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The Government’s amendments propose yearly indicative ranges of temperatures. This seems to be a fudge. How can it work in practice? For arguments sake, let us say that the first year’s indicative range is a reduction by between 3 and 5 per cent. What would that amount to? It would amount to 3 per cent becoming the target. Any Government would take all the credit that they could—the press officers overworked with reporting that the Government had delivered on their promises. The top end of the scale would become meaningless. A lot depends on how those ranges are set. If there were a minimum gap for the range, it may make the amendments more sensible. An indicative range of 3.00053 per cent as opposed to 3.00063 per cent would seem more persuasive. We want the targets to be at the upper limit of possibility, pushing Ministers to find ways to ensure that they are achieved. At the end of the day, or at the end of the budget period, doing just enough to meet the minimum requirement may not be good enough. We do not want Ministers continually to be able to justify their failures because of bad weather. Annual targets need to send clear signals; these ranges are anything but. It is like running a race with a victory ribbon that moves or, more aptly, it is like running the 200 metres but saying that anything between 175 metres and the finishing line will do. While we appreciate the Government’s recognition that there needs to be more accountability, the

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mechanism that they propose is too deeply flawed to represent even a step in the right direction. We strongly believe that if we are going to have genuine accountability during the budget period, it should come in the form of rolling annual targets—the rolling annual targets that we propose. I beg to move.

Lord Teverson: My Lords, I agree with the noble Lord, Lord Taylor. I enjoyed his sporting analogy. I do not know whether he will be joining me on the Westminster mile for Sports Relief on Wednesday when we can get some energy out and support a charity. On these Benches, we started during Committee and at Second Reading on the basis that five years was too long. We felt strongly that because of the political cycle and of concentration on achievement rather than just setting targets, three years was more appropriate. Not having received rapturous applause from the other sides of the House, we have not put that proposition forward at Report stage. We believe that with five years still there it is critical that we should have distinct annual targets within the Bill. You cannot have a void over a period of five years for a subject as important as this. We were persuaded by the argument made by the noble Lord, Lord Taylor, in Committee, for rolling targets. That is a useful addition; hence our support for the amendment.

Lord Turnbull: My Lords, it is accepted that from one year to the next there can be a great deal of variability either in greenhouse gas emissions or temperature. The particular feature here is that much of that variability within the timescale of a year would be difficult to explain; much more difficult to explain than variations in the government accounts. That makes this rather different. Therefore, I support the Government’s proposal of having a quinquennium, a base year, a target year and a trajectory in between, which is very much the methodology of the delivery unit.

Suppose that, after the annual target, there is one year in which we are below trajectory, by which I mean on the wrong side of whatever trajectory we are trying to achieve. The implication is that you are then setting another set of targets on the basis of that one year’s change in evidence, much of which will be noise rather than signal. The right response may not be to act immediately. If one’s antennae begin to detect something going wrong, it may be to start researching or maybe start preparing what your response would be. Very often, it would not be a good idea to act. Suppose in the next year this variability reverses itself. What do you do? Do you then reset the targets back in the other direction?

I also find rolling targets confusing. Take the year 2017. This will have been set in the initial target setting of the initial quinquennia. It will then appear as year 5 in the 2013-17 period. It will appear again as year 4 a year later. It will appear again as year 3 in the next year. The public will be thinking, “What was the target for 2017? It has been reset six times in its lifetime”. Part of this mechanism is to provide clarity so that you can see where you stand. Philosophically, I am unsympathetic to the hyperactivity in pot-watching that the amendment implies. I am sure that many

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Members of this House have been highly critical of Ministers for initiative-itis; for not spending long enough looking at the evidence. Yet this amendment promotes exactly that kind of impatient policy-making.

Let us remember that we are engaged on a 40-to 50-year journey to decarbonise our society. What is required is purpose and persistence and not a flurry of initiatives. The outcome will be decided by the way in which society—business, families and public organisations—responds. They need a clear set of guidelines and a predictable framework, not one that is dodging back from one year to the next. For those reasons, with the addition of the trajectory—which I think is called the indicative guidelines—that has been proposed, this is the basis that we should support in the Bill.

Lord Woolmer of Leeds: My Lords, I wonder whether the noble Lord, Lord Taylor, in responding, could clarify two or three queries that I have about the meaning of his amendment. First, are these indicative targets, or targets in the meaning of the rest of the Bill as it stands? Secondly, does the annual target apply for 15 years ahead? It refers to five-year budget periods and there are three five-year budget periods always in play. Is he asking for 15 years to be published, but for the rolling target to apply only for the next six of those years?

Thirdly, what are the means at the disposal of the Government of the day to fine- tune on this annual basis? Taking into account the point made by the noble Lord, Lord Turnbull, the implication that I remarked on in Committee of having targets in the meaning of the Bill is that there are policies that can address those. If we are to go down the annual target route, and for that to be in some sense meaningful in its impact on policy, the Government of the day and the committee advising them must have some levers and tools by which they can respond on an annual basis, as opposed to setting a clear trajectory and a clear strategy with clear policies aimed at achieving that. What are the corresponding annual policies that could fine-tune in that way?

Lord Puttnam: My Lords, it has been very seldom during the passage of the Bill that I have disagreed with the noble Lord, Lord Taylor, but on this occasion I think that the Government have done very well. They have listened, and their Amendment No. 49 is not at all a bad attempt to deal with a tricky problem. All I would suggest to the Minister is that the term “indicative annual range” is a little broad. It would help enormously if that range could be narrowed to a point where people could have some confidence that it would be so, give or take 5 per cent either side of the range. As my noble friend Lord Woolmer said, the Government are rightly offering the opportunity to fine-tune, but fine-tune means just that. The phrase used at the moment in the amendment is a little broad and is probably broader than is intended.

Lord Rooker: My Lords, I will get off on the right foot. Subject to the government amendments being approved, I am always happy to look at their

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technical drafting, in answer to my noble friend, who speaks with the experience of chairing the Joint Committee. First, I apologise for the length of my response. A lot of key points have been made, and I am keen to explore why we think the opposition amendments are not a good idea and to get that across in a way that I hope the House will accept.

We had a detailed discussion in Committee on annual accountability, when I tried to explain the problems inherent in setting single-point annual targets, whether or not they were legally binding. We have looked again at the arguments presented in that debate, and it is clear that there is a good deal of common ground about what we are trying to achieve. That is to say, annual transparency and accountability about progress towards meeting the budgets are crucial for all of us, and some indication of the Government’s expected trajectory for reductions over the budget period would help in providing this. It is important that there is no divide between any sides of the House on that.

I note that the Bill already provides a strong annual accountability framework through a number of its existing provisions. Every year, the Government must publish a statement of emissions for the previous year. The climate change committee must then report to Parliament on progress towards meeting the budgets, and the Government respond to the committee’s report. Since our helpful discussions on this issue at Committee stage, we have considered ways in which still greater clarity can be provided about how the accountability framework will work in practice, because it has to work in practice. I will come to those shortly.

First, I want to look at the opposition amendments. Amendment No. 16 would require the setting of both an annual target and a rolling annual target in terms of the net UK carbon account. Amendment No. 18 makes the annual target set under the first paragraph of Amendment No. 16 legally binding. However, the rolling annual target, set under the second paragraph of Amendment No. 16, would not be legally binding. We have to ask: how is it possible to have two separate targets for the same thing in the same year? Let us take the year 2009. The Government would be required to have both a legally binding annual target and a rolling annual target that would not be legally binding. That looks like a recipe for total confusion.

7 pm

Amendment No. 21 would mean that the Government could set both the legally binding annual target and the non-binding rolling target only at the level recommended by the Committee on Climate Change. Again, these amendments would cut the Government out of the equation, which is another reason why we cannot accept them.

The more fundamental problem with the opposition amendments is that we simply think that a single-point annual target does not work. It is too blunt and inflexible. Instead, the Government have tabled proposals that have at their heart government Amendment No. 49, which requires that the report on

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proposals and policies to meet budgets should include an indicative range for the trajectory of emissions over the budgetary period. We believe that the idea of an annual indicative range is superior to proposals for an annual single-point target. As I said in Committee, emissions can fluctuate from year to year for a variety of reasons, many of which, such as the weather, are out of the Government’s direct control. There is also an inevitable uncertainty between the forecast of the impact of a given policy and actual emissions, again for reasons that may be beyond the Government’s direct control.

We need a system of annual accountability that can deal with these real-world fluctuations and uncertainties but which still provides sufficient clarity about progress to ensure that the Government of the day can be held to account appropriately. We believe more generally that single-point targets, whether annual or rolling, are too inflexible and are likely to lead to regular false alarms. Instead, setting out an indicative range for the net UK carbon account for each year of the budget period combined with greater clarity about the timescales for policies to take effect, as required by government Amendment No. 53, will ensure that the Government of the day can be properly held to account for progress during each year of the budget period, not just at the end of the period.

Within the package of government amendments, Amendments Nos. 67, 68, and 70 are consequential and relate to the annual statement of UK emissions required under Clause 12. These amendments require that the annual statement must give total amounts of carbon units credited to or debited from the net UK carbon account for each year, rather than for the budgetary period in which the year falls, and totals of the net UK carbon account. Without this information, there would be no way of measuring progress against the indicative trajectory.

Since tabling these amendments, I have been asked what my expectations are for the range. How will it work and how wide is it likely to be? Those are critical questions if an indicative range is to provide the right balance between the need to take account of the likely variation in emissions from year to year and the need to provide a robust framework against which to assess annual progress. Clearly, a range will not fulfil its function effectively if it is so wide as to be meaningless. Therefore, we need to look at the likely effect of the main factors creating uncertainties about annual emissions.

One factor is, as I have mentioned, the weather. UK emissions are sensitive to variations in the temperature above or below the average. There will be increased use of heating, for instance, in a particularly cold winter and increased use of air-conditioning in a particularly hot summer. Population growth is another factor. The Office for National Statistics provides annual revisions to population forecasts that directly affect projected emissions. If the number of UK households goes up, UK emissions are likely to increase. There is also the question of policy uncertainty. Not all policies deliver the exact

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emissions savings that we expect when we design them. Some will deliver more, others less.

Variability in emissions as a result of these factors can be seen clearly in the UK’s annual inventory since 1990. For example, if you look at figures for emissions of all the Kyoto greenhouse gases, you see that the reduction was 6.5 per cent in 1996 but 14 per cent in 1999, against a 1990 baseline, with emissions for surrounding years being somewhere in between.

There is also the wider European and international context. Around half our emissions are already capped by the EU Emissions Trading Scheme, which operates on a multiyear basis. Actual emissions in any one year could therefore differ from our assumptions because companies have decided to bring forward or put back their emissions or abatement action as a result of changing carbon prices or other economic factors outside the Government’s control. Referring again to historical figures, we can see that in 2004-06, when emissions trading was introduced, the effective reduction in the UK’s net carbon account from the 1990 baseline almost doubled. This demonstrates the potentially significant effect of introducing big new policy mechanisms. As the international framework develops, other mechanisms may come on stream over time that will also influence our level of flexibility in how we reduce emissions. The range will also need to change over time as, for example, our understanding of the underlying factors behind UK emissions trends improves.

It is not possible at this stage to put a definitive figure on how wide the range will need to be because of these factors. However, we believe that we are looking at a variation in single-figure percentages overall. That is as accurate as we can get and is not pie in the sky. We are looking at single-figure percentages rather than tens of percentages. We cannot see that it would need to be a great deal wider than that. Obviously, I accept that that is a broad estimate and that more detailed work needs to be done. However, we believe that that represents a much better way forward, which will reflect the nature of reality rather than the spurious precision of a single-point annual target.

I regret that I have had to give such a lengthy response to this issue. In summary, we have problems with the practical effects of the opposition amendments. I say the practical effects and I genuinely mean it because I have been on the other side as well. Sometimes you want to do something but, if it is impractical, it is not right to put it into legislation. It may not be accepted that this is impractical, but I hope that I have explained that it is. Indeed, the noble Lord, Lord Turnbull, reinforced that point.

I also believe that, as a whole, our proposals for an annual indicative range provide for even greater transparency on an annual basis about the Government’s expectations and progress while also maintaining the flexibility that we need in the five-year budgetary period. We are at one on that. We want to have that annual accountability within the five-year period, but the question concerns how we go about doing that.



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Finally, I do not believe that the points made in favour of annual targets outweighed the problems that those targets would bring, or that such targets would add value beyond the proposals that we have brought forward. Obviously, our amendments are as a package designed to achieve the objective in a practical way. I hope that I have made the point that the opposition amendments are basically impractical. We are trying to achieve the same thing. I ask noble Lords to consider their position and not to press their amendments.

Lord Taylor of Holbeach: My Lords, I am grateful for the Minister’s response and for the support of the noble Lord, Lord Teverson. I will try to respond to comments made by other noble Lords.

The noble Lord, Lord Turnbull, warned that the amendment could lead to impatient policy making. However, a rolling target provides a constant re-evaluation of where you are going. Indeed, I suspect that part of the purpose lying behind the government amendments is to make sure that there is a constant focus on the issues involved. I am not in favour of Whitehall knee-jerking, as I explained in my introduction to our amendments. The noble Lord, Lord Woolmer, asked about the form of a rolling target and whether it would have the same authority as the five-year target period. It is not designed to replace the five-year target, which is a crossroads, if one might take a pedestrian view of the issue, whereas the milestones are on the way. This is not meant to replace the five-year budget period; it is intended to provide a path.

I say in response to the noble Lord, Lord Puttnam, and the Minister that I recognise that by introducing their amendments the Government have recognised the argument that we were making; I appreciate that. However, we should not be worried about accepting the amendments from these Benches because these indicative targets will induce a degree of numeracy on this issue. Our biggest problem in tackling issues such as climate change is that they should not be discussed only in government circles. They should have a popular buy-in; there should be a sense that the whole nation is seeking to achieve an objective. The displaying of road casualty figures at the side of the road is designed to reduce the number of dead and injured, although we all know that figures will vary from year to year for all sorts of reasons other than the way that people drive. They are designed for a purpose. I believe that these rolling targets can have the same impact.

I remain confident that our amendments would strengthen the Bill in a direction that it needs and I wish to test the opinion of the House.

7.12 pm

On Question, Whether the said amendment (No. 16) shall be agreed to?

Their Lordships divided: Contents, 123; Not-Contents, 143.



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Division No. 3


CONTENTS

Addington, L.
Alton of Liverpool, L.
Anelay of St Johns, B. [Teller]
Ashcroft, L.
Ashdown of Norton-sub-Hamdon, L.
Attlee, E.
Avebury, L.
Bonham-Carter of Yarnbury, B.
Bottomley of Nettlestone, B.
Bowness, L.
Bradshaw, L.
Bridgeman, V.
Brooke of Sutton Mandeville, L.
Brougham and Vaux, L.
Byford, B.
Caithness, E.
Cathcart, E.
Chidgey, L.
Colwyn, L.
Cotter, L.
Courtown, E.
Craigavon, V.
Cumberlege, B.
De Mauley, L.
Denham, L.
Dholakia, L.
Dykes, L.
Elliott of Morpeth, L.
Elton, L.
Falkner of Margravine, B.
Fearn, L.
Fookes, B.
Fowler, L.
Freeman, L.
Glentoran, L.
Goodlad, L.
Hameed, L.
Hamilton of Epsom, L.
Hanham, B.
Harris of Richmond, B.
Henley, L.
Higgins, L.
Hooper, B.
Howard of Rising, L.
Howe, E.
Howe of Aberavon, L.
Howe of Idlicote, B.
Hunt of Wirral, L.
James of Blackheath, L.
Jenkin of Roding, L.
Jones of Cheltenham, L.
Jopling, L.
Kilclooney, L.
Kirkwood of Kirkhope, L.
Laird, L.
Lamont of Lerwick, L.
Lee of Trafford, L.
Lindsay, E.
Liverpool, E.
Livsey of Talgarth, L.
Ludford, B.
Luke, L.
Lyell, L.
Lyell of Markyate, L.
McColl of Dulwich, L.
McNally, L.
Maddock, B.
Mar and Kellie, E.
Masham of Ilton, B.
Mayhew of Twysden, L.
Miller of Chilthorne Domer, B.
Miller of Hendon, B.
Montrose, D.
Morris of Bolton, B.
Naseby, L.
Neuberger, B.
Newby, L.
Newton of Braintree, L.
Northbrook, L.
Northesk, E.
Northover, B.
Oakeshott of Seagrove Bay, L.
Park of Monmouth, B.
Pearson of Rannoch, L.
Perry of Southwark, B.
Plumb, L.
Ramsbotham, L.
Razzall, L.
Redesdale, L.
Roberts of Conwy, L.
Roberts of Llandudno, L.
Roper, L.
Ryder of Wensum, L.
Saatchi, L.
St John of Fawsley, L.
Seccombe, B.
Selborne, E.
Sheikh, L.
Shephard of Northwold, B.
Shutt of Greetland, L. [Teller]
Skelmersdale, L.
Smith of Clifton, L.
Steinberg, L.
Stern, B.
Stewartby, L.
Taylor of Holbeach, L.
Tebbit, L.
Teverson, L.
Thomas of Gresford, L.
Thomas of Walliswood, B.
Tordoff, L.
Trimble, L.
Tyler, L.
Ullswater, V.
Verma, B.
Wakeham, L.
Wallace of Saltaire, L.
Wallace of Tankerness, L.
Walmsley, B.
Walpole, L.
Watson of Richmond, L.
Wilcox, B.
Windlesham, L.

NOT CONTENTS

Acton, L.
Adams of Craigielea, B.
Adonis, L.
Ahmed, L.
Alli, L.
Anderson of Swansea, L.
Andrews, B.
Archer of Sandwell, L.
Ashton of Upholland, B. [Lord President.]
Bach, L.
Barnett, L.
Bassam of Brighton, L.
Berkeley, L.


25 Feb 2008 : Column 501

Bernstein of Craigweil, L.
Bilston, L.
Blackstone, B.
Blood, B.
Borrie, L.
Boyd of Duncansby, L.
Bradley, L.
Brett, L.
Brooke of Alverthorpe, L.
Brookman, L.
Brooks of Tremorfa, L.
Campbell-Savours, L.
Carter of Coles, L.
Chandos, V.
Clarke of Hampstead, L.
Clinton-Davis, L.
Corbett of Castle Vale, L.
Corston, B.
Crawley, B.
Darzi of Denham, L.
Davidson of Glen Clova, L.
Davies of Coity, L.
Davies of Oldham, L. [Teller]
Dean of Thornton-le-Fylde, B.
Dearing, L.
Desai, L.
Dixon, L.
D'Souza, B.
Elystan-Morgan, L.
Evans of Parkside, L.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Filkin, L.
Ford, B.
Foster of Bishop Auckland, L.
Foulkes of Cumnock, L.
Fyfe of Fairfield, L.
Gale, B.
Giddens, L.
Golding, B.
Gordon of Strathblane, L.
Graham of Edmonton, L.
Grocott, L.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haworth, L.
Hilton of Eggardon, B.
Hollis of Heigham, B.
Howarth of Breckland, B.
Howarth of Newport, L.
Howells of St. Davids, B.
Howie of Troon, L.
Hoyle, L.
Hughes of Woodside, L.
Hunt of Kings Heath, L.
Inglewood, L.
Janner of Braunstone, L.
Jay of Ewelme, L.
Jones, L.
Jones of Birmingham, L.
Jones of Whitchurch, B.
Jordan, L.
Judd, L.
King of West Bromwich, L.
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