected because it was tabled only on Friday for a debate on Monday. Therefore, I have been party to no discussions about the amendment. The discussions about how the Government will deal with the Bill in the other place have only just started and my colleagues there said to me, "We want to wait until you've finished with it because we don't know what else will happen". As noble Lords saw from the earlier debate, we came close to making another major change to the Bill. Therefore, positions have not been set and lines in the sand have not been drawn. Basically, as will be seen, we have confined the Government's amendments at Third Reading to ones that conform to the rules of your Lordships' House—that is, they are just tidying-up amendments. We would not have brought back a large, substantive amendment on this issue even if we had a fixed position on it, because that would have been outside the rules.
Our initial analysis of the amendment is that it adds very little, if anything, to the framework of the Bill. Nothing in the Bill, including in Clause 25, prevents overachievement of the budget set out in Clause 5. That is what I said earlier and it is what the noble Lord, Lord Teverson, said.
The key question for any Government in setting a budget under Clause 5 will be the costs and the benefits of any of the given budget levels. Any restriction on the use of overseas credits would be a relevant factor in that calculation, but this relates to the setting of budgets rather than meeting them or even going beyond them, if it is desired. This does not change our view that the issue should be considered in the other place and, therefore, I am in no position to bring a considered view on this to the House this afternoon.
My Lords, obviously I am disappointed that the Minister is not able to respond as he would wish. If the amendment had been laid before, it may have been possible for the Government to consider it. None the less, I hope that the Minister will accept that in tabling this amendment we were seeking to be helpful and to clarify the position of what we think is an extremely important clause.
Clause 25 places on the Secretary of State a particular responsibility to ensure that domestic reductions are at 70 per cent. We accept that that may well be a burdensome responsibility, but it is one that we believe is part and parcel of making a success of this Bill. Although I am disappointed that we are not able to put this amendment into the Bill for clarification of the text, I am grateful at least for the chance to discuss it. I hope that the Minister will be able to advocate the sentiments behind my amendment when he has discussions on the Bill as it moves to the other place. In the mean time, I beg leave to withdraw the amendment.
My Lords, I shall speak also to government Amendment No. 8. This relates to the Committee on Climate Change and its powers and functions, which we discussed earlier. It will provide the Government with independent expert advice and keep track of our progress towards meeting our targets. We consider that the Bill as it stands provides a strong institutional structure for the committee. On Report, we made a number of enhancements to further strengthen the transparency and accountability of the Bill's framework to ensure greater clarity about the expected progress over the whole of the budget period. We also discussed amendments tabled by the noble Lord, Lord Dearing, and these government amendments respond to the points made during that debate.
I realised that during the course of that debate, I had the noble Lord, Lord Dearing, with me through most of my speech. It was only in the last few minutes that I lost him and, privately afterwards, I informed him that in the last few minutes I had stuck to the brief. The noble Lord made some valuable points and I hope, in what I am about to say, that it will be appreciated that we have listened and had discussions about this.
In introducing his amendment on Report, the noble Lord, Lord Dearing, said that,
"it is in the interests of the Government and us all that the Government should have, through the committee, the information and analysis required to formulate good policy".—[Hansard, 11/3/08; col. 1494.]
The Government agree with that sentiment, and these amendments are intended to make it crystal clear that the Committee on Climate Change may do anything that appears to it necessary or appropriate in relation to any of its functions. That includes gathering information and carrying out research and analysis, and commissioning others to carry out such activities. Importantly, this also includes publishing the results of all such activities, if the committee so desires, so that information can be made public and openly debated. For instance, in providing its advice on budgets and targets, the committee will need to carry out an in-depth analysis of the potential for reducing emissions across the economy and rationally presents the costs, benefits and other impacts of doing so. It is also now required to advise on the sectors in which there are particular opportunities to reduce emissions and to publish the reasons for its advice.
We expect that the committee will publish its workings in some detail, so that its advice is seen as being as credible as possible. For comparison—although this is not a target—the first report by the Low Pay Commission ran to almost 300 pages, so we will not be short of analysis. That is not a target but we would expect the committee to publish its workings in some detail. We want its advice to be credible in the view of the public. The decision on what level of analysis to carry out and to publish, in support of its advice, is for the Committee on Climate Change to take and nothing in the Bill restricts that.
The committee's analysis will also inform its annual report to Parliament which will be an essential part of holding the Government and the country to account for progress. Clause 35 requires that the committee's annual report must refer to progress made so far towards meeting the targets and budgets; to progress that remains to be made; and whether, in the committee's view, the targets and budgets are likely to be met. So if the Committee on Climate Change considers that further progress is required to meet the United Kingdom's carbon budgets, there is nothing in the Bill which would prevent it from using its annual report to point out exactly where in the economy it believes there is the greatest potential to reduce emissions, and so enable the United Kingdom to get back on track.
As I have consistently argued, it is the job of the Government to draw policy conclusions from the committee's analysis, whether that is analysis in support of the committee's advice on budgets or contained in the committee's annual report to Parliament. So, for instance, we could imagine a scenario where the committee's analysis demonstrates that there is a cost-effective potential to reduce emissions, say, from domestic heating, or from increasing the energy efficiency of existing homes. But it would be for the Government to decide how to tap into that potential—whether to regulate, to tax, to incentivise, or to encourage, and when to do so. That will ensure that the Government retain political accountability for their decisions.
I hope that is clear. When these amendments are placed in the Bill, it will be seen that a committee of the calibre of the Committee on Climate Change will have a much freer hand—not carte blanche—than might have been thought before this debate started. I beg to move.
My Lords, I rise briefly so that the annunciator does not have to be changed, as it has had me moving the amendment for the past couple of minutes. I support the amendments in this group. On Report, I called the amendment tabled by the noble Lord, Lord Dearing, which had a similar intention, the Frankenstein amendment and this seems to be Frankenstein night, missing perhaps that extra final charge from the electrical condenser, but, none of the less, bringing new life to the committee. We welcome these amendments. Empowering the committee to conduct and commission its own research is an important concession from the Government. It is a credit to noble Lords in the previous debate and a credit to the Government that they have taken note of that debate.
The Committee on Climate Change needs to be armed with the potential to find out the information necessary to combat climate change without a direct order to do so from the Secretary of State. It is highly likely that the committee will notice areas that need further examination and that need to be brought to the Government's attention. Thus, it is welcome that the committee will now be empowered to do so. I hope it puts these new powers to good use. It is pleasing to see the Government finally taking on board a Conservative position: that this committee needs to have a power that comes from its scientific authority.
My Lords, as one who put his name to the original amendment of the noble Lord, Lord Dearing, I very much welcome the strong terms in which the Minister spoke to the amendments and described the ability of the climate change committee to take forward its own agenda in this area. Finally, I congratulate the noble Lord, Lord Dearing, on having pursued this strongly. He has achieved a good result.
moved Amendment No. 8:
Clause 38, page 20, line 21, at end insert—
"( ) In exercising its functions, the Committee may—
( ) gather information and carry out research and analysis,( ) commission others to carry out such activities, and( ) publish the results of such activities carried out by the Committee or others."
On Question, amendment agreed to.
moved Amendment No. 9:
Before Clause 80, insert the following new Clause—
"Guidance on reporting
(1) The Secretary of State may issue, or cause to be issued by an authorised body, guidance regarding the information concerning a company's greenhouse gas emissions which should be publicly disclosed by such a company as part of its annual reporting.
(2) The guidance may relate to the appropriate content and form of such disclosures or any matter necessary to promote the provision of transparent and comparable data regarding the greenhouse gas emissions of companies.
(3) The guidance issued under this section may distinguish between different categories of company according to criteria to be determined by the Secretary of State, such as turnover or market share or number of employees or any other criteria he or she deems relevant, and may contain different standards for each category of company in respect of the content and form of the disclosures or other matters referred to in subsection (2) above.
(4) Any company which is required to produce a business review under the Companies Act 2006 (c. 46) must report on greenhouse gas emissions having regard to any guidance given under this section, and the Secretary of State may provide that compliance with any such guidance will be presumed to constitute compliance with section 417 of that Act (contents of directors' report: business review) in respect of reporting on such emissions.
(5) The power to give guidance under this section includes the power to vary or revoke it."
My Lords, I am grateful to the House for allowing this issue to be raised again. The substance of the amendment was put both in Committee and on Report, and I fully realise that the,
"practice of the House is normally to resolve major points of difference by the end of report stage".
However, this had not happened because of the timing of the amendments at both stages. Amendments on this area were put close to 11 pm on the last day in Committee, and close to 10 pm of the last day on Report. The noble Lord, Lord Rooker, noted on Report that discussion in Committee had been "incredibly truncated". Discussion on Report was somewhat more substantial but, again, truncated by the late hour. This was certainly not something on which the opinion of the House could possibly be tested at that hour with the pressure of time. I am grateful to the Minister and the House for allowing this issue to be properly examined now and I am grateful for the support of the noble Lords, Lord Dubs and Lord Whitty, and the right reverend Prelate the Bishop of Liverpool, even if several of them cannot be here; the annunciator being stuck on Amendment No. 6 is probably not helping.
The more I look at this issue, the more I see it as a litmus test of the Government's seriousness. They are to be congratulated on bringing forward the Bill; now it must make a difference. In some ways, the amendment, limited though it is, reflects debate on many of the keys areas of the Bill. I shall explain what it is about, and why I think as I do.
A couple of years ago, we passed the Companies Act, bringing company law from the 19th and 20th centuries into the 21st. As it passed through this House, we insisted that, at the very least, quoted companies over a certain size should have a duty to report on various things, one of which needed to be their impact on the environment. Clause 417 of the Companies Act 2006 requires directors of quoted companies to include information on the impact of the company's business on the environment in their business review. A company director must also,
"have regard ... to ... the impact of the company's operations on ... the environment".
Amendment No. 9 states that those companies which are required to report on their environmental impact should include in that report information on their greenhouse gas emissions. Simple and non-controversial enough, you would have thought, and something which might be considered to be implicit in any environmental impact report. But we know it is not. Many companies do, or plan to do, this, but others do not. We seek to bring them up to the same standard. For companies which do not have this responsibility, we have a provision for the Secretary of State to guide on it. That is what this amendment is about. It is about being specific about something which is already supposed to be happening.
So why do I think this is a litmus test? I am spokesperson for the Liberal Democrats not on the environment but on international development. I bring forward the amendment because I recognise the impact that climate change will have, first and foremost, on developing countries. The Bill is being overseen by Defra, and led for us by our environment team. A cross-team, cross-party approach is surely what this issue requires. The Minister could not have been more refreshing, as we have heard, in his approach to the Bill. His heart is clearly in it. But remember those discussions earlier in the Bill about whether it should really be the Prime Minister who oversees this, because it must be implemented across government and across all departments? Of course, the Companies Act belongs to the new DBERR department, or what the noble Lord, Lord Rooker, prefers to call the DTI.
That is why the Government's reaction to our amendment is a litmus test. Will what Defra says must be done be seen through by DBERR? What does DBERR make of this Bill? Or is the problem the Treasury, given the problems of OFR and the business review of the Companies Bill? I have looked very hard at what Defra and DBERR say on this area and what the Minister said last time. There is more than a cigarette paper that could be slid in here, and that is what worries me. If, at this incredibly early stage, DBERR is apparently unwilling to countenance a spelling out of what in all honesty—and straightforwardly—ought to be included by quoted companies when they report on their impact on the environment, what possible hope have we for taking forward even more difficult decisions? The amendment does not force change on companies, though of course we hope that transparency, openness and simply working things through would indeed have that effect. It simply asks for a report.
I shall remind your Lordships. The Minister said that,
"these are incredibly important issues ... the Government are very keen to promote transparency of carbon reporting by companies".—[Hansard, 18/3/08; col. 245.]
He told us that he had his own Private Member's Bill in another place at another time which actually promoted company reporting of this kind. He did not prevail under the then Tory Government. He is a "goodie", he says, and I think we would all agree. So it seems that he accepts the case, and has long done so. I note from Defra's website that, in January 2006, it issued a set of environmental reporting guidelines,
"to help companies to identify and address their most significant environmental impacts".
"Companies that measure, manage and communicate their environmental performance are inherently well placed. They understand how to:
improve their processes, reduce their costs, comply with regulatory requirements and stakeholder expectations, and take advantages of new market opportunities.
Failure to plan for a future in which environmental factors are likely to be increasingly significant may risk the long-term future of a business.
Good environmental performance makes good business sense. Environmental risks and uncertainties impact to some extent on all companies, and affect investment decisions, consumer behavior and Government policy".
It goes on to note responsibilities under the Companies Act. All of that would seem to indicate that the Minister should long since have agreed to this amendment. So what has happened?
Well, this is where the litmus test comes in, and whether, indeed, the Prime Minister should have overall control here. I turn to the DBERR website. Issued in July 2007, there is a paper entitled Duties of Company Directors. Margaret Hodge, the Minister, says in the introduction:
"Pursuing the interests of shareholders and embracing wider responsibilities are complementary purposes, not contradictory ones.
I strongly believe that businesses perform better, and are more sustainable in the long term, when they have regard to a wider group of issues in pursuing success".
In this she includes,
"their impact on communities and the environment. They do so at least partly because it makes good business sense".
So far so good. But is there anything at all in the body of this paper on directors' duties about the environment? Not a thing.
So I undertook a pretty thorough search, as if I were a company director—which, of course, it would be nice to be—of DBERR's website to find out all my responsibilities. There is all sorts of information and all sorts of helpful distillations of the new law. Is there anything on my responsibilities to the environment? Hunt as might, I could not find it. It may well be there, but if so it is pretty effectively buried. That makes me think that DBERR seems not to be engaged in this Bill or if it is, it is saying "Hands Off". "Delay". "Don't do this now". "Wait until X or Y". I notice the Minister nodding. I should like him to tell me, hand on heart, that it is otherwise. I certainly hope he can, but I can think of no reason, other than that, for why the Government have not simply welcomed this amendment and said, "Yes, this fleshes out what we intended. We can say that in the next round of reporting, the relevant companies ought to include their carbon emissions, and most of them will have done that anyway".
Last time, the Minister said that many companies are already doing this, and that is indeed the case. However, we know that it is patchy and not comparable. We need to level the playing field. We need to bring the tardier companies up to the level of the leaders. We have realised, not least via the Stern review, that action needs to be more urgent and sustained than we realised even as the Companies Act was passed. To delay for assessment, as the Government seem to suggest, for two, four or six years simply does not reflect the urgency of this problem. I am sure that Defra is only too well aware of that and I hope that, at the eleventh hour, the Minister will allow this change to the Bill. He and his colleagues at the other end of the building might already be becoming aware that there is a campaign building on this. Would it not be easier to be able to reply to all the postcards saying that they have listened, they agree anyway and this significant marker, this litmus test of how the UK will take this forward, has already been agreed to? I beg to move.
My Lords, I strongly support this amendment. I am not sure whether the noble Baroness mentioned this, but in Committee I moved this amendment. It was rather later than my bedtime and that of most noble Lords, so it is reasonable that we come back to this issue. I do not want to say very much because I agree with pretty much everything that the noble Baroness said.
The fact of the matter is that the targets in the Bill are not going to be delivered by legislation, by Governments, by and large, or, essentially, by individuals acting on their own through their own ethical considerations. They are going to be delivered by the main economic movers; namely, private companies acting to meet those targets within the framework that the legislation and the Government set. For those companies to change the way in which they behave in relation to carbon and carbon equivalents, they need to ensure that they have proper, verifiable measures of what the carbon and carbon equivalent is and that they are built into their central motivation for their management, their staff and their researchers so that the success of the company relates to a large degree to the way in which it minimises its carbon and carbon equivalent emissions. For that to happen, we need a proper system of accounting, supported by guidance and the accounting profession to ensure not simply that carbon is effectively traded on a verifiable and equitable basis but also to change the way in which companies behave, research is rewarded and managers receive promotion to highlight the company's image and its public relations. Without that dramatic behavioural change in private enterprise, we will not achieve the targets set in the Bill.
It will also have a knock-on effect, and I declare my interest as chair of the National Consumer Council. Unless those consumers who are driven by ethical and environmental considerations can see that a company is making serious efforts to drive down its carbon emissions, doing so better than competitor companies, making its contribution and changing the way it does business, there will not be a demand effect on companies to redouble their efforts so that the full leverage of competition begins to operate in a way that means that these carbon targets are most likely to be met. This amendment is therefore absolutely necessary.
As the noble Baroness said, this amendment does not prescribe exactly what the Government should do but inserts an enabling clause to deliver legislation that is already on the statute book. However, it is an essential lever that we believe ought to be in the Bill. If he is not prepared to accept the amendment today, I hope that the Minister will take it back to his colleagues and will come back during the passage of the Bill with something that does deliver the whole of Whitehall because—if I can be indiscreet for a moment as I no longer hold the office that the Minister holds—there are recalcitrant elements in Whitehall and the noble Baroness pretty accurately identified them. However, with the overall political commitment to the Bill that has been set by the Prime Minister and the Government, that opposition within Whitehall has to be overcome, and this is one way of overcoming it with the support of British industry.
My Lords, I very strongly support the amendment. I remember sharing a platform in a very supplementary capacity with the previous Prime Minister when he launched the project Accounting for Sustainability. It is a research project that is currently under way under the leadership of KPMG that intends to do exactly what the noble Lord, Lord Whitty, said, which is to put into the DNA of companies the consideration of something that, because our existing accountancy rules are retrospective and look at historical costs, has not, until comparatively recently, been part of the picture of practical management. This amendment is entirely consonant with the way in which the general picture is developing. As has already been stated, it is permissive and shows direction of travel rather than being mandatory, so it does not tie the Government's hands in an inappropriately specific way.
My right reverend Brother the Bishop of Liverpool is a signatory to the amendment. He is characteristically abroad on his environmental crusade, but I want to sign up to this as well, particularly as I chair the Church of England's Shrinking the Footprint campaign, which affects 18,000 of our churches and many other buildings. I know perfectly well that such measures as are described here are complex, but it is entirely possible to get compliance and make progress, even with an amazingly devolved and undisciplined organisation such as ours. This is an essential indication of whether the Bill will take advantage of an evolution in the general climate, particularly the climate that relates to how we account for our enterprises.
My Lords, I support this amendment. I shall add an additional reason. I would not have spoken had any other noble Lord mentioned it, but it is important. The Government have tripped over themselves, sometimes to the point of going to far, to be business friendly, but I get around and talk to businesses and the businesses I talk to tend to be those that are the most responsible and the most eager to be seen to be part of the UK community. They always say the same thing to me: "For God's sake, why do the Government not legislate and create an even playing field between we who wish to be responsible and those many other businesses that chose not to be?". If that is not the best possible reason for pushing this amendment through, I can think of no better. It is to ensure that the actions taken by the best companies are matched by those that are at present wishing to evade and avoid them.
My Lords, I am pleased that we have had the opportunity of debating this subject at a reasonable hour, which has meant that the issue has been well aired. I shall speak to a particular aspect of the amendment, which is reporting on emissions. In the light of the National Audit Office report, that is a pressing issue. The NAO review of measuring and reporting greenhouse gas emissions pointed out that one of the potential pitfalls of the implementation of the Bill is how we will know what we are emitting. In its current form the Bill marries the measurement of reporting mechanisms to international reporting practice. That is right and proper and we see nothing wrong with that. It is indeed important to accord with international standards in the face of an international problem.
However, the amount of carbon being emitted might not correspond to those figures. According to the NAO report, the environmental accounts compiled for the Office for National Statistics show much higher emissions than those being reported to the United Nations Framework Convention on Climate Change.
One reason for that is that the ONS emission figures include international aviation and shipping, which we are pleased will now be included in the Bill on the decision of your Lordships' House. However, that is not the only reason that the ONS statistics are higher. There are many different ways of calculating greenhouse gas emissions. What efforts are currently being made to standardise the method? To what degree can the Minister guarantee the accuracy of the figures?
If we are calculating our emissions according to international standards, but have further information that we are emitting in ways that are not required to be reported to the UNFCCC, what do the Government plan to do to address that discrepancy? Can the Minister give undertakings that the budgets will be set to take account of the fact that there are emissions that are not being included? Will the Government agree to alter their percentages in the light of the fact that there might be more emissions that need to be reduced—such that a 100 per cent reduction would really get rid of all gases?
I was dismayed to see the context of the NAO report. It implies that the Government have not been effective at all in reducing emissions, although they had led us to believe that they had been. What mechanisms will be put in place to ensure that ministerial reporting on emissions takes into account the entire spectrum of our emissions? Does the Minister not think that it is vital to be open and accurate in reporting emissions data?
The NAO report notes that new reporting budget mechanisms in the Climate Change Bill might,
"complicate the reporting framework further".
What is being done to ensure that that does not happen? Is there any way to ensure that that is not the case? Will the National Audit Office review the new framework?
Finally, and importantly, will the Minister confirm that he has held consultations following the report to avoid the traps that it outlines? In order to implement a proper system as proposed under the amendment, we need to have a proper measurement system.
My Lords, I very much support the amendment and was delighted to put my name to it. I am aware that my noble friend has a very difficult case to answer—probably as difficult a case as any Minister has had to answer on any issue for a long, long time. Does he agree that if such reporting takes place, it would have a salutary effect on the way that companies behave? Is there any other way in which the same end could be achieved, other than that suggested in the amendment? If there is, we would all be happy to hear whether the Government will propose it. I believe that there is no better way to achieve this end; I cannot think of any other way to approach it. I therefore very much hope that the Minister will be sympathetic to the arguments put forward.
As my noble friend Lord Whitty said, if this were on the statute book and given effect, the culture of companies would inevitably change. In tackling climate change, we are seeking to alter the culture of individuals and of businesses and companies. This is one obvious way to make enormous progress on that. Of course it is a competitive world. This is a case where competition can only be a good thing. I would like to see reporting on Tesco, on Sainsbury, on Asda. Then we would begin to see what is actually happening. If we had reporting on the different airlines, would that not be interesting and salutary? It might influence our behaviour as between Tesco and Sainsbury and between airlines—I had better not say British Airways these days. That would enable us as consumers to make informed choices. If any of us were shareholders—I am not, except through an ISA, a PEP—we could exert pressure on companies.
If companies had that pressure brought on them, I believe that they would respond, because that is the nature of the marketplace and of competition. While that information does not exist, companies are under no pressure. Even well-meaning people within companies—trade unions, sympathetic directors and sympathetic workers—are in difficulty because they do not have the ammunition with which to make the argument. Goodness me, if I were working for a company and could see that down the road they had a much better record, I would want to know why they were doing it and we were not and what we could do to change our behaviour.
I find the argument absolutely compelling. I look forward to my noble friend's positive response.
My Lords, I also support the amendment. It is true that there have been moral homilies to companies to report and, under the Companies Act, some requirement to report for some time, but work done jointly between the Environment Agency and some City institutions shows that reporting is very inconsistent, very difficult to track between companies and very difficult to track over time.
Recent research during the past three years has shown that you sometimes need to be a bit of a detective to find company reporting on environmental parameters generally and on climate change and carbon emissions in particular. Some of them tuck it away in corporate social responsibility reports separate from their annual reports and read, one assumes, only by sad human beings such as me and, perhaps the Minister. Others cite it in their annual reports but in ways that vary from year to year, so that one cannot even track the progress of the same company on a consistent basis year on year.
The Companies Act talked about the responsibility being laid on companies for reporting according to their degree of risk and the assessment that the company would make about what were the significant risks. During the passage of the Bill, we have heard just how significant climate change is as a risk not only to companies but to us as a country, to our economy, to social considerations and, indeed, to the whole globe.
It is instructive that most of the work that the Environment Agency has done on company reporting has been done jointly with the insurance industry and with the investment management community within the City, which is very interested in being able to track what it now realises is a key risk that will influence how it feels about insuring companies and advising on investment in companies. There is a big community out there, all coming at this from different angles, which would like consistent, comparable, clear reporting. It would be useful if that helped us to avoid too many fights in future about the basis on which we are going to keep the books on carbon emissions.
This is a bit of a diversion, but I cannot resist it. I was tickled by the search of the noble Baroness, Lady Northover, of the BERR website. If we are into BERR-bashing, I must confess that when BERR recently published its statement of purpose and objectives, I put a quick word search into it looking for the word "environment". It came up three times and I thought, "Yippee! This is really good: BERR saying 'environment' three times". Alas, on each of the three occasions, it was talking about the business environment and there was no other mention of environmental issues. Of course, I could not possibly comment in terms of the amendment on whether that is a reason.
This is a very apt amendment because it is proportionate. It makes the point that the requirements to report must not be too onerous; they must reflect the size and impact of the business. It is not a one-size-fits-all amendment; it is therefore worthy of support.
My Lords, I support my noble friend. We have just debated an amendment that deals with the 60 per cent reduction in carbon dioxide that we are considering. We should not forget that this is a 60 per cent reduction in carbon dioxide not from electricity or big business but throughout the country. We have a slight problem in that there is no way of measuring that, as many noble Lords have pointed out.
On Virgin Radio this morning, there was an advert from the Carbon Trust saying something like, "If you're a business, we'd like to help you to reduce the amount of carbon dioxide you produce". Perhaps that is the wrong way around. Business should have a moral obligation to do so if we are to push this forward. We risk producing a piece of legislation that does nothing more than be a piece of legislation, because there are other pieces of legislation. Local government has an obligation to try to reduce domestic carbon dioxide emissions by 30 per cent but no means by which to do so.
The first thing we must do is find out who the polluters are. The amendment would help to do that. I am not sure that business would see it as a bad thing. I was at a dinner with a lot of CSR representatives from companies. I think they would see it as a good thing. This is true especially of some of the big companies such as BT and Ikea, which have a good message to send. BT has just advertised that it has reduced its carbon dioxide emissions by 60 per cent. That is a good message which they should put to their consumers.
However, there is a problem here. DBERR—or is it BERR? I never know; it has changed its name three times. I still prefer DBRRE, or Debris, but that is just a personal thing. It rolls off the tongue better and does what it says on the tin—and Defra measure carbon differently. How is business meant to measure carbon? Is it meant to follow BERR's measurement of carbon or Defra's? That is just a brief point, but it is no bad thing because the real point of the amendment is to make directors of companies think about their carbon footprint.
I am a director of the Institute of Advanced Motorists, the commercial arm of which has been pushing fleet training. We used to sell that very successfully on the basis that the more white van drivers you train, the fewer accidents they have. The training also pays for itself very quickly because fewer accidents mean a smaller insurance premium. We now have a much more persuasive argument for companies. People who have been trained in advanced driving, which is actually safe and sensible driving such as not putting your foot to the floor when you are coming up to a red light, produce 10 per cent fewer emissions from the tailpipe. This is a very effective argument, which companies have been taking on board in the past two years. The saving in carbon dioxide, as well as the saving in fuel, is now resonating with fleet managers, whom we never thought we would get through to on the environmental aspect.
This is a good news issue, but one that must be thought about. We must appeal to company directors not only on main issues such as electricity but on every aspect from transport and procurement through to office management. This is an excellent amendment. If the Government do not accept it, little success will be built into the Bill in the next few years.
My Lords, I have just counted up the votes. I think it is eight or nine to one: or perhaps nine to zero, to be honest. As my noble friend Lord Whitty said—I realise that the Annunciator was not quite right when we came to the debate—the noble Baroness, Lady Northover, referred to moving the amendment and to the unsatisfactory nature of the way our first two debates were held at almost 11 o'clock on the first night. The general consensus was that it was not known that we had to stop at a certain time. I think it was a Wednesday evening, and the House does not sit after 11 pm on a Wednesday because of the early start on Thursday. The debate on Report, too, was held late in the day. This debate has not suffered the fate of the daylight hours debate, which started late on both nights and has not come back today. I take what the noble Baroness said about bringing this back at Third Reading, but it is not for me to pronounce on the rules of this place. It is on the Order Paper and therefore up for debate. It gives me an opportunity to set out the Government's position.
First, as I have said before, we are not starting with a blank sheet. Many United Kingdom companies, such as the 1,000 companies in the EU Emissions Trading Scheme, are already required to disclose their emissions.
My Lords, I have only just got going. I know that I have said that before. I am simply setting out the facts—and being very careful with my use of words—that those companies are required to disclose at present.
Secondly, there are non-financial issues, which are relevant to the development of performance in a business. Environmental matters can be included, as noble Lords have already said. The good companies will include them, and for lots of reasons. At the end of the day, being good companies, they see that the bottom line improves as well as the customer base. The Companies Act business review requirements require that, and we expect that many companies will report on climate change issues in their business reviews. We will start to get a picture of that in the next few years, which will feed into the proposals.
On the standards for reporting, I understand that debates, in which I was not involved, during the passage of the Companies Act 2006 concluded that, rather than mandatory standards for narrative reporting, we could encourage minimum compliance with guidance and a voluntary approach. That would ensure that directors gave proper consideration to reporting. A lot of work is being done to support voluntary reporting. I must point out again that UK companies are already global leaders—I may fall foul of this; I am not claiming that they are the best—in voluntary environmental reporting.
The noble Lord, Lord Taylor, asked about the National Audit Office report. As that report says, UK greenhouse gas reporting follows international reporting requirements and, as I think I said during the passage of this Bill, we follow the best practice guidelines and have been favourably reviewed by international experts from the United Nations climate change convention and the Kyoto Protocol. If that is not enough, Clause 29, which came across our radar earlier, requires that UK emissions,
"must be determined consistently with international carbon reporting practice".
There are some issues relating to what Defra is doing. We are supporting the secretariat to the Climate Disclosure Standards Board, which was launched at the World Economic Forum in January 2007. David Miliband attended as the then Defra Secretary of State. The objective of the board member organisations is to align their core requests for information from companies to ensure that they report climate change-related information in a standardised format that facilitates easier comparative analysis by investors, managers and the public.
I know that some people take the old-fashioned view that company reports are simply for the shareholders and that everyone else should mind their own business, but we have gone way beyond that. I am in a position where I can break the habit of a lifetime. We have just had a Division, which the Government won by two votes—I am incredibly grateful to the two Members—on an issue that would have been major. I am using my experience from this place and from the other place. I have to say that the postcards can be a real bore, especially when they come in separate letters from Members of Parliament and require individual replies, to which they are entitled. It is a brave Minister who spends large sums which have not been agreed with colleagues, but that is not an issue with these amendments. As I and others have already said, when the Bill goes to the other place, the Government's collective view and individual views will determine how the Bill finally ends up and the lines that are taken. There are no lines in the sand in that respect. Every amendment that this place sends to the other place will be considered and either rejected or modified, as happens when the Government think again. Therefore, taking this completely sensible and cost-effective approach, I am going to suggest that the House accept the amendment.
My Lords, I am not sure what I am supposed to do now. I thank the Minister very much. When he said that it was eight or nine to one, it may have reflected how he really felt on this. I very much appreciate the participation of Members on all sides of the House, but especially the Minister's agreement to the amendment.
My Lords, I shall speak also to Amendments Nos. 12 to 14 in this group. Having read carefully the Minister's reply to my amendments on the final day of Report stage, I am left with the impression that those who were advising him were unable to shake off their predilection for the top-down approach where the Government define the area of the economy to which each scheme applies. As such, several of the answers appeared to be a bit wide of the mark.
As we have just heard, we are back to the question that runs through all our minds. Just how urgent is the saving of carbon emissions to our future? Opinions vary from those who propose the Gaia theory, where the problem is so serious that it is too late for us to do anything about it, to those who think that the current ideas are all far too theoretical and are influenced by forces so far beyond our control that what we are doing is a waste of time. My impression is that the Government find themselves in a dilemma because they would like to appear to be green by taking action but realise that an over-reaction might put the British economy at a disadvantage. So their enthusiasm has to be tempered.
As the Minister pointed out during the previous discussion on this subject, the nearest approach that the Government have made to what my amendments seek to achieve was the first UK Emissions Trading Scheme. It was certainly admirable in its way and it exceeded its targets by some considerable amount, but again it was taken up by only 32 fairly large businesses. As the Minister will be aware this scheme has now closed for new entrants and continues only for those for whom it has a little longer to run.
Part 2 of Schedule 2 would allow the Government to bring forward a similar scheme, but that is unlikely as they will be concentrating on their auctioning of allowances, in a scheme such as the carbon reduction commitment, to targeted industries rather than seeking to provide another £215 million or whatever to subsidise a new scheme. If we are anxious to pursue every meaningful opportunity to save carbon emissions and take account of the urgency that most of us feel, I am left rather quizzical about the Government's rejection of the mechanisms required to participate in the whole project-based mechanisms offered under joint implementation.
At Report stage I asked the Minister if he could explain the Government's reasoning. If the Minister is unable to do that now, I would be most grateful to receive an explanation in writing. This group of amendments would allow the climate change committee or the Government to consider an opt-in scheme for project-based enterprises within the UK. It would dovetail in with the tradable allowance concept in much the same way as the project-based schemes that are approved under joint implementation can dovetail in with the national allowances and credits generated under CDM for those who are meeting their Kyoto targets. Amendment No. 11 proposes that meaningful enterprises from any sector of the economy can put forward schemes that provide the necessary savings defined by the objectives to be achieved. At the earlier stage, the Minister expressed some concern that my amendments would leave out the obligation for a consultation process as required by Clause 40.
In a project-based mechanism, the Government will not be laying down enterprises to which they want a scheme to apply, so the need for that obligation would be at the most formal, or even unnecessary. There would be plenty of opportunity for the Government to determine whether applicants are aware of the requirements placed on them once the application has been received.
In response to my amendment regarding carbon credits at that earlier stage, the Minister said that paragraph 17 would provide for the issue of credits. But my understanding is that the Government's approach to the issuing of credits is that it will be totally their decision. My Amendment No. 12 highlights the possibility that projects first proposed and then approved can generate a right to certificates which would be issued as part of a UK trading scheme. Amendment No. 12 recognises the fact that the definition of credits is contained only in Part 1 of Schedule 2, as it is important that this ability is seen to apply equally to schemes encouraging activities.
One of the objections the Minister was trying to flag up about those earlier amendments was that the existing paragraphs in the Bill,
"will enable suitable safeguards to be put in place to ensure that participants and activities are controlled appropriately".—[Hansard, 18/3/08; col. 158.]
But this is a hint of all the uncertainties that the top-down approach contains—such as what should be the level of allowances foreseen for each enterprise? What level of reductions in emissions can be envisaged without making areas of British industry uncompetitive in the global economy? I understand that the renewables obligation is taken to be adding about 15 per cent to our energy prices. At what level should the price of the allowances issued be set before the market has stabilised?
Does the Minister accept that the project-based approach contains its own regulator? If the price of carbon in the main scheme of allowances starts to become too dear, more enterprises will be attracted into the scheme and will help to contain the price. But if the price of carbon begins to be too cheap, no proposals will come forward to aggravate the position and so will considerably reduce an existing area of uncertainty. In the present proposals, anything of this nature could require government intervention. Amendments Nos. 13 and 14 would give the limited element of official control to the scheme that would be necessary. I beg to move.
My Lords, we discussed similar amendments on Report, and I thank the noble Duke for bringing these back. However, rather like the earlier group of amendments moved by the noble Lord, Lord Taylor, I do not have much more to add before the Bill goes to the other place. As I have made as clear as I can, and if we understand the intention of these amendments correctly, nothing in the Bill would exclude what the noble Duke seeks to provide for.
The Bill provides a framework approach. There is nothing in Schedule 2 to prevent the development of a trading scheme allowing people to opt in or to do anything that this group of amendments seeks to ensure. Obviously, decisions on issues such as this would need to be taken in the context of individual schemes if and when they are established under the Bill.
As I noted on Report, the Government set up the voluntary UK Emissions Trading Scheme, which ran for four years from 2002. That was a bottom-up scheme of the kind mentioned by the noble Duke. It involved large and small organisations such as Ford, Tesco, the Natural History Museum and, indeed, Kirklees Council. The scheme delivered carbon savings well in excess of those anticipated, and was a valuable learning experience. The example demonstrates that we are willing to look at the issues raised by the noble Duke. As I said, however, we are in no position at this stage in the Bill's progress to come back with a demonstrable government acceptance. No doubt these issues will be discussed in the other place.
I apologise because I have repeated what I said on the previous occasion. I cannot take the matter any further at this point in the Bill.
My Lords, it is interesting to note that the Minister has indeed come back with the same arguments he made at the earlier stage. I think it is quite likely that the Government could decide that they will bring in a scheme of this nature, but it is very much a government decision in the first instance. I am seeking to ensure that the possibility exists in the Bill. However, in the light of what the Minister said, I beg leave to withdraw the amendment.
My Lords, I beg to move that this Bill do now pass.
Moved, That the Bill do now pass.—(Lord Rooker.)
My Lords, I hope that it is proper at this stage for me to thank the Minister for the way in which he has conducted the passage of the Bill through this House. It has been a challenging Bill and many of us have learnt a lot about things of which we knew relatively little when we embarked on the process, but it has been conducted by the Minister in a most agreeable and pleasant fashion, and it must be to his liking that he has been able to accept amendments made at Third Reading in the way that he has today.
I also appreciate the support given by the Bill team to making this a sounder piece of legislation than it was when it started. The Minister said that he knew it would leave this place in a very different form from that in which it arrived. I hope that it has been improved and that the work of your Lordships will be considered in another place. I thank noble Lords for all their contributions, and here I refer to the cadre of skill that has come from the Joint Committee of both Houses chaired by the noble Lord, Lord Puttnam. I hope that noble Lords have strengthened the Bill and thus ensured that its implementation is that much more likely to be successful.
My Lords, I should like to add to those words. I have not taken a Bill through the House from these Benches before but I have found this a positive process. Much of that is down to the Ministers involved, particularly the noble Lord, Lord Rooker. The Bill team has also been particularly helpful; they have been involved in many useful discussions and supplied amazingly comprehensive briefing papers. I tried to fire off a few myself but the salvos came back very quickly. I still think that mine were right and theirs were wrong, but there we are.
I, too, would like to thank the noble Lord, Lord Puttnam. I had the privilege of serving on the Joint Committee which scrutinised the draft Bill. I felt that it was a good exercise and the Government should be congratulated on it. That pre-legislative scrutiny has helped the passage of the Bill.
As we all know, this is a framework Bill. It is now down to all of us—whether in opposition or in government, as citizens, and now businesses as well—to get on and implement its provisions in order to save the planet, or whatever the cliché is. But the work is still to be done.
My Lords, I have no desire to delay the House and I know better than most how the credit roll at the end of a movie can be exasperating, so I shall keep my contribution as short as possible. I want to say on behalf of the members of the Joint Committee how involved and engaged we were in the process, and we are hugely appreciative of the Minister for the way in which he has treated our recommendations. Interestingly, around 70 per cent of our recommendations have been accepted and incorporated in the Bill that will now go to the other end of the corridor. That is not a bad day's work.
I think we would all agree that the Climate Change Bill cannot succeed in a purely party political environment. We are in this together and we will succeed or fail together. As the Bill passes to the other place, and in every sense I wish it godspeed, I want to point out to the Government that the atmosphere out there in the world at large regarding these matters has changed in the 10 months since we started our consideration of the Bill. Just recently, articles by John Vidal, Andrew Rawnsley, Martin Kettle and Ian Sample have all essentially made the same point—that there is a developing informed scepticism about the commitment of this House and the Government in general to the intentions that lie behind the Bill.
Like many noble Lords, I thoroughly enjoyed President Sarkozy's extravagant flattery last week, but there is another voice out there. Some of your Lordships may have read an article recently published in the Guardian by the dean of the Lee Kuan Yew School of Public Policy in Singapore, Professor Kishore Mahbubani. I am grateful to him for allowing me to précis his words:
"While the West conducts a self-congratulatory conversation, the rest of the world sees an emperor with no moral clothing".
Professor Mahbubani describes three crucial flaws in the following terms:
"The first is its [the West's] inability to practise what it preaches. The second flaw is its refusal to recognise its track record of double standards ... whenever a western country has to choose between promoting its values or defending its interests, interests always trump values. The third flaw in western discourse is that when presented with a choice between 'doing good' and 'feeling good', the West almost always chooses the latter—because it costs less".
The Bill is a fantastic opportunity for this country to prove that it will not remain guilty of those flaws, and in that sense I commend it and wish it well.
My Lords, I am most grateful for the kind remarks that have been made. The Bill was new ground for many of us. I fully expected to follow its passage through the other place while doing the farming job so that I would be up to speed by the time it finally arrived here. I was as surprised as anyone else to be told last November that it would start in your Lordships' House because I have only taken one other major Bill through this House first, the Police Reform Bill when I was at the Home Office.
The Bill has not been party politically contentious, and that is an important aspect of it. As my noble friend has just said, while it has been considered for around four months in this House, it also underwent the scrutiny of the Joint Committee. I know it will be a surprise to the other place where, like the Human Fertilisation and Embryology Bill, it will be treated as though it has never been debated. Nevertheless, I think that we are sending it across in better shape, and I thank everyone for their help and co-operation. I thank in particular my two colleagues on the Front Bench for dipping in and out and for keeping me in order so that I have said the right thing at the right time on most occasions. I certainly thank the team in the Box and those who are not present today. I have not always followed the notes I have been given, but they were helpful in putting what I wanted to say into context.
Sometimes you have to take the will of the House. The only way you can get that is to stand at the Dispatch Box and listen. Indeed, I have to say to the noble Lord, Lord Taylor, that I did not have any choice. When we won by two votes I was not prepared to risk defeat on the amendment—it could easily have gone the other way—and soured the day's work. I decided while listening to the debate that it would be a good idea, with all the caveats I put on to it, that we should accept the amendment.
The House is grateful to the Joint Committee for its work because it will be shown to have been a real credit to the activities of committees of both Houses when the Bill is considered in the other place. We have had the odd late night on the Bill, which meant that staff were dislocated, and I am grateful for their efforts. I have had very good back-up. I have the best private office in Defra and in Whitehall, and I am extremely grateful for all the help I have had during the passage of the Bill.
On Question, Bill passed, and sent to the Commons.