Energy Bill [HL]

Debate between Baroness Smith of Basildon and Viscount Ullswater

Monday 24th January 2011 Grand Committee

[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.