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Lord Dixon-Smith: My Lords, the Minister is essentially correct in his final point. But anyone who has ever served at a senior level in a local authority is entirely used to appealing to a Minister on a matter in regard to which the Minister is propagator, judge and jury. It is not unknown for Ministers occasionally to make an adjustment as a result of such appeals. So, although the method of appeal might not totally meet the Minister's requirement—I can well understand his not wanting to get into a situation where too many people were appealing to the Secretary of State on an issue at any one time—this is a no-cost situation.

It is all very well to say that an authority can go to judicial review, but that is expensive and time consuming. A matter is not taken to judicial review unless it is of great significance. I hear what the Minister says and I shall study his comments. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 6 [Borrowing and banking of landfill allowances]:

Lord Dixon-Smith moved Amendment No. 13:

Page 4, line 23, leave out from "to" to end of line 24 and insert "carry forward any unused allocation"

The noble Lord said: My Lords, Amendments Nos. 13 to 15, 26 and 40 are grouped together. These amendments relate to our belief that unused allowances should be carried forward if required. The borrowing of as yet untouched allowances from the future has, however, the makings of a disaster.

It has been said several times that the capital requirement for any programme of waste reduction is enormous. None of us wants incineration, but it will have to be part of the answer and it will be expensive. That is a fact. Anaerobic digestion, which we should prefer to see, is an even more expensive system. We are

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looking at major projects combining civil, mechanical, electrical and electronic engineering, along with some fancy biological technology.

It is not our intention to open a door to the possibility of any disposal authority or collection authority using forward allowances to help to justify a project which then builds up delays. We return to the business of straight-line targets. Borrowing from future allowances will create problems. That could be seen as a reason to delay construction which would ultimately result in failure to meet targets in future years. We are looking for a smooth progression; that is our reason for advancing the amendments. I beg to move.

Lord Livsey of Talgarth: My Lords, we debated these amendments in Grand Committee. They relate to provisions in the Bill for a waste disposal authority to utilise allowances from one scheme year to a different year. This is a complex matter, but the essence of the amendments is that they reduce the flexibility of waste disposal authorities—that is, county councils and unitary authorities—to manage the new scheme and adapt it to their own circumstances. For that reason, we do not support the amendments. We thought them useful in Committee—indeed, we moved similar amendments in order to probe how the Government see the scheme working. We believe that the explanations given in Committee were acceptable and we stand by that.

Amendment No. 40, on the face it, sets out the position in a much simpler, more understandable way than the Bill itself. However, it severely restricts the ability of waste disposal authorities to move allowances from one year to another—either a year earlier or a year later—and restricts allowances that can be traded. We believe that, like the other amendments, it would make life more difficult for the local authorities concerned. For that reason—we think it a good one—the amendment should be resisted.

Lord Whitty: My Lords, the noble Lord, Lord Livsey, has said much of what I would say. The whole point of providing a trading scheme in the Bill—it is a major part of the Bill—is to enable local authorities to meet their targets in a flexible way, given that some investment will be a step-change and the timing of it may not exactly fit in with the profile of the allocations given to them.

We are concerned to ensure that targets can be met cost effectively and flexibly. That is why we are providing the ability to transfer and trade allowances. In any trading system, borrowing and indeed banking are part of the system. The use of borrowing gives waste disposal authorities a vital flexibility in moving towards the requirements; allowing for regulations that provide for both banking and borrowing in effect underpins any trading scheme and therefore increases rather than reduces the ability of individual local authorities to meet the targets. For example, major investment in infrastructure could be required in many

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of the technologies to which the noble Lord refers. Investment could be required in years one and two but the infrastructure would not come on stream until year three. The waste disposal authority would need to borrow in the first two years knowing that it would be able to compensate for that borrowing and effectively pay back as soon as the facility was built and the capacity came on stream. That would not be possible if borrowing were not permitted.

The Bill's provision for a combination of targets and being able to borrow and bank around those targets increases rather than reduces flexibility. To remove that flexibility would undermine the whole dimension in the Bill of a trading scheme. I hope, therefore, that the noble Lord will think again and not pursue the amendment.

5.30 p.m.

Lord Dixon-Smith: My Lords, I agree in principle with what the Minister says about trading the allowances. However, we believe that trading those allowances should take place directly between authorities and not through the intervention of third parties. Trading allowances that one does not need is one thing; trading allowances from the future that one might need is entirely another. It is for that reason that we brought forward this group of amendments. I hear what the Minister says. It is to be hoped that the noble Lord is right. If not, we are all in deep trouble. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 14 and 15 not moved.]

Lord Dixon-Smith moved Amendment No. 16:

Page 5, line 12, leave out paragraph (i).

The noble Lord said: My Lords, the provision is not helpful because it implies that third parties will be able to trade in allowances which should be traded directly between authorities. Most importantly, paragraph (i) makes provision for,

"the levying of fees and charges on persons engaged in inter-year utilisation of allowances".

I am not sure which person is trading. That is why we have brought forward the amendment. We are talking about waste disposal authorities which have something to dispose of. Is the chief executive of that authority the person who is trading? Is the treasurer of the county council behind the waste disposal authority that person? Is the leader of the council who agrees that the trade may be made the person who is trading? Alternatively, is it simply a commission rate for a third party who is involved in the trade and nothing to do with the people who originated it? The position is not clear. We think that it should be. I beg to move.

Lord Whitty: My Lords, the amendment would delete one of the provisions which are intended as examples of features of a scheme which would allow the scheme to function successfully. It would remove the example of regulations providing for the levying of fees and charges on those involved in inter-year utilisation of allowances. I understand that the

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example is fees and charges in relation to the waste disposal authorities. The provision of fees could be useful to compensate for the additional resources required for administering the banking and borrowing of allowances.

The level set would be intended to discourage unnecessary usage but would not be so high as to be a disincentive to engaging in the banking and borrowing required to enable waste disposal authorities to meet their objectives. A provision for fees and levies would in concept be to discourage unnecessary engagement in a trade and to encourage the use of borrowing and banking in ways which are directly related to the meeting of the targets; and, of course, it is permissive. In that sense, the provisions go some way to meeting the noble Lord's anxieties about the previous amendment. The proposed deletion would be negative to the regime he seeks which focuses on the achievement of the targets rather than the way in which they are achieved. It does not engage waste disposal authorities in unnecessary transactions in order to meet other objectives.

I hope that the noble Lord will reconsider the issue. I shall look again at the amendment to see whether there are other ways of achieving his objective. My understanding of the provision's intention would help to meet his objectives as well as mine.

Lord Dixon-Smith: My Lords, I am grateful to the noble Lord. I never doubt his intentions. The difficulty arises when the words on the face of the Bill are not sufficiently specific and are open to other interpretation. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Dixon-Smith moved Amendment No. 17:

Page 5, line 14, after "breaches" insert ", resulting or intended to result in financial or other material gain for the offender,"

The noble Lord said: My Lords, the Bill provides that regulations may,

"make provision creating offences for breaches of provisions".

There could be many offences. We shall consider penalties somewhat later. The breaches should be,

"resulting or intended to result in financial or other material gain for the offender".

Simply creating offences is open ended. We should specify the nature of the offences. It is a small but helpful and vital point. I beg to move.

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