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This is one of the most important debates of the evening. Once you start thinking that the basis of overall targets is what can be achieved at the level of sectors, sub-sectors and businesses, one starts to see the dangers as well as the opportunities. Three five-year rolling programmes in advance can quickly turn out to be an illusion of planning, and you then get policies to achieve those plans over 15 years. The first conference that I went to as a young university economist was on planning coal production in the UK. All kinds of people told us how much coal had to be produced and how. It was a lot of coal. Eventually, we had to find a way of not producing a lot of coal, because people did not want that amount—certainly not of British coal. I was a Yorkshireman saddened by that.

I simply give a word of caution. You can easily enthuse about what policies have to achieve in particular sectors. The challenge for the climate change committee will be enormous, given complex questions such as what is economically possible, what is technologically possible, and how to allow the marketplace to respond over time.

Not as many people have quoted the CBI’s work as they have Greenpeace, Friends of the Earth and so on, but I thought that the work by McKinsey in Climate Change: Everyone’s Business showed what could be done at a strategic level. It also showed the gap between strategic thinking about sectors and what we are telling the climate change committee that it has to produce in two years’ time. We are expecting it then to produce some pretty important forecasts, on which government policies over 15 years will have to be laid out. When those come before the Government and Parliament there will have to be careful examination of our enthusiasm for what can be achieved and how to achieve it.

We will come in later amendments to the role of the Committee on Climate Change. There will always have to be a political judgment about what can be done and how best to guide it into taking us there. I think that the committee can only give guidance, because we could get into real difficulties if it becomes a planning agency for 15-year plans. The thrust of the proposal is enormously to be supported, but addressing the nuances and subtleties of converting it into action that Parliament, the public and industry can support and deliver will be a real challenge.

Lord Taylor of Holbeach: I return to the debate on the theme that the noble Lord, Lord Woolmer, brought up and which was raised also in contributions from other noble Lords. It brings to mind a particular element that we have not talked about: the degree to which there is genuine enthusiasm—a wish to co-operate and to see this working—outside political circles and among industry and the community at large. It is important to bear that in mind.

The second notion that I would like to introduce to our deliberations is the idea that this does not need to be all top-down; it can be bottom-up. In fact, any sector that one can think of or that has been mentioned today has a capacity to produce of its own account a

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way in which to will the means to achieve the end. That is an important way of making this work, with a dialogue between the Committee on Climate Change and the sectors that it identifies. The sectors that volunteer because they recognise their own role do not want a decision imposed on them; they want to be part of the decision-making process. They need to be at its heart.

I was reading something last week with my wife, a county councillor who was at the Local Government Association conference held last week. Confusingly, the association has a climate change commission that is looking at this matter. Its commission has come forward to volunteer the local government sector for climate change targets. It has recognised that local government is an area that can effect policies that will influence climate change.

I introduced these amendments fairly briefly because they are simple. They would simply introduce sectoral budgets onto the playing field in order to give the Committee on Climate Change and the Government a mechanism to implement the Bill more successfully. A lot of good could come out of including and working with these ideas.

Lord Rooker: When I look back on this Committee stage I will probably say that this debate was one of the shortest and yet one of the most interesting. I have a speech that would more or less squash it all but I am still of the view that I should take it away from the Committee in order to tie it in with what was said last week. I will essentially be negative, and I will explain some of the reasons for that, but on the other hand we have just had contributions that have shown the practicalities. We have had the example of apples, though I doubt that the noble Earl was on about the apple sector. It might be the fruit-growing sector, or the farming sector as a whole. My noble friend Lord Campbell-Savours then gave the residential sector as an example. But then we had a local government issue, with residential issues mixed up with land. It is a question of looking at sectors. But then my noble friend Lord Woolmer referred to the national plan of the 1960s and George Brown. I said to my ministerial colleague on the Front Bench that, as I have now discovered, “Not all members of the Government have heard of George Brown, so mentioning him is probably not a good idea”. I also expected my noble friend Lord Woolmer to mention the No. 7 tractor plant and the problem of picking winners.

The noble Lord, Lord Taylor, in his second contribution, then made the distinction that, contrary to the point about the demise of the national plan, here we have almost a consensus in principle for industry, government and business actually to do something to make it work, but not to have it imposed top-down by telling individual companies and sectors what to do. That is the important point coming out of the debate. Obviously, we want to make sure that each budget and the 2050 target are met. We can agree that it does not matter where in the economy the reductions come from. We must be flexible about this. Flexibility is the key, along with the principle of making sure that we achieve the targets.

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There is a number of problems with the idea of sectoral targets, but it depends on how you look at the sectors. There is no doubt that this is where the national plan of the 1960s would have led, and did lead, to inefficient policy making. If you are rigid with your plan and your target, you get a problem. I was given an example in my notes. Evidence might come forward—and it is highly likely to come forward today—of a new technology that turns out to be the most cost-effective means of reducing emissions, but we might be tied to meeting the targets through other sectors. That way you would ossify the technology and the chances of putting it into practice. I am not knocking sectoral targets, but we must be flexible about this. As I said on Second Reading, operation of this kind of legislation will unquestionably lead to the creation of new businesses, but not all of them will succeed. We have to give them the flexibility to work out what is best.

The emissions trading scheme is a good example of a policy that covers multiple sectors. One can broadly divide the economy into no more than five or six sectors, but we are looking at something below that. In a way, this comes down to letting the climate change committee take this principle, and maybe we will find a different way on Report of looking at the need for some kind of way forward. It should not be prescriptive, stop technology or wreck the putting into practice of new and good ideas, but it should assist those in different sectors who feel that they want to make a contribution.

The noble Earl made a good point. I am not saying that he gave this example, but he identified the fact that the large retailers dominate our food economy. We have asked them on a range of issues concerning the food chain to ensure through their suppliers, as part of their job, that workers are not exploited, that the gangmasters legislation is operated fairly and that the minimum wage is paid. It is the retailers’ job to make sure that the provenance of their products is okay—for example, by preventing the restamping of non free-range eggs as free-range. They can ensure that through each supplier in the chain. It is no different in the case of those who want to be associated with cutting emissions; the same can be done with suppliers, but you would not want to be prescriptive by ordering the sector to cut emissions. The work goes across many sectors.

I shall take some advice on this. If there are any targets knocking around Whitehall—I suspect that we will have some figures in the department or in the Treasury, although I do not know—they are not being operated and they would not be prescriptive in that sense. We must be flexible, but we need people to be assured that the legislation has clarity and that we can take it forward.

I have already agreed to look at other parts of the Bill so that we can find ways to demonstrate that the Government as a whole are committed to the issue. We do not think that setting emission reduction targets for each government department—to pick on Amendment No. 32—is the way but we will certainly consider that alongside the proposals we discussed last week. I do not think that anybody has used the word rigid about sectoral targets, but by implication

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they need to be flexible. We need to look at what we mean by a sector because that is not adequately explained. We need to make sure that the Committee on Climate Change has maximum flexibility in this with the good will and willingness of industry and competition and new technologies so that a door is not closed because some sector has been given a target that ends up knocking out an opportunity for new technology so that someone will not take the risk of investment. We would not want that to happen. If we can find a solution along those lines, we will have served the scrutiny of this Bill extremely well in exactly 30 minutes.

9.15 pm

Lord Taylor of Holbeach: I am very reassured by the Minister’s contribution and response to our amendment. I feel that we have taken the debate quite a long way. I hope it is a path for future discussions. I beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 30 to 32 not moved.]

Clause 4 agreed to.

Clause 5 [Level of carbon budgets]:

[Amendment No. 33 not moved.]

Lord Teverson moved Amendment No. 34:

The noble Lord said: At the beginning of our debate on the first day in Committee we talked about an 80 per cent, or 60 per cent—whatever that percentage should be—overall reduction by 2050. At Second Reading, I felt there was particular feeling from all sides of the House for this very strange mid-point target that the Government had inserted into the Bill which—I do not know whether it was meant to but it clearly does—put in not only a minimum target range but also a maximum. It suggested that if the UK economy by 2020 reduced carbon emissions by more than 32 per cent, then somehow the Secretary of State would be equally culpable if he had missed the lower target. That seemed an extremely perverse and almost masochistic form of legislation.

Our amendment does two things. It takes away the ceiling for reductions, which does not seem to make any sense, and it replaces the single target with a figure of 40 per cent. Perhaps we will get back into the previous argument about whether it is up to Parliament to decide what the target should be. Our view—and the Government’s view, we have heard—is that there needs to be a figure in the Bill. That is the case for the final target and we believe that it should also be the case for the approximate mid point in 2020, and that the right figure for an 80 per cent overall reduction is a best estimate of 40 per cent. Where does this figure come from? It is half of 80 per cent—rather easier mathematics than we heard earlier.

However, in terms of how quickly one can achieve the targets, there are clearly two forces working one against the other. There is the school of thought that there are easy areas to meet. The low-hanging fruit

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argument says that we should be able to save obvious carbon emissions quickly but that it will get more difficult as time goes on. On the other hand, we hope that technical innovation will be stimulated very strongly by the imperative of climate change. New technologies will come on stream some years ahead to allow the extra efficiencies to be met to a greater extent later. If we take the view that the two roughly cancel each other out, then the figure of 40 per cent is more or less correct and is suitable for the Bill at this stage.

Over the past week at Bali, it was the EU’s specific view that the target for developed nations should be between 25 and 40 per cent by 2020. That was for greenhouse gases generally but, as we know, carbon dioxide is the most important of those. I presume that the British Government fully supported the EU stance on targets to be met by developed nations and I would certainly expect them to have done so. If as a nation we are saying that we should be at the forefront of those targets and leading not just globally but within Europe, then, within that context, 40 per cent again seems to be the right figure. However, most importantly, we should remove the upper target. I beg to move.

The Deputy Chairman of Committees (Baroness Fookes): I point out that if this amendment is agreed to, I shall not be able to call Amendment No. 35.

Lord Crickhowell: Perhaps I should not have paid as much attention as I did to the last debate, as I had not intended to speak in it. However, I am taking the opportunity to refresh my memory of the evidence given to the Joint Committee by the Bill team and the then Secretary of State, David Miliband, who was cross-examined in detail on this point, but, first, I shall take up the point that has just been made from the Liberal Democrat Front Bench about European targets.

It is worth remembering—the evidence was given to us by Mr Mortimer of the Bill team—that the UK’s target of 26 to 32 per cent for CO2 translates into 32 to 37 per cent of all greenhouse gases. Therefore, the suggestion that we should lift the CO2 target to 40 per cent has some fairly substantial implications. However, I draw attention to the evidence given by the then Secretary of State, who has since been transferred to other responsibilities. I think that we should at least understand the case that he advanced under cross-examination, as it may help us to decide whether it was a strong argument.

The Joint Committee finally concluded that it was not a very strong argument and said that it was not convinced by it. Basically, the Secretary of State’s case was that this range of targets would be extremely tough to achieve. He said that, considering all the policies that the Government were putting in place, we had just about reached the limit. However, he also said that,

He went on to say that he regarded it as extremely important to give a clear indication to business of exactly where the Government wished it to go. He said:

He was then challenged by Helen Goodman from the other place who said:

Mr Miliband said no. Helen Goodman then said:

Mr Miliband replied:

He was then asked whether it was not rather odd to put an upper cap of 32 per cent on the provision, and then there was a diversion into the arrangements for changing the legislation and removing the cap if the circumstances should change.

There we have it from the Secretary of State that the whole reason for this cap is to give confidence to business and industry. I entirely and completely understand why we have to tell business and industry exactly where they need to get to if we are to achieve the results we want, but I find it difficult to believe that the confidence of business and industry is going to be shaken by the possibility that they might beat the target. It is not a situation I have ever discovered in business. Indeed, the Secretary of State—or it may have been one of his officials—pointed out in evidence that it would be possible to bank the surplus and use it in future. Most businessmen would be quite pleased to know that if they exceeded the target they would have a cushion for any subsequent setbacks. So while I understand the desirability of giving confidence to business and wholly support the need to let business know exactly where the Government want to go, after rereading the Secretary of State’s evidence under cross-examination, I remain as unconvinced as the committee was at the time. It is now up to the Minister, who is always compelling and convincing, to provide us with the certainty and the assurance that the now Foreign Secretary was unable to give us when he gave evidence to the committee.

Earl Cathcart: In one respect, these two amendments say the same thing: that the upper limit should be removed. We support that. In the unlikely event that the UK’s emissions reductions are 50 per cent by 2020, it would be admirable and we would be patting ourselves on the back, but as things stand, with the upper limit at 32 per cent, a higher achievement would be against the law, which would be absurd. We believe that setting the upper limit by 2020 would fly in the face of the thrust of the Bill, but that is where the similarities end.

The amendment tabled by the Liberal Democrats and the noble Lord, Lord Campbell-Savours, is for the reduction to be at least 40 per cent. That is consistent with what they previously said about target

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setting. We on these Benches do not support putting 40 per cent in the Bill. When Clause 1 was being discussed last week, my noble friend Lord Taylor of Holbeach argued that the committee not politicians should set the targets. His arguments apply equally to these amendments to Clause 5. Nearly all noble Lords who have contributed to debates on the Bill have said that the 2020 and 2050 targets are too low. Who knows? It might be that 40 per cent is the right answer, but we are saying that the committee should look at it and once it has looked at all the evidence and the science, the 2020 target can be set, but without an upper limit.

Baroness Miller of Chilthorne Domer: Is the noble Earl saying that he does not think the Bill should set targets at all or just not in this particular instance? Would he be kind enough to clarify that?

Earl Cathcart: The Committee on Climate Change ought to be setting this target in the same way that we are recommending that it should set the 2050 target.

9.30 pm

Lord Woolmer of Leeds: There is a difference between the 2020 target and the 2050 target: the 2020 target is a staging post along the way. It might be thought that the Committee on Climate Change needs some guidance on the absolute minimum acceptable target and the maximum that it ought to think about. Why is that? At the maximum point, there is inevitably a trade-off between what it might be possible to force through and what the consequences would be. One of the many issues the committee has to consider is the economic consequences of trying to achieve different things. If we say, “We will not give the committee any guidance. It should get the highest level of carbon reduction it can”, and the committee does that, the Government may then have to say, “We cannot face the consequences of that target”. Other amendments in the Marshalled List would ensure that the committee will effectively determine what happens and the Government will simply have to put before Parliament what it recommends.

There is an argument for providing guidance to the committee at staging posts along the way, but for my part the important question to ask the Minister in Committee is why the minimum target the Government regard as acceptable and the maximum they have in mind are reasonable guidelines to provide for the committee. If no guidelines are given, it is very difficult, but if a specific figure is given, it jolly well has to be justified. With respect to the noble Lord, Lord Teverson, I cannot see the argument that because 40 per cent is half of 80 per cent, that is a good reason why it should be the figure the Committee on Climate Change has to draw up plans for in 2020. It is not a sound argument. The idea of a range for an intermediate position is not at all ridiculous; in fact it is entirely sensible.

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