Baroness Smith of Basildon
Main Page: Baroness Smith of Basildon (Labour - Life peer)Energy Bill [HL]
Baroness Smith of Basildon Excerpts(13 years, 10 months ago)
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“( ) Before making regulations or an order under this Chapter, the Secretary of State must report to Parliament with proposals on green deal apprenticeships.”
The Deputy Chairman of Committees
I advise Members that there is a mistake in the amendment as it appears in the supplementary Marshalled List. It should state, “Clause 33, page 21, line 35, at end insert—”.
Baroness Smith of Basildon
My Lords, we have discussed before the issue of skills and whether there will be enough people with the skills required to undertake the Green Deal. Amendment 20DZA would require the Government to report to Parliament before any orders or regulations were made to state where we are on the issue of skills and, in particular, on introducing Green Deal apprenticeships. When we discussed this issue, there was wide agreement on the need to ensure that the workforce has the skills available. At the weekend, the Minister for Skills made an interesting statement that recognised the need to appreciate and value skills in manufacturing and engineering. Clearly, if we are to reach the desired level of Green Deal take-up, we will need significantly to upgrade skills in engineering as well as in science and technology.
I recommend to the Minister the Aldersgate Group’s report, Mind the Gap: Skills for the transition to a low carbon economy, which was published in November 2009. The group is a high-level coalition of businesses, environmental groups, individuals who have been involved in employment and trade unions, all of whom are keen to ensure that we capitalise on the number of jobs that can be made available through environmental work. The group believes that high environmental standards could ensure that we are an international leader in the field. The report—the outcome of a project chaired by former TUC president John Edmonds—is, I found, very helpful. Its key point is that, whatever the speed of our transition to a low-carbon economy, we need to fix the skills shortage in those areas. We are not talking about a completely new skills set so we do not need to build up new skills from scratch, but we certainly need training courses and further work to enhance the current skills set.
The biggest problem identified in the Aldersgate Group report is that, because the debate on the workforce skills has moved on so quickly, people at various levels in engineering and manufacturing in the UK—including at the highest management levels—have not really understood the implications of the degree of change that needs to be made. If we are to meet the significant challenges that we want the Green Deal to overcome, we must ensure that the skills are available. Companies will need to understand the nature of the change and explain the required skills to the workforce.
A number of recommendations in the Aldersgate Group report and in other reports—including some from the Government—deal with very similar issues. What is clear from all the reports that I have looked at is that business needs certainty from Government if it is to invest in skills and equipment. The Government have the responsibility to work alongside industry and those involved in training to ensure that we have the right kind of training programmes at the right time, with the right level of skills and the right kind of skills.
These are significant issues that the Government need to address. All that we ask today is that the Government take this away, look at the level of change that is required and ensure that there are Green Deal apprenticeships in place so that we have the take-up, which will initially come through owner-occupiers—we will come later to the issue of the delays that are currently envisaged in the private rented sector. We need to ensure that we have the necessary number of people who are fully trained to undertake the jobs required.
Amendment 20DZA is a probing amendment. I will be interested in the response from the Minister, but we may want to return to the issue, as we feel that it is crucial to the success of the Green Deal.
Baroness Northover
My Lords, the Green Deal will require a trained workforce to install measures in a safe, competent and professional manner. This will be assured by a new Green Deal quality mark and accreditation framework. The noble Baroness is right that this is going to be an area for jobs growth, and the Aldersgate Group is right to highlight that. It is estimated that, as a result of the Green Deal, 100,000 jobs will be created by 2015 and 270,000 by 2025. Business does indeed need certainty, and this Bill is part of providing that certainty and the way forward.
As the noble Baroness will know, this Government have previously pledged to increase the number of apprenticeships available across all sectors. It is a promising sign that the insulation industry has already launched a pilot apprenticeship scheme, which it hopes to expand over the next year in anticipation of the Green Deal. We welcome this development and we will work with the industry to promote the use of apprentices where possible. We will be speaking further with ministerial counterparts in the Department for Business, Innovation and Skills about this matter and we will continue to liaise with them over this.
However, we feel that Amendment 20DZA as drafted may interfere with the degree of flexibility necessary to tailor the Green Deal training to the needs of the sector and may risk forcing training opportunities down an inappropriate route. We understand the purposes behind the amendment. On that basis, I hope that noble Lords will be happy that the amendment be withdrawn.
Baroness Smith of Basildon
I beg leave to withdraw the amendment.
Amendment 20DZA withdrawn.
Clause 33 agreed.
After Clause 33
Lord Jenkin of Roding
My Lords, in reading the Bill, and in getting the substantial number of representations that I suspect that we have all had from the relevant organisations, I have been impressed by the sheer complexity of the problem that we face in dealing with the private rented sector. It covers an enormous range of properties, of kinds of tenancy, and of people who occupy the houses. One trade association, the Federation of Master Builders, told me that there are around 26 million homes in Britain, over half of which were built before the 1960s. Five million are Victorian terraced properties. The scale of the challenge is nothing short of enormous. That is what has impressed me. Yes, we have new homes coming up with new standards and owner-occupied homes, but the private rented sector offers a severe challenge to the Government and to all those working with them.
Everybody with whom I have spoken has had nothing but total support for the whole concept of the Green Deal. At the same time, they recognise that it will have to maintain a careful balance between the desire to get maximum energy efficiency from this huge range of houses and, at the same time, maintain the availability on the market of homes to rent. Some of the representations that I have heard have expressed some anxiety that, if too many obligations and restrictions are placed on landlords of rented homes, one result could be that they will simply be taken off the market. The consequence would be almost worse than the original problem.
There is no question about it: the rental market has grown substantially in recent years, largely because of the progressive removal of the controls which hampered it for so long. When I was very young, I lived in a rent-controlled property. My mother was renting and the landlord could not put up the rent at all. In those circumstances it was almost impossible for anybody to rent a house because none of them came on to the market. If the house was empty, it was immediately sold for owner occupation. One has to hold that balance carefully.
I hope that, when dealing with the amendments to the later clauses, the Committee will feel that we have to give attention to this. There has to be a proper balance between the desire to improve these houses and their energy efficiency, and making severe inroads into the rental market as a whole. I am encouraged that, both in the Bill and in one of the amendments to be moved by the Opposition, there is a recognition that this needs to be done rather carefully. A considerable duty rests on us to try to get that balance as fair as we can between the two objectives—making sure that there is a proper market in homes for rent and getting the houses improved.
I want to make only one other point, which has been made by speakers already. The biggest problems we face here are in the homes that are extremely difficult to make more energy-efficient. It has been made clear in some of the representations that the limit of £5,000, or whatever it is, would not cover those sorts of places. They are coming under the energy company obligation, or so I understand. One does need to look at all these various aspects if we are going to achieve our objective.
Like my noble friend Lady Maddock when moving her amendment, I congratulate the Government on having had the courage to pick up this ball and run with it, because it is important that we try to deal with this hugely varied sector of housing if we are to improve the lot of the tenants and at the same time save energy.
Baroness Smith of Basildon
My Lords, I welcome the comments of the noble Lord, Lord Jenkin of Roding, because I think they sum up some of the challenges of the legislation and why it is so welcome that we seek to make improvements in the private rented sector and indeed other sectors—the private sector and the social housing sectors—through the energy market.
It is right that we examine this in detail because the issue around the balance between the quality and quantity of housing is a fine one to walk, and we want to ensure that at all times the Government reach the correct balance. In proposing amendments and discussing and debating the clauses of the Bill, we want to ensure that the Government can fulfil the objectives they have set themselves. We entirely agree with the Government when they said that they wanted to be the greenest Government ever. When the Minister referred to that in the Chamber in our first energy debate, which seems an awfully long time ago, and I challenged him on it he said, “Like it or not”. I let him know that we do like it and that we will support the Government in these aims and wider where they seek to be as green as possible. The issue of having greener properties and more energy- efficient properties goes beyond just the idea of being energy-efficient. It goes into health, the economy and much wider. As we debate these clauses about the private rented sector I give the Minister our assurance that every time we raise an issue we do so only to improve the Bill and work with him to achieve his stated objectives.
Lord Marland
My Lords, it is wonderful to hear so much green co-operation bouncing backwards and forwards. We appreciate the very generous words from the opposition Benches, and of course from my noble friend Lord Jenkin of Roding, who has told us that we have a very significant task to perform in this Bill. He has told us that there are many challenges ahead, which we will have to address. The noble Baroness, Lady Smith, and my noble friend Lord Jenkin both talk about a balance that needs to be had, and they are quite right. If I may, I will deal with his specific point about ECOs later, when it comes up in the list of amendments, but I am very grateful for the encouragement.
I will speak to Clause 35, so that we are clear where that is going. Clause 35 lays the foundations for the provisions in the private rented sector by clearly defining what we mean by domestic and non-domestic private rented property in England and Wales for the purposes of this Bill. The domestic private rented sector is defined by the two most common types of tenancy agreements in the sector: assured and regulated tenancies. We have intentionally excluded social landlords from these requirements. The sector has previously been required to invest in the energy-efficiency performance of its homes. As a result, it has made some of the biggest energy-efficiency gains in recent years.
The definition of a non-domestic private rented property is one which is let under a tenancy and is not a dwelling. A dwelling is already defined under the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007, so it is logical to use this existing definition for the purpose of this chapter. I hope that that satisfies noble Lords.
Baroness Smith of Basildon
My Lords, it is interesting, looking at Clause 36 about the review, that it describes how the review should be undertaken; who would undertake it, in that the Secretary of State appoints somebody; it mentions an arrangement to include provision for payments; it talks about how; it talks about what will be done; and it refers to what follows on. However, it never says what the purpose of the review is and why the review should be undertaken. It seems to me that the purpose of the review is to explore how we can best implement proposals in the Green Deal in the private sector, and how we can ensure that we get the best possible take-up of the Green Deal in that sector. Perhaps it is just a quirk of drafting that the purpose of the review is never set out in the clause. I assume that its purpose is clear: to maximise the take-up of the Green Deal and to ensure that it is taken up in the right way.
Amendment 20KA suggests that in Clause 36(5) we are able to include other issues in the review. The reason we are putting that forward is that there are indeed other issues that the review should look at and consider if its purpose is to maximise the take-up. One example is apprenticeships. The Minister did not seem too keen on that, but certainly on the issues of skills and training there has been widespread agreement in this Committee today and previously. Another issue is the role of local government and how it will undertake its responsibilities under the Green Deal. As we have already heard from the noble Baroness, Lady Maddock, what level of energy-efficiency will the review seek to ensure that landlords implement? The amendment is fairly limited. It is a probing amendment. I am just curious as to why the purpose of the review is not there; and I do not think that we should limit what the review must include to the four criteria listed in the legislation.
Lord Deben
My Lords, I just hope that we do not underestimate the big role that the British Property Federation and others ought to have in making sure that information about the measures reaches both those who rent and those who let property. I am a little unhappy about the pressure from the British Property Federation. Having been involved in property and in writing about it all my life, I rather think that, despite the efforts that are being made to suggest that somebody else ought to provide the information, those who let property ought to do that. In addition, if there is a problem from the private sector, the British Property Federation and others could certainly take that up.
When the Minister replies, I hope that he will accept that it is not just for the Government to tell people of the advantages available to them; the first people who ought to do that should be those who have the interests of the landlords—and, I hope, the tenants—in mind. It would be a pity if we suggested that that was not a proper role for the industry to take on its shoulders. If this were something that was hurting the industry, the various organisations would be the first to make sure that everyone knew about it. Therefore, I find this whole pressure a bit odd. I hope that your Lordships will not move us towards a position that will underestimate or remove the important role that the organisations should take.
Baroness Smith of Basildon
My Lords, that is exceptionally good advice. It will be crucial that information is available for tenants and for landlords. My point in moving the amendment was that the review should not be limited to the items listed in subsection (5) of Clause 36.
The noble Baroness, Lady Noakes, suggested that my amendment is not clear on whether the Secretary of State or the reviewer would decide the criteria. I refer her to Clause 36(3)(a), which makes it clear that the matter is for the Secretary of State. All that I seek is not to limit the review to the four criteria listed in subsection (5). I hope that the Minister will take on board my point about information being available and how crucial that will be for the process being successful.
Lord O'Neill of Clackmannan
My Lords, before we leave this issue, I am not quite clear on the extent of the penetration of the membership of the British Property Federation and on whether it captures all landlords. If the BPF has not so far—as I imagine—captured the recalcitrant landlords, I suggest that we should not try to impose too much responsibility on the BPF. At the same time, if this legislation is to succeed, the Government’s role should be to show leadership by trying to inform the public of what could be available to them and what might be being denied them because of landlords who by and large—historically, sadly, there are all too many of these—are indifferent to the needs of many of their tenants.
It would seem that the more insecure the tenancy, the higher the rents and the less attractive the accommodation. Very often, individual metering and inadequate insulation are the hallmarks of such properties. While we have a responsibility towards those tenants who live under registered or trade association landlords, we have an important and even greater responsibility to those who live in wretched and dreadful conditions because of the force of very complex circumstances. Sometimes, such tenants are not in a position to make the right economic judgments—which, in many respects, lie at the heart of the Green Deal—because, sadly, they have too many other things to worry about. The fact that these folk may not be in these properties for long does not mean that their successors should be condemned to the same dreadful conditions as those in which the previous tenants had to stay. The Government must pay greater attention to this issue. It is to the shame of previous Governments that these situations have been allowed to prevail for so long.
Baroness Noakes
My Lords, before the noble Baroness, Lady Smith, decides what to do with her amendment, I will say that my amendment—Amendment 20L—seeks to go beyond what is in Clause 36(5)(b), which the Minister rightly said covers,
“the extent to which financial assistance is available”.
I accepted that, but I went on to ask for the review to ensure that financial assistance is “known to be available”. The Minister did not cover that point in his summing up—unless I missed it—and I would be grateful for his comments.
Baroness Smith of Basildon
While the Minister seeks inspiration on that point, perhaps I may put to him that my comments and my amendment seek to probe whether there should be additional items in the review, but he did not address that, either.
Baroness Smith of Basildon
The purpose of my Amendment 20KA is to probe whether additional items should be in the review other than those in paragraphs (a) to (d) of subsection (5). I do not think that the Minister addressed that, but I apologise if I have missed it.
Lord Marland
I will deal first with the point made by my noble friend Lady Noakes. There is a limit to how much one can inform. Clearly, there is a greater emphasis on the private rented sector to inform. If we find that the sector is not informing people, we will bring that to attention under the review. I hope that that deals with the point.
I am not sure of the direction of the question of the noble Baroness, Lady Smith. Perhaps I could also deal with that at a later point.
Lord Marland
I think that I understand the question, so it may be the second question that I do not understand. If we are talking about awareness, it is incumbent on the private rented sector to make people aware. It is also incumbent on the Government to make people aware of the range of assistance available under the Green Deal. If there has been no—or not enough—positive action, the review will endeavour to make the necessary adjustments to make sure that that action is provided to communicate the information that is required. This set of opportunities should be widely known about. This is a very new initiative that, as I understand it, virtually everyone in property knows is about to happen. If we feel that the information is not being passed on, obviously we should take action.
Baroness Smith of Basildon
I hate to confuse the Minister and I apologise if my earlier comment was not clear, but all that I seek is confirmation that the review will be able to consider items other than those listed in paragraphs (a) to (d) of subsection (5). Are those the only items that the review will look at? Is the review limited to those items, or can other issues be taken into consideration?
Lord Marland
I am getting a lot of notes, but the short answer is that the review can consider other issues. I hope that that answers the question.
“( ) a full assessment of the burden placed on local authorities as a result of any duty to improve the energy efficiency of the private rented sector”
Baroness Smith of Basildon
My Lords, this is a fairly straightforward amendment; I like to be straightforward to help the Ministers. I declare an interest as a current vice-president of the Local Government Association; therefore I have some concerns and an understanding of the impact of additional burdens on local government. I am helped by the Minister’s response to my last question. Whatever the purpose of the review—which I understood was to seek a review to maximise the uptake of the Green Deal, or, as the Minister said, to safeguard against regulation—we need to ensure that any new duty that is placed on local authorities can be properly scoped and evaluated to get a full assessment of the impact that will have.
My sense is that local authorities recognise the importance of the Green Deal, they want it to work and they want to be involved. They are aware of the duties being placed on them by this Bill. However, Clause 37 outlines some of the regulations that were brought in by the Secretary of State that will impact and place duties on local government. Therefore, it is sensible that these be included as part of the review so that they can be properly understood in terms of what it will cost local government, the implications on local government budgets, the implications on the time that will have to be spent by the officers who undertake it, the implications on their skills, and what additional information local government will need. It is a very straightforward provision to ensure, as we proceed and progress on this, that we can be confident that local government will be in the right place to undertake its responsibilities under the terms of the Bill. It is seeking to ensure in a new provision under subsection (5) that we make a proper assessment of the impact on local authorities.
Baroness Northover
I thank the noble Baroness for her straightforward amendment and acknowledge her concern about the funding of any additional burdens on local authorities. I can assure noble Lords that should we require local authorities to carry out any new duties, we will make a full assessment of the costs of such actions and how they might be appropriately funded. We are already committed to ensuring that new burdens on local authorities are properly funded to avoid pressure on council tax. With this explanation and assurance, I hope that the noble Baroness will be content to withdraw her amendment.
Baroness Smith of Basildon
Amendment 20PA, which is in my name, is in some ways not dissimilar to the amendment in the name of the noble Baroness, Lady Maddock. I think that we are perhaps trying to achieve the same ends in different ways. We both raised concerns that any regulations introduced by local authorities should not be conditional on a review taking place. It is worth looking at the scale of the problem, which we will perhaps do in respect of the next group of amendments. Nineteen per cent of private tenants live in fuel poverty. The figures and the impact assessment show how great the problem is for those who live in the private rented sector, the difficulties that they face in meeting their bills and the impact of living in cold properties on their health.
Properties in the private rented sector have the worst energy performance rating of any property sector in the UK. My amendment takes a slightly different approach to that of the noble Baroness, Lady Maddock. However, we share a widespread concern about the timing of the review and the fact that until the review takes place no regulations can be brought in. We do not want the action to be conditional on the review, but any regulations brought in must improve energy efficiency.
As regards the number of properties available to rent, no one wants to see a decrease. However, the issue is the degree of decrease. I am sure that although the Minister will tell me that the word “significant” is not normally used in legislation, he will understand the point that we are making. There may be times when it is appropriate to have a short-term decrease in the rented housing stock in order that work can be undertaken, but no one wants to see a permanent or a long-term decrease. We have put in the word “significant” to address that and to tease out from the Minister what he anticipates when he refers to a decrease in the housing stock.
The clause raises the enormous concern that the regulations will be pushed so far into the future that the significant problems of energy efficiency that exist now for people living in fuel poverty in the private rented sector will not be addressed. I am grateful to the Residential Landlords Association, to which we will come in the next group of amendments. The private sector needs certainty. As the Bill stands, all that it knows is that there will be a review, after which it may be required to undertake energy efficiency measures. But there is no clarity or certainty. This is a probing amendment. I hope that the Minister understands the points that are being made and why the concerns have been raised; namely, that great problems exist in the private rented sector.
Baroness Noakes
My Lords, I shall speak to Amendment 20Q in this group. I allowed it to be grouped with Amendments 20P and 20PA because it gives a contrasting view on the topic. The amendment moved by my noble friend Lady Maddock, and that spoken to by the noble Baroness, Lady Smith, seek to remove the conditionality, either totally or in relation to the report, before regulations are introduced. My concern, which I expressed earlier, is to ensure that regulation is not introduced unless there has been careful thought and consideration, because a regulatory solution would be an admission of failure and is not to be undertaken lightly.
Clause 37(1) requires not only that the report is published but that the Secretary of State considers that the regulations will improve energy efficiency and not reduce the number of properties available for rent. Those are the good requirements prior to the introduction of any regulation, and I support them. Amendment 20Q adds another requirement, namely that the report should be approved by both Houses of Parliament. We have already discussed the fact that the use of the regulation-making powers in this chapter could have a significant impact on the private rented sector, both in terms of economics and of the regulatory burden that could be laid on it. It will be important to ensure the widest possible consideration of the impact of any regulation. I tabled my amendment in relation to Clause 37, but my points apply also to Clause 40, which covers the power to make tenants’ energy efficiency improvement regulations. Both will have a significant impact.
Let us assume for a moment that the Secretary of State is some kind of ideologue who sees everything through green-tinted spectacles. While not for a moment would I say that this is a description of the current holder of that office, let us assume that we have such a green ideologue in the position of Secretary of State. That Secretary of State appoints another green ideologue to carry out the review, because Clause 36 makes no requirement for the reviewer to be an independent person. We could easily get one ideologue appointing another ideologue—there are rather a lot of them around in this area—to carry out a review which would then be undertaken from a particular set of prejudices. My amendment, in addition to providing the ordinary involvement of Parliament in such an important decision at any early stage and not simply in approving regulations, in approving the report would also be able to provide some kind of counterweight if a green bias was built into the review.
I am aware, of course, that there is a form of institutionalised bias along certain lines in both Houses of Parliament, and that Members of both Houses have a wide range of views on these issues. It is therefore important that the findings of the review are subjected to full and dispassionate scrutiny by both Houses and approved as the basis, effectively, for the Secretary of State to go forward and introduce regulations. While I have treated this in a rather light-hearted way, there is a serious point here in that we want to be clear before defaulting to regulation. This would provide another pause in the process before ending up in regulation. For that reason, I hope that the Minister will favour my amendment in this group and not those of the two other noble Baronesses.
The Deputy Chairman of Committees
I must advise your Lordships that if this amendment is agreed to I would not be able to call Amendment 20RA because of pre-emption.
Baroness Smith of Basildon
My Lords, I speak to Amendments 20RA and 20YA, which, in the new groupings list, are in this group. When I spoke to the previous group of amendments I mentioned the scale of the work that needs to be undertaken to improve the energy efficiency of our private rented sector and how many homes are affected. If we look at the information we have got from our own impact assessment report, from fuel poverty groups, from Friends of the Earth and from the Residential Landlords Association, we see that all are agreed that this is an enormous sector with enormous problems. The scale of the work that needs to be undertaken is huge. It is important that we discuss these amendments to ensure that we get it right.
Amendment 20RA seeks to take on board comments made last week on the issue of “shall” and “must”—that the Minister “must” make energy efficiency regulations. As the clause stands, it pushes back any intervention on private rented stock. I am not clear about when the timescale will start. I know when the review will start and how long it will roughly take, but we will not see any regulations in place until 2015. It is difficult to ascertain when the regulations will become effective and when that will come into play. We are talking about beyond the next election—four or five years away—before we see any significant improvements in the private rented stock.
One of my concerns is that that does not create the certainty for those involved to prepare to undertake the necessary work. At this stage, landlords do not know what is required of them. They do not know if and when, or to what level, they might be required to undertake work. In an earlier debate, the Minister talked about giving clarity to the private rented sector, but these regulation-making powers do the exact opposite. They give very little clarity because of the conditionality on them.
If the industry is to meet the needs of the Green Deal, it needs clarity, probably on the scale of the take-up, although I appreciate that that will not be easy at first. The industry will need to know what skills, training and employment will be required. Local authorities will need to know what is required of them. It is so far down the road that that will be very difficult and the conditionality will add to it. It could mean that this will have little impact and the worse properties—that is, the bands F and G-rated properties—being with us for many years to come. I am sure that that is not what the Minister intends. However, the wording of the Bill would have that effect.
There are a number of reasons why we might want to move more quickly. If we continue to have so many F and G-rated properties, the impact will be higher bills for those tenants and health issues. The Chief Medical Officer has estimated that the annual cost to the NHS of winter-related diseases due to cold housing is in the region of £859 million. That is a significant cost to the NHS and the Government.
I take on board the comments of the noble Baroness, Lady Maddock, about minimum energy efficiency standards. I have some sympathy with them. I would be grateful if the Minister would look at this. The costs of improving properties in bands F and G to raise them into band E are well within the Green Deal. That would give the critical mass needed for it to take off; it would give certainty to those involved; and a significant number of people in F and G properties—something like 40 per cent of tenants in these properties are in fuel poverty—could be moved into E-rated properties for less than £5,000 for each property. That is a significant issue.
I am unclear also about how the Minister can make regulations—it would be helpful if he would explain this to me, because I may have missed something—unless he knows what he is aiming for in terms of the kind and level of improvements that need to be made to those properties that are not energy efficient. How does he know that the correct regulations are in place? Owners will need to know what standard their properties must be brought up to. It may be a missed opportunity if we just look at the golden rule, which is arbitrary and will change over time—it is guidance more than anything else—and in two or five years find that those properties are still rated F and G because the work that has been undertaken has not been to the required level.
The Committee on Climate Change has recommended to the Government that there should be mandatory energy efficiency standards in the private rented sector. I do not often quote the Mayor of London, Boris Johnson, in support of proposals that I am putting forward. He stated:
“I agree that requiring landlords to meet energy efficiency standards when properties are re-let could be an important tool in improving the energy efficiency of the private rented sector in London. How these standards are communicated and enforced would be key to their success”.
There is a lot of sympathy for the view that landlords should know what is expected of them before they start on the process. It will be difficult for them to embark on it if there are no changes to the Bill before it passes into legislation. I am not clear what message that would send to landlords. Will they think, “This may happen later” or, “There will be changes. I should prepare for them now. What can I do?”? The issue is about giving certainty to landlords about whether they need to take action and, if they are to take action, what level of action they should take. The proposals point in the right direction, but are rather weak. If we are to see this critical mass, certainty must be given to those who rent out properties, to those who pay to rent them and to local government.
I will speak briefly to Amendment 20YA. I tabled this as a question to the Minister because I was confused. The amendment refers to Clause 38. I looked for an explanation of what it meant in the Explanatory Notes, which state that,
“the Secretary of State could provide that a landlord is not required … to make improvements if he cannot obtain consent which is required to be given by his freeholder”—
that is understandable—
“or if the property is likely to be worth less as a result of the improvements being installed”.
I cannot envisage what improvements to energy efficiency in the home would make the property worth less. Who would make the judgment that the property is worth less? This could be a get-out clause for the landlord to say, “If I do that, I won't get so much rent in” or, “If I do that, I couldn't sell it”. Will the judgment be made on rental income or the price that the property would fetch if it were sold? It would be helpful if the Minister would give us more information.
Lord Dixon-Smith
I feel compelled to intervene because I am not quite sure whether we are going in the direction in which this Bill should be aimed. I go right back to Clause 1(2),
“An energy plan is an arrangement made by the occupier or owner of a property for a person to make energy efficiency improvements to the property”.
The occupier of a property may well be the tenant. We have made a great deal of the efficiency or inefficiency of certain landlords. They do not just occur, sadly, in the private sector; there are good and bad landlords in the public sector. There are good and bad tenants in both sectors. The essence of this scheme, however, was that if the landlord did not want to do something the tenant could. I thought that the essence of the scheme was that it was voluntary but if I listened to my noble friend Lady Maddock correctly, and I am not sure that I did, she seemed to be thinking that perhaps local authorities should be in a position to compel.
I am not sure I agree with that because that is not within the original purpose of the Bill. But maybe I have misunderstood the Bill or maybe I have misunderstood the noble Baroness. I am not sure which; I am becoming rather confused. That is why I am speaking. I thought that this Bill was designed to give the property occupier—if the owner happened to be there, that would be fine and good—the right to take action which is in his own interest. If that is so, it is perfectly true that he would probably have to get the consent of his landlord because almost all tenancy agreements that I have seen say that any alterations to the property must be made with the consent of the landlord. I cannot conceive, as the noble Baroness, Lady Smith of Basildon, has said, that any landlord is ever going to refuse to have this sort of action taken in a property in their ownership. She is absolutely correct to say that action like this must enhance the value of the property one way or another.
That is not the bit that concerns me. It is that we seem to think that we should be giving local authorities powers to compel landlords to take action, but they are landlords themselves very often. I am quite happy that they should be compelled to take action for themselves, but I thought that the essence of the Bill was that this was an arrangement essentially between the consumer of energy and the energy supplier. If that is the case, I am very concerned about these amendments because they seem to imply something else.
I am anxious to see homes having their energy efficiency improved as soon and as rapidly as possible. However, it seems to me that the process suggested, and which I thought lay behind this Bill, would be likely to achieve that faster than any action implying that compulsion might come from somewhere else would be likely to do.
Baroness Smith of Basildon
The point made by the noble Lord, Lord Deben, relates to issues raised by amendments that we discussed in the previous Committee meeting about consent being given or withheld reasonably or unreasonably. The issue was whether a landlord or tenant was behaving unreasonably or reasonably. It might help the Minister to reflect on the amendments that we put forward the other day.
I seek clarification on a couple of points. The Minister referred to the lists that are held by local authorities, but those are held very much on an ad hoc basis. It would be preferable, as far as concerns the responsibilities placed on local authorities by the legislation, if such matters were made more formal and uniform, so that local authorities know what is expected of them and so that landlords, too, will know what information they are expected to provide to local authorities. The Minister also said that Clause 37 provides that the worst performing properties will be the first to be improved. I would be grateful if he could clarify or explain that, as I do not understand where I will find that in the legislation or how it can be guaranteed.
My response earlier to the comments of the noble Earl, Lord Cathcart, was perhaps badly worded. I was not at any stage trying to suggest that there are not landlords who at this moment are taking good energy efficiency measures in the homes that they rent out. I am sure that all noble Lords who have declared an interest as landlords will rush home to ensure that energy efficiency measures are put in place immediately. I was trying to argue from the landlord's point of view. There are no guarantees for landlords that these regulations will ever come into effect because of their conditionality on the review. There is no guarantee of any substantial change, whereas we need substantial change across an enormous number of properties, given that the Residential Landlords Association estimates that 40 per cent of properties were built prior to 1919 and some of those will be the hardest properties to treat. Many landlords will be waiting to see what will happen. Good landlords will rush to undertake the work, and some have done so already. However, because there is no guarantee for landlords that there will be regulations, it will be very difficult for them—many are working on a budget for the properties that they own—to guarantee that they will be able to do the work, because they are not sure whether the regulations will come into play.
My final point is that I asked a question on Amendment 20YA, but I think that the Minister was unable to respond at the time.
Lord Marland
The noble Baroness raises several questions. It is not for this Committee to prescribe to local authorities what they should be doing. I hope that this Bill is one that local authorities can buy in to. That is a subject for the DCLG. We are committed to focusing on the worst performing properties because we are committed to energy efficiency, and if we can attack the lower-performing properties, we will do it. Clearly, we have a governor in place—the EPC, which we are reviewing at the moment—which will establish the level that properties must come up to. We will focus on the worst performers. We can use only the tools that are available in a market-driven product. It would be totally wrong for us sitting here to prescribe regulations at this point for those in the sector who are being recalcitrant or not performing. That is the point of the review, which will take place as we have discussed. We will then consider what regulations, if any, are needed to push this thing forward.
On Amendment 20YA, which the noble Baroness spoke to, and on her question who makes the judgment about the property’s energy performance, the judgment will come from the EPC, which defines performance. That is there in black and white on every home.
Baroness Smith of Basildon
I think that the Minister has misunderstood the point in my amendment, which refers not to energy performance but to the impact on the price of the property. Indeed, the Explanatory Notes refer to the possibility of an exemption,
“if the property is likely to be worth less as a result of the improvements being installed”.
Who will make that judgment? That is not a matter for the EPC, which deals with energy efficiency.
Lord Marland
With all due respect, I think that I answered that. I said that it is very unlikely that there will be negative value, but the market makes the judgment if something has gone down in value. If you put a property on the market or to rent, the market determines whether its value has gone down. That is how every price is achieved. I hope that that answers the noble Baroness—she is looking a little bit negative. I cannot imagine that we can set up a system that prescribes that a property is worth this or that amount; the market determines that.
The Deputy Chairman of Committees (Lord Colwyn)
I understand that Amendments 20TA to 20Y are not moved. The question is that Clause 37 stand part of the Bill—
Baroness Smith of Basildon
Amendment 20TA, an amendment to Clause 37, has not yet been moved.
The Deputy Chairman of Committees
I thought it was not moved. According to my list, it should have been debated in the previous group. However, we will now debate Amendment 20TA.
Amendment 20TA
“( ) The Secretary of State must make regulations for the purpose of securing that a landlord of a domestic PR property of the type mentioned in subsection (2) who has failed to comply with a notice issued under subsection (3) may not let the property until the landlord has complied with that notice.”
Baroness Smith of Basildon
I thank the Committee. This is a probing amendment to look at the powers of local authorities regarding sanctions and the non-letting of properties where landlords have failed to make the required energy efficiency improvements. Clearly, landlords need to be given a reasonable length of time to comply, and that must be built into the notice. We should look at this in the light of later clauses.
Imposing a fine on a landlord who has failed to comply is not always the best way to proceed. If a landlord is fined for not complying with energy efficiency improvements, he has to recoup the money he has been fined and the energy efficiency of the property will not be improved. The council could seek to undertake the work and put a charge on the landlord through the Green Deal, through rent or by other means. It seems to me that where a landlord does not comply, it is necessary to make a range of compliance tools available to local authorities, giving them a number of options to take up depending on the circumstances. I am rather reluctant to follow the line of fining landlords or seeking to remove properties from letting as the first course of action. Every case has to be looked at on its merits.
As I have said, this is a probing amendment to look at what the Minister envisages in this regard. What kind of tools does he consider could be made available to local authorities to ensure that energy efficiency measures are implemented within a reasonable and appropriate timescale? I beg to move.
Lord Best
I am not sure that the new clauses I have proposed to come before Clause 40 fit terribly well at this point, but since they have been grouped with Amendment 20TA, perhaps I may now speak to them. I have a feeling that may well be familiar to noble Lords. I might have wasted my Sunday preparing a lengthy speech because the debate up to this point has already covered much of what these proposed new clauses seek to address. The point of them is to add a few more teeth to the regulatory process and to try to ensure that the difficulties in the private rented sector that we have been discussing are dealt with by reaching all landlords.
I ought to add a point that has not yet arisen. It is often necessary to reach the agents of private landlords. Some 60 per cent of homes in the private rented sector are managed by managing and letting agents rather than directly by landlords themselves. I declare an interest as chairman of the council of the Property Ombudsman that receives the complaints about managing agents. Although I can assure you that most agents do a very good job, there needs to be some protection against lazy agents who do not get round to doing the things that they ought to do on behalf of their landlords and on behalf of the tenants who live in those properties.
Lord Best
My Lords, I will address the point that the Government are very keen for there to be no barrier to the entry of new landlords into the market. It is improbable that people will enter at the level of the worst properties in the worst conditions. The buy-to-let market has become an extraordinary phenomenon. More than 1 million properties have been acquired on a buy-to-let basis. The typical profile of these properties is that they cost around £100,000 to £110,000, are brand new and are in a block of flats built by a housebuilder. The energy rating for these properties is pretty good. One would not be setting a big barrier if one prevented the entry into the market of landlords who buy the most rubbishy properties on the market. It might be a good idea if they were required, before they let them, to bring them up at least to band E as a basic level. With those provisos, we live to debate this another day.
Baroness Smith of Basildon
I am grateful for the Minister's comments, but I am not sure that he answered any of the points that I raised. I am still seeking guidance from him about the non-letting of a property where a landlord has failed to make the required energy efficiency improvements. I think that the Minister was referring to Clause 37(2)(c) when he said that the legislation provided that regulation should apply first to the worst performing energy efficiency homes. It defines a property in this category as one that,
“falls below such level of energy efficiency … as is provided for by the regulations”.
The Minister has not made it clear, and we do not yet know, what that level will be, although there has been a lot of guidance to the Committee that it should not be below band E. What happens when the landlord does not meet that standard? At what level would the local authority be able to tell the landlord not to re-let the property? That was the point that I was probing and that the Minister has not yet answered.