Climate Change Bill [HL]

My Lords, I shall do my best to answer my noble friend’s points. First, however, I want to respond to my noble friend Lord Puttnam on what Tony Blair said. We are doing what he said because that is what is encompassed in this Bill. It will lead to action. Moreover, I share the frustration of my noble friend that this Bill has sailed through your Lordships’ House as though the outside world does not exist. I did warn a Member of the other place who I passed on the escalator this morning that they have no idea of what is coming down the corridor. The Bill is incredibly complex and technical, and they will have to dig deep to get at the politics if that is what they seek to dig for—I should add that I was not talking to a member of the Labour Party. That is not to say that we do not do politics in the other place—I do not want to be misunderstood—but the fact is that when the Bill arrives in the other place, it will get reported as though it has not been through your Lordships’ House. I share my noble friend’s frustration over that, but it is a fact of life. A big success in this place is not getting something reported. We are an unelected Chamber. We are dealing with this Bill, and some issues will be raised in the other place where it is quite right to raise them. However, I think that we have done an absolutely first class job on the Bill, not by revising it because we have dealt with it in the first instance, and we have performed our role. I am convinced that, save for one or two technical adjustments in the voting Lobbies, this Bill will leave the House a much better piece of legislation than it was when it came in. My noble friend has pre-empted one of my problems with his amendment, which is that using the Bill to set up a new stakeholder forum is not the right way to address his real concerns. I shall explain that in more detail shortly. The point is that the Government are sympathetic to the underlying point. It is absolutely crucial that parts of society understand the challenge that we face and are engaged in the debate. On the other hand, the people of England let alone GB do not want a revolution. They do not want the language of revolution used because it is completely misunderstood. People want to get on with their lives, bring up their families, go to work, have their bread on the table and basically lead a peaceful life. Where the change has to occur, they have to be convinced of it. They have to be convinced of the connection between their daily existence and these planetary issues. It is our job to seek to make that connection—this Bill is a part of that. If we can make that connection we will get changes of behaviour in individuals, families and companies. They do not want it done in a revolutionary way. When the Government bring forward measures for reducing greenhouse gas emissions it is important that full consideration is given to the economic and social impacts and their distribution over society. I am absolutely four square with that. We work hard to ensure that any new measures, taxes or otherwise, do not have a disproportionate impact. You can have some unintended consequences if you are not careful about these things, the most important being having the electorate turn on you. We need to take people along with what we are doing. Creating a carbon price through appropriate measures has a number of effects. It ensures that the environmental cost of carbon emissions is taken into account in decision-making, motivating behaviour change and energy-efficient behaviour. That part of the message is slowly getting across. While we do not intend or expect it to encourage firms and households to switch their spending towards other, less emission-intensive goods and services, our policy approach is not a simplistic attempt to choke off demand. We are not seeking to do that. It also provides a financial incentive to deploy and research new technologies which reduce carbon emissions. To tackle climate change at the lowest cost to individuals in the economy, we need to address the other market failures that prevent businesses and households responding efficiently to a carbon price, particularly in installing energy-efficient measures that will save them money as well as reduce emissions. The carbon emissions reduction target obligations on energy companies represent a doubling of our ambition on carbon savings to be achieved from the household sector through energy efficiency and will be supported by resources for a green homes service to give people the advice and support they need. My noble friend argues that we should hypothecate tax revenues from climate change-related policies to spending on climate change. This is not as simple as it might sound for a number of reasons. Hypothecation is against widely accepted principles of sound public finance. It is an inefficient means of determining relative prioritisation of competing public expenditure programmes. It links funding for a particular programme to the revenue stream used to finance it rather than to need and increases the risk of unpredictable funding. My noble friend also made it abundantly clear that he was concerned that the Treasury is not sufficiently engaged in these important questions which, as he rightly identified, have significant implications for the economy, households and government policies and revenues. I assure him that for exactly those reasons the Treasury is closely involved. The Chancellor announced that, recognising the important economic and fiscal implications of the decisions required, the Government would set out their first carbon budgets arising from the Bill and their plans to meet them alongside the Budget of 2009. I am not the spokesman for the Treasury in your Lordships’ House but my noble friend Lord Davies is. He dealt with the issue in Committee as we are dividing up issues. The Treasury is intimately involved in all the discussions of the Bill and all the amendments the Government have brought to your Lordships’ House. None of those has been brought forward just by Defra Ministers, as noble Lords will appreciate; they have been brought forward on behalf of the Government. Indeed, some amendments have not been brought forward because of governmental discussions, even though I have been pressured to do so. Sometimes that has been because of the financial implications of the measures where, as I have said before on some issues, we want to maintain the maximum possible flexibility when we are seeking to change the behaviour of businesses and individuals. We do not want to get caught by the unintended consequences of what looks like a quick fix. As my noble friend Lord Davies said in Committee, the Government are working with the public and business to raise awareness of climate change and the challenges to come, to a greater or level degree of success. Last June we launched a web-based calculator that enables people to calculate their own individual or household CO2 footprint from their use of home energy, appliances and personal transport, and recommends steps users could take to cut their own emissions. We Defra Ministers used that calculator, and I have to say it was not always a happy story. I do not know how many hits the website has had, but we encouraged people to use it and lots of them have. We are targeting substantial funds to help support disadvantaged households and tackle the effects of increased energy prices, which are primarily the result of changes in international energy prices rather than environmental policy or the EU emissions trading system. For instance, since the year 2000 the Government have spent in the region of £20 billion on tackling fuel poverty across the UK. That includes funding for fuel poverty programmes and benefits such as Warm Front, the decent homes programme and the winter fuel payments. In addition, Defra has funded a range of grant schemes that have helped to support environmental objectives in tandem with social justice. As well as specific policies already being in place to address social justice issues, it is crucial that future policies are also designed the right way. As my noble friend Lord Davies explained in Committee, a rigorous impact assessment process is already in place to ensure that the wider impacts of all government policies are taken into consideration from the start of their development. My noble friend Lord Lea mentioned the Stern report. The report’s executive summary makes the following helpful point: "““With strong, deliberate policy choices, it is possible to ‘decarbonise’ both developed and developing economies on the scale required for climate stabilisation, while maintaining economic growth in both””." The overlying message of the report of the noble Lord, Lord Stern, who was not then a noble Lord, was that if we start now we can do it at virtually no cost to the economy; leave it 10 or 20 years and it will be a major cost to the economy and individuals. So we are starting now. The global policy framework to tackle climate change is the pro-growth strategy for the longer term. The economy will continue to grow but at a slightly lower rate, in the order of 1 per cent slower than if there had been no other constraints including climate change. For those reasons we cannot see the need for a specific forum as proposed by my noble friend Lord Lea, but I hope he is reassured that social justice and equity are at the heart of government policymaking in total and will be given full attention as we work towards meeting our carbon budgets. I have no doubt that when the Bill get to the other place—that needs to be as soon as possible, otherwise we are going to miss out on all the budgetary deadlines set for later this year—these issues will be raised by the elected Members, but they will get the same answer about the way the Government are operating. There is a large degree of consensus—although I am not claiming support from anywhere in particular—about the way we are trying to do this. It is not revolutionary; it is evolutionary, but with all haste. The Bill is here, we have made the necessary preparations for the climate change committee and we have set out our stall. That is why the former Prime Minister can justifiably go around making speeches on the basis that the UK is giving a lead. If we were not doing this it would be much more difficult for Tony Blair to make those speeches, but he knows that we are on our way to giving a lead to Europe and the world, even though we are relatively small emitters of greenhouse gases. I hope that, on that basis, my noble friend will be reassured that we are taking on board social justice and equity, and will not push his amendment.