Lord Marland
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)
My Lords, I place on record my thanks to all noble Lords for the spirit of collaboration and constructive criticism that has characterised our formal and informal meetings leading up to this moment. This has influenced not only the Government’s amendments, but also the consultation document and draft secondary legislation which we will soon be publishing. Your Lordships examined the Bill thoroughly when it started in this House and made many excellent suggestions of how it could be improved. These were taken up in the other place and I believe we now have a better Bill before us. I also place on record my thanks to all our officials and their team, who have worked so tirelessly to respond to questions from noble Lords and, indeed, to my own.
It is convenient to discuss Amendments 1 to 3 together with Amendments 4 to 32, 96, 97 and 131. Anchoring ambition for household energy efficiency was an issue we debated in depth following amendments tabled by the noble Baroness, Lady Smith of Basildon, and the noble Lords, Lord Grantchester and Lord Davies of Oldham. The Bill returns to us with Clauses 97 and 107, which oblige the Secretary of State to take reasonable steps to improve the energy efficiency of the English residential sector by 2020 in order that emissions from this sector follow a trajectory consistent with the UK carbon budget.
My noble friends Lady Parminter and Lord Teverson and the opposition Front Bench stressed the importance of an annual report on the Green Deal. This Bill now contains, via Amendments 96 and 131, a requirement on the Secretary of State to report to Parliament on the contribution of Green Deal policy and the energy company obligation to reduce carbon emissions in Great Britain, and the extent to which such reductions have contributed towards achieving the carbon budgets.
As we went into the detail of the Bill, we had considerable discussion on the importance of Green Deal assessors not being able to mislead customers. Noble Lords will now see that Amendment 4 requires that Green Deal assessors should act impartially. In addition, the Government have listened to the concerns raised in the House regarding liability for default on Green Deal payments. Amendment 10 fulfils this, making provision that energy companies will share revenue collected on a proportionate basis with the Green Deal provider in cases of customer default. In this model, the energy supplier will not be liable to pass anything on if no moneys are received from the customer, a feature that is vital to ensure they are not left with significant liabilities that would impact on their balance sheets. Amendment 12 is related to this. It allows the Government to require that energy suppliers, with customer consent, share relevant data on customers’ prior energy bill payments with Green Deal providers at the point of contracting. This is crucial as it ensures that Green Deal providers will be better placed to make responsible lending decisions.
Finally, early repayment fees are covered by Amendment 17, which I signalled in this House. Without it, Green Deal providers would find keeping the cost of finance low extremely difficult. I assure noble Lords that such a fee will be limited to Green Deals of a specific length, and the Secretary of State will be able to specify further conditions that must be met to ensure that additional compensation will only be available in appropriate circumstances. Further, the amount of compensation that can be claimed will be subject to a cap set by the directive. I beg to move.
Baroness Smith of Basildon
My Lords, the noble Lord, Lord Marland, is to be congratulated on his presentation of the amendments, and it is important that we also place on the record the fact that we welcome many of the government amendments before us. We still consider that more could have been done by the Government to make the legislation as effective as possible, but we welcome the direction the Government have moved in.
A number of issues were first raised in your Lordships’ House, and even if the Government did not concede the point at the time, it is clear that the Minister listened and that changes have been made in the other place. Specifically on the Green Deal, there is a clause that states the ambition of the Bill. Important consumer protections are now in place, particularly on the impartiality of the assessors, as well as the issues around apprenticeships. Further on in the Bill, the suggestion in amendments put forward by my noble friend Lord Judd in relation to the national parks has been taken up.
The noble Lord, Lord Marland, referred to the collaboration and co-operation that has marked the course of the Bill. I concur entirely with that, and I acknowledge his willingness to engage in debate, which was welcome. As successful as we have been on seeing a number of improvements made to the Bill, there were times when my persuasive powers failed. He knows that we do not give up easily, and I am sure that as this legislation is implemented we will all want to monitor its effectiveness and see how improvements can be made. We understand very well that this is a framework Bill and that further secondary legislation will be brought forward. I hope that we will be able to continue the collaborative approach we have seen during the course of this Bill. Given that the statutory instruments will be unamendable, it would be helpful to have discussions prior to them being brought before the House in order to get the best results possible. We have made it clear that we want the Green Deal to be successful, and early discussions on the 52-plus sets of regulations that will be tabled would be in the best interests of moving forward.
I turn to the amendments in the group before us. I welcome the introduction of the energy efficiency aim as set out in Commons Amendment 97. This was first raised in your Lordships’ House, and it would be a lost opportunity if it was not anchored in existing environmental legislation. The Government have said that they want to be the greenest Government ever, so tackling climate change has to be at the heart of any Government who seek to be responsible on the environment. Although I know that the Government do not like targets, they have often proved to be the best way of achieving stated aims. We have always recognised the potential for this legislation to be a good tool towards fulfilling the Government’s environmental objectives, including the carbon target set by the last Labour Government. This government amendment on energy efficiency aims sets down the right sentiments and heads in the right direction.
Amendment 96A is one that will assist the Government in measuring the success of the Green Deal by including in the annual report the number of homes that have had energy efficiency measures installed in that and in previous years as part of the deal. I acknowledge that the noble Lord agreed to this when we discussed it in Committee and possibly again on Report, but knowing how many homes have taken up the opportunity to subscribe to the Green Deal will allow the Government to take action in order to improve take-up, if necessary, and gauge success. I would be grateful if the noble Lord could respond to that. We all know how difficult it can be to wade through government reports to find exactly the figures we are looking for, but this would be a simple figure to illustrate how successful the project has been, and to take action if it has not.
I welcome the fact that the Government have taken on many of the concerns raised in your Lordships’ House and elsewhere about protection for the consumer. One area on which I badgered the Minister was the impartiality of the assessors. I know he felt that I went on at some length and rather laboured the point in Committee, but clearly the Government have listened and brought forward Amendment 4, which requires,
“green deal assessors to act with impartiality”,
and that is very welcome. Some concerns remain on this point; that is why I have tabled Amendments 4A and 4B, which are about monitoring and enforcement. I know that those details will come forward in regulation, and I welcome further discussions prior to those details coming forward.
The two amendments seek only to strengthen the points that the Government are making with this amendment. My amendments would have the effect of ensuring that the code of practice will extend to any arrangements for monitoring and enforcing impartiality. Amendment 4B is seeking to give the consumer the information on which the assessment will be made. That strengthens the consumer in that they know what to expect from the assessor and the methodology used. It would make it very much harder for an unscrupulous assessor to give bad advice and provide bad options for customers. One reason this amendment is so important is that the debt stays with the property, not with the individual who originally incurred that debt. It might be many years before any problems or difficulties came to light. It is better to take preventative action at an early stage rather than to wait until there is a problem, which might be quite difficult to resolve. The amendment also fulfils the Government’s objectives of openness and transparency.
I welcome the Government’s clarification to the Labour amendment passed in the Commons committee on Green Deal apprenticeships. I appreciate that the Government were not fully behind this proposal initially, but following the success of the amendment and voted on by Conservative Members in the House of Commons —albeit, I think, accidentally—the Government have responded well, for which I am grateful.
My final amendment relates to Commons Amendment 18, which proposes the new clause headed “Exercise of scheme functions on behalf of the Secretary of State or a public body”. We have discussed previously what public bodies could be involved. I am seeking clarification on whether they include charities, social enterprises and other non-profit-making organisations. I suspect that they do, but from the wording it is not clear. Furthermore, could the Minister clarify whether the Government intend to consult Green Deal participants and consumer groups about any proposals in this area to ensure that we get it right and that we take on board any comments that they have at an early stage?
I know that the Minister understands the concerns that I have raised with him directly about the financing arrangements. I remain concerned that the interest rate for any loan or credit agreement on the Green Deal is not a fixed loan as the legislation stands at present. The Minister has said to me that he takes the view, understandably, that the Government cannot intervene in the finance market in this way. I put a further point to the Minister for consideration. The Government have already intervened in the market by creating a new system of a loan or credit agreement attached to a property rather than to an individual. That is different from most loans and most credit agreements. So someone who purchases a house that already has a Green Deal credit arrangement has no say in the terms and conditions of that loan. They have a say if they have taken over the house and the terms and conditions of any mortgage that they may undertake, but not on a loan that is part of the Green Deal. Many people may well be reluctant to take on such a long-term loan or credit agreement that could run for another 10 or 15 years without knowing what the rate of interest could be and having had no say in the terms and conditions of that agreement. Given those unusual circumstances, it does not seem unreasonable that the interest rate should be fixed, so that someone coming along in the middle or at some stage in that loan knows what the interest rate will be for the remainder of that loan, given that it was taken out by another individual.
I hope that the Minister can reflect further on that point. I think it would be very helpful and perhaps lead to a greater take-up of the Green Deal, because it would not put prospective participants of the Green Deal off by worries about what would happen if they want to sell their property afterwards.
My final comment on this group of amendments is about the regulations, repeating the points that I made earlier. It would be very helpful if the Minister could give a commitment that he is happy to discuss any secondary legislation prior to it being tabled in the House. The spirit of collaboration and co-operation that we have had so far for this Bill has been very welcome and has led to significant changes that have improved it. We are grateful to have been part of that and welcome the Minister’s comments on those proposals.
Lord Jenkin of Roding
My Lords, I will be extremely brief. The Commons amendments, particularly those in this group, make considerable improvements to the Bill, and it was very welcome to hear the noble Baroness, Lady Smith of Basildon, say that the Opposition are finding it easy to accept these amendments.
I also thank my noble friend Lord Marland for the amount of trouble that he and his officials have taken with what is, at first sight, a pretty formidable list of amendments that have come from the other place. When I picked up the paper initially from the Printed Paper Office, I thought that we might be here for a week. But he has taken a huge amount of trouble to explain what the amendments are all about, which will make our debate very much simpler.
I want to raise two points on this group of amendments, which I have discussed with my noble friend. I have always found it difficult to understand why, if somebody chooses to pay off a debt early, they are subject to some sort of penalty. I would have thought that if you pay off your mortgage early, as I did some years ago, the lender then has more money to lend to somebody else. Why should one be expected to pay him compensation because you have repaid him early? Can my noble friend justify why that is particularly relevant in this case? He also talked about the regulations that will be limited to Green Deals of a specified length and so on. Is he able to give us any guidance as to how that will work?
The second point is much more relevant. From the beginning it has been recognised that a body will have to be appointed to manage the Green Deal oversight and the authorisation scheme, because that will be fundamental to securing the consumer protection that, quite rightly, the noble Baroness has referred to. Can we yet be told anything about who that will be or to what body this vital task is going to be entrusted? We have now come to the final stage of this Bill. It has gone on for a long time and we still know nothing about who is going to run the scheme. It is obviously going to be under the general supervision of Ministers, but a body will be delegated to manage the Green Deal oversight and authorisation scheme. Can my noble friend tell us anything more about that at this stage?
Lord Hunt of Chesterton
My Lords, I would like to ask just one question, which I asked at Second Reading and in Committee. Heating a house is also a matter of ventilation. I raised the fact that the word “ventilation” was not in the Bill and the Minister assured me that it was not. We still have no reference that I can see in the Bill to advice about investment in ventilation systems in housing, which is a huge part of the thermodynamics. Just to satisfy the odd thermodynamics freak in this House, I wonder whether he could put that straight.
Lord Whitty
My Lords, I join my noble friend and the noble Lord, Lord Jenkin, in expressing appreciation for the way in which many of the concerns, particularly in relation to consumer protection but more widely about the regulation of this area, have been taken into account by the Government in their amendments in the Commons.
However, before the noble Lord gets too complacent about this, he needs to recognise that we are leaving an awful lot to the regulations in a situation where there is considerable confusion as to how the Green Deal, which in concept most people welcome, is going to be delivered, and how the householders and landlords are going to relate to the rather lengthy chain between a bank or financial institution at one end right through to the installer at the other. There is a serious confidence issue here, which I addressed in Committee and which the noble Lord acknowledged, that the regulations and the code of practice are going to have to address. The fact is that information from neither financial institutions nor local builders—nor indeed government—is automatically accepted by householders and consumers.
I appreciate that considerable consumer protection has now been built in, but the task that the Government now have in the process of drawing up regulations, guidelines and the code of practice is to make clear exactly what quality control—to this extent, I agree with the noble Lord, Lord Jenkin—will be exercised by the body that will oversee the operation of the scheme, from the financial package right through to the independence of the assessor. The confidence that will need to be instilled in the market if the Government are to attain their worthy ambition of rolling out the Green Deal will require considerable attention in the regulations, the code of practice and the consultation.
Baroness Parminter
My Lords, when the Bill was first introduced in this House, we on these Benches—a number of us cannot be here today due to the rescheduling of business—welcomed it on the basis that it would help provide green jobs and move us towards meeting our legally binding carbon targets and achieving a low-carbon economy. However, like many other noble Lords, we also recognised that there could be further areas where the Bill could be strengthened. We have been heartened by the approach taken by the Minister, and I join other noble Lords in paying tribute to him for being prepared to listen to the many thoughtful comments that we in this House and another place have made during the progress of the Bill. It is a much strengthened Bill and it will do much to deliver on the Government’s commitment.
I thank the Minister particularly for listening to those of us who argued the need for a stated aim and ambition in the Bill, as well as the desperate need for an annual report. That is extremely welcome. I welcome also the further measures pertaining to consumer protection, in particular the early appointment of a body to manage the oversight and authorisation scheme. However, I support what the noble Baroness, Lady Smith of Basildon, said about the consultation on how such a body would take forward its role. Consumer protection, as the noble Lord, Lord Whitty, made clear, will be fundamental to the success of the Bill. I hope that the Minister can give reassurance today that such consultation will take place, without it necessarily being in the legislation. Without that consumer protection, all the good words spoken in this House will come to naught.
Lord Grantchester
My Lords, I join others in thanking the Minister for his introductory remarks. I congratulate him on the way in which he has led the government team on this Bill and on the fact that his first Bill will soon be enacted.
With the Bill now on its last lap, and with all the opportunities that we have had to examine it both here and in the other place and the improvements that have been made at each stage, we are now able to see the coherence of the Green Deal. With today’s amendments clarifying certain aspects of it, I should like the Minister to confirm my interpretation of them and give some guidance on the Government’s thinking. I ask the House’s indulgence concerning Amendments 6 to 9, on disclosure documents, Amendment 10, on default, and Amendments 12 to 15, on data for responsible lending.
I take it from the amendments that it is the Green Deal provider and his or her finance company that makes the payment risk decision on whether to give the go-ahead to a green deal on a certain property. Under Amendments 6 to 9, the Green Deal provider has to disclose detailed information to a consumer taking over a property; under Amendment 10, clarity is provided regarding who is liable in a default situation; and under Amendments 12 to 15, the Green Deal provider can, following the consent of the present or intended future bill payer, be advised by the energy company collecting the Green Deal payment regarding their payment history.
From these Benches, we are keen to see the legislation and the Green Deal a success in improving the energy efficiency of the nation’s housing stock and buildings and reducing the demand for energy. Given that Green Deal improvements are to be paid for over 20 years, I can envisage certain properties generally populated on a more short-term basis becoming problems, even given that it may be the landlord in these circumstances who gives the go-ahead for the Green Deal improvements. Given that the Green Deal loan attaches to the property, and that there is an element of risk-taking on the part of several participants, will the ultimate assessment of risk be made on the property or on the bill payer, who could pass on the payment? Has the Minister sense-checked the Green Deal in the marketplace and seen the results of the pilot scheme in Sutton, where nearly half the homeowners who expressed interest subsequently turned down the opportunity to participate?
Lord Marland
My Lords, I thank noble Lords for their contributions. I am grateful particularly to the noble Baroness, Lady Smith of Basildon, for her further searching and detailed questions, which will help us all better to construct the Green Deal. As we said in Committee and at every stage of the Bill, consumer protection is at the very heart of the scheme. I echo the noble Lord, Lord Whitty—who recognises the consumer position better than anyone having been chair of the consumers’ body—in saying that we must not make any early mistakes. He is quite right about that, and that is why this and future debates on this subject will be so valuable in creating a Green Deal that is fit for purpose.
I confirm that we will report annually on the take-up of the scheme. The noble Lord, Lord Grantchester, mentioned the Sutton housing scheme. If 50 per cent of households took up Green Deal, we would be incredibly satisfied. We would not be complacent about it, but if 50 per cent took it up, I think that we would all say, “Well, we’re moving in the right direction”.
As I said earlier, consumer protection is at the heart of the scheme. It is therefore fundamentally important that we have a code of practice that protects the consumer and provides a pathway for them. The assessors have to deliver and the consumer should be protected. I make the commitment on record that I shall be very happy to engage, as we have throughout the passage of the Bill, with all sides of the House in establishing the code of practice and ensuring that it is fit for purpose for the Green Deal.
The noble Baroness mentioned apprenticeships. Clearly, a good many of our MPs in the other place felt that apprenticeships were fundamental and therefore voted against the Government on this point, and one can only agree with them.
The issue of loan interest rates is difficult; there is no point in pretending otherwise. My noble friend Lord Jenkin of Roding got to the heart of the whole matter of borrowing for the consumer over a 20-year period. We have to remind ourselves that this is a market-driven proposition and that, therefore, the market, as it does in every other form of lending, will come up with a rating structure. If the Government try to confine that market by imposing restrictions and limitations on interest rates, they will shy the market away from it. The whole point is to encourage the market to react to this.
I wholeheartedly agree with my noble friend, as I do on virtually every occasion—I think that there was only once where I disagreed with him—that it would be wonderful to encourage people to pay off debt. Debt is at the core of this society’s problems at the moment. He knows that—we all do. I would be very keen to find a way to do that but unfortunately it is not within the powers of our department in the Bill. It goes to a far wider remit. It is for BIS and the Treasury to grapple with the serious problem that we have but it is a good point.
It seems a little churlish now to move to the subject of ventilation, which the noble Lord, Lord Hunt, frequently raises. This is part of the product offering that I am sure will be available as we roll out a range of products that will be acceptable within the Green Deal. He knows that our department is very sympathetic to the matter of ventilation as being at the heart of improving the build quality of a house. As I said, and to repeat the words of the noble Lord, Lord Whitty, it is important that we give confidence to the market so that it can deliver but also that, as my noble friend Lady Parminter kindly said, we continue to work together to ensure that this Green Deal is a roaring success.
Lord Marland
Lord Marland
Lord Marland
Lord Marland
Lord Grantchester
My Lords, I beg the House’s indulgence to ask the Minister further questions on Amendment 18. Has he envisaged an accreditation body for the Green Deal scheme? Has he only envisaged some administrative functions being undertaken or will such an accreditation body undertake any overarching role acting to co-ordinate, oversee and drive forward the objectives of the Green Deal? While the Minister may answer that the market will provide, the success of this initiative would be enhanced if there was a body that could take ownership of the task.
Lord Marland
My Lords, I can assure the noble Lord that we are working with UKAS—the United Kingdom Accreditation Service—to have an overarching effect on this particular Green Deal. I, too, beg the House’s indulgence in responding to something that the noble Baroness, Lady Smith, asked me earlier: charities are included in the Green Deal. I apologise for not answering that earlier. It occurred to me as I sat down.
Lord Marland
Lord Marland
Lord Marland
My Lords, this second group of amendments covers the private rented sector, the energy company obligation and the Home Energy Conservation Act. For convenience, I will speak to Amendments 33 to 72 and Amendment 104 as a group.
During the early stages of the Bill, many noble Lords tabled amendments in the House for stronger provisions to improve the energy efficiency of the private rented sector. I acknowledge the leadership shown in this by the noble Lord, Lord Best. During the Bill’s passage, the sentiments underlying those amendments were shared by many in another place and by a wide range of interest groups who made the case for a clearer and firmer regulatory position. We have listened carefully to those arguments and, through amendments in the other place, have responded to them.
Amendments 37 to 39, 44 and 47 remove the provisions from the Bill which required a review of the private rented sector by April 2014. The review has been omitted to send a clearer signal that we want action to address this problem. We have also made it clear that there is a duty on the Secretary of State to make regulations.
However, with the regulatory certainty generated by the omission of the review provisions, we need to give the sector longer to prepare. Therefore, from April 2016 instead of April 2015, all domestic landlords should not unreasonably refuse a tenant’s request for consent to have relevant energy efficiency improvements where there is finance available under the Green Deal and the ECO. Amendments 45 and 46 make these changes.
The current provisions for the domestic energy efficiency regulations were removed and we sought new regulation-making powers to introduce a minimum energy efficiency standard for the domestic private rented sector, as provided for in Amendments 35 and 36. Under these new provisions, from April 2018 landlords will not be permitted to rent property unless it has an E or above, or they have done the maximum package of measures under the Green Deal or ECO—even if that still does not take them above F. This is a clearer legislative position for both landlords and local authorities, as the enforcement body, and is similar to the current provisions in the Bill for the non-domestic sector.
Amendments 48 and 51 impose a duty on the Secretary of State to make the non-domestic regulations and change the date for regulating from 1 April 2015 to 1 April 2018, in line with the domestic provisions. Under these new provisions, we remain committed to minimising the regulatory burden on landlords. Amendments 54 to 69 relate to Chapter 3 and the Scottish private rented sector provisions, and reflect the differences in Scottish parliamentary procedure.
A number of additional amendments are very minor or technical. These include Amendments 33 and 34, 40 to 43, 49 and 50, 52 and 53, 72, and 125 and 126. I will not take up your Lordships’ time with these. Amendment 104 is to enable the Secretary of State to require local authorities to report on their engagement with the Green Deal and ECO. Scottish and Welsh Ministers have decided to continue with the repeal of HECA. I beg to move.
Lord Best
My Lords, I shall speak to Amendments 35A to 35E. I fear that some of the excitement of this debate may be lacking, as I recognise that it would be very bad form for me to press any amendment to a vote on a night when so many from the government Benches are away at their party conference. However, I feel sure that I would not in any case be tempted to divide the House since the Minister has, throughout this Bill's progress, been extremely helpful in recognising and responding to the suggestions made within—and, indeed, outside—your Lordships’ House.
During the Bill’s passage through this House, I moved an amendment to secure improved energy efficiency in the worst of the properties in the private rented sector. My amendment was promoted by Friends of the Earth and the Association for the Conservation of Energy, alongside a consortium of a large number of voluntary bodies— from Citizens Advice to National Energy Action and from Age Concern to the Chartered Institute of Environmental Health. The amendment aimed to make it compulsory for landlords to improve the properties with the very worst energy efficiency ratings to a minimum standard before letting them. This would address a serious problem in the private rented sector where there are 680,000 properties with the worst energy ratings of F and G. These properties are wasteful of energy, create fuel poverty for their occupants and represent a hazard to health. The private rented sector has a special problem in this regard because the owners of the property do not pay the fuel bills and may have little interest in upgrading energy standards.
The Minister was very receptive to the arguments put forward, although my amendment was not pursued by the Government during the Lords stages of the Bill. Indeed, there was widespread support for a new law outside that would ensure that tens of thousands of vulnerable households are saved from the poverty brought on—unnecessarily, when remedies are at hand—by huge heating bills following big hikes in the price of electricity and gas over recent months. I was very pleased that the Government tabled an amendment to the Bill in the Commons Committee, as the noble Lord has explained. It is the changes to this Commons amendment that we are now debating. In essence, Ministers have taken on board the principle that, to quote the right honourable Chris Huhne, the Secretary of State,
“the rental of the very worst performing properties—those rated F and G—will be banned through a minimum energy efficiency standard”.—[Official Report, Commons, 10/5/11; col. 1064.]
That is very good news and a credit to Ministers in both Houses for taking this matter forward.
However, the Commons amendment has some deficiencies in the opinion of the expert groups involved and my amendments seek to overcome them. I am hopeful that the Minister will be able to provide reassurances on most, if not all, of these points. The changes I am suggesting here are relatively straightforward. First, there are two proposed changes to subsection (1) of the proposed new clause so that as well as placing requirements on landlords, the legislation should cover letting and managing agents. It was estimated by the Rugg inquiry on the private rented sector that some 60 per cent of properties were in the hands of agents, often with the landlord being an investor rather than a hands-on participant in the process. With day-to-day management in the hands of agents in so many cases, it seems important for the Bill to cover those who are acting on behalf of landlords, so these amendments extend the legislation to appointed agents and make it an offence for them to let or indeed market the properties below the F or G energy rating. My amendment to subsection (4) ensures that there is a proper definition of marketing in regulations. If the Minister believes that other regulations achieve this without the need for my amendment, I know that he will explain that to the House.
I have some knowledge of managing and letting agents in the private rented sector, not least in my role as chair of the Property Ombudsman Council, which considers complaints against agents from both tenants and landlords. A good letting agent is a real asset but not all are perfect and it seems important, since so much privately rented property has been placed by absentee landlords in the hands of agents, that the Bill covers them too. I am hoping that the Minister will confirm that existing regulations can be used to ensure that landlords as well as tenants will be covered by the obligations in the Bill.
Secondly, the amendment to subsection (2) simply tightens up on the definition of the standard which the property must achieve—that is, above the abysmal F or G rating. I am hopeful that this is not a controversial point since I know it is the Government’s intention that the energy efficiency of privately rented properties should be raised above the F and G level. The problem with the wording of the Commons amendment is that there could still be some privately rented properties which fail to obtain an E rating but which could still be deemed to comply with the legislative requirement because the landlord has made some improvements. They may be using Green Deal funding, perhaps topped up with special ECO finance, even though these properties have failed to achieve the minimum standard.
This loophole would create a category of legally let F or G-rated properties. Such a situation would lead to real compliance difficulties for tenants, landlords, agents and the local authorities who will be doing the enforcing. It would not be clear whether the minimum standard for letting had been achieved. If there are to be exceptions to the rule so clearly announced by the Secretary of State—I think a case could be made in the rather obscure instances of private letting of grade 1 listed buildings, for example—then surely such exceptions will be spelt out in the regulations. Obviously, the straightforward ban on the rental of properties rated F and G is what the Government intend and my amendment would make the position clearer.
Finally, the amendment to subsection (6) substitutes 2016 in place of 2018. Although I am not entirely clear why, the date for compliance in the original amendment I tabled for all the environmental organisations and consumer bodies was changed from five years hence to seven years hence when the Bill was amended in the Commons. I hope that the noble Lord will be able to give me some reassurance on the arrangements here. It happens that 2016 is also the deadline for all new homes being built in the private and social sector to achieve the higher standards of energy efficiency required by the Code for Sustainable Homes—that is, to level 5 or above. While I understand 2016, I am not clear on why the extra two years are to be deployed in this case.
As in all such cases, we can be sure that the most recalcitrant and inefficient landlords will leave everything to the last minute, meaning that we would have to wait for a full seven years from today for action to be taken in a lot of serious cases. I know that many felt that a starting point of five years hence was taking the matter too slowly. Some older people living in cold and draughty properties and paying huge amounts for their heating will not be comforted by knowing that things will not change for five years. A seven-year delay really does sound a bit feeble. I know that there is an aversion in some parts of government to introducing any regulation which could affect the private landlord for fear that, with the decline of social housing, the sector might contract. However, private renting has been expanding rapidly. Rents are still rising in most areas and the costs of improving energy efficiency to above the F and G levels is not likely to be a deterrent to letting. Research by the Energy Saving Trust for Friends of the Earth puts the cost at under £900 for 37 per cent of the offending properties, and less than £3,500 for three-quarters of these homes. Moreover, landlords will have access to the Green Deal and to assistance, where costs are higher, through energy company obligation finance.
If there are properties where, despite all the Government's help and encouragement, the landlord feels the obligation is still too burdensome and sells them either to another landlord with a better business plan or to owner-occupiers who are keen to do the places up, this would not seem to be a bad thing.
I know that the Minister has worked hard on these matters and I am confident that he will be able to give us, and all the many interested parties, some reassurance in relation to most of the suggested improvements to the Commons amendment which I am suggesting. However, I am a bit worried that bringing forward the implementation date from 2018 to 2016 may still be problematic for the Minister. I know the Bill uses the words,
“no later than 1 April 2018”.
Therefore, if little progress is apparent as time goes by, Ministers could bring the regulation into force at an earlier date. Although it would seem better to fix a five-year deadline for the changes here and now, not least so that landlords know exactly where they stand, it would be good to hear from the Minister about the process for reviewing progress in the sector and considering an earlier starting date.
I am very grateful to the Minister for the considerable progress that has been made in improving this important Bill, and I look forward very much to hearing his response.
Lord Deben
My Lords, I thank my noble friend for the changes that he has made. I very much agree with the spirit in which the noble Lord has brought forward his amendments. However, I do not think we should leave this without accepting that this has been a major response to the pressures which have been brought about, and we ought to thank my noble friend for that.
However strongly one feels about the need for care with regulation, this is one area where regulation is essential. As any of us who have had to deal with this on either a constituency basis or a ministerial basis will know, there are many good landlords; but, my goodness, there are some pretty bad ones as well. I too would like to ask whether we could think again about the seven-year period, for several reasons. First of all, one has to think of the situation of a family in such accommodation. It is the whole primary-school period for a child. Seven years is a very long time for people in very poor accommodation, and it is something that we can do something about.
It is also very bad environmentally. Forget the sadness of the people themselves—we are wasting energy in a way which is unnecessary, in circumstances where this can relatively easily be put right.
Thirdly, although I hesitate to draw too close a comparison with other things that are happening, there is a worry that we are not living up to the promises that we have made. Therefore people are worried about the date of 2016. It is a crucial date. If this Government in any way move from that date, they will do huge damage to the housing industry. The good housebuilders are all prepared to meet the requirements which the last Government laid on them and which this Government are continuing. There are some quite large housebuilders who have no intention of doing anything about this until they are absolutely sure that we are sticking to 2016. It would be a crying shame if their tardiness were to succeed, and those who had done the job and were prepared were found to have wasted very considerable amounts of their money preparing to meet the Government’s targets. I am worried that if we move this from 2016 to 2018, there will be those in the companies which have decided not to do the job properly who will say, “There you are—the Government are not really absolutely sure. It is not actually on that date”.
Therefore I beg the Minister to reassure us that 2016 is written in stone, because the best housebuilders have spent a great deal of money on being prepared for that, and they will not only not forgive the Government but will not believe the Government again if we move from that. It is a cross-party agreement, and it is one which I think is crucial.
I therefore ask the Minister whether it is possible to think again about 2016. Five years is plenty of time to prepare, even for the most unhappy of landlords. I do not believe they need another two years; and there is also the ancillary problem, which I hope will be put right.
The second thing I wanted to say, very briefly, refers back to a point which has been raised about not being sure as to what all this means. Certainty is the key thing for the housing industry. I declare an interest in this, because although I am not a landlord I advise some housing companies on how to build ecological houses, and I do that as the chairman of a company as well. These are not covered, I am happy to say, by this Bill, so I can speak entirely independently, but as someone who knows something about it, the one thing the industry needs is absolute certainty. If there is any doubt in the way in which the amendments have been so fortunately made, I hope the Minister will allay those fears now, simply because this is an industry that does not actually move very fast, and only moves when it knows precisely what it has to do. I fear that is true, and it will be very helpful if the Minister would allay those fears.
Lord Jenkin of Roding
My Lords, I will make two brief points. The first is that, yes, there are landlords who fall well short of the standards that we might like them to adhere to. I am especially concerned with one category of letting, and that is letting to students. I say this with some feeling, as my grandchildren are in exactly this position now. A group of four students at Imperial rented accommodation in the north-east of London, and it was so draughty that my dear granddaughter came and said, “Please may we have a rug to lay against the front door to keep the snow out?”. They were not going to be there for more than a year, and indeed they were already looking for something else. However, these will be the really difficult cases, and I think one has to recognise that.
My second point is quite different. I have been consulting local authorities, because they now have quite specific rules to enforce the new provisions that are made for the private rented sector. I am gratified to find that they are in fact quite ready to take that up. They welcome this, provided that the full cost will be met, and that this will be treated under a full burdens assessment so that they will not have to thrust the cost upon their council tax payers. I think that they have been given some assurances, but if those assurances could be repeated this evening by my noble friend that would be very welcome.
Lord Whitty
My Lords, I also thank the Minister for bringing forward the substantive amendments here. However, I would also like to support the noble Lord, Lord Best, particularly on Amendment 35E, on the date. We have arrived at a slightly illogical position. There was some concern when the date was 2016, but there was a certain logic to that date. People were worried about it taking five years, but in the original proposition there was a review to be completed by 2014. The Government have accepted the logic of removing that review, which might delay progress and clarity about what we were requesting. However, that should make 2016 easier to attain, rather than less easy. I am therefore somewhat bemused as to why we are now talking about 2018 for meeting these standards.
I will accept that there could be two logical reasons for it. The noble Lord, Lord Jenkin, has touched on one: the argument that local authorities need time to prepare and to set up their enforcement. However, that is not what local authorities are saying. They are concerned about the cost, but they are also quite keen to get involved in this, at least at the RDA level. No doubt one or two local authorities will not quite make it but we know that most of them are trying to. Frankly, it would be slightly easier for them to do so had an amendment to another Bill proposed by the noble Lord, Lord Best, which would have allowed the local authorities to set up registers been accepted by the noble Lord’s colleagues in the DCLG. However, it is not really the case—
Lord Jenkin of Roding
I have specifically asked the local authority associations where they stand on the issue of 2016 or 2018. While they see the attraction of 2016, they have actually made it quite clear that they are not taking a position on this. No doubt different local authorities will have different views. However, the associations have specifically told me firmly that they are not taking sides in this argument.
Lord Whitty
I appreciate that, and am glad for the clarification. I was not implying that they were taking sides; they were saying that they could meet what would be required from them in 2016, provided that the cost is covered by the Minister’s department, as I believe to be the case. I really do not think that time for local authorities to prepare justifies moving the date back to 2018.
The other argument relates perhaps to the wider concern about the housing market, which we have debated during the passage of other Bills in recent days, that we might deter new landlords from coming into the market just as there is a big strain on the private rented sector to provide more accommodation. However, if you look behind that argument, the logic of that is not clear either. We want landlords to come into the private rented market who will be there for some time and who are prepared to provide accommodation that will not be deemed illegal in two years’ time. When attracting new landlords in, it must be those who are prepared to provide capacity within the private rented sector that meets the post-2018 standards. Were they prepared to come in earlier than that, they would have made sure that their property met those standards, whether it was new build, refurbished or existing premises. I can understand that there might be some concern about those two issues, but I do not think that it stands up.
I appreciate that the Minister may be in difficulty. This has been through the Commons and so forth, and clearly there are a number of interests to be placated here. However, if he cannot accept the amendment of the noble Lord, Lord Best, he can at least tell us this evening that, as far as his department is concerned, “no later than” means that it will attempt to bring the regulations in as soon as is practical. In my judgment, the end date would be earlier than 2018; it would probably be approximately 2016. A slippage of a few months will not worry me if the Minister can give the assurance that his department will work on the regulations, consult everybody concerned, from the property owners to the consumers, and aim to get an early date for those regulations, whatever the terminal date, in the statute book.
Baroness Smith of Basildon
My Lords, I support the amendments of the noble Lord, Lord Best, but speak specifically on Amendments 35C and 35E. I should apologise to the Minister for dragging him away from the Conservative Party conference. Looking around the Chamber, I think the average age in your Lordships’ House is currently significantly lower than in the debate I saw at the Conservative Party conference this afternoon. We are pleased to have the Minister here.
In some ways, this is the most controversial part of the Bill, although not in intent, because it is clear that everyone in your Lordships’ House wants to see improvements in energy efficiency in the private rented sector. The difference is the degree of urgency. I endorse the comments of other noble Lords who want to see the 2018 date brought forward.
I greatly welcome the changes that have been made, and a number of amendments in this group, particularly the Government removing the requirement for a review on which any change in energy efficiency regulations would be dependent. That is very good. That is the point that I raised in Committee. At the time it was not accepted. I have discussed it since with the Minister and I am really grateful to him for listening to the many voices that have asked for that condition to be removed.
I also greatly welcome the introduction of a minimum energy efficiency standard for private rented properties, so that properties that do not meet at least an E standard cannot be let. I entirely agree with and welcome that commitment. The impact of energy efficiency regulations could have a massive impact on health; on bringing down the energy bills of some of those hardest hit by the increases in energy prices; and, of course, as the noble Lord, Lord Deben, mentioned, on the environment. Consumer Focus estimated that just lifting band E to being the minimum could lift 150,000 households out of fuel poverty by saving each an average of £488 a year off their fuel bills. It would save 1.87 million tonnes of CO2 annually and cut the Bill to the NHS, as we have heard in previous debates, by around £145 million, which is currently spent on illnesses and conditions among those who live in poorly heated homes.
All those objectives have our full support, and I welcome the Minister’s movement on them. However, I part company with the Government on two qualifications, or loopholes, to those commitments, which undermine the Government’s stated objectives: first, to ensure that all homes that are rented out are of an acceptable energy efficiency standard; and, secondly, that this is done as soon as possible. The amendments of the noble Lord, Lord Best, seem a sensible and practical way of addressing these issues and meeting the Government's objectives. I hope that the Minister will be able to say something positive about those two amendments in particular and about all those tabled by the noble Lord, Lord Best.
Lord Marland
My Lords, I thank the noble Lord, Lord Best, for a very well constructed and well put argument on this amendment. It is fundamental, as he says, that we should deal with recalcitrant and inefficient landlords. I remind the House of what was happening before we brought the Bill forward: not a lot. The Bill has moved us on a long way. The other day I asked the noble Lord, Lord Whitty, “Is there any logic in government?”. He was careful in responding but his silence suggested that there is not. However, his logic here is that provided we get to 2016, there is logic. The answer is that it is not logic that we can live with here, but it is a logic that we can get a long way towards. I shall come to that point in a minute in addressing the remarks of the noble Lord, Lord Best, and my noble friend Lord Deben. In particular, I pick up on one remark that my noble friend made about certainty. We have to give certainty; it is absolutely right that we should do so in this area.
I shall address my noble friend Lord Jenkin. I am encouraged to hear that student accommodation has not changed since my day or my children’s day. However, that is a very good test case—one where we have to hit the landlord hard. My noble friend raised the point, as did the noble Lord, Lord Whitty, about local authorities and their attitude towards this. We have to work very closely with the local authorities. I was in Liverpool not long ago, persuading the chairman and chief executive of the local authority of the merits of the Green Deal. We have been to many other towns and cities, persuading them of those merits. I am thoroughly encouraged by their attitude towards this and their desire to ensure that properties in their cities are dealt with on this basis.
The noble Baroness, Lady Smith, gave a huge number of statistics, for which I am very grateful. I shall read them before I go to sleep tonight—or probably when I am going to sleep tonight. Many of these statistics will be helpful in getting us to where we should be. On a serious note, it is fundamental that these recalcitrant landlords—to quote the noble Lord, Lord Best—should act responsibly towards children and families in need, and that we stamp on them with great authority. Because of the significance of these amendments and the seriousness with which the Government take them, I shall break with tradition and read a script so that we are absolutely clear about the direction in which we are going.
I turn first to Amendments 35A, 35B and 35D, which deal with letting agents and marketing. We have investigated this matter and, under the existing Consumer Protection from Unfair Trading Regulations 2008, it will be unlawful for letting agents and landlords classified as traders to market properties that do not meet the minimum energy efficiency requirements. In addition, a landlord will not be able to circumvent the prohibition against letting a below-standard property simply by seeking the assistance of a letting agent.
I turn now to Amendment 35C on the implementation of the minimum standard. This is intended to ensure that all properties, regardless of cost and availability of finance under the Green Deal, are brought up to the minimum standard. I stress that “no up-front costs” is an important safeguard. It helps to ensure that our regulations do not have an adverse impact on the supply of properties in this key sector. Therefore, landlords will need either to reach band E or to carry out the maximum package of measures under the Green Deal and ECO, even if this does not take them above an F rating. Within that, there is the matter that the noble Lord raised to do with grade 1 listed houses. We are committed to a significant ECO, which will minimise those who cannot get above F under the golden rule.
Lastly, I turn to Amendment 35E on timing. As I outlined earlier, we amended the Bill and provided a firm legislative position. With this, we also need to provide landlords with a reasonable period in which to prepare and schedule works in their normal maintenance cycles. This is a long-backstop power; our intention is that regulations will bite right at the end of this period. However, the provisions of the Bill as they stand, without amendment, are expressed in terms that do not preclude regulations being made sooner than 1 April 2018. Therefore that possibility, as a matter of law, is left open. I also confirm that we will review progress in the sector annually—an excellent suggestion by the noble Lord, Lord Best, for which I am very grateful. If we do not see reasonable progress, we could consider acting earlier. As I have stated, this possibility, as a matter of law, is left open and is within the scope of the Bill. With these reassurances, I hope the noble Lord will withdraw his amendment.
Lord Deben
Will my noble friend take this opportunity to reassure me on one point that may not be in his script, elegant though it was? Does the movement from 2016 to 2018 in any way undermine our commitment to 2016 as the date from which domestic properties that are to be built from then must meet the new highest rating?
Lord Marland
I assure my noble friend that properties have to reach the highest rating but for the private rented sector, as I have said, 2018 is the long-backstop date. If we feel, having annually reviewed it—an undertaking that I have given the House today—that we are not making the right progress, we will act accordingly. The department is determined and keen to ensure that there is big take-up. That is why I have made the commitments that I have.
Baroness Smith of Basildon
I am grateful to the Minister, who is so eloquently reading out his script to take care over what he says in your Lordships’ House. I just want some clarification on the point about F and G properties. From what he said, it seems that it will remain legal to let an F or G property if it has had a package of measures under the Green Deal or the ECO. The deciding factor would not be whether it reaches the minimum standard that the Government have set, but whether the measures have been carried out on it. Will there be any circumstances in which it will be legal to let an F or G property?
Lord Marland
As I said, there may be circumstances, such as in the case of a grade 1 listed property, in which you cannot make the improvements that you need to because of the listing arrangements. Therefore, there must be some sort of caveat. However, if our annual review finds that things are falling through a loophole, we will of course act. Our attitude to this is not to allow inefficient properties and recalcitrant landlords to operate within the Green Deal, and to carry on acting inefficiently or inappropriately in perpetuity. We shall attempt to make sure that they do not. All the initiatives and drivers from our department try to force them into that position. However, there may be situations where we might have to take a view, for instance in the case of grade 1 listed properties. I think that the noble Lord, Lord Best, indicated that they may be a case in point.
Lord Best
My Lords, I am very grateful to all noble Lords who have spoken, the noble Lords, Lord Deben, Lord Jenkin and Lord Whitty, and the noble Baroness, Lady Smith of Basildon. I have received support around the House for this amendment. I deeply regret that I am not in a position to take it any further. However, I wish to press the Minister a little on where we have got to at the end of this discussion. I am very pleased that Amendments 35A, 35B and 35D, relating to agents, are clearly answered by his comments, for which I am grateful.
In relation to trying to ensure that there is clarity on whether a property has met a minimum standard, whether it is above the F and G level in the energy performance rating, and on the date—2018 versus 2016—as I do not think that we will make further progress tonight on changes to the Bill, I wonder whether the Minister would be willing to agree that further consultation might take place with the sector before the Green Deal kicks in and well in advance of 1 April next year, because I suspect that the private sector would prefer a position in which it is clear that the minimum standard means E or above except in specified circumstances such as grade 1 or grade 2 listed buildings. I think the private rented sector would prefer to be clear that the deadline was 2016 rather than having 2018 as a longstop. As the Minister says, it would be possible to bring forward the date if an annual review showed that that was worthwhile. I think the sector might prefer certainty. The noble Lord, Lord Deben, mentioned this. The industry finds it more helpful to know where it stands.
We need to be clear on whether a property is or is not meeting a minimum standard as it may have had certain expenditure spent on it although it has not got to level E. That leaves an uncertainty for local authorities trying to enforce this. They would have to understand the finances of that property, not just know whether the certificate says E or above. That will complicate matters. I wonder whether a bit of consultation with private landlords early on would not be more helpful to the Government and to them in getting clarity on that matter and on the date. I suspect that instead of the reviews they would rather have 2016 for sure. Would the Minister be willing to consult on that before all these measures kick in next year so that we can see whether, through regulation and through using the power that the Bill gives to come forward from the longstop of 2018, that might not happen rather earlier with everyone’s agreement? I hope that the noble Lord might wish to say something on this proposal before I sit down.
Lord Marland
I thank the noble Lord. Of course, we are in consultation with the sector and we will continue to be in consultation with it. If the sector wishes to move in that direction, of course, we will embrace it. I give a commitment that we shall continue with the consultation and we will continue to listen.
Lord Marland
Lord Marland
Lord Marland
Lord Marland
My Lords, it is convenient now to speak to Amendments 73 to 95, 98 to 103 and 105 to 135 together.
First, on the upstream petroleum infrastructure, Amendments 77 to 87 have been made in the other place to correct some unintended consequences of the drafting of these clauses. Your Lordships may recall that Calor Gas was concerned that an LPG project in which it is investing might unintentionally be caught. We have resolved this problem. We have also separated the upstream and downstream regimes for third party access so as to enable the new upstream regime set out in the Bill to be considered by Parliament in parallel with a separate legislative exercise that affects the downstream sector only, and which is required as part of the implementation of the EU gas directive.
The clause covering nuclear-funded decommissioning programmes was removed by the Government in Committee in the other place, Amendment 102; and was reinstated in an improved form on Report, Amendment 93. The amendment places a requirement on the Secretary of State that he cannot enter into an agreement under the clause unless he is satisfied that the agreement includes adequate provision for the modification of the funded decommissioning programme in the event that it ceases to make prudent provision.
Two new provisions—Amendments 94 and 95—were also introduced to facilitate the reuse of existing capital assets for CCS where they are suitable. The first of these amends the decommissioning arrangements for offshore energy structures to remove the possibility that the previous owners and operators of those facilities for petroleum production could be made liable for their decommissioning once they have been used for carbon capture and storage demonstration. The second enables the owner of an existing pipeline to compulsorily acquire rights from affected landowners to transport carbon dioxide through the pipeline rather than the substance which he already has rights to use the pipeline for.
On the small provision on the regulation of security at civil nuclear construction sites—Amendment 92—there are potential security risks from early on in the construction of new nuclear sites. The Secretary of State currently has no powers to make regulations to require owners of new civil nuclear sites to put security measures in place while sites are under construction. This amendment will permit him to do so.
Amendments 100, 101 and 133 extend the renewable heat incentive legislation to cover Northern Ireland, enabling it to make its own regulations to incentivise renewable heat.
The noble Lord, Lord Judd, raised an important issue in this House, and I am pleased that we have been able to fulfil his request, that Amendment 99 was passed in the other place unambiguously to allow national park authorities and the Broads Authority to generate and sell renewable electricity, which I hope noble Lords will agree is an exciting and positive change.
The remaining amendments in this group: Amendments 73 to 76, 88 to 91, 98, 102, 103, 105 to 132 and 134 to 135 in this group are minor and technical and I do not wish to take up the House’s time with these, so I shall simply go on to say that I hope noble Lords will be content to accept these amendments as passed in another place. I beg to move that the House do agree with the Commons in their Amendments 73 to 95.
Lord Judd
The House will not be surprised when I say a very warm thank you to the Minister, his officials and all those involved in introducing the amendment, which empowers the National Parks and the Broads Authority to generate renewable energy. I am sure that that will be welcomed. It is now a challenge to the parks and the Broads Authority to demonstrate how those important areas can make a real contribution to energy needs in a socially responsible way which is completely compatible with their overriding objective: to enhance and preserve the countryside for which they are responsible. Now that the Government have responded so positively, I hope that the parks and broads authorities will prove that they can set standards for the nation as a whole.
I would be remiss not to say that the way in which the Minister has conducted the Bill is a model. He has been untiringly—sometimes dangerously—charming, but he has delivered on his promises, and that is something very special. If I may say so, it would not have been possible without the leadership that has come from this side of the House from my noble friend Lady Smith of Basildon. Watching them both at work demonstrates a very interesting and constructive way that could enhance the quality of our democracy. There have been real, important, searching debates, but they have all been conducted in a most civilised and encouraging way. I hope that a lot of people will take the time to read the debate and see how it should be done. Anyway, I thank both noble Lords very much.
Lord Marland
Lord Marland
Lord Marland