Fuel Poverty (Rural Britain)

Debate between Lord Barker of Battle and Angus Brendan MacNeil

Wednesday 7th July 2010 Westminster Hall

[Gregory Barker]

I appreciate the hon. Gentleman’s comments, but he will also appreciate that we are in a resource-constrained environment for reasons that we do not need to rehearse here. As well as resources, another factor that empowers communities is knowledge. He made a good point about the need for greater transparency about wholesale and retail prices. I agree with him about that, but we also need greater transparency about billing, tariffs and the costs of switching to a different tariff or the best tariff, or paying by direct debit. Those are all important points.

My hon. Friend the Member for Totnes (Dr Wollaston) brought her medical expertise to bear when she talked about the excessive number of winter deaths. She reminded us of the shocking figures that were published last year and of the impact that poor housing has on not just health outcomes, but life expectancy. That helped to bring the debate into sharp focus.

The hon. Member for Angus (Mr Weir) was right to point out that a minority of the population will always be off-grid and that price is important. He made a crucial point about up-front payments and minimum deliveries. I will consider his ideas on section 10 of the Energy Act 2010. I cannot promise that we will act on them, but we will look at the matter with fresh eyes, because we are interested in radical steps forward and new thinking. As I said, we cannot go on as we are.

We have a big plan of our own: the green deal. It does not involve grants, loans or mortgages and it certainly does not involve the very modest proposals—pilot schemes—that the previous Government introduced. The green deal is a bold, unprecedented scheme that will not involve personal debt, as the pay-as-you-save model of the previous Government did.

[Mr MacNeil]

rose—

[Gregory Barker]

I shall not take interventions, because I am very short on time. The green deal will bring in new capital, new finance providers, new installers and local providers. A constant complaint about Warm Front and its provisions is that it has not empowered local suppliers. The green deal will mean that as long as a local provider can deliver the standards, they can do the work. That will even apply to a village supplier if they get the accreditation, which should be simple and easy to do. I hope that we will see many community enterprises and community partnerships working on the green deal.

The green deal is fundamentally a pay-as-you-save model. We accept that many of those who live in rural homes and some of the most fuel-poor cannot make the savings to justify the significant investment in building infrastructure that is needed; for example, those who have solid wall houses often fall into that category. That is why we intend radically to reform the supplier obligation. We have started doing that with our carbon emissions reduction target extension, where we have increased the amount that we can direct is spent on insulation; if we take into account DIY, it is now 80%. We have stopped the lunacy of mailing or subsidising light bulbs. The green deal is focused on real insulation efforts. We have increased the super-priority group—made up of pensioners, people with children and those from low-income households—from 10% to 15%, so that it is larger than under the Labour consultation. That is really important, but we want to go further.

[Mr MacNeil]

Will the hon. Gentleman give way?

[Gregory Barker]

I am afraid that I do not have time.

We want to go further to ensure that support is available. The carbon emissions reduction target will raise more than £1 billion, which is much greater than under the Warm Front programme. Potentially there is a significant amount of revenue, but it needs to be much more focused.

I welcome the thoughts of all hon. Members in the Chamber today about how we should focus on the fuel-poor. We will be considering reforming the supplier obligation, so that there is no hiatus beyond the CERT extension in 2012. There is a new deal—a green deal—and there will be a new supplier obligation. Real, substantial resources will be made available for the long term, and we are absolutely certain that we need to continue to deliver for the fuel-poor.

However, fundamentally, we cannot keep chasing the fuel price and subsidising fossil fuels. We need to spend the money we have on investment in building infrastructure to make homes not only warmer, but cheaper to heat in the long term. We must reduce people’s dependency—whether they are on-grid or off—on gas, coal and oil.

I again congratulate my hon. Friend the Member for Suffolk Coastal on initiating the debate. I am sorry that I have not been able to answer everyone’s questions, but I am sure that this is the first of many Westminster Hall debates on this vital issue.

Energy Efficiency

Debate between Lord Barker of Battle and Angus Brendan MacNeil

Wednesday 30th June 2010 Commons Chamber

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

I beg to move,

That this House has considered the matter of progress and prospects in energy efficiency.

Within the first days of taking office, the Prime Minister pledged to make this new coalition the greenest Government ever, and we are determined to deliver on that promise. Energy efficiency, the subject of today’s debate, is at the very heart of our greening programme. Better energy efficiency offers a genuine win-win, because it not only enhances the competitiveness of our economy, but is good for the environment in cutting carbon emissions. It is good for energy security in reducing our reliance on imported fossil fuels, and it is good for hard-pressed families, saving them money currently wasted heating inefficient and cold homes. Energy efficiency is not just a means to an end; it is a great thing in itself. In these times of rising bills and tight family budgets, there is one overarching simple truth: the cheapest energy we all have to pay for is the energy we do not use.

President Obama has gone even further. He recently said:

“Insulation is sexy stuff...Here’s what’s sexy about it: saving money”.

In our own way—a more modest way—we are determined to make it sexy too, because for too long, energy efficiency has been the poor relation of British energy policy. Too many politicians have talked the talk, but failed to deliver. Energy efficiency has too frequently been relegated to the fluffy optional extra end of the energy policy agenda. Energy efficiency, however, is the key benchmark of a globally competitive 21st century economy.

Yet on the key test of energy efficiency, the UK currently trails behind most of our European competitors and risks slipping even further behind. If Members pardon the pun, we lag behind Germany, Holland, Spain and Italy, to name but a few. The average British home uses more energy than a home in Sweden—a country partly within the Arctic circle. One in five of our homes still has the lowest energy-efficiency rating.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

On the point of energy efficiency in comparison with Sweden, I understand that there is considerable use of heat pumps—both ground source and air source heat pumps—in Sweden. The previous Government gave assistance for the installation of heat pumps; will this Government continue in that vein?

[Gregory Barker]

We are very keen on heat pumps, but those pumps are not an energy-efficiency device; they are a renewable-energy device. Today, we are obviously concerned primarily about energy efficiency, but I take the hon. Gentleman’s point on board, and we are certainly keen to encourage the use of a diverse range of new renewable technologies.

[Mr MacNeil]

Using 1 kW of electricity, an air source heat pump can generate 2.5 kW of heat and a ground source heat pump can generate up to 4 kW of heat. I would argue that that is quite an efficient use of energy.

--- Later in debate ---

[Gregory Barker]

Obviously my announcement is effective today. We hope to lay the regulations before Parliament before we rise for the summer, because I am fully aware that there has been uncertainty in the market, and that is what we aim to eliminate.

[Mr MacNeil]

Usually, house construction is a great battle between insulation, as the Minister has mentioned, and ventilation. The part of the world that I come from suffers from having to have the same ventilation standards as an urban area in Kent; the rural west coast of the Outer Hebrides certainly does not need the same amount of ventilation as might perhaps be needed in Kent. However, we are stuck with that and the result—I am sure that the situation is the same in other places in the country—is that once the completion certificate is achieved and received, the house builder goes round with a tube of mastic or silicon and blocks off the vents that have been placed unnecessarily. Perhaps ventilation could be seen as part of the argument for energy efficiency, too.

[Gregory Barker]

That is a very good point. I think that my colleagues in the Department for Communities and Local Government would have direct ministerial responsibility for that point, but it is worth while, and if the hon. Gentleman would care to write to me about it I would be happy to take it up.

We will go further. We are also talking to industry about similar restrictions on other low-value gadgets and appliances. All these new measures are specifically designed to do more for the fuel-poor, because we fully recognise that fuel poverty is a growing challenge, with the number of households in fuel poverty having risen every year since 2004, to 4.6 million households in England alone in 2009. Given that legacy of rising fuel poverty, we are creating a new CERT category of those who have the greatest need, in addition to the priority group of vulnerable households, which will already account for at least 40% of the total CERT extension measures. Pensioners, people with children and the disabled will form a super-priority group on whom at least 15% of the new programme must be targeted. That means that more than £400 million will be focused over the next 18 months on the poorest and most vulnerable.

--- Later in debate ---

[Gregory Barker]

It has never been the intention for the green deal to encompass, in its purest form, microgeneration, for which there is the separate support mechanism of feed-in tariffs. We will look closely at those tariffs to ensure that they are appropriate. We want to drive a far greater sense of ambition around microgeneration than was anticipated in the Energy Act 2010, which was passed in the previous Parliament. We are keen and ambitious for microgeneration, but I do not want it to be confused with the green deal, which is about energy efficiency, so it will not be included in that. However, we hope that providers that insulate homes under the financing of the green deal will, as I have outlined, take that opportunity to offer packages for appropriate microgeneration that also might not require any up-front payment because they are supported by a feed-in tariff.

It is important to stress the priority of energy efficiency over microgeneration, because there is no real point in adding microgeneration systems to energy-inefficient homes, but there is a great deal of sense in adding them at the same time as increasing energy efficiency. Of course, that would also require a smart meter. I hope that this package of measures will be available under the green deal umbrella, but the green deal financing we have been discussing and the £6,500 are for energy-efficiency measures. There is nothing magic about the £6,500 figure, but we had to come up with a figure and there has to be a cut-off point. We reached the figure with the help of BRE, but we might consider increasing it when proposed legislation comes before the House if that proves sensible. However, £6,500 is what we are committed to now. We hope that the game-changing nature of the new deal, the involvement of new players and the creation of new markets and financing tools will create a host of opportunities as well as driving real behaviour change.

[Mr MacNeil]

I am listening quite closely to what the Minister says about insulation, carbon footprints and new financing. Is he saying that when it comes to the householder paying, they will not be facing any higher than average bills in any particular year than they would have faced had they not entered the green deal? It is quite important that people fully understand. Is the Minister saying that bills should go down and that householders should not experience any greater costs than they had prior to entering the green deal?

[Gregory Barker]

That is what I am saying, with the caveat that there are two big variables, the first of which is behaviour change. If someone decides, in their newly insulated home, to turn up the dial and hoover in the nude, that will affect the energy bill. Likewise, if there is a spike in oil prices or a surge in gas or electricity prices, that will affect bills. On an equalised basis, assuming there is no major behaviour change, the assumption in the model we are working on will be that the financing costs will always be less than the overall costs of installation.

Our ambition goes way beyond just household energy efficiency. Households, businesses, industry and the public sector all need to pull together to achieve the change that we need. For businesses, energy efficiency can make sense provided that they are not constrained by unnecessary bureaucracy. The green deal will apply to businesses too, and especially to small and medium-sized enterprises. It has the potential to help many companies improve not only their green credentials but their bank balances and their overall competitiveness.

I want our reforms to take energy efficiency away from the corporate social responsibility managers and plant it firmly on the desk of Britain’s finance controllers. Pioneers in this area are already demonstrating that energy efficiency makes real sense for business. To pick just one example, Marks and Spencer made a saving of £50 million last year alone through energy-efficiency measures. It is just one of thousands of progressive British businesses that realise that energy efficiency has a direct impact on profitability.

Marks and Spencer launched Plan A in January 2007, in which it set out 100 commitments to achieve in five years and the aim of improving fuel efficiency by more than 20%. Critical to Plan A has been genuine and consistent leadership from the very top of the organisation. Providing leadership from Government Departments is a responsibility that we cannot shirk, and that is why the new Prime Minister has committed the coalition to cutting emissions from central Government Departments by 10% in just 12 months. I am pleased to inform the House that work is well under way, but the 10% cut in Whitehall is just the starting point. We are engaged in a major, long-term drive to reduce emissions and save energy costs right across the wider public sector, which alone accounts for 3% of total UK carbon emissions.

The public can watch our progress: all Government Departments are now committed to publishing their energy use online and in real time. Seventeen Departments will publish energy consumption data for their headquarters buildings by the end of July, following the first meeting of the new cross-departmental energy committee. However, I am pleased to say that the Department of Energy and Climate Change, the Home Office and the Ministry of Justice have already made their energy-use information available online and in real time. We have also asked the private sector to join Ministers in this cross-cutting group, so that we can hold Departments to account and ensure that we learn the very best practice from business. This Government are determined to get our house in shape in short order, and we are already delivering clearer leadership, greater transparency and real change.