Domestic Premises (Energy Performance) Bill [HL]

Lord Deben Excerpts

2nd reading & 2nd reading (Hansard): House of Lords & 2nd reading (Hansard)
Friday 7th February 2020 Lords Chamber

[Lord Deben (Con)]

My Lords, I declare an interest as chairman of the Committee on Climate Change and from the work that I do in other ways to increase sustainability. I thank the noble Lord, Lord Foster, for introducing the Bill, which seems admirable and one which we can all support. If my noble friend the Minister feels that I am a little critical, mine is the criticality of urgency rather than of the nature of what we have to do.

One of our problems is that we all know what we have to do and done for a long time. But we have not done it and we all share blame in that: the previous Labour Government, for putting the date for net-zero homes as far forward as they could so that no Minister would be around when it came; the coalition Government for then getting rid of that very important part of the deal; and the Conservative Governments for not getting on with it when they should have. Just as we can all celebrate the joint nature of the Climate Change Act, we also all have to take responsibility for the lack of urgency in dealing with these matters.

Net zero reminds us that urgency is all, because if we want to get to net zero in 2050 we have to do a great deal of the heavy lifting by 2030. If we do not, we cannot get to net zero by 2050. I have to argue with Extinction Rebellion’s claim that we could get there by 2025. When you ask carefully as to how that group thinks we ought to do it, answer comes there none. All the work we have done clearly shows that you cannot do it as immediately as that, but that does not mean to say that you do not have very large numbers of things to do by 2025 and 2030. My doubt about the Bill is that it confirms the Government’s targets, which are not good enough. I hope that the Government will not only accept the Bill and assist its passage, but recognise that it is not even a minimum. It is below the minimum that we need to do to achieve our ends.

I make just one comment: we are concerned with houses we already have, but we are making the situation worse by at least 250,000 homes every year because we are building houses today that will not meet our requirements. This is barmy and I am fed up with people, particularly Ministers of all kinds, telling me that because the other is the bigger issue they do not want to concentrate on the smaller one. Since they have been doing that, the bigger issue has gone up by 2 million. We have not done what we could have done.

One thing we will have to think about in considering the Bill is how we draw attention to the fact that houses should not be built now that do not more than reach the levels referred to in it. No new house should now be built differing much from a Passivhaus level—not a Passivhaus itself, because that has some complications that are not necessary. It needs the simplicity that Hastoe Housing is now giving to it. However, it is that level we should insist upon.

The nine big housebuilders, building nearly 80% of the homes that are bought, have avoided their duty to raise their standards on the basis that the Government have not raised them for them. Their federation is the only organisation I know which in its annual report—the most recent one published in October 2019—does not address climate change. This is the housebuilding business. It now looks as if the housebuilders have made a change; they have had a conference and they are working out how they will meet the target of no-fossil fuel connections by 2025. They have accepted that they are not going to “beat” the Government as they have on every previous occasion when they have tried to set some level from outside. My first suggested addition to the Bill—not objection—is that we make sure we think about that, because I have worked out that, between now and 2035, there will be 3 million new homes which under the present measurements will probably not meet the standards that the Government are trying to reach by that year.

The noble Lord, Lord Foster, raised the important issue of the skills gap. A problem this country faces right across the board in reaching our targets for net zero is in respect of the skills of the people who will do it. The work associated with this is marvellous for new jobs; it is one of the things that can happen so much in the north of England. We can do all the things that we want to do. It is a matter not of extra expense, but of better education, more targeted education, more provision of education, and no longer treating further education as some inferior way of learning. We need to deal with that, but the skills gaps will not be filled unless there is certainty in the industry. That was the point made by the noble Lord, Lord Foster, and anyone who has anything to do with this industry will accept it. It will not happen unless people know that they will need those skills in this year and for that year.

To do that, we have to examine the dates rather carefully. One of our problems is that we think that we are doing things on a certain date, but people who have planning permission, for example, manage to push the date out. I hope that the Government accept that these dates are the final dates, which are not to be moved on—actually, we want to move them back. I congratulate the Government on the remarkable step they have taken in accepting the advice of the climate change committee and saying that we will have a system whereby only electric vehicles will be sold from 2035—if not earlier—instead of 2040, which was manifestly outwith any system that we would need to reach net zero. I think that we can do the same with housing because we have a whole series of levers that I recommend to my noble friend the Minister.

It would be easy to insist that whenever any mortgage figure for monthly repayments is quoted on those banners outside new houses it should include the cost of heating. The mortgage price should never be quoted without the cost of heating, because that is the basic price. That would force housebuilders to admit to people that they are giving them an annual bill which should not be there, that if they built the house better they would not have that bill, both for heating and ventilation—I mention ventilation because that will be an increasing worry in view of the change in the climate which is already part of our existence; it is not something that we will be able to turn back. If we do that, we can make all sorts of arrangements.

I never understand why we cannot say that when you sell a house you have to show that you have raised it one energy performance level during the time you had it, or, if not, the cost of raising it another level will be put in escrow for the person who buys the house. I do not understand why we do not make it necessary for every survey to include clearly the cost of improving the house to the next level. That should be part of what the surveyor does so that people know what the situation is. The noble Lord, Lord Foster, did not refer to the fact that a high proportion—some say more than 60%—of people buying a house do not know what the energy efficiency level is. I have been to a particular housing area in my former constituency with one of my sons, who looked about the age to want to buy a house. We went around a house that was on the market for £500,000. I asked about the energy efficiency and the good lady said, “Very high.” I said, “What do you mean by ‘very high’? Is it A to F, or one to seven? Give me some idea.” It became clear that she did not know whether A was high or low; she had not quite got that right, so she said “very high” again. I said, “Well, can I see what it is?” “Oh”, she said, “head office has not given it to us.” This was a series of houses that had been on the market for some time, half of which had been sold, and nobody could have known what the efficiency was because they were not provided with the information. That is Britain’s second-largest housebuilder, which shall be nameless—although it was Persimmon.

I agree with the points made by the noble Lord, Lord Best, on rural-proofing, but rural-proofing should not be an excuse for not doing it. We should make sure that those things that cannot be done in the normal course of business are done because we have intervened. That is the matter of fairness. I say to my noble friend the Minister that we will not meet our climate change requirements if we are not fair. It is crucial that the people of Britain recognise that this is a battle which we all share, and which does not go on to the shoulders of the poorest. Unfortunately, the system that has been brilliant in bringing forward offshore wind bore much more heavily on those houses that did not have gas or alternative means of heating because their electricity bills were, and are, disproportionately high—because that is how we finance it. We must recognise that this is something for all of us. The benefits have to be seen, because many of them are interim benefits. Above all, the people of Britain must feel that this is fair dos. When we design this system, this is the minimum that we can do—so much the minimum that it is not enough—but, as we design it, we must build into it the fairness for which the British people are so keen. If we do not do that, we will have gilets jaunes, and perfectly rightly too, because that is a statement not about climate change but about unfairness and unthinking imposition on the nation.

--- Later in debate ---

[The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy and Northern Ireland Office (Lord Duncan of Springbank) (Con)]

My Lords, this has been an interesting and important discussion on a Bill that addresses an issue which I believe we all care very much about. As we look at the challenges facing the country in ensuring that all are able to live in a warm home, there is no doubt in my mind right now that that is a simple statement of ambition for everyone here.

The Government remain committed to delivering on a heat policy road map, and they will do so very soon indeed. It will look at how to both reduce emissions on buildings and address energy efficiency and will come as part of a series of announcements that we will make as we approach COP 26 in Glasgow in November. That heat policy road map is imminent. However, it cannot come alone; it must come alongside a fuel poverty strategy for England—I cannot on this occasion speak for Scotland. Again, that strategy will come very soon. These two combined policies will set out the series of steps which will be taken to bring us toward taking the necessary step to ensure that we have eliminated fuel poverty and addressed the energy efficiency of buildings in good time on our approach to our ambitious net zero target by 2050.

The noble Lord, Lord McNicol, asked when the White Paper is coming. It will necessarily come first, setting each of these policies and a wider range of policies into a broader context. Again, that is also part of our ambitious complete statement ahead of the Glasgow climate change conference.

On the question of ongoing investment in addressing the quality and durability of homes, we continue to invest some £2.5 billion in capital funding to improve the homes of those on lower incomes, and we are seeking to improve the warm home discount and energy company obligation. Each of these will be necessary.

A great deal has changed since the earlier incarnation of the Bill was introduced in the other place, not least that there has been an election, which is one of the reasons why that Bill did not make progress. In that election, the party of government, to which I belong, made a number of serious commitments in its manifesto, and it is worth while rehearsing what they are. There will be £6.3 billion-worth of upgrade for those in fuel-poor homes, particularly in social housing. We will consult on raising minimum energy performance standards in private rentals—again, as a number of noble Lords mentioned today, private rentals are perhaps the most difficult to reach of all properties, since they are in the hands of a large number of individuals. We will consult on setting requirements for lenders to improve the energy performance, which, again, should help us move in the right direction. Finally, we will consult on phasing out the installation of fossil fuel heating systems in off-gas grid properties—again, trying to get to that hard-to-reach final point in moving this forward.

We are putting forward a number of other policies, some of which touch on issues raised by noble Lords today. On the question of insulation, raised by the noble Lord, Lord Redesdale, he is quite right. You can have the best insulation, badly installed, and you achieve literally nothing. The problem with that is that if your kitemarked process does not recognise the installation, you could theoretically have a high quality and yet a low reality, and you might never know that, because there is no way to monitor it traditionally inside your own home. Therefore, we are instituting a new trust mark scheme, which should allow us to examine things such as cavity wall insulation to ensure that it is up to standard regarding not just the materials but the installation itself. That should go some of the way forward. We are also putting £5 million into the green home finance innovation to look at other ways in which we can address some of the issues inside homes, and £10 million to examine how best to retrofit.

A number of noble Lords, including the noble Earl, Lord Errol, questioned how we are able to look at some houses which are listed beyond the ability to address them. To be frank, it is a hornets’ nest to try to look at the whole listing process, but that will need to be done. We are sitting in a Chamber that is surrounded by glass held in by pieces of lead. As this building goes through its retrofit, we have to ask ourselves how it shall achieve the highest possible standard, and what it can expect to achieve in that regard.

The noble Lord, Lord Teverson, asked why the number of people who seem to be stuck in fuel poverty does not seem to change year on year. He is right to ask that, and the answer is a more straightforward one, as it is a relative metric. It is always looking at the bottom 10% to 12%, so we will always get a similar sort of figure. However, because what we are measuring inside that will change but the numbers themselves may not, to measure progress within it we need to look at the fuel poverty gap, which is the difference in bills between fuel-poor and not fuel-poor households. The fuel poverty gap fell from £873 million in 2010 to £812 million in 2017—the most recent statistics that we have. I do not think that is enough, if I am being honest, but it is a move in the right direction. The noble Lord, Lord Teverson, also asked about the renewable heat incentive. My right honourable friend the Prime Minister has committed to a replacement for that, but I do not yet know what that replacement will be, so I cannot give him any more detail on that.

The noble Lord, Lord Deben, made a number of serious points. His chairmanship of the Committee on Climate Change is welcome and his contribution is welcome in that regard. Our future home standards will be introduced by 2025. I know that he will quickly say that that is too late, and I understand why he would, but it will require new-build homes to be future-proofed, with low-carbon heating and world-leading levels of energy efficiency. As it happens, we are consulting on it right now, and consultation on that particular proposal closes today, so I fear those who have not yet put their thoughts on paper may be a little too late.

[Lord Deben]

Will my noble friend give way on that point? Can he assure me that in 2025, the new standards will come into operation on any house that is under construction, and not wait for people to have fulfilled their planning period; otherwise, it will not be 2025—as history tells us, it will be 2029?

[Lord Duncan of Springbank]

I will give that commitment; I think I can do that. This may not be in the consultation, but I think that would make perfect sense. We need dates to be meaningful, and 2025 is the meaningful date we are talking about here. If a piece of paper whistles towards me from the Box, noble Lords will realise that I have gone beyond my brief, but I think that at this point that commitment is something I can make—I hope. Yes, I have reassurance from over my shoulder.

The noble Lord, Lord Whitty, asked about the radio programme he heard this morning and what tax issue will come forward. I suspect that it is true to say that all of this area is being examined. The Treasury works in mysterious ways: I cannot tell noble Lords exactly what it is thinking about at this moment, but I am sure it is thinking very big thoughts. When it tells us what they are, I shall be very interested to hear them, much the same as the noble Lord.

What I have to come round to, and have been skirting around just now, is that although the Bill itself is welcome in so far as it facilitates this discussion and our debate today, we cannot support it. I appreciate that a number of noble Lords will be disappointed in that regard, but let me explain some of the reasons why we cannot do that today.

The first is that we have strategies coming which will examine this. I thought that was a piece of paper whistling toward me—good, it was not. I am sorry about that; I am distracting myself. The policies that we will be putting out in a matter of a few months will set the strategic direction and set in place within a road map how we will achieve it. The Bill before us would cut across that and reduce our flexibility when that comes forward.

The other aspect of the Bill is that it gives us no new powers or levers. It does not actually help us achieve the ends; it would simply set the framework within which we are to achieve them. Those dates will be contained within the strategies I mentioned. It will be important to ensure that the strategies have clear dates, and we have a road map with commitments which fit into a legal framework to ensure the certainty which underpins the purpose behind the Bill: to allow the building sector to understand what it is up against, what it has to commit to, and, frankly, what it should be exceeding. These should be setting minimum standards, there should not be any limit on their ambitions to move beyond that point.

I do not doubt that the noble Lord will be disappointed to hear that we do not support the Bill, but I can give assurances that in the development of the strategies to come, I would welcome his involvement and that of all Members of the House who have taken an interest in the Bill today. I would also welcome the involvement of Mr Bailey; I was disappointed to hear that he was ill, but would welcome his involvement in this process as the strategies become more robust. I think elements of the Bill will find a new home in the strategy as it manifests itself as a more solid approach.

I appreciate that that is not the outcome many here would have wished for, but I hope that noble Lords will understand why I am saying that. We are in no way seeking to be less than absolutely ambitious in this area, and we will seek to work with all to ensure that our strategy delivers, as this Bill itself would have delivered.