Energy Bill [HL]

Lord Dixon-Smith Excerpts

Wednesday 19th January 2011 Grand Committee

[Lord Jenkin of Roding]

I had hoped that the noble Lord would have given some indication of the range of improvements and benefits that might be available under the Green Deal. It seems to me that, if one were to list the entire range, including appliances and all the other things that now qualify under the Green Deal, that could in many cases be misleading to a householder, as it might be that only two or three of them could possibly be relevant to his or her house. I just wonder what the purpose is of listing the whole lot if inevitably the assessment will be that, within the price and given the nature of the building concerned, numbers 1, 2 and 3 are really the only ones that will be applicable. What is the purpose of listing, as the amendment suggests in the second subsection, all energy efficiency measures, if most of them might not apply to that house?

[Lord Dixon-Smith]

Following a slightly similar line of thought, but not exactly the same one, I think that, if you are going to have people in undertaking works to improve the energy efficiency of your building and you are able to do works outwith the scheme, why should that not all be done at the same time? I would hope that the Green Deal might set a minimum standard and a financial limit of the funding available and that, within that financial limit, as much work as the individual owner and improver wishes to undertake can be undertaken. After all, it is a financing arrangement that we are talking about; if the property owner or housing association or whatever wants to go the whole hog and really do the whole job, I do not see that the upper limit matters. What we want is the security of a scheme and it must have a minimum standard. We do not need the rest of it, so I think that the idea of listing it all is completely unnecessary. The only thing that needs to be totally determined is the minimum standard. After that, let it rip.

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[Lord Jenkin of Roding]

Another difficulty, which I referred to in our previous sitting, is that the householder faces a choice—whether to have a warmer home or lower bills. It will be difficult for anybody to estimate what the bills will be if the consumer decides that they have been cold and that they want the temperature to be a couple of degrees higher in their house. The problem is in quantifying. I totally support this whole proposal, but one has to make sure that it is realistic and workable. The noble Lord suggested an estimated range, making it clear that the estimate depends on whether the householder wants a warmer house. In many cases, one of the best things to do is to wear another layer of clothes. My granddaughter shares a flat. She is a sensible girl but one of her flatmates is not and their bills are higher because the flatmate chooses to wear pretty skimpy clothes. One has to take account of these human foibles.

[Lord Dixon-Smith]

Perhaps I could intervene as well at this point. This illustrates the classic difficulty of legislating in a way that is dependent on regulations, which we cannot possibly see at this stage. A critical issue is whether the Green Deal has a fixed rate of interest. Each individual deal must be based on a fixed interest. If the system fails to have a fixed rate of interest, a deal may show a clear saving when it is begun—particularly because interest rates are low and one could probably get financing for this sort of thing at 3 or 4 per cent—but, if interest rates rise to 5 per cent and the borrowing rate goes up to 8 per cent, that could completely take out the effect of the savings over a period of time. There is a real issue, which comes back to the fact that we are, as with all legislation of this sort, flying blind. We need to think seriously about interest rates. If the deals vary with interest rates, their attractiveness will be considerably eroded.

[Earl Cathcart]

I asked my noble friend whether the cost of the assessor could be rolled up within the Green Deal loan. The assessor may charge £100 or £120 plus VAT, which, if the cost is up front, may be a deterrent to the very people whom we want to take up this deal.

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[Lord Marland]

The methodology for the golden rule will be standardised and it is fundamental that it is. That is a good cornerstone from which to start. I hope that that answers the noble Lord’s question.

[Lord Dixon-Smith]

My noble friend has not touched on the question of the cost of the finance.

[Lord Marland]

I would rather pick that up later on, when we come to Amendment 15. If the noble Lord does not mind, I would be happy to deal with it then. As for rolling up the costs of the assessor, we would not encourage that, but there may be a framework in which it could happen. We will need to look into that further.

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I know that my noble friend the Minister is keen to involve local councils in energy efficiency, so I hope that he will be able to explain a little more, as my noble friend said, how the Government see local authorities’ involvement in this field. I was pleased to read in the Newcastle Journal this morning that the Department of Energy and Climate Change has awarded almost £250,000 to Northumberland County Council to develop work in connection with carbon reduction in local communities. I know that the Government are keen on this. We are also keen, as part of that Government, that local authorities should play an important role. I hope that the Government can take away this amendment and see whether they can use it in any way. I certainly look forward to hearing what my noble friend has to say about the important role of local authorities.

[Lord Dixon-Smith]

My Lords, my best line has been taken by my noble friend Lord Moynihan, as I was going to accuse the noble Lord, Lord Teverson, of speaking far too conservatively. He has neglected to take note of the change that has altered public sector housing enormously over the last decade and a half, which is, of course, the advent of housing associations. Housing associations are now responsible for a very large proportion of public sector housing, but they do not have the opportunity to offer things such as rent rebates.

Speaking as an old local authority man, I am not entirely sure that if I was still there I would like the thought of somebody committing my ratepayers to having to pay for something, however beneficial, by way of an added inducement. We need to be extremely careful to make sure that what is done in a scheme such as this is self-justified entirely within the scheme. If somebody else wants to add further inducement, there is nothing to prevent a local authority from doing it.

However, we should not begin to assume that any aspect of this scheme is going to be dependent—or might become dependent, which would be even worse—on some other outside source of funding. If the schemes are not justified in their own right, standing entirely within the terms of reference that will be established in this Bill, then frankly they are not worth having. We absolutely have to stick with that, as a primary rule in what we are doing here, without expecting others to make other commitments to support it.