Energy Bill [HL]

Lord Jenkin of Roding Excerpts

Monday 24th January 2011 Grand Committee

[The Deputy Chairman of Committees]

If Amendment 20A is agreed to, I cannot call Amendment 20B by reason of pre-emption.

[Lord Jenkin of Roding]

My Lords, I also put down amendments—Amendments 20B and 20D—which are differently worded but would have exactly the same effect. Having listened to my noble friend Lady Noakes, I have nothing to add, except to support her fully. I believe that it is normal practice for the Government, having considered the proposals of the Delegated Powers and Regulatory Reform Committee, to seek to accept them.

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Debate on whether Clause 35 should stand part of the Bill.

[Lord Jenkin of Roding]

My Lords, in reading the Bill, and in getting the substantial number of representations that I suspect that we have all had from the relevant organisations, I have been impressed by the sheer complexity of the problem that we face in dealing with the private rented sector. It covers an enormous range of properties, of kinds of tenancy, and of people who occupy the houses. One trade association, the Federation of Master Builders, told me that there are around 26 million homes in Britain, over half of which were built before the 1960s. Five million are Victorian terraced properties. The scale of the challenge is nothing short of enormous. That is what has impressed me. Yes, we have new homes coming up with new standards and owner-occupied homes, but the private rented sector offers a severe challenge to the Government and to all those working with them.

Everybody with whom I have spoken has had nothing but total support for the whole concept of the Green Deal. At the same time, they recognise that it will have to maintain a careful balance between the desire to get maximum energy efficiency from this huge range of houses and, at the same time, maintain the availability on the market of homes to rent. Some of the representations that I have heard have expressed some anxiety that, if too many obligations and restrictions are placed on landlords of rented homes, one result could be that they will simply be taken off the market. The consequence would be almost worse than the original problem.

There is no question about it: the rental market has grown substantially in recent years, largely because of the progressive removal of the controls which hampered it for so long. When I was very young, I lived in a rent-controlled property. My mother was renting and the landlord could not put up the rent at all. In those circumstances it was almost impossible for anybody to rent a house because none of them came on to the market. If the house was empty, it was immediately sold for owner occupation. One has to hold that balance carefully.

I hope that, when dealing with the amendments to the later clauses, the Committee will feel that we have to give attention to this. There has to be a proper balance between the desire to improve these houses and their energy efficiency, and making severe inroads into the rental market as a whole. I am encouraged that, both in the Bill and in one of the amendments to be moved by the Opposition, there is a recognition that this needs to be done rather carefully. A considerable duty rests on us to try to get that balance as fair as we can between the two objectives—making sure that there is a proper market in homes for rent and getting the houses improved.

I want to make only one other point, which has been made by speakers already. The biggest problems we face here are in the homes that are extremely difficult to make more energy-efficient. It has been made clear in some of the representations that the limit of £5,000, or whatever it is, would not cover those sorts of places. They are coming under the energy company obligation, or so I understand. One does need to look at all these various aspects if we are going to achieve our objective.

Like my noble friend Lady Maddock when moving her amendment, I congratulate the Government on having had the courage to pick up this ball and run with it, because it is important that we try to deal with this hugely varied sector of housing if we are to improve the lot of the tenants and at the same time save energy.

[Baroness Smith of Basildon]

My Lords, I welcome the comments of the noble Lord, Lord Jenkin of Roding, because I think they sum up some of the challenges of the legislation and why it is so welcome that we seek to make improvements in the private rented sector and indeed other sectors—the private sector and the social housing sectors—through the energy market.

It is right that we examine this in detail because the issue around the balance between the quality and quantity of housing is a fine one to walk, and we want to ensure that at all times the Government reach the correct balance. In proposing amendments and discussing and debating the clauses of the Bill, we want to ensure that the Government can fulfil the objectives they have set themselves. We entirely agree with the Government when they said that they wanted to be the greenest Government ever. When the Minister referred to that in the Chamber in our first energy debate, which seems an awfully long time ago, and I challenged him on it he said, “Like it or not”. I let him know that we do like it and that we will support the Government in these aims and wider where they seek to be as green as possible. The issue of having greener properties and more energy- efficient properties goes beyond just the idea of being energy-efficient. It goes into health, the economy and much wider. As we debate these clauses about the private rented sector I give the Minister our assurance that every time we raise an issue we do so only to improve the Bill and work with him to achieve his stated objectives.

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[Baroness Noakes]

My Lords, I have Amendment 20L grouped with this. Unfortunately I did not see the grouping before I got in today, and I am not sure it fits particularly well with Amendment 20KA. I support what the noble Baroness said about the review being capable of including other issues, whether specified by the Secretary of State or determined to be appropriate by the reviewer. I suggest that if that is what she wants she should have tabled the amendment differently—to say whether the Secretary of State should specify additional matters or whether the reviewer should be empowered to consider whatever other matters he wants. It seems to me a sensible flexibility to introduce into the Bill in some way.

Amendment 20L is rather different. I support the necessity of a review prior to the implementation of the private rented sector provisions of the Bill. The amendment is inspired by a briefing from the British Property Federation. It is differently expressed from the suggested amendment; my noble friend, Lord Jenkin, who has an amendment in this group, has followed the suggested amendment more faithfully.

Clause 36(5)(b) requires this review to include a consideration of the extent to which financial assistance is available to landlords of private rented properties for the purpose of taking measures to improve their energy-efficiency. My amendment takes this further, and asks that the review also examines the extent to which such financial assistance is known to be available. There is a world of difference between something being available and people knowing that it is. My noble friend Lord Jenkin’s amendment focuses on the amount of marketing effort and the sums spent in making landlords aware of financial assistance. To that extent his amendment focuses on the inputs to the process, while mine tries to focus on the outputs: in other words, whether there has actually been knowledge of the financial assistance available. For example, if the marketing in the early stages of the Green Deal is not addressed to landlords in the private rented sector, there may be zero knowledge of that in the sector.

Alternatively, landlords might know about the availability of financial assistance, not through marketing efforts from Green Deal providers, for example, but through trade bodies or the media. We cannot assume that because financial assistance is available landlords are aware of it and ready to act on it. It is important that the powers in this chapter are not activated unless and until there is awareness of financial assistance among private rented sector landlords.

[Lord Jenkin of Roding]

My Lords, as my noble friend Lady Noakes has indicated, Amendment 20MA in my name follows a recommendation from the British Property Federation. The federation makes the important point—which I may have made earlier—that the energy-efficiency supply sector does not have a good record of approaching private rented properties. It is much easier to take the low-hanging fruit provided by the owner-occupier properties, where the owner is the one paying the energy bills. The private rented sector has hitherto not been approached formally—other than perhaps in a number of cases—but that needs to happen. Therefore, the suggestion in my amendment is—as my noble friend Lady Noakes has said—that there should be a clear review of the efforts made to bring this whole process to the attention of both landlords and tenants.

I imagine that many noble Lords will share my experience of having people in their families who are both landlords and tenants—some are landlords and some are tenants. Of course, the biggest single problem is always to get both parties to see that an improvement will be to both their advantages. That will require a considerable effort. All that I am saying is that the review must take account of the efforts that are being and could be made to spread the awareness both of the process and of the mutual advantage that will come to landlords from the enhancement of the value of their property, and to tenants from lower energy bills and perhaps a more comfortable house. That will take some effort. The review must recognise that and form a view on how successful the measures have been to date.

[Baroness Maddock]

My Lords, further to my noble friend’s comment about the record of the private rented sector in this area, he is absolutely right that we have not seen its efforts in any great quantity. However, I remind him that one or two schemes got grants under the Home Energy Conservation Act. If he cares to look back, I am sure that the Energy Saving Trust has records of the one or two schemes that were quite successful. Unfortunately, nobody ever looked at the statistics to see how those schemes might be grown in the rest of the country, but that is history. I also remember that one very good scheme was initiated by Westminster City Council.

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[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.

[Lord Jenkin of Roding]

Perhaps I may add a word or two to the debate because I put my name on the amendment. We spent a good part of this afternoon’s proceedings all agreeing that the Government face a major challenge in seeking to extend the Green Deal or apply the Green Deal to the private rented sector; indeed many noble Lords from all parts of the Grand Committee were stressing the problems that are being faced on this. I agree with that.

Although I have a lot of sympathy for those who say we have waited a long time, we must get on with this. If we try to hurry it forward and bring forward the date of the review and curtail the length of time that the review may take, it will go off at half cock. When dealing with the complexities and the challenge, which I described earlier as enormous when citing the federation, we have to be prepared to make sure that the authorities and all the people who take part in this—the property owners, landlords and tenants so far as is possible—are sufficiently aware of what is expected before one tries to rush forward.

My noble friend Lord Teverson says that by 2013 we will know and have enough experience, but with the greatest respect I do not believe that for a moment. This is going to start pretty slow and the immediate reaction will be people coming along and saying “It’s not happening”, and that we have to have compulsion and the full panoply of regulations. That would be very unwise because it might get the process off in the wrong way.

The Minister has been absolutely right. The Government do not want to go down the road of compulsion through regulation, yet if one rushes the review and starts to make decisions on what is bound to be pretty imperfect and incomplete information, my guess is that is that we will be in greater difficulty than we otherwise would have been. I would therefore urge more caution on this.

The date that my noble friend and I have put on this amendment and the other amendments that go with it are perfectly realistic and I would not agree with the noble Lord, Lord Davies of Oldham, that we could bring the thing forward. That would run straight into the dangers which I have been trying, in my own imperfect way, to point out.

Perhaps I can say to my noble friends on the Front Bench that, if the Government are being criticised for anything, it is that on a number of issues they are moving too fast and trying to do too much at the same time. We are dealing here with a problem whose origins go back many decades. Indeed, in some cases it will be centuries. To try to rush forward and deal with it all in a relatively short time is a potential recipe for disaster. I hope that the Government will get the message that this needs a measured approach with enough time being given for people to consider and make sure that they understand the information that is to come out of the review before rushing to make regulations. That comes back to the very first point I made earlier this afternoon. If you go too fast, it will have the effect of drying up the rented sector. People will throw their hands in the air and say, “Blow that. I am not going to let any more”. That would be a very great pity.

[Lord Teverson]

Perhaps I could respond to that because it is exactly not what I am saying. I am surprised that we have a Bill where the Government are constraining themselves with a “best after” date as opposed to a “best before” one. I am not suggesting that things have to move forward at any time, but that we have within the Bill something that Governments normally try absolutely to avoid, which is a restriction on when they can take action if they feel that that action is necessary. We all hope that the action will not be necessary, although I note that a report of the review must be published by 1 April 2014, so there is a longstop. However, while I am the last person to argue that we should not put the quality and success of this scheme first—that is essential and why the 2012 date is right—what I find difficult to understand is not that we are forcing the Government to do this earlier, but that they could not exercise their own power to move forward if they felt it necessary to do so.

I did invite the Minister to suggest, if the scheme was seen not to be moving forward particularly well, other ways of doing it. I am sure that there are ways outside this Bill that the Government would get on with. Indeed, I know that my noble friend would do that, which may be part of making sure that landlords are aware of the benefits of the scheme, that it exists and can be successful. We have also discussed ways of utilising the local authorities, although not through enforcement because I am sure that the Government would find other ways to respond. What I find difficult is that the Government have imposed a constraint on themselves in the Bill about when the process can start.

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[Baroness Maddock]

My Lords, I shall speak also to Amendments 20AA and 20AB. I will be very brief because I believe I have covered quite a lot of this. We also have an amendment coming up later which is a little similar to amendments that I am speaking to here. I have already discussed the fact that I am concerned that we do not have a very good timetable for the regulations. Nevertheless, the Bill allows for some regulations to be made to deal with the worst properties, and that is what I have been assuming in some of my amendments. However, the Bill says that the Secretary of State “may”, and I have asked that it be “must”. If I had been well tutored by the noble Baroness, Lady Noakes, it would be “must”—I have put “shall”, but I think we all know what I mean, so let us leave it at that for now and not have a long discussion about may, shall and must.

I have already indicated that I think that if landlords are not complying with the regulations for the very worst properties—my noble friend Lord Best said this in speaking to other amendments—and if they are not letting these properties which, frankly, probably none of us in this Room would want to live in, then we need to be a bit clearer about how and when we are going to act. At the moment, under the housing health and safety rating system, where there are health hazards, the local authorities can go in, do the work and charge people for them. It is a far more effective way than fining people, because if we fine people, as I said, the work does not actually get done. It is clear that the Minister could bring in regulations in this legislation and the penalty put forward on the face of the Bill is £5,000. I have suggested that we make it £10,000, but it is clear from my Amendment 20AA that I prefer that we have local authorities going in and doing the work rather than fining, because then you actually get it done. At this stage in proceedings, I will not say anything else, and I beg to move.

[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.