Energy Performance of Buildings (England and Wales) (Amendment) (No. 2) Regulations 2015

Baroness Williams of Trafford Excerpts

Wednesday 16th December 2015 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)]

My Lords, I thank all noble Lords who have spoken in the debate on these regulations, and the Secondary Legislation Scrutiny Committee for its report, which has helped to inform it. I understand that the regulations apply to both domestic and public buildings. I thought that I might clear that up at the start.

I will start by addressing the concerns expressed by the Secondary Legislation Scrutiny Committee that the policy-making process relating to these regulations may have been weakened by the lack of consultation. I regret that in the limited time available to take action, my officials did not have the opportunity to carry out more extensive consultation on the regulations. However, they made use of the responses to the previous Government’s consultation on the future of the display energy certificate, or DEC, regime, which sought views on this enforcement regime. They then tested these regulatory proposals in discussion with a number of local weights and measures authorities and officers, based on their experience of implementing the existing duty.

Local weights and measures authorities have been responsible for the enforcement of energy performance of buildings regulations in England and Wales since 2008. These regulatory changes do not change the nature of the existing enforcement responsibility or set central targets for activity, as enforcement priorities are a matter for local determination. They create a new reporting duty and require local measures to resolve a potential conflict-of-interest issue. From their discussions with local enforcement officers, my officials were assured that the additional burdens imposed by this reporting of existing duties would be minimal, as all enforcement activity should already be appropriately recorded locally. They discussed these measures with local trading standards officers and confirmed that this was not a significant burden. They confirmed that enforcement action is already recorded, so one annual report is no burden. It is for local enforcement bodies to determine—

[Lord Harris of Haringey]

Yes, but this is the only one for which there is a requirement to present an annual report to the department. Why?

[Baroness Williams of Trafford]

My Lords, the DCLG will collate and publish a national report. The data will not be challenged in order to provide transparency and national evidence on activity. I am guessing that it is being done because it is an important matter.

It is for local enforcement bodies to determine the nature and extent of the enforcement activity, responding to local priorities and needs. Local weights and measures authorities have the power and discretion to issue penalty notices if necessary, as well as being able to take action to inform, advise and educate. We have ensured that the new reporting requirements are as light-touch as possible to fulfil the purposes of these regulations and provide the transparency that I talked about.

We did not simply spontaneously decide to impose requirements on these authorities, however. As set out in the appendix to the 11th report of the Secondary Legislation Scrutiny Committee, the department received a letter of formal notice in July 2014 from the European Commission relating to UK regulations. The focus of the letter was broader than the scope of these regulatory amendments as it was considering the issue and display of energy certificates in public buildings, although it raised a range of concerns on the adequacy of our enforcement regime. We responded to all the issues raised by the European Commission. We explained the measures we have put in place to allow scrutiny of compliance with the requirements of the Energy Performance of Buildings (England and Wales) Regulations 2012. This included the accessibility of registers on which all of our data are lodged and the amount of information that we put into the public domain.

In various exchanges with the Commission between July 2014 and June 2015, we made it clear that our enforcement regime did not need significant change. Views were sought regarding barriers to enforcement and information in the last Government’s consultation on the future of the display energy regime in early 2015. Local weights and measures authorities have, for the last seven years, had a duty to carry out this work, and appropriate funding has been included in the local government settlement since 2008, when regulations first placed responsibility for enforcement on local weights and measures bodies.

The noble Baroness, Lady Crawley, talked about ring-fencing funding. The settlement provides unring-fenced funding and individual councils can decide what resources they will allocate to each service, depending on the local priorities and needs. We received a range of suggestions on alternative approaches, along with a suggestion that we should ring-fence the funding for this work if it remains a local government responsibility. However, ring-fencing would run directly counter to the long-standing government policy to allow local authorities to determine for themselves how best to use the total pool of resources allocated to them, and cannot be justified in these circumstances.

I believe that these regulations set out the minimum measures necessary to satisfy the UK’s obligations under the directive and to protect England and Wales, and our local authorities, from the possibility of further action. However, that is not to say that they are set in stone.

I regret that we were unable to consult more widely regarding these regulations. However, despite the impression that we have had over a year to address any weaknesses, it was not until we received the Commission’s reasoned opinion in June 2015 that it was clear that further steps were necessary, in particular to address a potential conflict of interest that may arise when a local weights and measures authority is required to enforce against its own parent authority and to put more information into the public domain on enforcement activities.

Once we received the reasoned opinion, we had to act quickly to address any shortcomings. Our focus was to ensure that any further measures we introduced were fit for purpose but as light-touch as possible, and to this end we concentrated on engaging with enforcement officers directly in order to reality-check our thinking. Were we to fail to satisfactorily fulfil the obligations of the directive within the time allocated to us, the likely outcome would be a referral to the European Court of Justice and ultimately the imposition of a multimillion pound fine. Any such fine could potentially fall on local as well as central government.

Going forward, my department will continue to be open to considering the views or proposals of authorities and others based on their experience of implementation. I am also aware of the ongoing review of the functions of local trading standards authorities being led by the Department for Business, Innovation and Skills, and we will consider any relevant recommendations that arise from that.

With that, I hope that the House is assured that we take seriously the representations made to us regarding this enforcement regime. In acting to regulate, we have needed to respond—

[Baroness Crawley]

Has the Minister any idea when BIS will conclude its review?

[Baroness Williams of Trafford]

I can let the noble Baroness know that in writing because I do not know when that will be.

In acting to regulate, we have needed to respond to a tight deadline, but at the same time we have made every effort to avoid placing unnecessary burdens. This House has been greatly assisted by everything that has been said during this debate. I hope that the noble Lord, Lord McKenzie, will feel able not to press the Motion.

[Lord McKenzie of Luton]

My Lords, I thank all noble Lords who have contributed to this short but very well-informed debate. On the proposition that there was limited time to consult, the letter of 2014 would at least have given some fairly clear indication to the Government that something was going to have to be addressed. Even taking June 2015 as the date when that opinion came through, we believe that there was time to consult and it would have been to the Government’s advantage to have done so.

As for who these things apply to, my understanding is that it is necessary to produce energy performance certificates when all buildings are constructed, sold, or rented out, but that displaying such certificates is necessary for large public buildings. It seems to be at odds with the professionals’ view that these regulations will force them to change their priorities. Is the Minister entirely dismissive of that view? This is a profession that received praise from my noble friend Lady Crawley. It has been doing this thing for a long time; it is extremely knowledgeable. Why would it advance the proposition that this will change its priorities and what it will do if that were not the truth? Does the Minister think that they are misguided or misled? Why is that proposition rejected?

[Baroness Williams of Trafford]

My Lords, I would not accuse the profession in any way of being misguided. As I say, we are open to taking further representations as time goes on.