The Deputy Chairman of Committees (Lord Skelmersdale)
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.
The Deputy Chairman of Committees
I have to inform the Committee that in Clause 40 if Amendment 21A is agreed, I cannot call Amendment 21B by virtue of pre-emption.
Amendment 21A
Baroness Maddock
Baroness Maddock
Members of the Committee will recognise that this is a similar amendment to one I moved on an earlier clause but this clause refers to tenants. However, the arguments that I used then apply to the position on this clause.
To refresh the memories of Members of the Committee but without going into huge detail, I am proposing that making regulations in this area should not be dependent on the outcome of the review in Clause 36. We had quite a discussion about how, particularly in the private rented sector and at the bottom of the market, we want to get this moving and do not want it to be held up by anything unnecessarily. That is all I need to say. I beg to move.
Baroness Noakes
I have put my name to Amendment 21B in this group and I will not repeat the speech that I made linked to a similar amendment moved by the noble Baroness, Lady Maddock. I wholly oppose the noble Baroness’s amendment, in particular because she assumes that regulation is the right way forward. We had a good discussion about that and I hope that the Minister will reaffirm that the Government do not see regulation as an inevitability but something that should be used as a last resort. My amendment has been tabled more to discuss how much debate we should have before we start introducing regulations. It asks for Parliament to approve the review that will be undertaken. That was by way of emphasising that regulation should not be undertaken lightly and should not be seen as a default position in this Bill.
Lord Whitty
My Lords, I support this amendment. As suggested by the noble Baroness, Lady Noakes, this subsection may be deleted because the second subsection still leaves it to the judgment of the Secretary of State as to whether regulations are necessary. Clause (1)(b)(i) would be part of those regulations in any circumstances; the Secretary of State would need to be convinced the regulations would increase the energy efficiency of the buildings in question. Any Secretary of State who failed to do that would be perverse.
The remainder of subsection (1), which the amendment is designed to delete, makes it time-specific; it requires the review to have been completed and it requires the Secretary of State to consider how the supply of privately rented accommodation would suffer as a result of the regulations, whether the effect would be neutral or whether the quality would increase, therefore having an effect on the rental market as well.
The Secretary of State needs these powers, irrespective of the report and the timing. Subsection (1) permits the Secretary of State to use them if he or she decides to do so. We are not jumping immediately to regulation as a sledgehammer to crack a rather large nut; however, the constraints on so doing in subsection (1) are unnecessary and I therefore support the amendment.
Lord O'Neill of Clackmannan
My Lords, I support this amendment. In the past I may have conveyed the impression that all landlords were bad. That is not true and it was not my intention to do so. There are, however, too many landlords who are not very good and some of them go up the Richter scale to very awful. We know that some of them will not be moved by the spirit of this Bill, either to get people’s homes well insulated or to save the planet. We recognise that it is preferable not to be unduly prescriptive when legislation is being introduced, but if we find there are abuses which we could more speedily remedy through regulation, we need not necessarily have that within the agenda of the review committee, worthy though its endeavours may turn out to be.
We know that there are landlords who do not enter into the spirit of even the existing legislation and if they are shown to be as recalcitrant following the new legislation as they have been in the past with the old, then we should move with all reasonable speed. That does not necessarily require us to make their activities the subject of a review procedure, some aspects of which may not be relevant to the problem and may require a more leisurely and rigorous approach to dealing with it.
If there are abuses and there are remedies available to deal with these abuses, it should be incumbent on the Government of the day to move with all desirable speed to address these challenges. Even with the best of endeavours, we are not going to produce an ideal piece of legislation which will inspire the desire to follow on with the good work or inspire fear in the part of the more recalcitrant landlords whom I consider, for the benefit of the noble Earl, Lord Cathcart, a minority. Sadly, the nature of their abuses makes them a significant minority in a number of instances when we realise the pain they impose on, very often, vulnerable and disadvantaged families.
Lord Davies of Oldham
My Lords, I do not underestimate the challenge presented by this legislation in terms of making it effective. We recognise that good people and true subscribe to the broad objectives, but that is somewhat different from action, which they may not always define as being entirely within their interests. As my noble friend Lord O’Neill has identified, there may be some necessity for a degree of regulation. We hope that the thoughts of the noble Baroness, Lady Noakes, are translated into action so that regulation can be kept to a minimum; we hope that we get a fair wind behind these concepts and that they work well. However, the Secretary of State should certainly have the power to make a regulation and not have to wait unduly for a review report that would cover many dimensions, not just the ones we are particularly concerned about here. Therefore, we are very much in favour of the first amendment but do not see the merits of the second.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)
My Lords, welcome back; it is very nice to see such a full contribution from noble Lords. I thank all noble Lords for their contributions as we move into day four. They have been incredibly valuable. I assure everybody that we are drawing up a list of comments and suggestions, which we take very seriously. We will look at them and if any noble Lords seek clarification, there will be some opportunity for that between Committee and Report. We will make sure that there is an opportunity for discussion. It would be quite nice if we could get through the Green Deal today; this will be our fourth day on it. It looks as though we are moving on quite nicely. It would also be very nice to get through the AV Bill today.
Lord Davies of Oldham
I have noticed that the AV part of the Bill has long since been discussed. It is the other parts that are more difficult.
Lord Marland
I am obviously delaying our finishing the Green Deal Bill by adding some levity to the occasion. I will get on with it.
There are just a couple of points that need clarification after Monday’s debate. I will run through them so that they are on the record. As I said earlier, if people want clarification, let us have it now because I do not want to reopen a debate that we have already had. The definition of “private rented sector” in the Bill covers accommodation provided under an assured agricultural tenancy occupation, which was one of the points raised, or a protected occupancy for the purposes of the Rent (Agriculture) Act 1976. If they are let under an assured or regulated tenancy, this will not cover all cases. I have already agreed to consider whether the definition of “private rented sector” should be extended in the light of these amendments. That is for the subject of agriculture, which was discussed some amendments ago.
On payment holidays—another subject that my noble friend Lady Northover had to tussle with womanfully—Clause 30 enables us to allow the bill payer, who might be the landlord or the tenant, to suspend payments. However, suspension is likely to be available only in very limited circumstances. An example might be tenancy void periods. However, we do not expect tenants to be able to suspend payments, other than in the usual cases. The bill payer may also be able to enter into an arrangement with their energy supplier to reschedule their Green Deal payments.
Finally, on the purpose of the review of the private rented sector, our intention is that a key aim would be to safeguard against unnecessary and burdensome regulation. I hope this deals with the point of the noble Baroness, Lady Noakes. The Government are not set on regulation but on encouraging enterprise and activity. If we have to resort to regulation, it is, as the noble Lord, Lord Deben, said, probably a failure of government.
I hope that that clarifies the matter. We have debated this subject and I am grateful to my noble friend Lady Maddock for saying that we have discussed it already. We have given it a very good airing and I am sure we will have an opportunity to air it yet again. We are always open to discussion.
Lord Teverson
I thank my noble friend for that. I welcome his statement that the suspension of payments will occur in only a very restricted area, although I think that the Minister’s colleague may have taken the question the other way. However, in order for energy company providers to have faith in the scheme, they must know that they are going to be repaid. I understand that, but I like the fact that, in completely exceptional circumstances, there may be an alternative method. However, I welcome the fact that it will be a tight regime.
Lord Marland
The noble Baroness said that she had been put on the spot by a fellow Liberal Democrat Peer, which I do not think has happened too often, so I am very grateful that she should now have clarified these matters. It is very good for the Liberal Democrat Party that its members are now singing from the same hymn sheet. They were only not doing so temporarily—it was a momentary thing. I hope that, on that basis and the fact that we have debated this issue for quite some time, the noble Baronesses, Lady Noakes and Lady Maddock, will withdraw their amendments.
Baroness Noakes
My Lords, as I have not moved my amendment, I cannot possibly withdraw it. I believe that the Minister set out the issues that emerged from our debates on a previous Committee day that he intended to take forward in this chapter of the Bill. However, he omitted to say that we had tried to tease out how the structure of the provisions for the private rented sector fitted with the requirement for tenants to be involved in decisions on whether or not Green Deals could be used. As this chapter is predicated on finance being used by Green Deal or energy company obligations, we discussed whether obligations could be imposed on the landlord beyond that, given the powers that were potentially being enabled via regulations. The Minister did not mention that as a topic to be taken away, but I certainly had a feeling in Monday’s Committee that it was not well articulated and that there seemed to be gaps. If there were gaps, we might want to come back on Report with amendments to make it clear what the extent of those powers were.
Lord Marland
The noble Baroness is right: I think that that debate showed that there are gaps. That is why I prefaced my opening remarks by saying that we have to take away a number of issues—that is the whole point of Committee—and we shall be looking at whether we can improve those gaps, as we are committed to doing. From my point of view, it was an extremely useful and valuable debate, and I assure the Committee that we will be taking those issues away.
Baroness Maddock
I thank the Minister for his comments. I am very grateful to the noble Lords, Lord Whitty and Lord O’Neill, and I am also grateful to the noble Lord, Lord Deben, for putting his name to my amendment. Between us, over the years we have had quite a lot of experience of the issue that we are dealing with here—that is, the private rented sector. I am not in total disagreement with my noble friend Lady Noakes, in that I am not in favour of unnecessary regulation. However, for those who have been dealing with the bottom end of the rented market for a number of years, there comes a point when you have to try to do something about this problem. That is particularly important when we sometimes pay out a huge amount of housing benefit on these houses. We have to remember that; I really do not see why taxpayers should pay housing benefit for substandard properties.
We are getting to the stage where we need to get to grips with this matter, and I am really pleased that this Government have grasped the nettle on the private rented sector. Therefore, I agree with my noble friend that we do not want unnecessary regulation but I am sure that we all want people to live in decent homes. With that proviso, and thanking my noble friend for the point that he made about agricultural tenancies, I beg leave to withdraw the amendment.
Lord Grantchester
Lord Grantchester
In moving the amendment, I shall speak also to Amendment 21E. Amendment 21D is a simple amendment for the Minister to consider. By inserting the words “or third party” we recognise that tenants may act together. The “third party” could include an agent acting for a group of tenants. We wish to clarify that that would be covered in the Bill.
In Amendment 21E, we are similarly considering appeals against sanctions. In an earlier instance relating to tenants, we on this side intimated strongly that the overuse of regulations should preclude regulations regarding appeals against sanctions. Just as we feel strongly that tenants should understand exactly what they may or may not do as a result of the Bill, we would wish landlords to understand exactly what they may or may not do if sanctions were to be levied against them. I beg to move.
Baroness Northover
My Lords, I am grateful to noble Lords for the amendments proposed to Clause 42. Amendment 21D is not necessary, because I can clarify that a third party—a local residents’ association or similar body, for example—would be able to support tenants and take actions on their behalf, if the tenant so wished. However, I thank the noble Lord for raising this issue; we will consider it in more detail and, if necessary, return to it in secondary legislation.
Amendment 21E would remove the power which enables any new energy efficiency regulations to set out clearly the judicial procedures to be followed when a tenant applies to a court or tribunal for a ruling against a landlord. We believe that this existing requirement is essential to provide clarity in these circumstances, and we can assure the noble Lord that this is normal practice.
Given those explanations and assurances, I hope the noble Lord will be content to withdraw his amendment.
Lord Grantchester
I thank the noble Baroness for her clarification and I beg leave to withdraw the amendment.
Lord Grantchester
Lord Grantchester
In response to the noble Baroness, I will not move the amendment, but I nevertheless tell her that we are greatly concerned that the legislation does not specify whether it is a court or a tribunal. Although I note her words, these are the sort of instances where—
The Deputy Chairman of Committees
I am afraid that I must interrupt. If the noble Lord wishes a further response, he must move the amendment. If not, I am afraid that he must be silent.
Lord Grantchester
I beg the Committee’s forgiveness in getting the procedure wrong. I think that I have made the case several times and will pick the issue up later.
Lord O'Neill of Clackmannan
I have a question for the Minister on the Scottish section of the Bill. It was put by the Association for the Conservation of Energy that its people in Scotland had been looking at the Climate Change (Scotland) Act 2009, which was passed by the Scottish Parliament, and their feeling was that most of the provisions of this section relating to Scotland were covered by that legislation, perhaps in a more rigorous fashion. Has there been extensive consultation between officials, the Scottish Government and DECC on this issue, and are the Scottish officials on all fours with this? I am not making any point about one institution against another, but the impression conveyed to me was that it seemed that the prevailing Scottish legislation more than covered the area, and perhaps did it in a slightly better way than is suggested in the Bill. I would be interested to hear what the position is.
Baroness Smith of Basildon
I appreciate the clear willingness of the noble Baroness to answer quickly. I wish to raise a very similar point, about how this legislation fits in with the existing climate change legislation in Scotland. The Scottish Parliament has preceded us on some provisions. Can the noble Baroness give us some information on discussions with Scottish Ministers, and tell us what their response has been? Many of the issues that we have raised in relation to the Green Deal and other issues would apply to these provisions as well. Obviously we would not want to have the same discussions again; but if the noble Baroness can give some outline of the discussions she has had with Scottish Ministers, it would be very helpful.
Lord Whitty
My Lords, I was not expecting to be provoked to speak on this amendment or this clause, but I speak in my capacity as former chair of Consumer Focus. It was always a little uncertain where the boundaries between reserved legislation and responsibilities applied in this area. Fuel poverty is a devolved matter, as are most aspects of energy efficiency; but, of course, Ofgem regulation is a reserved matter. I feel that quite a number of the clauses that we are about to consider stray across both areas. I am not necessarily saying that we should hold up proceedings and delay consideration today but, before this Committee finalises its activities, it would be helpful for us—and, I think, for my colleagues in the Scottish Parliament—to have a clearer delineation of which jurisdiction applies to each area of intervention. It has caused some confusion in the past under the previous Government, and we are compounding it here if we leave these clauses precisely as they are at the end of our deliberations.
Baroness Northover
My Lords, I thank noble Lords for raising this matter, which gives me an opportunity to clarify things. Noble Lords can be reassured that there has been a great deal of discussion about this Bill prior to this stage, and after—as one hopes—the Bill goes through, there will continue to be discussions.
Chapter 3 deals with a policy matter which is indeed devolved to Scotland. It makes provision for Scotland which is equivalent to that made in Chapter 2 on the private rented sector for England and Wales. Similar to Clause 35, Clause 48 lays the foundations for the provisions in the private rented sector by clearly defining what we mean by “domestic” and “non-domestic” private rented properties in Scotland for the purposes of this Bill. The only substantial difference is the use of Scottish legislation to define what we mean by the domestic private rented sector in Scotland.
The domestic private rented sector in Scotland is defined as properties let under a tenancy covered by the landlord’s repairing duty in Chapter 4 of Part 1 of the Housing (Scotland) Act 2006. The intention is the same as the provisions for England and Wales. We wish to capture the widest range of private rental properties.
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 Regulations (Scotland) 2008, so it is logical to use this existing definition for the purposes of this chapter. I thank the noble Duke, the Duke of Montrose, for raising the point on Monday of whether the amendments on Chapter 2 should be extended to Scotland.
As the noble Lord, Lord Whitty, notes, as this is largely a devolved matter, it is for Scottish Ministers to consider the amendments and decide whether they would like similar amendments to be made to those provisions which extend to Scotland. Naturally, we will make Scottish Ministers aware of the amendments which this House has been considering, so that they can consider the issues raised and decide whether they wish similar amendments to be applied to the equivalent Scottish provisions in Chapter 3. It does not override existing Scottish legislation, but it gives Scottish Ministers the option to use these powers if they so wish.
Baroness Smith of Basildon
I am grateful for the noble Baroness’s response, but perhaps I may ask for clarification on one point. She said that Scottish Ministers would be consulted about the amendments. I was trying to probe whether Scottish Ministers should be consulted pre-amendment. Have there been discussions about these clauses with Scottish Ministers?
Baroness Northover
Yes, indeed. I had hoped that I had made that clear. There are ongoing discussions and there have been a lot of discussions about the Bill, the amendments, and everything in relation to this issue. The noble Baroness can be reassured that that dialogue is very much ongoing, and we regard it as extremely important.
“Chapter 3ASocial rented housing“Review of energy efficiency in the socially rented housing sector: England and Wales
(1) For the purposes of this Chapter, a property is a “socially rented property” if—
(a) it is a low-cost rental accommodation within the meaning of section 69 of the Housing and Regeneration Act 2008 and the landlord is a private registered provider of social housing; or(b) the landlord is a body registered as a social landlord under Chapter 1 of Part 1 of the Housing Act 1996.(2) A socially rented property is referred to in this chapter as an “SR property”.
(3) The Secretary of State must conduct a review of the energy efficiency of socially rented properties.
(4) The review mentioned in subsection (3) must, in particular, include—
(a) a comparison of the energy efficiency of SR properties with non-SR properties in England and Wales;(b) a consideration of the extent to which financial assistance is available to landlords of SR properties, for the purposes of taking measures to improve the energy efficiency of their properties;(c) a consideration of the need for action to be taken for the purposes of improving the energy efficiency of SR properties; and(d) a consideration of the possible effects of any action recommended to be taken as a result of the findings from paragraph (c).”
Baroness Smith of Basildon
My Lords, I shall speak also to Amendment 28B. It is welcome that the Green Deal is available to owner-occupiers. We also welcome the review for private tenants. Our dispute on this issue is that ongoing work to improve the condition and energy efficiency of privately rented homes should not be dependent on the review. In Committee on Monday, we spoke of why it was important to urgently address fuel poverty and energy inefficiency in those homes. My amendments may partly clarify some confusion.
It seemed that on Monday some noble Lords were of the view that social housing was already included, and there was reference to the role of council houses in our discussions. However, 4 per cent of social rented properties suffer from excess cold. Tenants often have little control over their heating bills and have had no insulation or energy-efficient measures. They are often people on low incomes and they risk poor health by underheating their homes, because the cost of adequately heating them is too high. We may be talking about a relatively small number of people, but they are some of the most vulnerable in the country.
There are two reasons why these amendments are important. First, there is the social impact of energy efficiency, which impacts equally on social housing and private rented housing. If we really want to have an impact on our carbon targets—and we will later consider local carbon targets—we need to address the impact of energy-efficiency measures in the social rented sector. That is why we have tabled these amendments. I would be grateful if the Minister could address some areas of concern. Does he have any assessment or rating of the current condition of the social rented sector? If it is to be excluded, I should imagine that there is a reason.
The previous Government introduced the Decent Homes Standard scheme and there was improvement in areas such as replacement boilers but we are aware that there is a lot of work to be done, so we have put forward these two amendments. Amendment 28A would ensure that the socially rented housing sector in England and Wales should also be included under these measures.
Lord Whitty
My Lords, in some social housing there is a district heating scheme. I am strongly in favour of decentralised energy but one of the reasons why it has got a bad name in some areas is because of the lack of consumer protection. With district heating it is often difficult for the tenant or, whatever the form of tenure, for the individual flat to control the use of energy. It is therefore important that consumer protection dimensions apply to those kinds of social housing.
There are examples where the schemes have led to a substantial increase in the fuel costs over which the tenants and leaseholders have no control. Among the tenants in particular, and in some cases among the leaseholders because they will be pensioners who bought under the right to buy scheme and have not got a great income, there will effectively be fuel poverty by the normal definition as a result of something over which they have no control—in other words, the level of use of energy within their own premises.
That is an additional dimension to why we need to be clear on social housing and how far social housing is covered by the provisions of this Bill.
Lord Marland
My Lords, I am grateful to the noble Baroness for this valuable contribution which should be considered carefully. The idea of a new chapter in this Bill for energy efficiency in the social rented sector is a good one but I suggest that it should be inserted elsewhere in the Bill as a new chapter. However, that is by the by.
The intention of Chapters 2 and 3 of the Bill is to provide powers to improve the energy efficiency of private rented properties, should they be required. It is not the intention to intervene in the same way in the social housing market which we believe has made some of the biggest energy efficiency gains in recent years due to the priority that has been given to the investment in social housing stock. For example, the social housing stock is 10 points higher than the private sector, which answers the point of the noble Baroness, so it is already ahead of the curve.
To pick up on some of the concerns of my noble friend Lady Noakes that we should not regulate unnecessarily, if the social housing sector is leading the market, which it is, we should not start imposing regulation on it now but we should review it at a later stage to see whether it is still ahead of the game.
I am grateful to the noble Lord, Lord Whitty, who as always makes a valuable and learned contribution in this area. Decentralisation is a big issue and is a subject for local authorities as well as the housing authorities but I do not think it is a matter for this Green Deal. We should take it into consideration in the overall scheme of things for some interdepartmental progress and I take on board what he said. I invite the noble Baroness to withdraw her amendment.
Lord O'Neill of Clackmannan
I am disappointed by the Minister’s response. Would he be prepared to assist in the drafting of something that would go in after Clause 2A, as he suggested this is the shortcoming of this amendment? The fact that local authorities and social housing organisations have been in the van of improving their housing stock does not mean that they should be left to take care of themselves. Funding arrangements of an easier kind may well become available. One would have thought that, if we are to continue to encourage them in their good endeavours, it would be desirable to include them in this, and for us to know—if not exactly, then a little better than we do already—the state of the stock and the work that is still to be done. Therefore, a review of energy efficiency would be very helpful. In other parts of the UK, including Scotland for many years, there have been regular housing reviews, which have been extremely helpful in determining the policy of the former Scottish Office and now the devolved Scottish Government. We are able to track over time the changes in the character of the housing stock and the shift in housing standards. Therefore, it would be unfortunate for people in the social rented sector, who tend to have longer-term tenancies than many privately renting tenants. People in the socially rented sector are usually long-term tenants; very often, they have in the past done work for themselves. As they get older they have fewer resources and, in some respects, greater need for energy efficiency and to keep their houses windproof, waterproof and well insulated.
The Government are missing a trick here by rejecting—out of hand, it would appear—the possibility of a review. If they are not rejecting it out of hand, perhaps they would be prepared to table an amendment on Report so that it could be inserted at an appropriate part of the Bill. It would appear that this is not the best part. I imagine that would be one of the arguments that my noble friend will make when she seeks leave to withdraw the amendment. It would be wrong to set aside a sector of the housing market that has been very successful so far in meeting many of the objectives that this legislation seeks to include.
Lord Marland
I will explain the Government’s thinking behind this to the noble Lord. This is a market-driven opportunity. The Government are not trying to be prescriptive. If two people were running a race, which one was winning easily by quite some margin, as the social rented sector is doing, you would train the runner who was not quick enough and encourage him to compete in the race. Here we have the social rented sector, which is by some margin ahead of the scale. It would be wrong to bring in legislation at this point that said, “Sorry, you’re not far enough ahead, despite beating the others. We intend to make sure that you get even further ahead”. The main aim of the Bill is to let the market drive the situation. At some point—the noble Lord is quite right—we will review the progress that the market has made and use any powers that are necessary.
The social rented sector should be congratulated. The noble Lord, Lord O’Neill of Clackmannan, said as much and I totally agree with him. That sector has led by example; we should encourage, not discourage, it. It is not my intention at this point to redraft part of the Bill to be prescriptive about this sector. I take on board that it is a critical area, which continues to make progress. Through this Bill, we will ensure that it does.
Baroness Smith of Basildon
I am grateful to the noble Lord for his explanation and to my noble friend Lord O’Neill. However, I struggle with his analogy of two runners. One is ahead, so we do not help that one. However, we do not have two runners here; we do not have two sectors in competition. To stretch his analogy, we have two teams. In the team that is doing well, there are some who are lagging a long way behind. A trainer would give support to them.
We should congratulate the social housing sector. With a lot of support from the previous Government, it has done extremely well in moving ahead on energy efficiency. However, that is not to say that every single home in the social rented sector is as energy efficient as possible. I recently spoke to a couple who have not had a new boiler for more than 20 years and whose electricity bill for heating last winter was £400. That is shocking. The point is that it is not the kind of house that someone lives in—whether it is privately rented, owner-occupied or socially rented—but the need to have energy-efficiency measures. Housing stock that is 10 points higher in the social rented sector or the private rented sector is quite good but the private rented sector starts from a very low base. Therefore, although it is better, it is not good enough.
Last week the Minister said that he wanted to skip out of the Committee, and he almost had the same effect on me when I heard him say that this was a very good idea. At one point I thought I heard him say that he would look at the issue, although he seems to have moved away from that. If he thinks that there is another way within the Bill—
Lord Marland
Perhaps I may clarify that for the noble Baroness. We intend to look at this matter as part of the review. The whole point is that we have to keep reviewing the whole procedure to see whether it operates properly. I hope that that gives her enough encouragement, particularly as we will be reviewing the progress that this sector, the private rented sector and the non-domestic and domestic sectors make with the Green Deal. If progress is not made, we will of course provide the necessary encouragement. The noble Baroness made a comment about teams and so on. This group is ahead of the curve. We must congratulate it and let it carry on about its business. It has taken the initiative and we do not want to frustrate that by being prescriptive. That is not how this Government will operate amid market-driven forces. The noble Baroness was absolutely right to bring to our attention how important it is that this sector makes progress, and the Government will carry out a review to make sure that it does.
Baroness Smith of Basildon
There are a number of points to pursue on that. The most important point that the Minister made was that he was going to carry out a review. I am not sure which review he is referring to but he said that there would be a review of the private rented sector, this sector and the owner-occupied sector. Therefore, on the basis of there being reviews to look into the matter, I am more than happy to withdraw the amendment.
Lord Teverson
“Carbon neutral buildings and developments
(1) The Secretary of State shall make building regulations that require newly built domestic housing to be designed and constructed in such a way as to be carbon neutral.
(2) These regulations will apply either to individual dwellings or to new developments as a whole.
(3) These regulations shall come into force during 2016.
(4) Within one year of the passing of this Act, the Secretary of State shall, by order made by statutory instrument, prescribe the date on which building regulations will come into force that require commercial buildings or commercial developments as a whole to be carbon neutral.
(5) The definition of the term carbon neutral shall be determined by the Secretary of State following consultation with the construction industry, the Climate Change Committee, environmental groups, energy companies and other experts and interested parties.”
Lord Teverson
I was glad to note in that last exchange that the Minister had moved far more towards the Opposition than the Liberal Democrats, as happened earlier in Committee.
We now move on to Chapter 4, which is headed “Reducing Carbon Emissions and Home-Heating Costs”. It seems to me that we have moved on psychologically from the paramount area—as the Government have recognised—of trying to retrofit and bring up to a reasonable standard of energy efficiency the existing building stock. Having moved on through the Bill from that stage, we now have an opportunity to look to the future, and I hope that this amendment will be particularly useful and helpful to the Government.
We have to make sure that in 25 years’ time we do not have to go through another Green Deal process with all the houses that we are currently building which will not be up to the standard that we require in the future. Instead, it would be much better to build these houses now to the right standards of energy efficiency and carbon emission levels. The Minister has perhaps recognised that in the area of energy and climate change there is a great deal of agreement among reasonable people and political parties. One area on which I certainly congratulated the previous Government was that they put a marker in the ground saying that by 2016 building regulations should effectively lead to carbon-neutral domestic dwellings. I do not think they said anything further regarding industrial buildings but that was what they said in respect of domestic dwellings. I tried to find out about it before the Committee, but my understanding is that Ministers in the present Government have endorsed that and have said that that will be the case.
We know that one important thing for industry and for people who have to build these Houses and ensure that regulations have been met is to have a degree of certainty in the market. We have heard how red tape and bureaucracy can be negative in legislation, but politicians and legislation should be able to give certainty to industry and the people who have to deliver policies, in a positive way. One of the best and most effective ways of doing that—the way in which we show true intent—is to put something in the Bill. Once we do that, that certainty of provision—the certainty that the Government mean that to happen—increases so that actions can take place, the target is met and the effect is achieved. In this case, it is not just for 2016 but for all the years ahead, when we are trying within this economy to reduce our carbon emissions and fuel poverty, so that they are history as well.
I tabled the amendment because it gives the Government an opportunity to confirm that target and to ensure that business, industry and the other various actors in producing these homes can make full plans for these measures so they can be delivered. The domestic sector is not the only sector. In fact, something that we truly welcome from the Government in terms of the Green Deal is that it includes a commercial aspect, which we have not discussed or debated much to date. The industrial sector is more difficult, so I have given the Government discretion to set a date, but it is important that the Secretary of State should set a date at some time.
Another area that I have emphasised or been careful about in my amendment is to avoid being overprescriptive. I hope that I have achieved that in two ways. It is not necessarily sensible for individual dwellings to be carbon neutral themselves, because the technology for renewables and low-carbon technologies are for groups of dwellings. They focus on ways in which a development as a whole can be carbon neutral in its broadest aspect, rather than an individual house, which is probably too big an ask, even for those who really want perfection in this area. There might be a renewable energy part of an overall housing development, which might be the travel plan that goes with it; there might be a district heating system or ground-sourced heat pumps put in across the whole estate that allow the larger unit to be carbon neutral, rather than the individual dwelling. That should be even truer of the commercial developments.
Another part of this amendment gives the discretion to the Secretary of State to define what carbon neutral means, because that definition is clearly something that we could debate for ever. At the end of the day, after proper consultation, it should be left to the Secretary of State to make that definition—one that is practical and will never be fudged.
The amendment introduces an aspiration for certainty by putting it into the Bill, which would ensure that we achieve it. I beg to move.
Lord O'Neill of Clackmannan
I support this amendment, which I realise is probing. One of the major reasons why we have an inadequate housing stock in the United Kingdom is that the incoming Government of 1951, charged with the ambition of building 300,000 houses, sought to achieve that by reducing housing standards. That was the way in which Harold Macmillan, as Housing Minister, achieved his obligation. It is as a result of that we have so many substandard houses in comparison with our European counterparts. In that fantastic period in the 1950s and early 1960s, when hundreds of thousands of houses were built every year, properties were more often than not built to standards which were less than desirable in terms of what could have been achieved. They were not bad but they could have been a lot better, and if they had been we probably would not have half of the problems we have today. It is useful, however, to give the Government an opportunity to make quite clear that they are signed up and prepared to take the appropriate steps to achieve the 2016 target.
The kind of pragmatic and flexible approach suggested by the noble Lord, Lord Teverson, in respect of different forms of heating and the combination of different forms of accommodation, is an appropriate way in. We do not want to be overprescriptive, but there are areas where we have to be prescriptive—not only prescriptive but prescriptive in a fairly tight, legalistic way. These regulations tend to be a mixture of the consultative processes which are implicit in secondary legislation. They can afford that degree of flexibility.
As in this decade we address the challenges of climate change and the environment, in some respects we are parallel to the post-war reconstruction challenges which were being addressed in the 1950s. I would like to think that this Conservative-led Government will not make the kind of mistakes made by the Churchill Administration, under the responsibility of Harold Macmillan as Housing Minister, in the early 1950s. I would like to think the Government could clearly and explicitly embrace the desirable environmental objectives set out by the previous Government and which appear to be supported by the Liberal part of this coalition.
Lord Jenkin of Roding
I have listened to this debate with some sense of nostalgia. From 1961 to 1963 I was chairman of the housing committee for Hornsey Borough Council, later to become the London Borough of Haringey. This was a period even later than that referred to by the noble Lord, Lord O’Neill, and my clear recollection is of the overwhelming pressure to build more houses and flats. To digress for a second, we had the problem of a large number of tenants who were sitting in houses which were badly needed for social housing. I think I was the first housing chairman to propose we should offer them a sum and a mortgage to move elsewhere, within 10 miles of the borough, to get some vacancies, clear some slums and build more houses. To imagine that at that stage we should have been building more energy-efficient—and therefore fewer—houses is unrealistic. It is easy to be wise after the event. Others may have longer memories than I do, but having been a housing chairman at that time, I know that was the overwhelming pressure.
I turn to the amendment. Of course one must broadly support the intention but, even with the caveats that my noble friend Lord Teverson has included in his amendment, it verges on the unrealistic. Indeed, recent research by one of our leading professional bodies, Knight Frank, has said that to make sure that all the new houses being built by 2016 are carbon neutral is, in its words, “looking increasingly unrealistic”. I have some hesitation about writing this into legislation when extremely well informed people are saying from the outset that, however good the intention, it looks increasingly unrealistic.
Next, there is the question of cost. I am told that to build a carbon-neutral domestic dwelling now—it may well be that the differential will narrow in the years ahead—will add £30,000 to £40,000 on to every unit produced. If housing budgets are constrained, as they inevitably are in our situation at the moment, that means that there will be fewer houses, because with any sum of money fewer houses will be able to be built. In those circumstances, that too might be an undesirable consequence of trying to pursue and put into the Bill an unrealistic environmental objective.
My third anxiety about my noble friend’s new clause lies in subsection (5). He has said that it is an advantage that he is not being prescriptive but leaving the determination of what is a carbon-neutral construction to the Secretary of State, following consultation. I am told that the question of what is a zero-carbon house is highly technical and that there is as yet no agreement between the various bodies involved. I suspect that this includes the Minister’s department and CLG, the other housing department. A conclusion has not yet been reached on this. The question of indoor air quality is also poorly understood, and it is essential on all these issues that time is allowed to ensure that we have sensible definitions if we are going to pursue these objectives.
To have an undeliverable target and a completely uncertain definition of what you are trying to achieve is not appropriate for inclusion in legislation. As my noble friend indicated, what he is trying to get is in the Bill, but it is not very sensible to put it in a Bill when there is such a high degree of uncertainty about it. It may be possible, perhaps at a later stage of the Bill, to frame something that really is an aspiration and something to be aimed for, but without putting in firm dates or such firm details as saying that it has to be zero carbon.
I understand that this is desirable and that over the years ahead more and more carbon-neutral buildings will have to be built; that is part of the process of fighting climate change, to which we are all firmly committed. I say to my noble friend on the Front Bench, though, that I hesitate to accept my noble friend’s suggestion that this new clause should be included in the Bill.
Lord O'Neill of Clackmannan
May I ask the noble Lord about a simple point? Britain is not the only country that is building houses, or has been building houses since the 1950s. One of the great sadnesses and shames of being British is that when one travels, particularly in northern Europe, one sees houses of a far higher standard that were built in the days when Haringey Council could not afford to build decent houses, because of the scale of the challenge. It seems that in these other countries, such work was done without undue economic penalty. It seems even now that those countries are meeting that challenge with a great deal more alacrity and success than we are. In Finnish and Scandinavian houses generally, where conditions are more extreme, the quality of housing is vastly superior.
Lord Jenkin of Roding
I yield to the noble Lord and any others, such as my noble friend Lord Deben. I am not as familiar as they are with the quality of the houses in Scandinavia. All I would point out is that winters in the Scandinavian countries and in many parts of northern Europe tend to be very much harsher than they have been over the decades and centuries in the United Kingdom. We get the benefit of the Gulf Stream, and so on. Last winter and the winter before were widely seen as exceptions to the trend. If you are not facing the same pressures from the climate as those faced by other countries which regularly have much harsher winters, I can well understand that perhaps we have been a bit slower in adopting the same standards as they have. All I am saying is that I do not think it is a realistic target that all new houses built after 2016 should be carbon neutral. It is certainly not realistic when no one seems able to agree—although they have been trying for quite a long time—what is actually a carbon-neutral house. I sound these notes not because I have any doubt about the bona fides and intention of my noble friend Lord Teverson, but because of the practicality.
Lord Judd
My Lords, I am tempted to follow the noble Lord, Lord Jenkin, down memory lane, because my first post on the edges of government was as a Parliamentary Private Secretary at the Ministry of Housing and Local Government. That was in the 1960s. I remember then how we were already beginning to face up, not only to the inadequate nature of the building, but to the very disturbing social consequences of the kind of building that had been carried out. We put a lot of effort into how we might turn some of the old terraced streets in our cities, for example, into attractive urban cottages, with space and the rest, to make communities and not just houses. However, I must not get distracted into nostalgic reminiscence.
I hope that the noble Lord will not be embarrassed by a surfeit of enthusiastic response on this side of the Committee to his proposition. I find myself, not for the first time, very impressed by his analysis and argument, and the vigour with which he pursues his case. I listened to the noble Lord, Lord Jenkin, questioning the issue of what is carbon neutral. This disturbs me profoundly. Here we are, in a situation of profound urgency, yet luxurious seminars are still being held all over the place discussing what is carbon neutral and what is not. When are we going to translate this real urgency that from every objective standard confronts us, into the urgency of action? If I look back at my life, I realise that my youth and formative years were during the Second World War. We were in the battle for survival, to preserve our land, and for humanity. We did not fuss about prescriptive regulations in those days. We did what was necessary to win the war. When are we in Parliament going to wake up to the fact that we are in a war situation? We are in the biggest strategic battle in the history of the human species to save the human species from the consequences of climate change and global warming. It is essential to turn this into specific action, and I cannot think of a more practical or sensible suggestion than to say that building regulations are a very good way in which to turn aspiration into effective action.
I have only one question. With the noble Lord’s persuasiveness and very sound commitment and analysis, does not he feel that 2016 is a bit luxurious? Because of the urgency of the situation, should not we have an earlier date than that?
Lord Deben
First, I must point out to the noble Lord, Lord Jenkin, that we are committed to 2016 in any case. That is what we are going to do—it is what this Government have committed themselves to and what the previous Government proposed. It is one matter that we agree about. I have to declare an interest because I have a financial interest in a business that seeks to build houses of precisely this kind of format now. It is perfectly possible to do. We are building houses that meet the requirements. The issue is that, unless you build enough of them, the price is greater. It is true that if you build them in penny packets when everybody else is building another type of house, it does cost you more. But if you start to build them as part of the general run of things, the result is that you can build them at a price not unadjacent, as Private Eye would say, to the present price for building houses that are not on eco level 6—to use my own shorthand—which is, roughly speaking, what we are looking for. At the moment, a lot of houses are built at eco level 3; we do not build any at less than eco level 4 and we are moving a whole stage up. As the machinery of being able to build those houses comes into operation, you can build more of them.
I very much support the proposals of the noble Lord, Lord Teverson, because they underline the reality of what we can do. The noble Lord spoke of what was happening in Scandinavia and Germany, underlining the fact that, once you get the thing moving, you enable people to build to a price that does not make the market significantly more expensive. Most housing is done in units that are prefabricated in various ways; even in brick, many of the parts are prefabricated. They can be prefabricated to either a lower or a higher level; once enough of them are being made, the price begins to be not unadjacent to the price at present. It is perfectly possible to do it and we are committed to it.
I support the amendment because it says three things that are very important. First, it restates the commitment, and that is important because, I fear, a number of people in the construction industry have been speaking to some of my noble friends who do not want to do this. They have not done the work and do not like the fact that they are behind major companies such as Barratt and Taylor Wimpey that have done the work and know they can do it. They tell their shareholders that they do not need to do it because in the end the Government will give way. They are saying that the Government will not stick to 2016 and that they will save the shareholders a lot of money because they will not have spent money on research, and so on. The real way in which to let down the major housebuilders—which I certainly am not—who are trying to do this is to move in any way from the commitment to carbon neutrality at that date. The people who have spent the money in trying to make this work have been constantly dogged by the backsliders in the industry.
Baroness Maddock
My Lords, I support my noble friend Lord Teverson, and also the comments made by the noble Lord, Lord Deben. I want to bring it home to people that this makes “eco-nomic” sense. The noble Lord, Lord O’Neill, delights in having arguments, but I agree with him on some of the points that he has made. I remember when I bought my first house, in 1966. It was a little box in Southampton, desperately hard to keep warm. As some of you will remember, there were floor-to-ceiling windows in those days, and we had one of those picture windows, so trying to keep the house warm in winter was quite difficult and the bills were quite high. Then I moved to a newly built flat in Stockholm where the winter temperature was minus 27, and I say to my noble friend Lord Jenkin that to heat that house cost me less than it used to cost to heat this box with the picture window in England. That is when I got the bug about building proper homes.
I am going back to 1969, and we still have not got there. The longer we put this off, the more it costs us as a nation. We have been spending masses of money over recent years on projects to try to bring houses up to a reasonable level of energy efficiency. It is desperate that we stop doing it any longer. I say to the noble Lord, Lord Deben, over the years many housebuilders and other builders were very conservative and did not want to go with this, and we have been suffering from it ever since. We really must not listen to the voices of holding back any longer. It makes economic sense to stop going down that road.
Lord Oxburgh
My Lords, I, too, strongly support this amendment. Listening to the informative discussion by noble Lords, I have seen my foxes shot one after the other so I will not detain the Committee for long, except to agree that the industry with which we are concerned here is fundamentally conservative. If we wait until there is any indication from the industry that it is ready for this, we shall wait for ever. The only thing to do is to fix a date.
If the noble Lord, Lord Jenkin, with whom I so often agree, were to look at the regulations for vehicle emissions imposed by the state of California a number of years ago, he would see that the motor industry cried that this was totally impossible and would destroy the industry. Lo and behold, within a small number of years it was not only meeting the regulations but exceeding them. We have to fix a date and the industry has to work to it.
The Lord Bishop of Liverpool
My Lords, I also support this amendment. However, I congratulate the Government on the lead they have taken in this Bill. I also congratulate the opposition Benches because, when they were in government, they gave an unequivocal lead on reducing carbon. It is great from these Benches to observe such common cause across the House. We need that.
I take on board a powerful point that the Minister has already made about having a light touch and not being overly prescriptive because it begs the question: when is legislation necessary? When in a process in a public debate do we need legislation? That question consumes this House on a number of subjects, but on this one it must be something to do with when the public attitudes do not yet match the public good. What we are agreed upon on all the Benches is that it is in the public good to reduce carbon as urgently as possible. Public attitudes, however, are not yet that adamant. Many of us in this House are working very hard in different ways to try to change hearts and minds on this subject. However, in the light of public opinion not changing as fast as the climate itself is changing, we need legislation, which is why I support this amendment.
Lord Davies of Oldham
My Lords, this has been a fascinating debate, not just about contemporary and immediate housing policy, and the necessities that face us with regard to the threat of climate change and improving the carbon content of our housing stock, but about housing policy in history. I very much enjoyed the speech of the noble Lord, Lord Deben, and he made an important contribution to our deliberations this afternoon. We are as one with him on the importance of the date and of bringing into line an industry which, in the past in the United Kingdom, has not always been the most innovative and has distinctly conservative—with a small “c”—elements to it. It is important to realise that this Government, like the previous Government and all of us as a whole community, are determined on the issue of carbon content because it is so important in the battle against climate change.
The noble Lord will forgive me if I do not go into housing history but he might recall that council housing was introduced by a Labour Government. He might also recall, having cast aspersions on the immediate post-war Government, that there was a fair bit of reconstruction to do, other than to housing, from 1945 to 1951. He might also think with regard to the present housing situation that people have either to buy or rent these houses, so cost is important.
In the basic need of housing, we are rendering many of our fellow citizens vulnerable to a market that is under terrible stress at present. The imminent possible significant interest rate rises cause enormous difficulties for people who have to meet housing costs, which in Britain are so reflective of movements in interest rates. In these circumstances, he might think that those parts of Conservative Party history that have put us in this position may not make us well placed to encourage our community to respond to the necessity of this dimension of housing construction and housing need. For the immediate and foreseeable future—in terms of housebuilding, 2016 is not very far away—people are bound to be constrained by cost and anxiety. The whole of the housing market is bound to be plagued by difficulties of people being unable to afford what they are committed to in terms of houses.
Having said that, I welcome the fact that all contributions to this debate responded to the noble Lord, Lord Jenkin; he has played a valuable part in identifying the proper anxieties that the Government should have, such as the fact that they have to weigh up the overall position of what can be afforded and achieved. Regulations require enforcement. Who is going to do that—local authorities, with their huge, abundant resources to train and develop the capacity to carry out this degree of scrutiny and control? In the immediate future, we are not looking at too rosy a picture on that front either. The noble Lord has identified our anxieties and the Committee—I hope that the Minister will take this message and respond to it—is very strong in its commitment to this amendment, which offers a great deal to the Bill. We are pleased to support it.
Lord Marland
My Lords, that was a magnificent debate. I am very interested to have had a history lesson. It is a slight shame that the noble Lord, Lord O’Neill, provoked political crossfire, because both sides are completely aligned on this. I am delighted to hear about events in 1951 but I am surprised that the noble Lord is of an age where he can remember them—he looks so young. I take his lesson on board. We are all lucky to be able to look in the rearview mirror and complain and criticise, but that is not what we are here to do today; we are moving forward.
I declare my own interest, having been involved in a building project that is going before the planners today—obviously I am not involved any more—for a small carbon-neutral eco-village. I have been working with the Prince of Wales and the Prince of Wales Trust on further housing development in this area, so I am in the vanguard of everyone in this Room and completely in support of them, with perhaps the very mild exception of my noble friend Lord Jenkin, who I know supports the spirit of this measure but is more worried about the timetable. I do not need to take messages back to the Government; I am completely in the vanguard and supportive of the attitude of the previous Government and the current Government to this subject.
In the end, though, we must remind ourselves why we are here: to talk about the Green Deal, not about new housing, which is what the amendment deals with. I am delighted to take this matter back to my honourable friend the Housing Minister, who is fully committed to enabling all new homes to be zero carbon from 2016, and non-domestic buildings from 2019. In July last year, my honourable friend made clear the Government’s ambitions for a low-carbon eco-friendly economy, with substantial and cost-effective reductions in carbon emissions forming an essential part of our effort. However, we are debating how we can improve the existing housing stock, not the new housing stock. On that basis, I invite my noble friend to withdraw his amendment.
Lord Teverson
My Lords, I have been seriously impressed by the debate. I actually enjoyed the history. I disagree slightly with the Minister: the 1950s are relevant because we are going to have to spend some £60 billion, or whatever it is, refurbishing the whole of the housing stock from that time, but otherwise I take his point. The historical perspective on this subject is a lesson for the future, which is exactly why I have tabled my amendment. A significant amount of the Bill is not about the Green Deal but about other things. The Green Deal, as I said in my opening remarks, is the most important, radical and needed aspect of the Bill and I congratulate the Government on it.
The Deputy Chairman of Committees (Lord Brougham and Vaux)
If Amendment 29ZA is agreed to, I cannot call Amendment 29ZB because of pre-emption.
Amendment 29ZA
“Proposals for local carbon budgets
(1) For the purposes of ensuring local authorities assist in meeting the United Kingdom’s carbon budgets under section 4(1) of the Climate Change Act 2008, the Secretary of State must report to Parliament on proposals for introducing local carbon budgets by December 2011.
(2) These proposals shall—
(a) apply to all carbon authorities, as defined in subsection (4);(b) set for each succeeding period of five years, beginning with the period 2013–18, an amount for the net emissions from each carbon authority area consistent with the overall emissions reductions required to meet UK carbon budgets.(3) The Secretary of State shall subsequently report annually on emissions reductions from carbon authorities as part of the annual progress reports and responses as defined under sections 36 and 37 of the Climate Change Act 2008.
(4) For the purposes of this Part—
“carbon authority” means any of the following authorities in England—
(a) a county council;(b) a district council;(c) a London borough council;(d) the Common Council of the City of London in its capacity as a local authority;(e) the Council of the Isles of Scilly;“UK carbon budget” means a carbon budget set under section 4(1) of the Climate Change Act 2008.”
Lord Judd
My Lords, I think that every member of the Committee regards himself or herself as fortunate in having such a genial Minister handling this subject. I might say that he is genial not only in Committee and private conversation, but in his correspondence. I thank him for not only his letter to me about his concerns, but the very seductive handwritten comment at the end, which is always the mark of a Minister who is on top of the job.
Lord Judd
I will come to that. I genuinely have no doubts about his intellectual and, indeed, moral commitment on these issues. I have talked with him and I know that he feels deeply about this. I therefore hope that he accepts that much of what we are saying in Committee is to support him in the debates which always take place within Whitehall about turning generalised aspirations into effective action.
I remember in the opening deliberations on the Bill at Second Reading that very powerful speech by my noble friend Lord Giddens. I am sorry that he has not been able to be with us in Committee, but, given all his experience and qualifications, he left no one in any doubt about how he saw these issues as imperative and needing the highest priority. I am sure that he would not mind me telling the Committee that not long after that speech, I went to a meeting elsewhere in this building to which he had been invited to speak on the subject. He started his remarks—which again were very telling—by saying that his message was so grim and would fill so many people with despondency, because of the urgency of the situation, that he wanted to start his remarks with a joke. He said: “There were two parrots. One said to the other, ‘I’m not feeling very well today’. The other said, ‘I’m sorry. What’s wrong?’. The first parrot said, ‘I think I have a touch of the homo sapiens’. The other said, ‘I wouldn’t worry, it does not last very long’”. That was a very sobering way in which to start his remarks.
My amendment is very much in the context of the discussion that we have just had on the previous amendment. I have heard for too long the repeated and vehement expression of aspirations. This is not a partisan point—it happens right across the Floor. Because of the urgency and the challenge to the survival of the species, we must really start being specific about this. It is no good just having targets and systems; we must have specific arrangements and measures to ensure that things are happening fast and effectively. That is why I have tabled my amendment.
I applaud the amendment proposed by my noble friend that comes after this one, and I fully support it, but I wanted to spell out some of the specifics, as they strike me. The Committee on Climate Change has said very firmly that a step change in action is needed if we are to meet UK climate change commitments. The vast majority of UK emissions—some 80 per cent—result from local activity, how we heat and power our homes and workplaces and how we get around. As well as getting the big national decisions right, reducing local energy use is really critical. Local government is in a strong position to lead and co-ordinate this local action. There is some outstanding work by trailblazing councils working with their communities to roll out strategies that create green jobs, cut fuel poverty and reduce traffic. But, nationwide, not nearly enough is happening. The challenge of climate change is too grave and urgent to be left to just those councils that choose to prioritise action.
The coalition—and I am sorry about this—has scrapped the local government performance framework, including the framework for councils to act on emissions reduction. From what I hear and read, early signs are that the result of this, and of other spending cuts, is the deprioritisation of action, with moves to weaken targets at the very time when they should be strengthened, the mothballing of area-wide strategies and the sacking of climate change officers. That is the reality of what is happening on the front line—the exact opposite of what we have all just been getting passionate about. A nationwide system is clearly needed to support councils and ensure that emissions come down in every local authority area.
I emphasise that I very much support my noble friend in her later amendment, but I should like to draw out the fact that councils that are trying to do the right thing are telling us that making action on climate change a core responsibility helps them to prioritise action alongside other duties at this time of economic pressure and spending cuts. I emphasise, too, that council leaders are calling for the system to be linked to the ambition of the Climate Change Act. Councils that are already delivering on strategies to cut emissions by at least 40 per cent by 2020 are demonstrating that acting in line with the Climate Change Act may be ambitious but it is realistic. The aim of what is proposed in this amendment is to ensure a step change in action while empowering local people to decide on the emissions-cutting measures that will best serve their communities. I beg to move.
Baroness Smith of Basildon
My Lords, I shall speak to Amendment 29ZB and also about the general principle of local carbon budgets, on which we have tabled two other amendments. We have just heard the noble Lord, Lord Judd, and the noble Lord, Lord Deben, will also speak on this issue.
At the start of discussions on this Bill, I suggested by way of an amendment that the Government should seek to quantify the level of carbon reduction they are seeking to achieve with this legislation, either directly or as a by-product of legislation, given that in improving energy efficiency we reduce carbon. The noble Lord, Lord Marland, said that he was in complete agreement on the relevance of the Bill to carbon targets and to the fuel poor. Today we are seeking to build on that agreement and that relevance.
The value and purpose of local carbon targets is quite evident. Local authorities were very keen to take up the previous Government’s pilot schemes which examined how carbon could be reduced by setting targets locally. The success and popularity of these schemes is quite significant. There is fairly widespread support for this approach. The Minister will be aware of the support from his ministerial colleagues, not just from his own department but from other departments as well. The Minister’s noble friend Greg Barker has said:
“It can’t all be done from the centre. We can put in the big infrastructure”,
but,
“fundamentally this is a transition that has to”,
have the active engagement of people locally. He added:
“I’m working now with my officials, having worked very extensively with Friends of the Earth in opposition, on local carbon budgets to try and come up with something that is effective, that is fair and useful, but also doesn’t impose undue burdens on councils”.
The key is the real difference that having local carbon budgets could make.
I am disappointed that since the 2010 spending review we have pulled back and local authorities are no longer required to choose which national indicators they wish to report on. The Department of Energy and Climate Change will still produce local carbon figures, so we are still recognising the relevance of local carbon reduction. This Bill, which already works with local authorities, is an ideal opportunity to bring forward these kinds of measures and work with local authorities and I am grateful to the Minister for the opportunity to raise this.
This issue has some very key supporters. One of the things said quite rightly by Greg Barker is that we have to find a way that is fair and effective but does not produce undue burdens on local authorities. The attitude of local government to local carbon budgets is one of support; clearly they would not support anything they considered placed undue burdens on them.
The Minister may have seen the letter to Secretary of State Chris Huhne from local authority leaders of all parties—Councillor Barbara Janke, the Liberal Democrat leader of Bristol City Council; Sir Richard Leese, the leader of Manchester City Council which is of course Labour and Councillor Mike Heenan, Conservative leader of Stafford Borough Council. There were pages and pages of local authority leaders of all parties who want to support this. I am sure the other noble Lords received the same letter I did from the leader of the Conservative-controlled West Sussex County Council, Louise Goldsmith, as well as from Barbara Janke and Sir Richard Leese.
These council leaders, players not only in their local authority but in their community, would not be seeking to impose burdens on their local authority if they thought they were ineffective, or that they were too costly or that they would not work. They are proposing them because they know they can do it and they know they can make a difference. The Localism Bill is very interesting but one of its big problems is that local authorities may not have the money to implement some of the things they wish to do. This amendment is an opportunity, in the spirit of localism, to introduce measures to have local targets to meet carbon budgets.
Lord Deben
It is most important that we should consider these three amendments as one because they are seeking to do the same thing. I do not have any pride of ownership for my own amendment, I just want to raise some of the issues which the noble Baroness, Lady Smith, has brought forward.
It is right to say that this is a cross-party concern. There is no division between us on this and it is supported by all sorts of places, some of them not wildly likely. I would like to take up the comment of the noble Baroness about the word “resist”. There is another part which happens before that, as all of us who have been Ministers know, and that is when civil servants say, “Better not, Minister”, a phrase I remember very well. This seems to be one of those areas.
My only disagreement with the noble Baroness is this: perfectly rightly, the Government saw the particular way of reporting that we have had before with local authorities having a number of drawbacks and fitting into a pattern which the incoming Government were unhappy about. But because one gets rid of something one is unhappy about does not mean that it is better not to put something in its place, where that seems sensible. Here it is sensible. The first reason for this is because of the Localism Bill. If you get rid, absolutely rightly, of regional government and the rest of it, you are going to ask local authorities to co-operate with each other. They need a framework within which they can co-operate. This is one area where they will have to co-operate. In the borough of Ipswich, for example, much of the urban area of Ipswich is in the Suffolk Coastal district council area. To do the thing properly, local authorities will have to co-operate over the boundaries. Therefore I support this kind of structure which will enable people to start off with the same basis, so they know how they are going to do it.
I shall have the pleasure of chairing the Suffolk-wide green conference which we have every year to promote exactly these things. In an entirely Conservative-controlled local authority, county and district, everyone believes that this is a necessary part of doing what they want to do. Suffolk wants to become the greenest county because it wants to force other people to compete with it, and that seems a good thing. The Minister may have been advised that it is not necessary because this is all voluntary and we will all be doing it happily together. We are not asking for compulsion, we are asking for a framework within which people can use their several and different talents to do this job properly.
All the amendments, certainly mine, show the need to take seriously the fact that we will not meet national carbon budgets unless we meet local carbon budgets. I have spent most of the past 10, 12 or 13 years trying to help big businesses change so that they become much more corporately responsible and concerned about these issues. I have become more and more passionate about the practicalities of doing this rather than the high-flown rhetoric. The more one does it, the more one wants to say, “Can I tell you how you can cut your energy by 13 per cent simply by using some kind of regulator of the voltage? Can I help you to do these things in a simple, basic way?”.
When I looked at the Bill it seemed that the one failing I wanted to correct is that we need to engage local authorities so that they feel that they have a real part in the achievement of the Green Deal. That is why this is so important. It is to get the local authorities to think that the Government have said that if they are going to achieve these things, if they are going to do these things, local authorities are an essential part of it. A lot of the practical nuts and bolts, which is what the Federation of Small Businesses is saying, have got to be put together at the local level by the local authority working with its own community. That is why my amendment refers to working,
“in partnership with local residents, businesses and”—
I hate the word “stakeholders” but it seems to be compulsory—
“stakeholders including schools and hospitals in drawing up and carrying out the strategy”.
The joint strategy referred to specifically in subsection (2) of the proposed new clause draws attention to that co-operative element which the Localism Bill will have and points out that CO2 is not a respecter of county or district boundaries. It is very important to make this part of the way in which we proceed.
Lastly, I have suggested that we should ask the Secretary of State to introduce the local carbon budget scheme to begin at the start of the second national carbon budget period.
I would like to pick up something that the noble Lord, Lord Judd, said. We do not have a long period of time to decide when it might be convenient for this or that to happen. The timetable before us is dictated by the climate change which we have caused. I will not get back to housing, but if we had known about this at the beginning of the Industrial Revolution, we would have done things rather better. But we did not. Now we are having to pay the price for what was vastly beneficial for the United Kingdom. We have a bigger responsibility than any other country because we got a bigger profit out of it earlier on. What is happening now is something that we caused—not quite alone, but certainly we were the leaders in what has caused the climate change that we have, because it takes that much time to work through. Therefore we have a huge moral responsibility to put this right.
There is an urgency here. In everything we do we should be asking the Government to sign up to that emergency by putting dates on it. We have had too many pieces of legislation. I remember a White Paper on energy in which the only date was 2050; every other date had been taken out. I think that even the noble Lord, Lord O’Neill, will accept that, if you take out every date which the Government are unlikely to live to see, it does not make for a sense of urgency. I am very keen on having things that everybody in this Room will see. Therefore I ask the Minister to take this extremely seriously.
Lord O'Neill of Clackmannan
I am very happy to follow the noble Lord; I broadly support his amendment, along with the other two. There is a degree of repetition, but that in itself is not a problem. As we were listening to his remarks, I was almost tempted to do an AV Bill-type speech here—but I am not going to. As I think I have said before, those of us who laboured in the Augean stables of Scottish legislation in the past have over the years learnt how to make a rather thin line go quite a distance.
I am interested in something that the noble Lord, to an extent, alluded to in his remarks about the start of the Industrial Revolution. When you have been in the House of Commons for a time, boundary changes become a regular feature of your life as a politician, and quite often you move with the changes. Over the years, as a Member of Parliament, I had dealings with about five different local authorities. I do not want to go through them in great detail, but I had five coal mines in my constituency which fed coal into a power station in a different local authority, and that power station generated 2,400 megawatts of electricity. That is an awful lot of smoke going up the chimney and a fantastic contributor to pollution within Scotland. The coal mines have closed, but the power station is still generating.
Across the River Forth was the petrochemicals complex of Grangemouth, which was in Falkirk local authority; and adjacent to that was Bo’ness and one or two other places where there were petrochemicals and hydrocarbon facilities. Then you had Clackmannanshire, where there was, I think, the biggest bottle-making plant in Britain—again, spewing out industrial waste of all kinds. We also had timber-processing plants near Stirling, and the like. Therefore, in an area of 40 to 50 square miles, you had an incredible amount of pollution. The local authority is trying to keep tabs on this. It does not have a clear and specific obligation to try to reduce the pollution, although it has a kind of moral obligation to do so. However, I think that authorities would be anxious about co-operating on a collective basis to reduce carbon emissions and enhance the energy efficiency of these communities, because very often the pollution moves from one area into another simply with the wind gently pushing it along.
The Lord Bishop of Liverpool
My Lords, I, too, support the thrust of the amendments. I completely agree with the arguments that have been put forward by the noble Baroness and the noble Lord, Lord Deben, and shall not repeat them. However, I should like to emphasise two points. First, we hear a lot of talk about whether initiatives should be top-down or bottom-up. However, these amendments—especially the one tabled by the noble Lord, Lord Deben—bring top-down and bottom-up together, and I hope that in that pincer movement we shall begin to change local opinion. Secondly, the north-west is the most renewable energy-rich region in the whole of the United Kingdom. I have before me the local carbon budget of Liverpool City Council and that of the city region. These are very important documents. Indeed, the Prime Minister was recently in Liverpool and on Merseyside with Peel Holdings, the biggest property owner in the region, which is already a partner in setting up a consultation on looking at the tidal barrier for the River Mersey. These are really important initiatives. However, I am concerned that the leader of Liverpool City Council estimates that over the next four years the city will lose about £1 billion of inward investment. That is a serious blow to any community. However, the council is committed to the low-carbon initiative. The leadership of the city and the region need this sort of legislation to protect them from the pressure that will inevitably come when hard decisions need to be made.
We believe, as we have already rehearsed, in the urgency of reducing our carbon emissions. That now needs to be translated into protection for people at the local level who also believe in it but need our legislative support to deliver it.
Lord Teverson
My Lords, I am going to speak personally here: I welcome the passion of the noble Lord, Lord Judd, on this subject and on the previous amendment; he has brought us back to what it is all about—the fundamentals and challenges of climate change.
I am a member of a local authority. In the previous amendment I should have declared my interest as chairman of a regional development property company, although I am not involved in domestic dwellings.
I have a couple of questions. I agree that local authorities are fundamental to making the Green Deal work and helping to deliver our carbon targets nationally. I welcome particularly the various transition town organisations that have sprung up throughout the country, due sometimes to the frustration of the local authorities regarding their lack of performance in this area, and that are trying to move this whole agenda forward.
One of the things that I have learnt from my European experiences is that if institutions do not have the power to change things, you should abolish them rather than invent more of them, which is what tends to happen in Europe. It is a challenge that we have our own carbon budgets at a national level and, even at that level, the levers to make them happen are there and valid, but a number of those are beyond the reach of the UK Government. Car emissions have been mentioned; that is a European single market decision. The way that UK carbon budgets have been set up and brought together means, strangely enough, that in the whole of that carbon area, if we have huge improvements by industry covered by the EU ETS, they are not reflected in the performance of UK plc.
There are other areas, not the least of which is nothing to do with Governments—offshoring. One of the easiest ways for certain local authorities not to meet their carbon budgets would be to rely on the fact that major employers move or cease to exist. I am in favour of these proposals in principle, so I would like to understand what levers local authorities have in order to have a real effect on carbon emissions in their areas. There is a persuasive power, which is important, and a co-ordination power, but I would like to understand from the proposals how it is felt that what I see as a relatively powerless local government—in comparison with the golden days in the 20th century and early this century that we were talking about—fits in with that.
I have a personal plug to make as well about something that I feel is important. An issue for all carbon budgets is that we should look at carbon consumption within an area as well as carbon production. That way you get rid of offshore issues and that sort of thing. We cannot achieve this to that level of sophistication, and I am not asking for it in terms of a local area, but I would like to hear how local authorities can affect those carbon budgets to make this exercise necessary. This is important as local authorities are essential to delivering this package, but we should be careful before putting too many obligations on local authorities to ensure that they are able to deliver what we want them to.
Having said that, I understand that a number of major local authorities are promoting this—I know that Bristol, a Liberal Democrat/Labour authority, is one—so I am sure that the answers are there.
Baroness Smith of Basildon
The noble Lord asked if the promoters could tell him what local authorities could do. I admit I am rather surprised that, as a local councillor himself, he asked the question, because he knows about Bristol. I know that the Minister is anxious to reply, I hope positively. Perhaps I may draw the attention of the noble Lord, Lord Teverson, to the local carbon framework pilots. I can give him the information, although it is easily available, on the work already undertaken by local authorities. Bournemouth, for example, has encouraged microgeneration in the domestic sector and production of energy from waste. There has been retrofitting for homes in Bristol. These pilots undertook a number of programmes to see what levers local authorities have and what practical measures they can take. It is because the outcome of those pilots was successful that not just I but all noble Lords would feel confident in putting these proposals before the Committee.
Lord Teverson
I thank the noble Baroness for that. My comment would then be that that shows how important local authorities are in this area. A number of them are probably significant as a proportion of total carbon within their regions.
Lord Marland
This has been yet another challenging and interesting debate. I notice that the noble Lord, Lord O’Neill, has gone for fear of being lynched by the officials behind me. Or perhaps he has gone to speak on the first amendment still being considered on the parliamentary voting systems Bill. We will miss him, of course. I thought that at one point he was probably in the wrong Chamber, but all his views are valuable.
I agree with the noble Lord, Lord Teverson, that the noble Lord, Lord Judd, made a passionate speech—as you would expect from someone who feels very passionately about this matter. I personally thank him for his kind comments. It is a great shame that the noble Lord, Lord Giddens, is not here. He has challenged me to a game of tennis, and my fear is that he is practising in order to try to beat me. That may be his excuse for not being here, but he made a very good speech at Second Reading.
The noble Lord, Lord Deben, comes to this issue with great experience of local authorities, and I am grateful for the amendment of the noble Baroness, Lady Smith of Basildon, on this subject. I should be interested to see the report to which the right reverend Prelate the Bishop of Liverpool referred. As he rightly said, the north-west is energy rich. We should be tapping into that, and I am delighted to hear that Liverpool is making strides within the local authority. Every person in this room—not everyone perhaps, but most of us—is looking to drive carbon reduction in every way. We are committed to it. We feel strongly and passionately about it. We want to see it happen, and we want to see it happen urgently. That is the strand of this debate.
Regarding the Green Deal, which is really what we are here to debate, our initial research revolved mainly around how local authorities could buy into this programme. It does two things. First, research shows that local authorities are among the most trusted when it comes to people’s homes. They have become good exponents of the Green Deal. By working closely with some of the building merchants and others, local authorities will be able to sell the Green Deal, because they will be trusted, and can advise on it. A definite incentive will be introduced for local authorities. If at some point the local authorities are not seen to be buying into the Green Deal—which I think is highly unlikely, because there will be great financial benefits for local authorities in this—we must bring in some form of regulation, where possible, within the remit of the Department of Energy and Climate Change, given that we are not the department that is responsible for local authorities. We must encourage a greater take-up. Our initial findings—I think that the right reverend Prelate said as much—are that there is a big take-up from local authorities, they are enthusiastic about the Green Deal and they want to participate vigorously.
Baroness Smith of Basildon
Perhaps I may ask the Minister to clarify a couple of points. I am sad to say that I am disappointed with his response. The Green Deal is only one part of what is being put forward here with regard to local carbon budgets. The Bill is not just about the Green Deal; it is also about reducing emissions, about energy efficiency and the private rented sector. Therefore, I am disappointed that the Minister cannot look at this issue more carefully.
With regard to localism, he said that he cannot impose powers on local authorities. However, we are not seeking to impose; localism is also about giving local authorities the powers that they ask for, and in this case there is a very clear cross-party steer from local authorities unanimously seeking these powers.
The Minister also said that he did not feel the amendment was necessary because local authorities are going to buy into the Green Deal. He said—I wrote this down as he said it—that there are great financial benefits for local authorities to buy into the Green Deal. Can he tell me what those financial benefits are, because that may well help local authorities when they are seeking to do something about carbon budgets? I hope that the Minister can take this matter away and think about it. If he does, he will see that there is very strong non-party support for it in the Committee. I think that we would all be happy with any wording as long as there was a report to the Government. However, I urge him to think again and not dismiss this matter out of hand, particularly when his ministerial colleague, Greg Barker, has talked about his discussions with organisations such as Friends of the Earth and said how keen he is to pursue this issue.
Lord Marland
The first point is that these amendments come under the section relating to the Green Deal, apart from the amendment in the name of the noble Lord, Lord Deben, which comes along later. The substantive issue here is the Green Deal, but the other substantive issue is that it is not for us to impose on local authorities what they should and should not do. As I said earlier, it is for us to produce a product that they are incentivised to put into homes and which they encourage other people to put into homes. This is what we are doing with the Green Deal. There are other elements relating to the energy sector, and of course we will encourage local authorities to set themselves achievable carbon reduction targets. However, it is for local authorities to buy into that; at this point, it is not for government to be prescriptive. I know that it is a tradition of the Labour Government to decide what everyone must do, and when and where they must do it. However, that is not the tradition of this Government. We are saying, “Here we are. Here’s an opportunity. Get on and do it”.
Lord Deben
It is not from the Labour Government that this comment comes. This amendment would impose something on a local authority to enable them to do things in common. If we do not do this, different local authorities will not easily be able to do things in a common structure so that they can actually work together. There is a practicality there. Furthermore, it does not impose anything on them to say that they have to produce a carbon budget. If they really want to be difficult, they can always produce a budget that does not mean very much, but then local people will know what they have thought of this. There is a very important localist and democratic position here. I want to know precisely what the Mid-Suffolk District Council thinks about these issues and what its carbon budget is. Happily, I think that I know the council well enough to go round there and bang on their door and say, “I really want this”. But it is a piece of information that the public should have.
I ask the Minister to think again about this being an imposition. It is a request to ensure that local authorities can work together and that the public can know where they are on these matters.
Lord Marland
I am not denying any of this. In an ideal world, that is what we would do, but it is up to the Department for Communities and Local Government, not our department, to ensure that there is a common theme running through this. Of course, we are working very closely with them to ensure standardisation. It is absolutely in our department’s interest, and the Government’s, that local authorities come up with a standardised plan. Of course, we are working within Government to try to achieve that, but it is not for us in this debate to be prescriptive of local government on what it should and should not do. It is for us to carry back the views of noble Lords to other departments, which is what I intend to do, and to make these valuable suggestions. That is the point that I am trying to make.
Do not get me wrong. I repeat what I have said: we are absolutely committed to driving down carbon emissions. It is a very important target for this Government. We have to get the 10 per cent reduction through government—it is a government diktat. That has to be achieved through the local authority and, if the local authority department does not drive it through, local authorities will be exposed in the tables that will be produced about reducing carbon emissions. So there is a mechanism. If local authorities have any sense, of course, they will try to standardise among themselves, but it is not for me today to make commitments. It is for me to take back these suggestions and report them back to the various departments.
I apologise for momentarily suggesting that this was to do with the Green Deal. Of course it is not; it is to do with the Bill as a whole. The noble Baroness was quite right to point that out, and I take back the comments.
Baroness Smith of Basildon
I would not want the noble Lord to think that we have any doubts about his commitment to reducing carbon and ensuring that this Bill is a success, but I do not think that he has understood the point that the noble Lord, Lord Deben, and I made about this not being a pressure or a duty on local authorities other than one that they seek for themselves.
The Minister said that there were great financial benefits for local authorities to bind the Green Deal. This will be significant in this debate and further debates, although we are not talking about the Green Deal at the moment. I appreciate that he may not have the information available, but it would help us to see whether there are other ways to achieve this objective for local government.
Lord Marland
I can answer that immediately. If local government is working with two or three suppliers, it may enter into a binding commission-sharing arrangement or something like that. So there could be financial benefits in supply or in being one of the registered assessors or accreditors, when there may be charges on behalf of building merchants, and so on. That is where there are potential financial benefits.
Lord Judd
My Lords, I thank everyone who has participated in this debate. It has been a privilege for me to propose my amendment in the company of other amendments with so much commitment behind them. I hope that noble Lords in all parts of the Committee will understand this, but it is very cheering to me to know that we have as our principal spokesperson on our side of the House someone who is not only well up to the job with regard to the detail but also has a passionate commitment to the strategy.
The Minister has a rare opportunity. There is widespread, deep commitment across the political divides in this House. That is a good moment in political history and it is a moment of opportunity. It should not be dissipated. We have heard it evidenced by several contributions from different parts of the Committee that he has the good will and firm commitment of local authorities and also of many key people in industry. This is a very powerful combination, and history will take it ill if we are not to seize this moment of opportunity and move firmly forward.
I was impressed by the strictures of the noble Lord, Lord Deben, about our own responsibility for the problem that confronts us. We will not get this right simply in terms of what we do ourselves in this country; we will get it right by combined international action. With his experience, I wonder if he would agree that one of the difficulties in generating the necessary positive and dynamic international consensus is the issue of credibility and leadership. An awful lot of people look at us telling them what they must do and say, “Excuse me, who caused the problem?”. They go on to say, “What are you doing about it?”. Therefore it is not just in our own immediate tactical self-interest as a nation; it is crucial in getting the international dynamic right that we are seen to take urgent action, and I am sure the Minister takes that point.
The noble Lord, Lord Deben, also referred to the fact that we could not play our part fully without taking into account what should be done by local authorities. He will recall that in my own remarks I made it plain that some 80 per cent of UK emissions result from local emissions and that therefore the local dimension is crucial.
In asking the Minister to take this debate very seriously, as I am sure he will, I make another point. I was slightly concerned that we might drift into an intellectual structural debate about whether we did things centrally, top-down, or whether we did things bottom-upwards and with voluntary co-operation. Life is not like that. You get dynamic action by getting the balance right between the two. You need leadership and you need opportunity for those people at the local level who have taken the message to take it forward. That is why the points that have been made about having the necessary support and encouragement for them is so important. It is also necessary to give them the opportunity of mechanisms that are put in place which they can seize and which they have to take seriously.
One might not be spelling out the detail, but one is saying that these things are required of you in terms of telling us what you are going to do. We are not telling you exactly what to do but we are expecting you to be taking action in this sort of way. I go back to the war situation: either we are in a battle for humanity or we are not. If we are in such a central battle, we have to look for comparisons with what we did in the Second World War and the rest. I make that point seriously; it is of that degree of significance and gravity.
I would like to thank everyone and I wish the Minister well. It would be wrong to drive him into a corner unnecessarily at this juncture. We are looking at a situation where he comes back at a later stage in our deliberations, having digested and taken very seriously what has been said, and convincingly meets the arguments. I thank all noble Lords, and I beg leave to withdraw the amendment.
Baroness Northover
My Lords, this is a convenient moment for a short break, as is usual. Perhaps we can reconvene in 10 minutes.
Lord Jenkin of Roding
Lord Jenkin of Roding
My Lords, we move to Chapter 4 of Part 1 and the clauses which encourage the energy industries to do much more in the way of carbon reduction. I do not need to go into the details of the clauses, although someone may want to make a speech on whether the clause should stand part.
Clause 61 applies to the gas industry and concerns the powers of the regulator and the obligations on the companies. In a sense, it replaces what was happening under the CERT programme. Clause 62 does exactly the same thing for the electricity industry. I shall discuss Amendment 29B at the same time because it concerns the same issue as Amendment 29A.
This matter has attracted the attention of the Delegated Powers and Regulatory Reform Committee. Whereas most of the regulations under these clauses are subject to the affirmative procedure, under subsection (6) in each case certain of the regulations will be subject only to the negative procedure. When the Delegated Powers Committee looked at that, it recited the department’s arguments as to why there should be this distinction, the department arguing—I am quoting from paragraph 12 of the report—that the matters are,
“‘less central, more technical’ and ‘essentially administrative’”.
The committee then said that it did not find this argument persuasive. It remains unconvinced, for instance, that the provision enabled by new paragraph (c), which specifies the method for determining the contribution that any action makes towards meeting a target, falls into that category any more than the other paragraphs do. Therefore, it makes a very clear recommendation that these orders, which are the subject of that paragraph, should have the affirmative procedure on their first exercise. My amendments would simply take out subsection (6) from both clauses, because I was not sure how one would be able to table an order or draft an amendment that dealt with the first exercise of the power and not any subsequent one. That defeated my powers of drafting.
I believe that the case that the committee makes is a strong one. As I have said before in these debates, it is usual for Governments to accept the recommendations of the Delegated Powers and Regulatory Reform Committee, because it is the body which the House has set up to look at these matters. I hope that my noble friend will be able to look with favour if not on the amendments then on the purpose that lies behind them and, if necessary, bring forward a government amendment at a later stage. I beg to move.
Lord Davies of Oldham
My Lords, the Committee and indeed the Minister should be grateful to the noble Lord, Lord Jenkin. There is no doubt that the Government need to look seriously at the point raised by the Delegated Powers Committee, to which we always accord the respect which it deserves.
I understand the difficulty that the noble Lord has had. I myself could not work out what the amendment should look like. However, if we win the moral argument and the Minister is persuaded to observe the convincing case made by the Delegated Powers Committee, it will be for the Government to produce the necessary expertise in bringing forward the appropriate amendment. I am sure that, if the Minister agrees with us, he will address that point.
Baroness Northover
I am grateful to the noble Lord for tabling these amendments. They relate to the secondary legislation that we will be making under some of the powers that we are proposing and to whether provision made using such powers should be subject to affirmative or negative resolution procedures in the House.
This is not about the majority of the provisions which may be made under this part of the Bill, as most are clearly for the affirmative procedure. It relates to certain specific provision that we might make on more technical aspects, such as the precise qualifying actions or measures which will be eligible for inclusion within the scheme. The Government’s proposal was that issues of this sort should be set out in secondary legislation which is subject to negative procedures. The noble Lord, through his amendment, proposes that this should be affirmative.
I am delighted to say that there is a compromise position, which has the support of the Delegated Powers Committee. In its considered report on the Bill, the committee suggested that it may be appropriate for the first use of these powers to be affirmative, with subsequent uses—in effect, later amendments—being subject to negative procedures. That seems to us an excellent suggestion. It has the virtue of maintaining a very strong degree of parliamentary oversight over the essentials while leaving more flexibility for changes to be made over time. We therefore propose to come back at a later stage with an amendment in line with the Delegated Powers Committee’s suggestion, and on that basis I hope that the noble Lord will feel able to withdraw his amendment.
Lord Jenkin of Roding
I can only say that I am extremely grateful. However, before I withdraw the amendment, I want to raise one other brief point which was mentioned by the noble Lord, Lord Davies of Oldham. It is the question of the constant amending of previous legislation. Anyone wanting to look at the current state of the Gas Act 1986 or the Electricity Act 1989—as I am certain the noble Baroness, Lady Smith, will have tried to do—will find it an extremely difficult job. There are now commercial legal publishers who will provide what they consider to be the up-to-date version as amended in perhaps four or five different Acts, as we are doing again here. There must come a time when these Acts will have to be consolidated, because it is becoming a matter of very grave difficulty not only for hapless Members of the two Houses of Parliament but for their advisers. Some of them are extremely good and know their way about. They keep their own copies very carefully annotated but most of us do not. There is therefore a case for consolidating these Acts and I hope that that message is taken back. Having said that, I beg leave to withdraw the amendment.
Baroness Noakes
My Lords, in tabling my opposition to Clause 61 standing part of the Bill, I am delighted to see that I am joined by not one or two but three noble Lords from the Official Opposition. For the convenience of the Committee, I shall also speak to Clauses 62 to 67 and Schedule 1 standing part of the Bill. Other noble Lords may wish to speak to those clauses later, but the points that I make on Clause 61 apply with equal force to the remainder of this chapter in this part of the Bill. As my noble friend Lord Jenkin has already noted, Chapter 4 deals with the energy company obligation, and I should state at the outset that I am not going to be talking about the energy company obligation itself. The issue that I raise with my stand part notifications is whether it is appropriate to legislate for something which has not yet been properly worked out by the Government.
I have mentioned in Committee the use of framework legislation, and I also raised it at Second Reading. The chapters of the Bill that we have already looked at—the Green Deal and the private rented sector provisions—are also very much lacking in detail. Indeed, to almost any of the many detailed questions put to my noble friend, he has tended to default to saying that this will all be dealt with in the later consultation on the regulations which will appear at some stage in the future. Perhaps I may remark that on that basis my noble friend has so far had a remarkably easy ride on this Bill.
As has been pointed out, it is customary with most framework Bills of this nature for advance drafts of related statutory instruments to be made available during the Committee stage of a Bill. This is important, because it allows the House to discover any issues in the way in which the Government intend to use the powers, which could be better dealt with in the Bill, or whether any safeguards are necessary. That is why it is quite normal for the Government to produce drafts of the related statutory instruments for the Committee—particularly in your Lordships’ House, where our obligations as a revising Chamber are more acutely felt than perhaps in the other place. We have not been offered that on any part of the Bill.
The Bill falls into that very small category of Bills which present a serious challenge to Parliament, and in particular to the role of your Lordships’ House as a revising Chamber. Our work is typically detailed and thorough, but it is virtually impossible to be detailed and thorough when dealing with long lists of enabling powers. The Bill is certainly not as bad as the Legislative and Regulatory Reform Act, which I am sure the noble Lord, Lord Davies of Oldham, will recall. It is not even as bad as the Public Bodies Bill, which is far from out of the woods in its passage through your Lordships’ House. However, the Bill is similar to both those pieces of legislation.
Let me read from the Sixth Report of 2010-11 of the Constitution Committee on the Public Bodies Bill. After rehearsing the history of the Legislative and Regulatory Reform Act, the report states at paragraph 13:
“The Public Bodies Bill … strikes at the very heart of our constitutional system, being a type of ‘framework’ or ‘enabling’ legislation that drains the lifeblood of legislative amendment and debate across a very broad range of public arrangements. In particular, it hits directly at the role of the House of Lords as a revising chamber”.
As I have said, this Bill is not nearly as bad as the Public Bodies Bill, but it is firmly in the same category.
I have singled out Chapter 4 of Part 1, rather than the chapters dealing with the Green Deal or the private rented sector, because Chapter 4 is so unclear and so lacking in detail on how the powers will be used, that it is simply not right to give the Executive the power to draft far-reaching regulations to impose the energy company obligation as they think fit, subject only to the affirmative procedure. That of course admits of no amendment and is a very unsatisfactory procedure for dealing with legislation which requires detailed, line-by-line scrutiny, in the way that we customarily approach things.
The impact assessment in respect of Chapter 4 has several pages of complete waffle. It is perhaps easier to go to the summary impact assessment, and I shall read from page 8. Under “Costs”, it states:
“There are no costs associated with the primary powers”—
the primary powers in Chapter 4 of Part 1—
“however, depending on the level of the ECO there is a potential for significant costs to suppliers in meeting the obligation which ultimately we expect to borne by consumers”.
Under “Benefits”, it is stated:
“There are not direct benefits from the primary powers, however they do enable future policy which has the potential to deliver benefits associated with energy and thermal efficiency measures”.
I note from the summary that there are likely to be significant costs. They are not costs that will be borne by the companies or taxpayers; they are costs which, as is fully anticipated in the impact assessment, will be passed on to customers. Therefore, there could be significant rises in energy bills, but neither customers nor the energy companies or Parliament will have any real influence over their size or incidence.
My contention is that this part of the Bill is simply not ready for passage as primary legislation. I do not challenge the fact that something may well be necessary in due course, but I believe that it would be correct for the Government to decide what to do, to consult on it and then to bring forward primary legislation to implement it, giving both Houses of Parliament—but in particular your Lordships’ House as a revising Chamber—the opportunity to do the job that it does so well. In that way, Parliament could give proper consideration to the practicality and fairness of how this area is to be tackled and its impact on companies and, importantly, on consumers. For these reasons, I do not think that these clauses should stand part of the Bill.
Baroness Smith of Basildon
My Lords, I want to make a very similar point relating to Clause 61 but also to Chapter 4 as a whole. We raised with the Minister previously the question of the amount of legislation that will need to be resolved through secondary legislation. There are 52 separate items in this Bill that would be dealt with through secondary legislation. I have had difficulty in understanding in detail what the ECO proposals really mean and how they will operate. It is a serious matter when it is difficult for noble Lords to assess the impact of the operation and the amount of money that will be involved for consumers as well as providers, because so little information can be provided in the legislation. It is all to be done by secondary legislation.
It might have helped the issue to be resolved if there had been a purpose clause at the beginning of this chapter, not dissimilar to the one that I proposed at the beginning of the Bill. Such a clause could set out what this chapter is seeking to do and the purpose of the energy company obligations. Without it, it is very difficult to assess the proposals put forward in the different clauses. Therefore, I have some specific questions for the Minister, although he may not be able to answer them, because the answers have not yet been compiled.
The noble Lord will recall that, possibly at Second Reading but certainly in the meetings that he has been generous enough to have with noble Lords prior to and throughout the passage of the Bill, I have raised with him the concern that the noble Baroness, Lady Noakes, has also spoken about—the need to have drafts of statutory instruments before us when we are considering these matters. Seeing the detail of where the Government intend to go would help to inform our discussions; otherwise, they are held in something of a vacuum. I certainly find it difficult to discuss the detail of the clauses.
Perhaps I may raise some specific questions to which the Minister may be able to respond. One question with which I struggle is whether the ECO is effectively and appropriately linked with the Green Deal. Without that link, I am not sure that the ECO can deliver, which is why I mentioned the purpose clause at the beginning. Like the noble Baroness, Lady Noakes, at times I find the impact assessment difficult to read, and it is probably best not to try reading it during a late-night sitting of this House. The impact assessment states:
“The domestic sector has the potential to play a big role in meeting the UK’s carbon budgets by delivering cost-effective emission reductions. Under Green Deal there is a range of policies aimed at helping households install cost effective energy efficiency measures. However there are a range of market failures (positive externalities) and barriers (e.g. consumer inertia) that are likely to continue to restrict households from undertaking cost-effective abatement measures”.
It goes on to set out the difficulties, saying that,
“it is necessary to gain the powers to intervene to ensure that energy and thermal efficiency programmes are focussed on delivering measures in vulnerable and hard to treat houses”.
Because the purpose of the obligation and how it underpins the Green Deal are not defined, the provisions in the Bill for the energy companies do not state how these measures are intended to be delivered or how those most vulnerable households will be assisted. There is a lack of clarity about how this will work, and I am sure that the Government could do more to assist the Committee in bringing forward some information regarding it.
Lord O'Neill of Clackmannan
My Lords, I missed the opening remarks of the noble Baroness, Lady Noakes, but I have heard her speak on this subject before. As I said at Second Reading, I am somewhat surprised that we are in broad agreement, although her concerns may not necessarily reach the same conclusions as mine. Nevertheless, we can make common cause in our concerns about this part of the Bill. As has been pointed out, we are affording ourselves the opportunity to pave the way for secondary legislation of an unknown kind. It is highly irresponsible for legislators or the scrutinisers of putative legislation to go down this road. This is not just a matter of partisan bleating; this is a serious constitutional issue.
The last point that my noble friend made, relating to Ofgem, is a serious one. A significant point about the handling of complex markets that are, in effect, oligopolies—not quite monopolies but dominated by big players—is the requirement that we have a credible quasi-judicial market regulator to protect the consumer and, equally important, to sustain competition if that is the road we go down. A shortcoming of the original privatisation processes was that we went from state monopolies to private monopolies. It took a while for the market to kick in. Indeed, it could be argued that we initially went down an overly simplistic route in respect of the competitive market. Certainly, in relation to electricity companies in England and Wales, the market structure was akin to pre-Cavour Italy—a series of city states fighting each other and, as a consequence, leaving themselves open to other invaders. That is what we have at present: five or six major generating companies, of which only two could be regarded as independently British. We live in a global economy and these things happen. However, it is dangerous when too many of the natural resources on which we so depend are in the hands of people who do not necessarily regard our national priorities as their first concern.
However, I do not want to go down that road tonight. All I want to say is that we must be exceedingly careful if we afford Governments of any stripe the right to change quasi-judicial organisations, such as the Gas and Electricity Markets Authority, by a process that affords no real opportunity for parliamentary scrutiny. We are delivered a statutory instrument that, although it has been the subject of extensive consultation, is the final article that we can accept or reject. If the changes were almost emergency measures but there was a difference of opinion, we could well have to defeat the thing and have another lengthy period of consultation before the Government of the day, regardless of party, got it right. So in terms of some of the powers which we are delivering to government here, if they were to stop and think about it they would not want to assume that kind of responsibility.
As far as the ECO is concerned, there were a number of points. First, there is the manner in which we allow electricity and energy companies to introduce new forms of subsidy by imposing what is, to all intents and purposes, an energy poll tax on the households of this country. There is not a great deal of difference in the imposition of the revenue-raising that takes place in these circumstances. The average charge to households is of the order of £80. We are talking in terms of introducing changes in market structure which have been calculated as being anything between £400 and £800. It is a fairly arbitrary means by which that is going to be imposed over a number of years.
We have to be exceedingly careful, therefore, if we are going to dress up support for the Green Deal, the energy and environmental improvement parts of the Green Deal and the financing of it as something that does not involve the Government or taxation but hits every household in this country, regardless of financial circumstances. If there is any group in this country that is entitled to feel that it is paying more towards this scheme through its electricity bills as a matter of course, it is those who live in hard-to-heat houses and those who are the most vulnerable, either in their health or their financial circumstances. It is to them that we have the first responsibility. That is to say, if we are to have an ECO, its fruits should go to the people who are either the most disadvantaged or the most vulnerable.
It would be helpful for us this evening to get something more than platitudes about market solutions. Markets are not perfect. If they were perfect, we would not need any form of regulation at all. The fact is that they need to be structured and nudged at particular times. What we need in these circumstances is recognition that if we do not have Warm Front or CERT, we still need some form of directed effort towards helping the disadvantaged. At the moment, my understanding is that the disadvantaged, whether they go in for the Green Deal or not, will still have to make their financial contribution through the ECO. It is my contention that they should not be required to pay for something from which they will not get very much, if that is because their local authority, social housing authority or private landlord—which we have discussed at length—is not prepared to enter into this deal in the way that we would like.
As we are giving Government the power to introduce a number of changes by secondary legislation, we are entitled tonight to get reassurances that fairly soon we will see the colour of the Government’s money in the form of some explicit draft statutory instruments. They will obviously be doing the rounds at the moment. It would be foolhardy to suggest that somehow they are going to emerge after Third Reading but before Second Reading in the Commons. They will be in pencil form somewhere, stamped with “Draft”, and it is not unreasonable for us to ask for that this evening.
We do not divide in this Committee and it is not our intention to gum up the works but such constraints do not apply when we get to Third Reading. A number of people will be concerned about this, not just within the ranks of the Cross-Benchers and the Opposition; we know that in both parts of the coalition there are people who have anxieties about this. Therefore we need a lot more assurance, a lot more clarity and a lot more detail than we are being offered here.
Baroness Maddock
The noble Lord, Lord O’Neill, is known for not always being terribly polite all the time, and we have seen that today. An important point has been raised here by my noble friend Lady Noakes. This issue has been going on for some time. I have now been in the House of Lords for 13 years, and I remember that when I arrived the first Bill that I debated was on tuition fees—that famous Bill that we were not expecting because it was not in the Labour manifesto, but which nevertheless arrived.
Baroness Maddock
Sorry, that was a mistake—I should not have mentioned it. I remember the Bill coming in, and I remember that when a new Government come in they are keen to get their legislation through. What have we had in this Committee? The noble Lord, Lord Judd, and everybody else have agreed that there is a great urgency about what we are doing. So there is always a conflict about making this process in the Houses of Parliament, which goes very slowly, keep up with what you want to do and your ambitions for the nation. This is always a challenge to us, and it is partly what we are facing here. At the same time, there is an issue here.
One thing has changed since I came in 13 years ago. We have the Merits of Statutory Instruments Committee, which gives a whole lot more scrutiny to secondary legislation than it ever did before. I served on that committee for the four years noble Lords can serve before they have to move on, and it was quite fascinating. In the normal course of events, if you are on the Front Bench, you do the primary legislation and you are lucky if you manage to keep abreast of what is going on in secondary legislation. I had done the last Housing Bill and then went on to the committee, where all the secondary legislation was coming through—so I knew what had gone on. We have something that is a little better, and we have used some of the facilities of this House to challenge secondary legislation as we could not before. It is not perfect and, if we were reforming Parliament, I think we would do it better. Nevertheless, it is slightly better than it was before, and we should remember that.
Quite often the previous Government got into this mess, but during the Bill people often tried to bring forward a little more detail. We are not very far into this Parliament, we are all keen for this to happen quickly and the Minister is trying to get to grips with this matter with his department. I appreciate the problems that he has, but most of us would like to see a little more clarification on Report, although his officials may not want that. Given the situation in which we find ourselves, and being realistic about when we will get to Report, that gives the Minister’s department a little time to help us with this issue. It is difficult, and I have heard a certain amount of hypocrisy today from the Opposition. I have been in opposition and I know what this is like. It behoves us all if we think this is important, and if we are all saying to the Minister, “Let’s rush ahead with this”, to give him a little time to come forward with a little more detail as we go through the Bill. I hope he can satisfy us on that today.
Lord Whitty
My Lords, I am not against relying on statutory instruments to clarify the policy as we go down the line. All Ministers find that it takes time to work out the details, but at this stage we need to put down some markers and to have an idea of the general direction in which the Government are going.
I agree with a lot of what my noble friend Lord O’Neill said on the ECO and fuel poverty. If the Government are effectively putting all their eggs in the fuel poverty basket through the ECO replacing all other forms of intervention, as my noble friend Lady Smith said, however good the scheme which emerges under the ECO is, it will be undermined if the payment for it is on a quasi-poll tax basis. You will take away with one hand what you have given with the other. I urge the Government to think clearly about what they are doing on both sides of that equation.
However, my main point is on Ofgem. I understand that a review of its role is still ongoing. As the Minister will know, there are widely different views, not necessarily on a party basis, on what Ofgem should and should not be doing. Ofgem itself tends to change its mind on what it should be doing. Clause 67 implies that we are taking something away from Ofgem. I should like to know from the Minister whether this is part of the review of Ofgem, which I understand will end in March, when there will be a report. Ofgem is also covered by the Public Bodies Bill, as my noble friend said, and there are uncertainties relating to what will emerge as a regulator in that regard. It is important that the totality of what Ofgem is responsible for is defined before we provide measures which could, piecemeal, carve off bits of Ofgem’s role or add bits to it. Before we finish the Bill, we need to hear the result of that review and what the Government propose in total.
Lord Jenkin of Roding
My Lords, I have much sympathy with what has been said about the need to know more about what will be in the orders and regulations made under the Bill. Like others, as my noble friend Lady Maddock has said, I understand the pressures that the Minister is under. He wants to get ahead with this and in the mean time he is consulting on the details of what will go into the regulations. At the same time, he must appreciate that it is quite difficult to debate the Bill—these clauses, including Clause 61, are particularly detailed—without knowing what is in the Government’s mind. I shall pick out only one subsection, subsection (3), which inserts new subsection (5A) in Section 33BC of the Gas Act 1986. The new subsection states:
“If the order makes provision … enabling the Authority to direct a transporter or supplier to meet part of a carbon emissions reduction target by action relating to an individual named in the direction the order may also make provision”.
I do not imagine for one moment that Ofgem will make an order directing the supplier to deal with Mrs Buggins by name. This must mean categories or classes of consumer. Indeed, the purpose of the Bill— which I very much welcomed at Second Reading—is to concentrate this help on the people who are fuel poor or in a similar category. That is what we are trying to do. However, that is left vague in the subsequent new paragraphs. In new paragraph (a), it is stated,
“authorising the Authority to require specified persons to provide it with information for the purpose of enabling it to identify and select individuals who are to be the subject of a direction”.
New paragraph (b) refers to,
“specifying criteria in accordance with which the Authority is to select individuals who are to be the subject of a direction”.
One can see that one is moving into a very complex and obviously very necessary part of the whole procedure.
I compare this with the CERT programme, which, after a short delay, this ECO is intended to replace. The CERT programme dealt with very large categories and applied to 11 million people. There was the ridiculous situation that companies that were supposed to concentrate their efforts on the priority group were not allowed to be told who they were. After a tremendous effort, and through the Pensions Bill, we got a power to make a regulation that allowed the Department for Work and Pensions to specify the names of a very small class of pension credit beneficiaries. I was reminded of that marvellous line from Lucretius—I will not quote the Latin as that is out of order—that the mountains heaved in childbirth and what came out was a little mouse. It was a very small group, a very small part of the 11 million.
What seems to be intended is that Ofgem will be given the criteria and will be able to select the groups to which it may then direct companies to give help and support. I hope I have understood this intention correctly. I am sure my noble friends on the Front Bench will recognise that it is very difficult to debate this if one does not have any idea of how that power is going to be used.
Over the several editions of CERT I made the point about not being allowed to identify these groups and having to search the streets to find the people who qualified for the priority group under that legislation. I get the impression that that message has been taken on board and that we are therefore going to have a more specific effort to try to define the group categories. When the Bill refers to,
“an individual named in the direction”,
presumably that means they are going to actually have names and therefore addresses so they will know where to go to give their help.
I suspect the noble Lord, Lord O’Neill, is right and that it may be a while before we get to Report. We have to do that on the Floor of the House when it is not occupied with other legislation, but there may be an opportunity for Ministers to give an indication of how the order is to be implemented. This is at the heart of what the energy companies’ obligation is about. They are going to help designated groups of people much more specifically than form part of the priority group under the CERT legislation. It is quite difficult to debate this, however, if we do not know who they will be. I take as an example subsection (3) and it is the same in the following subsection; if we could have had some indication as to who they are that would make the debate more meaningful.
However, going back to my first point, I do understand my noble friend’s problem of having to move ahead with this legislation so as to bring forward the day in which it can become operative, while at the same time negotiating in detail with all the various groups and bodies about how it is going to be implemented. We must lean over a little more to help Members of the House to carry out our duty of scrutiny so that we know what we are talking about.
Lord Marland
My Lords, I am grateful for these comments. Obviously I am a new boy and this is my first Bill, so I do not really know what the procedure is; I bow to my noble friend Lady Noakes, who knows more about it than I do, as do many others in this Room. Knowing how you do this should mean that you are a bit careful and recognise what the Government have to do. Here we are, sitting in this Room, while in the Chamber there have been 14 days of Committee. What is that doing? It is preventing the Government bringing forward legislation.
In this legislation, therefore, we are setting out a framework Bill that allows us to add bits of legislation, allows us time to consider carefully what needs to go towards them and, of course, allows us to bring them back to this House, as a revising Chamber, and indeed to the House of Commons for approval through statutory instruments, which the noble Lord, Lord Whitty, kindly recognised has been normal practice and, I fear, will become normal practice if we have to sit for hours when there is a log-jam in the Chamber. Noble Lords should recognise that government is actually about trying to get things done.
Why are we doing the ECO? The noble Baroness, Lady Smith, is right: the answer is that we have a problem with fuel poverty. It has gone up year on year despite CERT, Warm Front, CESP and every other possible and genuinely well intended attempt by the previous Government to reduce fuel poverty. I am not sitting here criticising the endeavours or saying, “You did this or that wrong”, but the fact is that fuel poverty has gone up significantly.
Lord O'Neill of Clackmannan
Before the Minister leaves that point, we should put this in its proper context. When energy prices were low, fuel poverty was falling quite dramatically. When energy prices went up, fuel poverty rocketed. There are three reasons for fuel poverty: inadequate houses that are badly insulated, the poverty and disadvantage of the households and the price of energy. The single most critical factor over the past eight years has been the changes in energy prices, which in large measure are beyond the capabilities and the control of individual companies. Indeed, it can be argued that energy prices in Britain are in fact in the lower part of the European basket. If we are going to change the circumstances of fuel poverty, insulating houses is a major consideration, but not the only one.
Lord Marland
I am grateful to the noble Lord for his intervention because he has just mentioned what I was about to say. There are three criteria. The first is inadequate homes and house insulation, and that is what we are seeking to tackle with the Green Deal in a very strong initiative. That is why it is fundamental that we link the Green Deal and the ECO but that we are sensible and take a measured approach to how we create the ECO, given that CERT and CESP have largely failed in their endeavour.
Secondly, there is the price of energy, which is a separate debate; we will doubtless hit that at various times. This Government are doing everything that we can to deliver energy security. The noble Lord and I would agree that our endeavours to recreate the nuclear industry, which has had no activity for 23 years, and various other endeavours to generate electricity in this country and regenerate our grid system, which has had no investment for many years.
Then, of course, there are the genuine poor. That is what the ECO must be targeted at. Every person in this Room feels desperately concerned about the genuine poor and how we get them out of fuel poverty. As such, we have telegraphed that we will lead a review of fuel poverty to see how we can target them. We are doing several other things in the mean time to eradicate fuel poverty. There are winter fuel discounts and we have come up with the warm home discount; we are now looking for a contribution from energy suppliers to ECO.
The noble Baroness, Lady Noakes, rightly asks, in fine Conservative tradition: who will pay for it? What about value for money? That is at the heart of this Government: who will pay for it and how will people provide for it? It is not as though they are not paying for it at the moment. Energy companies are responsible for delivering CERT and CESP and will be responsible for delivering the ECO. It is up to this Government and future Governments to ensure that there is competitiveness in the market so that companies, in selling their products, try to get a competitive price, which will come largely, we hope, from their profits. Similarly, the noble Baroness, Lady Smith, reasonably quoted my honourable friend Gregory Barker in the other place. He said that £1 billion would be spent on this. In our analysis that is only an initial figure. You would not expect me to go wider than that in this instance until we have developed this further.
The noble Lord, Lord Whitty, rightly says that we are reviewing Ofgem. It is right that we are doing so. I will not come to any conclusions on Ofgem yet because the consultation is taking place. It will conclude in March, which is before the autumn, when we start our consultation on the ECO and so will be able to take the findings into account and link them together, as the noble Lord, Lord Whitty, would expect us to do. Because the result of the Ofgem will be available in March, we hope to be able to take it into account in the passage of this Bill.
Noble Lords should be under no illusion. There is a very good document, which we have put in the Library and should explain clearly what we are trying to do in the ECO and every measure in the Green Deal. It is an excellent summary. It must be good because I can understand it. This is to explain what we are doing. Make no mistake: we are not trying to railroad a new policy through.
Baroness Noakes
The Minister referred to an excellent summary that had been placed in the Library. Judging by the looks of incomprehension around me and my own lack of knowledge, this may not be widely available to the Committee. It certainly does not appear to be in the documents that are available to the Committee at the back. I am not sure that it will answer the questions raised by these amendments but I just note that there does not appear to be a wide knowledge of it.
Lord Marland
I fear that the noble Baroness may be in a small minority on this. I have just sent someone to the Library to get the document. It is there and I see my noble friend Lord Teverson has it. When we launched this Bill the document was attached. I do not want to get into semantics but I am happy for the noble Baroness to be provided with a copy now so that she can read it. I agree that my department produces an awful lot of information, which shows its willingness to be transparent. Perhaps the document could be passed to the noble Baroness; I am sorry that it is a photocopy. I have just sent someone to the Library to check that it is there. The noble Baroness seems confused. I hope the document is satisfactory.
Baroness Noakes
I have now seen the document and it gives virtually no information.
Lord Marland
That is a matter of opinion. That is the opinion of the noble Baroness, but I find the document quite informative, as I know many others do. We will disagree on that.
The reality is that we must, in tabling the Green Deal, look at all the ancillary events that come alongside it. We are trying to improve and work towards reducing fuel poverty. That is why we are embarking on, effectively, a review of CERT to make it better. CERT was a very good initiative and endeavour but it did not hit the targets to the extent that was needed. It had several misadventures, including too many light bulbs appearing on people’s doorsteps. Therefore, the ECO will be a development on that theme.
We consider the views of this House very carefully. If we did not, we would not be starting this Bill here, as we have done. We would not be entering into very long debates on every aspect of it before it gets to the House of Commons. We would not be taking away the comments of everyone in this Room to think about in between sessions and when we get to the next stage. I think that is a genuine commitment by this Government to listen, to improve and to get things fit for purpose. I hope this satisfies those people who have raised these points.
Baroness Smith of Basildon
I am grateful to the noble Lord. He has gone some way to answering some of my questions, but not all the way, I regret. I welcome his point about linking the Green Deal and the ECO. If that could be enshrined in what comes before us, it would be helpful and, in the light of our later amendments, it might cover some of those points. His confirmation about roughly the amount of money involved is helpful. However, a number of questions remain. I will read again the document to which he referred and see if it answers them.
I am sorry if the noble Lord feels tetchy about my questions, but the Lords’ scrutiny is important. If I may raise one note of contention, I was most concerned that it would have wider implications when he seemed to threaten the use of more SIs if the Opposition seek to properly scrutinise legislation. The way to have shorter debates, if that is what he is looking for, is to have more detail; that is why I ask the questions. However, his comment gives me cause for concern, and, when we get the Hansard I will re-read what he has said about having more SIs if the Opposition insist on scrutiny.
Lord Marland
I am not concerned about scrutiny. Of course that is what SIs are for—to add on and improve legislation that is already in place. I merely said: do we think that the debate going on in the main Chamber at the moment is reasonable? Do we think things are being properly scrutinised and debated in the right way? Certain parts of the House of Lords do, large parts of it do not, and that is where the matter stands. I have no problem, of course, with proper scrutiny on these things and putting things towards the House. However, in the time available in this Parliament, we will probably not have the opportunity to get many more Energy Bills through that will be able to change various things. Therefore the opportunities available to us are through statutory instruments, and those are what we intend to use.
Baroness Smith of Basildon
I am not clear which Bill the noble Lord was talking about. The Bill that I am talking about is the Energy Bill before us today. However, in both cases the Opposition are fulfilling their legitimate and proper role in effective scrutiny.
I have a couple more questions. I know that the noble Lord has tried to answer the question, but I will re-read the Green Deal document as it addresses the issues that I have on the ECO. I am merely seeking clarity. I am genuinely not able to work out from the impact assessment, the legislation and the Explanatory Notes exactly how the ECO is going to work. That was the first of my questions. I am disappointed that I did not get answers to all of them, but I am sure that we can return to them. Perhaps the Minister could work with his officials and, before we get to Report stage, if there is more information available on the operation of the ECO, it would be very helpful to have that.
While it would be nice to have the actual statutory instruments before us then, I appreciate the Minister’s position. I have been a Minister. I have taken through legislation with statutory instruments. I have taken through a number of statutory instruments. However, if we were to have some of the information detail prior to that, it would assist this Committee and your Lordships’ House in being able to make a proper judgment. It is impossible to do so on what we have before us. I do not think that there is a person in this Committee who does not want the ECO to do exactly what the Minister wants it to do—address the issues of the fuel poor and the hardest-to-treat properties.
It would be very helpful to have clarification on two particular points. One is the cost to the consumer. That comes back to the idea of the consumer levy. I appreciate that CERT and CESP both included the consumer levy, but there was also Warm Front at that time, which was substantially greater than it is now. Perhaps the Minister can come back to us on that one.
The Minister also said that the energy companies would pay for large amounts of the ECO through their profits. Has he consulted the energy companies on that and what has there response been? If they intend to absorb the cost of the ECO through their profits, that would interest the Committee and the House, unless the energy companies intend to pass on the additional cost as well to their customers.
The final point is the one I made a moment ago about the report from GEMA, the Gas and Electricity Markets Authority. The Government are still consulting on what to do. That is why I understood it was in the Public Bodies Bill and that it could be moved from Schedule 7 to other schedules. But in this Bill it does seem that a more specific point is being made—I hope the Minister is listening and not just using his mobile phone—and I wonder if it is possible to give us more information on that, though I may be wasting my breath in raising the questions. I am not sure if the Minister is taking note.
Lord O'Neill of Clackmannan
I have had the opportunity to read this document and the three paragraphs referring to the ECO. It gives some detail but not a lot. Perhaps before we get to Report stage, if there is a delay and if things do take a long time, the civil servants will have the opportunity to provide us with the information we are asking for. It says that the ECO will be focused on houses needing support over and above the Green Deal. Can he tell us the manner in which this focusing will take place?
Secondly, he said the ECO will be able to combine legal powers to incentivise ECO support and Green Deal finance. Perhaps we could get some indication of how the incentivisation process will be carried out, because it would appear that the Government realistically anticipate in this document that something could go wrong. They are saying that these legal powers would be introduced only following a review of the company’s behaviour, if there was evidence that the households would lose out. We would want to know what losing out meant. If we can get some idea of the focusing process, if we can get some idea of the legal powers and the incentivisation mechanisms, and if we could get some information about how the Government would assess the means whereby companies would lose out, this would meet a number of our concerns, even if it was not in draft statutory instrument form. It would help if there was a slightly more explicit note.
I was rather surprised when the Minister referred to this document because we have all seen it before. It was a nicely produced thing but it was sufficiently insubstantial never to have appeared on the desk with the other papers. If the briefest reading and not a great deal of analysis under closer scrutiny can throw up four points like that, and if this is to be the defence of the Green Deal—the last but final word—then frankly we need rather more than we have at the moment.
Baroness Noakes
My Lords, this has been a very interesting debate and I thank all noble Lords from all parts of the Committee who have taken part in the debate. Like the noble Lord, Lord O’Neill, I thought the three paragraphs in the document on the energy company obligation clearly did not go any way towards giving the Committee the kind of information that we would customarily expect to see in something like draft statutory instruments. I did note that when the Minister responded, the one thing he did not do was undertake to give the Committee or the House any further information when the Bill returns to the Chamber. I regret that, and I suspect that it may mean that we will return to this issue.
I got the impression that the Minister was linking the time taken in the Chamber on amendments with the time taken on this Committee. I am conscious that we have not achieved the target that the Minister wished to achieve today; nevertheless, I do not think that any of our debates has in any sense been of an unnecessarily excessive length. I believe that we have raised genuine points.
The Minister suggested that the energy company obligation might be met from profits. I remind him that his department’s impact assessment says that,
“there is a potential for significant costs to suppliers in meeting the obligation which ultimately we”—
that is, his department—
“expect to be borne by consumers”.
That is why there are important issues that need to be teased out. What is this obligation? Which people will it affect? How much is it going to cost, and how is it going to flow through the system into consumer prices? There is a real problem that it may not alleviate fuel poverty if it just goes round the houses and comes back in the form of bills. We need all those details.
My main reason for tabling my opposition to the clause concerns parliamentary scrutiny; it is not to challenge any part of the energy company obligation. The Minister said that we have to recognise what the Government have to do. Governance is about trying to get things done, and there is a framework Bill in order to allow the Executive to do what it wants. I am sorry, but the reason why we have legislation is to ensure that there are proper checks and balances against the Executive doing exactly what they want. That is why we have Parliament and, in particular, it is why we have your Lordships’ House, which acts as a revising Chamber. It is not about stopping the Government doing what they want; it is about making sure that there are the right checks and balances in the process. This is what I feel most strongly about in connection with this part of the Bill. We are letting the Executive do what they want but with insufficient scrutiny by either House.
I hope that the Minister will reflect on this debate as we move through this Committee stage and before we reach Report. It is important that your Lordships’ House has further and better particulars as an aid to understanding how Chapter 4 of Part 1 of the Bill will be used, and as an aid to your Lordships’ House in determining whether it is content with the formulation of the powers in the Bill or whether other safeguards are needed in the Bill. That is the role of your Lordships’ House and I hope that the Minister will facilitate the House in carrying out its role.
Lord Jenkin of Roding
I am aware that we were a little critical of my noble friend in the previous debate but there is something in this clause that I believe deserves mention.
Lord Jenkin of Roding
Is someone shouting? In Clause 63(4) there is a whole series of paragraphs where the words “carbon emissions reduction obligation” are replaced by “home-heating cost reduction obligation”. These are two different things, of course, but I firmly believe that both the companies and, in particular, their customers will be much more responsive to a mention of home-heating cost reduction rather than carbon emissions reductions. Here in the rarefied atmosphere of Westminster we are very used to talking about carbon footprints and carbon reductions, but ordinary householders are looking at how to reduce their bills. I very much approve of this change in the wording. It moves away from what I always thought was a real problem with the CERT, which was that it started and ended by being a carbon reduction. Of course, that is what we want but it does not really appeal to ordinary people. Therefore, I welcome this change in the wording.
Baroness Maddock
“Advice on benefits of new or under-utilised technologies
(1) For the purpose of enabling the Secretary of State to assess the benefits of new or under-utilised technologies in reducing home heating costs and dealing with fuel poverty, the Secretary of State must request the advice of the bodies specified in subsection (2) on the following technologies—
(a) passive flue gas heat recovery systems (“PFGHR systems”);(b) voltage optimisation technologies;(c) standby down-powering technologies; (d) dynamic demand technologies;(e) district network connection technologies; and(f) such other technologies as the Secretary of State thinks appropriate.(2) The bodies referred to in subsection (1) are—
(a) the Energy Saving Trust;(b) the Fuel Poverty Advisory Group.(3) A request for advice made pursuant to subsection (1) may also include a request for advice as to how those technologies can assist in combating climate change.
(4) The Climate Change Committee must within 12 months of the coming into force of this section consider and produce a report on the ways in which the technologies specified in subsection (1) can assist in reducing carbon emissions.
(5) In this section—
“PFGHR systems” means technology that can use the waste heat from condensing boilers in order to heat water;
“voltage optimisation technologies” are technologies that lower the input of voltage to electrical equipment from that at which electricity is currently generated;
“standby down-powering technologies” are methods by which electrical equipment is turned off, or reduced, during periods of non-use;
“dynamic demand” has the same meaning as in the Climate Change and Sustainable Energy Act 2006;
“district network connection technologies” are technologies that enable consumers to link up lower cost and lower polluting energy generation.”
Baroness Maddock
My Lords, Amendment 30 would introduce a new clause into Chapter 4 of the Bill, which is about reducing carbon emissions and home heating costs. We have heard quite a lot about Greg Barker today, but this clause was actually tabled under the previous Government to be an amendment to the previous Energy Bill—as they have guillotines in the other House and a different way of selecting amendments, it was never discussed—and I know that Greg Barker and Charles Hendry, who both now have ministerial positions, were in support of it.
The amendment explains to people exactly what it is doing, but I thought that it might be helpful if I said a bit about what the different technologies are. Gas savers are devices that can be fitted above a boiler to track the waste heat. They improve the efficiency of the boiler because it builds up a reservoir of hot water so that when consumers turn on the tap, hot water arrives rather sooner. This has been described as “free to users” because you have not wasted the heat—you have used it to heat the water. They also reduce the wastage of water, and warm water arrives sooner at the tap; this gas saver won an award from Waterwise because of that. It heats the cold water going into the boiler, thus meaning that the boiler has to do less work to heat to the required temperature if warm water is going in rather than cold water. In a nutshell, this facility uses the waste heat from boilers to heat water. That is what gas savers are.
At some point today there was mention of the various technologies that allow us to use our power more efficiently. We have heard all sorts of figures about how much electricity we use with things that are left on standby, but currently there are no limits to how much power an appliance can use while it is on standby, and some things have to be on all the time—you tend not to turn them off, so a lot of energy is wasted. In the UK, standby represents about 80 per cent of residential electricity use. The proposal to limit standby power to between 0.5 watts and 2 watts could save 73 per cent of this wasted energy. I will not go through all the figures, but you reach 2 per cent of the total UK energy use if you take on these types of measures. Not only would they mean that we were not using the power but it would be another way of lowering people’s electricity bills.
The same goes for demand response. Another technology, dynamic demand technology, responds to the voltage in the national grid, and that was mentioned earlier today. These devices use electricity at times only at times when it is plentiful. When electricity demand is high, the appliances turn off; they turn back on again only when demand has dropped. Modern technology makes it possible for us to do this in a way that we would never have been able to do years ago. The current cost to the National Grid of dealing with fluctuating levels of demand is about £80 million, because we keep power stations running at part or half power so that they can quickly be turned up to full power when we get extra demand. If you have dynamic demand systems in appliances, that means we would need less of this type of facility, which wastes quite a lot of power. While the technology does not lead to less electricity being used by the consumer, it would help to save because we would not be running power stations at low power.
Lord Davies of Oldham
My Lords, I have a few things to say. The Minister has made comments about things that go on in the Chamber of which he disapproves. Committees finish at 7.45 pm and often at 7.30 pm. I want to know whether the government Front Bench is going to follow the rules or whether it is departing from them.
Lord Davies of Oldham
No, my Lords, I have asked whether the noble Baroness intends to move the adjournment of this Committee. It is 7.45 pm. I have quite a lot to say on this Committee. In fact, I could probably go on for three and a half hours and I assure the Committee that I certainly will unless the Government recognise that rules are rules. To complain about what is going on in the Chamber, which is well within the rules, and to break the rules in Committee is quite unacceptable.
Lord Teverson
I am not going to talk about the other Chamber, but with this Committee on the Energy Bill, if there is some time left, we take the amendment and finish after that amendment. I am amazed at that intervention. It is quite unnecessary. I find it absolutely astounding. I presume that we will do as we have always done, which is to finish debating the amendment then adjourn. I shall join with the noble Lord in doing that, if that is the case.
Lord Marland
We started at 3.45 pm and we have been here for four hours. That is how long I was instructed that we were here for. We are running over by a minute. I do not think that that is unreasonable; no one is trying to frustrate the Committee. I did not intend to stop the noble Baroness, Lady Maddock, making her excellent speech. I naturally thought that we would finish the amendment.
Lord Davies of Oldham
Well, my Lords, the Minister may assume that we are going to finish the amendment, but we are all entitled to contribute. I would first like to emphasise that we have a great deal of sympathy indeed with the amendment, which has many parts to it that we can see are constructive and advantageous. We note the reference in the Committee to the Energy Saving Trust, a body that is being greatly reduced in its capacity to play any role because of the resources of which it is being starved.
Secondly, my understanding is that the Fuel Poverty Advisory Group is named in the Public Bodies Bill. If the amendment of the noble Baroness, Lady Maddock, were agreed to, presumably that would have implications for the support that she would in due course give to opposition amendments in the Chamber on the Public Bodies Bill that try to protect the very body to which she refers in her amendment. It scarcely makes a great deal of sense to table an amendment about a body that her Government are bent on abolishing under proposals in the Public Bodies Bill. We certainly would wish to give broad support to the amendment, but there are difficulties with it.
I say again that Committees work to strict rules. We have always obeyed them. I have never been on a Committee that has sat past 7.45 pm. This is the first time. If other noble Lords have experienced that, I am seriously in error. I thought I understood the rules regarding the timetable of the Committee stage and I still find it extraordinary that the government Front Bench did not move the adjournment when it should have done.
Baroness Noakes
The noble Lord, Lord Davies, might have forgotten that on Wednesdays the Grand Committee normally sits until 7.45 pm, not 7.30, so we are not 15 minutes but only a couple of minutes over. That is the Wednesday convention. However, I support the noble Lord, Lord Davies of Oldham, having spent many days in Grand Committee, often with him. It is customary in Grand Committee not to overrun by more than a couple of minutes and it would have been helpful not to have begun consideration of this amendment. The custom is not like that in the main Chamber, where if you start an amendment before 10 pm you finish it, but as near as possible to that time. That was the custom when I was in Opposition and the noble Lord, Lord Davies, often had to call time on behalf of the Government. I thought it was fair to say that.
Baroness Northover
As the inexperienced Whip on this Bill, I think I need to apologise if we have overshot. Given that we started consideration of the amendment before the finishing time, and given that it is incredibly unpredictable as to how long any amendment will take, and given that we discussed various clauses, including the one that this amendment slots into, it seemed to me—although I was clearly in error—that we could look at it quickly. That is clearly not the case, and I therefore apologise for trespassing on noble Lords’ time.
Perhaps I may respond as rapidly as I can to my noble friend. We fully support the underlying ideas in this amendment. It is essential that, when designing new energy policies, we take into account the costs and benefits of the full range of technologies available. The noble Baroness flagged up some important areas. However, I should point out that including specific measures and organisations in the Bill in this way leads potentially to the kind of problems that the noble Lord, Lord Jenkin, was flagging up earlier, by potentially, if things become redundant, having the problem of needing to consolidate Bills because things have moved on and changed. Although we very much support the ideas behind the amendment, including bringing in new technologies, we encourage the noble Baroness to withdraw the amendment at this stage.
Baroness Maddock
My Lords, I am sorry that it is my amendment that has caused some disruption to the rather smoother running that this Committee has enjoyed. I understand what my noble friend is saying. When I intervened in the previous amendment, I hoped that I was being helpful to my noble friends about how we could proceed in the future and how we could satisfy some of the issues that have been raised today regarding having more detail about what goes on. It is unfortunate that we are doing this at the last minute, because that means it is not possible to get something on record about this in a little more detail. I hear what my noble friend says; I will take this away, and it may be that we look at other ways of ensuring that the Government consider these other sorts of technologies. I know that they take these technologies on board but the right signals must be sent to the markets so they proceed with them. If between now and Report we can bear that in mind, we may get somewhere.
The noble Lord, Lord Davies, is right when he says that the fuel poverty advisory group is down in another Bill. However, that Bill has yet to get through Parliament; it is not there. You write your amendment about the situation as it stands now. Having discussed these issues with the Government, I know that it is their intention that there will be a group that advises on fuel poverty issues, although it may not be called the same thing. Had the Government accepted my amendment and then introduced such a group, when it disappeared out of the Public Bodies Bill and a replacement body was there, they would amend the legislation accordingly. I beg leave to withdraw my amendment.
Baroness Northover
I think that this may be a convenient—or perhaps less inconvenient—moment for the Committee to adjourn until Monday at 3.30 pm.