The Deputy Chairman of Committees (Baroness Harris of Richmond)
My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Clause 33: Regulations and orders
Amendment 20A
Baroness Noakes
“(za) orders and regulations under section 1 or 2,”
Baroness Noakes
My Lords, briefly, Amendments 20A and 20C, which stand in my name in this group, come directly from the Delegated Powers and Regulatory Reform Committee’s eighth report of Session 2010-11. The amendments concern the level of parliamentary approval that should be given to orders and regulations made under Clauses 1 and 2. The eighth report makes it clear that the powers in Clauses 1 and 2 are significant. For example, the Government have powers to specify in detail what a Green Deal plan is, what improvements fall to be dealt with and what descriptions of property are covered or not covered. Clause 2 confers powers to extend by order the meaning of energy efficiency measures, and therefore the scope of the Green Deal scheme, as well as other matters.
The key point for the Delegated Powers and Regulatory Reform Committee is that the affirmative procedure is, in its view, the appropriate level of scrutiny, given the ability to extend key terms by subordinate legislation. In paragraph 5 of its report, that Committee recommends,
“that orders and regulations under clauses 1 and 2 should be subject to the affirmative procedures”.
That is what my two amendments provide. I beg leave to move.
The Deputy Chairman of Committees
If Amendment 20A is agreed to, I cannot call Amendment 20B by reason of pre-emption.
Lord Jenkin of Roding
My Lords, I also put down amendments—Amendments 20B and 20D—which are differently worded but would have exactly the same effect. Having listened to my noble friend Lady Noakes, I have nothing to add, except to support her fully. I believe that it is normal practice for the Government, having considered the proposals of the Delegated Powers and Regulatory Reform Committee, to seek to accept them.
Lord Davies of Oldham
My Lords, having had recent experience of the phenomenon to which the noble Lord, Lord Jenkin, has drawn attention, I can say that in Government we of course took the recommendations of the Committee very seriously. I am glad to see these amendments. I appreciate that the Minister has something of a choice, but in any case at Committee stage he is not going to accept these amendments exactly as they are written. However, the Opposition give their full support to the concept behind the amendments. Therefore, I hope that the Minister responds positively and that the appropriate amendment is tabled.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)
My Lords, I welcome back the noble Baroness, Lady Smith of Basildon, and hope that she is well. I hope that all noble Lords have had an agreeable weekend. We will now carry on with the Energy Bill.
The amendments in this group would affect a number of orders, including those that define qualifying energy improvements and eligible properties. We need to strike the right balance between normal administrative functions and parliamentary scrutiny of the criteria by which administrators exercise their functions. I am very grateful to my noble friends Lady Noakes and Lord Jenkin of Roding for tabling their amendments. However, we need to ensure that the amendments have the intended effect in law. Therefore, we will warmly and favourably consider the amendments and all the recommendations of the Delegated Powers Committee.
I hope that honourable Members have found my explanation reassuring and will not press their amendments.
Baroness Noakes
With the proviso that I am a noble, rather than an “honourable”, Member, I am grateful to the Minister for warmly considering my amendments. I hope that that warmth will extend to action on Report and I assure him that, if he does not take action, we will return to the matter. I beg leave to withdraw the amendment.
“( ) Before making regulations or an order under this Chapter, the Secretary of State must report to Parliament with proposals on green deal apprenticeships.”
The Deputy Chairman of Committees
I advise Members that there is a mistake in the amendment as it appears in the supplementary Marshalled List. It should state, “Clause 33, page 21, line 35, at end insert—”.
Baroness Smith of Basildon
My Lords, we have discussed before the issue of skills and whether there will be enough people with the skills required to undertake the Green Deal. Amendment 20DZA would require the Government to report to Parliament before any orders or regulations were made to state where we are on the issue of skills and, in particular, on introducing Green Deal apprenticeships. When we discussed this issue, there was wide agreement on the need to ensure that the workforce has the skills available. At the weekend, the Minister for Skills made an interesting statement that recognised the need to appreciate and value skills in manufacturing and engineering. Clearly, if we are to reach the desired level of Green Deal take-up, we will need significantly to upgrade skills in engineering as well as in science and technology.
I recommend to the Minister the Aldersgate Group’s report, Mind the Gap: Skills for the transition to a low carbon economy, which was published in November 2009. The group is a high-level coalition of businesses, environmental groups, individuals who have been involved in employment and trade unions, all of whom are keen to ensure that we capitalise on the number of jobs that can be made available through environmental work. The group believes that high environmental standards could ensure that we are an international leader in the field. The report—the outcome of a project chaired by former TUC president John Edmonds—is, I found, very helpful. Its key point is that, whatever the speed of our transition to a low-carbon economy, we need to fix the skills shortage in those areas. We are not talking about a completely new skills set so we do not need to build up new skills from scratch, but we certainly need training courses and further work to enhance the current skills set.
The biggest problem identified in the Aldersgate Group report is that, because the debate on the workforce skills has moved on so quickly, people at various levels in engineering and manufacturing in the UK—including at the highest management levels—have not really understood the implications of the degree of change that needs to be made. If we are to meet the significant challenges that we want the Green Deal to overcome, we must ensure that the skills are available. Companies will need to understand the nature of the change and explain the required skills to the workforce.
A number of recommendations in the Aldersgate Group report and in other reports—including some from the Government—deal with very similar issues. What is clear from all the reports that I have looked at is that business needs certainty from Government if it is to invest in skills and equipment. The Government have the responsibility to work alongside industry and those involved in training to ensure that we have the right kind of training programmes at the right time, with the right level of skills and the right kind of skills.
These are significant issues that the Government need to address. All that we ask today is that the Government take this away, look at the level of change that is required and ensure that there are Green Deal apprenticeships in place so that we have the take-up, which will initially come through owner-occupiers—we will come later to the issue of the delays that are currently envisaged in the private rented sector. We need to ensure that we have the necessary number of people who are fully trained to undertake the jobs required.
Amendment 20DZA is a probing amendment. I will be interested in the response from the Minister, but we may want to return to the issue, as we feel that it is crucial to the success of the Green Deal.
Baroness Northover
My Lords, the Green Deal will require a trained workforce to install measures in a safe, competent and professional manner. This will be assured by a new Green Deal quality mark and accreditation framework. The noble Baroness is right that this is going to be an area for jobs growth, and the Aldersgate Group is right to highlight that. It is estimated that, as a result of the Green Deal, 100,000 jobs will be created by 2015 and 270,000 by 2025. Business does indeed need certainty, and this Bill is part of providing that certainty and the way forward.
As the noble Baroness will know, this Government have previously pledged to increase the number of apprenticeships available across all sectors. It is a promising sign that the insulation industry has already launched a pilot apprenticeship scheme, which it hopes to expand over the next year in anticipation of the Green Deal. We welcome this development and we will work with the industry to promote the use of apprentices where possible. We will be speaking further with ministerial counterparts in the Department for Business, Innovation and Skills about this matter and we will continue to liaise with them over this.
However, we feel that Amendment 20DZA as drafted may interfere with the degree of flexibility necessary to tailor the Green Deal training to the needs of the sector and may risk forcing training opportunities down an inappropriate route. We understand the purposes behind the amendment. On that basis, I hope that noble Lords will be happy that the amendment be withdrawn.
Baroness Smith of Basildon
I beg leave to withdraw the amendment.
Amendment 20DZA withdrawn.
Clause 33 agreed.
After Clause 33
Baroness Maddock
Baroness Maddock
I rise to move Amendment 20E, as set out in the Marshalled List, and I will speak to Amendments 20F, 20G, 20H, 20J and 20K.
As we are starting on the chapter of the Bill that refers to the private rented sector, let me make a few general comments before speaking to the amendments. I welcome the fact that, for the first time, the Government are making a serious attempt to deal with energy efficiency in the private sector. The issue has dogged the housing world for a number of years, so I really welcome the Government’s proposals.
In making a few general points about the situation in the private sector, I also want to mention fuel poverty. In many cases, not only is private rented accommodation the worst maintained part of our housing stock, but it contains a large number of vulnerable households and those living in fuel poverty. The sector accounts for 14.2 per cent of the housing stock—a little over 3 million homes in England—and has a disproportionately high number of homes with the worst energy performance ratings compared with other sectors. According to the Government’s fuel poverty advisory group, 19 per cent of private tenants live in fuel poverty. According to the Chief Medical Officer, the annual cost to the National Health Service of winter-related diseases due to living in cold homes is something like £859 million.
Historically, landlords have had little incentive to improve their properties because the tenants rather than the landlords pay the fuel bills. A substantial coalition of bodies outside this House has now called on the Government to introduce a legal minimum standard of energy efficiency for rented homes and to make it an offence to let a property that does not meet the standard until it has been improved. I put on record that those organisations include: Age UK, Consumer Focus, Citizens Advice, Crisis, the National Childbirth Trust and Macmillan Cancer Support as well as councils up and down the country.
There has already been much discussion about the issue in another place, where an Early Day Motion has been signed by 147 Members of Parliament from across the political spectrum. The Government’s fuel poverty advisory group strongly supports the proposal—noble Lords might like to look at its annual report for 2009 rather than have me read it out here. Further, the Committee on Climate Change has called for mandatory energy efficiency standards to be set for the private rented sector.
The Government’s recognition that special attention needs to be paid to the poor condition of private rented properties is very much in line with views held outside Parliament and among civil society. The Energy Bill contains provisions that could, if taken up, give the Government powers to improve rented homes. My series of amendments aims to strengthen the Bill by introducing minimum standards that both landlords and tenants could both understand and plan for the introduction of.
Let me give a bit of detail about the minimum standard and its influence on fuel poverty. In December, Consumer Focus published a report setting out an impact assessment of Friends of the Earth’s minimum energy standard proposals. In terms of the measures required and their costs, two scenarios were investigated: one was to meet a minimum band E standard by 2015; the other was the impact of raising the minimum standard to band D by 2020. Raising the minimum energy performance certificate to band E for private rented homes would remove 150,000 households in the private rented sector from fuel poverty—25 per cent of households in private rented accommodation are currently living in fuel poverty. Raising the EPC for such homes to band D by 2020 would remove a little over 300,000 households from fuel poverty, which represents 50 per cent of those currently living in fuel poverty in the private rented sector.
The cost of doing that would not be as high as some people might think. A study has found that the cost of meeting the minimum standard would be low and would be well within the levels of finance associated with the Green Deal. In many cases, the cost would be low enough to be easily financed directly by the landlord, with no impact on rents. Some 40 per cent of F-rated and G-rated properties could be improved to EPC band E for less than £1,500, at an average cost of £270 per property. Of those properties in bands E, F and G, two thirds could be improved all the way up to band D for less than £3,000 per property. That is consistent with some work done by the Energy Saving Trust, which concurred that most F and G-rated properties could be improved to band E for less than £3,000. The Energy Saving Trust also said that 60 per cent of F and G-rated private rented properties could be brought up to band E for less than £5,000.
I turn to my amendments to Clause 35. As drafted, Clause 35 limits the categories of domestic short-term lettings that will come within the provisions of Chapter 2 to those categories of tenants that are expressly included within the provisions of the Rent Act 1977 and to assured short-hold tenancies under the Housing Act 1988. Undoubtedly, that captures the bulk of short-term lettings, but it certainly does not capture all forms of dwelling that are owner-occupied. Therefore, the purpose of my amendments is to expand the tenancies and dwellings included in this clause. Amendments 20E to 20J in my name would apply in particular to agricultural workers, whose tenancies have for some time been treated slightly differently from those of other tenants in landlord and tenant legislation.
Historically, many agricultural workers have occupied self-contained accommodation owned by their employers, often at very low rent. The Rent Act 1977 did not apply to tenants who were occupying buildings at no rent or very low rent. Instead, the bulk of agricultural workers are covered by the provisions of the Rent (Agriculture) Act 1976, which offers security of tenure to people occupying buildings at nil or low rent providing that they work in full-time agriculture. In 1989, the provisions of the Housing Act 1988 replaced the provisions of the Rent Act 1977, but again no specific provision was made for agricultural tenants. Living in rural Northumberland, I am very much aware of this issue, and I hope that the Minister will look on this matter favourably.
Amendment 20K—the last of my amendments in this group—would expand the categories of domestic occupiers to include those tenancies currently excluded by Schedule 1 to the Housing Act 1988 and also some houses in multiple occupation. The amendment would also allow the Secretary of State to include other definitions, should that be desirable at some point in the future.
The complication with the tenancies that have been left out is that the Government have used the Rent Act 1977 and the Housing Act 1988 to define a domestic PR property. However, in neither of those statutes was the building the central point. The Rent Act had two main purposes: to establish a fair rent structure and to seek to provide security of tenure for tenants while striking a balance between security and the needs of the landlord. The Housing Act 1988 similarly dealt with security of tenure. A long list of forms of occupation of dwellings were excluded from the Housing Act 1988 because it was considered inappropriate for tenants to have more security than they already had. However, this means that many properties that are actually dwellings will be left out of this Bill. I hope that that explains to the Minister why I think that this is important and that we look a little further at doing that. I beg to move.
Baroness Parminter
I support my noble friend Lady Maddock in her amendments, which seek to extend the reach of the Bill to those who live under short-term residential leases. While the Bill will ensure that the majority of those in the private rented sector will benefit from the Green Deal, about 1.5 million properties with long residential leases are outside the scope of this Bill. Many of those leases require the permission of the landlords for home energy improvements. In some cases, there may be an absolute prohibition on such improvements. I am aware of a leaseholder who is looking to make a home energy improvement of fitting a new gas boiler, but because that requires an external flue he is unable to get his landlord’s consent.
I accept that there are issues around long residential leases. I am also very much aware—and I am grateful—that the department is aware of those issues, but I hope that the department might use the period of the proposed review of the private rented sector to look closely at the issue of long residential leases and at how we might extend the Green Deal to the 1.5 million people who at present have long residential leases and are currently excluded from the benefits of the Green Deal.
Lord Grantchester
I am grateful to the noble Baroness, Lady Maddock, for bringing forward her amendments. I echo her opening words on the private rented sector, as we on this side of the House have also received considerable approaches from organisations that want us to look diligently at that sector. We take encouragement that the Government are now looking at those issues. Like the noble Baroness, Lady Maddock, we think that several such properties could be adequately improved at no great cost. We have also received a lot of submissions asking that we look carefully at this issue.
We also thank the noble Baroness for bringing the attention of the Committee to the issues around the Housing Act. On this side, we initially thought that all eventualities would be covered, so we thank her for drawing our attention to that. Along with the noble Baroness, we would wish, in so far as is possible, for all housing, including rural housing, to be brought within the ambit of the Bill. Will the Minister confirm that other types of housing, including in the mining industry, will be covered under the provisions?
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)
My Lords, I am grateful to my noble friend Lady Maddock, for moving Amendment 20E. She comes with a great wealth of knowledge of this sector, which is always much appreciated. In particular, her opening remarks welcomed some of the action that we are taking in this sector.
On the issue raised by my noble friend Lady Parminter, I should like to pick up the issue of the review at a later amendment.
I am glad to see that the Minister, my colleague Mr Gregory Barker, who will be taking this matter through the other place, has come to see how it is done properly here in the Upper Chamber. He will learn a lot from being here.
Amendments 20E to 20K all seek to amend Clause 35 by expanding the range of tenancy types and dwellings covered by the provisions in the Bill relating to the domestic private rented sector. Clause 35 lays the foundations for the provisions in the private rented sector by clearly defining what we mean by “domestic private rented property” and “non-domestic private rented property” in England and Wales for the purposes of this Bill. The domestic private rented sector is currently defined by the two most common types of tenancy arrangements in the sector: assured tenancies and regulated tenancies. We want to capture the largest range of private rented sector properties; we do not want to unintentionally exclude properties. I will now consider them in turn.
Amendments 20G and 20J would apply to accommodation provided for agricultural workers under either an assured agricultural occupancy, as defined in the Housing Act 1988, or a protected occupancy, as defined by the Rent (Agriculture) Act 1976. Those will be included in the definition; they do not need to be referred to specifically. I hope that that deals with the point made by the noble Baroness, Lady Maddock.
Baroness Maddock
My Lords, I am grateful to the Minister for his pretty positive reply. Of course, that is partly dependent on a review. As we will discuss this afternoon, some of us think that the timing of various reviews and actions following from them should be slightly different, so I may disagree with him a little later. However, in the mean time, I beg leave to withdraw the amendment.
Lord Jenkin of Roding
My Lords, in reading the Bill, and in getting the substantial number of representations that I suspect that we have all had from the relevant organisations, I have been impressed by the sheer complexity of the problem that we face in dealing with the private rented sector. It covers an enormous range of properties, of kinds of tenancy, and of people who occupy the houses. One trade association, the Federation of Master Builders, told me that there are around 26 million homes in Britain, over half of which were built before the 1960s. Five million are Victorian terraced properties. The scale of the challenge is nothing short of enormous. That is what has impressed me. Yes, we have new homes coming up with new standards and owner-occupied homes, but the private rented sector offers a severe challenge to the Government and to all those working with them.
Everybody with whom I have spoken has had nothing but total support for the whole concept of the Green Deal. At the same time, they recognise that it will have to maintain a careful balance between the desire to get maximum energy efficiency from this huge range of houses and, at the same time, maintain the availability on the market of homes to rent. Some of the representations that I have heard have expressed some anxiety that, if too many obligations and restrictions are placed on landlords of rented homes, one result could be that they will simply be taken off the market. The consequence would be almost worse than the original problem.
There is no question about it: the rental market has grown substantially in recent years, largely because of the progressive removal of the controls which hampered it for so long. When I was very young, I lived in a rent-controlled property. My mother was renting and the landlord could not put up the rent at all. In those circumstances it was almost impossible for anybody to rent a house because none of them came on to the market. If the house was empty, it was immediately sold for owner occupation. One has to hold that balance carefully.
I hope that, when dealing with the amendments to the later clauses, the Committee will feel that we have to give attention to this. There has to be a proper balance between the desire to improve these houses and their energy efficiency, and making severe inroads into the rental market as a whole. I am encouraged that, both in the Bill and in one of the amendments to be moved by the Opposition, there is a recognition that this needs to be done rather carefully. A considerable duty rests on us to try to get that balance as fair as we can between the two objectives—making sure that there is a proper market in homes for rent and getting the houses improved.
I want to make only one other point, which has been made by speakers already. The biggest problems we face here are in the homes that are extremely difficult to make more energy-efficient. It has been made clear in some of the representations that the limit of £5,000, or whatever it is, would not cover those sorts of places. They are coming under the energy company obligation, or so I understand. One does need to look at all these various aspects if we are going to achieve our objective.
Like my noble friend Lady Maddock when moving her amendment, I congratulate the Government on having had the courage to pick up this ball and run with it, because it is important that we try to deal with this hugely varied sector of housing if we are to improve the lot of the tenants and at the same time save energy.
Baroness Smith of Basildon
My Lords, I welcome the comments of the noble Lord, Lord Jenkin of Roding, because I think they sum up some of the challenges of the legislation and why it is so welcome that we seek to make improvements in the private rented sector and indeed other sectors—the private sector and the social housing sectors—through the energy market.
It is right that we examine this in detail because the issue around the balance between the quality and quantity of housing is a fine one to walk, and we want to ensure that at all times the Government reach the correct balance. In proposing amendments and discussing and debating the clauses of the Bill, we want to ensure that the Government can fulfil the objectives they have set themselves. We entirely agree with the Government when they said that they wanted to be the greenest Government ever. When the Minister referred to that in the Chamber in our first energy debate, which seems an awfully long time ago, and I challenged him on it he said, “Like it or not”. I let him know that we do like it and that we will support the Government in these aims and wider where they seek to be as green as possible. The issue of having greener properties and more energy- efficient properties goes beyond just the idea of being energy-efficient. It goes into health, the economy and much wider. As we debate these clauses about the private rented sector I give the Minister our assurance that every time we raise an issue we do so only to improve the Bill and work with him to achieve his stated objectives.
Lord Marland
My Lords, it is wonderful to hear so much green co-operation bouncing backwards and forwards. We appreciate the very generous words from the opposition Benches, and of course from my noble friend Lord Jenkin of Roding, who has told us that we have a very significant task to perform in this Bill. He has told us that there are many challenges ahead, which we will have to address. The noble Baroness, Lady Smith, and my noble friend Lord Jenkin both talk about a balance that needs to be had, and they are quite right. If I may, I will deal with his specific point about ECOs later, when it comes up in the list of amendments, but I am very grateful for the encouragement.
I will speak to Clause 35, so that we are clear where that is going. Clause 35 lays the foundations for the provisions in the private rented sector by clearly defining what we mean by domestic and non-domestic private rented property in England and Wales for the purposes of this Bill. The domestic private rented sector is defined by the two most common types of tenancy agreements in the sector: assured and regulated tenancies. We have intentionally excluded social landlords from these requirements. The sector has previously been required to invest in the energy-efficiency performance of its homes. As a result, it has made some of the biggest energy-efficiency gains in recent years.
The definition of a non-domestic private rented property is one which is let under a tenancy and is not a dwelling. A dwelling is already defined under the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007, so it is logical to use this existing definition for the purpose of this chapter. I hope that that satisfies noble Lords.
Baroness Smith of Basildon
My Lords, it is interesting, looking at Clause 36 about the review, that it describes how the review should be undertaken; who would undertake it, in that the Secretary of State appoints somebody; it mentions an arrangement to include provision for payments; it talks about how; it talks about what will be done; and it refers to what follows on. However, it never says what the purpose of the review is and why the review should be undertaken. It seems to me that the purpose of the review is to explore how we can best implement proposals in the Green Deal in the private sector, and how we can ensure that we get the best possible take-up of the Green Deal in that sector. Perhaps it is just a quirk of drafting that the purpose of the review is never set out in the clause. I assume that its purpose is clear: to maximise the take-up of the Green Deal and to ensure that it is taken up in the right way.
Amendment 20KA suggests that in Clause 36(5) we are able to include other issues in the review. The reason we are putting that forward is that there are indeed other issues that the review should look at and consider if its purpose is to maximise the take-up. One example is apprenticeships. The Minister did not seem too keen on that, but certainly on the issues of skills and training there has been widespread agreement in this Committee today and previously. Another issue is the role of local government and how it will undertake its responsibilities under the Green Deal. As we have already heard from the noble Baroness, Lady Maddock, what level of energy-efficiency will the review seek to ensure that landlords implement? The amendment is fairly limited. It is a probing amendment. I am just curious as to why the purpose of the review is not there; and I do not think that we should limit what the review must include to the four criteria listed in the legislation.
Baroness Noakes
My Lords, I have Amendment 20L grouped with this. Unfortunately I did not see the grouping before I got in today, and I am not sure it fits particularly well with Amendment 20KA. I support what the noble Baroness said about the review being capable of including other issues, whether specified by the Secretary of State or determined to be appropriate by the reviewer. I suggest that if that is what she wants she should have tabled the amendment differently—to say whether the Secretary of State should specify additional matters or whether the reviewer should be empowered to consider whatever other matters he wants. It seems to me a sensible flexibility to introduce into the Bill in some way.
Amendment 20L is rather different. I support the necessity of a review prior to the implementation of the private rented sector provisions of the Bill. The amendment is inspired by a briefing from the British Property Federation. It is differently expressed from the suggested amendment; my noble friend, Lord Jenkin, who has an amendment in this group, has followed the suggested amendment more faithfully.
Clause 36(5)(b) requires this review to include a consideration of the extent to which financial assistance is available to landlords of private rented properties for the purpose of taking measures to improve their energy-efficiency. My amendment takes this further, and asks that the review also examines the extent to which such financial assistance is known to be available. There is a world of difference between something being available and people knowing that it is. My noble friend Lord Jenkin’s amendment focuses on the amount of marketing effort and the sums spent in making landlords aware of financial assistance. To that extent his amendment focuses on the inputs to the process, while mine tries to focus on the outputs: in other words, whether there has actually been knowledge of the financial assistance available. For example, if the marketing in the early stages of the Green Deal is not addressed to landlords in the private rented sector, there may be zero knowledge of that in the sector.
Alternatively, landlords might know about the availability of financial assistance, not through marketing efforts from Green Deal providers, for example, but through trade bodies or the media. We cannot assume that because financial assistance is available landlords are aware of it and ready to act on it. It is important that the powers in this chapter are not activated unless and until there is awareness of financial assistance among private rented sector landlords.
Lord Jenkin of Roding
My Lords, as my noble friend Lady Noakes has indicated, Amendment 20MA in my name follows a recommendation from the British Property Federation. The federation makes the important point—which I may have made earlier—that the energy-efficiency supply sector does not have a good record of approaching private rented properties. It is much easier to take the low-hanging fruit provided by the owner-occupier properties, where the owner is the one paying the energy bills. The private rented sector has hitherto not been approached formally—other than perhaps in a number of cases—but that needs to happen. Therefore, the suggestion in my amendment is—as my noble friend Lady Noakes has said—that there should be a clear review of the efforts made to bring this whole process to the attention of both landlords and tenants.
I imagine that many noble Lords will share my experience of having people in their families who are both landlords and tenants—some are landlords and some are tenants. Of course, the biggest single problem is always to get both parties to see that an improvement will be to both their advantages. That will require a considerable effort. All that I am saying is that the review must take account of the efforts that are being and could be made to spread the awareness both of the process and of the mutual advantage that will come to landlords from the enhancement of the value of their property, and to tenants from lower energy bills and perhaps a more comfortable house. That will take some effort. The review must recognise that and form a view on how successful the measures have been to date.
Baroness Maddock
My Lords, further to my noble friend’s comment about the record of the private rented sector in this area, he is absolutely right that we have not seen its efforts in any great quantity. However, I remind him that one or two schemes got grants under the Home Energy Conservation Act. If he cares to look back, I am sure that the Energy Saving Trust has records of the one or two schemes that were quite successful. Unfortunately, nobody ever looked at the statistics to see how those schemes might be grown in the rest of the country, but that is history. I also remember that one very good scheme was initiated by Westminster City Council.
Lord Deben
My Lords, I just hope that we do not underestimate the big role that the British Property Federation and others ought to have in making sure that information about the measures reaches both those who rent and those who let property. I am a little unhappy about the pressure from the British Property Federation. Having been involved in property and in writing about it all my life, I rather think that, despite the efforts that are being made to suggest that somebody else ought to provide the information, those who let property ought to do that. In addition, if there is a problem from the private sector, the British Property Federation and others could certainly take that up.
When the Minister replies, I hope that he will accept that it is not just for the Government to tell people of the advantages available to them; the first people who ought to do that should be those who have the interests of the landlords—and, I hope, the tenants—in mind. It would be a pity if we suggested that that was not a proper role for the industry to take on its shoulders. If this were something that was hurting the industry, the various organisations would be the first to make sure that everyone knew about it. Therefore, I find this whole pressure a bit odd. I hope that your Lordships will not move us towards a position that will underestimate or remove the important role that the organisations should take.
Baroness Smith of Basildon
My Lords, that is exceptionally good advice. It will be crucial that information is available for tenants and for landlords. My point in moving the amendment was that the review should not be limited to the items listed in subsection (5) of Clause 36.
The noble Baroness, Lady Noakes, suggested that my amendment is not clear on whether the Secretary of State or the reviewer would decide the criteria. I refer her to Clause 36(3)(a), which makes it clear that the matter is for the Secretary of State. All that I seek is not to limit the review to the four criteria listed in subsection (5). I hope that the Minister will take on board my point about information being available and how crucial that will be for the process being successful.
Lord O'Neill of Clackmannan
My Lords, before we leave this issue, I am not quite clear on the extent of the penetration of the membership of the British Property Federation and on whether it captures all landlords. If the BPF has not so far—as I imagine—captured the recalcitrant landlords, I suggest that we should not try to impose too much responsibility on the BPF. At the same time, if this legislation is to succeed, the Government’s role should be to show leadership by trying to inform the public of what could be available to them and what might be being denied them because of landlords who by and large—historically, sadly, there are all too many of these—are indifferent to the needs of many of their tenants.
It would seem that the more insecure the tenancy, the higher the rents and the less attractive the accommodation. Very often, individual metering and inadequate insulation are the hallmarks of such properties. While we have a responsibility towards those tenants who live under registered or trade association landlords, we have an important and even greater responsibility to those who live in wretched and dreadful conditions because of the force of very complex circumstances. Sometimes, such tenants are not in a position to make the right economic judgments—which, in many respects, lie at the heart of the Green Deal—because, sadly, they have too many other things to worry about. The fact that these folk may not be in these properties for long does not mean that their successors should be condemned to the same dreadful conditions as those in which the previous tenants had to stay. The Government must pay greater attention to this issue. It is to the shame of previous Governments that these situations have been allowed to prevail for so long.
Lord Best
My Lords, perhaps I may add a little factual information on the profile of the private rented sector. We know from Dr Julie Rugg at the University of York that there are some 1.2 million private landlords. Very few of these belong to the British Property Federation, for which I have a great deal of time and which is doing some very good work, including on this Bill. The vast majority of the 1.2 million private landlords do not belong to any kind of federation. The Residential Landlords Association and the National Landlords Association together have, I think, less than 5 per cent of the ownership from the private landlords sector. We will have to bypass some of those institutions and put in place mechanisms that will reach out to this huge mass of small-time private landlords.
Lord Marland
My Lords, this group of amendments covers a wide range of issues. The noble Baroness, Lady Smith, rightly asked about the purpose of the review, which is, we hope, to safeguard against regulation. We do not believe that regulation will be the answer if we want to encourage landlords in the private rented sector to respond to the Green Deal with open arms, to embrace it and to act as willing and proper landlords. As my noble friend Lord Deben rightly said, we should strike a balance between the pressures brought on by the sector and what we want to achieve, but we should not be led by the nose. Of course, we are working closely with the BPF.
The noble Lord, Lord O’Neill of Clackmannan, rightly drew our attention to the fact that there are unscrupulous landlords out there. It may be that we have to take action against them in the strongest possible way through regulation, but it is our desire not to do that and to give them an opportunity—a breathing space—to take part.
The noble Baroness, Lady Maddock—the godmother of HECA—drew our attention in her usual persuasive way to the merits of the Home Energy Conservation Act. We are incredibly grateful for all the work that she did but, as she has nobly recognised, we have moved on to another phase. Perhaps she will be godmother of HECA II.
Finally, let me respond briefly to my noble friends Lord Jenkin and Lady Noakes, who have raised a number of issues relating to the review period. Perhaps I may discuss the review later, given that—as my noble friend Lady Noakes mentioned—groupings 7 and 8 also deal with the review and its various timeframes. Although my noble friends’ amendments aim to strengthen the review, I reassure noble Lords that there is already a requirement in Clause 36(5)(b) for the review to assess the extent to which financial assistance is available. On the broader point, I think that we will be able to debate the timings of reviews and the need for them when we consider groupings 7 and 8. With these assurances, I ask noble Lords not to press their amendments.
Baroness Noakes
My Lords, before the noble Baroness, Lady Smith, decides what to do with her amendment, I will say that my amendment—Amendment 20L—seeks to go beyond what is in Clause 36(5)(b), which the Minister rightly said covers,
“the extent to which financial assistance is available”.
I accepted that, but I went on to ask for the review to ensure that financial assistance is “known to be available”. The Minister did not cover that point in his summing up—unless I missed it—and I would be grateful for his comments.
Baroness Smith of Basildon
While the Minister seeks inspiration on that point, perhaps I may put to him that my comments and my amendment seek to probe whether there should be additional items in the review, but he did not address that, either.
Baroness Smith of Basildon
The purpose of my Amendment 20KA is to probe whether additional items should be in the review other than those in paragraphs (a) to (d) of subsection (5). I do not think that the Minister addressed that, but I apologise if I have missed it.
Lord Marland
I will deal first with the point made by my noble friend Lady Noakes. There is a limit to how much one can inform. Clearly, there is a greater emphasis on the private rented sector to inform. If we find that the sector is not informing people, we will bring that to attention under the review. I hope that that deals with the point.
I am not sure of the direction of the question of the noble Baroness, Lady Smith. Perhaps I could also deal with that at a later point.
Baroness Noakes
I am sorry. Possibly my noble friend has said that this might be looked at, but the point is not specified in Clause 36(5). I tabled Amendment 20L to see whether that should be specified, so that the matter would be covered. The Minister sort of said that it would be covered, but it is not covered in Clause 36, so I am still struggling on whether the Government think it important that landlords of public rented sector properties are aware of the financial assistance. As I pointed out, there is a big difference between financial assistance being available and people being aware of it, in particular if Green Deal providers do not target private sector landlords because of the difficulties.
Lord Marland
I think that I understand the question, so it may be the second question that I do not understand. If we are talking about awareness, it is incumbent on the private rented sector to make people aware. It is also incumbent on the Government to make people aware of the range of assistance available under the Green Deal. If there has been no—or not enough—positive action, the review will endeavour to make the necessary adjustments to make sure that that action is provided to communicate the information that is required. This set of opportunities should be widely known about. This is a very new initiative that, as I understand it, virtually everyone in property knows is about to happen. If we feel that the information is not being passed on, obviously we should take action.
Baroness Smith of Basildon
I hate to confuse the Minister and I apologise if my earlier comment was not clear, but all that I seek is confirmation that the review will be able to consider items other than those listed in paragraphs (a) to (d) of subsection (5). Are those the only items that the review will look at? Is the review limited to those items, or can other issues be taken into consideration?
Lord Marland
I am getting a lot of notes, but the short answer is that the review can consider other issues. I hope that that answers the question.
Baroness Smith of Basildon
I am most grateful. I beg leave to withdraw the amendment.
Baroness Noakes
“( ) a consideration of the willingness of tenants of PR properties to agree to repay the financial assistance available to improve the energy efficiency of PR properties”
Baroness Noakes
My Lords, we are sticking for the time being with Clause 36(5). I have another suggestion to make. The report that is required under this subsection focuses on property characteristics and on landlords, but it does not seem to say anything about tenants. If landlords enter into a Green Deal scheme, it will mean that the energy bills of tenants will increase and thus tenants’ willingness to pay is an important element which should not be ignored. The theory is that the golden rule will not allow a Green Deal to go ahead if the energy savings do not cover the additional cost of energy bills, but it is less than clear that tenants will see the analysis in that way. They will have different time horizons from, say, owner-occupiers, and almost certainly different appetites for risk. While tenants in the private rented sector are clearly not homogenous, I imagine that significant numbers do not have the ability to analyse a Green Deal and its potential impact on their household finances in their rented accommodation, or whether, even if they could analyse it, they would be comfortable with it.
The purpose of the amendment is to ask the Minister to explain what role the Government see for tenants in decisions under this clause. It seems that they have no existence in the context of a scheme, yet they are the ones who will be paying the energy bills. I beg to move.
Lord Teverson
My Lords, I welcome this amendment from my noble friend. It is important that tenants are actually mentioned, which is the emphasis here. The broader point is that although tenants are not a homogenous group, because of the differences that arise in the sector, there certainly will be people who cannot and never will be able to afford their own homes as opposed to more transient people who have not bought a property perhaps, because they are seeking to move on. The group will be different in many ways. I therefore support the idea that the review should try to identify the particular hurdles faced by this group in asking their landlords to make the improvements through the providers of the scheme. It is an important area and one it would be useful to understand if and when the report is produced.
Lord O'Neill of Clackmannan
Short-term tenants who are in poor-quality houses and move on regularly are not normally the kind of people who will have the time, let alone the inclination, to enter into such an agreement. They may not actually be involved when it comes to the implementation of the scheme, because there is likely to be some time lag. The other side of that is that the kind of landlords who operate in these areas are often unscrupulous and indifferent. Particularly in big cities, we now have substantial numbers of an almost underclass of people who live on the national minimum wage, are in one job that is lowly paid and get moved on to another and, perforce of circumstance, keep moving. There does not seem to be much consciousness on the part of government that such a group of people exist. I am not certain whether they will really be touched by the Green Deal because of the indifference of the landlord, the difficulties facing the tenant, and the persistence of high energy bills due to the inadequacy of the insulation of the houses—that is the simplest form of improvement that such properties could have. No matter how much encouragement we give either to the tenant or to the landlord in these circumstances, I am not sure that much will happen. We might have to fall back on other forms of remedial action, which might not have the market finesse that the Green Deal is supposed to promise.
Lord Teverson
My Lords, I am a landlord—very much in the line that the noble Lord, Lord Best, described of one property, but I thought that I should declare that interest in this debate.
Lord Best
I shall just add another statistical piece of information. Some 40 per cent of tenants move within a year of the occupation of their home. In principle, the idea of consulting with the residents of a place before you start doing anything to it is entirely right, but we have a big transient population in the private rented sector. My other point is that, although you could consult the first occupier, the debt is taken on and lasts 25 years. In almost no cases will the same person be there for all that period, and you are not able to consult people further down the line about a decision taken by an earlier tenant. Although I sympathise with the sentiment that one should consult with the tenants, this is possibly impractical.
Lord Davies of Oldham
My Lords, we are getting to the complexities and challenges of the Green Deal. We had early indications this afternoon of the problems in the private rented sector; they are not solely in that sector, but they mushroom in significant ways so far as it is concerned. The important statistic that the noble Lord, Lord Best, brought in identifies the challenges before us. As the noble Lord, Lord Deben, argued on the previous amendment, it is no doubt important that we get as much information across as we can both to landlords and to tenants. This is a major public information task, and we should make sure that this legislation enhances and creates the opportunities for the spread of as much information as possible. Of course, as my noble friend Lord O’Neill identified, there will be groups who are difficult to reach and for whom the relevance will be limited; that is where a significant challenge is represented by this legislation. We want the Minister’s assurance that he appreciates how important it is that the legislation be as enhancing as it can be on the need to distribute information so far as possible, and that we succeed in bringing the nation on board with regard to the objectives, benefits and significance for society. We have a whole range of private interests that are massively diverse, so we should recognise the challenge that the Government face.
Baroness Northover
My Lords, it is vital as a thread running through this debate that we ensure that this deal has as wide an impact as possible, and we welcome the input that noble Lords are putting into how that is to be achieved.
The nature of the review, as my noble friend Lord Marland has indicated, will be discussed in a bit more detail shortly. I would note to the noble Lord, Lord O’Neill, in terms of hurdles to tenants, that this is one of the reasons we want to give local authorities the power if needed to require improvements in the worst accommodation. When my noble friend Lord Teverson said that he had to declare an interest, I was hoping that it was not that he was a landlord of the type mentioned by the noble Lord, Lord O’Neill; it was reassuring that he was of the type mentioned by the noble Lord, Lord Best.
I thank the noble Baroness, Lady Noakes, for tabling this amendment, which would require that the review investigates the willingness of tenants to take on Green Deal repayments. We understand the intent behind this proposal. As she herself said, the golden rule should mean that tenants’ bills should not go up as a result of the Green Deal because of the energy savings they will be making. I see her slightly dissenting. That is part of the way this has been structured but we are well aware of the points that have been made in previous debates on that.
Baroness Noakes
Perhaps I can clarify the golden rule. The issue is that tenants have different time horizons so a tenant might be looking at a one or two-year time horizon for their tenancy, which is quite different from the time horizon of looking out over a 25-year period of an occupancy or long-term tenancy. That may well create difficulties in the rented sector because tenants analyse things differently. The point I was trying to make was that the golden rule does not help to give a guide to rational decision-making for tenants.
Baroness Northover
I understand what the noble Baroness is saying. These are all areas which the department is looking at. However, I point out that the Bill already ensures that sitting tenants must give their express consent before a Green Deal can be taken out, so if a tenant feels that it is to their detriment, they have the right to refuse. Similarly, landlords must make clear to new tenants if a Green Deal is attached to a rental property before they sign a contract.
Given that these consumer safeguards are already in place, and bearing in mind what the noble Baroness is saying, I hope that at this stage she feels able to withdraw her amendment.
Lord Teverson
I ask the Minister what happens when we have a change of tenancy and the golden rule is met by the first tenant whose energy use is quite high, so it works, but the new tenant is a lower energy user. They may be a smaller family or a smaller household or have a different preference as to how they spend their money. The golden rule that was met by the first tenant might not be met by the second and yet, because there is such a competition for rented accommodation, you will possibly get a position where the incoming tenant, although warned, will just say yes anyway.
I wonder if the Minister could remind us—or me—if there is an opportunity for the Green Deal to be renegotiated at that point or does the higher electricity rate stay the same all the way through? This may be important in terms of this change and whether subsequent families could be put into energy poverty.
Baroness Noakes
Perhaps I may clarify the aspect of the review that I was probing. While the consent of the individual tenant to a Green Deal may be required, the point of making sure that this is covered in the review is that if there was widespread tenant apathy or unwillingness to get involved because of the issues that I have raised, there would be little point in going ahead with a regulatory approach, which is what Chapter 4 allows the Government to do. I also suggested that the tenant environment should be properly assessed before we go down the regulatory route. That is why I tabled the amendment.
Baroness Northover
I hear what my noble friend says. We will debate the review in more detail. My noble friend Lord Marland has indicated that, in addition to the areas that are listed in connection with the review, there is the possibility that it will consider other things. It may be that the department should give some thought to this area.
I will respond to my noble friend Lord Teverson. I am concentrating on DfID, justice, et cetera. I am pretty sure that in this situation, should a tenant decide that they want to take a holiday from opting into the Green Deal, that would be possible. I remember being briefed on that. That may fit the situation that the noble Lord spoke about in which a tenant decides that it is not in their interest that the Green Deal is pushed down the track and that they do not want to repay the charge. I will make absolutely sure that I am right about that.
I am briefed that one cannot renegotiate the charge, but one can have a repayment holiday. Therefore, should the tenant decide in that instance that that is what they want to do, that would be possible. It does not mean that the money does not have to be paid back. However, it may not have to be paid back by that particular tenant at that time. It has also been pointed out to me that there will be a Green Deal ombudsman who will provide some protection. I hope that that will reassure noble Lords.
Lord Davies of Oldham
The Minister is doing her best in what we all appreciate is a very difficult area. We all understand that the tenant’s response is optional. We discussed this in the previous sitting of the Committee. We cannot have a situation where a tenant exercises an absolute veto, because one person might operate a veto on 400 fellow tenants, all of whom agreed to the change. We all recognise that there is no veto. However, there is an issue about a tenant's consent and subsequent payments. The Minister is leading us down some strange paths. Are we saying that the holiday could last for the whole period of their tenancy, however long that might be? Who makes the judgment on the right to opt out of an agreement that admittedly may have preceded their arrival in the tenancy? How do they exercise the opt-out, for how long, in which circumstances and who is the adjudicator?
Lord Dixon-Smith
My Lords, I feel provoked to intervene. We are making the subject far too complex. I thought that I heard, a few minutes ago, that the golden rule of the Green Deal would be that the energy savings would equal the cost increases. If I did not hear that, I am mistaken, but I am fairly sure that I did.
If that is the case, let us consider a situation where one tenant leaves and a new tenant comes in. Provided that rule applies, there is no disadvantage or, indeed, advantage to the new tenant in saying that he does not want to be part of the deal. If the deal is cost-neutral, why is he likely to refuse to participate?
I also think we need to bear in mind that word of mouth is a very powerful force. Once the scheme begins to operate on any sort of scale, I suspect that there will be a great deal of support from those who initially participate in it. They will all be telling their friends that they have a warmer house; that their energy bills are at a new level; and that the improvements apply to both tenants and landlords. I suspect that we will get to the point after a time where tenants start to demand their landlord to make the improvements if they cannot themselves. I am therefore optimistic about the way this scheme will go, and we should not raise too many potential difficulties. The difficulties are there, I admit, but in reality, once the scheme begins to take off, it will develop its own momentum and the nightmare scenarios being portrayed will not in fact exist.
Lord Deben
My Lords, I do not think we ought to take it quite as simply as that. One of the things we learned from the Warm Homes operation—which I had the privilege of introducing—was that many people live, as far as their heating is concerned, to the level that they can afford. If their house becomes better insulated, what happens is not that they have a lower bill: they merely warm the house better than they were able to do before. In other words, this is not as simple a mathematical equation as one might think.
I am worried about the concept of a sort of holiday. If someone enters a tenancy where the agreement has been made already, they will know the terms of the tenancy: it will be part of what they are offered. It does not seem possible that anyone can have a holiday in those circumstances, because that is what they joined in the first place. I realise that we have chosen to concentrate on people at the bottom end, with perhaps little choice in the tenancy they have. I very much agree with the comments made about some landlords. However, in my experience of having had a lot of landlords in my former constituency, a good number were decent. In those circumstances all I am suggesting is that when people enter into an agreement, they know what the situation is, and there certainly should not be a holiday.
The only circumstance seems to be the first one, where people are actually able to control the heating bills. If you have better insulation, you can decide whether you are going to continue with the amount of heating you had before—in other words the price you had before—but get more benefit from it because the house is better insulated. Alternately, you may decide—and many people do—that you would prefer to get even warmer. I am sure people who have gone canvassing know that there are certain houses where you bang on the door and cannot stop yourself stepping back from the wave of heat that hits you. It is not always true that we are sensible about our heating. The fact is that these things are within the control of the tenant, and I find it difficult to understand why we are going down this line. Tenants have a good deal here, paid for by the state, and it is absolutely right; but do not let ourselves get into a position in which we find that tenants are able to turn up the heat and then ask for a holiday because it does not work out as they thought it would.
Baroness Northover
Before I get dispatched back to DfID, justice, and all the other areas I am supposed to be covering, I think I had better pull myself back and make sure that the whole area is reported on in due course. As I mentioned before, we will be looking at this review in a bit more detail in a later grouping, and no doubt my noble friend Lord Marland will be able to put everybody—including me—absolutely straight as to what the situation is. I very much welcome the noble Lord, Lord Davies, trying to stop me going down roads I should not go down, and I very much welcome the noble Lord, Lord Dixon-Smith, explaining with such clarity how the golden rule works so that it should indeed be to everybody’s benefit and so that, I hope, we will not find ourselves in difficult situations.
Lord O'Neill of Clackmannan
I would like to ask the noble Baroness one further question. What will happen in the short tenancy housing market if landlords start increasing the rent on the basis that the house is now better insulated as a consequence of the Green Deal? That would mean that subsequent tenants would be paying twice—once for the improved property, and secondly for the improvement. Is there an ombudsperson who is going to take care of that?
Baroness Northover
I will resist the temptation to speculate about areas that I may be less than well briefed on. If the noble Lord wishes to bring that up again when my much better briefed noble friend Lord Marland is dealing with a suitable amendment, I would welcome that he does that. ECO will target households and presumably subsidise poorer ones. However, before I get myself into any more of a complicated mess, I invite the noble Baroness, having led me down various alleys, to withdraw the amendment.
Baroness Noakes
My Lords, I am happy to withdraw the amendment. I think that we have opened up a number of interesting areas in the debate on my small amendment. I cannot pretend that the Minister has answered all the points to the satisfaction of the Committee. I feel sure that, in one way or another, we will return to this topic when we reach Report stage; but, for the time being, I beg leave to withdraw.
“( ) a full assessment of the burden placed on local authorities as a result of any duty to improve the energy efficiency of the private rented sector”
Baroness Smith of Basildon
My Lords, this is a fairly straightforward amendment; I like to be straightforward to help the Ministers. I declare an interest as a current vice-president of the Local Government Association; therefore I have some concerns and an understanding of the impact of additional burdens on local government. I am helped by the Minister’s response to my last question. Whatever the purpose of the review—which I understood was to seek a review to maximise the uptake of the Green Deal, or, as the Minister said, to safeguard against regulation—we need to ensure that any new duty that is placed on local authorities can be properly scoped and evaluated to get a full assessment of the impact that will have.
My sense is that local authorities recognise the importance of the Green Deal, they want it to work and they want to be involved. They are aware of the duties being placed on them by this Bill. However, Clause 37 outlines some of the regulations that were brought in by the Secretary of State that will impact and place duties on local government. Therefore, it is sensible that these be included as part of the review so that they can be properly understood in terms of what it will cost local government, the implications on local government budgets, the implications on the time that will have to be spent by the officers who undertake it, the implications on their skills, and what additional information local government will need. It is a very straightforward provision to ensure, as we proceed and progress on this, that we can be confident that local government will be in the right place to undertake its responsibilities under the terms of the Bill. It is seeking to ensure in a new provision under subsection (5) that we make a proper assessment of the impact on local authorities.
Lord Teverson
I apologise for having asked the Minister a not particularly helpful question earlier. I want only to make a brief point that relates to this issue, and I should declare that I am a member of a local authority. I welcome the fact that local authorities are being brought back into the frame as well as the recognition that there will be implications at a time of financial stringency but, as the noble Baroness has said, local authorities will want to become involved in this area, and it is really important that they are. However, there is a slight irony here in that I am concerned that sometimes local authorities are unable to control building regulations sufficiently to minimise the amount of work that has to be done on these sorts of deals. If buildings are constructed to the specifications set out in the building regulations when they are first built, the problems might not be as great as they are now. The enforcement of building regulations and standards of insulation is a lesson because where in the past money has been saved in these areas, that has not had a good effect in terms of housing and energy performance standards for the future. I make the point, but it is not necessarily completely relevant to this amendment.
Baroness Northover
I thank the noble Baroness for her straightforward amendment and acknowledge her concern about the funding of any additional burdens on local authorities. I can assure noble Lords that should we require local authorities to carry out any new duties, we will make a full assessment of the costs of such actions and how they might be appropriately funded. We are already committed to ensuring that new burdens on local authorities are properly funded to avoid pressure on council tax. With this explanation and assurance, I hope that the noble Baroness will be content to withdraw her amendment.
Baroness Noakes
Baroness Noakes
I shall speak also to Amendments 20Y and 21C in this group. These amendments concern the timing of the regulations that will affect the private rented sector. Currently, the review that is required under Clause 36 has to be published by 1 April 2014, and the regulations that will follow the review, as provided for in Clauses 37 and 40, should come into effect no earlier than 1 April 2015. The effect of my amendments would be to slip all of those dates by exactly one year.
As I understand it, the Green Deal regulations themselves are likely to come into force in October 2012. If that is the case, the review under Clause 36(4) cannot start until October 2013. The report must be published by April 2014, which gives a mere six months. Since Ministers have said that a key element will be the impact of the Green Deal, it is difficult to see whether enough data from the early stages of the Green Deal will be available to reach an informed assessment. Indeed, initial take-up may well be low among the private rented sector precisely because Green Deal providers will target the very much easier owner-occupied sector rather than try to reach this diverse group of private sector landlords with different types of tenants.
A key component of the review under Clause 36(5)(a) is a
“comparison of the energy efficiency”,
of private rented sector properties with that of non-private rented sector properties. The British Property Federation has pointed out that the most comprehensive statistics available on housing are to be found in the English Housing Survey, but they take 18 months from collection to be published. So the review that is going to be taking place in the six months from October 2013 to April 2014 will use data that are considerably out of date and will not reflect the impact of the Green Deal. Therefore, the review, based on heaven knows what information, could lead to regulations being enforced from April 2015, only one year later. Those who are involved in the private rented sector believe that more time should be made available before something as heavy-handed as regulation under this chapter is introduced.
A number of bodies have lobbied for the Bill’s provisions on the private rented sector to be modified. However, none of them has suggested a date as early as 2015. They seem to have coalesced around 2016. It is interesting that the Government’s date is 2015 while those who have campaigned most actively for action to be taken in the private rented sector are content with 2016. My amendments challenge the Government to say why the timetables set out in the Bill are fair and practical. I beg to move.
Lord Teverson
My Lords, I am very concerned about the amendment. This is one of the risks of the critical path that we have in the Bill. I accept that because of training requirements, the setting up of everything that has to be done, proper consultation, and because the Green Deal has to work effectively, preparation is crucial and we cannot expect it to start until 2012. That is the Government's expectation. Therefore, we have the whole of this year and some part of next year. It is logical to start the review of the private rented sector by 2013. It will not report until 2014 and therefore we could not precipitately take action until 2015.
I like the direct approach on these issues of my noble friend Lord Dixon-Smith. If the policy is not working for tenants and landlords—which is one of the key areas of policy importance—the amendment would mean that we would have to twiddle our thumbs for four years from when the Bill gets Royal Assent. That worries me. There is logic in the current timeframe. It is questionable whether that is the case in the amendment of the noble Baroness.
If the Bill goes through in its current form, it will be obvious within a year—if we are collecting any data—whether it is working in the private rented sector. Whether or not we have sophisticated analysis, we will have enough data-capture to understand whether it is starting to work. I would be fundamentally concerned, and would not believe it to be the case because of the importance of the programme, if the Secretary of State were just to sit in his chair—I know that he would not do this—and say, “I’ve got to wait until 2014 to test this thing out and see whether I need to do anything else”. Surely that will not be the case.
I could perhaps cope with local authorities not being empowered to take action before 2015, although I am very sceptical even about that timeframe. I ask the Minister to imagine what actions the Government might take, apart from the formal process detailed here, to make sure that the tenanted sector gets a move on. This is my problem with the issue. There are very good landlords. I have nothing against the private rented sector, which is crucial in delivering accommodation to families. However, the Bill’s timetable gives a signal that says, “Actually, guys, you don't have to do anything until 2015. That's when we’ll start to get angry, and until then there won't be any pressure”.
Lord Davies of Oldham
My Lords, I was about to make the same speech. But as the Minister is likely to listen to a noble Lord who supports the coalition rather than to the Official Opposition, I will merely say that of course it can be seen from our amendment that we saw no reason why there should be a time constraint—a delaying element—built in. We very much agree with what the noble Lord, Lord Teverson, said about the impact of these amendments building an extra year of delay. But we are not quite clear on why there should be a restriction in Clause 37(8), which is why we have tabled an amendment for its deletion.
I agree with the noble Lord, Lord Teverson. Of course, we will not get a perfect profile of the challenge which lies ahead. Governments never have perfect information on which to act, any more than anyone operating in the so-called market mechanism ever has perfect information on which to act. But we will have clear indicators of where the issues lie. We do not see why we should build into statute—certainly, not through an amendment—an extension to what the Government think is realistic and what can be achieved. I hope that the Minister will answer the points made by the noble Lord, Lord Teverson.
Lord Marland
My Lords, I should like to correct the noble Lord, Lord Davies of Oldham, by saying that of course I listen to the Opposition. It is fundamental to this entente cordiale that we currently enjoy that I listen to the Opposition. The whole purpose of this debate is to listen to people and to take in their views. We now have two sides of the argument: one side says that we should start the review at a shorter time, and the other side says that we should push it out and asks whether the time is readily available.
The review will not be just one review; it will be constant. We have to keep this under constant review. Having listened to the arguments, I would be minded—and I will urge my colleagues to do the same—to start our first review in 2013. At least that would be a start and allow us to see, as my noble friend Lord Teverson asked, whether it is working. We should do that at the earliest possible time and set down a timetable in which to do it. The noble Baroness, Lady Noakes, perhaps feels that we should give a greater time. Of course, there will be a greater time, because we will review it to see whether this is working.
We are trying to achieve an acceleration of a reduction of carbon and of take-up on the Green Deal. It is incumbent on the Government to make sure that it is working and to urge everyone to get on with it. Therefore, I invite the noble Baroness to withdraw her amendment. Before I sit down, I should declare an interest as a landlord, which I perhaps should have done at the beginning. It is in the House of Lords register of interests.
Perhaps I may help my noble friend who was thrown into the lion’s den with some rigorous questioning and answer two or three of the questions that were put. The noble Lord, Lord O’Neill of Clackmannan, who is not in his place, asked what would happen to short-term tenancies if bills were put up as a result of these measures. My answer to that is that they would be very short-term tenancies because people would look elsewhere for a better and more commercial short-term tenancy. We are in a competitive market in that respect.
As regards payment holidays, the Bill enables the Government to specify circumstances in which Green Deal payments can be suspended. The policy of this is being consulted on, as one would expect, and we will develop that as we go through consultation. But we do not expect that tenants will be able to opt out other than in the usual circumstances.
I ask noble Lords to forgive me for dealing with these questions now, although they might want to come back to these issues. But let us do that as we follow the Bill through by way of information. The noble Lord, Lord Teverson, asked about the enforcement of building regulations. Obviously, that is a matter for CLG and we will pass his remarks on as noble Lords would normally expect. I hope that that clarifies a couple of the points and that it enables the noble Baroness to withdraw her amendment.
Lord Davies of Oldham
The noble Lord has clarified a number of interesting points but we are talking about dates here and I am not sure the Minister has responded on the issue of dates. What is the point of having a statutory limit with regard to these regulations in circumstances where the Government are hoping to make progress? As the noble Lord, Lord Teverson, indicated and I agree with him entirely, we do not know the nature of the information, how full it will be or the basis on which the Government will act. Why build in a set date when in fact the Government may be able to act against their good instincts with regard to this Bill earlier if it were not prescribed by the legislation? We do not need this prescription.
Lord Marland
The answer is quite simple. We have to put in a prescribed date or it is unfair on those who have to fulfil their obligations by that time. If you do not prescribe the time when we are going to review it, they have no idea of the timetable on which they have to act, so it is very clear. I have made quite a concession already that we are going to review the first date, which will be 2013, and that thereafter there will be dates to monitor how this Bill goes forward. I disagree with the noble Lord on this rare occasion. We have to send clear signals to the market as to how this is going to operate.
Lord Jenkin of Roding
Perhaps I may add a word or two to the debate because I put my name on the amendment. We spent a good part of this afternoon’s proceedings all agreeing that the Government face a major challenge in seeking to extend the Green Deal or apply the Green Deal to the private rented sector; indeed many noble Lords from all parts of the Grand Committee were stressing the problems that are being faced on this. I agree with that.
Although I have a lot of sympathy for those who say we have waited a long time, we must get on with this. If we try to hurry it forward and bring forward the date of the review and curtail the length of time that the review may take, it will go off at half cock. When dealing with the complexities and the challenge, which I described earlier as enormous when citing the federation, we have to be prepared to make sure that the authorities and all the people who take part in this—the property owners, landlords and tenants so far as is possible—are sufficiently aware of what is expected before one tries to rush forward.
My noble friend Lord Teverson says that by 2013 we will know and have enough experience, but with the greatest respect I do not believe that for a moment. This is going to start pretty slow and the immediate reaction will be people coming along and saying “It’s not happening”, and that we have to have compulsion and the full panoply of regulations. That would be very unwise because it might get the process off in the wrong way.
The Minister has been absolutely right. The Government do not want to go down the road of compulsion through regulation, yet if one rushes the review and starts to make decisions on what is bound to be pretty imperfect and incomplete information, my guess is that is that we will be in greater difficulty than we otherwise would have been. I would therefore urge more caution on this.
The date that my noble friend and I have put on this amendment and the other amendments that go with it are perfectly realistic and I would not agree with the noble Lord, Lord Davies of Oldham, that we could bring the thing forward. That would run straight into the dangers which I have been trying, in my own imperfect way, to point out.
Perhaps I can say to my noble friends on the Front Bench that, if the Government are being criticised for anything, it is that on a number of issues they are moving too fast and trying to do too much at the same time. We are dealing here with a problem whose origins go back many decades. Indeed, in some cases it will be centuries. To try to rush forward and deal with it all in a relatively short time is a potential recipe for disaster. I hope that the Government will get the message that this needs a measured approach with enough time being given for people to consider and make sure that they understand the information that is to come out of the review before rushing to make regulations. That comes back to the very first point I made earlier this afternoon. If you go too fast, it will have the effect of drying up the rented sector. People will throw their hands in the air and say, “Blow that. I am not going to let any more”. That would be a very great pity.
Lord Teverson
Perhaps I could respond to that because it is exactly not what I am saying. I am surprised that we have a Bill where the Government are constraining themselves with a “best after” date as opposed to a “best before” one. I am not suggesting that things have to move forward at any time, but that we have within the Bill something that Governments normally try absolutely to avoid, which is a restriction on when they can take action if they feel that that action is necessary. We all hope that the action will not be necessary, although I note that a report of the review must be published by 1 April 2014, so there is a longstop. However, while I am the last person to argue that we should not put the quality and success of this scheme first—that is essential and why the 2012 date is right—what I find difficult to understand is not that we are forcing the Government to do this earlier, but that they could not exercise their own power to move forward if they felt it necessary to do so.
I did invite the Minister to suggest, if the scheme was seen not to be moving forward particularly well, other ways of doing it. I am sure that there are ways outside this Bill that the Government would get on with. Indeed, I know that my noble friend would do that, which may be part of making sure that landlords are aware of the benefits of the scheme, that it exists and can be successful. We have also discussed ways of utilising the local authorities, although not through enforcement because I am sure that the Government would find other ways to respond. What I find difficult is that the Government have imposed a constraint on themselves in the Bill about when the process can start.
Lord Marland
I am afraid that I cannot agree with my noble friend Lord Jenkin of Roding. I deeply believe that Government have lost themselves in a mire by failing to proceed quickly on things. We have a massive task ahead of us of reforming so many things in order to meet our commitments and face the challenges that lie ahead, so I am afraid I do not agree that we should elasticate time so that some people in the building sector who have been briefing noble Lords do not feel that they are perhaps being rushed into something.
We are now effectively at 1 January 2011 and we are talking about having a review in perhaps two years’ time. Every professional organisation knows about the Green Deal. People understand the possibilities that are available and a number are already making plans to take full advantage of it and put it into the housing sector. It is therefore not right that the Government should not set down tight timelines to see how this progresses.
I will follow up on the remarks of my noble friend Lord Teverson that we need to find out early on if it is working and, if it is not, what action we need to take to make it work. I will amplify what I said earlier. The start of the review will be at the end of 2013. Some people—I am one—are persuaded that it should be done then, while others think that it should be done later. We must start somewhere and get on with it. We cannot allow the land to lie fallow. We have a massive and monumental task. As my noble friend Lord Jenkin of Roding graciously admitted, this has been sitting around unresolved for a long time. The Government must get on and resolve it. Therefore, I am afraid that I do not agree with the amendment. Perhaps we will discuss the issue further. In the mean time, I ask my noble friend Lady Noakes to withdraw the amendment.
Baroness Noakes
My Lords, we have had an interesting debate, with differing views on the most important factors, including whether we should press on quickly or make sure that we are very clear about whether regulatory action is required. The purpose of amendments is not to say that the Government should not, for example, communicate with landlords in the rented sector to ensure that, so far as possible, they are encouraged to act. My concern is to ensure that regulation is not rushed into. There is a danger that the Minister's rather gung-ho approach will be replicated across the whole of his department. I fear that precipitate action may be taken in this area.
Lord Marland
I slightly object to it being called a gung-ho approach. It is a very measured approach that has taken a lot of time. I am saying merely that a timetable should be available, that we should stick to it and that we should send out the right signals to the market.
Baroness Noakes
I will withdraw the word “gung-ho”, but perhaps not the sentiment. The Minister seems to be rushing towards action, particularly regulatory action, rather than focusing on the outcomes that are required. The need to take regulatory action would be a failure on the part of the Government. This early timetable will allow Ministers to be put under pressure by those who think that much tougher regulatory action should be taken much faster. That would not be the best approach in this area. The points of my noble friend Lord Jenkin were well made. As the noble Lord, Lord Best, pointed out, the rented sector is very complex, with a large number of different players who are not easily reached through organised groupings. Therefore, action in this sector will be particularly difficult. That is another reason for a longer timetable.
Lord Marland
Perhaps I may clarify one point for the noble Baroness. There are fundamental differences between reviews and regulations. It is important that we do not confuse them. What the Bill states is that there will not be any regulation before 2015. We will simply review the activity that has gone on in the market up to the end of 2013 in order to see what progress has been made. The Government are not fixated on regulation. In fact, we have a common tenet of “one in, one out”. We are not in a rush to regulate for the sake of regulating. We are talking merely about a review, not an insistence on regulation. We will review the situation to see whether we can urge the market to act more speedily if it needs to do so.
Baroness Noakes
I thank the noble Lord for that. I am sure that the Government will keep this under review. The issue is that a formal review will be launched at a particularly early date when the evidence on the impact of the Green Deal will be relatively light. This will lead to rushed and ill considered action. I will not pursue this further, but will read carefully in Hansard what the Minister and other noble Lords have said and may return to it, perhaps in a different form, on Report. I beg leave to withdraw the amendment.
Baroness Maddock
Baroness Maddock
My Lords, in moving Amendment 20P, perhaps I shall half come to the rescue of the previous discussion. Clause 37 refers to action by local authorities. My amendment would stop the introduction of some measures being conditional upon the outcome of the review to be established under Clause 36. My noble friend the Minister has said that he wants things to get going in this sector. We have had a view that perhaps we are trying to get going too quickly.
I agree with the Minister and with my noble friend Lord Teverson that we should do all that we can to encourage this to happen quickly. That is why I am anxious that some things can be done that are not conditional on the review. I think that my amendments in the next group will help us to get going quickly. Making regulations conditional on a review increases the likelihood that landlords will not do anything before 2015. However, if we set a clear minimum standard now to come into force after 2015, it would give landlords absolute clarity that from 2016 they would not be able to re-let a property with an F or G rating, thus allowing a significant time for preparation and encouraging voluntary uptake.
Crucially, the Government’s impact assessment admits that, because use of the powers to regulate is conditional on the outcome of the review, one would not expect landlords to install energy efficiency measures in significant numbers as a direct result of taking these powers. It is therefore assumed that there will be no pre-emptive action by landlords, but we could encourage action beforehand. If we set up a clear, timetabled, minimum standard of legislation now, it would maximise the opportunity for voluntary compliance by landlords and minimise the need for enforcement action later. The current legislation might achieve the reverse. However, a clear signal now will provide certainty for the market; will allow landlords to plan ahead; will allow the supply chains to get their supplies in; and possibly will allow new business models to be developed to serve the private rented sector. That is why I have introduced this amendment to stop the introduction of the measures being conditional on the outcome of the review established in Clause 36.
I will speak further to other amendments, which will give an idea of what else could be happening in local authorities to speed up action in the private rented sector, as many of us want. We are all saying how pleased we are that the Government have grasped the nettle. For goodness’ sake, let us try to be keen and encourage them to get on with it. I beg to move.
The Deputy Chairman of Committees (Viscount Ullswater)
My Lords, I must advise your Lordships that if this amendment is agreed to I will not be able to call Amendments 20PA and 20Q because of pre-emption.
Baroness Smith of Basildon
Amendment 20PA, which is in my name, is in some ways not dissimilar to the amendment in the name of the noble Baroness, Lady Maddock. I think that we are perhaps trying to achieve the same ends in different ways. We both raised concerns that any regulations introduced by local authorities should not be conditional on a review taking place. It is worth looking at the scale of the problem, which we will perhaps do in respect of the next group of amendments. Nineteen per cent of private tenants live in fuel poverty. The figures and the impact assessment show how great the problem is for those who live in the private rented sector, the difficulties that they face in meeting their bills and the impact of living in cold properties on their health.
Properties in the private rented sector have the worst energy performance rating of any property sector in the UK. My amendment takes a slightly different approach to that of the noble Baroness, Lady Maddock. However, we share a widespread concern about the timing of the review and the fact that until the review takes place no regulations can be brought in. We do not want the action to be conditional on the review, but any regulations brought in must improve energy efficiency.
As regards the number of properties available to rent, no one wants to see a decrease. However, the issue is the degree of decrease. I am sure that although the Minister will tell me that the word “significant” is not normally used in legislation, he will understand the point that we are making. There may be times when it is appropriate to have a short-term decrease in the rented housing stock in order that work can be undertaken, but no one wants to see a permanent or a long-term decrease. We have put in the word “significant” to address that and to tease out from the Minister what he anticipates when he refers to a decrease in the housing stock.
The clause raises the enormous concern that the regulations will be pushed so far into the future that the significant problems of energy efficiency that exist now for people living in fuel poverty in the private rented sector will not be addressed. I am grateful to the Residential Landlords Association, to which we will come in the next group of amendments. The private sector needs certainty. As the Bill stands, all that it knows is that there will be a review, after which it may be required to undertake energy efficiency measures. But there is no clarity or certainty. This is a probing amendment. I hope that the Minister understands the points that are being made and why the concerns have been raised; namely, that great problems exist in the private rented sector.
Baroness Noakes
My Lords, I shall speak to Amendment 20Q in this group. I allowed it to be grouped with Amendments 20P and 20PA because it gives a contrasting view on the topic. The amendment moved by my noble friend Lady Maddock, and that spoken to by the noble Baroness, Lady Smith, seek to remove the conditionality, either totally or in relation to the report, before regulations are introduced. My concern, which I expressed earlier, is to ensure that regulation is not introduced unless there has been careful thought and consideration, because a regulatory solution would be an admission of failure and is not to be undertaken lightly.
Clause 37(1) requires not only that the report is published but that the Secretary of State considers that the regulations will improve energy efficiency and not reduce the number of properties available for rent. Those are the good requirements prior to the introduction of any regulation, and I support them. Amendment 20Q adds another requirement, namely that the report should be approved by both Houses of Parliament. We have already discussed the fact that the use of the regulation-making powers in this chapter could have a significant impact on the private rented sector, both in terms of economics and of the regulatory burden that could be laid on it. It will be important to ensure the widest possible consideration of the impact of any regulation. I tabled my amendment in relation to Clause 37, but my points apply also to Clause 40, which covers the power to make tenants’ energy efficiency improvement regulations. Both will have a significant impact.
Let us assume for a moment that the Secretary of State is some kind of ideologue who sees everything through green-tinted spectacles. While not for a moment would I say that this is a description of the current holder of that office, let us assume that we have such a green ideologue in the position of Secretary of State. That Secretary of State appoints another green ideologue to carry out the review, because Clause 36 makes no requirement for the reviewer to be an independent person. We could easily get one ideologue appointing another ideologue—there are rather a lot of them around in this area—to carry out a review which would then be undertaken from a particular set of prejudices. My amendment, in addition to providing the ordinary involvement of Parliament in such an important decision at any early stage and not simply in approving regulations, in approving the report would also be able to provide some kind of counterweight if a green bias was built into the review.
I am aware, of course, that there is a form of institutionalised bias along certain lines in both Houses of Parliament, and that Members of both Houses have a wide range of views on these issues. It is therefore important that the findings of the review are subjected to full and dispassionate scrutiny by both Houses and approved as the basis, effectively, for the Secretary of State to go forward and introduce regulations. While I have treated this in a rather light-hearted way, there is a serious point here in that we want to be clear before defaulting to regulation. This would provide another pause in the process before ending up in regulation. For that reason, I hope that the Minister will favour my amendment in this group and not those of the two other noble Baronesses.
Lord Deben
I did try to get in rather earlier, but I am now able to say that I would be very unhappy if the Minister were to go down the route of putting in another pause. We have had enough pauses in this over the past 20 years, so really we have now got to get on with it. I also have a slight difficulty believing that there is a connection between green bias and green ideologues. I hope that one is not a green ideologue, but I hope that there is a green bias. If there is not, the world will be in some difficulty. The concept that the opposite of that is a person who is somehow independent and not of that kind worries me very much. I hope, therefore, that the Minister will not go down this route.
My problem with the first part of the clause is that I fear the Minister will be in real difficulties. Under subsection (1)(b)(ii), he has to consider that the regulations,
“will not decrease the number of properties available for rent”.
Let us consider this in imaginary terms. When you think of some of the landlords we have, I can see a number of them saying, “I don’t want to spend anything and I don’t want to have anything to do with it. If there are regulations, I will take my property off the market”. In those circumstances, how on earth will the Minister be able to say that he does not consider that there will be a decrease in the number of properties available for rent? He could say that someone is off their head or make any number of comments, but the wording of this sub-paragraph could mean that he might be under judicial review if it could be adduced that any landlord had taken this view.
I am closely following the noble Baroness, Lady Smith, here. The problem is that this is one of those rare occasions where the actual wording is dangerously total. It is does not say “significant” or perhaps that there is “good reason to believe” that the number of available properties would decrease in more than a marginal way. There is nothing about whether the situation might change over time. It is a dangerous sentence and I hope that the Minister will agree at least to think about it again. I think that it is wrong.
The second reason why I am a supporter of the amendment proposed by the noble Baroness, Lady Maddock, is that I think that, although it is reasonable to say that regulations should not be made until the report has been published, it is perfectly reasonable to say that, once the report has been published—notwithstanding the worries of the noble Baroness, Lady Noakes—it should then be for the Minister to make his decisions in the context of the report. Picking out two things in the way that subsection (b) does will limit his ability. After all, this is a Government who do not believe in and do not like regulation; they turn to regulation only when necessary. My fear is that regulation may be necessary simply because the people in this business—or a very large number of them, as the noble Baroness opposite said—are not an easy lot to get to do things in a rational and sensible way. However, we are going to do our best. No one can possibly imagine that this Government will not go as far as it can to help people to do their best.
Having been responsible for the housing policy of the United Kingdom for some years, I have to say that private landlords—even the good ones—are not the easiest group of people to corral. There are some—rather fewer than some people think—who are certainly not good and who are impossible to corral. Given that that is what we know now, this may be an area where—however hard we may wish to bear down on regulation—we may need to do something. If we come to that conclusion, surely we ought to leave it in the hands of the Minster, who will, after all, have to argue his case for doing something that he has said that he does not want to do. He will have to argue his case against the general view of the coalition parties in both Houses of Parliament, and he will have to lay the regulations. Therefore, there are quite a number of hurdles in his way anyway in addition to any psychological dislike of regulation.
I would much prefer the Secretary of State to be faced with the simple statement of the report. The report will say to him these things, and he will have to make up his mind about it. That is what I would prefer. I would be happy to accept subsection (1)(a) of Clause 37—although, as no such amendment has been put down, I would be prepared to go for not having subsection (1) at all—but it seems to me that the Minister has undermined his position in a way I would have preferred him not to have done. Therefore, I would like him to accept this amendment. Certainly, I think that he would be well advised, if I may say so, to look at subsection (1)(b)(ii), because whatever bits of notes he gets handed to him from behind, I suspect that he will rue the day that he included that provision, because somebody will make mischief over it—even if it is somebody who just wants to push this off because they do not really believe in it.
Lord Marland
My Lords, I am very grateful to the noble Lord, Lord Deben, for his remarks and to others for the remarks that they have made. Before we start, to get us on the right footing, I would like to say that his excellent remarks about Amendment 20PA and subsection (1)(b)(ii) are very well made. Of course we will consider his comments, take them away and see how best we can improve matters. I am very grateful that he and the noble Baroness have drawn our attention to that particular issue, because these things do need tightening up.
On Amendment 20Q—some of this was answered by my noble friend Lord Deben—I agree with my noble friend Lady Noakes that it is an admission of failure for Government to regulate. That is a primary tenet of this Government, as my noble friend Lord Deben has said. If we cannot encourage people through these actions to participate in this opportunity—this great opportunity—then we will have failed and we will, therefore, have to regulate accordingly. However, as I said earlier, regulation is made on the basis that we have a “one in, one out”, arrangement, so we will have to look at the matter very carefully. I am not into “what if” scenarios about ideology, but I think that Government have quite a strong track record of choosing someone to do a review. That individual has to withstand the brickbats and the challenges of both Houses as to whether they are competent or going to give fair reason. Of course we must remind ourselves, as we do periodically, that the Green Deal will be a market-led product. We have to have confidence in the market without imposing too much regulation if the people involved are to be the proponents of the market. On that basis, I ask the noble Baroness, Lady Noakes, to consider withdrawing her amendment.
Amendments 20PA, 20P and 20Q would impact on the preconditions ahead of a Secretary of State being able to make these regulations. The Secretary of State will be able to make regulations only following publication of the review and only if he considers that the regulations are necessary to improve the energy efficiency of domestic private rented properties and would not decrease the number of properties available for rent. That is the framework that I mentioned earlier.
I hope that that largely covers the questions that have been asked. I invite noble Lords to withdraw their amendments.
The Duke of Montrose
My Lords, although I have not participated greatly, I have attended quite a few of the Committee’s meetings. The Minister says that he will take away and consider issues such as those raised by my noble friend Lord Deben. With the great efficiency of this Committee, we are presently discussing the clauses to do with England and Wales, but exactly mirroring clauses, which are word for word the same, later extend the provisions to Scotland. However, nobody has thought to extend their amendments into that same text, but no doubt the Minister will consider—
The Duke of Montrose
Well, I have said that it is highly efficient to consider these matters at the same time.
Lord Marland
Perhaps I should clarify that the authorities in Scotland will and can do whatever they want with their own powers. We are acting only as a facilitator for them to consider enacting those powers. I hope that that clarifies the matter for the noble Duke.
Baroness Maddock
My Lords, I thank the Minister for his reply. In a minute, I will be moving further amendments that are about regulation in local authorities. I hear what the Minister says. We may want to return to this another time, depending on the outcome of further discussions on this area.
I say to the noble Lord, Lord Deben, that, not for the first time, I am grateful to him for his support in this sort of area—the last time being rather long ago in another place. I am very pleased to see the noble Lord here because I know that he is a great enthusiast of the sorts of things that we are trying to put forward in this Bill. In the mean time, I beg leave to withdraw the amendment.
The Deputy Chairman of Committees
My Lords, it has been suggested that this may be a good time for the Committee to adjourn for 10 minutes. We will return at about 6.08 pm.
Baroness Maddock
Baroness Maddock
My Lords, I shall speak also to Amendments 20S to 20X. What I am trying to do here is to hurry up local authorities’ action since they are best placed to understand the state of the rented sector in their own areas. These amendments are designed to give local authorities a bit more certainty and a better timetable for action. As the Bill stands, local authorities are merely given access to the energy performance certificate database. They will also be allowed to continue to use their existing powers under the housing health and safety rating system. This legislation will not give landlords long-term certainty in advance about what their legal duty is or when they will be required to act. Further, they do not know now whether local authorities will be given a duty to act post-2015. Equally, after 2015 they will have no prior warning of when local authorities are likely to make a request of them or what that request might be. This means that although a small minority of landlords might react by taking their properties out of bands F or G in advance, I think that the vast majority will be encouraged to wait and see. This will considerably delay any action.
Local authorities will also have to take two actions, the first of which is a request and the second is to monitor actions taken and enforce compliance. It would be perfectly legal for landlords to let out bands F and G-rated properties until local authorities get around to issuing them with a request. In the absence of a clear timetable for local authorities, this could be as late as 2020 or beyond, and a landlord would not be committing an offence by letting out a band F or G-rated property until he had been issued with a request by the local authority and had then failed to take action by not claiming an exemption for the property, which he could do by going through a court or tribunal process.
I believe that the measures should be brought forward to 2012 and used to give local authorities an effective tool to make progress on improving the worst of the local private rented sector housing stock at a pace that is appropriate to local circumstances. This is important because local authorities know best what the local circumstances are, so it would be good if we could encourage them and landlords to start taking action sooner.
There is no guarantee, as the Bill is written, that properties will be brought out of bands F or G on the request of local authorities. Indeed, given that the Secretary may determine in regulations what level of energy efficiency was deemed to be too low and therefore requiring improvement, there is no guarantee that, despite the intention as set out in the impact assessment, properties other than those with a G rating will be required to improve. The Bill also does not allow local authorities to carry out works by default, whereby local authorities can carry out general improvement works in other areas and charge the landlord. That would be useful in this area as well; indeed, it is rather more useful than issuing a fine, because the work would actually get done. This flexibility is important to ensure that as many properties as possible are improved rather than simply issuing penalties to landlords, and is something that I know has been called for by the Local Government Association. I have already declared that I am a vice-president of the LGA, and I know that it is keen to act in this area.
The amendments grouped with Amendment 20R try to address some of these problems. Amendment 20R and 20T would bring forward the date of the introduction of local authority improvement notices to 1 April 2012, and would ensure that where a local authority issues a notice to a landlord requesting relevant energy efficiency improvements, those improvements would ensure that the property is brought up to a minimum level of energy efficiency. Amendment 20U would give the Secretary of State the power to establish a local or national register of private rented properties,
“for the purpose of distributing information relevant to this Act”,
to landlords and tenants. This touches on a point made by my noble friend Lady Noakes, who was concerned about information for landlords and tenants. The register could also be used for other purposes designed to help increase the energy efficiency of private rented properties.
Amendment 20V would define energy performance certificate band E as the minimum level of energy efficiency that private rented properties must meet if landlords have been issued with a notice to make relevant energy efficiency improvements by a local authority. It also allows the minimum level to be raised in accordance with the timetable as proposed under Amendment 20W. That will ensure that the minimum energy efficiency level is increased from band E at least once between 2016 and 2020.
The Deputy Chairman of Committees
I must advise your Lordships that if this amendment is agreed to I would not be able to call Amendment 20RA because of pre-emption.
Baroness Smith of Basildon
My Lords, I speak to Amendments 20RA and 20YA, which, in the new groupings list, are in this group. When I spoke to the previous group of amendments I mentioned the scale of the work that needs to be undertaken to improve the energy efficiency of our private rented sector and how many homes are affected. If we look at the information we have got from our own impact assessment report, from fuel poverty groups, from Friends of the Earth and from the Residential Landlords Association, we see that all are agreed that this is an enormous sector with enormous problems. The scale of the work that needs to be undertaken is huge. It is important that we discuss these amendments to ensure that we get it right.
Amendment 20RA seeks to take on board comments made last week on the issue of “shall” and “must”—that the Minister “must” make energy efficiency regulations. As the clause stands, it pushes back any intervention on private rented stock. I am not clear about when the timescale will start. I know when the review will start and how long it will roughly take, but we will not see any regulations in place until 2015. It is difficult to ascertain when the regulations will become effective and when that will come into play. We are talking about beyond the next election—four or five years away—before we see any significant improvements in the private rented stock.
One of my concerns is that that does not create the certainty for those involved to prepare to undertake the necessary work. At this stage, landlords do not know what is required of them. They do not know if and when, or to what level, they might be required to undertake work. In an earlier debate, the Minister talked about giving clarity to the private rented sector, but these regulation-making powers do the exact opposite. They give very little clarity because of the conditionality on them.
If the industry is to meet the needs of the Green Deal, it needs clarity, probably on the scale of the take-up, although I appreciate that that will not be easy at first. The industry will need to know what skills, training and employment will be required. Local authorities will need to know what is required of them. It is so far down the road that that will be very difficult and the conditionality will add to it. It could mean that this will have little impact and the worse properties—that is, the bands F and G-rated properties—being with us for many years to come. I am sure that that is not what the Minister intends. However, the wording of the Bill would have that effect.
There are a number of reasons why we might want to move more quickly. If we continue to have so many F and G-rated properties, the impact will be higher bills for those tenants and health issues. The Chief Medical Officer has estimated that the annual cost to the NHS of winter-related diseases due to cold housing is in the region of £859 million. That is a significant cost to the NHS and the Government.
I take on board the comments of the noble Baroness, Lady Maddock, about minimum energy efficiency standards. I have some sympathy with them. I would be grateful if the Minister would look at this. The costs of improving properties in bands F and G to raise them into band E are well within the Green Deal. That would give the critical mass needed for it to take off; it would give certainty to those involved; and a significant number of people in F and G properties—something like 40 per cent of tenants in these properties are in fuel poverty—could be moved into E-rated properties for less than £5,000 for each property. That is a significant issue.
I am unclear also about how the Minister can make regulations—it would be helpful if he would explain this to me, because I may have missed something—unless he knows what he is aiming for in terms of the kind and level of improvements that need to be made to those properties that are not energy efficient. How does he know that the correct regulations are in place? Owners will need to know what standard their properties must be brought up to. It may be a missed opportunity if we just look at the golden rule, which is arbitrary and will change over time—it is guidance more than anything else—and in two or five years find that those properties are still rated F and G because the work that has been undertaken has not been to the required level.
The Committee on Climate Change has recommended to the Government that there should be mandatory energy efficiency standards in the private rented sector. I do not often quote the Mayor of London, Boris Johnson, in support of proposals that I am putting forward. He stated:
“I agree that requiring landlords to meet energy efficiency standards when properties are re-let could be an important tool in improving the energy efficiency of the private rented sector in London. How these standards are communicated and enforced would be key to their success”.
There is a lot of sympathy for the view that landlords should know what is expected of them before they start on the process. It will be difficult for them to embark on it if there are no changes to the Bill before it passes into legislation. I am not clear what message that would send to landlords. Will they think, “This may happen later” or, “There will be changes. I should prepare for them now. What can I do?”? The issue is about giving certainty to landlords about whether they need to take action and, if they are to take action, what level of action they should take. The proposals point in the right direction, but are rather weak. If we are to see this critical mass, certainty must be given to those who rent out properties, to those who pay to rent them and to local government.
I will speak briefly to Amendment 20YA. I tabled this as a question to the Minister because I was confused. The amendment refers to Clause 38. I looked for an explanation of what it meant in the Explanatory Notes, which state that,
“the Secretary of State could provide that a landlord is not required … to make improvements if he cannot obtain consent which is required to be given by his freeholder”—
that is understandable—
“or if the property is likely to be worth less as a result of the improvements being installed”.
I cannot envisage what improvements to energy efficiency in the home would make the property worth less. Who would make the judgment that the property is worth less? This could be a get-out clause for the landlord to say, “If I do that, I won't get so much rent in” or, “If I do that, I couldn't sell it”. Will the judgment be made on rental income or the price that the property would fetch if it were sold? It would be helpful if the Minister would give us more information.
Lord Dixon-Smith
I feel compelled to intervene because I am not quite sure whether we are going in the direction in which this Bill should be aimed. I go right back to Clause 1(2),
“An energy plan is an arrangement made by the occupier or owner of a property for a person to make energy efficiency improvements to the property”.
The occupier of a property may well be the tenant. We have made a great deal of the efficiency or inefficiency of certain landlords. They do not just occur, sadly, in the private sector; there are good and bad landlords in the public sector. There are good and bad tenants in both sectors. The essence of this scheme, however, was that if the landlord did not want to do something the tenant could. I thought that the essence of the scheme was that it was voluntary but if I listened to my noble friend Lady Maddock correctly, and I am not sure that I did, she seemed to be thinking that perhaps local authorities should be in a position to compel.
I am not sure I agree with that because that is not within the original purpose of the Bill. But maybe I have misunderstood the Bill or maybe I have misunderstood the noble Baroness. I am not sure which; I am becoming rather confused. That is why I am speaking. I thought that this Bill was designed to give the property occupier—if the owner happened to be there, that would be fine and good—the right to take action which is in his own interest. If that is so, it is perfectly true that he would probably have to get the consent of his landlord because almost all tenancy agreements that I have seen say that any alterations to the property must be made with the consent of the landlord. I cannot conceive, as the noble Baroness, Lady Smith of Basildon, has said, that any landlord is ever going to refuse to have this sort of action taken in a property in their ownership. She is absolutely correct to say that action like this must enhance the value of the property one way or another.
That is not the bit that concerns me. It is that we seem to think that we should be giving local authorities powers to compel landlords to take action, but they are landlords themselves very often. I am quite happy that they should be compelled to take action for themselves, but I thought that the essence of the Bill was that this was an arrangement essentially between the consumer of energy and the energy supplier. If that is the case, I am very concerned about these amendments because they seem to imply something else.
I am anxious to see homes having their energy efficiency improved as soon and as rapidly as possible. However, it seems to me that the process suggested, and which I thought lay behind this Bill, would be likely to achieve that faster than any action implying that compulsion might come from somewhere else would be likely to do.
Earl Cathcart
My Lords, I have not spoken on this chapter before but I welcome provisions in the private rented sector. I am not attacking the noble Baroness, Lady Smith, but I recall it being said that nothing would happen in the private rented sector until 2015 when the regulations can come in. That is assuming that landlords do not allow all this to happen, as my noble friend said. There are many landlords and, as the noble Lord, Lord O’Neill, said, not all of them are unscrupulous. I like to think that a lot of good landlords will want their tenants to use these provisions because, as my noble friend Lord Dixon-Smith said, it will increase the value of the property; it will make the tenant warmer; it will increase the well-being of the tenants; and it will make them want to stay longer. A lot of landlords and tenants will want to do this deal well before regulations have to come into place.
I want to play devil’s advocate here, following what my noble friend Lady Noakes said in her Amendment 20M, which talked about,
“consideration of the willingness of tenants”.
Clause 37(2) requires local authorities to issue notices to the landlords of each domestic private rented property,
“(c) which falls below such level of energy efficiency … as is provided for by the regulations”.
Subsection (3) states:
“The notice is one requiring the landlord to make to the property such relevant energy efficiency improvements as are identified by the notice”.
I might be splitting hairs, but should not subsection (3) read:
“The notice is one requiring the landlord”,
to allow,
“such relevant energy efficiency improvements”,
to be made to the property,
“as are identified by the notice”?
My thinking is that it could be the tenant who wants this done and the landlord who is dragging his heels, and that therefore one needs this notice to make sure that the landlord allows the tenant to sign up to the Green Deal.
Lord Marland
My Lords, I am grateful for these amendments, which aim to set a minimum energy efficiency standard for the private rented sector. As a result, Amendments 20R, 20S, 20T and 20V would set a minimum energy efficiency level of EPC band E for the domestic private rented sector. I hope that this deals with one of the questions asked by the noble Baroness, Lady Smith. Amendment 20X would require the Secretary of State to make at least one increase to this minimum standard between 2016 and 2019. The EPC is a key factor in this.
First, I can reassure the House that our provisions in Clause 37 already target the worst performing properties. Our intention is similar to that of the amendment—that properties below a band E rating would be targeted under the local authority enforcement powers. Secondly, and most importantly, we are achieving this without setting a minimum standard that could be viewed as a barrier to new landlords entering the market. That is very important. The private rented sector is an increasingly important part of responding to our housing challenge. Yet evidence suggests that there is currently a shortage of supply, which is illustrated by increasing rents. We are trying to plot a pragmatic and sensitive course here. I believe that the provisions are drafted to achieve this balance.
Amendment 20YA would remove an important safeguard for property owners. While we do not believe that improving a property’s energy performance will result in a negative impact on its value, it is only right and proper that we provide owners with that reassurance. I agree with my noble friend Lord Dixon-Smith and the noble Baroness, Lady Smith, that it is unlikely. There could be solid wall installations, for example, which do not enhance the value of an old property, but that would be pretty rare.
Amendment 20U proposes a national or local register of domestic private rented properties. On 10 June, the Housing Minister stated that the Government have no plans to create a national register of landlords, although he will keep that position under review. I am, however, aware that local authorities are initiating local lists of this type of property where they deem that such lists are of benefit in their areas. My noble friend Lord Dixon-Smith made the good point that some landlords are the local authorities.
Amendment 20RA would provide that the Secretary of State must make regulations requiring local authorities to issue a notice to landlords of domestic private rented properties requiring them to make such improvements as are identified in the notice. If regulation is required, it is our intention clearly to set out provisions requiring local authorities to issue a notice to landlords requiring them to make the necessary improvements. Finally, Amendment 20W would appear to create an incorrect cross-reference. It proposes deleting “subsection (5)” and inserting “subsection (6)”. I hope that that acts as an explanation.
I was asked about whether it is the landlord who must make improvements to a property. Under Clause 37, the requirement is on the landlord, but tenants can request that the landlord take action. I was asked: what if the property is vacant? That is not covered by a definition. No action is required until the property is re-let, after which the action will take place. In summing up, I would invite my noble friend Lady Maddock to withdraw her amendment. Her amendments are extremely valuable and I am very grateful to her for presenting them to us.
Baroness Noakes
Before the noble Baroness, Lady Maddock, decides what to do with her amendment, perhaps I may follow up a point made by my noble friend Lord Cathcart in relation to tenants. I do not understand the position. Since my noble friend laid it out so clearly, I recall some of the debates that left me with a slightly foggy view when we debated this earlier.
The local authority can require an energy efficiency improvement under the terms of the regulations. An energy efficiency improvement is one which is either paid for by the Green Deal or is free under the energy company’s obligations. Let us assume that it is not free but must be funded by the Green Deal. Let us suppose that the tenant says: “I do not want it. I am the bill payer and I do not want this Green Deal because I do not understand all this stuff about getting extra bills and about energy efficiency—it is too complicated”. This is the point I was trying to make earlier about tenants having a different perspective on life, with different timescales. What happens then?
Lord Marland
The first tenant has to agree to the Green Deal. If he or she does not, it will not be installed. If he or she does, it will be part of the ongoing tenancy agreement. As to the desire to have the Green Deal installed, the initiator is the first tenant.
Baroness Noakes
That is what I hoped the Minister would say. Can he then explain to me what happens in relation to the local authority’s powers, and whether a landlord who is not in compliance with his obligations is therefore subject to the sanctions that are covered by Clause 39? The local authority issues the regulations; the landlord says, “I will do it, I will get this Green Deal”. The tenant then says no, so the energy efficiency of the property is not improved. Is that landlord, because of the tenant’s action, in non-compliance with his obligations and therefore subject to the penalty clauses?
Lord Marland
The noble Baroness hits on an important point. It is that awkward period when the landlord is under an obligation to achieve a minimal EPC banding and is continuing to let the property. It is therefore incumbent upon the local authority to put pressure on the landlord to deliver a property that reaches that banding. I totally accept that, if you have a tenant who does not want the improvements, there is a period of time when pressures are brought to bear. If they do not work, the landlord may have to withdraw his property from the market and the tenant might have to find something elsewhere.
Baroness Noakes
It is my understanding that you cannot just throw tenants out nowadays; it is a rather more complicated process.
Lord Dixon-Smith
My Lords, my noble friend has a serious point. If the tenant seriously objects, it is completely wrong to hold the landlord responsible for that individual decision. It may be uncomfortable, but that is the reality. Otherwise, we have a form of compulsion that is wholly inappropriate.
Lord Marland
The point that I am making is that the landlord, if he has a tenant who will not agree, will continue the tenancy. When the tenancy changes, the landlord will have to change his plans. No one can force a tenant out, unless it is done legally—and, as the noble Baroness, Lady Noakes, says, tenants are strongly protected. But what would one do? One cannot force people into this Green Deal; one has to encourage them. The Green Deal is a market-led product. We are saying that once the tenancy ends, the new tenant will have to have the Green Deal. I am afraid that that is as far as we can legitimately go at this stage. No doubt during the review we will find out whether this has operated voluntarily or whether we need to find other ways to encourage people.
Lord Deben
Would the Minister not agree that there is a difficult issue here? We have to do things in this uncomfortable way because we could not have a situation where the landlord puts pressure on the tenant to refuse the Green Deal in order that he himself can claim that he was therefore not subject to the local authority’s rules. It has to be a little uncomfortable because we know there are landlords who will bring pressure on their tenants to do a number of things, and it would be very difficult to stop this. Therefore, we must accept that this is an uneasy but reasonable compromise.
Lord Marland
I am very grateful to the noble Lord. The situation is not ideal, but we have to live in a regulatory framework and the landlord-tenant framework that exists. In an ideal world, we would insist that everyone did this at a particular time, but the world is not ideal so we are going as close as we can to achieving that. I think that the noble Baroness makes a very valid point. When we review this, we will see whether there are other nudges or encouragements that we can make in respect of landlords.
Baroness Smith of Basildon
The point made by the noble Lord, Lord Deben, relates to issues raised by amendments that we discussed in the previous Committee meeting about consent being given or withheld reasonably or unreasonably. The issue was whether a landlord or tenant was behaving unreasonably or reasonably. It might help the Minister to reflect on the amendments that we put forward the other day.
I seek clarification on a couple of points. The Minister referred to the lists that are held by local authorities, but those are held very much on an ad hoc basis. It would be preferable, as far as concerns the responsibilities placed on local authorities by the legislation, if such matters were made more formal and uniform, so that local authorities know what is expected of them and so that landlords, too, will know what information they are expected to provide to local authorities. The Minister also said that Clause 37 provides that the worst performing properties will be the first to be improved. I would be grateful if he could clarify or explain that, as I do not understand where I will find that in the legislation or how it can be guaranteed.
My response earlier to the comments of the noble Earl, Lord Cathcart, was perhaps badly worded. I was not at any stage trying to suggest that there are not landlords who at this moment are taking good energy efficiency measures in the homes that they rent out. I am sure that all noble Lords who have declared an interest as landlords will rush home to ensure that energy efficiency measures are put in place immediately. I was trying to argue from the landlord's point of view. There are no guarantees for landlords that these regulations will ever come into effect because of their conditionality on the review. There is no guarantee of any substantial change, whereas we need substantial change across an enormous number of properties, given that the Residential Landlords Association estimates that 40 per cent of properties were built prior to 1919 and some of those will be the hardest properties to treat. Many landlords will be waiting to see what will happen. Good landlords will rush to undertake the work, and some have done so already. However, because there is no guarantee for landlords that there will be regulations, it will be very difficult for them—many are working on a budget for the properties that they own—to guarantee that they will be able to do the work, because they are not sure whether the regulations will come into play.
My final point is that I asked a question on Amendment 20YA, but I think that the Minister was unable to respond at the time.
Lord Marland
The noble Baroness raises several questions. It is not for this Committee to prescribe to local authorities what they should be doing. I hope that this Bill is one that local authorities can buy in to. That is a subject for the DCLG. We are committed to focusing on the worst performing properties because we are committed to energy efficiency, and if we can attack the lower-performing properties, we will do it. Clearly, we have a governor in place—the EPC, which we are reviewing at the moment—which will establish the level that properties must come up to. We will focus on the worst performers. We can use only the tools that are available in a market-driven product. It would be totally wrong for us sitting here to prescribe regulations at this point for those in the sector who are being recalcitrant or not performing. That is the point of the review, which will take place as we have discussed. We will then consider what regulations, if any, are needed to push this thing forward.
On Amendment 20YA, which the noble Baroness spoke to, and on her question who makes the judgment about the property’s energy performance, the judgment will come from the EPC, which defines performance. That is there in black and white on every home.
Baroness Smith of Basildon
I think that the Minister has misunderstood the point in my amendment, which refers not to energy performance but to the impact on the price of the property. Indeed, the Explanatory Notes refer to the possibility of an exemption,
“if the property is likely to be worth less as a result of the improvements being installed”.
Who will make that judgment? That is not a matter for the EPC, which deals with energy efficiency.
Lord Marland
With all due respect, I think that I answered that. I said that it is very unlikely that there will be negative value, but the market makes the judgment if something has gone down in value. If you put a property on the market or to rent, the market determines whether its value has gone down. That is how every price is achieved. I hope that that answers the noble Baroness—she is looking a little bit negative. I cannot imagine that we can set up a system that prescribes that a property is worth this or that amount; the market determines that.
Baroness Maddock
My Lords, I am grateful to the Minister for his reply and to other noble Lords who have taken part in the debate on this group of amendments. As the noble Baroness, Lady Smith, said, when we are looking at some of these very low rated properties, we are not talking about a lot of money to improve them one step up to the next band. I suggested some figures at the beginning and the noble Baroness, Lady Smith, repeated some of them. When we discuss this, I think that people are not really looking at what these properties are like. We may be talking about insulation and draught proofing, so some measures will involve quite low amounts of money. Therefore, in persuading tenants to improve the property’s rating, it may not be very much extra that they will be asked to contribute.
I am not quite clear what the Minister was saying in his answers to my amendments. I think that he was saying, “Yes, we understand all of this, and when we eventually get around to making regulations, we might do something a bit like what you are suggesting”. I am not sure whether that is what he was saying, but I will look at what is in the record. Perhaps at some point we can have a discussion about this. If we are keen to get local authorities and landlords working together to improve properties, we need a little more than is on the face of the Bill at the moment.
Lord Marland
Would the noble Baroness allow me to reply? What I am saying is that we must not prescribe regulation now for the private rented sector. This whole Bill is about trying to enable the sector to pick up the Green Deal and run with it. If we start saying, “If you don’t run with it, we’ll do this, that and the next thing”, we will be making a rod for our own back. That is the whole point. I think we are agreed on this particular subject of a review—an early review—and then a second review to work out what the dynamics are. I hope that answers her question; but, as always, I am very happy to extend the invitation to discuss the matter further outside the room.
Baroness Maddock
My Lords, the offer of further discussions might be helpful, because I think that, by using some of the legislation that we have already got and by being a bit clearer about the dates when regulations and so on might come into effect, we might be able to get landlords to start taking action earlier. We may be able to explore that between now and Report stage. In the mean time, I beg leave to withdraw my amendment.
The Deputy Chairman of Committees (Lord Colwyn)
I understand that Amendments 20TA to 20Y are not moved. The question is that Clause 37 stand part of the Bill—
Baroness Smith of Basildon
Amendment 20TA, an amendment to Clause 37, has not yet been moved.
The Deputy Chairman of Committees
I thought it was not moved. According to my list, it should have been debated in the previous group. However, we will now debate Amendment 20TA.
Amendment 20TA
“( ) The Secretary of State must make regulations for the purpose of securing that a landlord of a domestic PR property of the type mentioned in subsection (2) who has failed to comply with a notice issued under subsection (3) may not let the property until the landlord has complied with that notice.”
Baroness Smith of Basildon
I thank the Committee. This is a probing amendment to look at the powers of local authorities regarding sanctions and the non-letting of properties where landlords have failed to make the required energy efficiency improvements. Clearly, landlords need to be given a reasonable length of time to comply, and that must be built into the notice. We should look at this in the light of later clauses.
Imposing a fine on a landlord who has failed to comply is not always the best way to proceed. If a landlord is fined for not complying with energy efficiency improvements, he has to recoup the money he has been fined and the energy efficiency of the property will not be improved. The council could seek to undertake the work and put a charge on the landlord through the Green Deal, through rent or by other means. It seems to me that where a landlord does not comply, it is necessary to make a range of compliance tools available to local authorities, giving them a number of options to take up depending on the circumstances. I am rather reluctant to follow the line of fining landlords or seeking to remove properties from letting as the first course of action. Every case has to be looked at on its merits.
As I have said, this is a probing amendment to look at what the Minister envisages in this regard. What kind of tools does he consider could be made available to local authorities to ensure that energy efficiency measures are implemented within a reasonable and appropriate timescale? I beg to move.
Lord Best
I am not sure that the new clauses I have proposed to come before Clause 40 fit terribly well at this point, but since they have been grouped with Amendment 20TA, perhaps I may now speak to them. I have a feeling that may well be familiar to noble Lords. I might have wasted my Sunday preparing a lengthy speech because the debate up to this point has already covered much of what these proposed new clauses seek to address. The point of them is to add a few more teeth to the regulatory process and to try to ensure that the difficulties in the private rented sector that we have been discussing are dealt with by reaching all landlords.
I ought to add a point that has not yet arisen. It is often necessary to reach the agents of private landlords. Some 60 per cent of homes in the private rented sector are managed by managing and letting agents rather than directly by landlords themselves. I declare an interest as chairman of the council of the Property Ombudsman that receives the complaints about managing agents. Although I can assure you that most agents do a very good job, there needs to be some protection against lazy agents who do not get round to doing the things that they ought to do on behalf of their landlords and on behalf of the tenants who live in those properties.
The Deputy Chairman of Committees
I wonder if the noble Lord could clarify for the Committee which amendment he is speaking to, because I do not have any in my grouping.
Lord Best
I am speaking to the two amendments grouped with Amendment 20TA; namely, Amendments 21ZA and 21ZB. Further, I think we will probably be able to embrace a bit of 21ZC.
These two proposed new clauses have been prepared by the Association for the Conservation of Energy, which represents 30 organisations in this field, and Friends of the Earth. They are trying to avoid the pitfalls of the Green Deal, of which I am a tremendous supporter, proving to be a bit of a wet blanket for some parts of the private rented sector. They establish a minimum standard of energy efficiency at band E on the energy performance scale, which we suspect is where the Government are going in any case, for all properties that are let from 2016. To put it in the negative, this would make it illegal to let a property after 2016 if it does not accord with the minimum standard set at band E, which is a pretty modest level but one that affects some 350,000 properties in the private rented sector. As we all know, the private rented sector has a much higher number of properties that are in need of bringing up to new standards.
Let me give the reasons why this might be a good plan. Knowing that this legal obligation will kick in in five years’ time would mean that landlords are likely to gear up now to make sure that their properties meet the standard. Their agents will also know that it is coming, so they can prepare for this as a certainty in the future. This follows the same approach that the Government have already determined for commercial properties, where a minimum standard will apply.
Properties that are rated only F and G are in fact classified as a health hazard, a category 1 risk, under the housing health and safety rating system. Action to enforce that measure, however, has proved to be difficult. Local authorities have other fish to fry, they often do not have enough environmental health officers to go round and there are other priorities. This would address the health hazards of people, often on low incomes and vulnerable, who are prone to hypothermia and winter deaths in these low-energy rated properties. It does not put the onus on the tenant, and indeed it is unrealistic to expect tenants in all cases to be bold enough to go through the hassle of requiring their landlord to do something. We should remember that many tenants have short-term tenancies. They do not have security of tenure and, if they fall out badly with their landlord, the tenancy may not be renewed. It is better if there is a regulation outside of the landlord-tenant relationship to do this.
Landlords, and as I mentioned in 60 per cent of cases their agents, are familiar with the gas safety certificate. The new regime that requires you to meet an energy performance certificate standard is just the same as the gas safety certificate. Landlords have all got used to it. Tedious as it may seem, you have to go through the inspection process and the property has to meet the gas safety requirement. This is a health and safety matter as well, so they would have to meet the energy requirement on that same pattern. This is classified as moving into regulation, but it is fairly light-touch bearing in mind that band E is a pretty low level to reach, and it is five years away, giving plenty of time for people to get there.
It gives local authorities a specific measure and a clear duty. They know where they stand and they can get on with it. These clauses would be a helpful addition to the Bill. They also put on the Secretary of State the duty to take the minimum standard up another notch by 2020, since band E still represents a very basic bottom line.
The second proposed new clause here puts some constraints on the requirement to meet a minimum standard over the next five years or face a fine of up to £10,000 if it is ignored. These constraints are that there must be exceptions where the landlord can show that achieving the minimum standard is impractical; it offends against the golden rule. The tenant may refuse to have the works done, although there is still a question mark in my mind following the point made by the noble Earl, Lord Cathcart, as to what happens when there is a group of tenants of which all but one are keen to see energy efficiency measures in their block of flats or converted house, and one tenant refuses. There may be more to be said on that, but where the single tenant of a single property refuses to have the works done or because the changes would reduce the value of the property, these circumstances would be exceptions and the obligation would not apply.
Secondly, there would need to be a duty placed upon the Secretary of State to establish an appeals process to ensure that all was fair and proper. Thirdly, if in a particular local authority area there is evidence that the new requirement is leading to a shortage of rented properties, which frankly is an unlikely event, the Secretary of State could then suspend the minimum standard for that area. This contingency seems better than a blanket suspension across the whole country on the basis that the number of homes to rent had fallen in one or two specific places, as it would target the places where it happens.
These amendments seek to ensure that for the private rented sector the Green Deal is not a damp squib. They make it pretty certain that the very worst properties will be tackled within the next five years. Landlords will know where they stand, and voluntary action over the years ahead seems highly likely. I was pleased to note that the thinking behind these amendments is endorsed by the Government’s fuel poverty advisory group, by the Committee on Climate Change and by the many MPs who signed the Early Day Motion. I was also going to quote the Mayor of London, but the noble Baroness, Lady Smith of Basildon, has already done that for me.
Baroness Maddock
My Lords, my name is attached to the amendments to which the noble Lord, Lord Best, has just spoken. I do not intend to say much. It is clear from the amendments I moved earlier that I have a great deal of sympathy for what the noble Lord is saying. Perhaps we can also discuss between the Committee and Report stages whether there is some merit in doing more to encourage the private rented sector and to help local authorities with this work. I support the noble Lord, Lord Best, and I hope the Minister can at least agree to discussions on the detailed proposals that have been put forward.
Lord Marland
I am very grateful to the noble Lord, Lord Best, and for the support expressed by my noble friend Lady Maddock. The noble Lord spent a constructive Sunday writing his excellent speech because it has given us a good picture of what is going on in the sector. In many ways I wish he had spoken earlier, because he would have set the scene nicely for some of the debates today, as indeed he did at Second Reading.
Amendments 21ZA and 21ZB would insert two new clauses setting a minimum energy efficiency standard. However, they go further in that they would prevent the renting of properties that do not meet the minimum standard. They would also allow for the Secretary of State to suspend regulations with any local authority area if it is found that regulations are having an adverse effect on supply. Amendment 20TA would also prevent a landlord letting a property if a notice had been served by a local authority but not complied with.
The amendments raise an interesting proposition: that of using a minimum standard to improve performance in the sector and preventing properties that do not meet this new standard from being let. I read them with interest and welcome their intention to create a level playing field in terms of energy efficiency within the sector. However, I cannot accept the proposals for two reasons. First, I reassure the Committee that the provisions as currently drafted in Clause 37 already target the worst performing properties. Secondly, and most important, we will achieve this without setting minimum standards, other than those that have been referenced, which could be viewed as a barrier to new landlords entering the market. We are trying to plot a pragmatic and sensitive course.
Amendment 21ZB would give powers to the Secretary of State to suspend minimum standard regulations in local authority areas where they could be shown to be impacting adversely on the supply of properties available. As I have outlined, it is not our intention to impact on the market; in fact, it is the opposite. We want to create a more attractive rental market for improved properties. The review already creates a safeguard. It will take a very careful look at the impact of potential regulation on the rental market across the country.
I turn to the issue of timing, which we have covered quite frequently. Amendment 21ZA proposes that regulations, if any, be made no later than 1 January 2016. The noble Lord, Lord Best, has already referred to that. I hope that this explains the Government’s position. I am extremely grateful for the very valuable input, but I hope that these amendments will not be pressed.
Lord Best
My Lords, I will address the point that the Government are very keen for there to be no barrier to the entry of new landlords into the market. It is improbable that people will enter at the level of the worst properties in the worst conditions. The buy-to-let market has become an extraordinary phenomenon. More than 1 million properties have been acquired on a buy-to-let basis. The typical profile of these properties is that they cost around £100,000 to £110,000, are brand new and are in a block of flats built by a housebuilder. The energy rating for these properties is pretty good. One would not be setting a big barrier if one prevented the entry into the market of landlords who buy the most rubbishy properties on the market. It might be a good idea if they were required, before they let them, to bring them up at least to band E as a basic level. With those provisos, we live to debate this another day.
Baroness Smith of Basildon
I am grateful for the Minister's comments, but I am not sure that he answered any of the points that I raised. I am still seeking guidance from him about the non-letting of a property where a landlord has failed to make the required energy efficiency improvements. I think that the Minister was referring to Clause 37(2)(c) when he said that the legislation provided that regulation should apply first to the worst performing energy efficiency homes. It defines a property in this category as one that,
“falls below such level of energy efficiency … as is provided for by the regulations”.
The Minister has not made it clear, and we do not yet know, what that level will be, although there has been a lot of guidance to the Committee that it should not be below band E. What happens when the landlord does not meet that standard? At what level would the local authority be able to tell the landlord not to re-let the property? That was the point that I was probing and that the Minister has not yet answered.
Lord Marland
I think I have answered that point, and I answered it on the previous batch of amendments. There is a guideline of EPC band E. The noble Baroness asked what the guideline is; that is it, and I have said it on a number of occasions. It is incumbent upon the local authority, because of not only its own carbon targets but its authority targets, to ensure that that property delivers that standard. Therefore it will use what powers the local authority has and what power the Local Government Association decides to use to make them fulfil their own carbon commitments. As I said on the previous group of amendments, it is not for us to be prescriptive to the local authority, other than in respect of the broader picture of what we are trying to achieve and what the Government are trying to achieve. It is up to the local authority to achieve its carbon reduction targets and its home improvement targets.
Baroness Maddock
Baroness Maddock
My Lords, I shall speak also to Amendments 20AA and 20AB. I will be very brief because I believe I have covered quite a lot of this. We also have an amendment coming up later which is a little similar to amendments that I am speaking to here. I have already discussed the fact that I am concerned that we do not have a very good timetable for the regulations. Nevertheless, the Bill allows for some regulations to be made to deal with the worst properties, and that is what I have been assuming in some of my amendments. However, the Bill says that the Secretary of State “may”, and I have asked that it be “must”. If I had been well tutored by the noble Baroness, Lady Noakes, it would be “must”—I have put “shall”, but I think we all know what I mean, so let us leave it at that for now and not have a long discussion about may, shall and must.
I have already indicated that I think that if landlords are not complying with the regulations for the very worst properties—my noble friend Lord Best said this in speaking to other amendments—and if they are not letting these properties which, frankly, probably none of us in this Room would want to live in, then we need to be a bit clearer about how and when we are going to act. At the moment, under the housing health and safety rating system, where there are health hazards, the local authorities can go in, do the work and charge people for them. It is a far more effective way than fining people, because if we fine people, as I said, the work does not actually get done. It is clear that the Minister could bring in regulations in this legislation and the penalty put forward on the face of the Bill is £5,000. I have suggested that we make it £10,000, but it is clear from my Amendment 20AA that I prefer that we have local authorities going in and doing the work rather than fining, because then you actually get it done. At this stage in proceedings, I will not say anything else, and I beg to move.
Lord Jenkin of Roding
My Lords, I get the impression that we are coming up against the problem of balance that I referred to in a speech made some hours ago. It is now getting to the point where, if these amendments are accepted, the Bill will expect local authorities to take fairly drastic enforcement action. The noble Lord, Lord Best, will know much more about this than I do, but I have always been given to understand that local authorities already have quite substantial powers under the housing health and safety rating system, which can be used to tackle houses where tenants suffer excess cold and, no doubt, other factors. But the real problem is that these powers are very rarely used. The noble Lord, Lord Best, made the point that local authorities have many other duties, that they do not have enough environmental health officers, and that with the stringencies under which they now have to operate, it is not expected that they will be in a position to recruit more. Faced with pressures on resources and competing priorities, I wonder where the sense is in landing them with still more duties. Indeed, one has to ask what the probability is of such new duties being enforced.
There is no point in substantially increasing penalties and in introducing other measures that enable local authorities to take over houses, improve them and then charge the landlord, if no one is going to enforce them. Increasing the fine from £5,000 to £10,000 will do absolutely nothing if the notices are not enforced. I will sound a note of caution on this. We should not expect local authorities, over the next few years, to take substantial action when they are well known for not using the powers that they already have under the system that I have just mentioned. Again, I am just sounding a note of caution and I hope that the Minister will look at some of these proposals with a fairly cold and analytical eye to assess whether they will improve the Bill and increase the chance of the objectives that we all support being achieved, or whether this will be the point at which landlords simply throw up their hands and say, “Blow the lot of you, we are not going to re-let”.
Lord Davies of Oldham
My Lords, I have not the slightest doubt that the Government will apply a cold and analytical eye to these issues, because that is their role. I hear what the noble Lord, Lord Jenkin, says, and we all know that certain powers are more honoured in the breach than in their exercise. But, of course, the powers underpin the position of the local authority. He is absolutely right to say that local authorities do not often exercise their powers: but if they did not exist at all, standards would conceivably be a good deal lower, because everyone would know that if minimal standards were not observed, the local authority would not be able to take action.
These amendments commend themselves because they introduce a floor to the position. They say, basically, that these are the powers that local authorities will enjoy. They may not have to exercise them often, but if they do not exist, the Minister will have to show how enforcement can effectively take place. It seems to me that these amendments are a constructive way of underpinning the Bill with an effective sanction. Given that, I think that the noble Lord, Lord Jenkin, is on somewhat dangerous ground if he says that the issue of enforcement depends on the level of resources at your disposal, and therefore underperformance may be looked at in those terms. If that were translated to the police under the present cuts, the Government would be in serious trouble. One has to look carefully at the issue of what level of resources is available, but what is important is that it is only through local authority enforcement that certain minimum standards with regard to this legislation can be achieved. We should seek to guarantee that such powers exist. The degree of enforcement will depend on resources, on will and on a general perception of the value of the legislation. We have said all along that the legislation depends not on compulsion but on the engagement of the community. That is the main driver. The issue covered by the amendments is the provision of an element of underpinning, which I subscribe to.
Lord Marland
I am grateful to my noble friend Lady Maddock for putting forward the amendment. Obviously it has considerable merit. The greater the fine, the greater the determination we show to achieve what we set out. On this occasion, contrary to the last, I agree with my noble friend Lord Jenkin of Roding—generally I agree totally with the noble Lord—that £5,000 is a reasonable limit. It is a considerable amount of money that is in line with existing limits for the amounts that local authorities can fine landlords for letting out substandard and hazardous accommodation. On that basis, and with due respect, I invite the noble Baroness to withdraw her amendment. As she rightly says, we have spoken to other amendments covering various parts of the Bill, and no doubt we will in future as well.
Baroness Maddock
My Lords, as I was only speaking to that amendment, I cannot withdraw it. However, I can withdraw Amendment 20Z that led this group. Given the discussions that we have had, I am prepared to do that. However, in doing so, I will say that it would be helpful to have some discussion about how we can encourage landlords to improve their properties, particularly the very bad ones—I hope that that will happen—and about how we can involve local authorities. I am particularly keen on local authorities because of some of the powers that they have under other legislation, which I will not mention again by name. That is one reason why I am keen to see them involved. I beg leave to withdraw Amendment 20Z.
Lord Grantchester
“( ) Provision falling within subsection (1) may also include the power to carry out improvement works in default of the landlord, recovering all reasonable costs necessary for undertaking the work.”
Lord Grantchester
I apologise for the delay; the groupings are a little confusing. I am reminded during these debates of the words of the noble Lord, Lord Jenkin, who said that we were entering a very complex area. One comes to the Grand Committee thinking that one understands everything, but as the debate moves forward one is often prompted to think that we are questioning at cross-purposes. On other occasions, one thinks that one knows all about it when a question is suddenly asked that makes one think, “Have I really understood it?”. In proposing Amendment 20AAA, I wonder whether I have really understood it because I am confused as to why this amendment is not also grouped with Amendment 20AA, but there are quite a few areas in which that amendment could have had an effect. The amendment is rather simple, but it touches on three serious areas which we have already debated and which I shall pick up on as I go through my remarks.
Baroness Noakes
My Lords, I certainly do not want to delay the Committee beyond its natural span, but perhaps I could just ask the noble Lord, Lord Grantchester, how the possibility of local authorities carrying out improvement works and charging for them fits with the scheme of this Bill, which contains a requirement to carry out the relevant efficiency improvements financed either by the Green Deal or by the energy company obligation. I do not understand how another party in the form of the local authority can do something that should be dealt with by either the Green Deal or by the energy company obligation. It seems unfair at the very least, if we are talking about a group of tenants where one is holding out, for the landlord to be stuck with the cost for a whole building or block in circumstances where, for the rest, there would be a Green Deal. I do not understand how this amendment fits with the scheme, which is that the relevant energy efficiency improvements are Green Deal or energy company obligation-funded. They are not funded in any other way.
Lord Grantchester
I thank the noble Baroness for seeking that extra clarification. In this clause we are assuming that in a situation where a tenant is holding out against the wishes of every other tenant in a block, he would be required to undertake the improvements as part of the Green Deal. The costs arising would not land on the local authority. The tenant that was proving to be the roadblock would be entered under the Green Deal and would make payments under that deal. I think that this provision is set out in Clause 37.
Lord Teverson
My Lords, I admit that I do not understand this amendment. I do not understand what it does. I thank the noble Lord, Lord Grantchester, for his explanation, but I do not see how it relates to multiple tenancies. I apologise and will leave it at that.
Baroness Northover
My Lords, I am very grateful to noble Lords for their amendments to Clause 39. Amendment 20AAA would give local authorities the power to carry out improvement works if the landlord defaults, and to recover all reasonable costs for undertaking work. We are not convinced that it is appropriate to grant such powers. Local authorities already have the power under the Housing Act 2004 to carry out works and recover costs in cases where there is an immediate and serious threat to health and safety. We are not convinced that any further power is appropriate or proportionate.
I will address the point about a tenant dissenting. Sitting tenants will not be forced to take on a Green Deal, and secondary legislation will set out how this affects landlords' obligations under any PRS regulations. I hope that the noble Lord will be happy to withdraw the amendment.
Lord Grantchester
I am of course grateful for the questions on this matter, especially from the noble Lord, Lord Teverson. Perhaps later we will sit down and put our heads together. It could benefit all of us to read today's proceedings twice or three times to understand the different angles from which everyone has approached this. What I was referring to here, and perhaps did not explain clearly, is a situation where one tenant in a block of flats is holding out and the landlord does not go ahead because he does not have the full agreement of that tenant. I remember the point of the noble Lord, Lord Dixon-Smith, who asked: if there is no consent, where are we? The point of the amendment was to get over that hurdle and enable a local authority to step in if a landlord cannot carry on because one tenant refuses to make the improvements. However, at this time of the evening, and in view of all the debate that we have had, I suggest that we will all benefit from sitting down and thinking through where we are on the Bill. I beg leave to withdraw the amendment.
Baroness Northover
My Lords, this may be a convenient moment for the Committee to adjourn until Wednesday at 3.45 pm.