Electricity and Gas (Carbon Emissions Reduction) (Amendment) Order 2010

Lord Hunt of Kings Heath Excerpts

Monday 26th July 2010 Grand Committee

[Lord Woolmer of Leeds]

My Lords, like the noble Lord, Lord Teverson, I have a different view of the room, but I can also see the same people and it is a great pleasure to see old friends here again. I have one simple question. In the 1960s and 1970s, I recall the piecemeal efforts made to improve old Victorian housing stock in Leeds. In the end the council adopted what eventually became a national approach, that of taking whole areas of housing, identifying it as old stock and designating “whole house improvement areas”. The council worked through the worst of the housing by taking a whole series of streets at a time. In some cases, we decided to demolish the houses because it was never going to be worth trying to keep them, but other areas were kept. This proved to be an extremely cost-effective way of dealing with improvements.

Certain areas of housing clearly need improvements in terms of energy efficiency. It seems to be common sense, and it may be that this is what is being done in some areas, that if one works through the areas most in need, that is a cost-effective approach. But instead of doing that, we are attempting to prioritise in the first instance individual properties where particular people with particular characteristics live. That is extraordinarily difficult to do, as the documents we are considering today show. In any case, people die or move on into other housing, and some individuals may therefore qualify again. My question for the Minister is this: will the Government reflect on whether the most cost-effective approach over 15 or 20 years would be by area? Clearly we would not be going into more recently built housing for a long time. This approach could be funded in the same way and suppliers could put the work out to tender by negotiation with local authorities who know the areas well and can easily identify them. This approach may already be in train, and it seems to be the most cost-effective one—not in the short run, that cannot be denied, but over a period of time it would be. Certainly it would avoid all the bureaucracy of trying to identify people in particular circumstances and with particular needs, but who are in fact moving targets. I hope that the Minister can reflect on this when he responds.

[Lord Hunt of Kings Heath]

My Lords, I should like to welcome the Minister to the world of order-making and the familiar cast list of noble Lords present who spoke in a similar debate a year ago. The Community Energy Saving Programme is extremely important and we see this as a critical part of how we can help people to make energy savings, cut their household bills, and contribute to permanent reductions in CO₂ emissions. Over the years that the schemes have been in operation, millions of households have been helped. However, as noble Lords have suggested, there is no room for complacency. That is why the previous Government consulted on the scheme a few months ago, and on the amendments to the existing framework. I am grateful to the Minister for his explanation.

I will also ask a question raised by the noble Lord, Lord Jenkin. I, too, have read the brief report of the Merits Committee, and I am grateful to the committee for its work and comments. As the noble Lord, Lord Jenkin, said, the committee noted that the detailed impact assessment, which runs to 77 pages, is attached to the statutory instrument that we are debating today. The committee said that it had not had the time to make a detailed assessment of the instrument, given the speed with which the Government wish the SI to proceed. Like the noble Lord, Lord Jenkin, I ask the Minister for an explanation. I am confused: surely the Merits Committee must be given enough time in which to do its job properly. I speak as the first chair of the Merits Committee, the point of which is to have time to go through statutory instruments in order to make a judgment on whether it should draw to the attention of the House that scrutiny of a statutory instrument merits special attention. If it does, it is marked with an asterisk on the Order Paper, which usually will lead to a debate in the Chamber. The Minister should explain why the Select Committee has not been given proper time to do its job. I am sure that, when the SI goes back to your Lordships' House, I will raise this matter on the Floor of the House.

--- Later in debate ---

[Lord Hunt of Kings Heath]

We were not always able to agree with the noble Lord, Lord Jenkin, on specific proposals, but I do not think that I ever argued with him on the general principle. I realise that “The Judgment of Daniel” is facing me and that I must be very careful about how I respond, but I recall the noble Lord, Lord Reay, raising this very point in Grand Committee 12 months ago. I am absolutely convinced that if we are seeking to ensure that these measures are taken—and I do not mean just the measures that will have to be taken on energy saving, but more generally in terms of the energy strategy; no doubt we will discuss this tomorrow afternoon in relation to the Statement on energy—the more general information that can be provided to the public, the better.

My noble friend Lord Woolmer mentioned the scheme in Leeds in which whole housing areas were taken together. In the inner city in Birmingham we also had a scheme called “enveloping”. Essentially, the local authority renovated the whole structure of houses which might have been privately rented or owner occupied. That scheme was enormously effective and meant that in many inner city areas, instead of houses being knocked down, some of the social fabric of the areas was maintained. I have long thought that such an approach could be used in relation to energy saving. We will be very interested to hear the Minister give some indication of when he is likely to come forward with proposals. He mentioned the green deal and the forthcoming energy Bill; I would certainly welcome as much information as he can give about what is likely to be contained in them and when they are likely to come to your Lordships' House.

I remind the noble Lord of a comment made by the noble Baroness, Lady Wilcox, who was standing in my place on this side of the Room only 12 months ago. When we debated a previous order on this matter, she then referred to Conservative Party policy to grant an entitlement to householders for approved home energy works up to the value of £6,500. At the time, I estimated that a loan guarantee of up to £200 billion would be required of a Conservative Government. I would be interested to know whether thinking has moved on since then. We will look at this carefully, but it strikes me that at a time when they seem to have found it impossible to give a rather modest loan to Sheffield Forgemasters, they have been indulging themselves in schemes which would involve considerable amounts in loans. I should be interested in the noble Lord’s response to that.

Finally, I come to the question raised by the noble Lord, Lord Jenkin. Given the current economic circumstances, a particular focus must be the impact on poorer people and households. The order contains a specific amendment in relation to microgeneration which means that suppliers will be able to promote only microgeneration measures that are eligible under other microgeneration support mechanisms for promotion to super priority group households. The noble Lord, Lord Jenkin, asked for information about super priority households. The Explanatory Memorandum states at paragraph 7.4:

“All microgeneration uplifts will be withdrawn from April 2011”.

Can the Minister confirm that this applies only in circumstances arising in this order—in other words, it does not apply generally to the other microgeneration support mechanisms embracing feed-in tariffs and renewable heat incentives? Some clarification would be welcome.

[Lord Marland]

My Lords, as always, it is a great pleasure to enter into a debate with such eminent gentlemen who know so much about the subject. Perhaps I may deal with the points raised in consecutive order. I note the comments of the noble Lords, Lord Jenkin and Lord Hunt, that this order should have gone through the Merits Committee. You’re damned if you do and you’re damned if you don’t. It is worth pointing out that the Joint Committee of both Houses that scrutinises statutory instruments did not think that it needed drawing to the special attention of both Houses. This legislation is in operation and all we are doing is seeking to extend its lifetime. We have had three months of public consultation; some 102 companies have been consulted, as have the big six and their agencies. The whole point here is to keep up the pressure on an existing programme to build the bridge between now and the green deal.

This programme is being filled quickly—probably quicker than we predicted—and we now have an opportunity to keep up the pressure. It would be wholly wrong to tear up the current programme while it is in force and particularly while we are planning the green deal to which the noble Lord, Lord Jenkin, referred. We completely understand the bureaucratic and complex nature of the current arrangements, and I give the noble Lord the commitment that the green deal will seek to address that. As regards his point on difficulty of suppliers, that is a practical issue. Some people have no difficulty with them, while others do. We hear positive remarks and I am sorry that he experienced difficulty. Perhaps if he joins the super priority pension group, it might be a different thing altogether.

--- Later in debate ---

[Lord Marland]

The answer is that they may or they may not. There is no fixed method by which to use the commercial levers that are available to them, as you would expect. I hope that that answers my noble friend’s question.

My coalition friend, the noble Lord, Lord Teverson, rightly mentioned that he has changed his place and now has to look at a new picture. I agree that it is nice to see a different prospect and I do not have to work out whose foot that is, lying there wearing the sandal; hopefully, the intelligence of the noble Lords, Lord Hunt of Kings Heath and Lord Woolmer, will work that out for us. I certainly know who wears the trousers in our household, but I have never worked out who wears the sandals.

He mentioned the counterintuitive nature of the current CERT arrangement. I agree with him that it is counterintuitive; again, the green deal—sorry to bang on—should help to cope with some of that counterintuitivity.

The noble Lord asked what the uplifts are, compared with existing targets. The pro rata extension of the reduction of 108 million lifetime tonnes of carbon dioxide represents a 3 per cent reduction of household emissions from the non-traded sector in 2013. I hope that that deals with his question.

The noble Lord, Lord Woolmer, dealt with what the noble Lord, Lord Hunt, calls “enveloping”. I was wryly pleased that he asked that question; it was the first question that I asked our officials when this was brought to my attention. The answer is that it is the best way of coping with this, and it is the most cost-effective way for the supplier to deal with small groups in certain areas. We should encourage this. I take on board fully what the noble Lord said, but I am amused that we should have thought of the same thing together. I am grateful to him.

The noble Lord, Lord Hunt, whose baton I am merely picking up on this issue—I am glad I did not get as hard a time as I might otherwise have done—went on about cost. With all due respect to him and to others, there are more than 11 pages in the document outlining the costs. I know that the breakdown is complicated and split into various measures, but I commend it to noble Lords because it is comprehensive, and I am grateful to my noble friend Lord Taylor for talking me through it.

[Lord Hunt of Kings Heath]

The RIA, like all RIAs produced by his department, is comprehensive. However, what is difficult to get out of it, and what would have been helpful in the Explanatory Memorandum, is a succinct summary of the likely overall impact on costs.

[Lord Marland]

I take on board the noble Lord’s point. I addressed the issue of costs earlier. They are not significant in the context of the average bill. The noble Lord mentioned Sheffield Forgemasters. I have a private bet—as this is only round one of three rounds in the next three days—on how many times he will mention that. A lot of discussion and water have gone under the bridge. I confirm that the feed-in tariff will not be affected and I hope that that will give him comfort.

I hope that I have answered the questions that have been put by noble Lords and addressed the issues that they have raised. The principal theme of the order is to keep up the pressure on installation suppliers, to maintain employment and to deliver carbon reduction. It will also help us to bridge the gap between now and the green deal, which is a fundamental part of the Government’s policy. The green deal will bring forward a new and ambitious approach to driving home energy efficiency which will not require up-front payment, but will benefit from the repayment of the costs of work over time through the savings of the Bill.

Ahead of this change, it is essential that we do everything that we can to maintain and, where possible, quicken the pace of energy efficiency movements, and to increase the focus on lower-income pensioners and family households. We can make a difference to household energy bills this winter if we act now. Therefore, I hope that noble Lords will support the refocused CERT scheme so that householders, and the UK more broadly, can reap the benefit of energy-reducing measures as soon as possible. I commend the order to the Committee.