Energy Bill [HL]

Lord Marland Excerpts

Wednesday 2nd March 2011 Lords Chamber

I know that the Minister understands the very strong feelings across the House on this issue and that he will take these arguments on board. At no stage in Committee was it a party-political issue, and indeed it gained widespread support. But we need to see in the Bill a determination that action will be taken. Unless there is that credibility in the Bill, landlords will not have certainty that regulations will be put in place, tenants will not have certainty, and we could find ourselves facing a spiral of conditions getting worse rather than better in a very short space of time. The whole objective of the Bill is to improve conditions and make things better.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)]

My Lords, the noble Baroness has told some shocking tales. Funnily enough, I do feel that I stayed in one of those properties in my younger days. It was not at all comfortable, and I have a feeling that one of my sons, who is a student, is staying in such a property at the moment. It is a terrible tale and the whole idea of the Green Deal is to remove this from the equation. But let us stand back for a moment and work out what the Green Deal is. It is about giving people the opportunity to drive energy-efficiency endeavours into their homes, and to reduce the cost of electricity and thus to have all the ongoing effects that that may have in their lives. However, the Green Deal is not a prescriptive document, one that determines that “You, you and you should have this, this and this”, but rather it is to encourage and provide the facilities by which people can take advantage of situations.

Of course, there are also some very good landlords. There is some terrible accommodation, terrible houses and very bad landlords, but there are also some very good ones. So we have to look at this. However, we must start from the standpoint that we are committed, as a Government, to ensuring that the Green Deal works at all levels, and we are committed, as a Government, to ensuring that this drives hard into the private rented sector. But as I have said on a number of occasions, this is a market-driven endeavour where we want to see natural buy-in by all forms of property owners, including landlords, and we expect them to improve their properties to an acceptable standard. We would all love to wave a magic wand and say that the minimum standard should be band E, but the standard of what? We have inherited an energy performance certificate which was designed for people buying and selling houses, not for those relevant to the Green Deal. So until we have redesigned the energy performance certificate to make it fit for purpose within the Green Deal rather than for buying and selling houses tied into the now abandoned HIPs, which as I have told the House on many occasions we are working extremely hard to do, it would be wrong to be prescriptive about that element.

We are starting from the standpoint, which has been excellently portrayed by the noble Lord, Lord Best, of the 1.2 million properties that fit into the category of the private rented sector. The noble Baroness, Lady Smith, rightly pointed out that 150,000 of them are in bands F and G. One would hope that landlords are listening to what the noble Baroness and my noble friend Lady Maddock are saying and will feel compelled to raise these houses up to an acceptable EPC level of band E and above. We want also to ensure that local authorities buy into this, along with all other housing sectors. Further, we have been briefed by ACE and Friends of the Earth, and we are very receptive to their briefings. But we are at an early stage in the passage of the Bill and we are starting to shape it. One of the fundamental timescales that we have established is a review in 2013. If landlords in the private rented sector do not adopt decent standards by 2013, we will be able to establish where the pressure points and the weaknesses lie.

We believe, with the encouragement that the Green Deal gives to property owners, that they will take it up, when the new EPC is produced, to level E and beyond, and this Government are fundamentally committed, as the sponsor of this Green Deal, to ensure that they do. It would be ridiculous for us to think that we have achieved things if we have not driven hard to get the public rented sector out of the F and G bands. There is a lot of work going on to get to this position. We do not want to get to this position until we have thoroughly gone through the process of redesigning the EPC and setting a framework that people can attach themselves to. We have given people the opportunity to use market forces and their best endeavours and best practices to achieve a minimum standard. If we find that they have not taken that up, of course we will come down like a ton of bricks, because it will show that what we have set out to achieve has not succeeded.

Throughout all these debates, which have been extremely well enunciated, and have found great favour with us, we have listened. We are all, after all, singing from the same hymn sheet, in particular on Amendments 69, 70, 76, 84, 89, and 94 to 99, which really deal with the materiality. It would be ridiculous if this did not find favour with us in terms of a form of words. I accept in principle the intention of this. I have listened to what noble Lords have said in Grand Committee, I will warmly consider this element of the amendments, and we will take the view of tabling this as a government amendment as the Bill carries on with its passage. I hope that that will find favour with noble Lords, and will demonstrate that, on the one hand, we have listened and that we all understand the problem that we all face, and, on the other hand, that we understand that, in the timeframe available and with the concept of the Green Deal, we must make an evaluation. Once we have persuaded the market to accept an opportunity, if it does not take it up we must evaluate it in a very short timeframe, which will be the end of 2013. If the market does not respond to that, we will then bring into action a set of standards, which we will help it to maintain. With that, I hope that this finds favour with the noble Lord, Lord Best, and the noble Baronesses, Lady Maddock and Lady Smith, who made excellent speeches, and that they will not press their amendments.

[Baroness Maddock]

My Lords, perhaps I should say that my glass is half-full at the end of that. I obviously think that this is a really important issue, or I would not have gone on at such length in Committee and here on Report. I take issue with my noble friend. As far as I remember, the energy performance certificates were not there because of what we are doing on buying and selling houses. It was a European piece of legislation, and it got thrown in with the HIPs because it was the best way of dealing with it. At the time, I thought it should be separate, and spoke on that issue. We need to look at it carefully, because the EPCs are part of what we are required to do in signing up to our responsibilities in Europe for reducing carbon emissions.

I will withdraw my amendment, but I look forward to what the Minister has promised. As I say, I feel my glass half-full at the moment. Maybe he will be able to top it up at some point. I beg leave to withdraw the amendment.

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Moved by

[Lord Marland]

80: Clause 39, page 25, line 45, at end insert “and includes an instrument made under a Measure or Act of the National Assembly for Wales”

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[Lord Marland]

87: Clause 42, page 28, line 22, at end insert “and includes an instrument made under a Measure or Act of the National Assembly for Wales”

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[Lord Marland]

90: Clause 45, page 30, line 41, at end insert “and includes an instrument made under a Measure or Act of the National Assembly for Wales”

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[Lord Marland]

91: Clause 46, page 31, line 7, leave out “this Chapter” and insert “section 37(7) or 43(6)”

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[Lord Teverson]

We do not do that at national carbon level, do we? If we were to do that, we would disaggregate by industry, but the previous Government and the present Government have not gone down that route. If we took that a step further, we would come to individual personal carbon budgets. There are arguments for and against that. I do not think that you need to disaggregate everything completely as all the relevant levers are not in place and splitting it all down does not mean to say that everything would necessarily add up because all sorts of areas, including motorways and EU ETS major emitters—even proponents of carbon budgets agree on this—could not be effectively and practically included in those carbon budgets. That system of making the detail add up to the total would not work under this scheme anyway. I am not saying that the question was invalid but if we really wanted to go down that route we would have to go down the industrial sectorial route as well or separate out consumers, the manufacturing sector and the services sector. Such an approach gets too involved in the mass of detail as opposed to inventing the policy instruments that we need. We need to involve local government in the Green Deal. I would much prefer it to have a statutory obligation but I think that carbon budgets are the wrong way to do it.

As regards wind farms, in Cornwall they are fantastic. Tourists like them and the majority of people are not against them. They are beautiful objects to behold on the horizon and may there be more of them.

[Lord Marland]

My Lords, you have heard differing views on the future of carbon budgets, including those of the noble Baroness, Lady Smith of Basildon, the noble Lord, Lord Judd, and my noble friend Lady Maddock. My noble friend Lord Teverson, as usual, clearly told us his views; and we heard those of the noble Lords, Lord Dixon-Smith and Lord Reay, who would be opposed to carbon budgets. It has been an excellent debate and we have heard views from all sides—all of which are respected.

Throughout the passage of the Bill, this has been a subject on which I have taken those views on board. We should try to find a way through in a spirit of co-operation. The Localism Bill, which is about a spirit of partnership, is going through Parliament at the moment. We have imposed upon local authorities a 10 per cent carbon reduction target through the DCLG, and they will have to set their own examples.

During the passage of the Bill, we have given great consideration to these issues, and we have determined that the best way forward is co-operation. I hope that next week we will be able to sign a memorandum of understanding with the local government group, to build upon the Nottingham declaration. The memorandum will set out a timetable for progress on reducing carbon emissions that we hope all local authorities will buy into.

At this point, I offer my thanks to the right reverend Prelate the Bishop of Liverpool, who has set up a meeting with me and the chief executive of Liverpool City Council to discuss how we can get the Green Deal through to Liverpool and together reduce carbon emissions, and use Liverpool almost as a test case.

I have taken on board the valuable comments of noble Lords. I have taken on board the fact that it will not be acceptable to impose provisions on local authorities. Indeed, the Department for Energy and Climate Change cannot impose our will on local authorities, but we can impose a way forward and an understanding between us all that this has got to be right for the country, as the noble Lord, Lord Judd, said. It has to be right for future generations and it has to be right that we use less electricity and less energy than we are using now, to conserve the future.

I hope that given those comments and the impending memorandum of understanding—which I cannot reveal too much about now because, as you know, I am a very junior person—the noble Baroness, Lady Smith, will appreciate what we are doing. I hope that that finds favour with her and with the noble Baroness, Lady Maddock, and that they will not press their amendments.

[Baroness Smith of Basildon]

I am grateful to the noble Lord, because on two occasions today he has provided your Lordships’ House with information on the memorandum. He cannot make the announcement, but I think that he has stolen the thunder of whichever Minister will do so. The noble Lord’s response on the memorandum that he and his colleagues intend to bring forward addresses exactly the kind of issue we are looking at, whereby local communities and local authorities will have an opportunity to play their role in achieving carbon reductions across the country. I look forward to the further information, and I hope that there will be a statement to the House at a later date. I beg leave to withdraw the amendment.

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Moved by

[Lord Marland]

101: Clause 61, page 40, line 23, at end insert—
“( ) In subsection (1) (power by order to impose an obligation to achieve a carbon emissions reduction target) for “the Authority” substitute “the Administrator”.
( ) After subsection (2) insert—
“(2A) In this section “the Administrator” means—
(a) the Authority; or(b) if the order so provides, the Secretary of State or a specified body other than the Authority.”( ) In subsection (3) for “the Authority” substitute “the Administrator”.
( ) In subsection (4) for “the Authority” substitute “(subject to any directions given under subsection (9B)) the Administrator”.”

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[Lord Marland]

My Lords, we come to yet another huge group of amendments that the Government have tabled, which recognise the points made in debates in Committee and at Second Reading.

These amendments serve to clarify the powers currently set out in Clause 67. They pertain to the Secretary of State’s ability to transfer from “the Authority” to himself or another body the administrative powers and responsibilities for the energy company obligation. The authority is defined as the Gas and Electricity Markets Authority, the functions of which are presently carried out by Ofgem. The Government are currently reviewing the role of their various delivery bodies, including Ofgem, and it would be helpful to have powers already available that would enable us promptly to take account of the results of that review, thus ensuring certainty for those being regulated by the ECO.

In tabling this amendment, we are in no way prejudging the outcome of the review. This series of amendments refines the policy objective contained in Clause 67 by enabling the Secretary of State to transfer directly to another body, or to him, the functions currently performed by the authority. The refinement will preclude the need to make two sets of orders—one establishing the ECO and another moving some or all of the authority’s functions to another body or to the Secretary of State. The process for doing so has been streamlined. I beg to move.

[Lord Grantchester]

I thank the Minister for his explanation of what is indeed an extensive list of amendments that address issues touched on in Committee. The amendments are necessary to ensure that future recommendations of the Government’s delivery review can be implemented without unnecessary delay and without causing unnecessary uncertainty to those energy companies caught by the future energy company obligations. It is possible that the Government’s delivery review may conclude that administrative responsibilities for the ECO should be transferred to a body other than the authority, which is currently Ofgem. This series of amendments enables any future ECO to be administered by “the Administrator”. The amendments make the authority the default administrator but give the Secretary of State a power to transfer the administrative functions away from the authority and place them on another body, or to transfer the functions to himself. We are content with these amendments.

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Moved by

[Lord Marland]

103: Clause 61, page 40, line 38, leave out “Authority” and insert “Administrator”

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[Lord Marland]

120: Clause 62, page 42, line 39, at end insert—
“( ) In subsection (1) (power by order to impose an obligation to achieve a carbon emissions reduction target) for “the Authority” substitute “the Administrator”.
( ) After subsection (2) insert—
“(2A) In this section “the Administrator” means—
(a) the Authority; or(b) if the order so provides, the Secretary of State or a specified body other than the Authority.”( ) In subsection (3) for “the Authority” substitute “the Administrator”.
( ) In subsection (4) for “the Authority” substitute “(subject to any directions given under subsection (9B)) the Administrator”.”

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[Lord Marland]

122: Clause 62, page 43, line 10, leave out “Authority” and insert “Administrator”

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[Lord Marland]

139: Clause 63, page 45, line 14, leave out “Authority” and insert “Administrator”

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[Lord Marland]

143: Clause 64, page 46, line 14, leave out “Authority” and insert “Administrator”

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[Lord Marland]

147: Clause 65, page 47, line 5, leave out “by the Authority of its functions” and insert “of the functions of the Administrator”

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[Lord Marland]

151: Clause 66, page 48, line 27, at end insert “; and
( ) any body other than the Authority that is for the time being the Administrator in relation to a carbon emissions reduction order or a home-heating cost reduction order”

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[Lord Marland]

152: Clause 67, leave out Clause 67

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[Lord Marland]

154: Schedule 1, page 80, line 11, leave out paragraph 3

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[Lord Davies of Oldham]

I am confused as I was not sure whether the noble Lord, Lord Teverson, was moving or withdrawing his amendment. When I made my contribution last time on the general lines on which the noble Lord spoke today, I must say that I had every sympathy with the main principles on which his amendment is based, but the Bill is not the place in which to locate this issue, important though it is. We heard not just from the noble Lord, Lord Teverson and the noble Earl, Lord Cathcart, last time, but we had the benefit of the contribution from the noble Lord, Lord Oxburgh, who talked about energy prices from a historical perspective and explained how they had established themselves on a basis that is indefensible in terms of what we are seeking to achieve. I refer particularly to the fact that the old standing charge necessitated the heavy impost of the early units.

We are aware of the fact that we need a revision of the issue. The noble Lord, Lord Teverson, should be congratulated on articulating the case forcefully in Committee and for again today identifying why he still advocates the main principles. I do not think—and I think he was coming to the same conclusion—that it quite fits within the framework of the Bill. That is why last time I said that the amendment should be withdrawn and the Minister seemed to think that I had done his job for him. I had not done that then, and I have not done so this evening. I look forward to the Minister’s response.

[Lord Marland]

My Lords, I have a declaration to make. I am not an Essex person which seems to be the thing to declare before speaking in this debate.

The noble Lord, Lord Teverson, as the noble Lord, Lord Davies, suggested, was considering withdrawing his amendment. My department has been made available to him for discussing and working through this problem which we take seriously. We have made it available to my noble friend Lord Cathcart. The noble Lord, Lord Davies, is right that this is probably not the right Bill for this tariff but the department will be happy to work with the noble Lord and reach a conclusion. As he rightly says, it will take several months, but I invite my noble friend to either withdraw or do whatever he was going to do with his excellent amendment.

[Lord Teverson]

I thank the Minister. I have only two alternatives: to test the opinion of the House or withdraw the amendment. I have come across no other option in the Companion. I am happy to take the advice of both Front Benches in anticipation that we will revisit the issue in the next Energy Bill on market reform that comes to the House. I beg leave to withdraw the amendment.

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Moved by

[Lord Marland]

160: Clause 73, page 54, leave out lines 13 to 18 and insert “, in paragraph (f) (as inserted by section 20(7) of this Act), after “Part 1” insert “or section 72”.
( ) In section 81(2) of the Utilities Act 2000 (standard conditions of gas licences), after “Part 1” (as inserted by section 20(8) of this Act) insert “or section 72”.”

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[Baroness Smith of Basildon]

My Lords, I raised a similar amendment to this in Committee as a probing amendment to try to clarify financial liability for oil spills off the UK coast. Looking back, I am not sure that I am any clearer on the financial responsibility, but my amendments then got a fair amount of support in Committee. It was understood that there has to be an arrangement whereby, should there be an accidental spill by those seeking oil off our coast, the responsibility for cleaning it up does not fall on local authorities. We were seeking clarification. We did not get that then and it would be helpful if the Minister could provide it now. As the Minister may recall, I drew comparisons with the requirements on the nuclear industry, which has to provide all costs of clean-up after its operations, with that of the oil industry of accidental oil releases into the environment.

A couple of issues were raised in Committee which I think were entirely reasonable, and I have incorporated provision for funding into our new amendment. I hope that the Minister can take this away to look at it. We have included a definition of sufficient funds and taken out detailed provision about certification, because that could go into regulations. I will be grateful to hear the Minister's comments.

[Lord Marland]

This is a very complicated issue for someone who is not in the insurance world; but for someone who is, it is quite simple. It may be best in this instance if I commit in writing the exact layering of this requirement. Suffice it to say that the oil industry is a very mature industry. Substantial insurance requirements are placed on it. As I mentioned extensively in Committee, it has a mutual pool which offers additional protection to its balance sheets, and those that it makes in the open market. As someone with an insurance background, I would be happy to explain that in greater detail in writing to the noble Baroness. I hope that she finds that an adequate response to enable her to withdraw her amendment.

[Baroness Smith of Basildon]

I am grateful to the noble Lord. I think that he understands why I raised this issue. It is in large part due to public concern. He and I debated in this Chamber the Deepwater Horizon oil spill. It was in research for that debate that I discovered concern about not knowing what the full implications would be if there were an oil spill off our shores. I am grateful for his comments and his commitment to come back to me in writing.

It would also be helpful if he would come back to me on the issues that I raised about comparisons with the nuclear industry. I have never really understood why the nuclear industry is treated differently from the oil industry. He may be able in his response to assure me that it is not treated differently. The nuclear industry, particularly under this Government, now has to find all the costs of remediation and disposal of waste. As I understand it, that is not the same for the oil industry. Can the Minister tell me that he is entirely satisfied that, in any event, for any oil spill, the liability will not fall on local authorities, and that insurance is in place to deal with the matter? I look forward to receiving that information in his correspondence on the matter, which I can perhaps discuss with him further, and beg leave to withdraw my amendment.

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[Lord Marland]

163: Clause 92, Page 72, line 31, at end insert—
“( ) In section 33(1) of the Utilities Act 2000 (standard conditions of licenses under Part 1 of the Electricity Act 1989), after “72” (as inserted by section 73(6) of this Act) insert “or 92,”,”
164: Clause 92, page 72, line 34, at end insert—
“( ) Sections 4AA to 4B of the Gas Act 1986 (principal objective and general duties) apply in relation to the powers of the Secretary of State under this section with respect to holders of gas licences as they apply in relation to functions of the Secretary of State under Part 1 of that Act.
( ) Sections 3A to 3D of the Electricity Act 1989 (principal objective and general duties) apply in relation to the powers of the Secretary of State under this section with respect to holders of electricity licences as they apply in relation to functions of the Secretary of State under Part 1 of that Act.”
165: Clause 92, page 72, line 35, leave out from “section” to end of line 37 and insert“—
(a) references to a gas licence are to a licence for the purposes of section 5 of the Gas Act 1986 (prohibition on unlicensed activities relating to gas), and
(b) references to an electricity licence are to a licence for the purposes of section 4 of the Electricity Act 1989 (prohibition on unlicensed activities relating to electricity)”

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[Lord Davies of Oldham]

My Lords, I rise briefly to say that I appreciate the fact that the noble Lord, Lord Teverson, is presenting a very important argument, which we discussed intensively and fully in Committee. I have no doubt that we would have had a much more intensive debate this evening were it not for the lateness of the hour. That does not mean to say that those of us who have kept our speeches short, as I intend to do, do not have enormous respect for the arguments that the noble Lord, Lord Teverson, has put forward, but we did have a full debate in Committee and I am very grateful that he drew our attention to the matter again this evening.

[Lord Marland]

My Lords, I concur with the noble Lord, Lord Davies of Oldham. We had intensive debates in Committee and at Second Reading on this subject. My views are well known on the subject. That is why our department facilitated discussions with the Minister of State, Greg Barker, who is discussing this with the Environment Agency in the next few days. I think he had a meeting with him today, but I do not want to get diaries out of kilter to see how we can take the matter forward. He knows, as well as I do, that we are very interested in the subject and are committed to offering every possible opportunity for those who are interested in the subject, in taking the matter forward and in hoping to bring this provision into reality in what is a very difficult area. I think the noble Lord was thinking of withdrawing his amendment because of the meetings he has had. With that, I hope he will formally withdraw his amendment.

Perhaps I may take the opportunity of thanking noble Lords for staying up, particularly the noble Baroness, Lady Smith of Basildon, who is still recovering from her ghastly operation, who, with great cheerfulness, has maintained an excellent presence here tonight, and I thank all noble Lords for their contributions so far and for helping in what has been a very harmonious evening.