Good morning, Mr. Cook. Clause 12 is important. Conservative Members in the other place did a splendid job in encouraging the Government to introduce indicative annual ranges. The inclusion of the ranges is a significant enhancement of the Bill. Friends of the Earth described the inclusion of the clause as
“one of the most important changes which the Government made to the Bill”,
because it adds political accountability. Members of the Committee will recall that when the Conservative party launched our climate change Bill in advance of the Queen’s Speech in 2007, the inclusion of annual targets was considered an essential part of the primary reason that any five-year carbon budget would stretch across more than one Parliament.
We rightly argued that we should not allow NIMTOism—the new acronym, meaning not in my term of office—to infect carbon budgets. The system is not sufficiently accountable, so a Government could sit through a full term without ever having to report to Parliament on their carbon reduction performance. It is conceivable that a future Government could then dump their failure on a successive Government, who would have to report on the budget in their first year in office, having had little time to do anything about meeting it.
We need no better example of why the annual ranges are necessary than the current Government’s performance on cutting emissions. Despite three manifesto commitments to reduce emissions by 20 per cent. by 2010, emissions have, in fact, increased since 1997, and the Government quietly dropped their 20 per cent. target to just more than 15 per cent. in 2006. That is what can happen without year-on-year accountability. The addition of indicative annual ranges under clause 12 is a significant enhancement of the Bill, and it is a testament to the sterling efforts of our colleagues from all parties in the other place.
Indeed, Lord Rooker spoke favourably of annual accountability when he said:
“annual transparency and accountability about progress towards meeting the budgets are crucial for all of us. Some indication of the Government’s expected trajectory for reductions over the budget period would help in providing them. It is important that there is no divide between any sides of the House on that.”
The Government further stated in the other place that
“setting out an indicative range for the net UK carbon account for each year of the budget period combined with greater clarity about the timescales of policies to take effect...will ensure that the Government of the day can be properly held to account for progress during each year of the budget period, not just at the end of the period.”—[Official Report, House of Lords, 25 February 2008; Vol. 699, c. 496-7.]
As we all agree on that substantive point, I hope that we can also agree that a range without definition is of little practical use to anyone.
For example, if a five-year budget period has a total budget of 500 million tonnes of carbon, it is hardly of any value to say that the indicative annual range will be between 1 million tonnes and 150 million tonnes per year, whereas it would be of real value if the indicative ranges were set out year by year along the lines of year 1, which must be between 115 and 125 million tonnes; year 2, which must be between 105 and 115 million tonnes; year 3, which must be between 95 and 105 million tonnes, and so on.
As the clause is worded, there is no obligation on the Secretary of State to provide such an instructive range. He or she could set the range so broadly as to be practically meaningless. That is why, in amendment No. 53, we are proposing that the Secretary of State seeks advice from the Committee on Climate Change before setting those annual ranges. The committee would approach the exercise with not only an expert but an apolitical and dispassionate eye. That should prevent any unnecessary politicisation of the annual range, which could otherwise be back-loaded, for example, so that much of the effort would fall into the final year of a budget, by which time the Government who had set the ranges might well be out of office.
I have further broad comments on the clause, but they relate to amendment No. 54.
I am sorry to have been two minutes late this morning, Mr. Cook. I make the single point that, if one had the chance to read this morning’s newspapers, one would see just how cynical the public is about politicians of all kinds. It made pretty miserable reading for any of us who recognise that politicians in all parts of the House come to this place to try and make the world a better place—even though we disagree with each other, that is why we are here. Today’s Daily Mail, for example, is even worse than usual in its refusal to believe the better of anyone, of any kind, in any circumstances, from the Prince of Wales to the humblest Back Bencher.
Why I feel strongly about the amendment is extremely simple. We need to provide the public with a mechanism whereby that cynicism cannot easily be given rein. My hon. Friend the Member for Bexhill and Battle, in the 97 per cent. of his speech that I was lucky enough to hear, made that point clearly. We need to ensure that there is clear recourse to the Committee on Climate Change in order that the worst may not be thought of politicians.
I have a self-denying ordinance not to praise the Ministers, because it has been bruited abroad that that does them no good. Therefore, I take it as read that they will behave properly. The Secretary of State, for whom I have considerable respect, would certainly behave properly. However, that is not the issue. We are, unusually, legislating for a long period ahead. It is our purpose to create a framework within which we will be working for a long time, under Governments of different persuasions and Ministers of different enthusiasms.
I take that issue hard. During my time as Secretary of State for the Environment, I took a great interest in the design and quality of architecture, never realising that it was my personal interest that led it to be moved forward along the agenda. Others did not have the same interest in the quality of the built environment, particularly my successor, the right hon. Member for Kingston upon Hull, East (Mr. Prescott). He may have had other qualities, but not that one. The result was that that agenda was not taken forward with the enthusiasm and desire that I had wanted.
Climate change is also an area that can too easily rely on the enthusiasm and commitment of individual Ministers. That is why I support my hon. Friend’s amendment. I do not think there is anything in it that could possibly upset anyone, unless they did not want to meet the parameters that I know the Government, the official Opposition, the Liberal Democrats and the Scottish Nationalists all want to meet. It does not seem to be an unreasonable amendment.
Two brief comments before I explain the Government’s problem with the amendment, although not with its intent. First, my advice to you, Mr. Cook, and to all members of the Committee is not to read the Daily Mail. The problem goes away. Secondly, my right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) is responsible for the renovation of St. Pancras station. I must put that on the record.
I always find that it helps to go back to the explanatory notes to put the amendments into context, and the explanatory notes for this Bill are especially good. They explain the purpose of clause 12. As the hon. Member for Bexhill and Battle eloquently outlined, annual accountability was discussed extensively in the other place and we have been over it many times. Clause 12 addresses those concerns by requiring the Secretary of State to produce a report setting out the indicative range for the trajectory of the UK’s net carbon account over the budgetary period. The word net is important. I shall return to the expected range in a moment. Clause 12 is a critical part of the Bill’s framework and will ensure transparency and accountability for progress for every year of the budget period, not just at the end of the five years.
An indicative annual range is superior to earlier proposals for a single-point annual target because emissions can and do fluctuate from year to year for a variety of reasons, some of which are well outside the control of the Government of the day, such as the weather. A particularly bad winter or a mild winter can have a big impact on annual figures. We all agree that we need a system of annual accountability that can deal with real-world fluctuations while still providing clarity about progress to ensure that the Government of the day can be held to account properly.
Amendment No. 53 would require the views of the Committee on Climate Change to be sought and taken into account in respect of the indicative annual ranges before they could be set. That is not consistent with the role envisaged by all of us for the committee. The committee has been established to provide expert advice on the level of the carbon budget. It is for the Secretary of State and Parliament, in consultation with the devolved Administrations, to make decisions on the level of the carbon budget and the policies needed to ensure that the UK remains within that budget, which has been recommended and to all intents and purposes set by the committee.
In formulating its advice, the committee will need to look at existing and planned Government policies and the estimated impacts of those policies in order to understand exactly what measures the Government have in place to meet a given budget. It is then the job of the Government to draw policy conclusions from the committee’s analysis. That will ensure that the Government of the day retain political accountability to Parliament, and through that to the people, for their decisions. We do not want the committee to be seen to be taking a particular policy position, as that could undermine the credibility of the advice that it provides on the carbon budget and its impartiality in performing its scrutiny function.
It will be vital that the committee’s advice is viewed as credible and authoritative. For that to happen, it must be formulated outside the political arena. The committee must therefore refrain from having a role in the choice of policy mechanisms needed to meet a budget. The question of decisions on the indicative annual range is no different. It will be set based on the Secretary of State’s analysis of the policies that the Government intend to implement in order to meet the carbon budget, and when they will take effect. That is why clause 14 requires that the Secretary of State should set out the time scales for the policies and proposals.
The annual ranges will depend on the policies implemented. Decisions on policy matters should be made by the Government, not the Committee on Climate Change, and we fear that amendment No. 53 would jeopardise that position, as it implicitly requires the committee to provide advice on the Government’s policy mix for meeting their overall carbon budget.
I shall now answer the question from the hon. Member for Bexhill and Battle about how wide we expect the range to be. Of course, if it is too wide, it will not fulfil its function and will be meaningless. We must look at the main factors that create uncertainties about annual emissions and assess their likely effect on informing how the range is set.
I have already mentioned the weather; records show that exceptionally cold winters, such as those in 1996 and 2001, caused an increase in emissions by 4 per cent. compared with previous and subsequent years. Another factor is the wider European context and the emissions trading scheme, which covers about half of the UK’s carbon dioxide emissions and allows companies to make decisions over a five-year horizon as to whether and when they abate their emissions. The actual emissions in any one year would not necessarily be a fifth as those policy decisions kick in.
I remind the Committee that the clause refers to the net carbon accounts, which could fluctuate depending on how things are dealt with under the carbon accounting rules. Other important factors include population growth or shrinkage—the annually revised population forecast by the Office for National Statistics directly affects projected emissions. Put simply, the more households that there are in the UK, the higher the emissions are likely to be, although the goal of our housing policy in new build is to neutralise carbon emissions.
The point of having annual indicative ranges, which are preferable, is so that we do not simply take the five-year carbon budget, divide it by five and declare that to be the annual target. We have some flexibility in meeting the budget advised by the committee, which will give the Government flexibility as well as the desired parliamentary accountability. The intention of the amendment is to give more surety, but we fear that it could inadvertently and unintentionally undermine the committee’s impartiality. That is my argument on amendment No. 53.
I understand the Minister’s argument, but he has said some things that are slightly troubling, which I will return to. Indicative annual ranges can take into account varying circumstances or unforeseen events, to which the Minister has alluded. The Committee on Climate Change, which I hope will be made up of eminent but sensible people, will be able to take that in its stride.
I find it slightly strange that the Minister mentioned housing numbers as an unforeseen circumstance. It is odd to think that we might suddenly be taken by surprise at the number of houses built in any one year, as I imagine that the Government can foresee the likely number of new houses or dwellings that will be occupied. The weather, I agree, is out of their control, but I expect them to have a firmer grip on the housing stock. The Minister has alluded to severe winters, but there are mild winters, too. We are more likely to experience milder winters than severe ones as global warming continues apace.
The crux of the issue is the Minister’s suggestion—albeit implicit rather than explicit—that targets should follow policy rather than policy should follow targets. He seemed to imply that it was not for the committee to set policy and that we should therefore not have indicative annual targets, because the policy may direct or produce something rather different. Clearly, it should be the other way round. We should have indicative annual ranges, which have inherent flexibility, and policies should be designed to meet those ranges rather than putting the ranges in place once we know the policies. The policy is the servant, not the master, of indicative annual ranges and the overall carbon budget. The danger with that slightly lazy thinking is that it makes for less ambitious policy making and for the slight sense that there is get-out-of-jail-free flexibility on the targets, particularly if in the two or three years of the near term there is some doubt whether the indicative ranges of the short-term trajectory will be met. The trajectory should be the real spur to more ambitious policies by Governments of whatever political hue.
The case for indicative ranges is very clear, and I have not been persuaded by any argument other than that they should be there. However, the Minister has pointed out his belief that that point is already in the legislation. Clause 12(1) sets out a duty to provide Parliament with a report setting out annual indicative ranges for the UK. For the elimination of doubt, I would have preferred that clause to be tightened by our amendment, but if the Minister is going to resist on that point, I will not push the amendment to a vote. I beg to ask leave to withdraw the amendment.
‘the net UK carbon account for the year must fall in order to meet the carbon budget for the relevant budgetary period’.
Amendment No. 54 directly relates to our previous discussion. It is informed by our concern that indicative annual ranges could be politicised, particularly in a period of likely political change, when the end of the carbon budgeting period would be likely to fall within the term of a new Government. That could lead, if not to political shenanigans then certainly a lack of ambition or other priorities on the part of the Government of the day, whoever they are.
To prevent that situation from arising, we have tabled amendment No. 54, which would put a requirement on the Government to produce an annual range that is tight enough to meet the trajectory required to meet the carbon budgets. As clause 12 stands, all that the Government need to do is predict where the carbon account should be in any given year. Amendment No. 54 would ensure that the annual range is set so as to fall inside the net carbon account for that budgetary period, which would necessitate tightening the annual range to a more meaningful figure.
We are not a long way apart from the Government. Indeed, Lord Rooker, during the passage of the Bill through the Lords, said:
“We need a system of annual accountability that can deal with these real-world fluctuations and uncertainties but which still provides sufficient clarity about progress to ensure that the Government of the day can be held to account appropriately... setting out an indicative range for the net UK carbon account for each year of the budget period... will ensure that Government of the day can be properly held to account for progress during each year of the budget period, not just at the end of the period.”—[Official Report, House of Lords, 25 February 2008; Vol. 699, c. 497.]
That is the crux of amendment No. 54. We believe that tightening the annual ranges to a more meaningful figure will help the Government of the day and inform this legislation.
I have a lot of sympathy with the hon. Gentleman’s point, but, given the earlier discussion on the ability of Ministers to amend the carbon budget within the five-year period, how would his amendment fit within that, as it would mean that the range has to show a fall within each year of the five-year budget?
I will repeat the amendment for the hon. Gentleman:
“the net UK carbon account for the year must fall in order to meet the carbon budget for the relevant budgetary period”.
That is what we need to be aiming for. If that budget were not met, an adjustment would be required in the following year, but we should not anticipate that the budget will rise or that the trajectory will be anything other than down.
We all accept that there could be unforeseen circumstances, but we do not accept that there are foreseen circumstances in which we would anticipate a rise in the budget. If we can see factors that are likely to push up carbon emissions, we should take other actions ahead of time in other parts of the economy to depress carbon emissions. The whole point of flexibility is to allow us to deal with unforeseen events, which can only be addressed with the benefit of hindsight.
Will the hon. Gentleman help me with my understanding of the clause, because I have become more confused? In subsection (2), does “fall” mean decline? It means fall within a range—in other words, the provision states that an indicative annual range is a range within which the figure must fall. That does not mean that the figure must go down; it just means that the figure must fall within the range. Am I right in that understanding?
The hon. Gentleman is correct, but so too is the assertion that the trajectory must be met. Obviously, the trajectory is declining, and we do not anticipate that it will rise. The only reason why it would rise is unforeseen circumstances. Does the Minister foresee any circumstances in which we would anticipate the trajectory rising and not take preventive action?
My understanding is the same as the hon. Gentleman’s—“to fall” in subsection (2) means to lie within the five-year budget. I cannot envisage circumstances in which the trajectory would not fall, unless the American presidential election throws up something really unexpected.
I am grateful to the hon. Gentleman for tabling a helpful amendment. The amendment sounds like common sense, but I did a bit of digging and the issue boils down to the difference between “expects” and “must”. Let me explain—my argument is convincing and I am going to use maths.
The clause requires the Secretary of State to set out the indicative annual range within which he “expects” the net UK carbon account to fall—to lie within—for each year of the budget period. Amendment No. 54 would change that to the range within which the net UK carbon account “must” fall to meet the carbon budget. I consider the amendment unnecessary, given the existing provisions in the Bill about both the Government’s duty to meet the five-year carbon budget and the strong framework for annual accountability. By inserting “must”, the amendment would effectively change the budgetary period to an annual one, which is not the intention.
Let me explain the practical problems.
The way in which the Bill is worded makes it clear to Parliament, and to everyone else, whether the Government are taking the necessary actions throughout a budgetary period to ensure that the budget is met, but the Government will not be acting unlawfully if emissions increase, although I imagine that they could increase only slightly beyond the level that the range sets out. Underpinning that, clause 5 places a duty on the Government to ensure that the net UK carbon account for a period does not exceed the carbon budget—the five-year period.
That means that the indicative annual ranges will effectively have to be set with a view to meeting the budget. No matter where we are within the range each year, at the end of the period we must still meet the budget. In addition, there is the strong annual framework that I have spoken about. Under clause 35, the annual report by the committee must set out, inter alia, whether the budget is likely to be met. That is part of the process which, I think, the other place urged upon us; certainly, the pre-legislative scrutiny Committee did.
I am not sure how amendment No. 54 would work in practice, as there would be both a budget that had be met and a range for each year, which also had to be met. The range recognises that emissions fluctuate—we are agreed on that—so it would be possible for the net UK carbon account to lie within the range for each year of a budget, but for the total net carbon account to exceed the budget at the end of the period, because if we hit the top of the annual range each year, that would, by definition, be greater than the five-year budget. There is, therefore, a practical problem with changing “expects” to “must”. My argument is that it essentially makes the annual period the budget and not a range, and mathematically, the possibility of hitting the top of the range for each of the five years would defeat the five-year budget target, which is more important.
That is a good explanation. Perhaps the Minister would be kind enough to recognise the thought behind this amendment and others, which was admirably expressed by the hon. Member for Angus. If one looks at how the Bill must be written, the Government should be able to make alterations, which may be up or down. Those of a cynical disposition might say that that is all very well, but if the Government were so minded, they could defeat the whole purpose of the Bill. We know that it would be difficult, within the parliamentary arrangements, for that to happen. It would be helpful, however, if the Minister undertook to identify other parts of the Bill that exemplify the points that he made in accepting the reasonable nature of the amendment. This is one of those occasions where we must ensure that we are getting it right and meeting public expectations. I have some sympathy with what the hon. Member for Angus said, both today and in previous sittings.
I have been reflecting that perhaps The Guardian is even more cynical than the Daily Mail. It certainly puts me in a worse mood. I can do what the right hon. Gentleman requests. I do not believe that in the other place there was a challenge to the point that he makes. I made reference to the interrelationship with clause 5.
I shall briefly put my mathematical argument, which I think is a convincing one. Let us say that the relationship between a range within which emissions must fall and an overall budget did not work. Suppose the budget is 100, and for each year of the period the range is set between, for the sake of argument, 15 and 25. If the net carbon account for each year was 23, 22, 24, 25 and 21, we would still have complied with amendment No. 54, which states that the net carbon account “must” fall within the range, but we would have missed the five-year budget.
The Minister’s maths are good, but his politics are less good. The annual targets do not release the Government from the obligation to meet the five-year budget. The mathematical possibility that the top of the range could be hit five years running and the budget therefore missed does not mean that the budget must not be met. That still applies. There are two sets of complementary targets. Of course, if the top range of the budget for the annual targets were hit repeatedly, budgets in later years would have to be made tighter and lower.
That is why I said that the problem is the word “necessary”. The amendment is unnecessary because of the point made by the hon. Member for Bexhill and Battle. By inserting the word “must”, a duty is placed on the Secretary of State under clause 12 that could be used to override the obligation that we spent three hours debating earlier. It confuses budgets and annual ranges.
Again, the Minister is mathematically right but politically wrong. The problem is not that the maths do not add up, but that they would need to be added up only after the subsequent general election. By supporting the amendment together with the Conservative Front Benchers, we seek to hold the Government more precisely to account on an annual basis.
I am glad the hon. Gentleman accepts my maths, even if he does not agree with me on the policy. I do not believe that the amendment achieves what he wants it to do. In fact, it could achieve the opposite. In the run-up to a general election, the Government could set the annual indicative figure at the top of the range. That would be within the law under the amendment, but outside the law under the earlier obligation to meet the five-year carbon budget. That would create political confusion. Precisely because I do not want to do that, the amendment is unnecessary.
The amendment would take us into an area where the annual indicative range would effectively become an annual budget. That is not what we are trying to achieve here or in the other place. I hope the hon. Gentleman accepts that my policy is right, that my politics are right and not particularly partisan, as this will happen in the future, and that clause 5 overrides the need for amendment No. 54.
I have listened carefully to the Minister and have endeavoured to follow his maths. His point is persuasive. I understand and appreciate the point made by the hon. Member for Cheltenham that setting more robust indicative annual ranges does not in any way negate or offset the Government’s legal obligations to meet the carbon budget. However, I am mindful of the Minister’s point that inserting the word “must” could call into question the supremacy of the five-year carbon account, and we do not want uncertainty or confusion in the Bill.
Clarity is desirable, but I accept that the amendment may not be the best way of achieving that. We will look again at the issue. In an ideal world, there remains a case for tighter, clearer and more effective annual indicative ranges within the context of a finite five-year carbon budget. I beg to ask leave to withdraw the amendment.
We have not touched on subsections (3) and (4), which are important. I reassure the hon. Gentleman that subsection (1) states that the Secretary of State “must” lay before Parliament, while subsection (3) states that the Secretary of State “must” consult the other national authorities. It is important that reference is made to the devolved Administrations. Subsection (4) states that the Secretary of State “must” send a copy, an imperative repeated in clause 13. I hope there is consensus on the clause.