Energy Bill [HL]

Lord Deben Excerpts

Monday 24th January 2011 Grand Committee

[Baroness Maddock]

My Lords, further to my noble friend’s comment about the record of the private rented sector in this area, he is absolutely right that we have not seen its efforts in any great quantity. However, I remind him that one or two schemes got grants under the Home Energy Conservation Act. If he cares to look back, I am sure that the Energy Saving Trust has records of the one or two schemes that were quite successful. Unfortunately, nobody ever looked at the statistics to see how those schemes might be grown in the rest of the country, but that is history. I also remember that one very good scheme was initiated by Westminster City Council.

[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.

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[Lord Dixon-Smith]

My Lords, I feel provoked to intervene. We are making the subject far too complex. I thought that I heard, a few minutes ago, that the golden rule of the Green Deal would be that the energy savings would equal the cost increases. If I did not hear that, I am mistaken, but I am fairly sure that I did.

If that is the case, let us consider a situation where one tenant leaves and a new tenant comes in. Provided that rule applies, there is no disadvantage or, indeed, advantage to the new tenant in saying that he does not want to be part of the deal. If the deal is cost-neutral, why is he likely to refuse to participate?

I also think we need to bear in mind that word of mouth is a very powerful force. Once the scheme begins to operate on any sort of scale, I suspect that there will be a great deal of support from those who initially participate in it. They will all be telling their friends that they have a warmer house; that their energy bills are at a new level; and that the improvements apply to both tenants and landlords. I suspect that we will get to the point after a time where tenants start to demand their landlord to make the improvements if they cannot themselves. I am therefore optimistic about the way this scheme will go, and we should not raise too many potential difficulties. The difficulties are there, I admit, but in reality, once the scheme begins to take off, it will develop its own momentum and the nightmare scenarios being portrayed will not in fact exist.

[Lord Deben]

My Lords, I do not think we ought to take it quite as simply as that. One of the things we learned from the Warm Homes operation—which I had the privilege of introducing—was that many people live, as far as their heating is concerned, to the level that they can afford. If their house becomes better insulated, what happens is not that they have a lower bill: they merely warm the house better than they were able to do before. In other words, this is not as simple a mathematical equation as one might think.

I am worried about the concept of a sort of holiday. If someone enters a tenancy where the agreement has been made already, they will know the terms of the tenancy: it will be part of what they are offered. It does not seem possible that anyone can have a holiday in those circumstances, because that is what they joined in the first place. I realise that we have chosen to concentrate on people at the bottom end, with perhaps little choice in the tenancy they have. I very much agree with the comments made about some landlords. However, in my experience of having had a lot of landlords in my former constituency, a good number were decent. In those circumstances all I am suggesting is that when people enter into an agreement, they know what the situation is, and there certainly should not be a holiday.

The only circumstance seems to be the first one, where people are actually able to control the heating bills. If you have better insulation, you can decide whether you are going to continue with the amount of heating you had before—in other words the price you had before—but get more benefit from it because the house is better insulated. Alternately, you may decide—and many people do—that you would prefer to get even warmer. I am sure people who have gone canvassing know that there are certain houses where you bang on the door and cannot stop yourself stepping back from the wave of heat that hits you. It is not always true that we are sensible about our heating. The fact is that these things are within the control of the tenant, and I find it difficult to understand why we are going down this line. Tenants have a good deal here, paid for by the state, and it is absolutely right; but do not let ourselves get into a position in which we find that tenants are able to turn up the heat and then ask for a holiday because it does not work out as they thought it would.

[Baroness Northover]

Before I get dispatched back to DfID, justice, and all the other areas I am supposed to be covering, I think I had better pull myself back and make sure that the whole area is reported on in due course. As I mentioned before, we will be looking at this review in a bit more detail in a later grouping, and no doubt my noble friend Lord Marland will be able to put everybody—including me—absolutely straight as to what the situation is. I very much welcome the noble Lord, Lord Davies, trying to stop me going down roads I should not go down, and I very much welcome the noble Lord, Lord Dixon-Smith, explaining with such clarity how the golden rule works so that it should indeed be to everybody’s benefit and so that, I hope, we will not find ourselves in difficult situations.

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[The Deputy Chairman of Committees (Viscount Ullswater)]

My Lords, I must advise your Lordships that if this amendment is agreed to I will not be able to call Amendments 20PA and 20Q because of pre-emption.

[Lord Deben]

My Lords, I would like to suggest—

[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.

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[Lord Deben]

I did try to get in rather earlier, but I am now able to say that I would be very unhappy if the Minister were to go down the route of putting in another pause. We have had enough pauses in this over the past 20 years, so really we have now got to get on with it. I also have a slight difficulty believing that there is a connection between green bias and green ideologues. I hope that one is not a green ideologue, but I hope that there is a green bias. If there is not, the world will be in some difficulty. The concept that the opposite of that is a person who is somehow independent and not of that kind worries me very much. I hope, therefore, that the Minister will not go down this route.

My problem with the first part of the clause is that I fear the Minister will be in real difficulties. Under subsection (1)(b)(ii), he has to consider that the regulations,

“will not decrease the number of properties available for rent”.

Let us consider this in imaginary terms. When you think of some of the landlords we have, I can see a number of them saying, “I don’t want to spend anything and I don’t want to have anything to do with it. If there are regulations, I will take my property off the market”. In those circumstances, how on earth will the Minister be able to say that he does not consider that there will be a decrease in the number of properties available for rent? He could say that someone is off their head or make any number of comments, but the wording of this sub-paragraph could mean that he might be under judicial review if it could be adduced that any landlord had taken this view.

I am closely following the noble Baroness, Lady Smith, here. The problem is that this is one of those rare occasions where the actual wording is dangerously total. It is does not say “significant” or perhaps that there is “good reason to believe” that the number of available properties would decrease in more than a marginal way. There is nothing about whether the situation might change over time. It is a dangerous sentence and I hope that the Minister will agree at least to think about it again. I think that it is wrong.

The second reason why I am a supporter of the amendment proposed by the noble Baroness, Lady Maddock, is that I think that, although it is reasonable to say that regulations should not be made until the report has been published, it is perfectly reasonable to say that, once the report has been published—notwithstanding the worries of the noble Baroness, Lady Noakes—it should then be for the Minister to make his decisions in the context of the report. Picking out two things in the way that subsection (b) does will limit his ability. After all, this is a Government who do not believe in and do not like regulation; they turn to regulation only when necessary. My fear is that regulation may be necessary simply because the people in this business—or a very large number of them, as the noble Baroness opposite said—are not an easy lot to get to do things in a rational and sensible way. However, we are going to do our best. No one can possibly imagine that this Government will not go as far as it can to help people to do their best.

Having been responsible for the housing policy of the United Kingdom for some years, I have to say that private landlords—even the good ones—are not the easiest group of people to corral. There are some—rather fewer than some people think—who are certainly not good and who are impossible to corral. Given that that is what we know now, this may be an area where—however hard we may wish to bear down on regulation—we may need to do something. If we come to that conclusion, surely we ought to leave it in the hands of the Minster, who will, after all, have to argue his case for doing something that he has said that he does not want to do. He will have to argue his case against the general view of the coalition parties in both Houses of Parliament, and he will have to lay the regulations. Therefore, there are quite a number of hurdles in his way anyway in addition to any psychological dislike of regulation.

I would much prefer the Secretary of State to be faced with the simple statement of the report. The report will say to him these things, and he will have to make up his mind about it. That is what I would prefer. I would be happy to accept subsection (1)(a) of Clause 37—although, as no such amendment has been put down, I would be prepared to go for not having subsection (1) at all—but it seems to me that the Minister has undermined his position in a way I would have preferred him not to have done. Therefore, I would like him to accept this amendment. Certainly, I think that he would be well advised, if I may say so, to look at subsection (1)(b)(ii), because whatever bits of notes he gets handed to him from behind, I suspect that he will rue the day that he included that provision, because somebody will make mischief over it—even if it is somebody who just wants to push this off because they do not really believe in it.

[Lord Marland]

My Lords, I am very grateful to the noble Lord, Lord Deben, for his remarks and to others for the remarks that they have made. Before we start, to get us on the right footing, I would like to say that his excellent remarks about Amendment 20PA and subsection (1)(b)(ii) are very well made. Of course we will consider his comments, take them away and see how best we can improve matters. I am very grateful that he and the noble Baroness have drawn our attention to that particular issue, because these things do need tightening up.

On Amendment 20Q—some of this was answered by my noble friend Lord Deben—I agree with my noble friend Lady Noakes that it is an admission of failure for Government to regulate. That is a primary tenet of this Government, as my noble friend Lord Deben has said. If we cannot encourage people through these actions to participate in this opportunity—this great opportunity—then we will have failed and we will, therefore, have to regulate accordingly. However, as I said earlier, regulation is made on the basis that we have a “one in, one out”, arrangement, so we will have to look at the matter very carefully. I am not into “what if” scenarios about ideology, but I think that Government have quite a strong track record of choosing someone to do a review. That individual has to withstand the brickbats and the challenges of both Houses as to whether they are competent or going to give fair reason. Of course we must remind ourselves, as we do periodically, that the Green Deal will be a market-led product. We have to have confidence in the market without imposing too much regulation if the people involved are to be the proponents of the market. On that basis, I ask the noble Baroness, Lady Noakes, to consider withdrawing her amendment.

Amendments 20PA, 20P and 20Q would impact on the preconditions ahead of a Secretary of State being able to make these regulations. The Secretary of State will be able to make regulations only following publication of the review and only if he considers that the regulations are necessary to improve the energy efficiency of domestic private rented properties and would not decrease the number of properties available for rent. That is the framework that I mentioned earlier.

I hope that that largely covers the questions that have been asked. I invite noble Lords to withdraw their amendments.

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[Lord Deben]

Would the Minister not agree that there is a difficult issue here? We have to do things in this uncomfortable way because we could not have a situation where the landlord puts pressure on the tenant to refuse the Green Deal in order that he himself can claim that he was therefore not subject to the local authority’s rules. It has to be a little uncomfortable because we know there are landlords who will bring pressure on their tenants to do a number of things, and it would be very difficult to stop this. Therefore, we must accept that this is an uneasy but reasonable compromise.

[Lord Marland]

I am very grateful to the noble Lord. The situation is not ideal, but we have to live in a regulatory framework and the landlord-tenant framework that exists. In an ideal world, we would insist that everyone did this at a particular time, but the world is not ideal so we are going as close as we can to achieving that. I think that the noble Baroness makes a very valid point. When we review this, we will see whether there are other nudges or encouragements that we can make in respect of landlords.