Energy Performance of Buildings (England and Wales) (Amendment) Regulations 2021

Debate between Lord Caine and Lord Lansley

Thursday 18th March 2021 Grand Committee

[Lord Lansley (Con)]

My Lords, it is a genuine pleasure to follow my noble friend Lord Moynihan, who has made lots of good points. Some of them relate directly to points that I was hoping to make, so I will not repeat them, but the importance of the building sector in achieving our net zero carbon objectives should not be underestimated. The second largest source of emissions is from buildings.

It is easy for us to focus far too much on the commendable achievements in building net zero carbon homes, but by my calculation, we simply have to recognise that, by 2050, something like two-thirds of the homes we live in will already have been built, so retrofitting and securing energy efficiency in our existing housing stock is absolutely critical. There are government schemes for this purpose, such as the Whole House Retrofit plan related to social housing, and so on.

The scope of these regulations is modest, and I welcome that. I know that we are all grateful to the Minister for explaining the regulations at the outset, but I shall unashamedly take the opportunity to talk about not the price of EPCs but the uses to which they should be put. Far too infrequently are EPCs seen as the spur to energy efficiency improvements that they should be, which is what we are looking for.

On this occasion I will not be drawn into the private rented sector. I know that the Government undertook a consultation in the latter part of last year. I am probably slightly disappointed that, in the event, they were not a bit more ambitious, because the cost-benefit ratio they ended up with suggested that the benefits did not outweigh the costs, but that of course was at the carbon price assumed between now and 2050.

Again, I will not go down this rabbit hole for too long because it is too important and too deep, but we ought to ensure that our carbon pricing is set at a level that forces change. If it is set at that level, it is also one that is likely to deliver substantial benefits in relation to the energy efficiency of buildings and the costs that renters and landlords have to meet.

I come back to the use of the EPC. Two-thirds of the existing housing stock has a rating of D or worse, so we need to effect change. There are government schemes: my noble friend Lord Moynihan is quite right; it is not that there are not schemes. The Government have put money and resources behind grant schemes, but the supply chain and the people influenced by it need these things to be sustained over a considerable period and we need the response to be substantial and positive. I am afraid it is not.

At the moment, even in the last few weeks, we are sitting here saying, “Why are people not taking up the green homes grant?” I think it would be far too easy to blame it on Covid and say, “They do not want people in their homes, understandably, so they are not taking up the grant.” However, it was true beforehand. We have had this with other insulation schemes. It is sometimes as brutally simple as people living in a house not wanting to empty their loft to let somebody up there to put the right insulation in place. They do not want the disruption.

I will put just one point to my noble friend in the hope he will convey it into the right ears across government. Like we do in the private rented sector, focusing on when there is a new tenancy, in the owner-occupied sector we must focus on the moment of sale—when the EPC is given to a potential new owner and they have a period ahead of them when they might reap the benefits of investment in energy efficiency. At that moment, they also are likely to empty the house. They may empty the loft and sometimes they can engineer a short window of opportunity for energy efficiency improvements to take place.

I suggest that, at that moment, rather than a grant scheme which comes and goes and depends on the vagaries of spending reviews, there could be a permanent allowance against stamp duty for energy efficiency improvements up to, say, the value of £5,000 that they undertake—if recommended as a result of an energy performance certificate. Such a scheme could be confined to houses with an EPC of D or worse or, to start off with, those rated F and G, to see how it goes.

I prefer tax incentives to government grant schemes. I prefer tax relief to expenditure. I prefer incentives people can permanently rely on and where they feel they are getting some of their own money back or not having to give their money to the Government. As the tax is targeted on that moment, the incentive can be deployed in that moment as well. I commend that thought to my noble friend.

I know government departments not only hesitate, but will not enter the territory of tax, because it is all the Treasury’s business. But if they have an objective—and there is an objective here—and they think it can best be achieved by working with the Treasury through a tax incentive, I ask that they go down that path.

[The Deputy Chairman of Committees (Lord Caine) (Con)]

The noble Baroness, Lady McIntosh of Pickering, has withdrawn, so I call the noble Lord, Lord Addington.