Energy Bill [Lords]

Debate between John Leech and Andrew Percy

Wednesday 14th September 2011 Commons Chamber

[Andrew Percy (Brigg and Goole) (Con)]

I wish to speak to my amendment 28. I am delighted to hear the Minister say that he will respond to it later, which allows me to make my points before they are addressed.

I say at the outset that I think the green deal is a fantastic idea. As we went into the election campaign, I was very enthusiastic about it and I found a lot of support for the concept on the doorstep. I pay tribute to the ministerial team for bringing it forward so quickly and in such a concise manner. It is especially important because it provides for improved energy efficiency of our housing stock, which is vital to protect not only the environment, but residents. It will also have the benefit of reducing carbon emissions and hopefully, if it works correctly, insulate our residents and consumers against rising energy prices. If the “pay as you save” model works as envisioned, many more homes will be made much more energy efficient than could have been achieved under the previous schemes, whose limitations anyone who has served as an MP or a local councillor will have seen. This model is a great improvement.

Affordability is a massive issue for our constituents, as no doubt all of us have seen over the summer, with a large amount of correspondence in our postbags arising from various energy companies raising their prices. Citizens Advice has informed me and other Members that there has been a 78% increase in hits to its advice websites compared with a year ago. That clearly demonstrates how welcome is any measure that helps to bring down prices and encourage energy efficiency. It is in all our interests that the green deal works properly and effectively and is accessible to as many residents as possible on an equal basis.

There are some concerns—the Minister probably heard them in Committee—about the attractiveness of the green deal to certain sections of our constituents. The Great British Refurb campaign has said that although the green deal is attractive, mass demand will be contingent on a number of factors. I believe it surveyed about 2,000 people across the UK and found that whereas 56% of respondents saw the green deal as attractive, only 7% said that they would be prepared to take it up if a 6% interest rate applied. That is why my amendment focuses on interest rates.

We need to ensure that the interest rates are as low as possible to make the scheme as attractive as possible to as many people as possible. That is what amendment 28 would allow. The advantage of setting a single scheme interest rate is that it will stimulate demand from as many people as possible while forcing green deal providers to compete directly for customers based on the cost and quality of the energy efficiency measures and installation, rather than on the headline interest rate of the finance. I believe that it will also help to increase transparency and empower consumers who would find it much easier to compare different offers and the services provided by different companies.

[Mr John Leech (Manchester, Withington) (LD)]

Does the hon. Gentleman agree that the people most likely to be affected by high interest rates are the poorest, so having a level playing field will ensure that everyone gets the same deal rather than only those who can afford it getting the best deal?

[Andrew Percy]

I thank my hon. Friend. I am aware of his work in this area. He has said exactly what I am going on to say. It is important to ensure that the scheme is as attractive as possible to the poorest households, which, as he knows, are at the greatest risk of fuel poverty.

The alternative to a single scheme interest rate is risk-based pricing. In my view, green deal finance providers must not be able to price green deal finance packages based on the perceived default risk of the original occupier, given that the work done will stay with the property probably long after that household has moved on, sold up or moved to a different private rented property. It would be unfair and illogical to allow that to happen, given that there is no way of predicting the default risk of any future occupants. We cannot price with accuracy on that basis.