Energy Bill [HL]

Lord Jenkin of Roding Excerpts

Wednesday 26th January 2011 Grand Committee

[Lord O'Neill of Clackmannan]

I support this amendment, which I realise is probing. One of the major reasons why we have an inadequate housing stock in the United Kingdom is that the incoming Government of 1951, charged with the ambition of building 300,000 houses, sought to achieve that by reducing housing standards. That was the way in which Harold Macmillan, as Housing Minister, achieved his obligation. It is as a result of that we have so many substandard houses in comparison with our European counterparts. In that fantastic period in the 1950s and early 1960s, when hundreds of thousands of houses were built every year, properties were more often than not built to standards which were less than desirable in terms of what could have been achieved. They were not bad but they could have been a lot better, and if they had been we probably would not have half of the problems we have today. It is useful, however, to give the Government an opportunity to make quite clear that they are signed up and prepared to take the appropriate steps to achieve the 2016 target.

The kind of pragmatic and flexible approach suggested by the noble Lord, Lord Teverson, in respect of different forms of heating and the combination of different forms of accommodation, is an appropriate way in. We do not want to be overprescriptive, but there are areas where we have to be prescriptive—not only prescriptive but prescriptive in a fairly tight, legalistic way. These regulations tend to be a mixture of the consultative processes which are implicit in secondary legislation. They can afford that degree of flexibility.

As in this decade we address the challenges of climate change and the environment, in some respects we are parallel to the post-war reconstruction challenges which were being addressed in the 1950s. I would like to think that this Conservative-led Government will not make the kind of mistakes made by the Churchill Administration, under the responsibility of Harold Macmillan as Housing Minister, in the early 1950s. I would like to think the Government could clearly and explicitly embrace the desirable environmental objectives set out by the previous Government and which appear to be supported by the Liberal part of this coalition.

[Lord Jenkin of Roding]

I have listened to this debate with some sense of nostalgia. From 1961 to 1963 I was chairman of the housing committee for Hornsey Borough Council, later to become the London Borough of Haringey. This was a period even later than that referred to by the noble Lord, Lord O’Neill, and my clear recollection is of the overwhelming pressure to build more houses and flats. To digress for a second, we had the problem of a large number of tenants who were sitting in houses which were badly needed for social housing. I think I was the first housing chairman to propose we should offer them a sum and a mortgage to move elsewhere, within 10 miles of the borough, to get some vacancies, clear some slums and build more houses. To imagine that at that stage we should have been building more energy-efficient—and therefore fewer—houses is unrealistic. It is easy to be wise after the event. Others may have longer memories than I do, but having been a housing chairman at that time, I know that was the overwhelming pressure.

I turn to the amendment. Of course one must broadly support the intention but, even with the caveats that my noble friend Lord Teverson has included in his amendment, it verges on the unrealistic. Indeed, recent research by one of our leading professional bodies, Knight Frank, has said that to make sure that all the new houses being built by 2016 are carbon neutral is, in its words, “looking increasingly unrealistic”. I have some hesitation about writing this into legislation when extremely well informed people are saying from the outset that, however good the intention, it looks increasingly unrealistic.

Next, there is the question of cost. I am told that to build a carbon-neutral domestic dwelling now—it may well be that the differential will narrow in the years ahead—will add £30,000 to £40,000 on to every unit produced. If housing budgets are constrained, as they inevitably are in our situation at the moment, that means that there will be fewer houses, because with any sum of money fewer houses will be able to be built. In those circumstances, that too might be an undesirable consequence of trying to pursue and put into the Bill an unrealistic environmental objective.

My third anxiety about my noble friend’s new clause lies in subsection (5). He has said that it is an advantage that he is not being prescriptive but leaving the determination of what is a carbon-neutral construction to the Secretary of State, following consultation. I am told that the question of what is a zero-carbon house is highly technical and that there is as yet no agreement between the various bodies involved. I suspect that this includes the Minister’s department and CLG, the other housing department. A conclusion has not yet been reached on this. The question of indoor air quality is also poorly understood, and it is essential on all these issues that time is allowed to ensure that we have sensible definitions if we are going to pursue these objectives.

To have an undeliverable target and a completely uncertain definition of what you are trying to achieve is not appropriate for inclusion in legislation. As my noble friend indicated, what he is trying to get is in the Bill, but it is not very sensible to put it in a Bill when there is such a high degree of uncertainty about it. It may be possible, perhaps at a later stage of the Bill, to frame something that really is an aspiration and something to be aimed for, but without putting in firm dates or such firm details as saying that it has to be zero carbon.

I understand that this is desirable and that over the years ahead more and more carbon-neutral buildings will have to be built; that is part of the process of fighting climate change, to which we are all firmly committed. I say to my noble friend on the Front Bench, though, that I hesitate to accept my noble friend’s suggestion that this new clause should be included in the Bill.

[Lord O'Neill of Clackmannan]

May I ask the noble Lord about a simple point? Britain is not the only country that is building houses, or has been building houses since the 1950s. One of the great sadnesses and shames of being British is that when one travels, particularly in northern Europe, one sees houses of a far higher standard that were built in the days when Haringey Council could not afford to build decent houses, because of the scale of the challenge. It seems that in these other countries, such work was done without undue economic penalty. It seems even now that those countries are meeting that challenge with a great deal more alacrity and success than we are. In Finnish and Scandinavian houses generally, where conditions are more extreme, the quality of housing is vastly superior.

[Lord Jenkin of Roding]

I yield to the noble Lord and any others, such as my noble friend Lord Deben. I am not as familiar as they are with the quality of the houses in Scandinavia. All I would point out is that winters in the Scandinavian countries and in many parts of northern Europe tend to be very much harsher than they have been over the decades and centuries in the United Kingdom. We get the benefit of the Gulf Stream, and so on. Last winter and the winter before were widely seen as exceptions to the trend. If you are not facing the same pressures from the climate as those faced by other countries which regularly have much harsher winters, I can well understand that perhaps we have been a bit slower in adopting the same standards as they have. All I am saying is that I do not think it is a realistic target that all new houses built after 2016 should be carbon neutral. It is certainly not realistic when no one seems able to agree—although they have been trying for quite a long time—what is actually a carbon-neutral house. I sound these notes not because I have any doubt about the bona fides and intention of my noble friend Lord Teverson, but because of the practicality.

[Lord Judd]

My Lords, I am tempted to follow the noble Lord, Lord Jenkin, down memory lane, because my first post on the edges of government was as a Parliamentary Private Secretary at the Ministry of Housing and Local Government. That was in the 1960s. I remember then how we were already beginning to face up, not only to the inadequate nature of the building, but to the very disturbing social consequences of the kind of building that had been carried out. We put a lot of effort into how we might turn some of the old terraced streets in our cities, for example, into attractive urban cottages, with space and the rest, to make communities and not just houses. However, I must not get distracted into nostalgic reminiscence.

I hope that the noble Lord will not be embarrassed by a surfeit of enthusiastic response on this side of the Committee to his proposition. I find myself, not for the first time, very impressed by his analysis and argument, and the vigour with which he pursues his case. I listened to the noble Lord, Lord Jenkin, questioning the issue of what is carbon neutral. This disturbs me profoundly. Here we are, in a situation of profound urgency, yet luxurious seminars are still being held all over the place discussing what is carbon neutral and what is not. When are we going to translate this real urgency that from every objective standard confronts us, into the urgency of action? If I look back at my life, I realise that my youth and formative years were during the Second World War. We were in the battle for survival, to preserve our land, and for humanity. We did not fuss about prescriptive regulations in those days. We did what was necessary to win the war. When are we in Parliament going to wake up to the fact that we are in a war situation? We are in the biggest strategic battle in the history of the human species to save the human species from the consequences of climate change and global warming. It is essential to turn this into specific action, and I cannot think of a more practical or sensible suggestion than to say that building regulations are a very good way in which to turn aspiration into effective action.

I have only one question. With the noble Lord’s persuasiveness and very sound commitment and analysis, does not he feel that 2016 is a bit luxurious? Because of the urgency of the situation, should not we have an earlier date than that?

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Moved by

[Lord Jenkin of Roding]

29A: Clause 61, page 42, line 23, leave out subsection (6)

[Lord Jenkin of Roding]

My Lords, we move to Chapter 4 of Part 1 and the clauses which encourage the energy industries to do much more in the way of carbon reduction. I do not need to go into the details of the clauses, although someone may want to make a speech on whether the clause should stand part.

Clause 61 applies to the gas industry and concerns the powers of the regulator and the obligations on the companies. In a sense, it replaces what was happening under the CERT programme. Clause 62 does exactly the same thing for the electricity industry. I shall discuss Amendment 29B at the same time because it concerns the same issue as Amendment 29A.

This matter has attracted the attention of the Delegated Powers and Regulatory Reform Committee. Whereas most of the regulations under these clauses are subject to the affirmative procedure, under subsection (6) in each case certain of the regulations will be subject only to the negative procedure. When the Delegated Powers Committee looked at that, it recited the department’s arguments as to why there should be this distinction, the department arguing—I am quoting from paragraph 12 of the report—that the matters are,

“‘less central, more technical’ and ‘essentially administrative’”.

The committee then said that it did not find this argument persuasive. It remains unconvinced, for instance, that the provision enabled by new paragraph (c), which specifies the method for determining the contribution that any action makes towards meeting a target, falls into that category any more than the other paragraphs do. Therefore, it makes a very clear recommendation that these orders, which are the subject of that paragraph, should have the affirmative procedure on their first exercise. My amendments would simply take out subsection (6) from both clauses, because I was not sure how one would be able to table an order or draft an amendment that dealt with the first exercise of the power and not any subsequent one. That defeated my powers of drafting.

I believe that the case that the committee makes is a strong one. As I have said before in these debates, it is usual for Governments to accept the recommendations of the Delegated Powers and Regulatory Reform Committee, because it is the body which the House has set up to look at these matters. I hope that my noble friend will be able to look with favour if not on the amendments then on the purpose that lies behind them and, if necessary, bring forward a government amendment at a later stage. I beg to move.

[Lord Davies of Oldham]

My Lords, the Committee and indeed the Minister should be grateful to the noble Lord, Lord Jenkin. There is no doubt that the Government need to look seriously at the point raised by the Delegated Powers Committee, to which we always accord the respect which it deserves.

I understand the difficulty that the noble Lord has had. I myself could not work out what the amendment should look like. However, if we win the moral argument and the Minister is persuaded to observe the convincing case made by the Delegated Powers Committee, it will be for the Government to produce the necessary expertise in bringing forward the appropriate amendment. I am sure that, if the Minister agrees with us, he will address that point.

[Baroness Northover]

I am grateful to the noble Lord for tabling these amendments. They relate to the secondary legislation that we will be making under some of the powers that we are proposing and to whether provision made using such powers should be subject to affirmative or negative resolution procedures in the House.

This is not about the majority of the provisions which may be made under this part of the Bill, as most are clearly for the affirmative procedure. It relates to certain specific provision that we might make on more technical aspects, such as the precise qualifying actions or measures which will be eligible for inclusion within the scheme. The Government’s proposal was that issues of this sort should be set out in secondary legislation which is subject to negative procedures. The noble Lord, through his amendment, proposes that this should be affirmative.

I am delighted to say that there is a compromise position, which has the support of the Delegated Powers Committee. In its considered report on the Bill, the committee suggested that it may be appropriate for the first use of these powers to be affirmative, with subsequent uses—in effect, later amendments—being subject to negative procedures. That seems to us an excellent suggestion. It has the virtue of maintaining a very strong degree of parliamentary oversight over the essentials while leaving more flexibility for changes to be made over time. We therefore propose to come back at a later stage with an amendment in line with the Delegated Powers Committee’s suggestion, and on that basis I hope that the noble Lord will feel able to withdraw his amendment.

[Lord Jenkin of Roding]

I can only say that I am extremely grateful. However, before I withdraw the amendment, I want to raise one other brief point which was mentioned by the noble Lord, Lord Davies of Oldham. It is the question of the constant amending of previous legislation. Anyone wanting to look at the current state of the Gas Act 1986 or the Electricity Act 1989—as I am certain the noble Baroness, Lady Smith, will have tried to do—will find it an extremely difficult job. There are now commercial legal publishers who will provide what they consider to be the up-to-date version as amended in perhaps four or five different Acts, as we are doing again here. There must come a time when these Acts will have to be consolidated, because it is becoming a matter of very grave difficulty not only for hapless Members of the two Houses of Parliament but for their advisers. Some of them are extremely good and know their way about. They keep their own copies very carefully annotated but most of us do not. There is therefore a case for consolidating these Acts and I hope that that message is taken back. Having said that, I beg leave to withdraw the amendment.

Amendment 29A withdrawn.

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[Lord Whitty]

My Lords, I am not against relying on statutory instruments to clarify the policy as we go down the line. All Ministers find that it takes time to work out the details, but at this stage we need to put down some markers and to have an idea of the general direction in which the Government are going.

I agree with a lot of what my noble friend Lord O’Neill said on the ECO and fuel poverty. If the Government are effectively putting all their eggs in the fuel poverty basket through the ECO replacing all other forms of intervention, as my noble friend Lady Smith said, however good the scheme which emerges under the ECO is, it will be undermined if the payment for it is on a quasi-poll tax basis. You will take away with one hand what you have given with the other. I urge the Government to think clearly about what they are doing on both sides of that equation.

However, my main point is on Ofgem. I understand that a review of its role is still ongoing. As the Minister will know, there are widely different views, not necessarily on a party basis, on what Ofgem should and should not be doing. Ofgem itself tends to change its mind on what it should be doing. Clause 67 implies that we are taking something away from Ofgem. I should like to know from the Minister whether this is part of the review of Ofgem, which I understand will end in March, when there will be a report. Ofgem is also covered by the Public Bodies Bill, as my noble friend said, and there are uncertainties relating to what will emerge as a regulator in that regard. It is important that the totality of what Ofgem is responsible for is defined before we provide measures which could, piecemeal, carve off bits of Ofgem’s role or add bits to it. Before we finish the Bill, we need to hear the result of that review and what the Government propose in total.

[Lord Jenkin of Roding]

My Lords, I have much sympathy with what has been said about the need to know more about what will be in the orders and regulations made under the Bill. Like others, as my noble friend Lady Maddock has said, I understand the pressures that the Minister is under. He wants to get ahead with this and in the mean time he is consulting on the details of what will go into the regulations. At the same time, he must appreciate that it is quite difficult to debate the Bill—these clauses, including Clause 61, are particularly detailed—without knowing what is in the Government’s mind. I shall pick out only one subsection, subsection (3), which inserts new subsection (5A) in Section 33BC of the Gas Act 1986. The new subsection states:

“If the order makes provision … enabling the Authority to direct a transporter or supplier to meet part of a carbon emissions reduction target by action relating to an individual named in the direction the order may also make provision”.

I do not imagine for one moment that Ofgem will make an order directing the supplier to deal with Mrs Buggins by name. This must mean categories or classes of consumer. Indeed, the purpose of the Bill— which I very much welcomed at Second Reading—is to concentrate this help on the people who are fuel poor or in a similar category. That is what we are trying to do. However, that is left vague in the subsequent new paragraphs. In new paragraph (a), it is stated,

“authorising the Authority to require specified persons to provide it with information for the purpose of enabling it to identify and select individuals who are to be the subject of a direction”.

New paragraph (b) refers to,

“specifying criteria in accordance with which the Authority is to select individuals who are to be the subject of a direction”.

One can see that one is moving into a very complex and obviously very necessary part of the whole procedure.

I compare this with the CERT programme, which, after a short delay, this ECO is intended to replace. The CERT programme dealt with very large categories and applied to 11 million people. There was the ridiculous situation that companies that were supposed to concentrate their efforts on the priority group were not allowed to be told who they were. After a tremendous effort, and through the Pensions Bill, we got a power to make a regulation that allowed the Department for Work and Pensions to specify the names of a very small class of pension credit beneficiaries. I was reminded of that marvellous line from Lucretius—I will not quote the Latin as that is out of order—that the mountains heaved in childbirth and what came out was a little mouse. It was a very small group, a very small part of the 11 million.

What seems to be intended is that Ofgem will be given the criteria and will be able to select the groups to which it may then direct companies to give help and support. I hope I have understood this intention correctly. I am sure my noble friends on the Front Bench will recognise that it is very difficult to debate this if one does not have any idea of how that power is going to be used.

Over the several editions of CERT I made the point about not being allowed to identify these groups and having to search the streets to find the people who qualified for the priority group under that legislation. I get the impression that that message has been taken on board and that we are therefore going to have a more specific effort to try to define the group categories. When the Bill refers to,

“an individual named in the direction”,

presumably that means they are going to actually have names and therefore addresses so they will know where to go to give their help.

I suspect the noble Lord, Lord O’Neill, is right and that it may be a while before we get to Report. We have to do that on the Floor of the House when it is not occupied with other legislation, but there may be an opportunity for Ministers to give an indication of how the order is to be implemented. This is at the heart of what the energy companies’ obligation is about. They are going to help designated groups of people much more specifically than form part of the priority group under the CERT legislation. It is quite difficult to debate this, however, if we do not know who they will be. I take as an example subsection (3) and it is the same in the following subsection; if we could have had some indication as to who they are that would make the debate more meaningful.

However, going back to my first point, I do understand my noble friend’s problem of having to move ahead with this legislation so as to bring forward the day in which it can become operative, while at the same time negotiating in detail with all the various groups and bodies about how it is going to be implemented. We must lean over a little more to help Members of the House to carry out our duty of scrutiny so that we know what we are talking about.

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Debate on whether Clause 63 should stand part of the Bill.

[Lord Jenkin of Roding]

I am aware that we were a little critical of my noble friend in the previous debate but there is something in this clause that I believe deserves mention.

[A noble Lord]

It is diabolical.

[Lord Jenkin of Roding]

Is someone shouting? In Clause 63(4) there is a whole series of paragraphs where the words “carbon emissions reduction obligation” are replaced by “home-heating cost reduction obligation”. These are two different things, of course, but I firmly believe that both the companies and, in particular, their customers will be much more responsive to a mention of home-heating cost reduction rather than carbon emissions reductions. Here in the rarefied atmosphere of Westminster we are very used to talking about carbon footprints and carbon reductions, but ordinary householders are looking at how to reduce their bills. I very much approve of this change in the wording. It moves away from what I always thought was a real problem with the CERT, which was that it started and ended by being a carbon reduction. Of course, that is what we want but it does not really appeal to ordinary people. Therefore, I welcome this change in the wording.

Clause 63 agreed.