Energy Bill [Lords]

Lord Barker of Battle Excerpts

Wednesday 14th September 2011 Commons Chamber

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following: new clause 8—Support from the Green Investment Bank

‘(1) The Secretary of State must, within six months of this Act receiving Royal Assent, report to Parliament with proposals on the ways in which the Green Investment Bank could maximise the take up of the Green Deal.

(2) The report required by section (1) shall include an examination of the extent to which action taken by the Green Investment Bank could—

(a) reduce interest rates linked to the repayment of Green Deal loans and the impact this may have on consumer demand;

(b) support the research into and development of technologies which could increase household energy efficiency.’.

Government amendment 29.

Amendment 26, in clause 3, page 4, line 29, at end insert—

‘(j) Prohibiting the sale of products and services during Green Deal assessment and installation visits which are not eligible for Green Deal financing unless those products are recognised as being able to reduce household CO2emissions.’.

Government amendment 30.

Amendment 49, page 5, line 2, leave out ‘may’ and insert ‘will’.

Amendment 28, in clause 4, page 6, line 16, at end insert—

‘(9A) The ninth condition is that the green deal provider meets any requirement specified in the framework regulations as to the level of interest charged on the plan’.

Amendment 50, page 6, line 16, at end insert—

‘(9A) The ninth condition is that the green deal provider meets any requirement specified in the framework regulations to enable the consumer to compare recommendations and estimated costs and savings.’.

Amendment 27, in clause 5, page 6, line 34, at end add—

‘(e) a term permitting the improver to specify whether the instalments will be paid via his electricity bill or his gas bill;

(f) a term permitting the improver to change his decision taken pursuant to paragraph (e).’.

Government amendments 31 to 34.

Amendment 45, in clause 18, page 15, line 4, after ‘may’, insert ‘and may not’.

Government amendment 36.

--- Later in debate ---

[Gregory Barker]

It is a pleasure to be back in the House to debate this historic Energy Bill one last time before it moves back for the last time to the other place. To better inform the debate on the amendments before us, I shall update the House briefly on the progress made over the summer on a number of issues that were raised in Committee.

We had a lively discussion on measures eligible for green deal finance. That was led by the hon. Member for Ogmore (Huw Irranca-Davies), who championed the power shower. I committed to an early refresh of the Government paper to take into account queries about our position on water efficiency and recommendation of measures outside the green deal. That has been done. After our exploration in Committee of the detail of the energy company obligation—an important part of the Bill—I agreed that my officials would meet the hon. Member for Southampton, Test (Dr Whitehead) to discuss our brokerage proposal. That has been done.

The private rented sector was another important subject of debate—fruitful debate, I hope—with contributions from the hon. Member for Wells (Tessa Munt), among others. I shall say more about that later. My officials are setting up a new workshop to look specifically at how the provisions can best work with older buildings, which present a challenge to the green deal, particularly older historic buildings.

Lastly, I am pleased to report progress on energy efficiency for service family accommodation, following the excellent suggestion of my hon. Friend the Member for Richmond Park (Zac Goldsmith). My officials have had a number of meetings with their counterparts in the Ministry of Defence and, having agreed the shared objective of improving the energy efficiency of accommodation, are investigating the best ways to achieve that. As I mentioned in Committee, it is a complex problem owing to the unique nature of service family accommodation. None the less, I am optimistic that a solution will be found to satisfy the House and, most importantly, service families.

We have a large group of amendments, not all of which were tabled by the Government. I propose to speak to the Government amendments in my opening remarks and address the other amendments in my closing remarks, rather than pre-empt them before the Members who tabled them have spoken. That should make for a more orderly debate. There is nothing more annoying than having one’s arguments addressed before one has even had a chance to make them to the House.

The Government amendments are largely technical. Government amendments 31 to 34 cover disclosure. They enable the Secretary of State, if necessary, to require a green deal provider to produce a further document containing information about the green deal plan as part of the confirmation process. This would be in addition to the energy performance certificate. Both documents would then have to be disclosed to future bill payers. These amendments therefore enable the Secretary of State to require, if necessary, additional information about the green deal plan to be given to future bill payers as part of the disclosure process. This small amendment responds to the concerns of stakeholders and the concerns that were expressed in Committee about consumer protection, particularly in the rented sector. We have moved to tighten that up.

On the transfer of payments, Government amendment 29 is a technical amendment that makes it clear on the face of the Bill that when collecting payments, energy companies are acting in an agent and trustee capacity for the green deal provider, which, in many cases, will not be the energy company itself. This is in line with the policy that I set out in Committee. Liability for green deal payments should sit on the balance sheet not of the energy companies, but of the green deal provider.

Without this clarification, there is a risk that payments received would be the property of the energy company until they were remitted to the green deal provider, which might enable an administrator to claim green deal payments in the event of energy company insolvency. Through the amendment we can minimise this risk and, as with all risk minimisation in this process, help to push down the cost of green deal finance.

On assessment and installation, I shall deal with a number of Government amendments relating to the role of professionals operating under the green deal, and consider them with amendment 26, tabled by the hon. Member for Brighton, Pavilion (Caroline Lucas). Amendment 26 and Government amendment 30 relate to the role of professionals and the importance of protecting customers, while allowing the green deal to thrive. I apologise for breaking the rule that I said I would abide by in my opening comments, but this makes more sense, so I hope the hon. Lady will forgive me. I am grateful to her for raising the issue of cross-selling.

It is important to consider how and when green deals are likely to take place. Many will come about as a result of other activities, such as the installation of a new kitchen or boiler in a home. We do not wish to limit these trigger points. They will often be important opportunities to promote the green deal alongside other renovations or improvements that are happening in the home, which the householder may not have considered ahead of planning for a new bathroom, kitchen or other improvement.

Our market research has shown that customers would welcome and are therefore more likely to trust the involvement of local authorities, community groups and third sector organisations when thinking about entering into a green deal. This was a recurring theme in Committee, when we all agreed that the involvement of local authorities and community groups was vital to ensure the successful large-scale roll-out of the green deal. Such organisations may see participation in the green deal as a way of making people aware of other valuable services—for example, loft clearance for the elderly is an essential prerequisite for putting in insulation. Some voluntary or community groups might offer such a service in some areas at no cost or at a reduced cost.

A blanket ban could reduce the willingness of these organisations to play a full and positive role in the green deal. This could be especially detrimental to vulnerable groups such as the elderly, who are most likely to benefit from energy efficiency. It could also affect the ability of enthusiastic volunteers and community groups to encourage their neighbours by knocking on their door, sharing their enthusiasm and urging them to join in community projects. Members of a community or neighbourhood group are more likely to go round and speak to their neighbours individually, rather than e-mailing or writing to them. We are concerned that a blanket ban could be detrimental.

Our approach is therefore to be mindful of the points raised by the hon. Member for Brighton, Pavilion. She is right to identify the need for strong consumer safeguards, but we believe the right way forward is to build on existing regulations that protect customers, and set out a clear enforceable framework within the green deal code of practice for such activities. This will be clearly set out in our consultation and we will seek further views on this important aspect then.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Does the Minister agree that there is a world of difference between a community group knocking on a door in order to clear a loft so that loft insulation can go ahead, and selling wallpaper, carpets and sofas, which was the example that the Minister gave in Committee? Would he come some way towards supporting my amendment, given that it clearly says that it is permissible to knock on people’s door if the aim is to reduce CO₂, but not if the aim is to sell a sofa?

[Gregory Barker]

I am sympathetic to the thrust of the hon. Lady’s amendment, but it is not illegal to sell things door to door. There is already a code of practice for that, but we do not live in a country where it is illegal for people to sell products door to door. That is already a fact of life and we do not propose to alter it; however, we do think there should be a strong code of practice. However annoying and regressive such practices may be, trying to address them outside a code of practice—that is, through blanket legislation—could affect not just loft clearance services, but the ability to go door to door, just as we as politicians go door to door trying to convince people of our ideas.

--- Later in debate ---

[Gregory Barker]

Yes. I have a great deal of sympathy with that point. We believe strongly that high-pressure sales tactics, which cold callers sometimes use illegally, should be prevented. When I referred previously to cold calling by assessors, that is the kind of activity to which I was referring and is, I think, what the hon. Member for Brighton, Pavilion was thinking of too.

[Barry Gardiner (Brent North) (Lab)]

Will the Minister also ensure that when the new measures under the green deal are being touted door to door, there will be no opportunity for the simultaneous selling of energy?

[Gregory Barker]

That is a good point. We certainly do not anticipate that assessors would be able to go door to door, give an assessment and then have people sign up there and then. There will be a cooling-off period. We considered in Committee whether an assessor could also be a representative of a commercial organisation or company. We came to the view that that could be possible, but that there would have to be a clear distinction between the roles they performed. An assessor would have to make their assessment on a uniform format and to the same standard right across the industry, so that it could be taken to other providers of green deal services. We would encourage all consumers to get a competitive quote before committing. If consumers wish to go with the first person who knocks on their door or the first person whom they invite in to make an assessment, it is obviously their right to do so. However, we are building in apparatus to ensure that that is not encouraged.

[Barry Gardiner]

I am grateful to the Minister for giving way again; he is being extremely generous. Will he confirm whether he believes it would be possible under the legislation for an assessor, who is there to give impartial and independent advice about one’s energy consumption, also to be a representative of an energy company and to engage in the selling of energy to the consumer? It would be dangerous if the legislation permitted that.

[Gregory Barker]

Is the hon. Gentleman suggesting that an assessor would knock on someone’s door, undertake a green deal assessment and, at the same time, encourage them to switch to another tariff? [Interruption.] He is suggesting that they would switch hats and do that. I do not expect that to happen, not least because the assessment must be independent. However, there can be a degree of cross-selling, provided that the independent assessment is truly independent. However, I shall clarify that when we come to the technical detail of the Bill. I understand that what the hon. Gentleman describes is possible, but energy company practice would be covered by the regulations, such as the code of practice. We shall have an opportunity to look at the detail of what they can offer under the code of practice, but I would expect that type of activity to be strongly regulated.

However, it would not be impossible—indeed, it would not necessarily be a bad thing—for people to be able to switch to a better tariff at the same time as they were considering their energy usage. We are encouraging consumers to switch. Far too many families in this country are on the wrong tariff and do not take advantage of the cheaper tariffs that are available, often from their own supplier, particularly by switching to a direct debit. I would therefore not want to rule out the possibility of a consumer taking a green deal assessment and, at the same time, switching to a cheaper, more appropriate tariff. Indeed, that might seem quite sensible, but it will be covered by the code of best practice.

[Barry Gardiner]

Although I agree that it should always be open to people to switch to a cheaper tariff, I am sure that the Minister would agree that energy advisers operate in an independent capacity and therefore engage with the consumer in a capacity of trust. Will he therefore ensure that if any energy adviser offers advice about switching tariffs, they will have to offer independent advice and will not be able to give it as a tied agent? Otherwise, there will be a perverse incentive for the energy companies to use a new doorstep sales technique, which will involve getting through the door as an independent adviser, switching hats—which will not always be obvious to the consumer—and then selling their own product.

[Gregory Barker]

I will need to consider that more carefully, because we accept that assessors can be part of commercial organisations. It is not a requirement of the green deal legislation—we went through this in detail in Committee—that they have to be totally impartial and that someone else should act as a salesman. For example, gas boilers have to be fitted to the high and rigorous standards set out in CORGI guidelines, and that work must be done independently. When we take our cars for a service and MOT, that must be done impartially and to a certain standard; yet at the same time, those doing that work are selling a service. Indeed, there are several examples of where it is quite possible for professional bodies to undertake professional services independently, transparently and to a uniform format, but where at the same time they have opportunities to sell.

Indeed, that is part of the attraction of the green deal. There is a quid pro quo at work: we are using the power of the market to scale-up the deployment of energy efficiency. Although we hope to go for an ambitious and large-scale eco-subsidy to work with the green deal, ultimately we are talking about a private sector proposition. We are creating a new market, but the investment that will drive take-up will come from the private sector, and obviously those making that investment will be attracted by more than just lagging. That is a good thing, because it will drive innovation and drive prices down as it increases competition, opening up energy services from the big six companies to a new array of retailers and, we hope, small and medium-sized enterprises and local groups. Competition will be good, but for competition there must be something for people to compete for. I hope that that reassures the hon. Member for Brent North (Barry Gardiner), but I will perhaps come back a little later to the point that he has raised.

Government amendment 30, which relates to the impartiality of green deal assessors, is a result of a commitment I made in Committee, given that so many Members were seeking reassurance on this point. It clearly sets out our intention to ensure the impartiality of the assessment process, and I urge the hon. Member for Brent North to look at it closely. We believe that it should be possible for assessors to be employed by a green deal provider, allowing for a more holistic service for consumers, but that should not interfere with the impartiality of the assessment process. The code of practice for assessors will therefore include robust requirements for green deal assessors to act in an impartial manner and declare to consumers any links that they have with green deal providers—or, indeed, energy companies. That is vital in order to retain consumer confidence in the information that they are being provided with.

[Andrea Leadsom (South Northamptonshire) (Con)]

The green deal seems to be a financial services product, and there will be similarities between selling that and, say, selling an ISA, rather than double glazing. This process will certainly involve selling a financial services product. Can my hon. Friend reassure me that, if the proverbial little old lady who lives alone is sold a product with a usurious interest rate, she will have recourse to the financial services ombudsman? Also, is there any intention for the Financial Services Authority to regulate the funding providers?

[Gregory Barker]

As this is defined as consumer finance, it will be the Office of Fair Trading, rather than the FSA, that will regulate this market. My hon. Friend makes a good point, however. It is our intention that there should be robust consumer protection, and we expect that the guidelines will be improved and refreshed to reflect the green deal. We will also expect the Office of Fair Trading to take a robust line from the very start, to ensure the integrity of the selling, and to ensure that any mis-selling is stamped out at the outset and full compensation is paid to any victims.

[Mr Mike Weir (Angus) (SNP)]

One of the problems with energy mis-selling was that it was a long time before many of the cases came to light. Does the Minister have any thoughts on ensuring that the standards that are to be imposed on those selling green energy are regularly inspected to ensure that any problems can be detected at an early stage, rather than finding a huge range of problems several years down the line, which is what happened following the doorstep mis-selling in the past?

[Gregory Barker]

I can assure the hon. Gentleman that we will keep all elements of the green deal under close review. We are embarking on a really new, large-scale proposition; there is nothing quite like it anywhere in the world. We are pioneering a new model for energy saving, at scale, and as a result we will need continually to monitor all aspects of it, especially those relating to selling and mis-selling. We will need to ensure that the legislation that we have put on the statute book, the codes of practice that underpin it and the secondary legislation that we will introduce in due course before the launch of the green deal remain pertinent. If we identify any areas in which we think improvements can be made, we will not hesitate to make them.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

Given the Minister’s response to the question from the hon. Member for South Northamptonshire (Andrea Leadsom), it would be useful to know whether there have been any developments over the summer following our discussions on the golden rule. The distinction between the green deal and other financial products is that the cumulative cost of the rate of interest and the cost of the installation should not exceed the amount that people are currently paying on their energy bills. We discussed that in Committee, and it would be useful to know whether there have been any developments on that front.

[Gregory Barker]

There has not been any substantive development on that because we have not yet undertaken the consultation on the secondary legislation that will bring in the regulations. We have begun to hold discussions with stakeholders, and we will consult on the detail of the golden rule because it forms an important part of the measures, but there was no substantive movement over the recess.

[Barry Gardiner]

The Office of Fair Trading will regulate the contracts. Has the Minister been in contact with his counterpart in the Department for Business, Innovation and Skills to check on the reduction in the number of officers who are able to enforce the measures? The process will put a considerable new responsibility on to the OFT.

[Gregory Barker]

I have not raised the matter in person, but my officials are working closely with a number of Departments—including, importantly, BIS—on that important element of the green deal proposition. We are satisfied that the OFT will have sufficient resource properly to monitor the green deal, and we will keep that under review as the green deal rolls out.

I will deal now with new clause 10 and the consequential amendment 36. The new clause has been tabled to replace the Opposition’s amendment on green deal apprenticeships, which we accepted in Committee—a great personal victory for the hon. Member for Liverpool, Wavertree (Luciana Berger). As I said at the time, it is important that we take expert drafting advice on any amendment to a Bill, however well intentioned it might be. I reiterate that we fully support the creation of apprenticeships in green deal-related trades, and we will be happy to report to Parliament on our progress, as the hon. Lady requested. We believe that the new clause captures the spirit of her amendment; it simply clarifies a couple of technical matters regarding the exact nature of the new obligation. It requires the Secretary of State, before making the first framework regulations, to report to Parliament on the steps that he has taken to encourage green deal installation apprenticeships. I hope that that satisfies the hon. Lady.

Taken together, these are important measures in what will be the most ambitious home improvement programme since the second world war, and I hope that the whole House will support them. There are other amendments in the group that I have yet to address.

[Ian Lavery (Wansbeck) (Lab)]

Getting back to the financing of the green deal, is the Minister aware that 1.9 million people are in arrears with their energy bills, and that that number is increasing by the day because of the increasing price of energy? Is he also aware that 5.5 million people are living in fuel poverty, and that that figure is also rising by the day because of the problems with the energy companies? Will not those people who have been unable to pay their bills have difficulty in gaining access to finance for the green deal?

--- Later in debate ---

[Gregory Barker]

Of course they will have access, although it might vary in individual cases—I cannot give a universal commitment. The hon. Gentleman is right to raise fuel poverty, and in the Adjournment debate this evening called by his hon. Friend the Member for Glasgow North West (John Robertson) we will be able to debate the matter more specifically. Importantly, for the most fuel-poor there will be the energy company obligation. We fully recognise that a significant number of families will simply not be able to afford to pay for the green deal interventions through paid-for savings, because if they cannot afford to spend the money on heating in the first place, they will not capture the savings. We will therefore ensure that the very substantial energy company obligation will be directed towards meeting the needs of those vulnerable consumers.

[Ian Lavery]

The energy company obligation does not wholly focus on the people I mentioned, though. My worry is that the 1.9 million people in arrears and the 5.5 million people in fuel poverty—the poorest and most vulnerable, many of whom are elderly—will not be able to get finance under green deal. I am worried that that will create more poverty and do great harm to those who need help the most.

[Gregory Barker]

One or two, or small numbers, may fall through the net, but by and large we have to think about how the green deal will be implemented. Many of the families and individuals the hon. Gentleman is worried about will be captured by community roll-out and street-by-street roll-out of energy efficiency improvement schemes. We have the ECO so that we can offer whole communities the same service on an equal footing, regardless of their ability to pay. We will have to think about how to ensure fairness, because we want to include people living in isolated communities or those living in a relatively prosperous areas in a detached home, perhaps on their own, but I think the vast majority of the types of vulnerable consumer the hon. Gentleman is worried about will be captured by the whole-community approach that we anticipate will be taken up by many local authorities in street-by-street approaches. We need the ECO to be able to offer insulation and home improvements to whole streets, regardless of income, to ensure that we do these things at scale. I do not pretend that we have the perfect solution, but I believe that what we have is by far the best approach in comparison with anything tried before.

With that, I will finish. I will respond to the other amendments raised by hon. Members when I wind up the debate on this group.

[Luciana Berger]

We are delighted that the Government are keeping the amendments proposed in Committee. We accept the proposals to make the provisions more workable, as the Minister set out.

--- Later in debate ---

[Gregory Barker]

It is not correct to compare the two schemes. The German scheme consists of a normal personal loan, secured in the normal way. It must be applied for through the banks, and in the case of a successful application the interest rate is subsidised. That is the nub of the programme, which I have discussed in Berlin with the German environment Minister. There is a great deal more to the green deal, which involves substantial subsidy not of the interest rate, but of the interventions themselves. We expect that most solid wall installations will attract a substantial element of subsidy, and that other interventions for fuel-poor households and more vulnerable customers will also be able to attract subsidies. Customers may pay a competitive interest rate, but they will be doing so on a significantly subsidised final bill, and I would have thought that it was much better to pay a competitive interest rate on a smaller bill than a subsidised interest rate on a higher bill.

This is a fundamentally different proposition, therefore. The German scheme simply involves subsidies of existing loans. What makes the green deal unique is that it is not a personal loan in the way the German scheme is. It will be secured against savings on future energy bills. It will not add to the personal debt of the individual who benefits from the installations, and it will remain with the home. There is also the golden rule. I apologise for making such a lengthy intervention, but it was important to put that on the record.

[Caroline Lucas]

We discussed this matter in Committee, so I know that the Minister and I do not agree. I still do not think that the measures under the green deal will be significantly subsidised. I agree that we have the ECO pot of money for the fuel poor and hard-to-treat homes, but the figures that have been discussed in respect of the ECO are about £1 billion to £2 billion, which is a small amount given that we hope there will be mass take-up of the green deal. Most people who take up green deal provisions will therefore not feel that they are being significantly subsidised. I still do not agree with the Minister that this proposal will in its current form be attractive enough.

--- Later in debate ---

[Barry Gardiner]

The shadow Minister is absolutely right that there has yet to be clarity on the issue, and clarity is vital. If we are to meet the targets that the Committee on Climate Change has set and the budgets, we must know that sufficient funds are available for the ECO to meet those targets. At present, my analysis and other analyses are quite clear that up to £22 billion is required, although an absolute cap of £1 billion might be provided under the ECO. As my hon. Friend suggests, that £1 billion might prove not to be a full £1 billion after all.

On new clause 9, the Secretary of State for Energy and Climate Change has estimated that the green deal will lead to employment in the sector increasing from 27,000 jobs currently to something approaching 250,000 jobs by 2020. That involves the creation of 27,875 jobs every year from the start of the green deal until 2020. Double the number of jobs that currently exist must be created every year. We heard earlier at Prime Minister’s Question Time about the latest unemployment figures and particularly the problems of youth unemployment. Of course, if those jobs were created, we would all welcome them, but there must be a doubt about these provisions.

In opposition, the Prime Minister called for a revolution in skills and training, so that the skills system responds far more effectively to the needs of individuals and businesses in a greener economy, but the recent green economy road map recognises the importance of that and refers to the introduction of new skills for a green economy and the grouping of sector skills councils to help businesses understand the changing skills requirement. It is crucial that that new grouping of sector skills councils supports the development of the additional 27,875 jobs every year between now and 2020. It would be of considerable interest to the House if the Minister explained what financial provision will be made to the sector skills councils to enable that sort of expansion—a tenfold expansion—to take place in the next nine years.

[Gregory Barker]

I should like to start by thanking the hon. Member for Brighton, Pavilion (Caroline Lucas) for tabling amendments 49 and 50 and my hon. Friends the Members for Manchester, Withington (Mr Leech) and for Brigg and Goole (Andrew Percy) for tabling amendment 28.

Amendment 49 would require that any energy efficiency services provided or products sold by green deal participants, in addition to those paid for with green deal finance, should be subject to the green deal regulatory framework. It is important to note that the green deal is an innovative form of finance agreement that is attached to the meter and therefore passes between bill payers. I think that we all understand that. So it needs specific protections, which are not necessarily relevant to those who do not take out the green deal.

I should like to assure hon. Members that we intend to require customers to be made fully aware of the difference between offers that fall under the green deal scheme, with all its specific safeguards, and those that fall outside. However, many of the forms of mis-selling that rightly concern the House can be prosecuted already under existing general consumer protection legislation. We will not accept companies using green deal accreditation as cover for less appropriate goods and services.

Amendment 50 would ensure that recommendations and estimated costs and savings are clearly and transparently communicated to the consumer as part of the green deal plan, thus enabling customers to compare offers. I should like to reassure hon. Members that we intend to require green deal providers to set out clearly how the proposed savings and costs meet the golden rule principle, as enabled by the power in clauses 4 and 5. I urge hon. Members to look specifically at clause 5.

In addition, the Consumer Credit Act 1974 will apply to domestic green deal plans in full, bar a few essential amendments, thus ensuring robust consumer protection, and it already regulates the provision of information to consumers who enter into credit arrangements.

[Caroline Lucas]

I wonder whether the Minister can clarify things a little further. On amendment 50 and comparability, is he saying that there are some guidelines somewhere that will ensure that many different green deal providers will be required to present the savings that are likely to accrue from investing in a green deal package in a similar way, so that they are genuinely comparable? On amendment 49, if a green deal assessor goes in and after a big assessment the householder decides not to take a green deal finance package but to pay up front, will they be unable to access things such as an advice line?

[Gregory Barker]

Such people can certainly access the advice line. If people choose to pay in full and not to take finance agreements, they will not be any less covered by the accreditation of all green deal service providers and the protection and warranties that go with all green deal products. We must not forget that the green deal is not just about financial arrangements where consumer protection kicks in. We will set out in further detail in secondary legislation, which hon. Members will thoroughly scrutinise, and go to great lengths to ensure that there is a rigorous consumer protection element to the accreditation of all services that are green deal applicable. That will apply whether or not they are financed by consumer credit. Obviously, all products must be specified and approved for use under the green deal to ensure that they meet the golden rule.

[Barry Gardiner]

I welcome the fact that the Minister has said that customers and consumers will be protected by consumer credit legislation, and I welcome the fact that robust secondary legislation outlining further protections will be put in place. Will he tell the House at this stage whether he believes that consumers will be protected by the legislation that applies to the financial services industry so that an adviser can act either as a tied agent or as an independent agent, but not mix and match the two roles—at least not in the same consultation? If that protection is not provided by existing legislation, will he ensure that it is introduced in the secondary legislation to which he referred?

[Gregory Barker]

We will have to disagree on this. I understand the protections that the hon. Gentleman is trying to insert into the Bill, but I take a slightly more optimistic view of the potential both for introducing competition in the green deal process and for home improvement.

The biggest driver for take-up—and this is different from the German experience—is not concern about climate change and, surprisingly, it is not even concern about saving money on energy bills. The consumer research that our stakeholder forums have commissioned is revealing, because the majority of consumers said that the biggest factor in their taking up the green deal would be a desire to make their home nicer. That may seem counter-intuitive and surprising, given the high cost of energy, but more than half of respondents indicated that home improvement was the driving force. We need to harness that, and it is little wonder that people failed to respond to energy companies that were not in the home improvement game. They will be responsive, however to new entrants to the market such as B & Q, Marks and Spencer, John Lewis and so on, which excel in offering aspirational consumer propositions. Many people will seek to improve their house, and see no contradiction in making improvements by purchasing new wallpaper and carpets while, at the same time, undertaking energy improvements. I regard this not as an either/or conflict, but as an opportunity to ride on the back of that motivation. Rather than offering a hairshirt proposition, we should harness the inherent instincts of the British public to improve their home, and make it both nicer and warmer.

I welcome the arrival in the market of a host of new players offering additional propositions for home improvement that fall outside strict energy efficiency measures, because that will draw in more people and catch their interest, but—and it is an important but—we must ensure that the integrity of the independent assessment is upheld. We must ensure that there is no inappropriate cold calling or hard selling in the home, which is why we will thoroughly review the measures that are in place. If the evidence shows that they are not sufficient, we will introduce strong codes of practice and ensure that assessments are thoroughly independent. However, I do not share the pessimism of the hon. Member for Brent North (Barry Gardiner), or his reluctance to introduce the two measures alongside each other. As long as that is done in a thoroughly transparent and responsible way, it could be a benefit, rather than a negative.

[Barry Gardiner]

The Minister has said that in his view the green deal is market driven—that is a fundamental difference from the German scheme—so investment by commercial companies will propel the scheme forward. He is telling the House that, in a sense, it is driven principally by the profits that those companies will make. It is not driven by the imperative of increased energy efficiency, or by the need to meet the carbon budgets set by the Committee on Climate Change, or by the need to address fuel poverty. It is driven by the profit motive. I am willing to capture the drive that the market can bring, but the focus of the scheme, as set out by the Minister, is fundamentally wrong.

[Gregory Barker]

I know that the hon. Gentleman is not quite an unreconstructed, planned-economy socialist, but he is confusing means with ends. The purpose of the green deal—our starting point and our end point—is to meet our carbon budgets and fulfil our legal and statutory obligations under the Climate Change Act 2008, which was introduced with the support of Members in all parts of the House. For decades, we have singularly failed to drive effective home energy efficiency and, come to that, energy efficiency in the business and industrial sectors. Given the size of the deficit and the burden on the public purse, we are living in cloud cuckoo land if we imagine that we would drive down carbon emissions and transform home and business energy efficiency if we left the private sector untapped. We will achieve our objectives only if we harness effectively the power of the private sector. Of course, people will make profits, but provided that that is transparent and fair, I do not have a problem with it. It is called job and wealth creation, and spreading that widely. We do not have enough wealth creation in the UK—we need more—and the green deal will be an incredibly important vehicle in helping us to rebalance our economy and making us more efficient.

We should not ignore that, but it does not detract from the fact that the central aim of the legislation is to allow us to meet our stretching carbon reduction targets. The coalition is absolutely committed to doing so, and the green deal is the means to that end, so we should not confuse the two as the hon. Gentleman did.

Amendment 28, which was tabled by the hon. Member for Manchester, Withington and my hon. Friend the Member for Brigg and Goole, seeks to ensure that we have powers to place restrictions on interest rates that can be offered as part of the green deal plan. I understand the concerns that my hon. Friend the Member for Brigg and Goole articulated in his thoughtful speech, but I can assure him and other hon. Members that clause 5(1)(b) already provides the power—we accept the point that the hon. Gentleman is making—to limit interest rate structures that can be applied to green deal plans. It will not be possible to create a valid green deal plan, unless it specifically complies with the conditions contained in, or made under, clause 5.

The green deal is a market mechanism, and the golden-rule principle will create a natural incentive to drive down costs, so the Government do not intend to place restrictions on the level of interest charged. However, we are considering broader restrictions to ensure that green deal plans are equitable not just for the first but for all subsequent bill payers. This could mean limiting interest rate structures offered to domestic customers to those with the greatest likelihood of the golden rule being met in the first and subsequent years, and we will be consulting on what is quite a complicated area, not just with stakeholders in the financial services sector, but with all concerned stakeholders.

I would certainly welcome the thoughtful input from Members on both sides of the House into this important area of how we ensure we get the most competitive interest rate for the consumer. I invite my hon. Friend the Member for Brigg and Goole, the hon. Member for Manchester, Withington, and other hon. Members who have spoken in the debate and expressed legitimate concerns, to meet my officials so that we can ensure that we take notice of their concerns and take advantage of some of their ideas. I hope that I have been clear throughout proceedings on the Bill that we do not have a monopoly on the best ideas. As we develop the fine detail of the green deal, I am more than happy to work with them.

We recognise that the interest rate is only one of the drivers of affordability. We do not want unnecessarily to focus just on the interest rate. The actual cost of the products, particularly things like solid wall insulation, will be a key driver. Replacement windows are in a very exciting place. For the first time, because of technical innovation and the increased thermal value of new glazing, and because prices are coming down, we can anticipate that we will be able to include glazing in windows. Consumer-facing home improvements will come within the remit of the green deal, and make it much more attractive. The green deal will not just be about out of sight, out of mind, hidden interventions in a household, but about things that people will really value on a day-to-day basis.

[Ian Lavery]

Will the Minister give a categorical guarantee that anyone who cannot pay the green deal part of the bill will not have their supply disconnected?

[Gregory Barker]

The hon. Gentleman’s question is predicated on a misunderstanding. It will simply not be possible for any consumer, poor or rich, to disaggregate their bill payments for the green deal, other charges and the energy consumed. There will not be that opportunity to withhold green deal payments, just as one cannot refuse to pay transmission charges or other levies that are included on the consumer bill. That will not be an option for them.

[Caroline Lucas]

Will the Minister confirm that he is still leaving the door open to using the green investment bank to support and subsidise the interest rates? I am not clear what he is saying specifically about the green investment bank.

[Gregory Barker]

That is a very important point. I do not rule it out completely. It is unnecessary to do so at this stage. But we do not anticipate that it will be necessary, and it is certainly not part of our planning and budgeting. Rather than the green investment bank subsidising interest rates at the consumer end of the journey, it is more likely that it will play a role in helping to pump-prime the liquidity in the bond market when we first see companies taking these aggregated packages of green deal finance and seeking to offer them into the bond market as new securitised products. In the long term, there is an exciting future, and there will be a lot of strong institutional demand for such products.

The conversations that we have had with the largest city institutions and banks have been encouraging and we have set up a working group. Short-term interventions to aid initial liquidity are more likely to be a fruitful use of green investment bank money. Although the coalition Government have promised £3 billion, substantially more than anyone anticipated at the general election, to fund this new important piece of financial architecture in the City of London, which will make a substantial difference to our economy and drive green growth, that money can be spent only once. The key to the green investment bank priorities must be to address market failure. We cannot keep spending that money time after time. There are many demands on the green investment bank funding, and if the market, as we believe, is capable of supplying competitive interest rates in a way that is affordable to most consumers, supported by the ECO subsidy, it would be quite wrong to use green investment bank money when we clearly need to prioritise other areas of the low-carbon economy as well.

Likewise, as the hon. Lady can imagine, DECC is pushing for an ambitious ECO. This is a huge opportunity that is extremely cost-effective, and in terms of the hierarchy of spend on the low-carbon transition, the ECO represents incredibly good value, particularly compared with forms of low-carbon generation; but, again, the ECO comes out of consumers’ bills, and there is a balance to be struck. We cannot keep pushing up the ECO, because ultimately that will start to become regressive. When the coalition came into government, we took steps to reduce consumers’ bills by taking off the cost of funding the CCS programme and taking it into general taxation. We took measures to ensure that the renewable heat programme would be funded not through consumers’ bills but out of general taxation, and that is a progressive measure. We have to ensure that we get the right balance and have an ECO that is good for consumers and does the job. We cannot treat it as a magic pot of money. It is paid by every energy bill payer, and more than ever, as world energy prices go up, they are scrutinising bills to ensure that they are getting good value for money.

[Dr Whitehead]

When the Minister says that he is pushing for a generous ECO, does he mean that he is pushing the Treasury to raise the cap that it has set on levies; that he is trying to ensure that the ECO is as generous as possible within the cap; that the ECO should remain outside the cap and therefore can be as large as he might wish to make it; or that the cap overall ought not to be referred further to the Office for National Statistics for a determination on whether the ECO is inside it at all?

[Gregory Barker]

All those issues are the subject of a constructive and thoughtful conversation between my Department and the Treasury.

[Luciana Berger]

The Minister has said that interest rates are just one element, and we have argued that it is integral and crucial to whether the green deal will deliver, not only because of the affordability of products—if the interest rate is 8% or more, very few products will fall within the golden rule, and if it is 6% or more, a few more will be added but some of the more ambitious measures would not be included—but most importantly because of public uptake. According to the Great British Refurb campaign study and polling of the public, just 7% of the public said that they would take up the green deal if the interest rate was 6% or more. The Government will not meet their ambition of reaching 14 million homes by 2020 if the interest rate is too high.

--- Later in debate ---

[Gregory Barker]

There will be a commercial consideration involved, because those matters are not lost on participants who want to carve out a large piece of what will be a substantial market. The interest rate is only one element of the cost. If the product bought is expensive, it does not matter if the interest rate is low. If a product is £1,000 and one is asked to pay an interest rate of 7%, would that be preferable to a product that costs £600 on which one pays 8%? There are many more variables than the absolute interest rate.

Customers will be looking for the absolute savings, taking into account the overall desirability of the package that they are being offered. The industry and new entrants will be looking at which of the levers they are most responsive to. I have no doubt that some companies will offer zero interest rate propositions. It is already possible to grab a sofa in the market and pay nothing until Easter or bank holiday Monday next year, and even then it may be with 0% finance. However, we know, because we are not stupid, that we invariably pay more in such offers than the actual price being offered. A sophisticated blend of different costs will be taken into consideration.

--- Later in debate ---

[Luciana Berger]

We are obviously aware of the stakeholder groups and the consultations going on in DECC, but as far as I am aware only one or two consumer groups are involved, and the majority of organisations taking part in those discussions are businesses. None of the businesses I have spoken with has indicated that it will seek to present a 0% interest rate on its green deal package. Returning to the polling I just asked the Minister about, does he accept the polling from the Great British Refurb campaign, which indicates that only 7% of the British public would take up the green deal if the interest rate was 6% or more? All the organisations we have spoken with have indicated that the interest rate would be at that level or above.

[Gregory Barker]

I am afraid that the hon. Lady is wrong. We have a huge degree of engagement with consumer groups. All the obvious consumer groups have been involved heavily in formulating different parts of the green deal, and that work is ongoing. I have not seen the particular research she mentions, but we have certainly had involvement from Which?, Citizens Advice and Consumer Focus, as well as from sophisticated investors and institutions in the City of London. I do not expect offers to appear until October next year, and it is most unlikely that ambitious new entrants in the market will declare their hand so far in advance: they will wait to see how the market shapes up and look at their competitors before revealing their offers. That is my expectation, which is based on observing what else happens in the market, rather than on what stakeholders have said to me at DECC.

[Barry Gardiner]

The Minister has explained candidly that the ECO is a regressive measure that will be imposed on general utility bill payers and that it will be an additional cost for them. He has also alluded to the fact that the Government removed the cost of carbon capture and storage from those bills on coming into office. Will he give an undertaking that the additional amount he proposes to impose on bill payers through the ECO will not be greater than what he and his Government have already taken off bill payers through their previous measures? He talks of securitisation in the bond markets, but will he explain how a default rate can be estimated, given his assertion that there will be no possibility of defaulting on that part of the bill?

[Gregory Barker]

The default rate will be the same as the standard default rate for electricity bills generally, which is a very low percentage. It is probably higher in the present economic circumstances, but when averaged out over a decade, it is very low compared with other instances, and it will not be extrapolated out of that. On the ECO, the hon. Gentleman seems to be trying to have his cake and eat it. The bottom line is that there is no magic source of money; it all has to come from somewhere and ultimately that is the taxpayer and the consumer, who are basically the same person in this context. We have to be very responsible and we are constantly looking for ways to lighten the load for hard-pressed consumers, who are concerned about rising energy costs.

We will publish in the autumn our expectations of how DECC policies, taken together, will impact on consumers through to 2020. The results of the early work are extremely encouraging. These things must be seen in the round—one strand of policy cannot be taken out as though it was part of a Woolworths pick ’n’ mix. We have to take the energy efficiency measures, the levies and our other measures to encourage greater competition in the energy sector as a whole. We will publish that in the autumn, when I am sure the hon. Gentleman will have an opportunity to quiz the Secretary of State.

[Caroline Lucas]

The Minister rightly says that there is no magic pot of money, but there are certainly progressive and regressive ways of doing this. Does he agree that putting a levy on all consumer bills, irrespective of the financial situation of the householder, is inherently regressive? Indeed, the impact assessment of the 2009 extension of the carbon emissions reduction target showed that using a levy actually pushed more people into poverty than were pulled out as a result of the CERT money.

--- Later in debate ---

[Gregory Barker]

The hon. Lady makes an indisputable point. We are mindful of the mistakes made by the previous Labour Government, which resulted in a succession of levies being put on consumer bills without any thought to the long and short-term impact on the vulnerable. That is one reason why we saw such a steep rise in the number of people living in fuel poverty, which increased by millions during the last Parliament alone. It is a difficult balance to strike, and I can understand why Ministers took those decisions, because they had to find the money from somewhere. We are certainly very mindful of the point she raises, which is why, as the hon. Member for Brent North said earlier, we have taken steps to remove the levy for CCS and the renewable heat incentive levy from the bills. The Treasury will insist on clear value for money and due consideration of the impact on those who are least able to pay when we finally settle on the exact figure of the ECO, which will replace the CERT funding.

Amendment 27 tabled by the hon. Member for Brighton, Pavilion, and amendment 45 tabled by the hon. Member for Manchester, Withington, deal with the collection of green deal payments. Allowing either energy bill to be used to collect the green deal charge looks attractive. I asked the very same questions myself and got exactly the same initial response as the hon. Lady, but the devil is in the detail and close analysis reveals significant problems. Requiring gas suppliers as well as electricity suppliers to facilitate the collection of green deal charges, which seems the obvious thing to do, given that heating is the larger element, substantially increases the implementation costs.

I really pushed back on that in the early stages of policy implementation, but our findings indicate that it could increase the implementation costs by up to 50%, which would ultimately be passed on to consumers, mainly because most energy suppliers have separate gas and electricity billing systems. Introducing a choice between collection of the green deal charge via electricity or gas, however desirable—I am all in favour of greater consumer choice—would require regulating two groups of companies rather than one, which would increase the risk of implementation failure and potentially cause a delay to the launch of the green deal in autumn 2012. Auditing payment flows would also be more difficult, because there would then be two possible routes through which the funding might flow.

The idea of allowing the occupier of a property with a green deal plan to switch collection methods at any point also prompted considerable concern in the industry. It would increase the possibility of billing inaccuracies, which in extreme cases could increase disconnections, which I know we all want to avoid, as well as increase the overall risk premium and push up interest rates, which we obviously want to keep as low as possible. I will return in a minute to the issue of disconnection.

That leaves collection only by electricity or by gas; fundamentally, it comes down to an either/or situation. I agree with the hon. Member for Brighton, Pavilion that gas seems the obvious choice, but collection via gas bills would automatically exclude the possibility of billing in that way the 4.3 million households that are off the mains gas grid when they access green deal finance for energy efficiency measures. Many of those properties are in rural communities, and it is important to the coalition that the green deal be available to both rural and urban communities. In contrast, almost all properties in Great Britain are connected to the electricity grid.

The change proposed would also raise the possibility of customers paying summer gas bills that are significantly higher than those before the green deal plan was taken out, which could be very difficult for many low-income families who are prepayment customers and not used to paying large amounts on their gas bill over the summer months. Many breathe a sigh of relief as they reach spring and have that little extra give in the family budget as a result of not having constantly to load their gas prepayment meter. It would be most problematic for prepayment customers on gas, who would then be expected to carry on paying charges equally through the summer, when normally they do not.

We still have a lot more work to do to deal with the iniquity of billing, whereby people on prepayment meters and low incomes often end up paying a higher tariff, so for the foreseeable future it makes sense to ensure that the charge is levelled out across the electricity bill, where we see far fewer lumpy payments, spikes and troughs.

[Barry Gardiner]

Does the Minister accept that, if we are really to reduce fuel poverty, we need to place the first units on the cheapest tariff, so that those who use least energy pay least for it, instead of, as happens now, their paying most for the first bundle and paying less the more they consume? They should pay least for the smallest amount and, as they increase their consumption, pay more per unit.

[Gregory Barker]

I am of course familiar with that argument of rising block tariffs, but that too has unintended consequences, which often hit pensioners in particular. However, I think I would be ruled out of order if I lurched into a discussion of tariffs, which are not necessarily the subject of the amendments before us.

We are left with collection via electricity bills as the only practical solution. The Government accept that that requires measures to strengthen the cognitive link between the green deal charge and energy savings, which in many cases will be realised on the gas bill. That is why the Government plan two requirements to increase the link between the two. First, for the 14.8 million households that receive their gas and electricity from the same supplier, the Government plan to introduce a requirement on energy suppliers to provide a combined energy bill, with the charges for gas and electricity supply and the green deal charge clearly identified on the front page. Secondly, the Government will introduce a requirement for electricity suppliers to reproduce the estimated savings from the green deal assessment on the green deal customer’s annual energy statement.

On the issue of disconnection, it is important that the green deal charge is treated in the same way as normal energy bill payments, so that defaults are kept to an absolute minimum and low-cost finance can be offered. I do not expect the green deal to increase disconnection, given the protection of the golden rule principle.

--- Later in debate ---

[Gregory Barker]

I shall give way to the hon. Lady, but then I really do need to make some progress so that we can get on to other parts of the Bill.

[Luciana Berger]

I am grateful to the Minister for stating the developments for those customers who have the same energy provider for their electricity and gas supply. He says there are 14.8 million of them, but my question, which came up in Committee, is about those customers who have different providers for electricity and for gas. What will happen to them? How will they be able to measure the savings across their two bills? My conversations with many energy providers tell me that their systems do not currently speak to each other, and that to make them to do so would cost a great deal.

[Gregory Barker]

There will be access to the energy annual statement, which will make that crystal clear.

Energy suppliers are already prohibited from disconnecting households in the winter months when they know or have reason to believe that the customer is a pensioner or lives with pensioners or with those under 18 years old. We plan to extend those protections to the non-payment of green deal charges.

We have had a very good debate. I have commented on the green investment bank to make clear the Government’s views on what appropriate interventions for the green investment bank would be. Although we understand the intention behind new clause 8, we will not support it. I hope that the hon. Member for Brighton, Pavilion is reassured by my explanation and will not press her amendments 26, 27, 49 and 50 or new clause 8; and that the hon. Member for Manchester, Withington and my hon. Friend the Member for Brigg and Goole are similarly reassured on amendment 28. I hope also that the hon. Member for Manchester, Withington found my explanation regarding amendment 45 equally compelling and will not press that, either. I urge the House to support Government amendments 29 to 34 and 36 and new clause 10.

Question put and agreed to.

New clause 10 accordingly read a Second time, and added to the Bill.

New Clause 11

Agreement about modifying decommissioning programme

‘(1) Section 46 of the Energy Act 2008 (approval of a decommissioning programme) is amended as follows.

(2) After subsection (3) insert—

“(3A) When approving a programme the Secretary of State may agree to exercise, or not to exercise, the section 48 power—

(a) in a particular manner;

(b) within a particular period.

(3B) An agreement under subsection (3A) may subsequently be amended by the Secretary of State and the other party to the agreement.

(3C) The Secretary of State may not make such an agreement or amend such an agreement unless satisfied that the agreement (or the agreement as amended) includes adequate provision for the modification of the programme in the event that the provision made by it for the technical matters (including the financing of the designated technical matters) ceases to be prudent.

(3D) Provision in such an agreement (including the provision mentioned in subsection (3C)) may include provision—

(a) for a determination by a third party in relation to a relevant matter specified in the agreement, and

(b) for the Secretary of State to be bound by such a determination.

(3E) A “relevant matter” is a matter relating to the provision made by the programme for the technical matters.

(3F) Subsections (3A) to (3D) apply notwithstanding that the agreement or amendment fetters the Secretary of State’s discretion.

(3G) In subsection (3A) “section 48 power” means the power of the Secretary of State under section 48 to propose a modification of the programme or a modification of the conditions to which the approval of the programme is subject.”

(3) In subsection (4) for “(3)” substitute “(3B)”.’.—(Charles Hendry.)

Brought up, and read the First time.

[The Minister of State, Department of Energy and Climate Change (Charles Hendry)]

I beg to move, That the clause be read a Second time.

--- Later in debate ---

The Committee on Climate Change has highlighted its concerns about the dual direction of the ECO funds. It states clearly that they should be used to prioritise solid-wall insulation in the 1.9 million fuel-poor households that live in solid-wall properties. We should combine the two functions of the ECO: yes, it should be used for low-income and vulnerable families, but it should also be used for low-income and vulnerable families in hard-to-heat homes.

[Gregory Barker]

I am listening closely to the hon. Lady, and I admit that the Government have not yet come forward with our proposal on the ECO. She seems quite clear about what it should involve, but I did not pick up the actual figure that she thinks would be right for it. Will she tell us what she thinks that figure should be, so that we can work out whether the sources of revenue would be sufficient to fund it?

[Caroline Lucas]

I thank the Minister for his intervention, and I am pleased to see his impatience for me to get to the crunchy bits involving the figures, which I will now do. The figures that I was quoting were from an all-party group chaired by the hon. Member for Southampton, Test that involved myself and a few others. The group believed that it would be necessary to have a minimum of £2.5 billion in the ECO pot specifically for low-income and vulnerable households involved; some members of the group felt that it should be £4 billion. We were therefore looking at between £2.5 billion and £4 billion, but that was intended not for solid-wall insulation in the able-to-pay sector; it was focused solely on low-income and vulnerable households.

We considered where we might be able to find such sums of money, including down the back of the sofa and so forth. Based on the Treasury’s own budgetary projections, the EU emissions trading scheme and the carbon floor price will bring in a combined revenue of £2.7 billion in the first year of the green deal’s operation, 2013-14, rising to £3.6 billion by 2015-16. If we were to choose to hypothecate those two revenue streams alone, they could be used to supplement the revenues of the ECO. That is exactly what many groups and individuals have recommended. A 2008 European Parliament directive recommended that at least 50% of revenues from EU ETS auctions of allowances should be devoted to environmental protections, including more efficient heating and improved insulation. In contrast to the UK, countries such as Germany, Hungary and Poland are doing exactly that.

Ofgem provided constructive support in its report to the Chancellor of the Exchequer in 2008, stating:

“In view of these pressures on prices the regulator has identified a windfall to the electricity industry arising from the free allocation of tradeable emission permits.”

That windfall still exists. The report continues:

“This could be used to fund aid for fuel-poor households: those who spend more than 10 per cent of their income on energy.”

The European Parliament and Ofgem are thus both in favour of such a move.

--- Later in debate ---

[Caroline Lucas]

If money were no object, I would love to see hard-to-treat homes subsidised through the ECO, even for those who are able to pay. We are living in financially constrained times, however, and I am therefore suggesting that we focus all the money in the ECO, which should be increased, on low-income and vulnerable households, of which a subset would be those low-income and vulnerable households in properties that are hard to heat and therefore need solid-wall insulation.

[Gregory Barker]

If the hon. Lady is not prepared to subsidise solid-wall insulation, does she accept that many able-to-pay customers will baulk at the substantial cost of such insulation, so there is a very real risk—it is almost certain—that we would be unable to hit our CO₂ reduction targets? All the analysis of this problem that has come from a climate change or environmental perspective is absolutely clear that we will need to subsidise these currently expensive measures.

[Caroline Lucas]

I thank the Minister for his intervention. I hope he will allow me to explain my proposal. It would mean that for at least the first three years the ECO would be used for the low-income and vulnerable families that live in hard-to-heat homes. As about 40% of the low-income and vulnerable households do live in such homes, I am confident that if the revenues from the ECO were focused on that group of people, we would have a much greater uptake of solid-wall insulation and the price would come down far more quickly. If we were to use the bulk of the ECO to go house to house or street by street to some of the poorest, most vulnerable people, I believe it would have a far better environmental impact than sitting back and allowing market forces to see who happens to ring up the advice line to say, “By the way, I’m living in poverty in a hard-to-treat home, so could I have some support from the ECO?” What I am suggesting would be better for dealing with fuel poverty and also better for the environment—the figures suggesting that do stack up.

--- Later in debate ---

[Albert Owen]

Absolutely. To be fair to the national grid, as part of our inquiry into the market, we went to see the National Grid Company which, for the first time, is offering choices and options in transmission, such as underground, overground and subsea. I agree that these hikes are ripping people off. They want choices and if they choose underground and it costs more in certain areas, we might have to consider paying more for it, but at the moment we are getting a poor deal when we have the minimum upgrade to the transmission lines and the infrastructure, and are paying the maximum amount through our bills. That balance needs to be addressed.

I realise that time is of the essence, but in closing I want to highlight the point about off-grid so that all households in the UK are treated equally. We need to ensure that we have a level playing field for people in peripheral areas as well as in large towns and cities when it comes to the green deal and paying for electricity and gas. I am sure that there is consensus on this and we need to move forward.

I congratulate the hon. Member for Basildon and Billericay on raising this important point about simplicity, the changing of the tariffs and how we can get a better deal for all those whom we represent, because at the moment they are being ripped off.

[Gregory Barker]

I shall speak to all the amendments tabled by the Opposition and Back-Bench Members in this group. The first important cluster of amendments covers the green deal. I thank hon. Members for all the amendments and the opportunity, even where we have not agreed, to debate a set of issues that are of particular significance to all our constituents. As we look towards the winter, people will be looking to us for leadership on the important issues of our energy bills and energy efficiency.

I start with amendment 1, tabled by the hon. Members for Ogmore (Huw Irranca-Davies) and for Liverpool, Wavertree (Luciana Berger), and new clauses 1 and 2, also tabled by the hon. Members and by the hon. Member for Rutherglen and Hamilton West (Tom Greatrex). The amendments might appear to duplicate existing legislation, but they raise important issues. On our aims for meeting carbon budgets and tackling fuel poverty, legislation already exists to compel this, as the amendments highlight. There is no doubt about the coalition Government’s commitment to both those issues, and we have already met our first and second carbon budgets and published our strategy for the third. We will be publishing our strategy for meeting the fourth carbon budget in the 2020s this autumn.

As I have said, the green deal and the ECO must be seen in the context of our overarching carbon budgets. The amendments tabled by the hon. Member for Southampton, Test (Dr Whitehead) emphasise the importance of taking a broad view to maximise cost-effectiveness. Our strategy will set out the role played by the green deal and the ECO in support of the green deal. We have already committed to report to Parliament specifically on this.

The Climate Change Act 2008 already obliges us to justify any shortfall and to take action to address it. Likewise, the Act also enables the Committee on Climate Change to provide advice, which I will come to later. This aim commits the Government to ensure household energy efficiency makes a fair and appropriate contribution to delivering our existing legally binding carbon budgets. We will report each year on what our energy efficiency policies are delivering and to what extent they contribute to the carbon budgets. It will be clear to all who wish to challenge us if our policies are underperforming. That is already in the Climate Change Act or in the Bill.

Only English households are covered because energy efficiency is a devolved matter. It is not for the UK Government to dictate the ambitions of the Government of Scotland and the Welsh Assembly, but we are working in tandem with devolved Administrations, and I have been pleased with the way in which, particularly at official level, but also at a political level, there has been real agreement. We are definitely heading together in the right direction.

Amendments 9 to 12, tabled by the hon. Member for Southampton, Test, relate to energy efficiency in a broader sense. I certainly support the principle behind them. He is right to say that successive Governments have ignored at their own expense—or rather, at ours—the compelling argument in favour of energy efficiency improvements before leaping to build new generation capacity, and they have failed to pick up the money available from energy efficiency action on the ground. Energy efficiency within that spectrum of measures must always focus on the most cost-effective savings. Cost-effectiveness is enshrined in policy making within the coalition, and all existing energy efficiency policies come with impact assessments for that purpose. The costs and benefits for UK plc are always in the foreground, not stuffed into the small print. It is for this reason that we propose the green deal as a market mechanism. We will publish an updated impact assessment of the green deal and the ECO, along with a consultation and full details of the secondary regulation, next month.

I assure the hon. Gentleman, who has a substantial record of campaigning and contributing to serious debate on energy efficiency, that it is something my Department now takes far more seriously. We are not just using words to show this, and it goes beyond the green deal. The green deal is clearly a radical, ambitious and key part of our efforts and a flagship policy of which we are extremely proud, but it is certainly not the end of the story. We will establish by the end of the year a new energy efficiency deployment office to deliver energy efficiency; it will sit within the Department alongside the office for renewable energy deployment and the office for nuclear energy deployment, and with equal weight. For too long, and for some extraordinary reason, while successive Governments have exalted the building of new energy generation capacity, energy efficiency, when not ignored altogether, has been dispersed around the Department. It will now have its rightful place in the Department’s hierarchy of actions and priorities.

I am happy to meet hon. Members privately to explain in detail our plans for bringing together the energy efficiency deployment office. It will not only be a first for the UK, but set a precedent around the world. In the international forums I attend, I have found real interest in what we are doing. We are looking at new market models that have not been tried anywhere else. We will certainly look abroad for best practice to build on, but I really think that we will come up with something that has a leading edge.

The energy efficiency deployment office will be tasked with identifying ways of driving further carbon abatement across the economy, which the hon. Gentleman seeks in his amendment, and learning from best practice in other countries. At the heart of its mission, as expressed in the amendment, will be analysing the cost-effectiveness of energy efficiency and energy generation, and it will have the resources to do that. We are recruiting the senior staff with appropriate experience to drive that effort. I hope that that satisfies him and that he is content not to press his amendment to a vote.

The amendments also raise the important matter of the role of non-domestic buildings in the green deal. I assure the House that, as I have said on many occasions, the green deal is an opportunity not only for homes and households, but for businesses and communities. There will be more detail in the consultation document, which we intend to publish next month, about how the green deal will be tailored for non-domestic—invariably business—customers. The UK’s building stock is a key sector of our annual carbon reporting, so the green deal’s contribution to both domestic and non-domestic buildings will be covered. I take the green deal’s contribution to our carbon budgets very seriously, which is why I tabled an amendment in Committee to include in the Bill that reporting commitment, as many stakeholders and other members of the Committee suggested.

--- Later in debate ---

[Lyn Brown (West Ham) (Lab)]

I have been listening very carefully to the Minister, but I do not quite get how we will measure that, in order to ensure that we are successful.

[Gregory Barker]

As the Bill Committee and, in particular, the Chairman of the Environmental Audit Committee suggested I do, I have already met Lord Turner of Ecchinswell and the Committee on Climate Change to discuss how it might inform the guidance that the Government are preparing to help local authorities cut carbon emission in their areas. I expect that the framework and the guidance that the CCC provides will help to answer, at least in part, the hon. Lady’s question. I expect a formal proposal from the CCC shortly; when we met, Lord Turner certainly took on board how crucial it is that the Committee’s advice be completed early next year, so as to feed into the permissive guidance for local authorities being developed by the Department for Communities and Local Government.

[Barry Gardiner]

Will the Minister undertake to make Lord Turner’s advice available to Members who sat on the Bill Committee and, indeed, to my hon. Friend the Member for West Ham (Lyn Brown), so that we might see exactly how it will operate?

[Gregory Barker]

I am very happy to do so. Indeed, I am sure that Members will have further ideas on how to build up the advice that we give local authorities. Given that it will go to councils of every political party, it is important that it is seen to be thoroughly objective, so a sense of co-ownership would indeed be very helpful.

New clauses 7 and 18 and amendment 24 deal with the ECO and fuel poverty. The hon. Member for Brighton, Pavilion (Caroline Lucas), who tabled new clause 7, may recall what I said in Committee in response to a similar amendment: that the Treasury is responsible for the allocation of public funds. Putting a duty on the Secretary of State to report on potential uses of central Government revenues would, I am afraid, conflict with the Treasury’s responsibility. I assure her, however, that the Government are taking great care to ensure that their policies in the round will be up to the task of delivering our climate change and fuel poverty objectives. The ECO is a key part of this, and we will make sure that it has the right level of ambition to achieve our goals without putting an unduly heavy or inequitable burden on energy bills. On that basis, I hope that the hon. Lady will not press the amendment.

Amendment 24, tabled by the hon. Members for Liverpool, Wavertree and for Ogmore, and new clause 18, tabled by the hon. Member for Brighton, Pavilion, focus on data sharing. Although I understand the intent of the proposal, we do not need it now because the existing warm home discount scheme will provide the six major energy suppliers with the details of more than 600,000 older poorer pensioners this winter and information on thousands of further customers over each of the three subsequent years. That information will be used to provide a £120 rebate this winter to those customers, but it can also be used to provide the customers with additional advice, including information about the ECO. Additional powers for further data sharing are therefore not necessary at this time.

The forthcoming ECO consultation will report on the likely impacts of the policy, as will the accompanying impact assessment. The type of statutory duty that amendment 24 would introduce is not necessary for the purpose of showing the intended impact that the ECO will have on fuel poverty and the energy efficiency of properties. I can therefore assure the hon. Members for Liverpool, Wavertree and for Ogmore that the intentions of the amendment are already met in full.

Amendments 2 to 8, 19, 47 and 48 deal with the private rented sector provisions. These were tabled by the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith), the hon. Members for Manchester, Withington (Mr Leech), for Brighton, Pavilion, for Leeds North West (Greg Mulholland), for Foyle (Mark Durkan), for Liverpool, Wavertree and for Ogmore, and my hon. Friend the Member for Hove (Mike Weatherley). Amendments 6, 7, 19, 47 and 48 relate to timing issues, and I will consider those first, albeit briefly.

As we debated in Committee, we are providing landlords with a firm legislative position. The tenants’ energy efficiency regulations must come into force no later than 1 April 2016. Under those regulations, tenants will be able to ask for consent from their landlord to make relevant energy efficiency improvements such as those funded under the green deal or ECO, and their requests cannot be unreasonably refused. Amendments 7 and 48 propose that the regulations on tenants’ right to request should be introduced sooner, but as well as regulatory certainty, we need to provide landlords with a reasonable period in which to prepare and get up to speed with the regulations. The dates we have chosen strike a balance between pursuing greater energy efficiency benefits and giving landlords time to prepare.

I draw the House’s attention to the latest survey, published this week, which clearly shows that two thirds of landlords are keen to act and take up the green deal, and that only a relatively small minority—fewer than 20%—are dragging their feet. There are grounds to be optimistic that landlords are not resisting this agenda. We have set the dates of 2016 and, as a backstop, 2018, but I cannot reiterate strongly enough—

[Luciana Berger]

rose—

[Gregory Barker]

I will not give way, because I have to get through these points.

The backstop is 2018—the point at which we must cross the finishing line. Clearly, in the five years to 2018, from the point at which the green deal goes live, it will be up to the Government to monitor progress in the private rented sector. If we see that there is not a significant glide path towards being able to complete by 2018, it remains to us to take further measures and actions, and we will. [Interruption.] If the hon. Member for Brent North (Barry Gardiner) had been in the Committee, he would know that we will have available an improved online register that is much better than the existing data facilities. We will have the information, we will monitor it carefully, and we certainly see the 2018 date as the end line and reserve the right to introduce new powers, measures, regulations and incentives to drive uptake if we do not see it happening.

Amendment 4 considers the implementation of the minimum standard. The principle behind the amendment is that all F and G-rated properties should be brought up to the minimum standard, regardless of how much of the work can be funded through the green deal. However, the regulations come with safeguards. We do not want our regulations to have an adverse impact on the supply of properties in the private rented sector. For that reason, we remain committed to ensuring that there are no up-front costs for landlords. Landlords will either have to reach an E rating or carry out the maximum package of measures funded under the green deal and the ECO, even if that does not take them above an F rating.

My hon. Friend the Member for Hexham (Guy Opperman) raised a very important point. The Government hear and share the concerns that he expressed so eloquently. We were so concerned by the problems in the domestic heating oil sector last winter that the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry), asked the Office of Fair Trading to undertake an urgent assessment of the whole off-grid sector. I am pleased to say that it has already taken action to ensure that price comparison websites are genuinely independent. We look forward to its final report next month so that we can see what further steps may be necessary ahead of this winter and ensure that there is proper and effective competition in this important sector, where customers consistently get a very raw deal. The Minister of State is absolutely determined to drive home the agenda that my hon. Friend the Member for Hexham articulated so well.

I turn now to the points raised by my hon. Friend the Member for Basildon and Billericay (Mr Baron) and his new clause 19. This is an area in which he has considerable knowledge and I place on record my thanks to him for taking up the challenge of chairing the consumer billing stakeholder group, which has provided invaluable advice to the Government and has helped to drive forward the aim enshrined in clause 74 of providing consumers with additional information about their suppliers’ cheaper tariffs. My hon. Friend makes the good point that we should seek to provide consumers with helpful, clear information at the earliest opportunity, and that we should build on that through research informed by consumer groups and consumer responses. His new clause would put a set of specific implementation actions in the Bill.

As my hon. Friend is aware, because he has been essential to the steps that the Department is taking, we are on exactly the same page as him on identifying what needs to be done to give the consumer the best possible information. This winter we are doing what can reasonably be achieved, with a clear signpost on bills that will start going out in the next few weeks. There will then be an urgent communication—a letter in most cases—advising consumers of the advantages of switching. I greatly welcome the suggestion that that campaign be backed by consumer groups such as Which? and Consumer Focus to encourage a better take-up than sometimes results from similar mail. We are awaiting the recommendations of the retail market review. If we judge that it does not go far enough, we will look to go further and we have the back-stop of being able to legislate. I have conveyed clearly to the energy companies what we expect and that we will not hesitate to legislate if they do not come to a voluntary agreement.

[Mr Baron]

In short, does the Minister accept the three recommendations of the billing stakeholder group, which are contained in new clause 19? I accept that we do not need to press the matter and put them in the Bill.

[Gregory Barker]

I broadly support those recommendations, although we might have to address some of the detail, such as the nature of the communication. We want to ensure that we have the best possible advice. However, I am happy to confirm that we are on exactly the same page in broadly supporting the three recommendations my hon. Friend has made.

In summary, although I am sympathetic to the well intentioned principles behind many of the amendments, and I apologise if I have been unable to speak in detail to some of them, I hope that the hon. Members for Liverpool, Wavertree, for Ogmore, for Rutherglen and Hamilton West, for Southampton, Test, for Brighton, Pavilion, and for Gower, and my hon. Friend the Member for Basildon and Billericay, have found my reassurances, explanations and commitments satisfactory, and that they consider not pressing their proposals to a Division, given that we have moved a long way since the Bill was first published—