Green Deal (Qualifying Energy Improvements) (Amendment) Order 2014

Baroness Verma Excerpts

Wednesday 16th July 2014 Grand Committee

Moved by

[Baroness Verma]

That the Grand Committee do consider the Green Deal (Qualifying Energy Improvements) (Amendment) Order 2014.

Relevant document: 3rd Report from the Joint Committee on Statutory Instruments

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)]

My Lords, since its launch in January 2013, the impact of the Green Deal has been growing steadily. At the end of May, more than 230,000 Green Deal assessments had taken place. Almost 24,000 of those took place in May alone. Research has shown that 80% of those who have had a Green Deal assessment have installed, or intend to install, at least one measure. More than 800,000 energy efficiency measures had been installed in almost 700,000 homes through the energy company obligation, cashback and the Green Deal by the end of April. This is a great achievement.

To continue building momentum, we recently launched the Green Deal home improvement fund. This fund will help even more people to install energy efficiency measures in their homes by providing them with money back on the contributions they make towards the installation of improvements. People in England and Wales can now get up to £7,600 back through this new fund, which will allow them to take control of their energy bills and have warmer, cleaner and greener homes. This includes: up to £1,000 for installing two energy efficiency measures from an approved list; up to £6,000 for installing solid wall insulation; and up to a £100 refund on the cost of their Green Deal assessment. Take-up of the Green Deal home improvement fund has been positive. The latest figures show that, as of 14 July, 9,559 applications had been received and 6,607 vouchers issued, with a total potential total value of £36,484,100.

The delivery of more measures, on a large scale, can dramatically improve people’s quality of life by making their homes warmer, by having an impact on their health and by driving down the cost of having a decently heated home. The successful implementation of the Green Deal is dependent on encouraging consumers to take decisions to retrofit their homes with a range of measures that they can trust to deliver savings in energy consumption and in their bills. To do this, we have put in place a robust framework that defines what measures are legally eligible for use within the Green Deal, alongside a robust methodology for estimating the savings that will be realised.

When the Green Deal was launched in 2013, the Green Deal (Qualifying Energy Improvements) Order 2012 defined an initial list of 45 measures that would be legally eligible for use. To ensure that we are promoting the maximum number of measures possible and taking account of developments in energy efficiency product technology, we are committed to keeping this list under review. This amendment order makes two minor technical adjustments to the original 2012 order. The instrument amends the 2012 order to allow two additional energy efficiency improvements to be installed under a Green Deal plan. Those are: more efficient circulator pumps; and storage wastewater heat recovery devices—attached to baths or showers. We will be introducing a number of further measures within the Green Deal later this year, which will not require a technical amendment to the 2012 order as they are already covered by its definitions. These additional measures are: energy efficient luminaires, including modern LED lighting for the first time in domestic properties; the use of replacement glazing panels for double-glazed windows; party-wall insulation; and more efficient storage heaters.

The amendments brought about by this order are technical in nature but will add greater choice under the Green Deal and form part of continuing efforts to maintain and improve a robust legal framework that provides consumers with the confidence required to take forward whole-house retrofit and therefore save energy. I commend the order to the Committee.

[The Earl of Lindsay (Con)]

My Lords, I welcome my noble friend’s explanation of this amendment order. I declare an interest, first, as chairman of the United Kingdom Accreditation Service, which provides accreditation in order to protect the consumer interest in the rollout of the Green Deal, although that is not relevant to this order. I also have a more specific interest, as I have recently had a Green Deal assessment of my own and have signed up to a number of measures arising from that assessment, although I should point out that the specific proposals in this amendment order do not affect my own circumstances.

I just want to put a question to my noble friend. Having had a long involvement with better regulation and advising the Government on how to make legislation and regulations more efficient, I welcome any ability for existing legislation and regulations to be amended promptly and easily. I have looked with interest at the final sentence of paragraph 8.1 of the Explanatory Memorandum—it contains a certain amount of gobbledygook or a typo, as it does not quite make sense, although I think I understand what it intends to communicate—which suggests that the measures are being brought forward after technical dialogue, albeit at an informal level. The question that I want to put to my noble friend is: is there a continuous process for reviewing and, where necessary, revising the technical and other aspects of the Green Deal, especially as they relate to legislation and regulation, or is it a periodic process? I suppose the sub-question of that is: is it a formal process or, as implied by that paragraph, is it very much reliant on informal dialogue? I ask that last question not because I have any concerns about the value of informal dialogue but to be better advised as to what that process is.

[Lord Grantchester (Lab)]

I am grateful to the Minister for her introduction to the order before the Committee today. On this side, we are very happy to support the Green Deal and all that it seeks to achieve to improve the energy efficiency of the UK’s housing stock. However, we urge the Government to do better. In the past, the Minister has side-stepped my requests for the Government to share with us their measure of success for the uptake of Green Deal plans. In the context of her extolling the numbers to date, is she able to tell us the date, on a projection forward, when the Government would identify the Green Deal programme as having been a success?

The measure before the Committee today is merely technical, in extending by two the measures that could be taken up under a Green Deal plan: namely, circulatory pumps and storage wastewater heat recovery devices attached to baths and showers. I am happy to support the order and agree that it is good to be able to make more measures available that will improve energy efficiency further.

In the debate on the order in the other place, it was mentioned that householders must now have two items to qualify for a cashback contribution. Will the Minister clarify that householders can still proceed with only one measure in their plan—they will just not qualify for cashback—or is the level of expenditure also important? The Minister might argue that this is sensible to drive forward the ambition for home energy efficiency improvements, but might imposing supplementary qualifying standards have the effect of reducing uptake? I appreciate the information given by the Minister on further measures to improve uptake. Will her department be monitoring the effects on uptake once these are introduced?

There was widespread concern about the cost of finance under the funding provisions at the inception of the Green Deal. While the introduction and extension of cashback measures may be a reaction to the slow uptake, can the Minister say who provides the cash for cashback and whether the department has plans to review the terms of finance from the Green Deal Finance Company? Will the Government be reassessing the total amount that could be financed under the Green Deal, especially in relation to the addition of these two measures today, and indeed any further measures once they are introduced?

We are a little anxious that the plethora of measures under the Green Deal may be adding unnecessary complexity to the scheme, but endorse the order before the Committee today.

[Baroness Verma]

My Lords, I am extremely grateful to my noble friend and the noble Lord for their supportive remarks. I reassure my noble friend that we are constantly reviewing the process, whether internally or externally with industry and more widely. That is because this programme is the first of its kind in the world and, therefore, as we learn how to better streamline some processes or make available information so that consumers can engage much more fully, we want to ensure that the process is responding outwards so that we get as much uptake as possible.

My noble friend is absolutely right. I have just looked at the grammar and I think that the grammar might be tweaked slightly. I will ensure that I take that back to those who put it in there in the first place.

The noble Lord opposite had several questions, as always, on this very simple order. If I do not pick up all his questions, I promise to write to him. He asked what success would look like. He is aware that these are still very early days in the programme, but I have indicated the figures that are now beginning to emerge. Of course, success will take many forms, so it would be wrong for us to put in place a real target, but an aspiration would be to have possibly around 1 million households adopting some of these measures by 2015. I add the caveat that we may not know about the take-up of some measures which have been financed through a different route. I am looking for inspiration from the officials behind me as regards other responses. If they are not forthcoming, I will have to write to the noble Lord on those responses.

The noble Lord also asked about cashback and whether it constituted support through subsidy. He is, of course, aware of the golden rule which is in place to protect consumers, so that, whatever they pay, they will make savings. Overall, I judge that the noble Lord supports this order although he will continue to question and challenge what the Government are doing, which is absolutely right. Does he wish to ask me another question, given that I have failed to answer the others?

[Lord Grantchester]

I merely wished to tease from the Minister whether cashback was a subsidy or part of the golden rule. Could people’s bills be larger at a later stage because they had received some cash savings upfront?

[Baroness Verma]

No, my Lords. As the noble Lord is aware, the golden rule is very strict. The cashback is the incentive which should encourage people to put measures in place given that the savings which flow from that will count towards the cost of installing the measures.

I will need to look at some of the questions that the noble Lord has raised. I hope that he is reasonably satisfied with my response. I commend the order to the Committee.

Motion agreed.