Personal Carbon Trading

• [Jun 18] Simon Hughes (North Southwark & Bermondsey, Liberal Democrat): ' . . I BELIEVE that public understanding of the crisis is growing quickly . . we must ensure that the public do not think that there will be unfair penalties, or that the rich . . will be able to manage far better than the poor . . '

I, too, wish you all the best in the next few interesting days, Mr. Bercow. Yesterday, at an event in my constituency for one of the major secondary schools, I enquired whether the four senior prefects would be interested in coming to see the election of a Speaker, and they were positively excited about the idea, so it is of interest outside too. I hope that it will be the beginning of a good and positive new phase for Parliament.

May I join others in paying tribute to Mr. Yeo, both for his work in producing the report and more generally? I have not had the opportunity to say that to him formally since I took back responsibility for these matters. Like him, I go back a long way in this place, so I can pay tribute to his interest in these matters over many years. He rightly reflected on the rather long gestation period that these debates have, and that it is 30 months since his Committee came to its view on this matter in its very full report. I join his colleagues from the Committee, particularly Joan Walley, in commending the report to the interested public, because it has set out the arguments and a good amount of evidence, thereby launching the debate.

Before the Government produced their response in the autumn, the idea of personal carbon budgets got a bit of traction in the press. This is always a risky route to go down, but I noticed that there was a positive endorsement from Polly Toynbee in her column in The Guardian, which was entitled "Carbon credits tick all the boxes", on 16 August 2008. That piece was written against the backdrop of an awful August climatologically, as we remember. The following month, there was an equally robust response from Richard Starkey of the Tyndall centre entitled, "Personal carbon trading is not as simple as swiping an Oyster card", in which he argued the DEFRA case. So the intellectual public debate got going, and the Government responded, before the Minister's stewardship, in October.

I do not know who the individual author of the Government response was, or whether a collection of authors did the drafting on behalf of the civil service, but the document was robust in rejecting the proposition. Colleagues will remember that when the matter came before the Environmental Audit Committee for discussion last spring, my hon. Friend Martin Horwood was the one member of the Committee who did not go along with the recommendations. Indeed, at the beginning of the proceedings he moved an amendment to the formal minutes stating that

"this Committee declines to read the draft report a second time because it unfairly criticises the concept of green taxation and does not adequately address the problems that would be faced by those who already struggle to manage the competing demands of low incomes and high living costs and limited options for changing their lifestyles and circumstances".

He came to the debate minded to support personal carbon budgets, but as he listened to the evidence and engaged in the debate, he became increasingly dissuaded about the fairness of the idea and, hence, put down his marker in the debate at the end of the report.

That is enough history. I want to say a word about the context today. Like colleagues such as Colin Challen, I have just come from the Chamber, where I heard the statement by the Secretary of State for Environment, Food and Rural Affairs introducing the Met Office report and its stark predictions of the effect of climate change on this country. I hope that people who read this debate will also read that statement and the responses to it. Whatever our differences, whether politically or on some of the responses, there is no doubt that we need an effective, robust and comprehensive set of personal and collective responses in the UK and worldwide to what the scientists are increasingly showing to be a crisis of unparalleled proportions in our environment, given the speed at which changes are developing.

I shall not rehearse our earlier exchanges, except to summarise that the Met Office predicts a minimum increase in temperature of 2°, but it could be higher. If that happens, large changes are projected not only for the south of England, but across the country. Not only will there be an impact on the climate but on ecology and biodiversity, as well as on social and other policies. We need to see our response to the issue of what we do about our carbon use against that backdrop.

I absolutely agree with the hon. Member for Morley and Rothwell and with the Chairman of the Committee, the hon. Member for South Suffolk: institutional change alone is not sufficient. There has to be personal responsibility and, to put it simply, we each have to understand the score. As the Minister said in response to a debate we recently had in this Chamber on the energy industry, that is not yet easy to do. We live in a country where it is extremely difficult for people to understand the impact of what they buy and what they do. There is a huge set of items on the agenda if we wish to make it easier for people to understand the impact of their life choices.

Again, it is appropriate that I pay tribute to the hon. Member for Morley and Rothwell for presenting a Bill today, as it makes another good consumer-orientated proposal: when members of the public make a choice-in this case in relation to vehicles for their own use-it is important that they know what the impact of that vehicle is. We have argued, and the Minister has agreed, that it is important that when, for example, people go shopping on a Saturday to B&Q, Asda and other places near where she and I live down the Old Kent road, they should be able to see what the impact is on the climate of buying a bit of kitchen equipment, a fridge or a television.

This morning, I was in a discussion with my noble Friend Lord Redesdale, who has been talking to people in the construction industry about the need for people to understand the impact that home boilers have on housing carbon emissions. The boiler is probably the most significant single item in someone's home and is something that most people desperately hope they will never need to replace because they see it as a big issue with big budget implications. People need information in relation to that. We have had formal exchanges with Gregory Barker and his colleagues in the Conservative party and elsewhere about how to get the energy companies to tell people in their bills exactly what their choice means and its implications for their carbon footprint and the costs.

A general point is that we need to do far better to make sure that people understand the implications-not just people like us who may have the time and ability to do that, but people who may have much more stressed lives and who may be less academic than the policy makers. People may have illnesses or be subject to other pressures that mean they do not have the time to look through the 4,000 different tariffs that the Consumers Association has told us exist.

Where does that leave us on personal carbon emission limits and where should that take us in the debate? I shall make one further general point, then say a few things about the response of my party and myself to the proposal. A general point is that we are all now beginning to understand the collective targets that we need to achieve if we are going to respond to the crisis. Those targets are becoming more demanding, but they are only the beginning. They provide the framework, but it is the delivery that is the issue. Yes, the delivery can happen in the workplace and companies have a big role to play, but meeting those targets is absolutely dependent on the energy sector. There is a whole debate to be had about making sure we have the renewable and other energy alternatives and that we deal with carbon capture and storage and all the issues that we have discussed elsewhere. There are also other responsibilities to do with Government legislation and Europe-wide legislation. Of course, the frameworks are important, but that still does not mean there is not a question about whether we should have personal legal responsibilities and legal limits.

When my hon. Friend the Member for Cheltenham expressed his concerns last year, he did so-I shall use just one example-because, put simply, he believed that there would be difficult and unfair outcomes, as certain choices would lead the relatively poor and disadvantaged into more difficulty. To provide an analogy, it is a bit like somebody who is given a credit card not being able to manage their finances very well and discovering that, at crucial moments when they need it, there is no credit left-in other words, it is possible that someone might run out of capacity and reach their limit when they most need something. That is particularly a risk to people who are less well off and less equipped to deal with such things. The report recognises that and understands that there are all sorts of social issues, which is why the hon. Member for South Suffolk picked up on the idea in the report that we should proceed with a pilot scheme to test whether such difficult organisational and mechanistic issues can be ironed out.

An addition to the debate on the subject was made in the interval between the publication of the report last May and the period after the Government's response. Having done some pilot work on the subject, the Royal Society for the Encouragement of Arts, Manufactures and Commerce published a report in, I think, February this year that was supportive of the proposal. I have not seen that report and I am unsure of its nature. It appears to be very limited and based on the activities of about 112 individuals who had been working through how such a scheme would work in relation to them. On that basis, they said the scheme was to be commended and that it was worth doing.

If there is to be consensus building, there needs to be a pilot approach. It would not be sufficient for a pilot to be held in one local authority, even if it were a very willing one in a beautiful part of the country. It is necessary to have pilots in several places, and it would be logical to choose places from the four countries of the United Kingdom. We should choose places that are urban as well as rural and that have a mixture of communities. I support that approach.

Having picked up the brief, I have made some inquiries among my colleagues about what they think about the issue. Some of my colleagues are strongly opposed to the idea because of the obvious conflict with liberal principles-for example, it would lead to too much of a Big Brother state and would be too much of an intrusion. The scheme would require people to have, as it were, another set of organisational accountabilities. There is also a danger that those administering the system would be able to track much more carefully what people do with their lives-where people spend their money, what they use it on and so on. There is a big bureaucratic and organisational overlay, which could be a big risk. I understand that issue clearly. Some of my colleagues put it very robustly and say that they are in favour of making sure that there are sticks and carrots, but that they think that should be done through the tax system.

Our party had a big debate on the matter at our conference two years ago and produced a report, which those who are interested can read. It is called "Zero Carbon Britain-Taking a Global Lead." One of our proposals is to switch from the climate change levy to a carbon tax, which would apply to

"primary fuels as they enter the economy, once our energy efficiency measures have become effective in tackling fuel poverty, using revenues to cut other taxes."

We have argued-including my colleagues who are against this mechanism-that carbon taxes are a better mechanism and that they are more obvious, visible and transparent. Putting it simply, we could tax the bad things and reduce tax on the good things. We could also do things that the Government have already started to do, such as imposing an incremental vehicle excise duty. For example, there should either be no tax at all or very low tax on cars that are non-polluting and a high tax on cars that are much more polluting.

Some colleagues are robustly opposed to the scheme and some think that it is certainly worth pursuing and we should not let it drop off the agenda. I accept the proposition that the next Parliament is effectively the last parliamentary opportunity we have as a country for getting our house in order on this range of issues. The crisis is so great that, as many of the well-informed advisory groups have said, if we do not get a deal in Copenhagen that is robust enough, and if the Americans, the Chinese, the Indians and others do not put policies in place that will allow us to turn the corner some time during the next decade-people have dates such as 2016 in mind-it will be too late and we will be accused of failing in our obligations. Therefore, I have to decide what is the responsible thing to do, and how to respond. I shall give an uncomplicated summary of my position.

My party has in place policies that I believe will contribute to a reduction in carbon emissions and in the use of fuel, and to an increased chance of combating climate change. We have schemes for making all homes energy-efficient and so on. We have other policies in place that relate to what kind of transport we use, moving from the more harmful to the less harmful. We have made it clear that we must not have coal-burning power stations that do not have full carbon capture and storage, and that we absolutely must expand the renewables sector. All those policies are in place.

I have decided that my party has an obligation to respond formally to the proposition in the report, and that we need to do so quickly, so I have decided that we will have a short period of formal but open consultation, picking up on what has come from the Committee's report and from the Government response, which makes arguments against it. We will complete that process by September, by the time of our conference. We will then be able to formulate a party view in good time for the general election, which we expect afterwards. The plan will allow us to have an internal debate and look at the pilot scheme option. My sense of the way forward is that the pilot scheme option is likely to command the most confidence, as it will allow people to see whether the proposal works.

I am nervous about an over-authoritarian response, and anything that is illiberal in the way in which it intrudes on people's privacy. I do not have a problem with having a tough set of laws and regulations to deal with the global crisis, because sometimes one has to regulate and legislate to change behaviour. I do not believe that everyone will wake up in time and come to understand their obligations. However, we need to respond positively. My response to the hon. Member for South Suffolk and his colleagues is to say that the public are clearly divided on the issue. It is controversial, and it would involve people living their life in an entirely different way and being environmentally accountable. We should go down this road only if the preconditions that the Committee set out on public understanding are met.

I believe that public understanding of the crisis is growing quickly. They understand increasingly clearly that we all have personal obligations to do things about it, but we must ensure that the public do not think that there will be unfair penalties, or that the rich and well looked-after will be able to manage far better than the poor and disadvantaged. That would not be a good, fair or equitable social outcome. My proposal seems to be a reasonable way forward. I hope that it commends itself to members of the Committee, to the Government and to the public. I will, of course, ensure that we make public our response later this year.

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