Energy Bill [HL]

Lord Teverson Excerpts

Wednesday 22nd December 2010 Lords Chamber

[Lord Teverson]

My Lords, one of the big issues in which I have been involved over the past 10 years concerns the water industry and the great amount of water leakage through our mains system. Water is a scarce resource and a significant proportion of it never reaches the consumer through the taps because it is dispersed through the ground. It is a great waste and we have made, and continue to make, a considerable investment to stop the leakage.

I see that as an equivalent challenge to the one that we now face in regard to heat and energy saving. Huge amounts of energy leak out into the atmosphere. The energy is not used for its right purpose—which is to keep us warm, to cook with, to manufacture with and all the other things for which it is needed. The Bill gives us an opportunity to plug the gaps in a number of ways. That is why I welcome it. Energy saving is often a less exciting area of energy policy—it is a Cinderella area—because it is not one of the new technologies and does not require billions of pounds of investment in shiny new machines. It is about the boring issue of making what we have work far better.

I also welcome the Bill because of the way in which it aims to tackle the scale of the problems involved. That could make a difference. Fourteen million homes need a degree of retro-fitting. Some of that has already taken place and there are a huge number of dwellings out there—a huge target population—that we need to make sure are fit for the future. The issue centres not only on energy security. The gap in energy generation that will occur in a few years time will require £250 billion of investment to fill, but, by encouraging greater energy efficiency, the Bill will allow us to reduce that future investment in the power sector. This will enable us to meet our targets under the Climate Change Act of an 80 per cent reduction in carbon emissions by 2050 and, more immediately, a 34 per cent reduction—or even a 40 per cent reduction—by 2020. We can do that only by having energy efficiency as a major part of our energy strategy, not only in the long term but in the short and medium term as well. I welcome the Bill and the fact that it has come early in the Government’s legislative programme.

However, a number of areas need greater explanation and perhaps tightening up. Also, in one or two areas, some additions are needed, which I think will be in the grain of what most noble Lords want the Bill to achieve. When I read the Bill through, one key area that did not convince me entirely was the part that relates to the rented sector. As the Minister stated, that sector includes properties that are the worst in terms of energy efficiency. It certainly contains true energy poverty, which is, regrettably, a growing problem in this nation. I am concerned that the Bill—perhaps the Minister can explain this when he sums up—seems to flag up that private landlords can go on hold and will not be put under pressure to do anything until 2015, some five years away. I know that there is some tough language in the Explanatory Notes and other DECC publications. All the same, saying categorically that the sector will not be kicked if it does not move for another five years is not what we want. I think that the date has to be brought forward and that greater pressure needs to be put on landlords to perform. I am delighted that the SME sector is not excluded from the Green Deal. The number of tenanted rather than owned properties is even greater in the business sector, so the Bill is important in that area, too.

As we move through Committee and other stages, I should like some assurances about what I would call conflicts of interest. I have some limited experience in financial services, where the Financial Services Authority is keen on the concept of treating the customer fairly. That is all about preventing mis-selling and making sure that there are no conflicts of interest in the financial supply chain. The structure proposed in the Bill, although the detail is not there yet, poses some risks, as we will have advisers, installers and the people who provide the finance. We know from consumer experience in the financial services sector that this structure can lead to market abuse, to the lack of Chinese walls and to mis-selling. If that starts to happen, households and small businesses will look at the Green Deal less positively than we would want. It is important to get that right. We must ensure that mis-selling does not happen and that households get the right advice, the right finance and the right deal for the long term, so that the money that is transferred between the energy sector and the property sector is used properly.

I want briefly to talk about local authorities; I am sure that my noble friend Lady Maddock will speak about this in more detail. I am disappointed that the role of local authorities does not appear slightly more in the Bill. Admittedly, recalcitrant landlords will in the end have to confront their local councils, as I think the Bill describes, but I would like to think that there is scope for the conversion of old houses and housing stock by street and by area, as that would be much more effective and efficient. That could be done well with local authorities. There is a good track record of schemes involving British Gas, for example, where households have been incentivised by council tax rebates to carry out home insulation, with money coming back through that route. I hope the Minister will look at that scheme and consider how it, too, can be harnessed for this purpose.

I am also interested in the area—I am sure that other noble Lords will mention it—of what I regard as inverted tariffs. Because of the way in which the market works in this country we have a situation where—certainly with electricity, and I think this applies to gas as well—you pay a much higher rate for the first units of energy used. The rate then goes down as your usage increases. While that is logical in terms of fixed costs and businesses looking to cover those fixed costs, it does not make a lot of sense in terms of energy management at household level. I should like to think that we can reconsider that as well.

As I said, the good thing about the Bill is that it deals with energy efficiency rather than some of the shiny technologies that are out there. However, one thing has been left out that, like the noble Lord, Lord Grantchester, I would like to mention, and that is geothermal. But I would also remind the noble Lord that, in their last energy Bill, the previous Government rejected my amendments on geothermal which would have created a framework in which it could flourish. Nevertheless, I know that the other side of the House has been generally positive about this technology. Under Chapter 3, which covers low-carbon generation, I should like to see a basis for geothermal licensing that allows investment to take place. I shall not try to sell its wares at great length, but geothermal is a renewable technology with a constant rather than intermittent or variable output; it has a small footprint on the ground; it is made up of tested technologies; and the UK has the opportunity to retake the leadership in it.

This is an excellent Bill and I am sure that all sides of the House look forward to its various stages. I know that we on these Benches will contribute to that very constructively.