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Baroness Carnegy of Lour: Perhaps I may raise another point. I believe I understood the noble Baroness to tell us that there are four bidders short-listed in this exercise. That, of course, is very good news. Can she assure the Committee that there will be proper competition in this deal? Should, say, three bidders fall out and only one remains, what will be the Government's intention? Have they in their own mind set a level above which they cannot subsidise? What have they in mind should there be only one bidder?

Baroness Blackstone: There have been a substantial number of bidders in this competition, far above the four that were short-listed. Some of them put in insufficiently competitive bids. Many of the bids were relatively close. We have short-listed four on the assumption that they will all stay in the competition. None has given any sign of intending to withdraw. I am very confident that they will stay in. I do not believe that we have any need to be concerned or to worry about a situation in which only one bidder is left in the competition. Were that to happen we would have to consider very carefully what steps we ought to take. I am, however, confident that we have four very serious potential bidders for the sale of the student loan debt.

Lord Tope: I believe that we have strayed a little from the purpose of the amendment. Nevertheless, it has been a useful debate. I am grateful to the noble Baroness, Lady Blatch, for raising the point and to the Minister for sending me a copy of her letter to the noble Baroness, which I received shortly before coming into the Chamber. I have not yet had an opportunity to study it. But I remain as confused as--I hope she will forgive me--the noble Baroness, Lady Blatch. I hesitate to suggest that the Minister is in any way confused. I am sure that all will become clear and that she will again send me a copy of the letter of explanation. I recall

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being perhaps the first to spot that the Teaching and Higher Education Bill repeals the whole of the current Bill that we are considering today. I am still a little confused as to what it all means.

I must return to the subject of the amendment that I have moved. Both the noble Lord, Lord Davies of Oldham, and the Minister referred to the differing circumstances now and in 1995. I think that the most significant difference is one of opposition and of government. I suspect that what is causing the biggest difficulty with regard to the amendment is that in 1995 the Labour Party was in opposition but it is now the Government. I am told--I have yet to find out from personal experience--that things look different from the other side of the Chamber. That is probably the most significant different circumstance.

In moving the amendment, I said that I understood the differences between the previous Bill, now an Act, and this Bill. I must stress, however, that the principle is still the same. We should not be giving, to quote Mr. Byers in 1995, a "blank cheque" to the private sector. There should be some limit on the permitted subsidy. Whether that should be one-quarter, as I am suggesting, or some other figure which the Government might have wished to suggest, I do not know. But it should not be a "blank cheque".

I do not want to stray into another Second Reading debate, but I must take up one point raised by the noble Lord, Lord Davies of Oldham. He rightly said that higher education urgently needs more funds. As we said at Second Reading, this measure will not release funds to higher education. It is already built into the department's expenditure targets. If the sum is not realised, there will be further cuts in higher education or somewhere else in the education budget. The Bill will not produce any more money for higher education--and it is not intended to do so. Whenever it is suggested that that is the case, I, for one, will knock it on the head. I have stressed the reason why, in principle, I do not think that we should give a "blank cheque" and why I believe there should be some restriction on the subsidy.

I had hoped to be a little reassured by the Minister during our discussion. I did not really expect her to accept the amendment, but I had hoped for some reassurance. She has told us--and I accept--that there is strong competition. Therefore, I still wonder why the Government feel that providing for a 25 per cent. limit would be a constraint which would tie their hands and that, as the Minister suggested, this is a wrecking amendment. I do not believe that it is a wrecking amendment; it is certainly not intended to be. I fear that the Government are expecting the subsidy to be significantly greater than 25 per cent. If that were not the case, these provisions could not be seen as tying their hands.

I do not intend to press the amendment to a vote. It would not be proper to do so now. This has been a useful discussion and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 agreed to.

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Remaining Clauses and Schedule agreed to.

House resumed: Bill reported without amendment.

Climate Change: Kyoto Conference

3.33 p.m.

The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman): My Lords, with the leave of the House I should like to repeat a Statement made by my right honourable friend the Deputy Prime Minister in another place. The Statement is as follows:

    "Madam Speaker, with permission I would like to make a Statement about the outcome of the United Nations Conference on Climate Change which I attended last week in Kyoto, Japan, along with my right honourable friend the Minister for the Environment.

    "Man-made climate change is the greatest environmental threat facing the world today. In the UK, we have been suffering record drought for the last two-and-a-half years. This year the world experienced the highest average temperatures ever recorded. Terrible floods have engulfed central Europe. Droughts and storms have followed from this year's El Nino. Forest fires have caused deadly pollution in South East Asia and Australia. Our polar ice caps are melting; and only this weekend Mexico was hit by freak snowstorms.

    "Already our sea levels are rising as ocean temperatures increase and the waters expand. If this continues some island communities will disappear into the sea. A third of the world's population live within 40 miles of the coast. Whole swathes of Britain's east coast could fall victim to rising sea levels.

    "Man risks playing havoc with the world's weather systems. Unless we act now, we will be condemning our children to a world of drought and crop failures, rising seas, mass migration and spreading disease. Nature is no respecter of boundaries. This is a global problem demanding a global solution, and the very justification for the Kyoto conference.

    "The main purpose of the conference was for the developed countries to set legally binding targets for reducing greenhouse gas emissions between the years 1990 and 2010. Success was by no means certain. Consensus had to be achieved among 160 different nations, and the conference started with the major players poles apart--the European Union proposed a 15 per cent. cut; Japan a 2.5 per cent. cut; and the United States zero.

    "After long and gruelling negotiations, the protocol was agreed on Thursday morning, and will be open for signature in March. For the first time, developed countries, which account for over half the world's greenhouse gas emissions, will commit themselves to legally binding targets. This agreement will produce a cut of more than 5 per cent. in their emissions below 1990 levels by 2010.

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    "I said before negotiations began that political will would be needed to deliver a successful agreement. The outcome of hard negotiations was that: America moved from zero to a cut of 7 per cent.; Japan moved from a cut of 2.5 to 6 per cent.; and the European Union set the top standard with a cut of 8 per cent.--which was adopted by 26 countries in total. This demonstrated beyond doubt that genuine political will did exist in all these countries, and a political breakthrough was achieved. I have placed in the Library a full copy of the Kyoto Protocol, which lists the figures for each country.

    "There will be a chance to review, and if possible improve, the targets in four to five years' time. The targets will cover the six main greenhouse gases, not just carbon dioxide. The protocol also provides a number of measures which will help countries to achieve their targets. These include the possibility of trading in permits for greenhouse gas emissions; limited allowance for the absorption of carbon dioxide by forests, which act as so-called "carbon sinks"; and provision for developed countries to gain credit for helping developing countries curb emissions.

    "There were fears expressed that these provisions might amount to loopholes in the agreement. That is why we, the United Kingdom, proposed the concept of a "window of credibility" for countries to demonstrate their firm commitment to the agreement; and it is why the European Union insisted that clear rules for all these provisions must be developed over the next two years or so.

    "The conference fully recognised that the developed world must take the lead in curbing global warming. It is now necessary to discuss how developing countries can become more involved in the commitment to this process. That is necessary for long-term success in tackling global warming.

    "The United Kingdom played a major role in ensuring that Kyoto was successful. I pay tribute to my predecessor as Secretary of State for the Environment, the right honourable Member for Suffolk Coastal, for the part he played in agreeing the Berlin mandate in 1995, which set the parameters for Kyoto; and indeed he was a member of the United Kingdom delegation.

    "This Government have demonstrated their commitment to environmental issues at the highest levels. My right honourable friend the Prime Minister highlighted climate change at the G8 Summit in Denver, at the Earth Summit in New York, and at the Commonwealth Heads of Government Meeting in Edinburgh. My right honourable friend the Foreign Secretary has put the environment at the heart of his foreign policy and worked for a successful conclusion at Kyoto. At the request of the Japanese hosts, I myself chaired the meeting of developed countries which took place in Tokyo last month; and in the run-up to Kyoto I met the leaders of a number of developed and developing countries.

    "I would also like to praise the efforts of the Prime Minister himself, who was in telephone contact with other world leaders to secure the final deal. I would

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    also like to thank my right honourable friend the Minister for the Environment who played a key role with our European partners. Finally, this agreement would not have been achieved without the sheer professionalism and commitment of our civil servants. This was a really strong British team effort within a powerful European contribution.

    "We must now turn our minds to implementation. The United Kingdom will assume the European Union Presidency at a crucial stage. Over the next six months we need to agree how the European target of an 8 per cent. reduction will be shared out between member states; policies and measures at a European level to help achieve those targets; and the EU position on rules for the various issues that I have mentioned. Indeed, my right honourable friend the Minister for the Environment is today discussing these very matters at the Environment Council in Brussels.

    "Previously the European Union had agreed proposals to achieve an average 10 per cent. cut in emissions. There were differential contributions from different member states. For example, Germany agreed a minus 25 per cent. target. Portugal agreed a 40 per cent. increase. We now need to renegotiate these figures in the light of the outcome of Kyoto. We will not be certain of the legal target applying to the United Kingdom until that share-out has been determined.

    "We will of course accept our legal obligation as a first priority, and still work to our aim of 20 per cent. We are already working on plans to achieve our targets taking into account the outcome from Kyoto. We will publish a consultation document next year. In setting out our programme we will consult widely, in particular with industry, local authorities and environmental groups who will all have key roles to play in delivering reductions. Let me reassure industry, as the Prime Minister did at our business summit, that we will not take unilateral measures which will unduly damage UK competitiveness.

    "But tackling climate change is about opportunity and gain, not about pain. It goes hand in hand with building a better, more modern and affluent Britain. It is about improving transport systems in a way that will give us a better quality of life and cleaner cities; improving the housing stock, which will give us warmer, more comfortable homes and tackle fuel poverty, using less energy in a way that will make our industries more efficient; and ensuring that the UK is at the forefront of the world environmental technology market so that we create new jobs and business opportunities. That is good for the environment, good for the economy, good for people and good for jobs.

    "In conclusion, I believe that Kyoto will be remembered in future as the place where the world, in a United Nations forum, faced a crucial decision and made the right choice. Failure, which many had predicted, would have condemned future generations to untold misery and disaster. We have taken the first, but only the first, crucial step to curbing climate

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    change. There is still much to be done but I am certainly proud of the role that the United Kingdom has played in this achievement.

    "We do not own this world. We hold it in trust to hand on to our children's children. We owe it to them to build on the Kyoto agreement to safeguard their future".

My Lords, that concludes the Statement.

3.43 p.m.

Lord Bowness: My Lords, I thank the Minister for repeating the Statement made in the other place. We on these Benches welcome the fact that there has been an agreement leading to the protocol. We offer our thanks to the right honourable Deputy Prime Minister and his colleagues for the work that they put into the negotiations in Kyoto. We welcome the agreement and protocol, not least because for the first time it provides a basis for a legally binding agreement to which developed countries are a party. It is the first international agreement of its kind which emphasises that this is a problem of global proportions and one that can be solved only by international co-operation and agreement.

Having said that, although one welcomes the agreement and the efforts made to reach it, one should not be over-enthusiastic about the outcome. In many ways it falls short of the expectations not just of the United Kingdom but of the European Union as a whole. It raises a number of questions about implementing the protocol, and indeed about government policy itself. I understand that the protocol provides countries with flexibility to meet their commitments, but detailed rules have yet to be decided. The Statement indicated the efforts that had been made in the European Union to set targets for individual member states. But beyond a statement that the rules within the protocol must be developed over the next two years it is not clear when and how, and what mechanisms are envisaged, to finalise these crucial rules without which the protocol can hardly be implemented.

Does the Minister agree that the average reduction of 5.2 per cent. is a long way below the European Union's initial target of 15 per cent.? An international system of emissions trading is to be welcomed, but are there not significant loopholes and details to be addressed before the scheme can be welcomed unconditionally? Is it not the case that since 1990 (which is the base) the United States could, for example, buy credits from Russia and other eastern European states which those states would not be using in any event and the reduction of 5.2 per cent. would not be achieved? Where a country is not in 1997 already using its credits the position may be worsened.

What about the Government's own commitment? The Statement indicates that the Government stand by their aim of 20 per cent. based on 1990 figures by the year 2010. What will the Government do to achieve that target? As far as I am aware, no firm proposals have been put forward since 1st May. If it is to be achieved by green taxes, can the Minister give a commitment that

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they will be matched by reductions in other taxes so that they are not another back-door tax rise? Further, do the Government agree that reducing travel distances, not just improving public transport, can play an important part in achieving their aims? Do they agree that that is yet another reason for ensuring suitable developments within town and city centres rather than further out on greenfield and green belt sites? Lastly, what are the implications of the Government's policy and targets to reduce emissions for their decision to defer the building of more gas-fired power stations and retain coal burners for the time being?

3.47 p.m.

Lord Ezra: My Lords, I too thank the Minister for repeating the Statement. I congratulate the Government on their role at the conference. It was quite clear at the start that the major countries were very far apart. The fact that as the result of the negotiations in which the United Kingdom obviously played an eminent role the target was substantially higher than the United States had originally proposed was quite an achievement. It may be that it is not near the European Union's figure of 15 per cent. Nevertheless, 5.5 per cent.--or 7 per cent. as it is for the United States--is very much better than nil.

However, as the noble Lord, Lord Bowness, points out, there is much work to be done. The Statement indicated that the agreement would be ready for signature in March. First, can one take it that signature will be automatic and no government will have second thoughts and not sign? Secondly, like the noble Lord, Lord Bowness, I am worried about the possible loopholes that have been referred to in the Statement. For example, there is a possibility of the more affluent countries purchasing permits for greenhouse gas emissions from less affluent countries. The effect of that would be relatively little net saving. The rules to be worked out will be absolutely crucial. When will that process be completed?

The European Union figure of 8 per cent. is below what the EU had originally proposed. The details are to be worked out in the near future. It is very satisfactory that the United Kingdom Government stand by their 20 per cent. objective. When I heard about the outcome of Kyoto I was a little worried about it. Therefore, I am glad that we shall go ahead with what we plan to do, irrespective of the targets that may be set for others.

Like the noble Lord, Lord Bowness, I shall refer to the measures recently taken to help the coal industry in its present difficulties. As the House will understand, I am thoroughly in favour of help being given to the coal industry. The measures agreed with the power stations, and the temporary moratorium on new gas-fired stations, are acceptable in present circumstances. There is however one aspect of the deferment about which I am concerned; that is, it includes a number of CHP plants, which, as the Minister will obviously be aware, are the most efficient available. They are twice as efficient as straightforward power plants.

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A number of those plants will be deferred under these arrangements. They amount to 700 megawatt of capacity. Deferring them for too long would make it difficult, if not impossible, for the Government's target of 5,000 megawatt of CHP plant to be in operation by 2000. I should like to end by asking the Government to think again about that aspect of the recent measures that they have taken.

3.51 p.m.

Baroness Hayman: My Lords, I am grateful to both noble Lords for the welcome they have given to what was achieved at Kyoto. Questions have rightly been asked about the detail. I shall try to deal with some of them in a moment. We should not underestimate the challenge that existed at that conference to reach agreement. That was both in terms of shifting the position of developed nations which were clearly below the challenging targets that this country and the EU were setting and achieving a consensus among all the participants. We are not talking about QMV or any sort of voting. The scale of the achievement was great.

In that context, the House must understand the work that has to take place over the coming months and years about the detail of the flexibilities. I understand the concerns, and, as the Statement made clear, this country is anxious that those flexibilities should not become loopholes. This is a sound agreement. The protocol offers countries a number of flexibilities which will usefully deliver their targets. The details of those schemes have not yet been agreed.

One of the challenges of our presidency of the EU will be to take forward the EU position on that. We shall have to work within that forum and with the US and others to develop the rules for emissions trading, joint implementation and calculation of sinks, and to ensure--this is the key--that they become useful ways of delivering reductions and not loopholes to prevent countries from delivering reductions. Those are the aims. How we achieve them is something that we shall have to take forward in the detailed negotiations that are to come.

It was made clear in the Statement that this was very much a first step. The noble Lord, Lord Bowness, accused us of being over-enthusiastic. I do not think that we are being over-enthusiastic. We are marking the achievement of having legally binding targets for the first time, without suggesting in any way that all the solutions have been reached or that all the details of how we are to achieve those challenging targets have been arrived at.

We were asked why the EU accepted a reduction from its own 15 per cent. target. That was always a negotiating figure and conditional upon other developed countries making similar efforts. The tough negotiating line that the EU took was instrumental in forcing the US and Japan to raise their offers. We still agreed to take on a slightly higher target. At the end of the day the judgment was that the most important thing was to reach an agreement that can move us all forward in the fight against global warming.

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I was asked about the Government sticking to their own 20 per cent. target. We shall do that because we believe that any action taken to reduce greenhouse gas emissions is a move in the right direction. As I said earlier, far too much of the debate has centred upon the cost of reducing emissions. There will be real benefits to the UK from action to tackle climate change. It will give us a more efficient and less car-dependent transport system. I say to the noble Lord, Lord Bowness, that we need to improve public transport and to look at the interaction of land use planning with transport policies if we are to achieve reductions in greenhouse gas emissions and the integrated transport policy for which we are looking. It gives us opportunities for energy savings for business and consumers and new jobs and market opportunities for more efficient technologies.

Our domestic target will ensure that we continue to lead by example in persuading others to take on the more ambitious targets needed in the longer term. Kyoto was a justification of us and the EU setting challenging targets.

I was asked about the coal industry. We are looking for a balanced climate change programme. We will not let one sector pick up all the costs of delivering our environmental objectives. There are many options for reducing emission levels: transport, energy efficiency, the greater use of renewables and CHP. I take the point made by the noble Lord, Lord Ezra, that it is important that we safeguard the achievement of that target within the recently announced review of Section 36 consents. They will have minimum impact on the current emissions projections. We need to await the outcome of the review before we can judge whether the final impact will be more significant.

There is an increasing anxiety about the growing and continuing reliance on gas, which has been raised by a number of people. We need to establish what part coal-fired generation should play in maintaining a secure electricity system. That review is driven by the Government's concern over security of supply, not by particular fuels. With regard to the detailed programme for the achievement of this country's targets, we have first to work out, within the EU, what this country's contribution will be within the overall EU target. We will then have to set ourselves a programme, upon which we shall be consulting early next year, as to how we will achieve our legally binding targets and start meeting our aim of a 20 per cent. reduction.

3.58 p.m.

Lord Renton: My Lords, I welcome the all-party support which the Government have and deserve. Throughout the world one of the major causes of air pollution is the burning of oil and petrol in the ever-increasing number of motor vehicles. Will the Government bear in mind that there are other ways of propelling motor vehicles; for example, by electricity, non-polluting gases, and as one sees in the newspaper today, hydrogen and oxygen activated by two electrodes is a method being developed by the Ford Motor Company at a cost of £600 million? Will the

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Government set an example to the world by encouraging the development of all those alternative methods of propelling motor vehicles?

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