Energy Bill [HL]

Baroness Noakes Excerpts

Wednesday 22nd December 2010 Lords Chamber

[Baroness Noakes]

My Lords, there is a temptation to see this Bill as one of those worthy Bills addressing climate change which deserves automatic and wholehearted support from all sides of the House. My speech today will not focus on the aims of the Bill or its role in the war on carbon emissions, but I associate myself wholeheartedly with the comments made by my noble friend Lord Lawson of Blaby. Rather, I shall seek to put the Bill in its context as a potentially dangerous example of policy changes being allowed to sleepwalk through Parliament with little or no supporting information. I very much hope that your Lordships' House will not allow this to happen simply on the basis that the ends appear to justify the means.

I shall start with Chapter 4 of Part 1, which enables something that is not named in the Bill—namely, the new energy company obligation. This can in due course be used to oblige energy suppliers to meet the costs of energy efficiency improvements for vulnerable customers and homes that are costly to insulate. We learn this from the Explanatory Notes, not from the Bill, because the clauses in the Bill comprise a long list of new powers which can be used to force the energy companies to do a huge and uncertain range of things in the name of carbon reduction targets and home heating reduction targets.

I will make one preliminary point about the energy company obligation—it applies to virtually the whole of the Government’s approach to climate change policies, including last week’s announcement on reforming the electricity market: climate change policies have a big price tag. The costs imposed on the energy sector in the name of climate change are borne by consumers, not shareholders or taxpayers. But consumers have never been engaged in an honest debate about whether it is what they want. When consumers wake up to the costly facts of climate change policies, they may well command much less support than the Government are taking for granted.

We have no idea what the energy company obligation could involve in terms of costs, because no scheme has been costed or even worked out. The impact assessments for the Bill say that the costs could be substantial, but the assessments contain not a single figure for the new obligation. Instead, we are told that costings will be produced to support the secondary legislation which will be needed to implement the obligation. And so, with breathtaking arrogance, the Department of Energy and Climate Change is taking powers to impose costly energy company obligations on the energy sector, and hence on consumers, without having the grace to give Parliament any details of the scheme which will be introduced and its costs. Parliament is being invited to write a blank cheque which will inevitably be met by energy consumers, who have no say in this. The only safeguards are the minimal procedures which accompany secondary legislation.

It is quite normal when major enabling powers of this nature are taken by a Government for them to bring drafts of the first statutory instruments in time for them to be considered in Committee. In that way, Parliament satisfies itself about the way in which the powers are intended to be used, and it can consider, for example, whether additional safeguards are required in the Bill.

Can my noble friend the Minister set out the timetable that the Government intend for the implementation of this part of the Bill? Will any aspects of implementation be available for scrutiny by either your Lordships' House or another place before the Bill becomes law? I fear that I know the answer to this question, but it would be good to hear it from the Minister himself. The right approach would be for the House to refuse to pass Chapter 4 without further and better particulars and I hope that the Minister will not be relying on green goodwill to pass these broad and costly powers.

The costs that will flow from the energy company obligation will increase the energy bills of consumers and that, as my noble friend Lord Lawson has already pointed out, will exacerbate the problem of fuel poverty. Before this Bill, the Government's own estimates were that climate change policies could lead to household energy costs in 2020 being one third higher than they would otherwise have been, and this new obligation will increase that further.

The Government usually cite the number of households living in fuel poverty based on 2008 statistics and they have done that again in the regulatory impact assessments. They say that there were 4.5 million, of which 3.3 million relate to England. But the department’s own Fuel Poverty Advisory Group in its latest report issued this year estimates that there were 4.6 million people in 2010 in fuel poverty in England alone. If we extrapolate that across the whole of the United Kingdom, we are talking about something like 6.3 million households in fuel poverty now.

The Minister knows that there are statutory targets set by the previous Government to eradicate fuel poverty by 2016. The target was challenging when it was set. It is certainly no easier now given that we are living in a post-recessionary world, with spending cuts and tax rises that I support because they have to deal with the economic mess that our Government inherited. But they will depress household income and will make it likely that fuel poverty will continue to rise.

When we debated climate change last month, I asked the Minister whether the Government stuck by that statutory commitment to eliminate fuel poverty by 2015. I did not get an answer then, but the Minister has another opportunity to answer today. Will the Minister give the Government’s estimates for the years running up to 2016 of the numbers that the Government expect to be in fuel poverty? Will he say precisely what impact this Bill is expected to have in that period and how increased energy costs will interact with the energy efficiency measures in the Bill? I hope that he will also cover the important and interesting point made by the noble Lord, Lord Giddens, in relation to the Jevons paradox, if I have that right.

I turn to other aspects of the Bill. I support the aims of the Green Deal, which is an imaginative way of harnessing the desires of many to improve the energy efficiency of their homes. Again, we hit the problem that this Bill does not give sufficient detail to evaluate the scheme for which we are invited to give legislative approval.

The impact assessment gives only illustrative scenarios, which taking the extreme of the high-cost estimate and the low-benefit scenario, indicate such a marginal gain that it might not be worth pursuing. Again, we have to await detailed secondary legislation to find out what will be involved. Again, I ask my noble friend whether he will set out the timetable for bringing before Parliament the detail of the scheme that your Lordships’ House will, I hope, be able to consider. Will the timetable allow us to consider it before the Bill completes its passage in both Houses or will we have to wait until secondary legislation appears? The House will know that our conventions in relation to secondary legislation in effect cede control to the Executive for the content of such legislation. I regret that for this Bill.

The Green Deal may well be a very good deal for a consumer who initiates the energy efficiency works and the related finance. I am sure that it will work for many long-term owner-occupiers. But I have very real concerns for the practical difficulties down the line when properties are sold or let, possibly several times in succession before the initial financing is repaid. Will we see properties burdened by Green Deal loans providing a drag on the property market at the bottom end? How will the disclosure arrangements work in practice? How will all of this interact with potential consumer defaults?

I have concerns about the Green Deal and how it will work in practice, but I have even more concerns about the proposals for the private rented sector. I fully appreciate the need for energy efficiency incentives to operate in the rented sector, for the reasons given by other noble Lords today, but we must be wary of driving landlords and properties out of that sector. In today’s environment, home ownership is not as easily available and will not be for some time, so the private rented sector will be particularly important. For that reason, I very much support the requirements in Clauses 37 and 50 that any arrangements introduced under the powers in the Bill for the private rented sector must not diminish the stock of private rented housing. But there are many problems and pitfalls for the private rented sector, and the prospect of compulsion fills many in the sector with horror.

As with other areas of the Bill, the clauses set out an enormous range of powers and penalties, but with no indication of how they might be used. Accordingly, the impact assessment ducks out of giving any figures or costs. It is a fair working assumption that if the powers are invoked the costs falling on the private rented sector could be significant. We are told that the way forward on these powers will not be considered until the impact of the Green Deal is evaluated and that these wide-ranging powers will not be brought in for several years—possibly 2015. It is clearly premature to include them in the Bill and we should challenge whether they should be allowed to remain here. When the Government have devised a scheme, consulted on it and costed it, they should return to Parliament with primary legislation to implement it. It is dangerous to parliamentary democracy to leave this kind of scheme to secondary legislation at some uncertain point in future.

This cuddly green bunny of a Bill conceals some of the most unsatisfactory aspects of legislation that we ever had to contend with from the previous Government. There are policies with zero detail and no timetable for the emergence of that detail; there are sweeping powers for the Executive, constrained only by the weak parliamentary safeguard of the affirmative procedure. There are virtually no details of costs or benefits for major parts of the Bill, where there are at best aspirational statements in support of them. I hate to say it to my own party on the Front Bench, but this is no way to govern.