Energy Efficiency (Private Rented Property) (England and Wales) (Amendment) Regulations 2016

Baroness Jones of Whitchurch Excerpts

Thursday 5th May 2016 Lords Chamber

[Baroness Jones of Whitchurch (Lab)]

My Lords, I thank the Minister for his introduction. It is important that we are clear that the changes being proposed will not impact on the ultimate aim: that there should be a widespread prohibition on private sector landlords granting a new tenancy on substandard properties after 1 April 2018, and for existing tenants by 2023. Keeping to those ultimate dates is absolutely crucial. The Minister referred to that, but it would be useful if he could put on record his absolute determination to stick to those original deadlines. I have some questions about the process in the meantime and the timetable for reviewing Part 3, which is what we are looking at now.

The Explanatory Notes and the Minister say that the department assesses that, as things stand under Part 3, a significant proportion of landlords would be eligible for an exemption. That would clearly make a mockery of the programme we are trying to achieve. I am concerned because the notes state that the department is merely considering whether changes to Part 3 are required. Is it not clear that Part 3 has to be changed, and soon? I would like a more definitive answer from the Minister on that issue.

I say that because unfortunately, the Government have form on dragging their feet on this issue. From the passing of the Energy Bill in 2011, they took four years to come up with the original set of regulations in 2015. Even then, they bent over backwards to give private landlords the maximum time to take action on substandard properties. At the time, we argued they could have been implemented by 2016, but we have ended up with a much longer timetable despite the urgent need for action. Indeed, when the then Minister finally introduced the regulations in 2015, she described them as game changing and went on to talk about their importance in reducing the UK’s carbon emissions. That underlines the significance of these changes.

As the noble Lord acknowledged today, the number of properties in the private rented sector has increased significantly in the past few years and now totals more than 4 million, yet this is also the sector with the highest proportion of energy-inefficient homes: around 11% are in bands F and G. It is fairly obvious that this is not only a waste of energy but a major potential contributor to fuel poverty.

When the original regulations were debated in 2015, my noble friend Lady Worthington, not surprisingly, welcomed them as a sensible policy. However, she also emphasised the importance of sending a long-term signal to the industry that this was part of an ongoing process of improvement. Rather presciently, she raised concerns about linking the process too closely to the Green Deal. Clearly, the Government should have paid more heed to what she said because only a couple of months later, they pulled the plug on the Green Deal, causing the CEO of the UK Green Building Council to say:

“Government’s strategy on dealing with high energy bills through home efficiency is now dead in the water”.

This comes at a time when the funding for the ECO scheme, which provides grant funding for energy-efficient upgrades, has been cut from £1.3 billion to £800 million with more cuts expected. Inevitably, this has reverberated through the industry, with jobs lost and investors pulling out of the sector, and has caused uncertainty where uncertainty was not necessary.

I have several questions. First, when did the Government first consider pulling out of the Green Deal? Presumably, the future of the Green Deal was at least under review before the initial regulations were laid in March 2015. Why did the Government’s risk register not flag up the dangers of regulations allowing exemptions to energy-efficiency measures to be based on the availability of the Green Deal? What is the latest thinking about a replacement for the Green Deal? Could it form the basis for a revised version of Part 3 of the regulations? Will the Minister clarify whether the Government intend to take action on the 1 million-plus units in houses in multiple occupation which I understand are currently exempt from the regulations? They probably represent the most energy inefficient properties in any housing sector. The Minister has been quoted as saying that there will not be a new energy efficiency strategy until 2018. Is that the case? What will be the estimated impact on employment and businesses in the sector?

Lastly, I want to pick up on a separate point that is covered by the Explanatory Memorandum: why there is a delay in introducing the provisions for non-domestic landlords, which the Minister also referred to. The memorandum says that the delay is for,

“additional time to procure a third-party to design, user test, and implement the Register, ensuring an optimal customer experience”.

Is the Minister really happy with that explanation? The department has already had over a year to prepare for this change, yet it reads as if a designer has not even been procured for the first stage of implementation. Is this not just symptomatic of the lack of urgency the department has shown on the whole issue of energy efficiency?

In summary, we believe that by linking the exemptions to the Green Deal provisions in the first place, the Government have created a problem that they should have foreseen, and they now seem to be showing a distinct lack of ambition for a solution. I very much look forward to hearing what the Minister has to say about the issues I have raised.

[Lord Redesdale (LD)]

My Lords, we on these Benches also support the regulation. I declare an interest as CEO of the Energy Managers Association and as a landlord. I find it incredible that the landlords are arguing that they cannot afford to upgrade their properties. I know from personal experience that that can be very expensive but they are expecting their tenants, who often are in fuel poverty, to pick up the tab, and they are the least able to pay. Moving forward to a new rating—as quickly as possible—is a very important step. I take on board that this is going to be a complicated register, and it has to work to ensure compliance with it.

However, there is one issue on which I wish to question the Minister, which was brought to my attention by the Country Land and Business Association. If you own a listed property, it is difficult to change it to meet some of the registrations under the EPC rating, especially given the criteria from English Heritage—as was—on double glazing, which should be revised. Not having double glazing in listed properties is ridiculous, given that the standard has improved so significantly. At present, if you want an exemption you have to go through the planning consent process and roll that over for five years, which seems a very clunky way of dealing with this problem.

During the consultation, could a more satisfactory system be looked at, especially for listed properties, to ensure that landlords do not face major costs arising from bureaucracy? I believe that solutions can be found. If owners of listed properties wish to rent them out, they should make them as energy efficient as possible. That said, I have a 16th-century bastle house that is difficult to get even close to an E, even though I have carried out almost every measure I can think of.

--- Later in debate ---

[Baroness Jones of Whitchurch]

I am grateful for what the Minister has said, but he did not answer the critical question of why the Government did not foresee this. They created regulations that were predicated on the Green Deal, in the knowledge that they were already questioning the future of the Green Deal. It would have made sense to anticipate that when the original regulations were drawn up in 2015. We would not be in this situation now, had the Government had a little more foresight. Will the Minister respond to that?

[Lord Bourne of Aberystwyth]

Indeed, my Lords; I apologise for the lack of foresight. With 20:20 hindsight vision, it is possible to say that this should have been foreseen. However, the best thing to do when you can see that a scheme is not working, which Green Deal finance was not, is to end it. We are now seeking a replacement, without any delay in implementing the legislation the noble Baroness referred to. She mentioned lack of ambition but the ambition remains absolutely constant. These changes are necessary for us to deliver on the aim of dealing with the scourge of fuel poverty, to ensure that we are energy efficient and to deal with security of supply.