Energy Bill [HL]

Lord Davies of Oldham Excerpts

Monday 24th January 2011 Grand Committee

[Lord Davies of Oldham]

My Lords, having had recent experience of the phenomenon to which the noble Lord, Lord Jenkin, has drawn attention, I can say that in Government we of course took the recommendations of the Committee very seriously. I am glad to see these amendments. I appreciate that the Minister has something of a choice, but in any case at Committee stage he is not going to accept these amendments exactly as they are written. However, the Opposition give their full support to the concept behind the amendments. Therefore, I hope that the Minister responds positively and that the appropriate amendment is tabled.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)]

My Lords, I welcome back the noble Baroness, Lady Smith of Basildon, and hope that she is well. I hope that all noble Lords have had an agreeable weekend. We will now carry on with the Energy Bill.

The amendments in this group would affect a number of orders, including those that define qualifying energy improvements and eligible properties. We need to strike the right balance between normal administrative functions and parliamentary scrutiny of the criteria by which administrators exercise their functions. I am very grateful to my noble friends Lady Noakes and Lord Jenkin of Roding for tabling their amendments. However, we need to ensure that the amendments have the intended effect in law. Therefore, we will warmly and favourably consider the amendments and all the recommendations of the Delegated Powers Committee.

I hope that honourable Members have found my explanation reassuring and will not press their amendments.

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[Lord Best]

I shall just add another statistical piece of information. Some 40 per cent of tenants move within a year of the occupation of their home. In principle, the idea of consulting with the residents of a place before you start doing anything to it is entirely right, but we have a big transient population in the private rented sector. My other point is that, although you could consult the first occupier, the debt is taken on and lasts 25 years. In almost no cases will the same person be there for all that period, and you are not able to consult people further down the line about a decision taken by an earlier tenant. Although I sympathise with the sentiment that one should consult with the tenants, this is possibly impractical.

[Lord Davies of Oldham]

My Lords, we are getting to the complexities and challenges of the Green Deal. We had early indications this afternoon of the problems in the private rented sector; they are not solely in that sector, but they mushroom in significant ways so far as it is concerned. The important statistic that the noble Lord, Lord Best, brought in identifies the challenges before us. As the noble Lord, Lord Deben, argued on the previous amendment, it is no doubt important that we get as much information across as we can both to landlords and to tenants. This is a major public information task, and we should make sure that this legislation enhances and creates the opportunities for the spread of as much information as possible. Of course, as my noble friend Lord O’Neill identified, there will be groups who are difficult to reach and for whom the relevance will be limited; that is where a significant challenge is represented by this legislation. We want the Minister’s assurance that he appreciates how important it is that the legislation be as enhancing as it can be on the need to distribute information so far as possible, and that we succeed in bringing the nation on board with regard to the objectives, benefits and significance for society. We have a whole range of private interests that are massively diverse, so we should recognise the challenge that the Government face.

[Baroness Northover]

My Lords, it is vital as a thread running through this debate that we ensure that this deal has as wide an impact as possible, and we welcome the input that noble Lords are putting into how that is to be achieved.

The nature of the review, as my noble friend Lord Marland has indicated, will be discussed in a bit more detail shortly. I would note to the noble Lord, Lord O’Neill, in terms of hurdles to tenants, that this is one of the reasons we want to give local authorities the power if needed to require improvements in the worst accommodation. When my noble friend Lord Teverson said that he had to declare an interest, I was hoping that it was not that he was a landlord of the type mentioned by the noble Lord, Lord O’Neill; it was reassuring that he was of the type mentioned by the noble Lord, Lord Best.

I thank the noble Baroness, Lady Noakes, for tabling this amendment, which would require that the review investigates the willingness of tenants to take on Green Deal repayments. We understand the intent behind this proposal. As she herself said, the golden rule should mean that tenants’ bills should not go up as a result of the Green Deal because of the energy savings they will be making. I see her slightly dissenting. That is part of the way this has been structured but we are well aware of the points that have been made in previous debates on that.

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[Baroness Northover]

I hear what my noble friend says. We will debate the review in more detail. My noble friend Lord Marland has indicated that, in addition to the areas that are listed in connection with the review, there is the possibility that it will consider other things. It may be that the department should give some thought to this area.

I will respond to my noble friend Lord Teverson. I am concentrating on DfID, justice, et cetera. I am pretty sure that in this situation, should a tenant decide that they want to take a holiday from opting into the Green Deal, that would be possible. I remember being briefed on that. That may fit the situation that the noble Lord spoke about in which a tenant decides that it is not in their interest that the Green Deal is pushed down the track and that they do not want to repay the charge. I will make absolutely sure that I am right about that.

I am briefed that one cannot renegotiate the charge, but one can have a repayment holiday. Therefore, should the tenant decide in that instance that that is what they want to do, that would be possible. It does not mean that the money does not have to be paid back. However, it may not have to be paid back by that particular tenant at that time. It has also been pointed out to me that there will be a Green Deal ombudsman who will provide some protection. I hope that that will reassure noble Lords.

[Lord Davies of Oldham]

The Minister is doing her best in what we all appreciate is a very difficult area. We all understand that the tenant’s response is optional. We discussed this in the previous sitting of the Committee. We cannot have a situation where a tenant exercises an absolute veto, because one person might operate a veto on 400 fellow tenants, all of whom agreed to the change. We all recognise that there is no veto. However, there is an issue about a tenant's consent and subsequent payments. The Minister is leading us down some strange paths. Are we saying that the holiday could last for the whole period of their tenancy, however long that might be? Who makes the judgment on the right to opt out of an agreement that admittedly may have preceded their arrival in the tenancy? How do they exercise the opt-out, for how long, in which circumstances and who is the adjudicator?

[Lord Dixon-Smith]

My Lords, I feel provoked to intervene. We are making the subject far too complex. I thought that I heard, a few minutes ago, that the golden rule of the Green Deal would be that the energy savings would equal the cost increases. If I did not hear that, I am mistaken, but I am fairly sure that I did.

If that is the case, let us consider a situation where one tenant leaves and a new tenant comes in. Provided that rule applies, there is no disadvantage or, indeed, advantage to the new tenant in saying that he does not want to be part of the deal. If the deal is cost-neutral, why is he likely to refuse to participate?

I also think we need to bear in mind that word of mouth is a very powerful force. Once the scheme begins to operate on any sort of scale, I suspect that there will be a great deal of support from those who initially participate in it. They will all be telling their friends that they have a warmer house; that their energy bills are at a new level; and that the improvements apply to both tenants and landlords. I suspect that we will get to the point after a time where tenants start to demand their landlord to make the improvements if they cannot themselves. I am therefore optimistic about the way this scheme will go, and we should not raise too many potential difficulties. The difficulties are there, I admit, but in reality, once the scheme begins to take off, it will develop its own momentum and the nightmare scenarios being portrayed will not in fact exist.

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[Lord Davies of Oldham]

My Lords, I was about to make the same speech. But as the Minister is likely to listen to a noble Lord who supports the coalition rather than to the Official Opposition, I will merely say that of course it can be seen from our amendment that we saw no reason why there should be a time constraint—a delaying element—built in. We very much agree with what the noble Lord, Lord Teverson, said about the impact of these amendments building an extra year of delay. But we are not quite clear on why there should be a restriction in Clause 37(8), which is why we have tabled an amendment for its deletion.

I agree with the noble Lord, Lord Teverson. Of course, we will not get a perfect profile of the challenge which lies ahead. Governments never have perfect information on which to act, any more than anyone operating in the so-called market mechanism ever has perfect information on which to act. But we will have clear indicators of where the issues lie. We do not see why we should build into statute—certainly, not through an amendment—an extension to what the Government think is realistic and what can be achieved. I hope that the Minister will answer the points made by the noble Lord, Lord Teverson.

[Lord Marland]

My Lords, I should like to correct the noble Lord, Lord Davies of Oldham, by saying that of course I listen to the Opposition. It is fundamental to this entente cordiale that we currently enjoy that I listen to the Opposition. The whole purpose of this debate is to listen to people and to take in their views. We now have two sides of the argument: one side says that we should start the review at a shorter time, and the other side says that we should push it out and asks whether the time is readily available.

The review will not be just one review; it will be constant. We have to keep this under constant review. Having listened to the arguments, I would be minded—and I will urge my colleagues to do the same—to start our first review in 2013. At least that would be a start and allow us to see, as my noble friend Lord Teverson asked, whether it is working. We should do that at the earliest possible time and set down a timetable in which to do it. The noble Baroness, Lady Noakes, perhaps feels that we should give a greater time. Of course, there will be a greater time, because we will review it to see whether this is working.

We are trying to achieve an acceleration of a reduction of carbon and of take-up on the Green Deal. It is incumbent on the Government to make sure that it is working and to urge everyone to get on with it. Therefore, I invite the noble Baroness to withdraw her amendment. Before I sit down, I should declare an interest as a landlord, which I perhaps should have done at the beginning. It is in the House of Lords register of interests.

Perhaps I may help my noble friend who was thrown into the lion’s den with some rigorous questioning and answer two or three of the questions that were put. The noble Lord, Lord O’Neill of Clackmannan, who is not in his place, asked what would happen to short-term tenancies if bills were put up as a result of these measures. My answer to that is that they would be very short-term tenancies because people would look elsewhere for a better and more commercial short-term tenancy. We are in a competitive market in that respect.

As regards payment holidays, the Bill enables the Government to specify circumstances in which Green Deal payments can be suspended. The policy of this is being consulted on, as one would expect, and we will develop that as we go through consultation. But we do not expect that tenants will be able to opt out other than in the usual circumstances.

I ask noble Lords to forgive me for dealing with these questions now, although they might want to come back to these issues. But let us do that as we follow the Bill through by way of information. The noble Lord, Lord Teverson, asked about the enforcement of building regulations. Obviously, that is a matter for CLG and we will pass his remarks on as noble Lords would normally expect. I hope that that clarifies a couple of the points and that it enables the noble Baroness to withdraw her amendment.

[Lord Davies of Oldham]

The noble Lord has clarified a number of interesting points but we are talking about dates here and I am not sure the Minister has responded on the issue of dates. What is the point of having a statutory limit with regard to these regulations in circumstances where the Government are hoping to make progress? As the noble Lord, Lord Teverson, indicated and I agree with him entirely, we do not know the nature of the information, how full it will be or the basis on which the Government will act. Why build in a set date when in fact the Government may be able to act against their good instincts with regard to this Bill earlier if it were not prescribed by the legislation? We do not need this prescription.

[Lord Marland]

The answer is quite simple. We have to put in a prescribed date or it is unfair on those who have to fulfil their obligations by that time. If you do not prescribe the time when we are going to review it, they have no idea of the timetable on which they have to act, so it is very clear. I have made quite a concession already that we are going to review the first date, which will be 2013, and that thereafter there will be dates to monitor how this Bill goes forward. I disagree with the noble Lord on this rare occasion. We have to send clear signals to the market as to how this is going to operate.

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[Lord Jenkin of Roding]

My Lords, I get the impression that we are coming up against the problem of balance that I referred to in a speech made some hours ago. It is now getting to the point where, if these amendments are accepted, the Bill will expect local authorities to take fairly drastic enforcement action. The noble Lord, Lord Best, will know much more about this than I do, but I have always been given to understand that local authorities already have quite substantial powers under the housing health and safety rating system, which can be used to tackle houses where tenants suffer excess cold and, no doubt, other factors. But the real problem is that these powers are very rarely used. The noble Lord, Lord Best, made the point that local authorities have many other duties, that they do not have enough environmental health officers, and that with the stringencies under which they now have to operate, it is not expected that they will be in a position to recruit more. Faced with pressures on resources and competing priorities, I wonder where the sense is in landing them with still more duties. Indeed, one has to ask what the probability is of such new duties being enforced.

There is no point in substantially increasing penalties and in introducing other measures that enable local authorities to take over houses, improve them and then charge the landlord, if no one is going to enforce them. Increasing the fine from £5,000 to £10,000 will do absolutely nothing if the notices are not enforced. I will sound a note of caution on this. We should not expect local authorities, over the next few years, to take substantial action when they are well known for not using the powers that they already have under the system that I have just mentioned. Again, I am just sounding a note of caution and I hope that the Minister will look at some of these proposals with a fairly cold and analytical eye to assess whether they will improve the Bill and increase the chance of the objectives that we all support being achieved, or whether this will be the point at which landlords simply throw up their hands and say, “Blow the lot of you, we are not going to re-let”.

[Lord Davies of Oldham]

My Lords, I have not the slightest doubt that the Government will apply a cold and analytical eye to these issues, because that is their role. I hear what the noble Lord, Lord Jenkin, says, and we all know that certain powers are more honoured in the breach than in their exercise. But, of course, the powers underpin the position of the local authority. He is absolutely right to say that local authorities do not often exercise their powers: but if they did not exist at all, standards would conceivably be a good deal lower, because everyone would know that if minimal standards were not observed, the local authority would not be able to take action.

These amendments commend themselves because they introduce a floor to the position. They say, basically, that these are the powers that local authorities will enjoy. They may not have to exercise them often, but if they do not exist, the Minister will have to show how enforcement can effectively take place. It seems to me that these amendments are a constructive way of underpinning the Bill with an effective sanction. Given that, I think that the noble Lord, Lord Jenkin, is on somewhat dangerous ground if he says that the issue of enforcement depends on the level of resources at your disposal, and therefore underperformance may be looked at in those terms. If that were translated to the police under the present cuts, the Government would be in serious trouble. One has to look carefully at the issue of what level of resources is available, but what is important is that it is only through local authority enforcement that certain minimum standards with regard to this legislation can be achieved. We should seek to guarantee that such powers exist. The degree of enforcement will depend on resources, on will and on a general perception of the value of the legislation. We have said all along that the legislation depends not on compulsion but on the engagement of the community. That is the main driver. The issue covered by the amendments is the provision of an element of underpinning, which I subscribe to.

[Lord Marland]

I am grateful to my noble friend Lady Maddock for putting forward the amendment. Obviously it has considerable merit. The greater the fine, the greater the determination we show to achieve what we set out. On this occasion, contrary to the last, I agree with my noble friend Lord Jenkin of Roding—generally I agree totally with the noble Lord—that £5,000 is a reasonable limit. It is a considerable amount of money that is in line with existing limits for the amounts that local authorities can fine landlords for letting out substandard and hazardous accommodation. On that basis, and with due respect, I invite the noble Baroness to withdraw her amendment. As she rightly says, we have spoken to other amendments covering various parts of the Bill, and no doubt we will in future as well.