Alan Whitehead
Main Page: Alan Whitehead (Labour - Southampton, Test)
Chris Huhne
I do not agree with the hon. Lady’s assessment. It is important to deal with people in fuel poverty. The energy company obligation, as she pointed out, will enable us to fund green deal measures for those in fuel poverty. The ECO will ensure that people, such as the stereotypical little old lady in her extremely draughty home who could suffer from hypothermia, can enjoy more comfort and do not have to generate energy savings to install insulation. The hon. Lady is right that we want such people to have more comfort and to enjoy a higher temperature, because we do not want to see our fellow citizens dying from hypothermia. Providing more comfort is explicitly allowed for in the Bill, and we have just introduced legislative measures for the warm home discount. We want to ensure that there are means through the green deal to tackle the root of the problem of fuel poverty, and to deal with fuel poverty problems for those who have not benefited from that.
Dr Alan Whitehead (Southampton, Test) (Lab)
On the ECO, does the right hon. Gentleman regret agreeing with the Treasury cap on Department of Energy and Climate Change levy-based spending over the current funding cycle, under which any new levy spending—if it is so defined by the Office for National Statistics—would come within the levy cap? Under that scenario, what present levies does he intend to carve out in order to carve in the ECO?
Mr Iain Wright (Hartlepool) (Lab)
It is a pleasure to follow the hon. Member for Cheltenham (Martin Horwood). I have fond memories of debating with him the glorious merits of the south-west regional spatial strategy, and I am sure that you, Madam Deputy Speaker, as a fine Bristol Member of Parliament, have your own thoughts on that, too.
I welcome the notion of the Bill, because it is difficult to oppose in principle a Bill that intends to increase energy efficiency, improve energy security and ensure greater competitiveness for energy companies in the UK, but, as my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) said, this Energy Bill is such a wasted opportunity. It treads water so much that British industry and enterprise, in a field where we could lead the world, will be left behind by other countries, and the poorest and most vulnerable households, which face massive increases in fuel bills over the next few years, will not be helped quickly enough. I want to focus on two broad themes, and in particular on where the Bill does not provide enough detail—a recurring theme of this Second Reading—or enough ambition.
Let me outline the huge potential that we have in Hartlepool, my area, and the wider Teesside and north-east areas to lead the world in modern energy production and distribution. In my part of the world we have always been at the cutting edge of energy infrastructure and technology. The docks and the railways in Hartlepool and elsewhere in the north-east were built in the 1820s and 1830s to transport coal from the south Durham coalfields —I see my hon. Friend the Member for Sedgefield (Phil Wilson) seated on the Front Bench—to London, and the world’s first bulk oil tanker for Standard Oil, the Marex, was built at west Hartlepool docks in 1892.
My area has the potential to lead the world in energy in the 21st century, as it did in the 19th century. Our assets in the region are second to none. The largest heavy industrial area in the country is on Teesside, and we already have a cluster of world-class petrochemical, energy and industrial biotechnology plants. In my constituency I have a nuclear power station with the prospect of a replacement in the next decade, the fourth largest port in the UK, a steel industry specialising in construction and energy infrastructure, and a world-class advanced engineering industry.
The port of Hartlepool is the closest such facility to the Dogger bank, the location in the North sea of the biggest offshore wind project this century, which could provide one quarter of Britain’s energy requirements by the middle of this century. We also have a highly skilled and flexible work force who can innovate and adapt their engineering expertise to design and manufacture new forms of energy production and distribution for the 21st century.
In my constituency PD Ports has introduced the concept of “Chain Reaction”, the Teesside renewable energy supply chain cluster, where firms work together in Hartlepool and in the wider Teesside and north-east areas to provide facilities and skills for other companies that wish to invest in the energy industry.
We have other ambitious companies determined to grow and succeed, such as JDR Cables and Heerema Hartlepool, which are located on land provided by PD Ports and supply the components for offshore wind developments. Tata Tubes in Hartlepool manufactures pipes that sit on the bottom of oceans throughout the globe, allowing oil and gas to be extracted, transported, processed and distributed to the highest possible specification.
Our region has identified a £6 billion pipeline of commercial investment for the next decade with regard to energy policy, but we have to move quickly if we want to lead the world in this field, because other nations are already stealing a march on us. The Pew Environment Group states that the UK is losing the race to be the leading economic powerhouse of the global green economy. Last year we declined from third in the world in terms of investment in green growth to 13th, behind Brazil, Mexico and Singapore.
Frustratingly, Singapore’s energy industry is similar in many respects to Teesside’s: centred on oil refining, with successful spin-offs into chemicals, oilfield equipment manufacturing, shipping and logistics. Singapore is moving much more ambitiously than the United Kingdom, particularly in new growth areas such as solar power, fuel cells, biofuels and energy management, and it aims to increase the value-added from its energy industry from $20 billion to $34 billion in four years and to triple employment in the sector in little over five years.
Closer to home, Rotterdam is pushing itself as the energy port of Europe. The city’s port authority has aspirations to become the CO2-free hub of north-west Europe, and about €6 billion will be invested in the port authority in the next few years to help realise that aspiration, with an emphasis on hydrogen production, supply and distribution.
Given what other countries are doing, the possibility of a missed opportunity is particularly frustrating, because we in this country remain very well placed to lead that global industry. Pew Environment Group estimates that $2.3 trillion could be invested in clean energy infrastructure in the next decade, and, although much of the attention is focused on the east, on China and the Pacific rim, Pew concludes that the UK, the US and India are the three countries with the most to gain from what it terms the
“adoption of aggressive clean energy, when enhanced policies are compared to current policies.”
I do not see the ambitions of my area, Hartlepool and Teesside, matched by the Government’s actions in the Bill. The rhetoric is often positive and encouraging, but the Bill demonstrates that the Government are merely providing warm words. After so much rhetoric about the green investment bank, there is nothing in the Bill to help it to move forward successfully and quickly. Businesses in the field are requesting a clear vision for the road ahead, with certainty and stability to allow for large-scale investment decisions, but that is not happening. Uncertainty about the green investment bank, one-off raids on small and medium oil and gas explorers in the Budget, and further delays to round three of the Crown Estate project to increase offshore energy generation are undermining confidence and stalling investment decisions.
I cannot stress this enough: we would miss the opportunity of our generation if we failed to grasp the huge potential that this country, not least my constituency and region, possesses. I fear that in five, 10 or 15 years’ time we in this House will be reflecting on how we could have been pioneers of a noble and groundbreaking world industry, but are instead rueing the loss of jobs, ambition, wealth, social equality and climate stability.
The second theme that I wish to explore is the pressing need to improve the energy efficiency of much of our housing stock, particularly in the private rented sector. As the Secretary of State articulately explained, there are more energy-inefficient properties in the private rented sector than in other tenures. For instance, privately rented properties are much more likely to have inadequate loft and cavity wall insulation, and less likely to have double glazing or a condensing boiler. The landlord’s energy savings allowance, an incentive introduced by the last Labour Government, had considerable merit, but—I must be honest—a very disappointing take-up. The Secretary of State mentioned that over 40% of tenants in F-rated and G-rated homes in the private rented sector are fuel-poor, and I imagine that there is a big risk that that proportion will get worse as energy prices increase. In this context, the Secretary of State’s announcement about minimum efficiency standards is very welcome, although I do not understand why it was not announced during the Bill’s passage through the other place.
Questions still remain about certain elements of this aspect of the Bill, particularly whether big and numerous Government amendments will be needed to put in place their ambitions in chapter 2. The Bill’s impact assessment acknowledges:
“It is assumed that landlords will not act on primary powers”
provided in the Bill. It concludes that
“no benefits are expected to arise from primary legislation”.
In that case, what is the point of the provision? I understand the need for secondary legislation in this field, but why cannot we act more quickly to ensure that tenants are helped now? The powers in the Bill are very weak, and the prospect of secondary legislation is so far into the future as to be completely meaningless to tenants in my constituency.
What is the point of having a review of energy efficiency in the private rented sector that is not required to report until 1 April 2014? And under the powers in clause 43, regulations relating to energy efficiency for tenants mean that improvements may come into force no earlier than 1 April 2015. We all know that energy efficiency is bad in the private rented sector; even if we did not, the Bill’s impact assessment tells us so. Why can the Government not move faster to do something about it now, instead of making somewhat vague promises about acting in three or four years’ time?
Dr Whitehead
Will my hon. Friend reflect on how landlords are going to be found under the arrangements that have been announced? Will he also reflect on the fact that the Government recently removed the secondary legislation that provided for the creation of a national landlords register for homes in multiple occupation, by which landlords could be found for energy efficiency purposes?
Dr Alan Whitehead (Southampton, Test) (Lab)
I am pleased to follow the hon. Member for Richmond Park (Zac Goldsmith), who has made a thoughtful contribution to the debate. He has underlined a number of the issues that I want to raise in connection with the Bill and the green deal. It is extremely important that the green deal should work well, so it must be as good as it possibly can be when the Bill completes its passage through Parliament. That is important because of the ambition that we must have for energy efficiency, whether through “negawatt” arrangements or other forms of energy management and energy saving. We must have the best and most energy-efficient housing stock that we can bring about. That is an essential part of our climate change action, and our action on energy management and the achievement of the CO2 emissions targets set out by the Committee on Climate Change.
Achieving that will involve an ambitious programme, and as a mechanism, the green deal is certainly ambitious. Indeed, the Minister himself said last summer that by 2050, as a result of the green deal, houses would not have to be visited more than once to assess their energy efficiency. That is the kind of ambition that we need for the green deal; we need to make it work as well as it can. My worry is that as matters stand, many things are missing from that ambition. That is what we need to concentrate on in Committee, so that when the Bill is enacted, the import of the 50-odd pieces of secondary legislation that have yet to be written, let alone enacted, will be much clearer. We shall also need to ensure that that secondary legislation provides the mechanisms to make the green deal work well.
I was pleased to hear this afternoon that among other things, the Government are not now intending to proceed with clause 105, which at the moment proposes the repeal of the Home Energy Conservation Act 1995 in its entirety. I would welcome an intervention from the Minister to confirm that that entire clause will now disappear and not go forward into Committee or beyond. Is that right?
Gregory Barker
I cannot comment on the detail, but I can assure the hon. Gentleman, as I assured the right hon. Member for Oldham West and Royton (Mr Meacher) earlier, that we have looked at this matter in the round. Having listened to a number of experts in the field, we think that we can breathe new life into HECA. It effectively became redundant under the previous Government, but we think that it could be revitalised and become an effective tool that could allow us to avoid imposing new regulation on local government.
Dr Whitehead
I thank the Minister for that clarification.
When we are talking about energy efficiency in homes, we need to understand just how big the task ahead of us is. The SAP—standard assessment procedure—rating of UK homes went up considerably under the last Labour Government. To be precise, the average SAP rating, which measures the energy efficiency of homes, went up by 11 points between 1996 and 2010—from an average of 42 up to 53. Over the last five years, the SAP rate increase went up one a half times as fast as in the previous five years and the five years before that. That shows how measures such as Warm Front and CERT—carbon emissions reduction target—which are going to disappear when the green deal comes in, were having some success in ensuring that homes were more energy-efficient.
In order to get anywhere near the sort of targets that hon. Members have suggested that the Government should consider introducing in an amendment to align energy efficiency with climate change targets—which I hope will happen in Committee—we need to move the SAP ratings much further up over the next few years, perhaps to 70 or more on average at band C by the end of the decade. That means making progress getting on for twice as fast as we have over the last few years. That is the sort of ambition that the Bill needs to encompass. My concern—hon. Members have already mentioned a number of concerns—is that it remains unclear whether that ambition can be achieved under the current mechanism, despite the claims for the efficacy of the green deal.
Mark Tami
Other Members have mentioned the problem of poorer homes, and private landlords are a particular problem, because they have no vested interest in doing anything about them. I am sure we have all had people coming to our surgeries with horrific stories about windows that do not fit, damp all over the place and so forth—yet the landlord often does not care at all.
Dr Whitehead
Indeed. I welcome what I understand to be a change of heart by the Government about the extent to which compulsion can be used to get landlords to improve their properties. Sanctions on landlords with F and G-rated properties have been mentioned; we could argue about when those sanctions might be introduced, but compulsion to prevent landlords from letting properties below certain minimum energy standards is right. The standards are well below the sort of average rating that we have talked about this afternoon, but they are nevertheless minimum standards. If that is indeed a change of heart reflected in this part of the Bill, I welcome it.
I am sure that the detailed provisions affecting landlords can be sorted out effectively in Committee—but first we have to find the landlords. It was not a good sign that when this Bill was being discussed, another Department helpfully removed the idea of having a landlords register as the responsibility of local government. Without that, it will be more difficult to find the landlords who should carry out these arrangements. I trust that the Minister will have a word with his counterpart in the Department for Communities and Local Government and perhaps think again about that particularly destructive act.
The problem of finance has been mentioned. It is essential to making the green deal work. It is not just a matter of suggesting that the market will sort the finances out one way or another and that competitive interest rates will be charged. We can be fairly clear about how finance for the green deal as it stands, without changes, will turn out, because that is how the market works in respect of the sort of return that can be expected at different interest rates. The rate may well be around 9%, or perhaps a bit less. If we look at what can be got under the golden rule with finance at 9%, we find that it turns out to be very little in terms of improvements for properties to which the green deal and the golden rule apply. Loft cavity wall insulation and draft-proofing are probably the only things that work out at that sort of level. With interest rates at 7%, we get draft-proofing, some glazing, some internal wall insulation. With interest rates at 5%, we may get loft cavity wall insulation, glazing and a condensing boiler. If the green deal comes in at 9%, hardly any of the properties that need that sort of level of serious work—glazing, condensing boilers, perhaps microgeneration—will be touched by the mechanism. We must have a better mechanism for making the green deal work.
The energy company obligation exists as a back-up for fuel poverty and hard-to-treat properties. Hon. Members might have noticed that with interest rates at about 5% or so, solid wall insulation, which is present in about 7 million homes up and down the country, will not be touched. The ECO programme might touch it and might have a substantial hand in dealing with those in fuel poverty. Perhaps they should have their green deal underwritten by the ECO so that they can join in the benefits that other people get.
If we are thinking about how the ECO might underwrite the green deal, it is important to understand whether the ECO will exist to any great extent as a financial mechanism. What greatly concerns me—I hope the Committee will be able to look at the problem in much greater detail—is that as matters stand, DECC has signed up to a Treasury-based cap on levy-based arrangements. Under the present financial arrangements—for the spending round up to 2015—DECC has signed up to a cap on renewable obligations, feed-in tariffs and warm homes discount. That cap is set at £11.8 billion over the whole period, but there is also an annual cap.
The Treasury says that any new initiatives that come in the form of a levy must be financed within that cap. If the Department wished to undertake an ECO programme and it proved to be a levy as defined by the Office for National Statistics, it would have to be found under the present cap. That means either that the Government will have to go slow on renewable obligations and reduce the amount of renewable energy, or that the ECO will prove to be so small as to make it impossible to produce the sort of mechanism that many people hoped for—one for adding value to the green deal, getting on with the hard-to-treat properties, dealing with people in fuel poverty and homes off the grid that need extra assistance to make the green deal work, and so forth.
Unless we get the mechanisms right and have the right finance in the system—and, I would suggest, among other things, unless the ECO works properly—the green deal will not work. I am the last person who would want to see the green deal fall. Because a great deal of work has to be done to make our country as energy-efficient as possible, the green deal has to work. The task of making it work properly is the task of the Committee. I hope the Government will be generous in taking on board those ideas, which will make the green deal work as well as it can to bring our energy efficiency targets as close to realisation as possible.