Chris Huhne
Main Page: Chris Huhne (Liberal Democrat - Eastleigh)
The Secretary of State for Energy and Climate Change (Chris Huhne)
I beg to move, That the Bill be now read a Second time.
Over the past year, energy policy has been in the spotlight. From the gulf of Mexico to Fukushima, no one can doubt the importance of our energy choices. For the first time, scientists have linked greenhouse gas emissions to an increased risk of major floods. Faced with a difficult financial situation, the Government’s objectives are clear: we must secure affordable energy supplies for the future and avoid dangerous climate change. Neither will be easy. The gap between our energy demand and our energy supply is growing and we are increasingly dependent on imported energy. We still rely heavily on unclean and unsustainable fossil fuels. By law, we must cut our emissions by 80% by 2050, and we must get 15% of our energy from renewable sources by 2020 under EU law. Our energy infrastructure is ageing. Our old polluting power stations are shutting down.
Barry Gardiner (Brent North) (Lab)
While the Secretary of State is talking about the targets, will he expand on the dispute that appears to be taking place between Cabinet colleagues on whether the recommendations of the Committee on Climate Change should be met or abandoned?
Chris Huhne
The hon. Gentleman can take it from me, as a former journalist on The Guardian, that he should not always believe everything he reads. The Government will make our announcement on the question of the fourth carbon budget in due course.
Building the next generation of power plants will take time and money. If we are to cut our carbon emissions and keep the lights on, we must act now. The cheapest way of closing the gap between supply and demand is to reduce the amount of energy used.
Mr John Baron (Basildon and Billericay) (Con)
The Government are rightly concerned about fuel poverty and whether customers are paying too much for their energy—a situation not helped by a myriad of tariffs and complex energy bills. As my right hon. Friend’s fellow Ministers know, I have submitted simple proposals to his Department that would oblige energy companies to show customers how much they would save if they were on that company’s cheapest standard tariff, based on the customer’s actual usage, rather than a generic or average usage. Other Ministers have been supportive. Will he be?
Chris Huhne
I am grateful to my hon. Friend, and I know that he has been very active in promoting that cause. I thank him for the way in which he has been championing that change, which will help to increase consumers’ control of their energy bills, and I very much hope that he will continue to do so. I can certainly say—for myself and the whole ministerial team—that we are supportive of his work and the ideas that he has brought forward; we see a lot of merit in them. I would want to consult more before introducing detailed legislation, but we very much welcome the thrust of that work.
Mr John Redwood (Wokingham) (Con)
Given the looming shortage of capacity, how much new capacity is in-build as a result of decisions taken in the last year, and how much does the Minister wish to get in-build as a result of decisions in the forthcoming year?
Chris Huhne
I am grateful to the right hon. Gentleman for his question on that issue. Obviously, there is an absolutely central objective of the electricity market reforms, on which we are consulting, and it is that we bring forward proposals. We are determined that we should have an adequate supply margin through even the toughest of winters. My whole ministerial team is determined to ensure that, and I merely urge him to wait for our White Paper, which will I hope reassure him about the prospect.
Joan Ruddock (Lewisham, Deptford) (Lab)
In the light of what the Secretary of State has just said, what does he make of Centrica’s threat not to reopen its gas field because of the punitive taxation that his colleagues have imposed on it? If he really wants security of supply, surely that is central to its future.
Chris Huhne
Perhaps the right hon. Lady has more information on that than I do. I read the comments very carefully, but I did not read a comment about closing down the Morecambe gas field. That would be a very odd thing for an operator to do, but we will have to wait for the fullness of time to see whether she or I are right.
Chris Huhne
I will give way once more—to the right hon. Gentleman—before making a little more progress.
Mr Andrew Smith
The Secretary of State said a few moments ago that we need to act now to combat climate change. Will he therefore act now to bring in emissions performance standards for power stations by adding an enabling clause to the Bill, so that we make progress in that crucial area as soon as possible, the electricity companies know where we stand, and we do not have to wait months and years for action that, as he says, needs to be taken now?
Chris Huhne
The right hon. Gentleman knows that it is not a question of months or years; the proper place for the House to debate as significant a change as emissions performance standards is as part of the electricity market reforms. We will give a very clear indication, as I said to the right hon. Member for Wokingham (Mr Redwood), of exactly what direction we are taking with our energy policy on the production side. The thrust of this Bill, which we are debating today, is more on the energy saving side, but we will make very clear the detailed proposals on emissions performance standards. We have a clear commitment in the coalition agreement—and, indeed, in our parties’ manifestos.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Will the right hon. Gentleman give way?
Chris Huhne
I am going to make a bit more progress, if I may, and if the hon. Gentleman will excuse me, because I have taken four interventions without being able to draw breath between any of them.
Building the next generation of power plants will take time and money. If we are to cut our carbon emissions and keep the lights on, we must act, and the cheapest way of closing the gap between supply and demand is, as I said, to reduce energy use.
The Bill contains provisions to boost our energy security, to encourage low-carbon technologies and to improve energy efficiency. It gives energy companies a new obligation to reduce carbon emissions and to support vulnerable consumers, and it delivers a key coalition commitment: the green deal—a self-financing building improvement scheme to bring our properties into the 21st century.
The UK has some of the oldest and least efficient buildings in Europe. Every day, throughout the country, our homes and businesses leak heat and waste energy.
Mr Dave Watts (St Helens North) (Lab)
As up to 24% of heat can go out of the window, will double glazing be included in the green deal?
Chris Huhne
The exact specifications of the measures that can be included in the green deal are properly left to secondary legislation—and for several reasons, because setting it out will require detail and my officials are in the process of talking to industries throughout the country about getting costs down. The scale of the green deal gives us an opportunity for economies of scale that may well bring a whole new series of measures into the possibilities that it offers. I would very much like to see the maximum possible range of measures—including, indeed, double glazing. As the hon. Gentleman rightly says, a quarter of the UK’s energy emissions come from energy used in the home, and billions of pounds spent on domestic heating literally disappear up the chimney. Businesses are wasting money and our outdated building stock is costing us the earth. Not any more: under the green deal—
Mr John Leech (Manchester, Withington) (LD)
Does my right hon. Friend accept that the biggest problem is in the private rented sector, and that one of the best ways to deal with some of the worst properties is to stop landlords being allowed to let F-rated and G-rated properties by 2016?
Chris Huhne
I entirely agree with my hon. Friend, and I will respond to his point later if he will allow me to make a bit of progress.
Under the green deal, energy-saving packages worth thousands of pounds will be installed in millions of homes and businesses right across the country. There has never been anything quite like it. It is the most comprehensive energy-saving plan in the world. Green deal measures will be provided by trusted businesses, installed by accredited professionals, and backed up with a watertight legal framework. Customers will pay nothing up front; businesses will do that for them. Once the property has been refitted, green deal providers will get their money back from the expected savings on energy bills over the lifetime of the measures. This is the big change: payments can be made not just by the existing tenant or owner-occupier but by the new beneficiaries once the original installers have moved out and moved on, so there is a longer repayment period. That makes the whole scheme much more financeable and much more attractive.
Andrew George (St Ives) (LD)
My right hon. Friend refers to the companies that will undertake the assessments and potentially the work itself. Has he had time to reflect on the lessons from the Warm Front scheme, where large companies cleaned up all that work when a lot of it could have been undertaken efficiently by small local companies? Will he ensure that the way in which the legislation is framed does not keep those small local companies out of undertaking this important work?
Chris Huhne
My hon. Friend makes a good point. We are absolutely determined to ensure that this scheme is open to small businesses that are properly accredited and properly qualified as installers. I am sure that all of us, in all parts of the House, want not only the biggest companies but small businesses to benefit from the advantages of the green deal.
Barry Gardiner
The right hon. Gentleman talked about householders moving and the contract then being taken on. However, in the evaluation process that took place at the beginning, the estimated savings were based on usage by the initial occupier. What will happen when the occupier changes and those savings then change as well?
Chris Huhne
As the hon. Gentleman knows, when we are looking at savings or cash flow, money today is worth more than money tomorrow, so from the point of view of the installer, the longer the period, the more the work is worth doing. The key change in the Bill is to introduce the ability to go beyond the existing owner-occupier or tenant in order to spread payments out over a long period.
At the heart of the green deal is a golden rule—that for typical households, expected savings will offset costs. Each month, a green deal home will save energy while providing the same level of comfort. Money from likely energy savings will pay off the costs of the work. This is not a personal loan. Let me repeat: once a property has had the green deal, payment will stay on the energy bill at that address, even if the occupants then move out. When someone moves into a green deal home, they inherit the energy savings that pay for the work. Everyone has a part to play. This is about Government helping businesses and households to come together to deliver energy savings that are important on a national scale.
Through this legislation, we are creating a new market in energy saving. Just as the law establishing joint stock companies unleashed big investment, so this law will set the legal framework for a new green growth industry.
Mr Andrew Tyrie (Chichester) (Con)
The Secretary of State said that he is creating a new market. Considerable consumer protection and competition concerns have been expressed to me about the creation of this market. What advice has he taken on the aspects of the Bill that will set aside the Consumer Credit Act 1974? Is it not the case that many people will feel tied to a particular energy provider? How will he ensure that these measures do not inhibit people from switching between energy providers?
Chris Huhne
We have taken extensive advice on the provisions of the Consumer Credit Act 1974, and the Bill is absolutely in line with the protections.
In the view of this ministerial team, it is essential that the consumer has the highest possible protection, both financially and in terms of the quality of the installation, for the simple reason that the success of the scheme will depend on word of mouth. If people go around saying that they have had a bad experience, either financially or in terms of the installation, the scheme will not be the success that we want it to be. That is why we have been careful not to rush the Bill through. A lot of pressure has been brought to bear on us, because of the state of the economy, to ensure that we get it through as quickly as possible, but we have been determined, particularly drawing on the experience of Australia, to avoid the mistakes of countries that have rushed this matter, and to ensure that we get it right. I assure the hon. Gentleman that we have done that. I will turn to some of the more detailed answers to his question later.
Caroline Lucas
I am grateful for the opportunity to speak. Is it not the case that the golden rule will not help people in fuel poverty much because they are far more likely to feel any green deal benefits through greater thermal comfort rather than through reduced fuel bills? The energy company obligation pot does not have much money in it, although £2 billion is a good start. However, even that is being paid for by a levy on consumers’ bills, and there is research to suggest that that mechanism will push more people into fuel poverty than it pulls out.
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?
Chris Huhne
The hon. Gentleman should first realise that the ECO is not covered by that as yet, although it may be in the future. Secondly, it is legitimate for the Treasury to have an interest in the taxable capacity of the country as a whole. If we impose an additional obligation on electricity consumers through legislation, we should be absolutely transparent about it, and we have committed to do that through the annual energy statement, for example. It is also absolutely appropriate that the Treasury should have oversight of that, and that there should be ongoing negotiation to ensure that the balance is struck between the progress that we want to see on fuel poverty and hard-to-treat homes, and the charges that are put on the electricity consumer.
Chris Huhne
I will make a little progress, if I may.
Millions of homes, and millions of businesses, could benefit from the green deal in the next decade. We expect that households will be able to install measures worth up to £10,000. That is a massive undertaking, and it can make a real difference. Heating is the second biggest driver of energy demand in Britain, and British Gas pilots show that householders who put in energy efficiency measures can cut their gas consumption, and their bills, by up to 44%. That is a very substantial and significant saving, but so far energy efficiency has passed under the radar. We estimate that between £2 billion and £3 billion of energy is wasted every year because our homes are poorly insulated and inefficiently run. We may as well be standing outside our front doors burning £50 notes. That waste represents £2 billion to £3 billion of gas and oil imports that make us more vulnerable to the vagaries of global oil and gas markets.
Gavin Barwell (Croydon Central) (Con)
What estimate have the Government made of the contribution that the energy efficiency measures in the Bill will make to the UK’s obligations on reducing carbon emissions?
Chris Huhne
One problem that we have in making that assessment is that, as I have said, this is the first scheme of its kind in the world. If an economist is trying to make a projection of what is going to happen in future, they usually examine what has happened in the past, but there is no history for this scheme, so it will be a case of “suck it and see”. However, later in my speech I will give some estimates of what will happen if the scheme progresses as rapidly as I would like it to.
Joan Ruddock
I am exceedingly grateful.
I have to say that much of what the Secretary of State is telling the House is familiar to me, as the person who pioneered and piloted so much of the history of the green scheme that he denies exists. What conversations has he had with the banks? How investment is to be raised is the key element that has not been described to date.
Chris Huhne
I am grateful to the right hon. Lady, and I pay personal tribute to her for her work on the matter. I am not—repeat not—attempting to make any partisan points. This has been a genuinely important piece of work to which Members of all parties have contributed, and I think it will be a game changer.
On the banks, I shall read the right hon. Lady a quotation that I believe sums up better than anything that I could say what is likely to happen with the financing of the scheme. It comes from Conor Hennebry, the director of global capital markets at Deutsche Bank, who says:
“We believe the Green Deal has the potential to improve access to home energy efficiency for families across Britain, and we are delighted to be working with DECC on this exciting initiative.”
He added on another occasion that
“the City is practically champing at the bit to finance the government’s green deal.”
I believe that the finance for the scheme will come through very strongly. The securitisation market is opening up—Eaga, for example, has already gone to the bond market with a securitisation, and many of the utility companies have securitised gas bills. I think that finance will be readily available, which will be an important part of making the green deal work.
Andrea Leadsom (South Northamptonshire) (Con)
I welcome the Bill—it is a superb idea, and I applaud the Government for bringing it forward so quickly. May I press the Secretary of State on consumer protection? As with any new initiative that a tremendous number of people want to take up, some providers will inevitably promise the earth and not deliver. What protection will there be for consumers, particularly those in fuel poverty to whom much is promised but little is delivered, to ensure that they get the insulation and the reduction in their fuel costs that they are expecting?
Chris Huhne
I absolutely sympathise with the hon. Lady’s question—I spent a number of years on the board of the Consumers Association, and I am a firm believer in the need for good consumer protection. There are several layers of protection, and the first line of defence for the consumer is competition. The inability of householders to get an assessment and an alternative quote—such competition keeps suppliers lean and mean—is perhaps what went wrong with the Warm Front scheme.
In addition, we will have all of the usual protections. I mentioned the Consumer Credit Act 2006 in respect of finance, but there is also the accreditation scheme for assessors, so we will know that assessors are properly trained to assess what people need in their homes to meet that golden rule. We will have properly qualified installers, so avoiding the problems that occurred, for example, in Australia, where untrained people crawled through people’s lofts, banging nails into wires and setting fire to homes. The whole Australian energy efficiency industry was given a bad name for many years because of that, but we are avoiding those problems. The hon. Lady will see in Committee that we have delivered a lot on consumer protection.
Mr Michael Meacher (Oldham West and Royton) (Lab)
The Secretary of State has concentrated on the benefits of the Bill, which of course depend on whether there is high take-up, which in turn depends on the interest rates on loans under the green deal. Will he give us some idea of what he intends the interest rate to be? Most expect that it will be of the order of 8% to 10% over a 25-year period, which will rule out very large numbers of people, particularly the poorest.
Chris Huhne
The right hon. Gentleman is right to say that the interest rate is important. However, it is up to competing businesses to arrange that finance. I also very much hope and trust that finance houses will make pools available for the small businesses of which my hon. Friend the Member for St Ives (Andrew George) spoke, so that providers other than the B&Qs and the Scottish and Southerns—the big providers—can get involved. The key point is that the securitisation market is opening up for such businesses, and the finance available is at a reasonable level, which I believe will ensure that we have take-off. However, the right hon. Gentleman is right that that is a market decision.
Mr MacNeil
The Secretary of State mentioned qualified installers, which in theory are all very well. However, one problem, especially in rural and island areas such as mine, is that in practice, local businesses are often unable to tender for the work because of the big contracts that are put together. People in the locality are cut out and left without the work while people come in from outside and take it up.
Chris Huhne
As I have already said, the Government are committed to trying to make the benefits of the green deal available to small businesses, which obviously includes those in remote islands and rural communities. We have consulted widely on that with both of the devolved Administrations, including the Scottish Government. We have a very substantial measure of consensus with the Scottish Government, but if issues need to be addressed in Committee, we will happily address them. I am terribly keen to ensure that the Bill works throughout the UK, because the homes that need insulating exist throughout the UK. Some of the greatest beneficiaries will be communities that are off the mains gas grid. Homes in such communities are often quite hard to treat, and the Bill will be of enormous benefit to them.
Under the green deal, households could save up to £400 a year once the measures have been paid off. That will flow through to spending power, boosting living standards for all, yet many people have never even considered making their homes more efficient—they do not know what better energy efficiency could do for them. New green deal assessments will set out clearly and consistently just how homes and businesses can save energy. The green deal is a new way of doing energy efficiency.
Chris Huhne
Let me make a bit more progress, but I will give way again later.
There will be no more picking off the easy bits, with a little insulation here and a low-energy light bulb there; no more relying on regulation alone to change behaviour; and no more top-down schemes imposed using public money. Instead, we are creating a new dynamic market in energy efficiency, shifting from small-scale improvements to deep retrofits on a national scale. This dynamic market will bring jobs across the length and breadth of the country, and real growth, reaching into the most deprived areas, with no regional bias.
James Morris (Halesowen and Rowley Regis) (Con)
On that point about the added benefit of the scheme to regional economies, can the Secretary of State estimate the number of the quality jobs that will be created in areas such as the west midlands and the black country, a part of which I represent?
Chris Huhne
That will depend on the take-up in different areas, but we estimate that nationally—there is no reason for any geographic or regional disparity; the numbers should be the same across the country—that the number of people employed in insulation alone could soar from 27,000 to 100,000 by 2015. The potential benefits are huge, with opportunities for skilled and unskilled labour alike up and down the supply chain.
The green deal will save energy and help us to hit our carbon emissions targets. It will also give us a chance to get people thinking about how they can reduce their own energy consumption. Millions of homes and businesses could benefit from the green deal, but as with any new product, building consumer trust will be critical to success. We want people to know that the green deal is not just a smart choice, but a safe choice, which is why the Bill also ensures that consumers will be protected. The green deal will be delivered by partnerships across the country.
Jim Shannon
For a minute I thought that as a Democratic Unionist Member I was not going to be allowed to speak in a green debate. When I was a Northern Ireland Assembly Member, I was involved in discussions on these measures, so it is appropriate that I have the opportunity to speak today. At the time, we proposed a clause on guaranteed performance standards that made it clear that if providers did not live up to their promises, they would be accountable for losses and monetary penalties could ensue. Does the Secretary of State intend to enshrine that principle in the Bill, so that what the Assembly proposed will be applicable across the United Kingdom? It would ensure good customer service and enhance security and protection.
Chris Huhne
The short answer is that there is a limit to what we can guarantee—the hon. Gentleman used the word “guarantee”—for reasons that will become obvious: if someone were suddenly to marry a Brazilian and wanted to keep their temperatures 3° or 4° higher in the winter, I could not guarantee that their energy bills would be lower. We have to be cautious, therefore, but if there is no behavioural change, we would expect energy savings.
We will ensure that high-quality, standardised advice is given so that each customer can see clearly where and how the green deal will work for them, and that those installing green deal measures must meet robust standards. We will guard against mis-selling, and ensure that the right information is on hand at the point of sale. Competition will keep suppliers keen: if a customer does not like the quote from one green deal provider, they will be able to get another.
Heather Wheeler (South Derbyshire) (Con)
This is a key test that will give legs to the Bill. Some of my constituents have contacted me about their troubles with Warm Front. There has to be a clean break with the past. This has to be a better way of doing business and giving us all a green deal for the future. I am looking forward to that particular piece of the Bill.
Chris Huhne
The hon. Lady is right. Many of us have been visited in surgery by constituents saying that they were quoted under Warm Front for an improvement, but oddly the entire subsidy was taken up by the provider, rather than going to the constituent. The point of introducing this competitive provision is to ensure that the subsidy goes where it is meant to, instead of disappearing into the pockets of some large business.
The Bill will also introduce a new energy company obligation to replace the carbon emissions reduction target and the community energy savings programme, which have not unlocked carbon savings fast enough. The new obligation will be more ambitious. Energy companies will be expected to pay to support hard-to-treat properties such as those with solid walls, where insulation costs can be higher and the payback period longer than with the typical home. ECO payments from energy companies will be bundled with green deal finance and delivered together to ensure that the green deal is available to all. The scheme will also help the most vulnerable people—those in the coldest homes—to get the heating improvements that they need to keep warm and stay healthy. Cold homes cost lives. By targeting support more closely, we can reach more people more effectively.
Tessa Munt (Wells) (LD)
I wonder whether this Energy Bill might be the right place for the Government to instruct the regulators to say that companies should no longer charge so much for the first units of electricity used—or whatever power it is—but instead swing that round to the point where there is better use of power. That will help the vulnerable and those in fuel poverty, because the whole thing has tipped the wrong way.
Chris Huhne
My hon. Friend makes a good point. There are many difficulties in the energy market of the kind that she describes—for example, with prepayment meters, which often make things more expensive. That is precisely why we introduced the Warm Homes discount, which provides people in vulnerable households with extra support, and why the green deal is so important. We are not just using a sticking plaster—which is what we do when we subsidise people—but dealing with the root cause of the problem. One of the key points is that people in fuel poverty and those at the bottom end of the income distribution have an enormous range of energy use. Their use can vary by a factor of six merely depending on the kind of property they happen to be in. If they are lucky enough to have a social landlord who has recently renovated the property to the decent homes standard, their energy bill can be low; if they are in the private rented sector, it can be six times as high.
Chris Huhne
If I may, I am going to make some progress.
We will focus our resources on where they can do the most good. That means finding practical solutions to identify households that need the most support. We are determined to get to grips with the causes of fuel poverty, not just the symptoms, but the tools at our disposal are not up to the job. That is why I have asked Professor John Hills to conduct an independent review of the fuel poverty target and definition, so that we can understand the problem and what we can do to fix it, and also be held to account as a Government for the progress that we make. The review will produce an interim report in the autumn and a final report early in 2012.
For too long, a sizeable minority of tenants has suffered from higher bills and colder homes. Privately rented houses are more likely to have the lowest energy efficiency rating than those that are owned outright.
Caroline Lucas
I thank the Secretary of State for giving way again. Are not tenants unlikely to challenge their landlords on the introduction of the green deal because of a fear of retaliatory eviction? Would it not be much more effective to introduce minimum energy efficiency standards that landlords have to keep to if they want to put their buildings on the market?
Chris Huhne
The hon. Lady anticipates a point that I will turn to very soon.
Landlords do not want to invest because tenants benefit; tenants do not want to invest because they will move on. By linking the green deal measures to the property, not the tenant, the Bill bridges that divide. With the green deal, everybody wins. Landlords will face no up-front costs; tenants will keep warm for less.
I welcome many of the positive responses that we have had from landlords to the prospect of the green deal. However, some individuals and organisations feel that we are not committed to securing improvements to the least energy-efficient properties in the private rented sector. Many tenants suffer appalling conditions without the power to agree improvements with their landlords. The debate has been lively, and we have listened. That is why I am pleased to announce that we will change the current provisions to make it clear that we will regulate. This is significant step and a marker of our intent. From 2016, any tenant or their representatives asking for their landlord’s consent to make reasonable energy efficiency improvements cannot be refused. From 2018, the rental of the very worst performing properties—those rated F and G—will be banned through a minimum energy efficiency standard. We will of course seek to work with landlords well in advance to support their take-up of the green deal. The precise form of these regulations will be subject to the usual scrutiny processes.
We also remain committed to ensuring that all councils play a role in delivering the green deal. The recent memorandum of understanding between DECC and the Local Government Group recognises the enthusiasm that councils have for delivering the green deal.
Malcolm Wicks (Croydon North) (Lab)
I have a question about the private rented sector, and I ask it in a spirit of non-partisanship because I know that the Secretary of State likes that kind of thing. I welcome what he has said about putting some pressure on landlords but, given that the public sector will in effect be paying the rents of some of these energy-efficient dwellings, through housing benefit and housing allowances, has his Department had talks with the Department for Work and Pensions to see whether the withdrawal of housing benefit could become another weapon in his Department’s armoury?
Chris Huhne
We have discussed this with the DWP, and that would certainly be one route down which we could go. There would be dangers in doing so, however, not least because some of those on housing benefit find it hard to get into privately rented property. The simpler route that I have suggested will have a clear and predictable effect and will touch more than 680,000 homes in the private rented sector that are currently rated F and G. This is a substantial move.
Stephen Gilbert (St Austell and Newquay) (LD)
The Government are clearly announcing significant changes to improve energy efficiency in the private rented sector. Will the Secretary of State expand on what he would consider to be reasonable, in the context of his saying that any reasonable request from a tenant would not be refused? Also, why has 2018 been chosen, rather than 2016 as many outside groups have been calling for?
Chris Huhne
The clear idea here is to give a point at which we know people are going to be able to aim. It is not reasonable to introduce changes very rapidly when, for example, there might not be voids in property renting. We do not want to impose unnecessary costs, and it is therefore appropriate to set a date. Let us remember that the scheme does not begin until October 2012, and we want to set a date by which the private rental sector can deliver.
Andrew George
Before he took those last two interventions, my right hon. Friend had just reached the point about the memorandum of understanding between his Department and the Local Government Group. The Bill does not at present include any powers for local authorities, and some of us are concerned that if it is simply left to the private sector to generate the scheme, it might not be sufficiently targeted at the communities that need it the most. Should we not give a duty, or at least a power, to local authorities in this regard? Does the Local Government Group sign up to that kind of joint arrangement with the Government?
Chris Huhne
My hon. Friend needs to recognise that a substantial number of councils are very enthusiastic about the scheme, because of the benefits that it can bring in regard not only to energy saving but to local jobs. I personally think that we are going to see go-ahead councils trumpeting the work that they do in this area. They already have substantial powers to monitor and to ensure that this will happen.
Alongside the green deal provisions, the Bill also contains measures to enhance energy security. They include legislative changes to reduce the likelihood, duration and extent of gas supply disruption, and to protect consumers from very high wholesale prices. These new powers would sharpen the commercial incentives for energy companies to meet their contractual supply obligation during a gas supply emergency. The Bill also introduces a special administration regime for gas and electricity suppliers, which will help to maintain market stability and protect consumers.
Mr Mike Weir (Angus) (SNP)
The right hon. Gentleman is rapidly going through energy security measures, but clause 100 provides a power to change the boundaries of the continental shelf. According to Library research papers, the aim is to provide flexibility in managing the UK continental shelf resources. Will the Secretary of State give us more information about which parts of the UKCS he envisages changing, what resources are involved and what consultations have taken place with the devolved Administrations?
Chris Huhne
We have indeed had consultations with the devolved Administrations on all aspects of the Bill. One objective of this part of it is to ensure that the smaller and more difficult to get at fields, which have potentially higher costs, are nevertheless attractive and can be handed on to companies who will exploit them to the full. I hope that the hon. Gentleman will see from the Public Bill Committee that that is what we are trying to achieve.
Chris Huhne
I must make progress.
The regime will ensure that if a large supplier becomes insolvent, customers will be supplied with gas and electricity as cost effectively as possible until the company is rescued, sold, or its customers are transferred to other suppliers.
The Bill also includes an updated regime for third-party access to oil and gas infrastructure. Timely access to infrastructure on fair terms will be increasingly critical over the next decade. The discoveries now being made in the North sea are typically smaller than those in the past and need to make use of existing infrastructure where possible. The measures in the Bill will help us to secure the full economic benefits of our North sea oil and gas resources.
The Bill brings energy efficiency to homes and businesses across the country. It boosts the security of our energy supply, protects consumers and supports green technology. In setting up the green deal, it places us at the very forefront of the low-carbon drive—with an innovative, dynamic market delivering energy efficiency at scale, with no extra cost to the public purse.
Chris Huhne
I have come to my peroration and I have given way many times. I would like to continue.
Together with our reform of the electricity market, which will open up our energy portfolio and deliver the next generation of low-carbon electricity, the Bill represents a signal step towards a cleaner, greener future for the UK. In the scale of its ambition, this Bill is a statement of intent. It will help cut our carbon emissions, reduce our dependence on imported energy and protect the most vulnerable in society. This is our flagship policy on energy saving. This legislation provides for it, and this Government will deliver it. I commend the Bill to the House.
Mr Tim Yeo (South Suffolk) (Con)
I begin by drawing attention to my entry in the Register of Members’ Financial Interests.
I would very much like to find something nice to say about the speech that has just been delivered by the hon. Member for Hackney South and Shoreditch (Meg Hillier). I listened carefully for 25 minutes and I could not really say that it made any serious contribution at all to the debate. It was extraordinarily churlish in tone and very ill-judged. If ever there was an issue that cried out for a bipartisan, long-term and constructive approach, it is energy policy and climate change. That was wholly lacking from every sentence of the hon. Lady’s speech.
I warmly welcome the Bill, which is a big—and overdue—step in the right direction. I agree that some details remain to be filled in, but no doubt they will be addressed in Committee. I want to comment briefly on four aspects of energy policy that relate to the Bill. The first, of course, is energy efficiency. The Bill is especially welcome because of its intense focus on energy efficiency, which has always been the Cinderella of energy policy. I have always found that to be extraordinary—it is truly the no regrets policy. Even people who do not accept that climate change is a threat to the conditions of climate stability that have prevailed in the very recent history of our planet, thereby allowing one of the most recently arrived species, human beings, to proliferate in number and enjoy phenomenal and unprecedented success, and who see no advantage, either environmental or economic, in moving to a low-carbon economy can see the merits of greater energy efficiency, which has economic as well as environmental advantages. Those economic advantages accrue to households, rich and poor alike, and to businesses.
The green deal, which is the centrepiece of the Bill, is an excellent concept, even if there remain some areas of its implementation that we would like to know more about. The principle that energy efficiency measures can be financed through savings on fuel bills is a good one that is attractive to consumers. In practice, however, although most of the energy efficiency measures needed have a large and fast enough payback to meet the golden rule to which the Secretary of State referred-that instalment payments for the improvements will not exceed the cost of the savings made-there will be some measures that probably do not come into that category. I hope therefore that the Government will recognise—not necessarily in the context of the Bill, but soon—that some further incentive might be needed to improve all the housing stock in this country. I urge Ministers, as I have before, to explore more fully how discounts on council tax could be used to encourage faster progress to a comprehensive energy efficiency process. Those discounts could even be introduced on a revenue-neutral basis.
Chris Huhne
Powers for councils to do that are already on the statute book. A number of councils have introduced incentives through council tax, which have been very effective. We do not need new powers to do that, and I think that a lot of the most go-ahead councils will do it.
Mr Yeo
I am grateful to the Secretary of State for that point. I hope that means he will encourage the use of those powers in areas in which a significant number of households are not able to use the green deal measures as a sufficient mechanism and incentive to get the improvements that are needed. The same approach could be adopted for business premises by giving discounts on business rates.
Smart meters might also help. Helping consumers to understand the costs of energy and how they can better manage their energy consumption could be very valuable, but I hope that the Government will take a close interest in the roll-out of smart meters. There is a risk that the whole initiative might turn sour if the meters do not get off to a good start, if mistakes are made or if consumers become suspicious that they are going to benefit suppliers more than consumers.
Chris Huhne
My hon. Friend should recognise that the clause intends not only to provide more certainty for investors, but to recognise that there might need to be changes. Those changes would not necessarily be downwards, either; they might well be upwards, in circumstances that would have been set out clearly in an agreement. That applies to costs as well, so, far from saying that the measure would drive a coach and horses through our commitment to no public subsidy, I am saying exactly the opposite: it puts flesh on our commitment to no public subsidy for nuclear.
Martin Horwood
I did not say that the measure would drive a coach and horses through our commitment to no subsidy. I am sure that our commitment to it is absolutely intact, but the clause seems to insert a rather large crack in the edifice. The arrangement that my right hon. Friend mentions—in which the operator and the Secretary of State may agree to the necessity of some amendments, which might be upwards or downwards —is in the existing legislation. The difference between that and the clause under discussion, however, is that in the existing legislation the final decision rests with the Secretary of State, and in the clause before us the Secretary of State gives away that right in advance. That seems to represent poor negotiation.
To return to the situation in Fukushima—