With this it will be convenient to discuss the following amendments: No. 47, in clause 14, page 7, line 22, at end insert
‘, and the indicative annual ranges within the net UK carbon account for each year must fall in order to meet the carbon budget for the relevant budgetary period (“the climate change strategy”).’.
No. 48, in clause 14, page 7, line 23, leave out ‘report’ and insert ‘climate change strategy’.
No. 49, in clause 14, page 7, line 28, leave out ‘report’ and insert ‘climate change strategy’.
No. 50, in clause 14, page 7, line 30, leave out ‘report’ and insert ‘climate change strategy’.
No. 51, in clause 14, page 7, line 33, leave out ‘report’ and insert ‘climate change strategy’.
Clause 14 places a duty on the Prime Minister to put together a report setting out proposals and policies for meeting the carbon budget. However, the existing proposal is not robust enough. The Prime Minister should be able to tell Parliament not only what we should be doing to meet the budgets, but, crucially, how we should do it. That is an important difference. Rather than merely producing a report, it would show far greater leadership if the Prime Minister were to set out a detailed climate change strategy on how the Government are going to meet those demanding targets.
The Prime Minister should not merely report on the progress made in the past and display a map of where we need to go. They should lead on how we will meet our targets in future. The reporting procedures in the Bill will not be complete unless they include a duty for the annual reports to contain an assessment of the effectiveness of the measures taken to reduce carbon emissions. The amendments would require that the statement laid before Parliament should include a comprehensive report on the effectiveness of the climate change strategy as well as details of any further policies or proposals that may need to be included. Government policies to reduce emissions should be assessed regularly, their successes should be reported on openly and changes should be proposed wherever progress is falling short.
I am quite up front in saying that we in the Conservative party fully intend to be the Government responsible for the report on the first budgetary period, so we should be holding ourselves to the highest standards of accountability in meeting those targets. I consider the strategy report to be like the annual finance Budget. The Chancellor proposes a tax and spending regime for a year and says that he will bring in x billion pounds in taxation and spend y billion pounds on providing services. However, it is inevitable that in the following year the Chancellor will find that growth was not exactly as predicted or that events caused a little bit more spending than proposed, so in the next Budget he will therefore make the necessary adjustments to get things back on track. If we are to bring carbon emissions under control, that is how we should deal with them.
There is precedent for placing a duty on the Government to produce such a strategy report. For example, section 2(1) of the Warm Homes and Energy Conservation Act 2000 places a duty on Ministers to
“prepare and publish...a strategy setting out the authority’s policies for ensuring...that as far as reasonably practicable persons do not live in fuel poverty.”
Section 2(5) requires Ministers to
“take such steps as are in its opinion necessary to implement the strategy.”
There is also precedent for requesting a detailed report or proposal. Schedule 5 to the Planning and Compulsory Purchase Act 2004 and schedule 89 to the Local Government and Housing Act 1989 both require the submission of detailed proposals. The requirement for a detailed report already exists in regulation 32 of the Ionising Radiation Regulations 1999.
With specific reference to amendment No. 47, as we have already discussed, it would make eminently good sense to set out indicative annual ranges in this detailed strategy report. The strategy report should be the natural and authoritative place for the Government to publish their indicative annual ranges.
I thank the hon. Member for Bexhill and Battle for laying out his amendment, which, if I have understood him correctly, would replace the words “report setting out” with
“strategy report setting out the measures”.
Further amendments would replace the word “report” with “climate change strategy”, so I am glad to see that he has adopted the language of new Labour, although I prefer plain English, especially in relation to legislation.
The hon. Gentleman has made a serious point, however, so let me respond. I shall deal with amendment No. 47 separately, as you have asked us to, Mr. Cook, but amendments Nos. 46, 48, 49, 50 and 51 would change the wording to a “climate change strategy” setting out measures, proposals and policies. The practical effect of the amendments would be negligible. The only possible problem with them is that the report will cover measures to reduce emissions only and will not cover adaptation to climate change. There might be a point to calling the report a climate change strategy, but equally it might be misleading.
The report published under clause 14 plays an important part in the greater predictability provided by the Bill’s framework. We all agree that those who are planning investments want to know not only the overall level of the UK-wide budget, but the choice of policies that will be implemented. The report will be crucial in bringing together policies and showing how they will combine to meet the carbon budgets. In that context, we cannot see what amendment No. 46 and amendments Nos. 48 to 51 would achieve. The report required under clause 14 will already have a high status, which has been further emphasised by the Chancellor’s announcement that the Government’s plans for meeting the first three carbon budgets will be set out alongside the Budget 2009.
It is not clear how calling the report a strategy or requiring it to contain measures in addition to proposals and policies will fundamentally change its nature. In addition, calling it a climate change strategy might be misleading, as the report will cover mitigation only—measures to reduce emissions. It will not cover adaptation to climate change, which will be dealt with by the Government’s adaptation programme in clause 56. Of course, I agree with the hon. Gentleman that the report will be an important document, but the amendments are unnecessary. I shall stop there, because I think that amendment No. 47 will be dealt with separately.
Amendment No. 47 is similar to amendment No. 54, which we have already dealt with. Amendment No. 54 would have turned the annual indicative range into a range within which the net carbon account “must” fall, and colleagues will remember that debate from this morning. Amendment No. 47 would give rise to the same problems: as before, the annual net UK carbon account for any one given year could be outside the range but the budget could still be met. Alternatively, for one year we could be within the range, but still exceed the budget as a whole. The intention behind the indicative annual range is to provide an indication of what is expected to happen within each year of the budget based on the proposals and policies. Therefore, while I welcome the intention behind the amendments, I do not believe that they are necessary.
We believe that there is more to a strategy than to a report. A report could be a very staid, brief and backward-looking document, whereas a strategy must be exactly that. I take on board what the Minister has said and note his reluctance, and I will consider the matter further. I beg to ask leave to withdraw the amendment.
‘( ) The report must outline the implications of the proposals and policies as regards the crediting of carbon units to the net UK carbon account for each budgetary period covered by the report.’.
This is an important part of the package of Government amendments. It relates to the balance between action to reduce emissions in the UK, action at European Union level—by UK companies through the European Union emissions trading scheme for example—and the purchase of international carbon units. Clause 25, which was a change made in the other place, seeks to ensure the correct balance by placing a limit on the contribution that action at EU and international level can make towards our carbon budget. We will come to that clause later.
The Government do not believe that an inflexible limit is the best way to approach the issue. However, we recognise that the balance between action at UK, EU and international levels is extremely important. The Bill helps us to achieve that by providing a clear framework for action and ensuring greater clarity for industry and households about our path towards a low-carbon economy. We must send a clear signal to our international partners about our commitment in the UK to tackling climate change.
Amendment No. 8 will add to existing provisions in clause 34 by increasing transparency. Clause 34 already requires the Committee on Climate Change, as part of its advice on each of the five-year carbon budgets, to advise on the extent to which the carbon budget should be met by action within the UK and the use of carbon units. The amendment goes even further; clause 14 requires the Government to lay a report before Parliament setting out proposals and policies for meeting the carbon budget. Amendment No. 8 means that that report must also set out the implications of those proposals and policies with regard to the relative balance between action to reduce emissions within the UK and the purchase of carbon units, which hon. Members on both sides of the Committee have asked for.
For instance, the report could include information on the role of the emissions trading scheme in helping to meet our budgets or detail the Government’s broad expectations for the purchase of carbon units through EU or international trading mechanisms that may come about in the future. We want to keep the balance between action at UK, European Union and wider international levels under review, and, if necessary, we will revisit our approach ahead of each budgetary period.
The Minister has said that the report will reflect what happens in the EU ETS. Businesses are the bodies that buy and sell the credits, and the Government want 100 per cent. tradability. Therefore, if a business exceeds its carbon quota and buys credits to offset that, the net effect will be nil. Given the Government’s world view, where there is no cap on the percentage that can come from overseas, the number will always be the same. In what sense will information be conveyed in the report, when we know in advance what the answer will be because the ETS cap is fixed in advance?
That is a good question. The hon. Gentleman has said that we want 100 per cent., but we do not—we want flexibility for 100 per cent. We will have this debate later, but, in practice, one has to achieve a balance between UK domestic emissions capping and what is available for offsetting overseas. I do not want him to leave this debate thinking that we want 100 per cent., as we do not. We want to get the balance right. The simple point in what I have just said, which I want to emphasise, is that we want flexibility. I believe that the hon. Gentleman agrees with me—Members of his party in the other place did.
I believe that the amendment helps to provide the clarity for which business and others have been calling. Incidentally, for maximum transparency, the report in clause 14 to which the hon. Gentleman has referred must be laid before Parliament at the same time as each budget is set, which is a point that we probed during consideration of an earlier amendment.
We have not reached the vitally important issue of using overseas carbon credits in Committee, but I have no doubt that it will be an extremely important and engaging discussion when we do. My party is strongly of the opinion that if we are to secure first-mover advantage in the new low-carbon economy, it is vital that the UK focuses its investment here in Britain, facilitating dynamic industrial change in our economy, rather than through a trading system that would involve the majority of the money going overseas. We certainly need to do that if we are to develop the skills, jobs and technologies to make Britain a truly green economy, but I shall save that debate for another sitting.
We will support Government amendment No. 8. Whatever their designs may be towards the distribution of domestic versus international carbon reductions—we all have different views on the exact distribution—it is certainly in the best interests of all concerned and of the Bill that the implications of carbon trading are examined and included in the strategy report.