Climate Change Bill [Lords]

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Mr. Woolas: I thought that the amendment was one of the cleverest that has been tabled because of the point made by the hon. Member for Northavon. The figure sounds small but, as in all such matters, the devil is in the detail. He is right that the amendment was discussed at some length both in Committee and on Report in the other place, and I refer members of the Committee to the Hansard record of those debates.
The accusation has been made that the figure of 1 per cent. has been plucked out of the air. Nothing is further from the truth. All the figures under the Bill are scientifically based and have been debated robustly. In case the hon. Gentleman mistakes my tone of voice, let me reassure him. Why do we consider that the 1 per cent. borrowing limit is appropriate? Our analysis suggested that allowing up to 1 per cent. of a future budget to be borrowed would be consistent with the rising emissions that might result during odd weather. The right hon. Member for Suffolk, Coastal reminded us of the importance of that to the British—I think that he referred to the English, but I am sure that he meant that it was the British predilection to discuss it. Furthermore, we must bear in mind the uncertainty of emissions data.
There have been three large emission rises due to unexpectedly cold winters since 1990, the coldest of which led to emissions in those years that were between 3 per cent. and 4 per cent. higher than in the year before. Translated into the clause, that means that if 0.8 per cent. of the subsequent budget was borrowed—4 per cent. divided by the five years of the budget period—the shock could be absorbed within a 1 per cent. limit on borrowing and the budget would still be met. That is my methodology. I agree that it is not rocket science, but it makes mathematical sense. It is symmetrical.
A more serious point is that those extremes of climate are, of course, expected to increase with climate change.
Mr. Gummer rose—
Mr. Woolas: I knew that I should not have said that.
Mr. Gummer: According to the Stern report and other reports, the problem is that we shall have a decrease in emissions as a result of cold weather and an increase in emissions as a result of hot weather because of less emissions due to heating and more emissions due to air conditioning.
Does the Minister accept that it would be rather good for the nation if it knew that it had to face the fact that the Government were going to stick to the targets? The nation would react much better if, rather than the Government’s saying, more or less, every time one of these things happened, “When it is particularly bad, we have this stuff in our back pocket that we can bring out”, they said, “We are not going to change this because we are stuck with targets that are fixed not because of our ability to meet them but because of the reality of the threat.” That is why I would be much happier with a smaller figure and a greater degree of straightforwardness from the Government.
Mr. Woolas: I hesitate to argue this point on common sense because when Ministers or Front-Bench spokesmen start using that argument, it shows that they are on weak ground.
Steve Webb: Desperate.
Mr. Woolas: Not desperate, but on weak ground. I counter with the opposite argument and say that the British public would not understand if we were not able to have that point of view. Again, we are not trying to wriggle out of this.
Let me complete my argument about the emissions data. All of us in the world of politics and Parliament talk about emissions data as if it were a pure measurement of geometry: it is not, I am afraid, although hopefully it will be in future. Provisional figures for emissions in the final year of the budget period will be available shortly after the period ends—such figures are generally accurate to within a few per cent.—but the final confirmed emission figures are not available until later. That is part of the frustration of the job. As the budget period would already have ended, if the emissions for the last year of the budget period were to be revised upward by the amount proposed, the Government’s options would be limited. The 1 per cent. limit is therefore considered the most appropriate approach to providing a small degree of flexibility because it meets the five-year point that the hon. Member for Northavon mentioned—I am talking about the end of the period, of course—without undermining the clarity and certainty that the budget system as a whole provides, which are crucial.
It is important for the United Kingdom and UK plc that we have ensured that a robust system of accountability is in place, in that the UK Government must seek and take into account the advice of the Committee on Climate Change and consult the devolved Administrations before using either the banking or borrowing powers in the clause. That will mean that any decision to bank or borrow emissions will be based on robust independent analysis. Further to that, analysis suggests that allowing up to 1 per cent. of a future budget to be borrowed would be consistent with the rise in emissions that might result from these two factors. We have followed the advice of the other place and provided a credible argument for 1 per cent. I confess that it is not scientific and can be challenged, as it has been.
I am grateful to the hon. Member for Bexhill and Battle for moving his amendment to question why that 1 per cent. figure was chosen, because he has rightly forced the Government to outline their methodology and rationale; that is the raison d’ĂȘtre of Committees. I am sure that the hon. Gentleman will hold me, or my successors, to account on this point.
Gregory Barker: I am grateful to the Minister for that explanation. I am certainly more informed. This is a probing amendment and I do not intend to press it to a Division. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
6 pm
Steve Webb: We have considered the specific number, but there is a wider principle about the banking and borrowing idea. Do we need this power at all? If there is a problem with hitting the carbon budget in any period, a facility is available to buy in credits, because this is the UK carbon account, not UK carbon emissions. Assuming that we do not get to 31 December at the end of the fifth year and suddenly think, “Ooh ‘eck, we’re in trouble”, and assuming that things will be very closely monitored by experts, scientists, forecasters, meteorologists and all manner of people, presumably it should not come as a total shock if we are on course to miss the target. If there is any prospect of missing the target, mechanisms other than those in the clause are available to deal with it—for example, we could buy in credits.
A facility for injecting savings into the current period appears unnecessary, therefore, but the opposite provision of pushing savings into the next period is, if anything, more worrying. It suggests that, if we do really well in the first period, we could give ourselves a few weeks off in the next five-year period. It is almost like working overtime and then having a vacation, which is fine in working life, but does not represent a sane or desirable carbon strategy. The clause will allow us to say, “Not only will we hit our targets, but we will have some slack and carbon savings to spare, so we will push a few into the next period, which means that we will not have to try so hard.”
Given everything that we discussed at the start of our proceedings—about this being a global challenge, of which the UK is a small point, and about how we need to do as much as we can—if we over-achieve, we should literally bank that and continue to be adventurous by maintaining the trajectory, but from a new starting point. We should not simply pat ourselves on the back and say, “We have done quite well. We consider ourselves to have achieved our goals already, even if we don’t do very well in the next five-year period, because it is already in the bank.” That is not the mindset with which we should approach this issue.
I would be very worried if we were skating so close to the upper limit of the five-year target that provisions would be necessary in case we breached it. After all, we are dealing with ranges, so I hope that we would aim to meet the targets comfortably, but fail-safe mechanisms are in place if it looks as though we are going to exceed them. On the other side of the coin, if we are over-performing and doing really well, which gives us breathing space, we should not just relax, but say, “That’s great. We’ve achieved good things, so let us press on from a new starting point, rather than have a few weeks, months or years off.” I cannot see any reason for clause 16 to stand part of the Bill.
Mr. Gummer: I disagree with everything that was just said. If we are to run this thing sensibly, we should provide for the ability at either end to sort things out. As anyone who knows anything about writing books knows, before starting, one must say, for example, “I’ve got to write 10,000 words a day”. However, on completing those 10,000 words, it is a great mistake to do another 5,000, because the next 10,000 never get done the next day. It is necessary to keep to an organised system. There is a great deal to be said for tough targets run sensibly and a Government who stand by their word, but who have the necessary opportunity at the end of each of those otherwise artificial periods to carry over amounts.
Mr. Woolas: I am worried about what book the right hon. Gentleman is writing and when it will be delivered. A draft copy for review would be dealt with in strictest confidence. I remind him that the incentives for early action and over-achievement are recognised by the Kyoto protocol, for the reasons that he gives.
Mr. Gummer: We must be tough with ourselves and do this properly. Furthermore, we must not let ourselves down by being pusillanimous over the targets and carbon budget or get into the position of the iron maiden.
Mr. Woolas: The right hon. Gentleman makes some very good arguments. In addition, I use the example of the evidence cited in the Stern review about the United States acid rain programme, which the right hon. Gentleman and others will recall. Allowing for banking between phases of that programme helped to deliver early reductions and improved participants’ efficiency. The evidence suggests that, because of the ability to bank from the first phase into the second phase, the emissions reduced in phase 1 were twice that required to meet the cap.
I take the arguments of the hon. Member for Northavon. They are slightly purist, but I do not criticise him for that. He is right to press the issue, but in practice it makes sense, from experience and from analysis, that we allow some give and take.
Question put, That the clause stand part of the Bill:—
The Committee divided: Ayes 17, Noes 2.
Division No. 5]
Banks, Gordon
Barker, Gregory
Brown, Mr. Russell
Buck, Ms Karen
Chaytor, Mr. David
Gilroy, Linda
Griffith, Nia
Gummer, rh Mr. John
Hurd, Mr. Nick
Maclean, rh David
McDonagh, Siobhain
Ruddock, Joan
Snelgrove, Anne
Walley, Joan
Weir, Mr. Mike
Whitehead, Dr. Alan
Woolas, Mr. Phil
Horwood, Martin
Webb, Steve
Question accordingly agreed to.
Clause 16 ordered to stand part of the Bill.
Clause 17 ordered to stand part of the Bill.

Clause 18

Duty to report on proposals and policies for compensating for budget excess
Martin Horwood: 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.
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