Duty to report on proposals and policies for compensating for budget excess

I beg to move amendment No. 35, in clause 18, page 10, line 6, at end insert

‘and any sanctions proposed against those responsible for budget excesses’.

What happens if we fail? Taken collectively, globally, the consequences are unthinkable. The cost of failure is famine, poverty, disease and death on an unprecedented scale. However, what happens specifically if we, the British political class, fail to meet the objectives being discussed in the Bill? I am saying “we” because I am not assuming that the Labour Government will still be around in 2012-13. It could be any of us, any combination of us or any of our successors who are in government at the time.

At the moment, the great sanction present in the Bill is a report on proposals and policies. In a sense, that is appropriate. If the budget target is missed, action must be taken. It is a greater threat—but only just—than the letter that has to be written by the Governor of the Bank of England on behalf of the Monetary Policy Committee to the Chancellor for exceeding the inflation target. I suspect that, as more and more inflation targets are missed and more and more letters are written, familiarity might even breed contempt for that sanction as well. I can see the Treasury quaking in its boots at the receipt of another letter. Likewise, I do not see Parliament shaken to its foundations by the need to produce a report. Yet in most cases when Governments break the law, which in a sense is what we are talking about when the targets are missed, some consequences normally follow.

There have been various suggestions as to what those sanctions might be. In another place, Lord Teverson suggested that the Secretary of State might one day be dragged away to the Tower of London because the targets had not been met. I do not think that he spoke in all seriousness but, given the consequences of failure, we must think seriously about what should happen to Secretaries of State who preside over the missing of such targets. We as the British Parliament could think collectively about a financial penalty—the Treasury could buy the carbon credits, perhaps at a premium, to make up for the lost target. However, that rather undermines the arguments about trying to minimise the proportion of targets met by purchasing credits, rather than by a genuine domestic effort to decarbonise the economy. If, at some stage, the Treasury could be persuaded to say that that was an affordable route, the sanction would clearly have been counter-productive, as it would have encouraged the Government to think about buying their way out of the problem.

We tried to table an amendment that would have caused an automatic reduction in Cabinet salaries equivalent to the excess by which the target had been missed. I thought that it was an exciting amendment; it would have led to an interesting debate that could have extended  into the general area of performance-related pay for Ministers and Governments. Sadly, it was ruled out of order on the grounds that there are, apparently, already existing processes for setting Cabinet salaries, and this was not one of them.

I sense a slight problem with the amendment. Under the clause, a report must be laid before Parliament. Subsection (2) refers to

“proposals and policies of the Scottish Ministers, the Welsh Ministers or a Northern Ireland department, it must be prepared for consultation with that authority.”

Does the hon. Gentleman propose that the UK Parliament takes powers to impose financial penalties on the devolved Administrations? That might be a step too far for the powers of this Parliament.

I would hesitate to suggest any such thing, not simply because I am afraid of the hon. Gentleman, but because I am afraid of some of my Scottish colleagues. However, on careful reading, I think that we are amending only subsection (1), so I am not sure that the criticism is correct. However, it is an important matter and I take the hon. Gentleman’s point.

Having had those slightly more exciting and interesting options ruled out, we are left with the less exciting amendment No. 35, which opens the debate about what sanctions, if any, will be proposed against those responsible for budget excesses. I hope that the tabling of the amendment starts to stimulate that debate both inside and outside Parliament. I have often drawn an analogy between the challenge and threat that we as a society face now with that faced in war time. In that sense, it is carbon criminals, rather than war criminals, who we seek to hold to account. Given the consequences of failure, it is important that we address this matter and that the Government and the official Opposition give us their perceptions of what sanctions will apply that will really incentivise the meeting of targets in a serious way.

Amendment No. 35 opens a new chapter in the story and direction of the Bill. It proposes that the Secretary of State report to Parliament on the reasons why, and solutions for, having exceeded a budgetary limit. The report should include a list of

“sanctions against those responsible for budget excesses.”

We cannot support the amendment for a number of reasons. First, it goes against what I like to call the opportunity agenda around climate change. My party likes to make both business and the public realise that, in the climate challenge, there also lies an enormous economic opportunity and the chance to live more fulfilling lives. We believe in the power of “can do”, not the dour politics of “cannot” that the Liberal Democrats are so fond of.

The Bill currently sets a long-term framework and clear road map within which business can work with confidence towards developing new technologies, growing new markets and processing the challenge of decarbonising our economy. The vehicle for getting there can be found in policies outside the Bill. My party has announced incentives such as feed-in tariffs for microgeneration, an emissions performance standard for electricity that is generated in the UK and a new green exchange market  to kick-start investment in our low-carbon economy. There is plenty more where that came from, but the place to legislate for such policies is not in the Bill, which should remain a lean, focused framework document.

To include a list of sanctions on any group that breaches its budget, as the Liberal Democrats propose in the amendment, is beyond the remit of the Bill. Who would decide those sanctions—the Secretary of State or the Committee on Climate Change? Under which legislation would they be empowered to lay those sanctions? Presumably, the sanctions would take the shape of either a monetary fine or additional legislation.

Is not this a manifestation of the Praise-God Barebones approach to life, in which the only way to solve these problems is to be thoroughly miserable and to punish people who get it wrong? Surely, we ought to be doing exactly the opposite, which is to be thoroughly cheerful about the fact that we are going to get through and win, and to encourage people who do things right. Those people should profit rather than have to wear hair shirts of the liberal variety.

By hair shirts of the liberal variety, I presume that my right hon. Friend means short-sleeved hair shirts. He is absolutely right. The Conservatives are passionately wedded to adopting a can-do, hopeful and optimistic agenda.

Existing market mechanisms, such as the EU ETS and the carbon reduction commitment programme, should have sufficient sanctions if the targets are not met. If they do not, those mechanisms should be tightened, rather than additional costs and regulations being placed on business. We can be sure that any final increase in cost will be passed on to consumers, and the law of unintended consequences should be considered. Policy makers should remain acutely aware of that at this time of increased energy costs and heightened energy poverty. In the interests of optimism and ambition—

Steve Webbrose—

I cannot say, “In the interests of optimism and ambition, I give way,” but perhaps we could have a semi-colon before “I give way.”

I heard the hon. Gentleman’s semi-colon.

Is he saying that we should lay all those duties on the Government and Secretaries of State and that, if they fail to achieve them, so what?

Let me restate that the Bill is not the place for harsh penalties. The message that we, as legislators, must send out to the public, the electorate and the wider world is that we are focused on finding solutions and funding a road map to a sustainable low-carbon economy. We have an inherent belief in that mission, and we do not believe that we should start things by clobbering people with fines, regulations and tokenistic measures for taking the pay of Ministers. The agenda is much bigger than that.

I am listening with interest to this hug-a-hoodie approach to Ministers who break the law. Does not the Conservative party believe in there being consequences for Ministers who break the law?

Talking about carbon criminals and Government Ministers breaking the law takes the debate in a thoroughly different direction. We have to get back to common sense, which is to rely on Ministers and the good judgment of the British electorate to elect a Government—in future—who will be good to their word and who will provide an ambitious route forward, rather than relying on silly mechanisms in the Bill. For those reasons, I cannot support the amendment.

I did not intend to speak to the amendment, but I have been spurred into action by some of the remarks made by the hon. Member for Cheltenham. His response to my intervention was quite wrong. In the few years left in which Scotland will be part of the UK, we will be part of a net UK carbon budget, which covers all parts of the UK, and the report will be on the UK carbon budget. I am sure that Scottish Ministers will well exceed their part of things, but if one of the devolved Administrations did not do so, under his amendment, the UK Parliament would fine or act against Ministers over whom they have no authority because they are part of a devolved Administration. There has been a good bit of party political knockabout between the other two parties, but the amendment is inept and would introduce something that would only cause division and confusion. I oppose the amendment.

I am sorry to intervene in this tremendous disagreement between the opposition parties. I want to put on record something that we believe is important in relation to the clause and amendment No. 35. We are discussing a serious requirement on the Secretary of State to lay a report before Parliament setting out proposals and policies to compensate for the excess emissions if a budget were not met. The Secretary of State must lay that report before Parliament, because clause 5 will establish that responsibility.

Our view of the amendment and its relationship with clause 5 is that, given the statutory basis of the targets and budgets in the Bill, any failure to meet a target or budget carries the risk for the Government of judicial review, like most legal duties on the Government. In such a case, the remedy would be at the discretion of the court. In most circumstances when a Government have failed to comply with a duty, courts do no more than issue a declaration, but we cannot rule out completely the possibility of a court making a more stringent order, such as ordering them to purchase credit. No Government would take that risk lightly.

Sitting suspended for Divisions in the House.

On resuming—

I was drawing my remarks on amendment No. 35 to a close. I want to add that schedule 2 provides powers to establish trading schemes and that includes,  of course, provisions for penalties. In that case, for example, within the context of the new carbon reduction commitment, we are looking to develop a compliance regime that provides a transparent and proportionate deterrent against non-compliance.

The sanctions relate to the level of the individual trading scheme or policy, and that is because they are tied to the obligations that fall upon the individual participants in the scheme. In the same way, the framework of sanctions set out in clause 18 falls upon the Secretary of State, because that is where the obligations are placed. I hope that those reassurances about the transparency of the provisions will allow the amendment to be withdrawn.

The Minister has made some serious criticisms of the amendment. He says that there is a risk of judicial review, and that therefore sanctions will be imposed at the discretion of the courts. That is an extraordinary admission in respect of a Bill of this seriousness. We are saying that we will leave whatever sanctions emerge against Governments, specific Ministers or Secretaries of State to unelected judges and that we will refrain from ever specifying sanctions in the Bill or in any legislation that comes before the House. That does not seem to be very democratic.

The Minister suggests that one of the possible sanctions might involve forcing the purchase of credits and that that might be imposed by the courts. That is one of the scenarios that I described in my opening remarks. As I said, it runs the risk—especially if it is not done at a premium but simply involves buying more credits outside the planned regime—of allowing the Government to buy their way out of a situation, with all the problems around domestic effort and purchasing of credits that we will probably discuss later this evening.

Finally, the Minister said that if we take the model of things such as the carbon reduction commitment, there will be sanctions for certain sections of the economy. In a sense, he is saying that participants in such schemes—in other words, business—will face severe sanctions but politicians will not. That is not a very positive signal for this Parliament to send out.

Most of the Conservative criticisms of the amendment seem to relate to our dress sense, with references to dour, short-sleeved Liberal hair shirts. I seem to remember similar criticisms coming from the Conservatives in the 1980s and 1990s, when we were accused of being sandal-wearing bearded hippies, but those were the days when the Conservative party thought that carbon reduction meant closing down coal mines. We were ahead of our time then, and we are ahead of our time now.

In the light of political reality and some genuine criticisms from the hon. Member for Angus, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

I beg to move amendment No. 34, in clause 18, page 10, line 10, at end add—

‘(4) The Secretary of State shall certify that the Committee on Climate Change agrees the factual content of any report laid in accordance with this section.’.

My comments will be reasonably brief. We propose the amendment because distrust has been expressed in Committee, mainly of the Daily Mail and The Guardian,  but also of potential successors to this Minister and other Ministers. At some level, we share some of that distrust. We see the need for some gold-plating in parts of the Bill, and this is one of them.

The amendment would ensure that when action plans and reports were presented to Parliament as the means to remedy the excess over the carbon reduction targets in the budget, they were not simply a strategy or a report as described by the hon. Member for Bexhill and Battle, but were rigorously based on sound science and analysis. For that reason, the amendment would ensure that the Committee on Climate Change had agreed the factual content of any such report and that its authority was attached to the assumptions underlying it.

In the interests of balance and fairness, I assure the Liberals that we are happy to support the amendment on the grounds that it would enhance the authority of the Committee on Climate Change and improve the transparency of Government reporting on proposals and policies for meeting future budgets.

The report provided for in the clause will outline what proposals the Government would bring forward in the event of an excess of emissions in a given budget period, and it will be issued as a result of Government failure. Transparency and accountability are key themes of the Bill and it is important that we improve it in that direction wherever possible, so I am happy to lend my support to this measure.

One word comes to mind—shocking. It is shocking that the allegation should be made that the committee would be required to check the factual content of a ministerial report. On a serious point, people have asked what is the statutory enforcement of the Bill. One thing that the Bill does is put in statute the relationship between the civil service and Ministers regarding advice. It will be illegal for civil servants to advise Ministers contrary to the Bill. That is an important point, although it may not be seen by the outside world.

Let me give some reassurances to counter what I see as the undue scepticism—not cynicism—of the hon. Member for Cheltenham. Under the clause, the Government proposals will be a statement of fact to the extent that they will represent facts about what the Government intend to do. The report will be a statement of the policies that the Government intend to implement, so it does not seem entirely logical that an independent committee should be called on to verify the factual content of the report.

More importantly, it is crucial that the committee should remain completely independent from the Government—that is a debate that we have had before. It is Parliament that will hold the Government to account for the progress that we are making towards our 2050 target and it is important that I emphasise that. That is why, although I understand the intent in relation to subsection (3), requiring that the Secretary of State’s report be sent to the authorities listed, I cannot envisage circumstances where the report will not be based on fact. If it were to be so, Parliament would hold us to account through due process.

The Minister has perhaps an unduly optimistic view of the integrity of all Government proceedings, but perhaps that is reassuring in someone  who is serving as a Minister. There is a need for the amendment, but in the light of the hour and the lack of support for it on the Government side, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 18 ordered to stand part of the Bill.

Clauses 19 to 22 ordered to stand part of the Bill.