Small Business, Enterprise and Employment Bill
Debate between Lord Grantchester and Baroness Verma(9 years, 1 month ago)
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Lord Grantchester (Lab)
I thank the Minister for her explanation of the amendment. Even if today the closure of a mine is not of the significance that it was a generation ago, it is still an important matter to the industry, to the local community around the pit and to the people directly involved. It is right that the Government should be able to provide appropriate support in this amendment through concessionary coal payments.
The amendments in this group are welcome as they can help to provide assistance at a time of great anxiety and stress to employees, who will appreciate the security that they can provide. In order that these concessionary coal payments can have some certainty as well, I ask the Minister if she can provide a bit more clarity on certain points with regard to subsection (3) of the new clause proposed by Amendment 81A, concerning Treasury consent. I understand that her department is preparing to submit these proposals for clearance under state aid rules. Does this mean that this enabling power could never be needed should the Treasury refuse to sanction her department’s submission? What would be the scope of that decision? Is it likely to lead to a reduction in the concession?
I understand from my honourable friend Tom Greatrex in the other place that the Minister, Matt Hancock, has promised to submit the proposal before Dissolution. I would be grateful if the Minister can confirm that commitment tonight and make the announcement before Parliament rises. For the comfort of the people who will be nervous of their situation in the coalfield, can she provide as much information as possible concerning how long she would envisage clearance to take on this state aid submission to the EU? Every week that goes by without state aid, the sum required actually increases. Should clearance be received before Dissolution, will she make the commitment that this will be announced to Parliament? However, should clearance not be received before Dissolution, can an announcement be made between Parliaments? Clarity and certainty in her assurances will be vital to those in these vulnerable communities.
Baroness Verma
My Lords, I am extremely grateful to the noble Lord, Lord Grantchester, for his support for the amendments. He raised a couple of questions which I hope I will be able to clarify. The Treasury has confirmed that it will meet the entitlements, although the reinstatement remains conditional, as the noble Lord is aware, on the Government securing the necessary approvals, including one from the Commission. We can assure concessionaires that entitlements will be reinstated, as they have been in the past, on the same terms and conditions.
We will be discussing state aid aspects with the Commission at the earliest opportunity and will formally notify the concessionaires as soon as practicable. The state aid clearance processes can take time, as the noble Lord is aware, so it is difficult for me to provide your Lordships with definitive assurances at this time. We will discuss, of course, with the Commission at the earliest opportunity to ensure a prompt and smooth clearance process. I reassure the noble Lord that no concessionaries will suffer loss as a consequence of any inertia in the process. Entitlements will be backdated, as they have been in the past, should any delays arise. I am extremely grateful to the noble Lord for his support and I hope that my response has satisfied him.
Electricity Capacity (Supplier Payment etc.) Regulations 2014
Debate between Lord Grantchester and Baroness Verma(9 years, 4 months ago)
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The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, this draft instrument—the supplier payment regulations—forms part of the implementing secondary legislation for the Government’s capacity market scheme, which is part of the electricity market reform programme. The powers to make this implementing secondary legislation are found in the Energy Act 2013, which, following scrutiny in this House and the other place, received Royal Assent in December last year, with cross-party support.
The capacity market will address our medium-term electricity needs and ensure that there is sufficient electricity supply towards the end of the decade and beyond. It is one of the two key schemes brought in by electricity market reform to incentivise much needed investment into our energy infrastructure. The other, the contract for difference scheme, is not the subject of today’s debate.
The capacity market will help keep the lights on by driving new investment in gas and demand-side capacity, as well as getting the best out of our existing generation fleet as we transition to a low-carbon electricity future. In brief, the capacity market will achieve this by making a regular capacity payment to providers who are successful in capacity auctions. In return for this payment, providers must meet their obligations to provide capacity or reduce demand when the system is tight, ensuring that enough capacity is in place to maintain security of electricity supply.
The supplier payment regulations will sit alongside the Electricity Capacity Regulations 2014, called the principal regulations, and the Capacity Market Rules 2014. The principal regulations and rules, which received parliamentary approval in July this year, brought the capacity market into force on 1 August and, as a result, the first capacity auction will be held later this month for delivery in 2018-19. Those successful in this and subsequent auctions will be awarded capacity agreements entitling them to capacity payments. This will be paid for by a charge on all electricity suppliers. It should also be noted that while the first capacity delivery year will be in 2018-19, the Government are committed to supporting the growth of the demand-side response sector. As part of this, two transitional auctions, just for this sector, will be held in 2015 and 2016 for delivery in 2016-17 and 2017-18. This tailored support will help grow the demand-side and storage industries and ensure effective competition between traditional power plants and new forms of capacity, thereby driving down future costs for consumers. As with payments made during the capacity delivery year, payments made under the transitional auctions will be funded by a charge on all electricity suppliers.
When we debated the principal regulations, I highlighted that the Government would be bringing forward a second set of regulations on the supplier payment arrangements for the capacity market to align the legislative framework for the capacity market and contracts for difference. The supplier payment regulations were not brought in at the same time as the principal regulations, as they are technical provisions which we wanted to get absolutely right. It was not necessary for them to be in force prior to the first capacity auction.
The supplier payment regulations, which suppliers, industry and consumer groups have been consulted on throughout their development, include an obligation on all electricity suppliers to pay a “capacity market supplier charge” from 1 April 2015. As I have mentioned, this charge will fund the capacity payments to those successful in capacity auctions. The first capacity payments will be made in 2016 and 2017 to those successful in the transitional auctions, and to those with a capacity agreement for the first capacity delivery year in 2018-19. In addition, the regulations include a small additional levy—known as the settlement costs levy—to cover the operating costs of the government-owned Electricity Settlements Company, whose role it is to calculate, determine and administer the payments from suppliers to those who are successful in the capacity auctions.
The regulations determine how much each licensed supplier will be required to pay for the capacity market. The amount payable by a supplier will be calculated on a supplier’s share of the market, based on how much electricity they were supplying between 4 pm and 7 pm on working days between November and February in the relevant delivery year. This approach seeks to achieve a balance between the objective of incentivising reductions in electricity use, at times when demand is high, and that of remaining predictable and manageable for electricity suppliers who have to pass these costs on to their customers transparently. The regulations will facilitate the flow of payment from all electricity suppliers to those successful in capacity auctions. On receipt of capacity payments, capacity providers are then obliged to provide capacity or reduce demand when required. This therefore ensures security of electricity supplies.
While further amendments will be made in early 2015 to the principal regulations, mainly to enable the Government to meet their commitment to allow interconnected capacity to participate in the capacity market from 2015 onwards, these regulations complete the secondary legislation framework for the capacity market. I beg to move.
Lord Grantchester (Lab)
I thank the Minister for her explanation to the Committee of the electricity capacity regulations. She referred to the Energy Act 2013, of which these and other provisions are the consequence. Many days were spent in this very Room debating the issues pertinent to the regulations before us today and we remain supportive of the role of the capacity market mechanisms, as part of electricity market reform. However, one or two curiosities remain from these regulations and I would be grateful if the Minister could clarify them today.
The Minister has made it clear that each supplier will pay the capacity market on a forecast of their share of net demand between 4 pm and 7 pm on working days in winter, and that this will be reconciled using actual demand data once they become known. What degree of accuracy in that forecast is specified in the regulations or is there an element of incentivisation included, such that suppliers do not overbudget the market for cash-flow purposes, resulting in higher consumer costs? How will this element be monitored and any sanction calculated or even applied for, should there be excessive demand forecasting, and what happens if there is then a dispute concerning the calculation of actual demand? What dispute-resolution mechanisms have been proposed?
The regulations also make it clear that should a supplier default on payment, this contribution to the capacity market must be made up through further contributions from the remaining non-defaulting suppliers. What degree of allowance for this can a supplier rely on in undertaking his or her forecasting? Have the Government calculated a fair cost element to each supplier of carrying this additional risk and how significant this may become?
In her remarks, the Minister referred to the inclusion of interconnectors. I remember our debates and the encouragement for the inclusion of this innovation, to contribute to the UK’s security of supply. In anticipation of such future inclusion of interconnected capacity, Regulation 3 of the principal regulations is amended in the definition of “providing electricity”. It is obviously disappointing that interconnectors could not take part in the capacity mechanism from the very beginning. With the first round of auctions taking place on 16 December, as she said, the potential for some of these interconnector projects, which could well be in place by 2020, is significant. The impact assessment also notes that a greater degree of interconnection could help to reduce the role of the capacity market in future, yet the capacity market is needed to enable access from interconnectors. How does the Minister see this conundrum playing out as we move to the more contractual counterparty model used for contracts for difference?
The position of existing nuclear power is also somewhat curious. It is included in the list of qualifying plant for the capacity market yet these nuclear plants have already been built, are already generating and are receiving revenues for electricity that will not be hit by carbon pricing. Has the Minister reflected that nuclear plants can now enter the capacity market, even though industry is intended to finance the cost of upgrade and life extension work? As the Minister knows, subsidy will find its way back in the end to bills that the consumer pays.
The Explanatory Memorandum also mentions that as the capacity market is intended to be a transitional measure, regular reviews of the capacity market will take place. Has the Minister any view on how often these regular reviews and audits should be taking place? As each year’s auction will clarify progress on a number of eventualities and be subject to demand-side and storage transitional arrangements, as mentioned in the Minister’s remarks, does she envisage that they would best be undertaken yearly?
The Minister will also be aware that carbon impact policies do not apply to plants producing less than 20 megawatts. This will give a cost advantage to plants conveniently bidding on providing 19 megawatts. Will the Minister outline the rationale for that defining level as oil plants, being perhaps among the most polluting forms of generation, will tend to be at a sub-20 megawatt level? In the expectation of her fulsome replies and clarifications, I am in support of these regulations today. In the spirit of Christmas, I look forward to congratulating the Minister on a successful auction next week. We will have the joy of experiencing it in the announcement of the results by National Grid early in the new year.
Baroness Verma
I start by thanking the noble Lord, Lord Grantchester, for what was, I think, his general support for the draft regulations. Of course, he reminded me of the hard work that the Committee undertook during debate on what became the Energy Act 2013. I was extremely grateful for the noble Lord’s participation in ensuring that the level of scrutiny that took place really did enhance the Bill as it moved through to become an Act.
As always, the noble Lord, Lord Grantchester, asked a large range of questions and before I continue, if I fail to answer any of the questions that he posed, I will of course read Hansard carefully, and I undertake to write to him and place a copy in the Library.
The noble Lord asked about the period of reviews. Reviews will be undertaken yearly by Ofgem and every five years by the Government. It is important that we ultimately deliver the right formula to ensure a value-for-money cost to the consumer. I know that ultimately the noble Lord and I share the primary object of ensuring that not only do we have enough supply but that it provides value to the consumer.
Fuel Poverty
Debate between Lord Grantchester and Baroness Verma
Baroness Verma
I am extremely grateful to the right reverend Prelate for his question, which enables me to reassure him and the House that we have looked very seriously at the pre-paid meter issue. We think that people on very low incomes must be among the greater beneficiaries of this policy, which is why we will make sure that through smart meters they are able to top up their meter as if they are topping up a mobile phone, so they have no chance of being cut off when they need their electricity the most.
Lord Grantchester (Lab)
My Lords, on 3 June the Times reported that profits from supplying electricity and gas to households had doubled in the past year. With profit margins from selling gas now over 10%, does the Minister not agree that we need to fix the broken energy market?
Baroness Verma
My Lords, the noble Lord is right, which is why the Government have referred the market to the CMA to look at how the energy markets are operating. We will await the outcome of its work, and in the mean time, Ofgem has the powers, as the noble Lord is aware, to take action against any supplier if it has any supported evidence that shows that they have behaved inappropriately.
Green Deal (Qualifying Energy Improvements) (Amendment) Order 2014
Debate between Lord Grantchester and Baroness Verma
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.
Energy Bill
Debate between Lord Grantchester and Baroness Verma(10 years, 5 months ago)
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Lord Grantchester
From these Benches, I am happy to endorse the spirit of the amendments in the interests of consumers and providing them with more information on their bills. These amendments seem more neutral than those proposed on Report in that they do not seek in the Bill to mandate energy suppliers to highlight certain designated costs. The amendments thereby avoid the claim that they are targeting so-called green levies on behalf of one strident viewpoint. I listened carefully to the Minister’s words in proposing these amendments and, like the noble Baroness, Lady Maddock, I am not sure that I picked up entirely how the Minister expected costs to be broken down to include the social costs. Can she clarify that in her reply? The impact of different costs, especially the so-called green or environmental costs, should be balanced and it is important how that is portrayed to consumers.
We welcome the consultation that this will enable so that all views can be expressed prior to the introduction of regulations—if any are introduced. However, we are concerned that the transparency of the whole market needs to be enhanced, not simply transparency with respect to the costs of energy supply companies. I refer here to generating costs and transfer pricing within each of the big six power companies, which can make big margins on their generation that would not then show up as the Government may intend.
We remain concerned that these clauses do not go anywhere near far enough. From these Benches, we contend that without proper reform of the market, the data available at any later date are likely to be of severely limited use. At this stage, we are content with the amendments but regard them as highly immaterial to the overall transparency of the market.
Baroness Verma
My Lords, I am extremely grateful to all noble Lords for, by and large, their support for my amendments. I will quickly respond to the right reverend Prelate the Bishop of Chester and to my noble friend Lady Maddock about transparency. The Government and Ofgem both agree that it is important that suppliers are transparent about their costs, including the costs of complying with government environmental and social programmes. One part of the list to which I referred earlier was about complying with greater transparency on those costs. The suppliers would be expected to be able to comply on the cost of delivering government environmental and social programmes. Just to reassure noble Lords, the power enables the Secretary of State to specify the particular kinds of costs that suppliers must refer to, so if we need to get further detail, there is scope to enable that to happen.
I have tried to provide a balance between not overcomplicating the Bill and enabling consumers to be able to look at a bill, see how much their energy is costing them and see whether they are able to get a cheaper deal elsewhere. Providing that information in a way that is clear and easy to understand is what my amendment proposes to do.
Energy: Long-term Supply
Debate between Lord Grantchester and Baroness Verma(10 years, 6 months ago)
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Lord Grantchester (Lab)
My Lords, while estimates of the investment required may vary, according to the energy mix in the future, would the Minister like to see energy companies put more emphasis on investment and keeping prices for the consumer down rather than on executive pay packages and dividends to shareholders?
Baroness Verma
My Lords, of course the noble Lord is right that we want to see greater investment, and that is what the Government are doing. This Government are working hard to get the £110 billion-worth of investment that is needed. Twenty per cent of our capacity is coming off-grid. We need that investment, we needed it earlier and, sadly, we are having to work very hard to catch up. However, rest assured that we are working very hard to ensure that energy companies are more transparent and are responding to the competition. However, if consumers need to change their energy companies because they are charging too much, they must be encouraged to switch, which is what we are trying to do.
Energy Bill
Debate between Lord Grantchester and Baroness Verma
Lord Roper
My Lords, I support the noble Lord, Lord Grantchester, on this amendment. I believe that we have a responsibility on behalf of the House to follow the report of our Delegated Powers Committee. Although I was in some ways disappointed, in other ways I was relieved when I saw in the Forthcoming Business published this morning that we will not be reaching Report stage in the first three weeks after the Recess. That will give the Government time to have these regulations published and for the House to examine them carefully. I was worried that we would get them just before we came back without a proper opportunity for discussion. I would be very grateful to have reassurance from the Minister that the regulations will be available in good time for Report.
Baroness Verma
My Lords, I thank the noble Lord, Lord Grantchester, for his amendment which would implement the recommendations of the Delegated Powers and Regulatory Reform Committee. It would require that all regulations made using the powers in Schedule 2 should be made using the affirmative procedure, apart from regulations made under paragraphs 10 and 11 on the provision of information and advice. These would need to be made using the affirmative procedure the first time such regulations are made.
I welcome the Committee’s scrutiny of the Energy Bill. As I have previously mentioned, the Government are carefully considering the recommendations of the Delegated Powers Committee’s reports and will respond in due course. I reassure the Committee that throughout the Summer Recess, Ministers and officials will be working very hard to try to provide as much information on the regulations as soon as we can. We intend to consult from October on the detailed implementation of the EMR, which will give noble Lords an opportunity to scrutinise the detail ahead of Report. Further details of our plans for secondary legislation can be found in the memorandum we recently sent to the Delegated Powers and Regulatory Reform Committee. I hope that with this reassurance that we will be working extremely hard to try to satisfy not only him but the Members of the Committee the noble Lord will withdraw his amendment.
Lord Grantchester
I thank the Minister for those comments and the noble Lord, Lord Roper, for telling the Committee that we may well get a chance to have a look at this in October so that we can take careful cognisance of the situation before we return on Report. I beg leave to withdraw the amendment.
Lord Grantchester
I thank the noble Lord, Lord Teverson, and my noble friend Lord Judd for bringing forward the subject of the use of organic waste and wider aspects of renewable generation. We welcome the opportunity to debate this, alongside amendments on other developing technologies. I understand that EU Sub-Committee D will be conducting an inquiry into food waste during the next Session.
A diverse mix of technologies and providers is crucial to a well functioning market, a point that was highlighted last week when this Committee debated access to the market for independent generators. Last week, we heard that while the rest of the economy showed meagre but welcome signs of growth, green growth in 2011-12 was 4.8%, thereby outstripping almost every other part of the economy. It bears saying again that investment in emerging technologies, such as biogas, that will provide the engine of growth in years to come is vital.
Sustainable development means that we must get a lot smarter about the management of our natural capital stock and flow, and this means smarter management of the entire life cycle of the resources we use. Recycling organic waste for renewable energy generation is no substitute for eliminating the volume of food waste produced in the first place, and I ask the Minister to update the Committee on what progress the Government have made in reducing this organic waste.
The amendment relates to reducing food waste from the retail supply chain. I shall extend this amendment’s probing to anaerobic digestion in the wider agricultural sector and sewage works in local authorities’ areas of activity. Where waste is unavoidable, anaerobic digestion can be a double win by reducing methane emissions caused by land-filling and, if used in CHP, generating renewable heat and energy. In addition, the digestate produced by anaerobic digestion can be used as a fertiliser.
In government, my party transformed our relationship with waste by quadrupling household recycling, introducing measures to divert waste from landfill and securing capital investment in these new technologies. We would not wish to see this work wasted—no pun intended—and urge the Government to build on this legacy.
In 2011, the Government published an Anaerobic Digestion Strategy and Action Plan for England. Can the Minister update the Committee on its progress? I shall raise a number of points in that regard. The Government say that they see AD CHP providing between 3 and 5 terawatt hours by 2020. Can the Minister update the Committee on the current level of deployment? The Government set themselves no specific targets for regional adoption of AD; however, they aim to remove unnecessary obstacles to its development. Given the Combined Heat and Power Association’s concerns about the ability of decentralised energy to access the market, are the Government confident that they have now removed these barriers to development of this important technology? Finally, what funding has been provided to date through the Waste and Resources Action Programme, WRAP, for the development of AD?
In Denmark, more than 80% of district heating is provided through CHP plant. Embedded, decentralised renewable generation of this kind requires a comprehensive strategic approach, and it is welcome that the amendment has brought this to our attention. The Committee looks forward to hearing from the Minister whether the Government will bring forward a plan to promote the sustainable development of this technology as part of our European commitment to recycle.
Baroness Verma
My Lords, I am grateful to my noble friend Lord Teverson for prompting a very important debate on setting targets for the landfilling of waste.
The amendment is designed to require the Secretary of State to set out a plan and timeframe, as soon as practicable, for reducing and eventually eliminating the landfilling of organic waste to make it available for renewable energy generation and other appropriate uses consistent with the waste hierarchy, as defined in the Waste (England and Wales) Regulations 2011.
We support the minimisation of organic waste going into landfill and are sympathetic to the aims of this amendment. To date, we have made considerable progress. We have reduced the amount of food waste produced and encouraged separate food waste collections that are suitable for anaerobic digestion and composting. We have already seen a substantial increase in the number of anaerobic digesters generating energy from food waste and expect many more to come on stream in the next few years.
As noble Lords will be aware, there are currently targets, set out in the EU landfill directive, for reducing the amount of biodegradable municipal waste entering landfill. Those require the UK to reduce the amount of biodegradable municipal waste entering landfill in 2020 to 35% of the levels that entered landfill in 1995; the UK is currently on course to meet that. An EU review of those targets is under way as part of a wider review of EU waste policy and legislation. I must stress that the outcome of the EU review will not be known until mid-2014, but there is a possibility that the European Commission will propose setting new targets. Therefore it would not be appropriate to commit ourselves to targets in addition to those set by the EU, particularly at this point in time when the outcome of the review of the EU targets is still unknown.
The Government have worked very successfully with industry to reduce supply chain food waste by nearly 10% over the past three years. Household food waste is down by even more: 13% since 2006. As noble Lords have pointed out, we want to focus in particular on waste prevention, rather than landfill targets or restrictions. As noted in the 2011 waste strategy, preventing food waste is the most effective approach in carbon-saving terms, compared to landfilling. Each tonne of food waste prevented means that 4.2 tonnes of carbon dioxide equivalent emissions are avoided. We believe that there are more efficient options than targets or restrictions in this area, with companies themselves knowing best where to make changes for maximum impact.
The voluntary approach has been shown to work and allows businesses to reduce waste and make themselves more efficient and competitive. We want to build on that work with businesses rather than impose targets or restrictions. As well as the continuation of the Courtauld agreement to reduce food and packaging waste in the retail and manufacturing sector, the Government have also recently launched a further voluntary agreement, which takes the same approach with the hospitality and food service sector.
We are also making progress in the collection and recycling of food waste, which is used to generate electricity by means of anaerobic digestion. Local authorities in the UK collected and recycled approximately 250,000 tonnes of separately collected food waste from households in 2011, which is a 54% increase on 2010. We expect that to be nearer 300,000 tonnes in 2013, which could provide electricity for 30,000 homes.
We can continue to support a growing anaerobic digestion industry without targets. Current evidence suggests that introducing further statutory targets would impact on businesses and local authorities in terms of compliance and monitoring, which would risk additional cost burdens on business.
I will respond briefly to a couple of points made by my noble friend Lord Teverson on the sector’s need for a plan that will avoid landfill from food waste. My noble friend will agree with me that the measures we are taking on anaerobic digestion are a success story. The Government have achieved their ambition of increasing the energy produced from anaerobic digestion of waste. The number of plants has increased from the 54 that existed when we published our strategy and action plan to 110. There are many other plants with planning permission in development.
We provide incentives for anaerobic digestion through the renewables obligation feed-in tariffs and the renewable heat incentive, which the noble Lord, Lord Grantchester, asked about. We have also provided a £10 million anaerobic digestion loan fund through the Green Investment Bank, whose fund managers have already invested in AD plants. The action plan has also delivered a driving innovation anaerobic digestion fund that is helping to challenge costs in the industry and a range of other measures, including reducing red tape for businesses in the sector. All these measures are helping the sector to grow and achieve its potential. Like my noble friend Lord Teverson, I am a keen supporter of composting, but I suspect he is probably much better at it than I am.
The noble Lord, Lord Grantchester, asked what the Government are doing to try to reduce the amount of food waste going to landfill. I referred to that in my speaking notes. We are working with business, and the voluntary approach has been successful. I hope that my noble friend finds my explanation reassuring and will withdraw his amendment.
Energy Bill
Debate between Lord Grantchester and Baroness Verma
Lord Grantchester
My Lords, the noble Lord, Lord Teverson, is to be congratulated on his persistence in tabling amendments on geothermal energy. He correctly identifies the huge contribution that this could make to the UK’s energy mix. I think this may be the third time that he has come forward with his amendment. The last time was in February 2011 during Committee on the previous Energy Bill. At that time, the Government had just slashed the remaining £2 million of a £6 million allocation for research from Labour’s time in office by 50%—plus ça change. Also at the time, the then Energy Minister, the noble Lord, Lord Marland, explained that two ROCs already in place were available for geothermal, which his department deemed to be sufficient to bring forward investment. However, of course, he rightly identified that it is not the ROCs that are important but the regulations to maintain the returns for the investor. At that time, the Minister spoke positively about this power source while saying that DECC would continue to work on the complexities of introducing a licensing system. That was well over two years ago. Perhaps the Minister will update the Committee today on how those regulations are proceeding.
Baroness Verma
My Lords, as my noble friend Lord Teverson has said, he has a longstanding interest in geothermal technologies. The Government share much of his enthusiasm and recognise that deep geothermal will have a part to play in the UK’s energy mix. We are keen to explore and to help realise this overall potential, both deep geothermal for direct heat use and those projects that are primarily about power generation.
Geothermal energy for direct heat use is a clear strategic fit with the Government’s planned transition to low-carbon heating. The Government’s heat strategy identified heat networks as having an important role to play in providing low-carbon heat to dense urban areas. Heat networks can have multiple sources of heat supply. Cities such as Manchester and Newcastle have identified deep geothermal as a possible future heat source for their networks. DECC is helping those cities to develop their heat network plans, including grant support for feasibility work and by creating a new heat networks delivery unit to add capacity and expertise to project teams in individual local authorities. The Government are also proposing a higher renewable heat incentive tariff for deep geothermal heat projects to support such developments.
The noble Lord, Lord Grantchester, and my noble friend Lord Teverson will recall that in 2011 the Environment Agency introduced changes to the abstraction licence procedures to provide greater certainty to deep geothermal investors for those projects accessing groundwater resources. This light-touch amendment to existing regulations was welcomed by the industry.
The department has been considering what additional support might be possible for deep geothermal power to help explore and test the resource for power generation. However, despite grant awards and eligibility for the renewables obligation, no deep geothermal power projects have commenced in the UK.
In response to this, the department has initiated a two-stage process to try to move the deep geothermal power sector forward. The first phase is an expert feasibility study to draw together all the evidence to explore and test the case for additional government support. Subject to the outcome of this first step, and taking into account value-for-money considerations, the various options for further support will be then analysed. The feasibility study, which is being undertaken by Atkins, will conclude shortly. We will need further analysis to help gauge the realisable potential of deep geothermal power and the extent of any support it may need.
My noble friend and, I know, many in industry argue that a licensing regime is required to underpin the expansion of this technology and to ensure that it can approach its full potential in the UK. At present the UK sector is at an early stage of development, which makes it difficult to gauge the impact of a licensing regime. The Government accept my noble friend’s argument that the impact is likely to be positive. The question is one of proportionality. At present, all parts of UK law are essentially silent on the subject of heat from deep below the earth’s surface. Any legislation would therefore proceed from a blank page, and full licensing regimes are complex to create. The legislation to do this in the Australian state of Queensland runs to more than 500 pages of primary legislation, which suggests that the call on the time of this House would not be trivial. The Atkins report will guide the Government’s position on how best we may be able to help support the geothermal sector, which will help to steer a future position on any new regulatory approaches.
I hope that my noble friend will agree with me that we must be guided by the Atkins report’s outputs and recommendations to help inform the Government’s position and next steps. I hope that on that basis my noble friend will feel reassured and withdraw his amendment.
Energy Bill
Debate between Lord Grantchester and Baroness Verma
Lord Grantchester
My Lords, we follow other noble Lords in also using our words in support of questioning the Minister on when such necessary legislation might come forward, if not included in the Bill currently before us. We agree that it mirrors to a large extent regulations that require the fitting of smoke detectors in all residential new builds, yet would go further than that in making it mandatory to install these alarms in all homes with any gas appliance.
We entirely agree that greater public awareness about the dangers of gas and of carbon monoxide poisoning is extremely important. After rising incident rates, it is encouraging that last year the number of such incidents fell. I understand that last year there were 46 incidents with casualties and one death. That still highlights that the problem persists. The noble Baroness, Lady Finlay, was correct to point out that there is severe underreporting going on and that incidents can affect health in many small, unnoticeable ways.
It is also striking that evidence suggests that those renting from private landlords are more at risk than those in other occupancy types. This deserves very careful consideration by the Government today. Like others, we understand that detectors cost only about £30, so this does not represent a huge cost to the household. The charge might also be absorbed by the plumber or fitter because it would seem to be him that would be liable under this clause. However, could the Minister clarify, as is it not entirely clear from the wording under subsections (2)(b) and (3)(b)(ii), if the occupier, although being made aware of the requirement, could refuse to pay the cost?
Baroness Verma
I am extremely grateful to the noble Baroness, Lady Finlay, for moving this amendment, and other noble Lords for participating in what has been a genuinely important debate on carbon monoxide poisoning. I am extremely grateful to the noble Baroness, whom I regard as a friend, for meeting me yesterday. Let me say from the outset that the Government take this issue extremely seriously.
For example, in my own department, following debate during the passage of the previous Energy Bill, prompted by the noble Baroness, we have procedures for checking and recommending carbon monoxide monitors in DECC programmes, including the Green Deal. In particular, the Green Deal adviser is trained to check for the presence of carbon monoxide detectors, and the Green Deal provider includes CO monitors in the specification of works. We are also looking into the Green Deal quality monitoring processes to determine whether we are checking the effectiveness of our policies with respect to carbon monoxide monitors.
We are sympathetic to the aims of this amendment. However, we do not believe that the proposed new clause would deliver these aims. Existing building regulations allied to the licence conditions for gas suppliers and the codes of practice established for boiler installers, meter installers and Green Deal installers ensure that occupiers are advised of the need for a carbon monoxide alarm in situations where the risk of poisoning is highest. Building regulations already require carbon monoxide alarms for solid-fuel boilers. They have also been updated to take account of the risks associated with the increased air tightness that can come with improvements in energy efficiency.
We are also taking steps to ensure that operatives are sufficiently competent to complete smart meter installations safely. Meter installers, where appropriate, will already inform the customer about the dangers of carbon monoxide and the need to have gas appliances serviced and checked. All meter installers will be required to be accredited by the National Skills Academy for Power as having completed their training, which includes gas safety elements.
Those working on dual-fuel or gas-only meters will also be required to be gas-safe accredited. In addition, condition 29 of the gas suppliers’ licence conditions considers gas safety; in particular, it states that the licensee must take all reasonable steps to provide free-of-charge information about the dangers of carbon monoxide poisoning and the benefits of fitting an audible carbon monoxide alarm.
We understand the scope of the gas safety regulations to be limited to gas safety, rather than any carbon burning device, as set out in the amendment. In the case of gas, as mentioned, the onus is already placed on the licensee to take all reasonable steps to provide free-of-charge information about the dangers of carbon monoxide and the benefits of an audible carbon monoxide alarm. It is not clear that a requirement on all landlords to install a carbon monoxide alarm is proportionate, but that is something I will take away and reflect on.
Across government, we are continually monitoring the effectiveness of our policies and processes regarding carbon monoxide. However, I have listened to the comments that have been made. This is an issue which my department in particular needs to understand better. I invite the All-Party Parliamentary Carbon Monoxide Group to come and meet me and my officials to discuss these issues further. I have also noted that my department is currently not a member of the cross-government group on gas safety and carbon monoxide awareness. I will ensure that officials from my department join the group and contribute to its meetings in future.
I know that my responses would perhaps not have satisfied noble Lords to the extent that they would have wished. Having said that, and reiterating my opening remarks that I take this issue incredibly seriously, I hope that the noble Baroness has found my explanation reassuring and will, on that basis, withdraw her amendment.
Renewable Heat Incentive Scheme (Amendment) (No. 2) Regulations 2013
Debate between Lord Grantchester and Baroness Verma(10 years, 9 months ago)
Grand CommitteeRead Full debate Read Hansard Text
Baroness Verma
My Lords, I am grateful to my noble friend Lord Teverson and the noble Lord, Lord Grantchester, for their warm welcome to the regulations. I am also grateful for the quality, rather than the quantity, of the debate. In this House, the one thing that we do well is contribute with quality. A number of questions have been asked and I will try to go through them as much as I can. If there are any questions that I fail to answer today, I will undertake to write after reading Hansard.
My noble friend Lord Teverson asked what “properly insulated” means. I am advised that it means that it is a section of external piping that does not exceed the maximum permissible heat loss outlined in British Standard 5422. I am sure that means a lot more to the noble Lord, Lord Teverson, than it does to me. “Properly insulated” is defined in Regulation 3 of these regulations.
My noble friend also asked about relocation. I think that I referred to that in my opening remarks. However, I am quite happy to repeat myself if the noble Lord wishes me to. Basically, if any plant is relocated the participant will be entitled to the remainder of the existing tariff for the remainder of the tariff lifetime. The plant does not have to meet air quality requirements, for example, as it is not a new accreditation, provided that the original accreditation is provided.
My noble friend also asked whether air quality emissions limits will apply only to future installations. The RHI emissions limits in these regulations are more stringent than those that apply to the highest-emitting boilers currently in the market. As a result, we will be encouraging the use of lower-emitting boilers.
On the question of which technologies have not met their potential, the currently supported technologies that have been subject to the tariff review are large biomass—that is, with a capacity of over 1 megawatt—ground source heat pumps and solar thermal.
The noble Lord, Lord Grantchester, asked why we were using degression so early in the process. The deployment of medium biomass has exceeded the rate that we had expected when the tariff was originally set, which suggests that the tariff is higher than is necessary to incentivise installers. Therefore, we may be overcompensating further installations if we do not adjust our tariffs downwards. Although we encourage biomass through its size, we do not want to support one type of technology in particular when there are other technologies out there that may do as well and provide equal value for money—and it is value for money that we are really keen to get. I hope that that has answered the noble Lord’s question.
Lord Grantchester
I am listening very carefully to the noble Baroness. Following the wise words of the noble Lord, Lord Teverson, my concern is that it is quite a big ask to reach our limits by 2020. I am concerned that, if the degression totals are set too soon and too early, we may choke off from coming forward those who could potentially help to meet these quite stringent targets.
Baroness Verma
The difficulty is achieving a balance between value for money and ensuring that we meet our targets. However, as I said, I think that we are managing to provide some encouragement and there is a great deal of interest. What we do not want is for one energy source to have an unnecessary advantage over another.
My noble friend Lord Teverson asked about the limits on boilers outside the RHI scheme. There are no emission limits for boilers outside the scheme but other measures may apply—for example, where environmental permits are required or where a boiler is within a smoke-controlled area under the Clean Air Act.
The noble Lord, Lord Grantchester, asked some other questions but I may have to respond to him in writing because I am finding it slightly difficult to read the responses. However, I shall finish with a response that I can read concerning a question from the noble Lords, Lord Teverson and Lord Grantchester, on the urgency of the domestic scheme. Details of the domestic scheme will be announced before the Recess—that is, in a matter of a few days rather than months.
I hope that, on that note, noble Lords will support these regulations and I commend them to the Committee.
Energy Bill
Debate between Lord Grantchester and Baroness Verma(10 years, 9 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Grantchester
My Lords, Amendment 50G would require the Secretary of State to present proposals to Parliament before making any changes to the terms of licence conditions under powers in Clause 127. However, while the Secretary of State is obliged to consult suppliers and Ofgem as well as any other person he thinks relevant, he is not obliged to present the proposals to Parliament for scrutiny. The Delegated Powers and Regulatory Reform Committee questioned the appropriateness of this in its report on the Bill, and drew attention to Clause 127(10). It stated:
“As is candidly acknowledged in paragraph 358 of the memorandum, the distinction between discretionary and principal terms ‘is central to the function of the clause’. It therefore seems to us surprising that the order-making power is subject to no Parliamentary control, and that paragraph 358 -while explaining why full definitions could not appropriately be included in the Bill - does not explain why there is no provision for Parliamentary scrutiny”.
Why do the Government deem it necessary to consult the industry and Ofgem but not Parliament or consumers?
Throughout the Committee’s scrutiny of the Bill, several noble Lords have highlighted the extensive enabling powers given to the Secretary of State. This fifth report of the Delegated Powers and Regulatory Reform Committee is also highly critical, rather uniquely for that committee, in stating that there is little provision in many chapters in the Bill,
“that does not involve the delegation of legislative powers”.
We offer our support to this amendment in order to ensure that any such order is given appropriate scrutiny by Parliament by the negative resolution procedure, as recommended by your Lordships’ Delegated Powers and Regulatory Reform Committee.
Baroness Verma
My Lords, I am extremely grateful to my noble friend Lord Roper for raising the issue in Amendment 50G that would make the use of powers set out in this clause subject to annulment resulting from a resolution of either House. Noble Lords will be aware that the Delegated Powers and Regulatory Reform Committee has recommended that the power of modification conferred by Clause 127(1) and the order-making powers in Clause 127(10) should require the draft negative procedure. We are looking at these recommendations, along with the others made by the committee, and will respond to it in due course. I therefore hope that my noble friend will withdraw the amendment.
Green Deal Framework (Disclosure, Acknowledgment, Redress etc.) (Amendment) Regulations 2013
Debate between Lord Grantchester and Baroness Verma(11 years, 3 months ago)
Lords ChamberRead Full debate Read Hansard Text
Baroness Verma
My Lords, I thank the noble Lord for his very warm welcome of the Green Deal. I expect he will be by my side when the launch goes ahead next Monday. The invitation is there for the noble Lord to join me, as it is for the noble Baroness.
The noble Lord has posed a huge number of questions and I have tried to note down as many as possible. However, the likelihood is that I may have to write to him on some of them.
I shall start by responding to the noble Lord’s point about high interest rates. As he will be aware, the rate is to be set by the Green Deal Finance Company and no doubt will reflect a safe and competitive level. The rate has not yet been confirmed, but I expect that to be done in the next day or so. The noble Lord will have to wait just a little longer for a response to that question. However, I take on board his point that the rate has to be competitive. That fits in with our wish to try to ensure that we meet the golden rule, which he rightly raised—namely, that no bill payer should pay more than what he or she is currently paying. That is absolutely the right way to look at this.
The noble Lord asked about early repayment penalties. Perhaps I can reassure him that we have also looked closely at these. I can tell him that the repayment formula and the penalty compensation payback are based on the consumer credit legislation that is in place, and we are not doing anything different from what is already in the marketplace.
The noble Lord asked about the forecast for take-up rates of the Green Deal. I would say to him that it has been very promising and there is a great deal of interest in it. However, as he recognises, we are proceeding with a soft launch because we want to ensure that people understand what the Green Deal is and that all the systems needed to deliver it are fully tested and in place. The noble Lord is right to say that when the Green Deal is taken up, many households will see a great difference in their energy consumption and it will impact on their energy bills—something which I know, like me, he is keen to see come down.
The noble Lord asked about monthly reporting, and we agree that this is an important element. The industry and providers have also welcomed it. He listed a number of other things that he would like to see included on the monitoring list. I may have to take those queries away simply because I was not able to write down all his points quickly enough. I shall read the report and come back to him with details of what is already part of the monitoring that has been put in place.
On the point about whether a householder who takes up a case will have their costs attached, I can assure the noble Lord that that will not be the case. If a complaint is lodged, it will be dealt with by the providers, and through DECC we will find ways of ensuring that a householder is not penalised.
The noble Lord mentioned the £125 million provision for early take-up; the cashback facility. We are expecting keen interest and we think that the £125 million for early take-up is a good way of encouraging people to take advantage of the scheme very early on. Perhaps I can link the rest of the work that we have been doing with our core cities to the £22 million referred to by the noble Lord. He referred to the fact that a newspaper had reported that it was £12 million. We have given out £12 million to seven core cities; we expect Liverpool to be added to the list of core cities. That is the £12 million, but another £10 million was also provided to local authorities outside the core cities to promote demand—hence the £22 million.
The noble Lord spoke about the expectation of job creation. We are very positive that this will generate up to 60,000 jobs in this sector, up from the 26,000 that are in place at the moment. We see this as a very positive scheme. I have listened very carefully to the noble Lord, who has, by and large, welcomed what we are doing with the Green Deal.
The noble Lord asked about the assessment costs. This is a market-based mechanism and we expect a range of models to develop. Some providers may offer assessments that have no upfront costs; others may charge, but it will be up to individuals whether to go with the first assessment or to shop around. This is something that all consumers do anyway. We encourage shopping around so that the consumer gets the best deal possible.
The noble Lord asked about the sanctions that the Secretary of State could impose. Of course, this very much depends on the circumstances. There could be a financial penalty on the provider, a compliance notice, or the withdrawal or suspension of authorisations for providers, assessors or installers. There are a number of safeguards that the Secretary of State has the power to use.
The noble Lord also asked whether Freud Communications was appointed through competition. The simple answer is yes, there was a competition. Freud was the preferred bidder.
The noble Lord asked a number of other questions that I physically was not able to note down. I am sure that the officials in the Box will have taken note of them. On those, I ask the noble Lord to allow me to write to him and put a copy in the Library. Overall, going through my own list of what I was able to note down, many of the points the noble Lord raised have been answered. I thank the noble Lord for his warm welcome of this SI and I commend—
Lord Grantchester
I thank the noble Baroness for attempting to answer so many quite detailed questions at very short notice. While we have this opportunity before the Green Deal is launched, perhaps I can tempt her to reflect and share with us how her department views success—what does success of the Green Deal look like? That would be really interesting to understand before it starts on Monday.
Baroness Verma
My Lords, if I had a crystal ball I would be able to tell the noble Lord lots of things. My own view is that, having talked to consumer groups and the industries within the sector, this is going to revolutionise the way in which people think about how to make their homes much more energy-efficient. It is about raising awareness. While we are rolling this out, we are very keen to ensure that consumers take control and have responsibility over what happens in their own properties. This approach is much more holistic. It is not just about short-term planning on, say, loft insulation; it is about looking at the whole property. I think consumers will be quite encouraged that this will be a long-term gain for them and their properties, and of course on their bills.
On that note, if I have satisfied the noble Lord, I commend these regulations to the House.
Green Deal Framework (Disclosure, Acknowledgment, Redress etc.) (Amendment) Regulations 2012
Debate between Lord Grantchester and Baroness Verma(11 years, 5 months ago)
Grand CommitteeRead Full debate Read Hansard Text
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, one of my department’s key priorities is reducing carbon emissions from energy-inefficient homes and reducing the number of households in fuel poverty. The Green Deal programme and the energy company obligation are designed to meet these joint objectives and give consumers access to a range of funding streams for energy-saving improvements in their homes.
The Green Deal is an innovative financing mechanism that enables consumers to pay for the cost of energy efficiency improvements over time through savings in their energy bill. Since the Green Deal legislative framework came into force in October, we have seen more than 270 separate installer organisations register to deliver Green Deal measures and more than 140 expressions of interest from potential Green Deal providers, with 13 already authorised.
The energy company obligation, which is worth an estimated £1.3 billion per year, will work with the Green Deal and require energy suppliers to support those living in harder-to-treat properties and assist low income households, helping them to heat and insulate their homes. We estimate that the ECO subsidy will support the installation of more than 1 million insulation measures by March 2015, which will drive the uptake and development of solid wall insulation technologies. We have ensured that at least 40% of ECO support will be targeted at low-income households, and that support is worth around £540 million per year. It will assist around 230,000 low-income households each year and will make a huge difference to the lives of those who need it most.
I am grateful to the Committee for allowing us to debate these statutory instruments together. I will briefly describe the purpose of each of them. First, the Green Deal Framework (Disclosure, Acknowledgment, Redress etc.) (Amendment) Regulations 2012 essentially relates to the energy performance of buildings regulations, which cover energy performance certificates, and are already a common feature of the property landscape. It is important that the Government amend the regulations relating to EPCs by 28 January 2013, which is when the Green Deal plans can begin to be made, to ensure that the EPC framework can be used to disclose the key terms of the Green Deal plan to subsequent bill payers when, for example, a property is sold or let out. This will be an essential element of our approach to consumer protection under the Green Deal.
Our initial legal view was that Regulation 42 of the Green Deal regulations did not need to be in force before we amended the EPC regulations. However, this is highly complex legal territory and, having given further consideration to the issue and in order to avoid any doubt, we have concluded that the amendment that we are considering today should be brought into force before 28 January 2013. In fact, it will come into force on the day after it is signed by the Secretary of State, following its approval by Parliament. This means that we can create a clear window of time within which the separate changes to the EPC regulations can be made. As the amendment that has been made is simply a change of date, I propose not to take up much of the Committee’s time on this instrument in these remarks.
The draft Electricity and Gas (Energy Companies Obligation) Order 2012, known as ECO, places three obligations on energy suppliers that have more than 250,000 domestic electricity and/or gas customers and have supplied more than the specified level of energy in a relevant period. The obligations are a carbon saving obligation, a carbon saving community obligation and a home-heating, cost-reduction obligation.
The ECO order was successfully debated in this House before the Summer Recess. It is brought back now for consideration in light of the technical amendments that we have identified as essential to its effective operation. These technical amendments centre on an “in-use factor”, which is used to reduce the amount of energy that a particular energy efficiency measure is calculated to save, compared to its theoretical assessment. The inclusion of an in-use factor will reflect that measure’s likely actual performance when in situ in a property. The previous ECO order did not incorporate the provisions necessary to ensure that in-use factors were applied, which created a degree of uncertainty for obligated parties. I apologise to the Committee that we did not identify this technical inconsistency earlier. However, as soon as we did we took the necessary steps to correct the position. My department immediately launched a short consultation to address the anomaly and provide greater clarity.
The overwhelming majority of respondents—about 80%—agreed with the three proposed amendments on which we consulted. The following revisions have therefore been made to the draft ECO order that we are considering today. In-use factors have been included for the scoring measures installed under the carbon emissions reduction obligation and the carbon-saving community obligation, and a schedule of fixed in-use factors for specific measures has been added. The draft order now provides for ECO-eligible measures installed from 1 October 2012 to count towards a supplier’s eventual ECO obligation.
We have made a number of other small amendments to the ECO order. These are not changes of policy but will provide greater clarity for energy suppliers and Ofgem in administering the scheme, to ensure that ECO delivers the policy objectives that were set out in the Government’s consultation response and impact assessment. The changes make explicit that ECO affordable warmth assistance should be targeted at individuals living in private-tenure properties and will provide clarity on the treatment of excess actions carried forward from the current CERT and CESP schemes. They also make it clear that the supplier can be credited for both space-heating savings and hot-water savings in a case where a measure delivers both—for example, a boiler or central heating system.
The regulations will help to improve the energy efficiency of homes across Great Britain, reduce our carbon emissions and, crucially, help households to manage their energy bills. I commend the regulations and order to the Committee.
Lord Grantchester
I thank the Minister for her explanation of the statutory instruments before us. It will be good to take up the challenge of the Green Deal with her, as it was with her predecessor. There is nothing wrong with the ambition to tackle energy efficiency and the nation’s housing stock. We on this side of the House continue to support the objectives of the Green Deal. It is a vital part of energy demand reduction and energy efficiency improvements to meet greenhouse gas emissions targets and promote energy security and climate change mitigation.
The Green Deal framework regulations were largely debated and agreed in July, so there is no need to revisit our discussions. However, we have the opportunity to press the Minister on progress, to voice some of our continuing concerns, most notably about finance and the Green Deal Finance Company, and to assess the Green Deal’s interrelationship with the energy companies obligation order.
The Green Deal regulations merely bring forward by six to eight weeks the date of the coming into force of some features of Regulation 42. The ECO order allows in-use factors to be used in the assessment of outcomes and benefits under the golden rule. The amendments drew comment in the 14th report of the Secondary Legislation Scrutiny Committee. It stated that it hoped that Her Majesty’s Government’s use of secondary legislation would not increase with further corrections and amendments. I do not criticise the coalition for this; after all, mistakes are a defining characteristic of this coalition. We raise concerns to be helpful to the Minister’s department, and note that a further suite of legislation relating to the Green Deal is expected shortly. It will concern the Consumer Credit Act and will contain guidance on the Green Deal generally, and for Green Deal providers on the confirmation and disclosure process.
I note that plans are intended to go live and to be signed up to from 28 January 2013. Perhaps I may ask the Minister when the House may have sight of them. The seriousness of the situation is underlined by the fact that CERT and CESP are due to finish at the end of December this year. While there may be some allowances for outstanding obligations to be carried over, nevertheless the uncertainty that this generates in the industry critically undermines confidence. If there continues to be slippage, there is a heightened risk of job losses and layoffs in the gap that will open up between the end of CERT and CESP and the implementation of Green Deal plans. While the date in January to allow plans to be signed up to is consequential on finance plans from the Green Deal Finance Company, perhaps I could ask the Minister why improvement plans that participants are content to pay for immediately and without finance may not be signed up to immediately.
There is widespread concern at the lack of clarity concerning interest rates, finance charges and penalties yet to be brought forward by the Green Deal Finance Company. It is largely academic to draw up Green Deal plans when the full cost alternatives are not yet available. We remain concerned that, to many people, the Green Deal may not be a good deal, especially when finance costs are included at a rate between 5% and 8%—which the Minister conceded in July was not an unreasonable figure, to use his words. When will the Government use their shareholding in the banks to inform them that they can do more for less, in the same way as every other company in the country is having to do?
The Government have our congratulations on setting up the Green Investment Bank legislation that is currently in your Lordships’ House. This is the Government’s own seedcorn. What plans do they have to utilise the Green Investment Bank to underwrite the Green Deal, and how will that work? Do they realise that the public’s attitude to debt has changed and that trust in banks is severely shaken?
Concerning the second order, the ECO is intended to work in tandem with the Green Deal policy to enhance further the installation of cost-effective energy efficiency improvement measures, especially those not fully financeable through the Green Deal alone, including measures to help those in fuel poverty and properties in communities in rural areas. The revised order is to ensure that in-use factors are applied when calculating carbon savings attributable to measures installed under ECO—that is, carbon savings that reflect actual performance once installed in domestic properties. Once again, guidance is eagerly awaited by the industry. This revision seems to be in response to the concerns raised about the golden rule. That the golden role may not apply once measures have been completed not only further undermines consumers’ confidence in the Green Deal, it could open up the Green Deal and even the Government to challenges for misselling. As the potential forthcoming Government, we would be especially keen to avoid that mistake.
Concerning the link between the Green Deal and ECO, I remain unclear about under what process the ECO may be triggered and hence the costs mushrooming out of control, leading to extra charges on all consumers’ bills. Does the take-up of measures under ECO expand in line with the poor take-up of the Green Deal plans? Will an attitude be encouraged that if consumers decline the voluntary take-up of a Green Deal, the energy companies under ECO will be obliged to undertake the plan anyway? If expenditure to alleviate fuel poverty is reducing as the definition of those qualifying is tightened up, how will that be financed other than by mushrooming domestic bills, already put under great stress by the actions of this Government? Can the Minister clarify the situation?
I understand that part of the delay in getting Green Deal plans going is that the software to set up the register is itself yet to be set up. I understand that the application of the golden rule and its interpretation, as applied to the specific property in question, is the problem. That seems core to the operation. Can the Minister throw any light on that?
I know that the Residential Landlords’ Association is keen to see and discuss the regulations for the private rented sector, particularly regarding the compulsion elements. I know that the Minister will agree that every encouragement must be given to the sector to get on with improvements before compulsion.
In conclusion, we continue to be concerned that the Green Deal may not be the game-changer that we all wish it to become. It is a huge undertaking, yet the prize of whole streets’ and districts’ housing stock being upgraded, without exception to tenure or to the ability to pay, remains the objective that we all applaud.
Baroness Verma
Absolutely. My noble friend—and the noble Lord, Lord Whitty—raised a very important point. Obviously I have not made myself clear. I will undertake to write to all members of the Committee, setting out exactly what we undertake to do about guidance for consumers and suppliers.
I will finish by addressing the point about job losses raised by the noble Lord, Lord Grantchester. I reassure the noble Lord that under the schemes that we are putting forward, we will see a rise in job creation. In the installation sector alone we expect to see jobs for 60,000 people. The noble Lord should be much reassured that this is a wonderful platform for job creation, particularly for the small and medium-sized sector.
Lord Grantchester
I accept what the Minister says. We do not doubt that as Green Deal plans build up, as my noble friend suggested, there will be wonderful opportunities. We wish to see—and will applaud—all the job creation that this will entail. My point was similar to that of my noble friend Lord Whitty, and related to the gap that might open up before the plans are implemented. The installers may get very nervous about the continuing employment of people under CESP and CERT, which are coming to an end. A gap may open up that will make them extremely nervous when it comes to keeping those people on.
Baroness Verma
Although I cannot give the noble Lord figures at this moment, I can reassure him that we have no shortage of people signing up to the Green Deal. They fully recognise that there will not be a gap; there will just be a movement from one scheme to another. By and large, the noble Lord’s worry is perhaps slightly unjustified. I therefore commend these regulations to the Committee.
Motion agreed.
Energy: Costs
Debate between Lord Grantchester and Baroness Verma
Baroness Verma
My noble friend raises a very important point. I need to direct it to the department to which his question belongs.
Lord Grantchester
I congratulate the noble Baroness on her new ministerial position. I am sure that she will be able to keep her boots dry and need neither wellies nor huskies. Against last year’s downward trend in wholesale prices between 2011 and 2012, the energy companies are passing on price rises over a two-year period, claiming that that is when they last purchased their supplies. If a company makes a mistake on its forward buying policy, why is it that the consumer suffers and not the company? Does this look like a competitive market to the noble Baroness, especially when all energy companies seem to coalesce around similar price hikes and coincide with the timing of price rises?
Baroness Verma
My Lords, the noble Lord raises an important point, but in anticipation of someone asking this question, I have looked at the net margins of energy companies. By and large, their net margins have remained at around 3.4%, so they are not working with huge margins. Perhaps I may say once again that I want energy companies to direct people towards better tariffs if they are available or make it much easier for consumers to change suppliers. That gives consumers choice and puts energy companies in competition.