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Lord Soley: My Lords, does my noble friend accept that the great importance of the meeting is that it begins the long-overdue reform of the intergovernmental organisation, which was highly successful in 1944-45? It is immensely important for that process to begin now. Does she also accept that we welcome bringing tax havens into more public scrutiny? That is also long overdue. Finally, I suggest, in passing, that she does not worry too much about the comments of the noble Lord, Lord Strathclyde. Throughout the past 50 years, the Conservative Party has been remarkably consistent in talking Britain down when in opposition and in taking Britain down when in government.
Baroness Royall of Blaisdon: My Lords, the point made by my noble friend about the reform of international institutions is absolutely right and very important. However, it is interesting to note that my right honourable friend the Prime Minister has been arguing for the reform of those institutions for the past eight or nine years. He is the one to whom we should be listening at this time.
Lord Anderson of Swansea: My Lords, my noble friend said that the G8 is not dead, but is it not significant that, at a time of such crisis, it is not the G8 but the G20 which is convened? Given the fact that any Prime Ministers and leaders of Governments have only a limited time, should we not now gently put the G8 to rest? To most of us, it is clear that the Prime Minister and the Chancellor took a lead in that, as on the recapitalisation. A cursory glance of the international press shows the esteem in which the leadership of the Prime Minister is held. By contrast, the utterances of the Shadow Chancellor have the gravitas of a rather young and immature student leader. In the crisis, Denmark has had to rethink its attitude towards entering the euro. Is it my noble friends judgment and that of the Government that the current crisis leads to some rethinking, some retilting of the balance of argument in respect of the United Kingdom and the euro?
Baroness Royall of Blaisdon: My Lords, it would not be appropriate for me, at this Dispatch Box, to sound the death-knell of the G8. We shall just have to watch that space. It is absolutely clear that the G20 is the important body. At this time, it is the body which is most responsive to the needs of the 21st century. On the euro, at a time of such global economic turbulence it is even more important that the former Chancellors five economic tests are met.
Lord Barnett: My Lords, we have a serious global economic and financial problem. It is all the more serious that the noble Lord, Lord Strathclyde, could not find a single positive alternative. A fiscal stimulus is essential. That means an increase in borrowing. I do not know what serious alternative is being suggested. It certainly did not come from the noble Lord, Lord Strathclyde.
My concern is that it would be wrong if the fiscal stimulus were to result in increasing capital expenditure. I hope my noble friend would agree with this. It requires urgent and immediate capital investment, and I hope she can confirm that that is what the Government have in mind.
On regulation, one of the major reasons we have the banking problem today is a factor that did not apply in Keyness day or any other day I can think of; namely, the derivatives used by bankers, who used to be intelligent people. They have been spending money as if it did not matter at all. Not only that, they did not know what they were spending it on.
Who is going to put in place the new regulation that all sides want? Are we going to use ex-bankers? Perhaps my noble friend could tell us or give us some idea what kind of regulation the Government have in mind. This will be important if we are to get over these serious banking as well as economic and financial problems.
On monetary policy, the Prime Minister made it clear that he wants to see lower interest rates. In the past, the Governor of the Bank of England, who has the responsibility here, has been a little cautious, to put it mildly, in coming forward with interest rate cuts when he should have done. Is my noble friend really saying that, if the governor were to revert to his previous cautious position and not cut interest rates further, the Government would not use the reserve powers available to them in the Bill that set up the responsibility of the Bank of England? It would be a terrible situation if we left the Bank of England to act without any government responsibility.
Baroness Royall of Blaisdon: My Lords, on fiscal stimulus and the increase of capital expenditure, I will leave these issues for the Statement on the PBR, which will be made by my right honourable friend the Chancellor of the Exchequer on Monday. I am sure, however, that he is well aware of the points made by my noble friend.
On derivatives, I agree with my noble friend that this is one of the key issues that need better regulation. We have to ensure that these are regulated and that it is a proper, transparent market. I am not, however, the best person to address this today and I will write to my noble friend on this.
On interest rates, which are now at 3 per cent, the lowest since 1954, the Bank of England is doing what it can. I am sure that it will continue to watch the economic situation and take appropriate action at the appropriate time. The Governor of the Bank of England has said that, if and when necessary, he will reduce interest rates.
Lord Bates: My Lords, 10 years ago after the Asian financial crisis, the then Chancellor and now Prime Minister returned from a meeting of the G7 indicating that what was needed was an expansion of the Financial Stability Forum, the introduction of international financial standards and codes, greater transparency, early warning systems for the International Monetary Fund, and a more central role for the G20 because the G7 was somehow insufficient to deal with problems of this
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Baroness Royall of Blaisdon: My Lords, the noble Lord is right that my right honourable friend the Prime Minister was arguing 10 years ago for these reforms, and I think he will find that at every subsequent meeting he has been arguing for them. However, it is only now with the global crisis that other world leaders see that these reforms are absolutely necessary. They have all signed up to ensuring the reform of these global systems to meet the needs of the 21st century.
Lord Cope of Berkeley: My Lords, does the Leader of the House think that the issue of derivatives raised by the noble Lord, Lord Barnett, will be solved by regulation or by the fact that the markets are now and certainly in the future will be much more aware of the problems associated with such instruments? Will that not in itself police them to a far greater extent than has been the case until now, and far more than could be achieved through regulation by former bankers or by anyone else, because they will be extremely difficult to regulate? Further, will the other countries which are apparently imitating us also lend to their banks at 12 per cent and expect those banks to lend on to their customers at rates regulated at close to 3 per cent?
Baroness Royall of Blaisdon: My Lords, it was made clear at the weekend that, while there must be concerted and, where appropriate, co-ordinated action, each country must do whatever is deemed necessary for itself. I am sure that each country will look at these problems through its own spectacles, as it were. On the matter of derivatives, I am sure that the noble Lord is right to say that peer pressure will have an effect on that market, but it is also clear that some regulatory pressure needs to be applied. I would guess that the proposed international college of regulators will have something to do with policing the derivatives market.
Baroness Ford: My Lords, will my noble friend join me in congratulating my right honourable friends the Prime Minister and the Chancellor of the Exchequer on the continuing leadership and judgment they have shown throughout this evolving crisis? In particular, will she join me in welcoming the really tangible proof of the action that has been taken in the significant drop in the sterling LIBOR rate since 10 October and in the improving liquidity that we see week on week in the sterling bond markets? As I say, this is tangible proof that the action the Government are taking is working; that action has been noted not only by the Wall Street Journal but, I believe, even in comments in the New York Times.
Baroness Royall of Blaisdon: My Lords, I join my noble friend in her congratulations, and in noting the effect of the Governments policies. The effect on LIBOR rates and liquidity might be slower than we
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Lord Monson: My Lords, do the Government want people who can afford to do so to go on saving at the present time, or would they prefer them to liquidate their savings and use the money to go on a spending spree?
Baroness Royall of Blaisdon: My Lords, some people need to save, but there are many people who need to spend. At this point, it is good when people put money into the economy. However, it is especially so when business puts money into the economy. We want businesses to invest in the economy so that they create jobs.
Baroness Symons of Vernham Dean:My Lords, I have been travelling fairly extensively in the Middle East over the past five weeks or so, and in that time I have consistently heard, not only from political leaders but from a wide range of business people, about the admiration they have for the leadership offered by my right honourable friend the Prime Minister. Noble Lords opposite may not like that but it happens to be true. Does my noble friend think that the statement that came out of the G20 summit not only demonstrates the Prime Ministers prescience 10 years ago but his consistency in advocating something that is now recognised as being in the worlds interest?
Lord Stoddart of Swindon: My Lords, speaking from the Independent Labour corner, we must remember that the present problems have arisen because of profligacy in public and private expenditure. People have been offered 125 per cent of the value of their property and private consumption has exceeded the gross domestic product, and that has to be paid for some time. We have to take that into account.
I was rather impressed by the remark in the Statement that the world economy will double in size over the next 20 years. The next business is the Climate Change Bill. I am not much in favour of it, but we are not going to be able to meet its targets if we are going to double the standard of living of everyone in the world over the next 20 years. I hope that the Government realise that if that is to be so, we will not have the resources to meet the demand and we will be pushing a lot more CO2 into the air. Will the Minister comment on the hiatus between the Governments policies?
Baroness Royall of Blaisdon: My Lords, profligacy and greed might be at the root of some of our problems, but so are excessive risk-taking in too many financial institutions, inconsistent and insufficiently co-ordinated macroeconomic policies and inadequate structural reforms. The leaders of the G20 agreed that
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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 beg to move that the Commons amendments be now considered.
Lord Hunt of Kings Heath: My Lords, I beg to move that the House do agree with the Commons in their Amendments Nos. 1 to 6. I shall also speak to a number of other amendments that are related to this group.
Amendment No. 1 removes Clause 1, the purpose clause, because we do not think it works in practical terms. Having any measure based on global temperatures means that what we have to do is dependent on what happens elsewhere in the world. While we are fully committed to taking action at home, emission reductions in the UK alone cannot deliver this objective. It is only though global action that we can maximise the chance of limiting the rise in global temperatures to 2 degrees centigrade. In future, there may be a different way of framing the level of global ambition. To place an explicit reference to the 2 degrees centigrade goal in the Bill would be inflexible and might become irrelevant, especially when one considers the long-term framework that the Bills targets and budget establishes.
Moreover, the early advice from the shadow Committee on Climate Change made a specific link between 2 degrees centigrade and the level of the 2050 target, which underpins every other action required of us by this Bill. The committees advice stated that the target to reduce the UKs emissions by at least 80 per cent is a reasonable contribution to a global strategy of cutting global emissions by around 50 per cent by mid-century. Reductions on this scale are required to limit the expected global temperature increases to around 2 degrees centigrade above pre-industrial levels. In proposing to accept the committees advice on the level of the 2050 target, we therefore already intend to set our 2050 target in a way that would be consistent with the 2 degrees centigrade goal. We do not, therefore, consider a specific purpose clause to this effect to be necessary.
Amendment No. 2 would increase the level of the 2050 target to a reduction of at least 80 per cent. This follows the early advice of the Committee on Climate Change, which I announced we would accept in my Statement to the House on 16 October. By ensuring that the UKs long-term target is based on the most up-to-date science and on independent expert analysis, we will continue to provide leadership within the international debate. This is particularly important in the context of negotiations for a global and comprehensive agreement in Copenhagen in 2009.
Clause 3 provides a power for the Secretary of State to amend the 2050 target, based either on significant developments in scientific knowledge about climate change, or significant developments in European or international law or policy. Currently the developments in scientific knowledge are those since the 2000 report of the Royal Commission on Environmental Pollution. We consider that it is no longer appropriate to refer to the royal commissions 2000 report as our starting point, because the committee has provided advice on the basis of the latest scientific thinking, which we have accepted. Instead, we consider that the passing of this Act should be the reference point, and we propose Amendment No. 4 to effect this change.
Amendments Nos. 3, 13, 14, 15, 16, 19, 20 and 21 are also in response to the committees advice, and have the effect of including the other Kyoto greenhouse gases in the Bills targets and budgets. Amendments Nos. 5 and 6 concern the level of the target for 2020. As noble Lords will know, on 1 December the committee will provide its formal advice on the implications for the 2020 target of their advice on the 2050 target. We do not think that a change should be made to the 2020 target before we receive this advice, especially as we closely linked the committees advice to the first three carbon budgets. We want to ensure that we get the 2020 target right. Amendments Nos. 5 and 6 would therefore provide for the 2020 target to remain as it currently is; that is, a 26 per cent reduction in CO2 emissions. This recognises that a 26 per cent reduction target that includes all greenhouse gases, is not as demanding as a target of 26 per cent that includes only CO2. We accept that we will have to amend the target soon to account for the inclusion of the other greenhouse gases. As I have said, we simply do not consider it appropriate to make a change to the 2020 target until we have received the committees advice on this issue.
Amendments Nos. 8 and 10 revert to the Bills original drafting, and place the responsibility for publishing the report on proposals and policies, and sending copies of the report to the other national authorities, with the Secretary of State, rather than the Prime Minister. I understand that the House has been through this matter in some detail at earlier stages of the Bill, so the arguments may be familiar. The Government remain of the view that placing duties on the Prime Minister is unnecessary and inappropriate.
As is conventional in UK legislation, the Bill places a number of duties on the Secretary of State. By this, the law means one of Her Majestys principal Secretaries of State, which has the advantage that legislation does not have to be amended when the machinery of government changes, and that one Secretary of State
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We therefore think that it is better to revert to the wording in our amendment. There is no question of our collective commitment to tackle climate change. The fact that we have a new department, which has been set up precisely to create a new focus on tackling climate change, is an indication of that. I assure noble Lords that my colleagues and I, working with the Prime Minister and the rest of Government, are committed to finding sustainable, cost-effective solutions to the twin challenges of reducing emissions and ensuring secure supplies of safe and affordable energy.
Lord Lawson of Blaby: My Lords, the Minister has given an excellent summary of what we have to discuss here. Let me say just two things. The first is that, as many noble Lords may know, I have taken an interest in this issue for some time. Indeed, I have even written a book on the subject which, I am glad to say, has already been translated into two European languages and three more foreign editions are on the way. It is possible that I have had slightly more influence in that way on affairs than by speaking in this House. That is not the only reason why I have not spoken previously in this House on the Bill. The other reason is that I felt that it was unbecoming for an unbeliever to take part in a religious service, which is what all this is really about.
Nevertheless, we have the amendments that come back from the Commons to us today. The Bill will go down in history, and future generations will see it, as the most absurd Bill that this House and Parliament as a whole as ever had to examine, and it has now become more absurd with the increase from 60 per cent to 80 per cent. I should like to address as briefly as I canbecause I do not propose to speak on any subsequent occasion on this subject why I think that the Bill is so absurd.
Let us pretend that the planet is warming. We know, of course, that it is not. The figures published each year and, indeed, monthly, by the Met Office or the Hadley Centre, which is a department of the Met Office in association with the climate research unit of the University of East Anglia, show without any doubt that there has been no warming so far this century at all. Some people say that there has been a cooling but, although that has been the slight trend, I think that the margin for error is so great that I would not press that, but there has certainly been no warming. The majority of climate scientists do not think that if there were a warming, it would be a disaster.
Nevertheless, it is possible that warming will resume. The majority of climate scientists believe that warming will resume. I am completely agnostic on that; I do not know. Maybe it will, maybe it will not. The complete
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What lies behind this? It was implicit in what the Minister said, although he did not spell it out on this occasion, that by taking this massive step of virtually complete decarbonisation of our economy by 2050 in a mandatory waysomething that no other country has done for good reason, because no other country has been so foolish, nor do other countries have the slightest intention of going in this way, but I will come to that in a momentwe in the United Kingdom are giving a global lead that other countries will follow.
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