(1 day, 9 hours ago)
Lords ChamberMy Lords, I thank the Minister for responding on the Statement made in another place.
I very much appreciate that this plan has taken longer to finalise than expected, with a year’s delay, but I have to say that we will join those who support a measured and incremental move towards low-carbon home heating systems. If that is the objective, there are many measures in the plan today that are worthy of support, not least, for example, the greater role for home batteries.
Where our concerns lie is with the test against which any transition must be judged; namely, its impact on the capital and operating costs for families—in other words, on household bills. Having read the Statement and the impact assessment, our view is that what should be a welcome and important initiative to save consumers money looks more likely to have the opposite effect, with rising energy bills and taxpayer-funded initiatives, not least through the recently locked-in energy costs well above market rates.
In the impact assessment, there was no reference to the impact on tenants as a result of the requirements placed on landlords. I very much hope the Minister will address whether these costs can or in his view will be passed on to tenants.
Regarding heating systems, 50% of the British public are unlikely to install low-carbon systems, such as heat pumps, due to high installation costs. Even if the warm homes plan takes the proclaimed £200 off bills for the 5 million projected homes over the next four years, which is unlikely given current energy and projected costs, that will still leave 25 million homes without respite, worrying about the installation costs of the new heating systems. How does the Minister intend to reach the other 80% of the country struggling with higher bills?
Does the Minister agree that the central and more enduring problem is the ongoing operational costs of low-carbon heating? Two-thirds of people with heat pumps now find it more expensive to heat their homes than they did with their previous system. Frankly, that is no surprise. The price of electricity per unit currently sits at a multiple of that of gas, yet the Secretary of State’s plan offers no redress for the long-term costs of this policy. Perhaps the Minister can now lay out whether the department has plans to address the high operating costs of heat pumps.
The Secretary of State has also announced the founding of a new quango, the warm homes agency. The Government claim to be offsetting this with the abolition of Salix, but I am sure your Lordships are aware that this is not a like-for-like trade-off. Can the Minister now confirm what his colleague in the other place could not and give an estimate of the cost of both the new arm’s-length body and the net cost of this quango reorganisation?
Another key element of the plan is the move to introduce widespread solar panels in the UK, set out in the Warm Homes Plan as
“Unleashing the rooftop solar revolution”
on page 33. This is timely, given the Prime Minister’s visit to China. The reason this is so important is that well over 80% of PV modules used in the UK have significant Chinese content. The true figure is very likely to be above 90% when we include panels made by Chinese-headquartered manufacturers. As so many non-Chinese brands still rely on Chinese wafers, a panel can be assembled in, say, Vietnam, Malaysia or the EU and still be heavily Chinese in content. That is why estimates based only on the brand’s country of assembly understate the real proportion. Including these brands, most energy analysts treat around 90% of UK PV panels as having Chinese content in their supply chain.
China’s share of the global supply of polysilicon is some 80% to 85%, and the Xinjiang Uyghur Autonomous Region’s share of China’s solar polysilicon has been variously estimated at between 35% and 45% at its peak, all of which implies that 25% to 35% of global solar polysilicon has plausibly been sourced from Xinjiang-based plants. Can the Minister inform the House how Great British Energy can meet its legal obligation to track exactly which polysilicon plant was used for any UK import, whether that plant is in Xinjiang or elsewhere, and whether specific batches are verified as free of Uyghur labour?
The noble Lord, Lord Alton, has spoken in this House and discussed with me this morning his concern that forced labour has been widely documented in the region and that there is a need to shut the door on forced labour components found in Chinese supplies of polysilicon. Does the Minister therefore accept that independent auditors and NGOs still argue that full traceability is patchy due to multisite production in different factories and different time periods, continuously shifting new contracts and new plants coming online, and lack of full transparency at the level of polysilicon origin?
As I have said, the intentions behind the warm homes plan are commendable, and the help with capital costs is welcome, but this must be accompanied by plans for lowering operational costs, coupled with wider reforms to bring down the cost of electricity. Otherwise, this well-intentioned plan will become a passport to higher domestic electricity bills. I look forward to the Minister’s response.
My Lords, I welcome this Statement. Promised nearly two years ago as a “flagship response” to soaring energy bills and poor home efficiency, it has taken some time. Delays have consequences, particularly for the millions of families living in homes that are cold. They are paying the price.
That said, this plan brings forward welcome innovation and greater policy coherence, particularly through its focus on climate adaption and mitigation. It marks a significant milestone amid a national affordability crisis and an accelerating climate emergency. But if warm homes are one side of the equation, cheap, clean energy and market reforms are, indeed, the other. We need both to succeed.
The commitment to £15 billion of public investment is ambitious and right. Ministers forecast upgrades for 5 million homes and relief from fuel poverty for 1 million families by 2030. These are the benchmarks by which this plan will be judged. Too many families still live in cold and damp homes, causing ill health and rising health costs. Labour is right to call out the “lost decade” under the Conservatives, when investment collapsed and home upgrades fell by 90%. Greater vulnerability followed Russia’s invasion: 85% of our homes were still dependent on fossil fuels, and £40 billion in emergency support was required. This was the cost of the Conservatives’ delay.
Against this backdrop, the plan’s innovative pathway is welcome. Partnerships with British climate tech firms could, if implemented well, build a world-class retrofit industry, but SMEs need support, predictable regulation and open markets to bring products from design to real homes quickly. The proposed retrofit innovation panel and sherpa approval models are positive, if they deliver.
I am concerned about the six-month cliff edge gap between previous schemes winding down and new schemes starting. I ask the Minister for greater clarity, particularly on the use of the £1.5 billion reserve to help fill this gap.
I welcome the focus on climate adaption. Increasing heat will be a slow-motion killer, so homes must be built for cooling as well as warmth. Including air-to-air heat pumps and supporting communal ground source systems is vital. Passive measures are also needed. The plan’s emphasis on consumer-led energy flexibility is encouraging, with an ambition to triple solar by 2030. Integrating solar batteries, EVs and smart meters can turn homes into virtual power grid participants, cutting bills and easing pressures on the grid. However, this “rooftop revolution” will falter without faster grid connections, planning reform and more resources for local authorities.
The transition must create good jobs and uphold ethical standards. I supported the amendment from the noble Lord, Lord Alton, to the Great British Energy Bill on forced labour. Our clean energy revolution must not rest on exploitation. What measures are we undertaking with our EU partners and others to build our solar manufacturing capacity?
Despite the promising direction and other areas of overlap, this plan stands in isolation from Great British Energy and our community energy plans. This is a missed opportunity. We welcome the support for the UK heat pump industry but question whether £19 million will be enough. The dilution of deployment ambition is troubling—well below the 600,000 a year target by 2028. Even with a £7,500 grant, typical households still face a £5,000 shortfall, which will be too costly for many.
I reiterate the Liberal Democrats’ call for free heat pumps and insulation for low-income families. We welcome the innovation financing models but ask for greater details. Can the Minister assure the House that these will be properly regulated and transparent, and will not put people’s homes at risk?
The new rented sector standards, benefiting some 3 million over the next four years, are also welcome, but how will their effectiveness be measured? We welcome the warm homes agency as a single point of leadership. What more can be done to make sure that people are not the victims of energy scams? Can the Minister explain how the plan will be monitored and reviewed, and confirm some level of flexibility?
Too often in the past, insulation was missing or simply done badly. Government must work to restore confidence. It is essential that we do insulation and we do it well. Without insulation, the best technology cannot prevent heat loss.
Finally, I agree with the Opposition: we need energy market reform, and clean energy needs to be affordable. Electricity costs are too high; while they are that high, households will not change from fossil fuels, so we must balance levies and take them off bills.
To conclude, we welcome the ambition and the funding, but ambition must now be met with urgency, coherence and fairness. Ministers must close the funding gap, put insulation back at the heart, reform markets to make clean energy affordable, and back British workers and innovators. If Ministers rise to that challenge, this plan can deliver not just warmer homes but a fairer, cleaner and more secure future for Britain.
I thank the noble Lord and the noble Earl for their contributions on this Statement. I think I can say that both of them were pretty supportive, which is nice for something as large as this. I therefore bank that support, as it were, and will address myself to the very pertinent questions that the noble Lords put forward.
In banking the support, it is worth reflecting on the real scale and the extent to which there are winners all round in the proposal before the House. As the noble Earl, Lord Russell, said, it is £15 billion altogether. I might add that in respect of the total commitment by this Government, this is, all things considered, about two and a half times the total commitment of the previous Administration regarding overall energy-efficient measures. The noble Earl is also right to point out the collapse in measures that took place under the previous Government. Overall, this scheme is determined to get it right not only this time but for all sections of society.
The noble Lord, Lord Moynihan, pointed out what will happen to the 80% who he thought would not be particularly affected by this. When you look at the breadth of the proposals in the warm homes plan, there is indeed something for everybody in it. There are low-cost and interest-free loans for the private sector. For the private rented sector, there is the quite dramatic commitment to make sure that landlords spend £10,000 uprating their properties to what will provisionally be band C EPCs by 2030. By the way, there is no real evidence that landlords have put rents up in relation to their commitments to the previous level of spending £3,500 to increase to band E.
For the social housing sector, there will be grants and particular investments in that form, and, of course, substantial investment in seeking out those in fuel poverty and bringing treatments forward for their homes that will substantially uprate their warmth and decrease their bills. We really will decrease their bills, sometimes quite dramatically, and make sure that those are permanent changes, not just ones that go with the volatility of the energy market.
The noble Earl asked about the whole question of forced labour and solar panels. I appreciate his point. We live in a world in which it is difficult to assess accurately who is doing what as far as forced labour is concerned. In the Modern Slavery Act we already have the wherewithal to take action, if we can identify those circumstances. Certainly, this Government would want to do that. We are collaborating with the Solar Stewardship Initiative, which seeks to have a more accurate spotlight on the issue of forced labour. It is something we are very well aware of. The noble Earl will understand that this is a difficult area to get absolutely right straightaway, but it is work that is ongoing.
The noble Lord, Lord Moynihan, mentioned the ambition for heat pumps. I have a memory, from another time in the other place, about what happened with that ambition. The previous Administration declared a three-year programme for a total of 90,000 heat pumps, underwriting 30,000 per year for three years, up to 2025. Then there was a gap of three years, when nothing would have happened. Suddenly, in 2028 or 2029, there would then be 600,000 heat pumps installed per year—a piece of Guillermo del Toro magical realism, if ever there was one. That is what we are seeking to avoid on this occasion.
We want to have real targets, which we can actually meet. That is also important in terms of investment in UK heat pump manufacture, for example. We need to know that there is a steady market for those heat pumps, where they are increasingly manufactured in Britain—boiler manufacturers turning to heat pump manufacture—and that we have that target in place and we can reach it. With the measures in the warm homes plan—the £7,500 underwriting for heat pumps currently; the new underwriting for air-to-air heat pumps; the ability of heat pumps to be put into area schemes; and low-carbon loans and grants—there is every prospect that we can get to the target of 450,000 in an organised and effective way.
I am conscious that I have not been able to reply to every point that noble Lords made in response to the Statement. If I have missed anything, I will be happy to write to both noble Lords, so that we can have a full set of answers to their questions today.
The noble Lord, Lord Campbell-Savours, is taking part remotely. I invite the noble Lord to speak.
My Lords, I welcome the Government’s emphasis on solar. Is my noble friend following developments in the use of perovskite, a material that potentially greatly increases solar panel efficiency by as much as 30%, while reducing panel manufacturing costs? Are we monitoring the work being carried out by Oxford PV, a company—among others—at the forefront of the development of this technology? Can we be assured that, if it turns out to be commercially viable, we will back manufacture of the product in the United Kingdom and not leave it to the Germans or Chinese to take control of the market?
I thank the noble Lord for his question. It might be helpful if I go into a brief disquisition on perovskite and its qualities, to inform the House about the noble Lord’s question.
Perovskite is, quite simply, a wonder product in terms of solar development. It is a mineral, but largely made synthetically, and manages to trap a wider spectrum of the sun’s rays than traditional silica does. So-called tandem panels which have a silica panel underneath and a perovskite film on top have an increased efficiency of 20% to 30%—which is a fantastic addition. With solar on a field basis, far more power can be got out of a smaller series of solar arrays. As far as home solar is concerned, an enormous boost can be achieved—perhaps half the power used can be got from the roof, with the same amount of solar panels than would have been put on previously. It is a very exciting development.
Oxford PV is the company spin-out from Oxford University, which is engaging in the development and commercialisation of those tandem panels. There is also a pilot production line under way in Germany.
The Government have been very supportive of Oxford PV in its journey. There was an original grant for Oxford PV of, I think, £668,000 in 2014 and there have been grants from UKRI subsequently. Oxford PV is presently in some discussions with the Department for Business and Trade, as this is something that we very much look forward to developing for the great advantage of the solar world generally. I assure the noble Lord that the Government are active in this pursuit, with the prizes that it can bring.
My Lords, I thank my noble friend the Minister for his very extensive Statement on the warm homes plan today. Does he agree that heat pumps are most effective when paired with insulation? Could he say a little more about what the Government will do to increase insulation in existing homes now that the ECO scheme is ending? If the future homes standard is going to be published and implemented, when will that take place? Bearing in mind all the floods that we have seen over the last number of weeks and days, what further climate change adaptation measures will be considered? Maybe the Minister would write to me on that final issue.
I thank the noble Baroness for that contribution. The question of heat pumps and insulation is very clear: heat pumps do not work as well as they should if a property is poorly insulated, so increasing insulation hand in hand with heat pump installation is a very wise thing to do. However, among other things, the warm homes plan tries to take a measured view of where fabric improvements are perhaps necessary and needed, and where other forms of enhanced energy considerations could take their place. There are properties that are very difficult to insulate to the right standards but, with solar, batteries, heat pumps and such things, they can come up to the sort of standard you require. So this warm homes plan is a little more careful about the combination of various factors. Elements of the plan will involve fabric—probably about 700,000 homes will continue to get fabric uprating—but other factors will be coming into being.
I will be happy to write to the noble Baroness about the future homes plan and how that will work out. It is under way at the moment and will, among other things, ensure that new homes, when built, will be of a sufficient standard that they will not need fabric uprating for the future, because it will be in the definition of those new homes. That is going to be produced shortly and I will certainly inform the noble Baroness about its progress as soon as I can.
This is great news, my Lords. It would be good to be reassured that the warm homes agency will act as a one-stop shop to provide advice to consumers to help them navigate through the best options for their homes. The fuel poverty strategy rightly recognises the importance of using and sharing data to support more effective targeting and delivery of fuel poverty interventions, such as energy efficiency upgrades and installations of low-carbon technologies. Can the Minister outline how the Government intend to use anonymised and aggregated smart meter data to enable those interventions to reach those households in greatest need?
There is a large number of applications of anonymised and aggregated data from smart meters, assuming that you have enough smart meters installed in any one place to make the data meaningful. We still have some problems with that and the smart meter rollout but, in general, it can be used for a variety of applications. For example, the warm homes programme is looking to develop area-based applications wherever possible: having the data on where people in fuel poverty are and what areas have a concentration of such people gives you a very good chance of making sure that you can relate the investment that you are putting in with actually making a difference on fuel poverty. Previously, one of the problems with schemes was that we just did not know where those people were. Quite often, the schemes operated a scattergun approach that did not really hit the target as they should have done.
My Lords, I welcome the Statement from the bottom of my heart because, for a long time, I have been very uneasy that we have approaching 1.6 million children living in conditions that can only be described as Dickensian. It simply should not happen in a modern UK. We are uniquely exposed to the volatile gas price and we have the least energy-efficient houses in Europe. It is a litany of failure and I think that this plan goes some way to turning that around, at long last.
It tackles three very important issues as far as I am concerned. I want to explore one in particular with the Minister. It tackles the cost of living issue, which is going to be even more important in view of the volatility of the global political situation. It tackles the health impacts on poor families and of poor building standards, and it creates UK jobs. But when the Environment and Climate Change Committee took a look at some of the issues to do with consumer behaviour and change to new systems, the lesson that came out loud and clear from all the witnesses we saw was that they wanted help to make it easier and cheaper to switch from inadequate, polluting and ineffective standards to modern technologies. The role of the warm homes agency is very welcome and is really important. Can the Minister tell us a bit more about how that agency will be tasked with ensuring that the schemes that are in place do not fail and that the sort of consumer confidence to make the change that is going to be really fundamental to this is going to be promoted?
My noble friend is right to focus attention on the extent to which consumers and the general public will have confidence in the changes that are afoot and will be able to make decisions as to how they participate in those changes in the best way possible. I think that is one area where, as a country, we have been quite lacking in the past—although I exempt from this the nation of Scotland, which for quite a while has had a national advice agency in place, giving impartial advice and assistance and seeing that through to installation.
One of the functions of the warm homes agency will be to provide unbiased, informed advice and assistance to ensure that what is being proposed for individuals’ homes—and after all, they are the things that are most important in their lives and the things they are most concerned to get right—are done with a high degree of transparency, reliability and effectiveness. I hope that will be an early development of the warm homes agency as it comes into place. In the context of what we have seen just recently with the problems that ECO4 has had and the Public Accounts Committee report on it, we really do have to have that advice in place, and also that regulation to make sure that the standards that we think we are delivering to people really can be applied properly.
My Lords, I put on record my profound support for this very significant commitment, which meets not only the fuel poverty objectives but the environmental and economic objectives in developing our energy policy. The Minister may dimly recall that many years ago I was the Minister who brought in and developed the Warm Front programme, which was so tragically cut off in 2010.
In parallel to the information to consumers—and in particular to the least well-off consumers—about their options on insulation and heating, there needs to be a commitment to an effective employment policy, because a lot of new skills are going to be needed. To ensure quality control, we need to ensure that those who are working for the installers under the authority of the warm homes agency are effectively trained and that there is a forward plan for them. At the moment we do not have adequately skilled people on the ground, and a lot of those who are there are getting on a bit. So a new, significant programme of training and retraining is going to be needed in parallel with this commitment, which in general is a fantastic one. I congratulate the department on it.
My noble friend is quite right. We are going to need a great deal of upskilling of individuals who are participating in this programme to make sure that they provide the best possible service that they can. Indeed, to return to that PAC report on ECO4, that was perhaps an element of the process whereby people were putting, in particular, external home cladding into place without really knowing what they were doing. It is very important that we do that and that we see the jobs that are going to come out of this programme—200,000 or so of them—as permanent, long-term, skilled jobs and not fly-by-night little contract jobs. We want to make sure that we are investing in real jobs and good jobs.
I bear the scars of the previous things and congratulate my noble friend on his hand in Warm Front, which he will recall, along with programmes such as CERT and CEFs, really made a difference at that early stage. It is tragic that they all collapsed in the way they did. The opportunity now not only to bring back the lessons learned from those programmes but to expand them in the way that has been done warms the bottom of my heart.