Electricity and Gas (Carbon Emissions Reduction) (Amendment) Order 2010

Monday 26th July 2010 Grand Committee

Considered in Grand Committee

15:42

Moved By

[Lord Marland]

That the Grand Committee do report to the House that it has considered the Electricity and Gas (Carbon Emissions Reduction) (Amendment) Order 2010.

Relevant Document: Second Report from the Joint Committee on Statutory Instruments.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)]

My Lords, the carbon emissions reduction target, known as CERT, requires the larger energy supply companies to meet household carbon emissions reduction targets. The amending order before the Committee will extend the supplier obligation policy framework to December 2012 and significantly refocus it over that period. It will act to drive investment and secure jobs in energy efficient industries, ensure that households and the UK more broadly save energy and money, and reduce carbon emissions.

Before I turn to the detail of the order, let me remind noble Lords of the critical role I believe energy efficiency has as part of the transformation to a low- carbon society. UK households spend £20 billion on energy each year, mostly on electricity and gas, and account for 30 per cent of all the energy consumed in the UK, thus directly contributing to climate change the energy used to heat our homes. Energy saving measures are therefore a win-win. They help to increase our energy security by reducing our reliance on imported fossil fuels, they provide environmental benefits by delivering carbon emissions reductions and local air quality improvements, and they support fairness by providing hard-pressed families with a simple means of saving money and protecting against cold, inefficient homes. They provide further economic benefits by creating employment opportunities in the manufacturing and service delivery of energy-efficient technology.

The UK’s housing stock retains substantial opportunities to improve its thermal efficiency. That is why we are putting in place our radical and ambitious green deal, to be established through legislation in the forthcoming Energy Security and Green Economy Bill. The green deal will be a game changer. It will take a long-term approach to energy efficiency, unlocking capital investment and transforming the landscape for home energy efficiency improvements. However, it is imperative that we maintain and, where possible, quicken the pace of energy efficiency investment and activity immediately while we develop and implement the longer-term green deal.

I know that there is a good deal of consensus around the importance of the issues that the order addresses, and I welcome that fact. The refocused and extended CERT will set suppliers a new, challenging carbon emissions reduction target, will focus the scheme on driving insulation measures and will help low-income households get an improved share of investments. It will act as an important bridge to the future, building momentum as we put in place the arrangements for the green deal.

I turn to the specific amendments that we are making with the order. In doing so, I thank those people and bodies who responded to the public consultation process across the spectrum of interested partners, including energy suppliers, the insulation industry and local authorities as well as environmental and fuel-poverty groups. Their contributions have been crucial in forming our decisions.

We will extend CERT to the end of 2012, increasing the target by 108 million lifetime tonnes of CO₂ and setting a new overall target of 293 million lifetime tonnes of CO₂. This increase equates to just over a 3 per cent cut in household greenhouse gas emissions in 2013. Given how far advanced suppliers are in meeting their existing targets, we will allow suppliers to start work against this new target immediately to ensure that customers’ access to energy efficiency measures is not interrupted.

We will act to stamp out the mistakes of the past by introducing a complete ban on the subsidy of halogen and compact fluorescent lamps, and will focus instead on installed measures. Through this order, we will require over two-thirds of the increase in the overall target to be delivered through professionally installed loft, cavity wall and solid wall insulation. This will provide the insulation industry with confidence to invest and will ensure that all customers who want to make a real difference to their energy bills and carbon footprint have cost-effective opportunities to do so. That means help for some 3.5 million households from insulation measures.

To ensure an equitable distribution of measures, and in the light of the rising blight of fuel poverty, we are creating a new obligation for those households that have the greatest need. Low-income pensioners, families with children and the disabled will form a super priority group. Further, each benefiting household will be required to receive a heating or insulation measure. That means an estimated 600,000 such measures professionally installed in the most vulnerable homes, and over £400 million focused on helping the very poorest. Additionally, we will provide vulnerable households with continued support for microgeneration measures under CERT, such as heat pumps and solar water heating.

Our building block for targeting these vulnerable households is the energy rebate scheme, now aimed at a subset of pension credit claimants. We expect up to 250,000 pensioners on low income to receive a rebate worth £80, meaning up to £20 million under this scheme. These vulnerable households can go on to be targeted with supplier offers under CERT.

Overall, the CERT extension will have a significant positive impact on fuel poverty, with approximately 175,000 households expected to be provided with measures that provide them with a long-term solution to fuel poverty. Many more households will receive measures that will protect them from falling into fuel poverty.

In summary, the reshaping of the scheme that this order represents will help deliver a step change in insulation rollout and maximise the scheme’s contribution to environmental and social ambitions. I call on your Lordships to support this legislation in order to bring new impetus to the household energy efficiency agenda with immediate effect and ensure that we can best serve the interests of the economy and the public. I commend the order to the Committee.

[Lord Jenkin of Roding]

My Lords, I welcome what my noble friend said. He explained briefly the reason for the urgency of the measure; that point has been made to me by some of the interested parties. They desperately need to know where they stand at the end of the existing second phase of the CERT programme. As my noble friend said, the order provides a continuation up to the end of 2012.

However, perhaps my noble friend will comment on one of the consequences of the urgency with which the Government have brought forward the measure. I have in front of me the Merits Committee’s report. Under the heading, “Other instruments of interest”, it refers to this order. The paragraph ends:

“However, given the speed with which the Government wishes this SI to proceed, the Committee has not had the opportunity to make any detailed assessment of the instrument”.

I say with kindness to my noble friend that that requires some explanation. It is not satisfactory that this House should have a Merits Committee, which examines matters in the field of statutory instruments which are of interest, but which is precluded simply for shortage of time from being able to offer its comments.

We will have to do the best that we can. The report was published only last Thursday, on 22 July. It has been quite difficult to keep up with what has been going on. Obviously, I will have to do my best. There has been very little opportunity to consult with those outside, but it is a very complicated issue—not so much the changes that my noble friend has outlined, which are themselves quite complex, but the documents that accompany the order are very large. We have had the summary of consultation responses and the government response, a document running to no fewer than 50 pages, and the impact assessment, which runs to 77 pages. Like other noble Lords who have been faced with those documents at short notice, my questions to the Minister may seem naive and ill informed, but I shall have to do my best.

I found it a depressing experience to read the order, the consultation document and the impact assessment with which we have been supplied. That is not because the CERT scheme is undesirable; when we have debated the order’s predecessors, I have made the point firmly that the need to attack and deal with the poor quality of much of our existing housing stock is of huge importance, both to make life a bit more comfortable for the inhabitants and, as the Minister rightly pointed out, to achieve higher energy efficiency. What depresses me is its extremely complicated and bureaucratic method of achieving that.

I have had occasion to criticise that in the past and, although I have the copies of Hansard here, I promise noble Lords that I will not repeat what I have said on previous occasions. If anyone doubts whether it is bureaucratic and complex, just skim through the 77 pages of the impact assessment. That must have required a huge number of man hours to prepare for publication. One really has to wonder whether all that is necessary. I shall return to that point towards the end of my remarks.

In the mean time, I have a few more detailed questions to address to my noble friend. I turn at once to the major change in the order—the new super priority group. I can well understand the aim and have a good deal of sympathy with it. I should declare an interest: I am a member of the priority group. As such, I was able to get my house insulated—both loft and cavity wall insulation. I shall not repeat the horrors of that experience, but it filled me with a strong impression that the biggest single barrier we face is household hassle.

Under the priority group, 40 per cent of the carbon savings must come from people who enjoy a range of benefits or are pensioners aged over 70. The noble Lord, Lord Hunt of Kings Heath, will recognise that we have frequently had to complain about the difficulty for the suppliers who have to operate the scheme identifying the households that qualify for that treatment. I dealt with that two years ago under the 2008 order and again last year under the 2009 order. One concession was made by the Minister's predecessors. Under the Pensions Act, we had an order which allowed information to be shared on what was a very limited category of those in the priority group—namely, pension credit beneficiaries. No doubt that has been helpful. The data protection rules make it impossible for there to be a general exchange of names and addresses of people who fall within the various categories of beneficiary under the social security legislation.

Therefore, the companies which have to operate the scheme are reduced to other methods to try to find the people in the priority group, including cold calling and, much more intelligently, looking at areas and cities where they might expect to find a higher concentration of people in receipt of the various benefits. The point was made to me again this morning that that is a very unsatisfactory process which costs them a lot of money. It increases the cost of administering the whole scheme.

In the order, we are now faced with a new category, the super priority group. If anyone is any doubt about that, paragraph 3.2 of the order spells out the definition of those who are in the super priority group. It is nearly a full page long. Does my noble friend have a better answer than did his predecessors as to how on earth the companies are supposed to find out who those people are, so that they can approach them and, if they agree, insulate the houses in the way we all want?

I turn to the consultation. I will not weary noble Lords with the detail, but at paragraph 8.4 of the results of the consultation, there were many conflicting answers on how that problem should be tackled. I do not see any advance in the order on what has gone before. That is my first question.

My second question relates to the concept of market transformation measures. Again, there is an elaborate definition of that in subparagraph (4) of paragraph 3. Paragraph 7.4 of the Explanatory Memorandum spells that out in some detail. The second point in that paragraph states:

“CERT supports innovation and energy saving products and appliances”—

which my noble friend very properly mentioned in his speech—

“by providing a 50% increase in carbon score to qualifying products. The market transformation baseline”,

is set out in the 2001 order, thus going back some years.

“This means that a measure which saves carbon but was not promoted under the 2001 Order can be promoted as a market transformation action under the CERT order. However, we will increase the baseline to measures which have not been promoted under the …Order 2004. This will mean that suppliers need to come forward with new products or similar products which are no less than 20% more efficient than products promoted under the previous scheme to March 2008”.

I have hunted through the order, I hope with care, but I cannot find where the figure of 20 per cent comes from, so I would be most grateful if my noble friend could explain where in the order is the uplift, as it were, of 20 per cent which needs to be met. It is set out in the Explanatory Memorandum but I am quite unable to find it in the order.

16:00

My third question relates to costs, which have been a frequent refrain during these debates. I refer to the costs that suppliers will incur. At paragraph 8.2, the Explanatory Memorandum refers to the potential costs falling on consumers. That, of course, is an inevitable consequence. The suppliers incur the costs but it is the consumers who ultimately will meet them in their bills. Paragraph 8.2 goes on to state,

“given the potential costs falling to consumers. Keeping the costs of the scheme passed to consumers at a reasonable level was a key concern of respondents, whilst varying degrees of challenge were called for as part of the headline objectives”.

The press release and my noble friend have mentioned the possibility of 3.5 million more homes to be lagged. The document describes it as,

“a massive and urgent increase in home energy insulation”.

Yet this is to be achieved at a reasonable cost to consumers. Can my noble friend say a bit more about how one can reconcile these perfectly legitimate ambitions with the desire to keep the costs reasonable? Again, this is a problem which has emerged with each successive order.

My fourth question goes back to the super priority group. I have been asked to find out whether it is the Government’s intention that every single domestic energy user should request any measure in writing. Would that preclude, for example, social landlords or local authorities performing improvement works to buildings? It would also be useful to know about the Government’s intention regarding existing schemes and whether those could run as they are until March 2011 or, if not, are the Government concerned that changes to existing schemes at this point might drive up the cost of the obligation?

I come now to my main and final point, and here I return to the complexity and bureaucratic nature of this scheme. Paragraph 2.5 of the Explanatory Memorandum explains that the target period was extended to 31 December 2012 to align this programme with the period in the Climate Change Act. I can understand that from the point of view of maintaining a statistical consistency with the various programmes. However, the more I have looked at this policy, the more I have been forced to the conclusion that, because its primary motivation has been to help to meet climate change targets through the reduction in the emission of greenhouse gases, its concept is very remote from the perceptions and needs of millions of individual householders. They simply do not identify with that.

My noble friend knows that I have previously referred to the Hartwell paper. I have a copy of it here, in case anyone has any doubt about it. The paper was prepared by an international group of distinguished academics who proposed an approach to the problem different from this one. They accept the need to fight climate change; that it is caused by an increase of greenhouse gases in the atmosphere; and that it is largely manmade. However, instead of making the reduction of carbon the principal objective in a way which clearly leaves billions of people behind—the Copenhagen conference is only one example—they argue for measures with a more popular appeal that people can understand and that will have the incidental consequence of reducing carbon emissions and so fighting climate change.

We have a particular example which my noble friend mentioned in his speech: that people can understand savings in fuel costs and living more comfortably. If the approach were stated as, “This is the way you can cut your bills. This is the way you can live in a warmer house”, rather than saying, “You’re going to save the world by doing this and you’ll meet the climate change targets”, it might be a great deal easier and, if I may say so, a great deal less bureaucratic. That objective would be easily understood, and if presented attractively, could prove popular and achieve the Government’s targets.

In addition, it would surely render much of the turgid and complicated bureaucracy, to which I referred a few moments ago, largely unnecessary. It is simply because every action that is done by every player in this field under this scheme must be measured in relation to its carbon savings. One is faced with massive tables of figures to whose completion suppliers must contribute and which leave the public totally untouched and out of it. They feel that they have nothing to do with it, yet it is right at the heart of the programme. In those circumstances, it would be much better if one could follow the proposals in the Hartwell paper. One could detach this scheme from its absolute fixation on measuring the actual reductions in carbon emissions and doing so solely in terms of the carbon reductions achieved. I think that it might be easier and less costly to administer and could therefore result in more home insulation, more microgeneration and all the rest that is currently being promoted. For instance, there could be simple grants for home insulation. The rest could be made far more attractive for suppliers and householders than this over-elaborate structure based solely on measuring the carbon emissions.

I end by pointing out that there really is some hope. My noble friend explained that this order is to pave the way for the longer-term measures that will come under the energy Bill, the so-called “green deal”; indeed, the summary of the responses, interestingly, is headed:

“Paving the way for a green deal”.

The Government have an opportunity to look again at this and see whether or not something could be done. The green deal—one can look at the coalition policy document, which I have somewhere here, and see that there is some recognition in it of this—has to deal with this in a more effective and user-friendly way than has been done in the past, and I hope that it does. This offers us some hope for the future. I have here what was said during the election in the Conservative manifesto, but that has been replaced by the coalition deal. We have a chance now of making this a simpler and, in the end, a more effective programme to achieve the Government’s aims.

[Lord Reay]

My Lords, this order extends the scheme in both time and scope to promote various energy efficiency measures to be carried out on residential properties, principally insulation measures, designed to reduce domestic users’ consumption of heating fuel. In so far as they have that effect, they will reduce the carbon emissions attributable to the domestic sector. In so far, however, as consumers choose instead to enjoy a greater measure of what the department calls “thermal comfort”—that is, choose to use the same amount of heating fuel in order to maintain a higher temperature in their homes—it will have no effect on carbon emissions.

What effect this will have in the event is apparently to be assessed in a review to be conducted by Ofgem at the end of the scheme in 2013. Even then, though, assessing the effect on carbon consumption of the energy-saving measures adopted under this scheme will largely be a matter of guesswork. Therefore, how will we be able to distinguish the effect of energy-saving measures from the effect of variations in energy prices, of variations of people’s real incomes or even of variations of winter temperatures on the amount of heating fuel that households choose to consume?

I will not go deeply into one of the issues that my noble friend took up. I will leave on one side the question of whether it is worth while performing the extraordinary intellectual gymnastics contained in the order’s 77-page impact assessment in order to justify measures that in the best case will provide a reduction amounting to an infinitesimally small fraction of present global carbon emissions. I will instead agree that using fuel more efficiently and promoting that efficient use is inherently a good thing, but still needs to be viewed in the light of its cost.

The cost of carrying out measures such as cavity wall insulation is largely to be borne by the supplier—entirely so, in the case of the new super priority group—but in some cases the consumer apparently has an option to contribute. As the impact assessment says on page 61, the share of costs borne by suppliers depends on the householder’s willingness to pay. What happens when the householder does not wish to contribute? Does the supplier then pay all the cost, or do the measures then not get carried out? Will the Minister give us any assessment that his department must have made of the likely take-up rate of consumers of this choice?

The suppliers’ costs, of course, are recouped by the additional charges that they can put on customers’ bills, so although giving special treatment to the priority group and the special priority group may help with alleviating fuel poverty, everyone else therefore has to pay a higher price, which, apart from anything, else, will result in additions to the ranks of those in fuel poverty. The impact assessment is frank about this. On page 23, it estimates that,

“for the average UK house, the costs of higher fuel prices on their annual fuel bills would be £46 in 2011 and £61 in 2012”.

Those are not negligible increases, although it would be interesting—as my noble friend was trying to learn—to know what the total estimated cost for the measures might be. I could not find it in the impact assessment, although it must have been assessed in order to produce the figures about the effect on individual bills. I realise that it will be based on a pyramid of assumptions, as are all the other figures in the impact assessment, but the Minister should have it.

16:15

My understanding is that business premises cannot benefit under the scheme. Will the occupants of business premises be exposed to the general increase in fuel bills as a result of the costs being passed on by suppliers, or will suppliers be able to recoup costs only from the bills of domestic consumers?

When we debated the previous order in the House a year ago, together with the CESP order—I wonder what has happened to that—I said on that occasion that electricity and gas suppliers should be obliged to state on both domestic and business customers’ bills how much was attributable to each relevant piece of climate change legislation. The then Minister, the noble Lord, Lord Hunt of Kings Heath—I am very pleased that he is here this afternoon—replied:

“I fully understand the point that the noble Lord, Lord Reay, makes about energy bills showing what households are paying towards energy efficiency schemes ... I have no disagreement with him in terms of the principle ... it is very good to have this in the public domain. I agree with the noble Lord that it is very important that this is understood”.—[Official Report, 15/7/09; col. 1239.]

When in opposition, the present Energy Minister, Mr Charles Hendry, is also on record as having expressed very similar sentiments. I see also that my noble friend Lord Vinson has tabled a Written Question on similar lines. I hope that when we next receive an energy Bill, it will include such a provision. If not, I am sure that some of us will seek to amend it so that it does.

I have a final question for the Minister. How does this order relate to the Government’s so-called green deal, to which he referred, and to the loans that the green bank was supposed to be making to households to cover the installation of the same sorts of energy efficiency measures that are covered by this order? There seems to be considerable overlap. What would the green deal add to the effects of this order, and why is there a need for it?

[Lord Teverson]

My Lords, after those two speeches the Minister will be looking forward to that of the noble Lord, Lord Hunt, for some empathy. One thing I have discovered from being on these Benches is the picture opposite, which I have not seen before. I would stare for hours at “The Judgment of Daniel” in fear that one day it might be me. My sight is not good enough to see quite what that picture is about: it looks like a tragic circumstance with someone having befallen some terrible fate. Hopefully, that will not happen in this Committee.

I welcome the order as an interim measure. I very much agree with the noble Lord, Lord Jenkin, on that issue. It starts to improve a number of weaknesses of the original CERT scheme. The scheme had good intentions and was a good start, but a lot was still left to be desired. I hope that it will move on quite soon. I have said this before, so I shall say it only briefly, but it is counterintuitive to me that we have energy companies charged with reducing energy consumption. Somehow, life tells me that you get energy companies to be as efficient as they can by doing what they do well, which is producing energy, and get someone else to reduce consumption. However, the scheme is about energy saving, which has been the Cinderella subject of climate change and energy security, and I welcome it as an improvement.

There is one area that was put right by the previous Government, but the deal is sealed on this: light bulbs, of which I am sure that all of our houses are full. It was used as an easy way out by energy companies just to distribute them. I remember my fear of visiting my mother because every time I went to her house, she handed me a whole tray of energy-efficient light bulbs that she did not want but which had been thrust on her by her energy supplier. There was a bit of a farce with organisations going through the motions of energy saving that did not really happen. What we have instead is a much greater emphasis on insulation and the things that really make a difference. I am interested to see that microgeneration schemes are also mentioned.

On targets, I notice that there is a spectacular increase of 58 per cent, until you read down the bullet points and notice that the carbon budget extends over a much longer period. I would be interested to understand what the actual percentage uplift is pro rata in the overall targets for carbon reduction. The super priority group again sounds good, but I came up with exactly the same questions as did the noble Lord, Lord Jenkin: how do you identify this group and therefore how do you supply it?

The difficulty about the ongoing CERT scheme, which the order does not greatly improve, is the whole issue of value for money, of auditing and of transparency in how the money is spent. It is not public money because it never hits the public purse, the Chancellor’s piggy bank, but it is money that is paid compulsorily as a levy, effectively as a charge on individuals who use energy, which is all of us. It is not properly transparent in the way that it is used and whether energy companies do the work themselves or requisition it, where the margin goes or how the work is bid for. All of that is very unclear in terms of what in many ways would be seen as public money.

The figure that really struck me on reading the Explanatory Notes— no doubt it comes out of the elaborate cost estimates—is that of just under £9 billion-worth net present value of the scheme. My mind boggles as to how we get to that figure. It makes it sound a perfect and fantastic scheme if we are somehow all to receive that in our pockets. Net present values can be quite useful, but we must remember that although the super group is targeted here to reduce energy poverty, the scheme puts about £45 on every electricity bill in additional costs. It is well used at the moment, but we have to perform far better in the future than we have done in the past, and I look forward to further legislation.

Although I have enjoyed looking at the picture, what is more important is that I have the same view of the same people on the other side of the room, which is excellent.

[Lord Woolmer of Leeds]

My Lords, like the noble Lord, Lord Teverson, I have a different view of the room, but I can also see the same people and it is a great pleasure to see old friends here again. I have one simple question. In the 1960s and 1970s, I recall the piecemeal efforts made to improve old Victorian housing stock in Leeds. In the end the council adopted what eventually became a national approach, that of taking whole areas of housing, identifying it as old stock and designating “whole house improvement areas”. The council worked through the worst of the housing by taking a whole series of streets at a time. In some cases, we decided to demolish the houses because it was never going to be worth trying to keep them, but other areas were kept. This proved to be an extremely cost-effective way of dealing with improvements.

Certain areas of housing clearly need improvements in terms of energy efficiency. It seems to be common sense, and it may be that this is what is being done in some areas, that if one works through the areas most in need, that is a cost-effective approach. But instead of doing that, we are attempting to prioritise in the first instance individual properties where particular people with particular characteristics live. That is extraordinarily difficult to do, as the documents we are considering today show. In any case, people die or move on into other housing, and some individuals may therefore qualify again. My question for the Minister is this: will the Government reflect on whether the most cost-effective approach over 15 or 20 years would be by area? Clearly we would not be going into more recently built housing for a long time. This approach could be funded in the same way and suppliers could put the work out to tender by negotiation with local authorities who know the areas well and can easily identify them. This approach may already be in train, and it seems to be the most cost-effective one—not in the short run, that cannot be denied, but over a period of time it would be. Certainly it would avoid all the bureaucracy of trying to identify people in particular circumstances and with particular needs, but who are in fact moving targets. I hope that the Minister can reflect on this when he responds.

[Lord Hunt of Kings Heath]

My Lords, I should like to welcome the Minister to the world of order-making and the familiar cast list of noble Lords present who spoke in a similar debate a year ago. The Community Energy Saving Programme is extremely important and we see this as a critical part of how we can help people to make energy savings, cut their household bills, and contribute to permanent reductions in CO₂ emissions. Over the years that the schemes have been in operation, millions of households have been helped. However, as noble Lords have suggested, there is no room for complacency. That is why the previous Government consulted on the scheme a few months ago, and on the amendments to the existing framework. I am grateful to the Minister for his explanation.

I will also ask a question raised by the noble Lord, Lord Jenkin. I, too, have read the brief report of the Merits Committee, and I am grateful to the committee for its work and comments. As the noble Lord, Lord Jenkin, said, the committee noted that the detailed impact assessment, which runs to 77 pages, is attached to the statutory instrument that we are debating today. The committee said that it had not had the time to make a detailed assessment of the instrument, given the speed with which the Government wish the SI to proceed. Like the noble Lord, Lord Jenkin, I ask the Minister for an explanation. I am confused: surely the Merits Committee must be given enough time in which to do its job properly. I speak as the first chair of the Merits Committee, the point of which is to have time to go through statutory instruments in order to make a judgment on whether it should draw to the attention of the House that scrutiny of a statutory instrument merits special attention. If it does, it is marked with an asterisk on the Order Paper, which usually will lead to a debate in the Chamber. The Minister should explain why the Select Committee has not been given proper time to do its job. I am sure that, when the SI goes back to your Lordships' House, I will raise this matter on the Floor of the House.

16:30

We must look at the order in the wider context of the necessity of making a major effort on energy saving. There is no doubt that greater energy efficiency has huge potential to help the UK cut its greenhouse gas emissions. That was very well laid out in the 77-page RIA, which points out that the UK's housing stock retains substantial opportunities to improve its efficiency. With heating accounting on average for 60 per cent of household energy demands, there are still millions of British householders yet to take advantage of opportunities to improve their thermal efficiency. There is an enormous challenge still to be tackled.

The noble Lord, Lord Jenkin, raised the point made in the Explanatory Memorandum about costs to consumers being reasonable. I hope that the Minister will say more about costs. I have debated these matters with the noble Lord, Lord Reay, over 20 months. I fully agree with him about information. It will be interesting, when the energy Bill comes, to see what progress can be made. I am sure that we disagree about the general measures taken by the previous Government to move towards a low-carbon energy structure, and the undoubted costs that that will cause to consumers. The previous Government and I always took the view—we would always pray in aid the Stern analysis—that it was better to go for it now than to delay, and that it would be more cost-effective to take measures now rather than wait for catastrophe to hit us. However, it is also right that the public should be aware of the implications and costs of policies. In that way, we are more likely to get consumer ownership.

[Lord Jenkin of Roding]

I do not know when we will have an opportunity to come back to this: perhaps tomorrow or Wednesday. I am sure that the Minister wants to get his order through before the Summer Recess. The noble Lord, Lord Hunt, raised the issue of whether the figures should appear on bills. He would do well to remind himself of what he said when I moved similar amendments in the past that were rejected by the then Government.

I had thought that we would have this. It was in my honourable friend Mr Hendry’s speeches on many occasions; but we will have to wait and see. The noble Lord, Lord Hunt, is being a little disingenuous. He, in fact, has turned this down in the past.

[Lord Hunt of Kings Heath]

We were not always able to agree with the noble Lord, Lord Jenkin, on specific proposals, but I do not think that I ever argued with him on the general principle. I realise that “The Judgment of Daniel” is facing me and that I must be very careful about how I respond, but I recall the noble Lord, Lord Reay, raising this very point in Grand Committee 12 months ago. I am absolutely convinced that if we are seeking to ensure that these measures are taken—and I do not mean just the measures that will have to be taken on energy saving, but more generally in terms of the energy strategy; no doubt we will discuss this tomorrow afternoon in relation to the Statement on energy—the more general information that can be provided to the public, the better.

My noble friend Lord Woolmer mentioned the scheme in Leeds in which whole housing areas were taken together. In the inner city in Birmingham we also had a scheme called “enveloping”. Essentially, the local authority renovated the whole structure of houses which might have been privately rented or owner occupied. That scheme was enormously effective and meant that in many inner city areas, instead of houses being knocked down, some of the social fabric of the areas was maintained. I have long thought that such an approach could be used in relation to energy saving. We will be very interested to hear the Minister give some indication of when he is likely to come forward with proposals. He mentioned the green deal and the forthcoming energy Bill; I would certainly welcome as much information as he can give about what is likely to be contained in them and when they are likely to come to your Lordships' House.

I remind the noble Lord of a comment made by the noble Baroness, Lady Wilcox, who was standing in my place on this side of the Room only 12 months ago. When we debated a previous order on this matter, she then referred to Conservative Party policy to grant an entitlement to householders for approved home energy works up to the value of £6,500. At the time, I estimated that a loan guarantee of up to £200 billion would be required of a Conservative Government. I would be interested to know whether thinking has moved on since then. We will look at this carefully, but it strikes me that at a time when they seem to have found it impossible to give a rather modest loan to Sheffield Forgemasters, they have been indulging themselves in schemes which would involve considerable amounts in loans. I should be interested in the noble Lord’s response to that.

Finally, I come to the question raised by the noble Lord, Lord Jenkin. Given the current economic circumstances, a particular focus must be the impact on poorer people and households. The order contains a specific amendment in relation to microgeneration which means that suppliers will be able to promote only microgeneration measures that are eligible under other microgeneration support mechanisms for promotion to super priority group households. The noble Lord, Lord Jenkin, asked for information about super priority households. The Explanatory Memorandum states at paragraph 7.4:

“All microgeneration uplifts will be withdrawn from April 2011”.

Can the Minister confirm that this applies only in circumstances arising in this order—in other words, it does not apply generally to the other microgeneration support mechanisms embracing feed-in tariffs and renewable heat incentives? Some clarification would be welcome.

[Lord Marland]

My Lords, as always, it is a great pleasure to enter into a debate with such eminent gentlemen who know so much about the subject. Perhaps I may deal with the points raised in consecutive order. I note the comments of the noble Lords, Lord Jenkin and Lord Hunt, that this order should have gone through the Merits Committee. You’re damned if you do and you’re damned if you don’t. It is worth pointing out that the Joint Committee of both Houses that scrutinises statutory instruments did not think that it needed drawing to the special attention of both Houses. This legislation is in operation and all we are doing is seeking to extend its lifetime. We have had three months of public consultation; some 102 companies have been consulted, as have the big six and their agencies. The whole point here is to keep up the pressure on an existing programme to build the bridge between now and the green deal.

This programme is being filled quickly—probably quicker than we predicted—and we now have an opportunity to keep up the pressure. It would be wholly wrong to tear up the current programme while it is in force and particularly while we are planning the green deal to which the noble Lord, Lord Jenkin, referred. We completely understand the bureaucratic and complex nature of the current arrangements, and I give the noble Lord the commitment that the green deal will seek to address that. As regards his point on difficulty of suppliers, that is a practical issue. Some people have no difficulty with them, while others do. We hear positive remarks and I am sorry that he experienced difficulty. Perhaps if he joins the super priority pension group, it might be a different thing altogether.

[Lord Jenkin of Roding]

My Lords, I am tempted to regard myself as being very poor, but I am not as poor as that.

[Lord Marland]

We are deeply gratified to hear that. Of course, it is easy to data-share under the Pensions Act 2008 as it commits to providing data. I am afraid therefore that I do not agree that it is difficult to find out who the relevant people are. Any work with local charity groups and local authorities adds to the information flow. This is not therefore a change; it is an extension of a policy. It gives us time rightly to re-examine his points about bureaucracy and difficulty of commitment.

As regards cost, raised by a number of noble Lords, it is £50 to customers. It is an increase from £41. However, against an average bill of £1,124, it is a worthwhile commitment to the cause. Climate change is not the main driver—this is reducing carbon throughout the supply and we must differentiate between the two. The noble Lord, Lord Jenkin, rightly mentioned the Hartwell report—not for the first time. We have three days of debate coming up. I will lay a private bet that it will be mentioned every day and I look forward to the noble Lord doing so. I believe that the writers of the Hartwell report will see the green deal as an opportunity for their recommendations to be examined. It will give us the opportunity to take their views into account.

The noble Lord asked where legislation states that market transformation requires a 20 per cent improvement on existing products. I repeat that to him as said because it is important that we understand it. I will give him the officials’ response, which is that the CERT legislation details that uplifts will be applied if a significant improvement in efficiency is achieved to previously promoted measures. Ofgem, the scheme’s regulator, has indicated that a 20 per cent improvement is the minimum requirement. Ofgem consulted with suppliers and other interested parties before providing this figure.

My noble friend Lord Reay asked about priority groups and super priority groups and how they are going to be funded. I confirm to him that they will 100 per cent generally be funded. He asked questions about how carbon savings are assessed, especially comfort-taking. Comfort-taking is considered in the impact assessment calculation for the carbon savings, and if he would like more information on that, I would be happy to invite him to discuss it with our officials later.

16:45

My noble friend asked about CESP legislation and its current status. CESP legislation goes through to December 2012. There are 12 live CESP schemes. Obviously we are constantly reviewing legislation, and this will also be reviewed. He asked whether businesses will be eligible for this support. The answer is no, this is for domestic customers only. We think that that is the right method.

[Lord Reay]

Before the Minister leaves that point, will he say whether suppliers are able to charge business users to recoup the costs of the scheme, or may they charge only domestic consumers?

[Lord Marland]

The answer is that they may or they may not. There is no fixed method by which to use the commercial levers that are available to them, as you would expect. I hope that that answers my noble friend’s question.

My coalition friend, the noble Lord, Lord Teverson, rightly mentioned that he has changed his place and now has to look at a new picture. I agree that it is nice to see a different prospect and I do not have to work out whose foot that is, lying there wearing the sandal; hopefully, the intelligence of the noble Lords, Lord Hunt of Kings Heath and Lord Woolmer, will work that out for us. I certainly know who wears the trousers in our household, but I have never worked out who wears the sandals.

He mentioned the counterintuitive nature of the current CERT arrangement. I agree with him that it is counterintuitive; again, the green deal—sorry to bang on—should help to cope with some of that counterintuitivity.

The noble Lord asked what the uplifts are, compared with existing targets. The pro rata extension of the reduction of 108 million lifetime tonnes of carbon dioxide represents a 3 per cent reduction of household emissions from the non-traded sector in 2013. I hope that that deals with his question.

The noble Lord, Lord Woolmer, dealt with what the noble Lord, Lord Hunt, calls “enveloping”. I was wryly pleased that he asked that question; it was the first question that I asked our officials when this was brought to my attention. The answer is that it is the best way of coping with this, and it is the most cost-effective way for the supplier to deal with small groups in certain areas. We should encourage this. I take on board fully what the noble Lord said, but I am amused that we should have thought of the same thing together. I am grateful to him.

The noble Lord, Lord Hunt, whose baton I am merely picking up on this issue—I am glad I did not get as hard a time as I might otherwise have done—went on about cost. With all due respect to him and to others, there are more than 11 pages in the document outlining the costs. I know that the breakdown is complicated and split into various measures, but I commend it to noble Lords because it is comprehensive, and I am grateful to my noble friend Lord Taylor for talking me through it.

[Lord Hunt of Kings Heath]

The RIA, like all RIAs produced by his department, is comprehensive. However, what is difficult to get out of it, and what would have been helpful in the Explanatory Memorandum, is a succinct summary of the likely overall impact on costs.

[Lord Marland]

I take on board the noble Lord’s point. I addressed the issue of costs earlier. They are not significant in the context of the average bill. The noble Lord mentioned Sheffield Forgemasters. I have a private bet—as this is only round one of three rounds in the next three days—on how many times he will mention that. A lot of discussion and water have gone under the bridge. I confirm that the feed-in tariff will not be affected and I hope that that will give him comfort.

I hope that I have answered the questions that have been put by noble Lords and addressed the issues that they have raised. The principal theme of the order is to keep up the pressure on installation suppliers, to maintain employment and to deliver carbon reduction. It will also help us to bridge the gap between now and the green deal, which is a fundamental part of the Government’s policy. The green deal will bring forward a new and ambitious approach to driving home energy efficiency which will not require up-front payment, but will benefit from the repayment of the costs of work over time through the savings of the Bill.

Ahead of this change, it is essential that we do everything that we can to maintain and, where possible, quicken the pace of energy efficiency movements, and to increase the focus on lower-income pensioners and family households. We can make a difference to household energy bills this winter if we act now. Therefore, I hope that noble Lords will support the refocused CERT scheme so that householders, and the UK more broadly, can reap the benefit of energy-reducing measures as soon as possible. I commend the order to the Committee.

Motion agreed.