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Baroness Royall of Blaisdon: My Lords, many people have advocated a separate Bill, and I entirely respect that perspective. However, it is the Government’s intention to bring forward the Constitutional Renewal Bill, which contains clauses on the Civil Service.

Lord Campbell-Savours: My Lords, if Mr McBride had been sacked two and a half years ago when he was first exposed for his activities, surely that would have avoided all the difficulties that we had recently.

Baroness Royall of Blaisdon: My Lords, the problem with Mr McBride came to light a few months ago. As soon as it did, he was sacked. The Government acted quite properly and swiftly.

Tata Steel


3.30 pm

Asked By Lord Bates

The Secretary of State for Business, Enterprise and Regulatory Reform (Lord Mandelson): My Lords, I spoke to Kirby Adams, chief executive officer of Corus, last week when I first heard the news of the situation at Teesside Cast Products. I am seeing him again tomorrow. Officials in my department are exploring how the Government can help to resolve the dispute with the consortium of partners to the 10-year off-take agreement in a way that avoids job losses. Local agencies have also met Corus to discuss potential help for employees whose jobs may be lost if the dispute cannot be resolved.

Lord Bates: My Lords, I thank the Minister for that Answer. Will he join me in paying tribute to the outstanding skills and dedication of the 3,000 workers employed at the Redcar plant, which is under threat of closure, who have made that plant a world-class steel production facility? Does he share with me, and with the many people on Teesside whose jobs are under threat from this announcement, the intense anger that this closure should be the result not of any lack of international competitiveness but of a flagrant breach of contract by the people whom they have supplied? Will he commit this Government to giving every possible support to Corus, to the management, and to the unions and other organisations that are working to ensure that the proud history of steel production at Redcar is retained?

Lord Mandelson: My Lords, I certainly can give that commitment on behalf of the Government. The Prime Minister expressed the same sentiment in the other place only today. The noble Lord and I share a former constituency interest in Teesside, so I am well focused on this matter. It is extremely serious. If the plant is mothballed, there will be a risk that it cannot be restarted cheaply or easily. That will threaten the 3,000 jobs at stake. It is essential that Corus does

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everything that it can legally to reinstate the off-take agreement. I urge Corus and the consortium to seek to resolve their differences and reach a satisfactory solution that avoids these redundancies.

Lord Razzall: My Lords, I recognise that the Minister will not disclose to your Lordships the details of current and ensuing commercial negotiations, and I am sure that everyone on all sides of the House agrees with the sentiments that he expressed, but will he confirm that he has no intention of going back to the bad old days of old Labour propping up industries?

Lord Mandelson: My Lords, I am not quite sure what the noble Lord means. This is not some sort of old, discarded plant or industry that has no future. As the noble Lord, Lord Bates, has made absolutely clear, this is a profitable plant with high productivity, as shown by an excellent workforce. I have asked our embassies abroad to make contact with the consortium companies to understand their actions and to explore the options for reopening discussions with Corus to resolve this to everyone’s satisfaction. As I say, I will meet and discuss this again with the Corus chief executive, Kirby Adams, at a steel summit that I will hold with the All-Party Group on Steel tomorrow.

Lord Stoddart of Swindon: My Lords, bearing in mind that our manufacturing industry is at a very low ebb, will the Minister give the assurance that if some sort of subsidy is needed to keep the plant open, the Government would be prepared to make that subsidy available even if the European Union disagreed to it?

Lord Mandelson: No, my Lords, I do not think there is any need for a subsidy for a plant that is perfectly profitable and efficient, and simply needs a consortium of partners from four different countries to uphold their side of the agreement which they have entered into. That is what we will be seeking to obtain.

Baroness Turner of Camden: My Lords, will the unions be fully involved in any negotiations on this matter? I speak as a member of Unite, which as you will know has been very concerned about support for manufacturing industry.

Lord Mandelson: My Lords, shortly after I spoke to the chief executive, I telephoned Mick Leahy of the Community union on this matter to discuss the potential impact on the workforce and what can be done, and I will continue to talk to him and other representatives of his union as necessary. We are all joined in what we want to happen. We want the terms of this agreement reinstated so that the production and sale of steel slabs can resume as soon as possible.

Lord Foster of Bishop Auckland: My Lords, may I join with all those who have celebrated the skill, the commitment and the efficiency of those at the plant? We find what the Minister has to say very reassuring and we all urge him to continue what he is doing until it is brought to a successful conclusion.

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Lord Mandelson: My Lords, the matter is now going to arbitration. The notice that the company gave last week is for a 90-day consultation period. I assure my noble friend that I and other members of the Government will be working as hard as we can and pursuing every possible avenue in support of the company to get this matter resolved at the earliest possible moment.

House of Lords: Conduct of Members


3.36 pm

The Lord President of the Council (Baroness Royall of Blaisdon): My Lords, I undertook to keep the House informed about developments in the investigation into allegations made earlier this year about a number of Members of this House. I will continue to discharge that undertaking and am now in a position to give the House some further information.

The Committee for Privileges has now considered the report submitted to it by the Sub-Committee on Lords’ Interests on the allegations made by the Sunday Times on the 25 January. I can now inform the House that the report of the Privileges Committee will be published tomorrow at 11 am. It will contain the full report of the sub-committee. I believe it is important that Members of this House are made aware of the developments on this matter through information provided for them in this House, rather than speculation in the media, hence this brief statement. I understand that, especially in the current climate surrounding Parliament, there may well be considerable interest in these matters. For my part, and I hope on the part of others, I shall be making no further statement on these matters until the report is published. I urge Members of this House, and indeed the media and the public beyond, to concentrate on the report itself from the Committee for Privileges when it is published tomorrow, rather than any attempts to second guess it. The Members of this House, and indeed the House itself, deserve nothing less.

Perpetuities and Accumulations Bill [HL]

Membership Motion

3.38 pm

Moved By The Chairman of Committees

Motion agreed.

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Welfare Reform Bill

Order of Consideration Motion

3.38 pm

Moved By Lord McKenzie of Luton

Motion agreed.

Climate Change Act 2008 (2020 Target, Credit Limit and Definitions) Order 2009

Copy of the Order
12th Report from JCSI
15th Report from MC

Motion to Approve

3.39 pm

Moved By Lord Hunt of Kings Heath

The Minister of State, Department of Energy and Climate Change & Department for Environment, Food and Rural Affairs (Lord Hunt of Kings Heath): My Lords, I shall speak to all three statutory instruments on the Order Paper in my name. Noble Lords will remember the many stimulating debates we had during the passage of the Climate Change Act 2008, which was much improved by the contributions of Members of this House. All three instruments have been laid in accordance with that Act and implement elements of the system of carbon budgets established by it. I thank the Joint Committee on Statutory Instruments and the Merits Committee for carefully considering them. As noble Lords will be aware, neither committee found anything to comment on, but the Merits Committee reported the statutory instruments because it felt that they would be of interest to the House, as we are seeing today.

The challenge presented by climate change is enormous in both scale and urgency. The scientific consensus is unequivocal; namely, the global climate is warming and it is caused primarily by human activity. Without concerted world-wide action to reduce emissions, we face a best estimate increase in average temperatures of 4 degrees centigrade by the end of this century, with severe economic, social and environmental consequences. As the noble Lord, Lord Stern, set out very clearly in his review of the economics of climate change, the benefits of strong, early action outweigh the costs. The benefits include enormous economic opportunities for those companies and economies that adapt and innovate to take advantage of a low carbon future.

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That is why this House passed the Climate Change Act last year. It provides a clear, credible framework for the UK’s transition to a low-carbon economy and shows our commitment to playing our part in the global effort to tackle climate change. It is the core provisions in the first part of the Act that are most relevant to today’s debate; first, the requirement to reduce greenhouse emissions by at least 80 per cent by 2050 and carbon dioxide emissions by 26 per cent by 2020 and, secondly, the system of five-year carbon budgets, which are set up to 15 years in advance. Carbon budgets are one of the most radical and distinctive features of the Act. They provide a strong framework for delivering and monitoring the emissions reductions required to achieve the 2020 and 2050 targets.

This framework includes a legal requirement on the Government to put in place policies that ensure we live within the carbon budgets. This means that the effects of any new policies that could increase emissions are carefully considered and corresponding reductions found elsewhere if this is necessary to meet the budget. There are of course processes already in place to help ensure that this is done systematically, in particular through the requirement for an assessment of the carbon impact of all new policies within the overall impact assessment. To ensure that the overall impact is to keep us within the budgets, we are developing strong internal mechanisms within government to ensure that every department has a clear responsibility to play its part. We expect to set out more about how this will work alongside the publication this summer of our climate and energy strategy, which will also clearly set out the details of our policies and proposed policies to meet the first three carbon budgets as required by the Act.

I will speak to the first two draft orders before the House today; namely, the Carbon Budgets Order 2009 and the Climate Change Act 2008 (2020 Target, Credit Limit and Definitions) Order 2009, which are closely linked. The 2020 target should be covered first as it dictates the minimum level of the third carbon budget. As noble Lords may recall, the 2050 target was amended from 60 per cent to 80 per cent during the final stages of the passage of the Climate Change Bill. That followed advice from the shadow Committee on Climate Change, which is the independent, expert advisory body established by the Climate Change Act and very ably chaired by the noble Lord, Lord Turner. At the same time, the default greenhouse gas coverage in the Bill was changed to include all six Kyoto greenhouse gases rather than just carbon dioxide.

However, the level of the 2020 target was not amended. It remained at a 26 per cent reduction in carbon dioxide emissions on 1990 levels. The Government made it clear at the time that, once we received the advice of the Committee on Climate Change, we would consider amending the gas coverage and the level of the 2020 target. This advice was included in the committee’s first report, which was published on 1 December last year. The committee’s view was that the 2020 target and our first three carbon budgets should reflect the outcome of negotiations for a global deal to reduce emissions, which is the focus of the conference in Copenhagen this December. It felt that the UK should follow the European approach of setting targets contingent upon a global deal.

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On that basis, the committee recommended that an appropriate level for the target reduction in greenhouse gas emissions, before a global deal is reached, would be 34 per cent. That level is consistent with the UK’s share of overall EU targets under the climate and energy package agreed last December, which set out the EU policy framework for the period 2013 to 2020. The Government accept the committee’s recommendations on this point. The order therefore uses powers under Section 6 of the Climate Change Act to amend the 2020 target to 34 per cent and extend its coverage to all greenhouse gases.

I turn now to the Carbon Budgets Order 2009. This sets the first three carbon budgets; that is, the total permissible level of the net UK carbon account for the periods 2008 to 2012, 2013 to 2017 and 2018 to 2022. The net UK carbon account means the total amount of greenhouse gases emitted in the UK, adjusted for any credits or debits. I will say a little more about crediting and debiting later. The levels in the draft order are units of million tonnes of carbon dioxide equivalent, the standard for measuring greenhouse gas quantities. The reductions on 1990 emissions amount to just over 22 per cent in the first period, just over 28 per cent in the second period and just over 34 per cent in the third. The third budget complies with both the current 2020 target of a 26 per cent reduction in carbon dioxide and the amendment to a 34 per cent greenhouse gas reduction being considered today. Those levels follow the advice of the Committee on Climate Change.

In line with its approach on the 2020 target, that committee proposed two sets of carbon budgets: interim budgets to apply now, before a global deal is reached, and more challenging intended budgets to apply once a global deal has been agreed. The levels in the draft carbon budgets order are broadly at the committee’s interim level, with a small adjustment to reflect the final outcome of the EU climate and energy package. That package, which came after the Committee on Climate Change reported, results in budgets that are slightly more challenging than those recommended by the committee.

Some noble Lords have called on Government to set the budgets and the 2020 target at the intended level now. We accept absolutely the need for tighter carbon budgets following a successful global deal, but we agree with the committee that we should await the deal before setting them. The committee proposed a 2020 target of 42 per cent under the intended scenario, but the precise figure will depend on the details of a global agreement; after a global deal, and once proposals for sharing out the EU target are agreed, the Government will ask the committee to review its recommendation. We will then amend the budgets to take into account its advice.

It is important that I draw noble Lords’ attention to something that we announced when we laid this order before the House on 22 April. We said that we would aim to meet the budgets we propose through domestic emissions reductions alone, without use of international offset credits, outside of the EU Emissions Trading Scheme. That commitment shows how serious the Government are about decarbonising the UK economy,

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but we also think that it puts the UK in a good position to make the transition to tighter budgets after a global deal. That is because, given that we would expect international credit purchase to form part of the additional effort needed to meet tighter carbon budgets, we are likely to be well placed to deliver any extra domestic reductions that are needed. The committee recommended that approach and also advised that it was consistent with the path to meeting the long-term 2050 target of an 80 per cent reduction on 1990 levels.

I come to the second element of the Climate Change Act order—the credit limit. This refers to the use of carbon units to represent emission reductions, which have often taken place abroad, as credits against carbon budgets, thereby offsetting UK emissions. In line with the commitment to domestic emissions reductions I have just mentioned, the draft Climate Change Act order sets the limit for the first budget period at zero. There are two exceptions to the limit, where credits may be used, although in both cases they would not be bought by the Government, but by participants in emissions trading systems. The Government have consistently supported the principle of emissions trading and it remains our ultimate objective to achieve a global carbon market.

First, as I mentioned earlier, our commitment does not apply to the EU Emissions Trading System. Companies participating in the EU ETS may either purchase carbon units from within the scheme or from the international system, such as credits from projects under the Clean Development Mechanism, if they do not have enough carbon units to cover their emissions. If they have a surplus of carbon units, they may sell them to other EU ETS participants, whether in the UK or elsewhere in the EU. Overall, if UK participants are net purchasers of credits over a carbon budget period, by which I mean their collective emissions exceed the level of the UK’s overall cap under the scheme, we propose to count this as a credit against the budget, whereas a net sale would be counted as a debit.

However, there are already limits on the use of international credits by participants in the EU ETS which guarantee that at least 50 per cent of the emissions reductions between 2008 and 2020 will take place in Europe. In its report, the committee advised that these limits were appropriate and that further restrictions for carbon budget purposes were unnecessary. For this reason, we intend that any credits resulting from the EU ETS should not be counted against the zero limit being proposed.

The second exemption relates to EU allowances acquired through a trading scheme under Part 3 of the Climate Change Act. In practice, this would apply to the proposed carbon reduction commitment trading scheme which will include a “safety valve” mechanism that allows participants to use EU allowances to offset emissions in excess of the scheme’s cap. Because the mechanism will lead to a reduction in the number of EU allowances available to EU ETS participants, the Government consider it appropriate also to exclude these units from the zero limit. I should make it clear that safety valve allowances will be an option of last resort. We expect that the price of allowances purchased

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through the safety valve will be higher than the prevailing carbon reduction commitment allowance price, which will deter participants from using them. Furthermore, the exclusion does not mean that any safety valve units must be counted as credits, and the Government will aim to meet the budgets without using them, reserving their use as a fallback.

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