Domestic Premises (Energy Performance) Bill [HL]

Lord Foster of Bath Excerpts

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

Moved by

[Lord Foster of Bath]

That the Bill be now read a second time.

[Lord Foster of Bath (LD)]

My Lords, I am pleased to introduce this relatively simple Bill. I look forward to hearing from noble Lords speaking in the debate.

The Bill is simple: it requires the Government to do a number of things, to which they have already committed in writing, by certain dates, but it does not require them to be done in a specified way. Flexibility is built into the Bill. There will of course be much to decide, from the definition of fuel poverty and the availability of data to how to retrofit listed buildings and how to incorporate the use of new technologies into energy performance certificates, but such decisions do not impact on the Bill.

Some brief background may help to set the scene. As a Minister in DHCLG I was able to build on the work of my noble friend Lord Stunell and introduce a number of measures to improve the energy efficiency of new houses, but we both knew that the really important issue was to improve the energy efficiency of the existing housing stock. Successive Governments have introduced measures to address that issue, particularly in relation to helping those defined as fuel poor. I pay tribute to my noble friend Lady Maddock, who began to address this many years ago in her Home Energy Conservation Act in 1995. Despite all the efforts, though, and in light of the climate change emergency, it has become clear that not enough is being done. As the Chartered Association of Building Engineers, which supports the Bill, said:

“Overall, improving the energy efficiency of existing homes remains one of the key, but still to be fulfilled, challenges facing the property sector and is essential if we are to reduce carbon emissions and ensure all homes are warm and affordable to heat.”


Writing of the need for swift action, Elmhurst Energy said:

“Now is the time to make that step change necessary to ensure that our existing housing stock is improved.”


Last year the Committee on Climate Change, whose chairman, the noble Lord, Lord Deben, I am pleased to see in his place, published UK Housing: Fit for the Future?. It assessed the preparedness of our housing stock for the challenge of climate change, and concluded that the measures to reduce emissions from the UK’s 29 million homes, responsible for 17% of all carbon emissions, had stalled; that energy use in homes had increased; and adaptations of the housing stock to meet the impact of changing climate are lagging far behind what is needed to keep us safe and comfortable. Crucially, it went on to say that there needed to be greater policy certainty since the absence of such certainty has led to skill gaps and lack of investment in construction, design and the development of new technologies for the urgently needed major refit programme. As Andrew Warren, chairman of the British Energy Efficiency Federation, recently wrote:

“On far too many occasions the energy efficiency industry has been made promises by Governments, only to see them withdrawn. This has resulted in the laying off of staff, the loss of investment and the closure of factories.”


However, it is welcome that recently the Government have announced their intention to meet various ambitious targets: a target to improve the energy efficiency of the homes of the fuel poor; a target to improve the energy efficiency of the rest of the housing stock; and a target to improve the efficiency of heating systems. For some of this at least, significant sums of money have already been earmarked.

The Bill places a duty on the Secretary of State to achieve these targets—the ones the Government have already committed to. Placing them in legislation and requiring annual reports on progress provides Parliament with the means to ensure the delivery of government pledges. It is an approach just like that of the Climate Change Act, which sets overall targets in law for 2050, intermediate targets through the five-yearly carbon budgets and a duty on government to prepare proposals and policies for meeting them and to report on them. Crucially, the Bill also provides the policy certainty that the industry so desperately seeks, so that it can play its part in achieving the targets. Of course, none of this should detract from the steps we should all be taking to reduce our energy consumption, so I welcome the work of organisations such as the Energy Saving Trust, and Citizens Advice with its recent Big Energy Saving Week, in providing helpful tips on how to do so.

Before providing more details about the Bill, I should point out that Sir David Amess recently introduced a similar Bill in the other place. Sadly, events overtook it and it did not make progress, but I thank him. In drafting our respective Bills, we were both helped by civil servants from BEIS and the Sustainable Energy Association, whose president, the noble Lord, Lord Best, is also in his place. I thank them and especially Ron Bailey of the SEA, whose assistance I have declared in my register of interests. I also thank the Minister for the constructive, if challenging, discussions we have had on the Bill.

So, what does the Bill do to increase the energy efficiency of domestic properties? It uses as the benchmark, as proposed by the Government, the achievement of band C on an energy performance certificate. An EPC is an assessment of the energy performance of and carbon emissions from a property. The higher the EPC, the more efficient the property, with less carbon emitted. A lower-EPC property leaks heat, is more expensive to run and emits more carbon.

Part 1 of the Bill deals with the Government’s commitment to end fuel poverty by 2030, as stated in the Clean Growth Strategy and on more than a dozen occasions. For example, in your Lordships’ House, the noble Lord, Lord Henley, answered a Written Question with reference to policy to

“meet the Government’s commitment to upgrade all fuel poor homes to Band C by 2030.”

The Bill requires the Secretary of State to achieve that commitment with three caveats: where people refuse to allow required works to be carried out; where it is not technically feasible to achieve the objective; and where the cost of doing so is excessive. Bringing fuel-poor households up to EPC band C by 2030 will ensure that some 2.4 million households can live in warm homes with reduced fuel bills, with average savings of around £245 per annum according to studies by Verco and Cambridge Econometrics.

Part 2 deals with the Government’s objective to bring all remaining homes up to EPC band C by 2035, where practicable, cost-effective and affordable. One estimate suggests that 19 million homes in the UK do not currently reach this standard. The 2017 Clean Growth Strategy shows that this objective was initially just an aspiration. However, by April 2019, the then Minister, Claire Perry, made clear that all homes reaching EPC band C was a target; indeed, she described it as an “ambitious target”.

More recently, the Government said they agree

“wholeheartedly that energy efficiency is a fundamental pillar of our approach to reaching net zero emissions, addressing fuel poverty and cutting energy bills. This is why the Government has set ambitious energy efficiency targets.”

The Bill seeks to help the Government deliver on their target to get all homes to EPC band C by 2035, which will lead to average fuel bill reductions of around £400 per year and a total energy fuel bill saving of over £8.5 billion per annum.

Finally, Part 3 deals with ensuring that all new heating systems installed in existing properties have a water return temperature of no more than 55 degrees centigrade, as called for by the committee of the noble Lord, Lord Deben. Again, the Government appear to agree since their Domestic Building Services Compliance Guide states:

“Systems with condensing boilers should be designed to have low primary return water temperatures, preferably less than 55°C, to maximise condensing operation.”


Again, the Bill merely puts into legislation the Government’s own intentions. I accept that the target date of January next year is somewhat unrealistic and, at a later stage, I will propose a more realistic one. Incidentally, I also believe that, although further discussion is needed, an amendment may be required to restrict the extent of the Bill to England rather than England and Wales.

Achieving the three targets set out in the Bill will of course require a great deal of money. However, with the help of the Sustainable Energy Association, we have shared with the Government, and can make available to all noble Lords, costings which show that most of the money required can come from committed government expenditure for existing policies and from non-government sources from existing policies such as the energy company obligation. Although we have several suggestions, it will be up to the Government to decide what policy levers to use to ensure that any remaining amount is found. However, I am confident that the Government will want to find solutions since, as they said in their response to the BEIS Select Committee on 1 October last year:

“Our analysis suggests that our EPC C aspiration for all homes represents good value for money both for Carbon Budget 5, and in the context of achieving net zero.”


Overall, if the Bill delivers on its aim and the Government meet their targets, we will reduce fuel bills and the emission of greenhouse gases. We estimate carbon savings of nearly 24 megatonnes, which is roughly equivalent to cutting the carbon emissions of the UK transport fleet by one-third. We will save energy and provide the spur to business investment.

That spur is vital. The industry needs the certainty this Bill will bring. That is why it has the support of over 100 firms including Kingspan, Worcester Bosch, Vaillant, EDF, E.ON, Daikin and NAPIT, as well as installers, housing associations and organisations such as the National Energy Foundation, the Energy Saving Trust, the Solar Trade Association, WWF, the British Energy Efficiency Federation, Power for People and the Sustainable Energy Association.

Two years ago, writing about the similar Bill proposed by Sir David Amess, they collectively wrote to the Government, saying:

“In order for the energy industry to assist the government in achieving its ambitions, boardrooms and banks must be persuaded to invest in long-term infrastructure such as manufacturing and equipment together with research and development. This legislation will provide the certainty needed to trigger this vital investment in our sector.”


In deciding whether the Government will support the Bill, I hope the Minister will bear in mind the enormous loss of confidence, and subsequent loss of investment, that rejection will bring. In fairness, I should add that two organisations, Friends of the Earth and the Energy Saving Trust, have been critical. However, their objection is that I should have set earlier dates for the targets to be achieved, so perhaps I should concede to being too reasonable.

In conclusion, the Sustainable Energy Association has said:

“The Clean Growth Strategy demonstrates the current Government’s commitment to improving our homes. But introducing legislation is essential to ensure that their ambitions are achieved in the long-term regardless of who is in power. It is a legacy any Government should be happy to leave behind.


Our homes are where we sleep, work and play so ensuring that they are safe, affordable and healthy to live in is of upmost importance. This Bill will help to achieve this today and ensure that we are on our way to having a housing stock that is fit for future generations.”


This is a simple and reasonable Bill, but it has far-reaching implications for our quest to tackle climate change and, not least, help the less well-off as we do so. I beg to move.

--- Later in debate ---

[Lord Foster of Bath]

My Lords, I thank all noble Lords who have taken part in this interesting and informative debate. Inevitably, many of the issues raised are in a sense outwith the Bill, but will have to be addressed if the Bill is to go forward. For example, the noble Lord, Lord Best, raised the need for financial carrots to deal with issues in the private rented sector. He rightly raised the importance of rural-proofing, an issue he knows I am very passionate about following the work we were able to do in your Lordships’ Rural Economy Select Committee. Of course, it is wonderful to have the support of the noble Lord, Lord Deben. The House may recall that about two years ago, he spoke after me in a debate and began his contribution by saying how great it was to follow the noble Lord, Lord Foster, who always reminded him why he is not a Liberal Democrat. I am delighted that on this occasion, I have his full support.

He rightly raised, as did other noble Lords, issues about not just existing housing stock, which the Bill deals with, but the vital importance of getting it right for new housebuilding and the need, as others, including my noble friend Lord Teverson, said, to address Part L of the building regulations. I just say to the noble Lord, Lord Deben, that his history is slightly wrong in respect of zero-carbon homes. In fact, the policy was introduced—I played a small part in it as a Minister—during the coalition. It was George Osborne and the Conservative Government who removed that policy in 2016. Let us hope that in the strategy referred to by the Minister, zero-carbon homes will be coming back in.

Issues to do with listed buildings were raised, as was the need to revise the EPC, and the noble Lord, Lord McNicol, and others talked about the fuel poor. Various charities are doing excellent work to help them, but we need, above everything, for the Government to be doing far more. It is worth reflecting, as it was mentioned, that if we are to move to low-carbon electricity, if no support is given, the average house bill will go up by £200 per annum, placing an even bigger burden on the fuel poor in particular, so that needs to be addressed.

Of course, I am disappointed with the Minister’s response. I am delighted that the Government will have a clear road map and that there will be a set of strategies to deal with the various issues in the road map. But, frankly, it seems to me that nothing in the Bill can be cutting across what the Government plan to do. It provides in statute legally binding dates by which certain things should be achieved—things that the Minister has admitted are exactly what will be in the strategy. The difference with not putting that in legislation is that it does not provide your Lordships’ House and the other place with the means to hold this and future Governments to account in achieving what noble Lords have demonstrated we desperately want.

I say to the Minister that I am bitterly disappointed and warn him that in that light, the noble Baroness, Lady Jones, will be, as she said, nagging him for a very long time to come—a fate that I suspect he would not wish. Nevertheless, I beg to move.

Bill read a second time and committed to a Committee of the Whole House.