Lord Jenkin of Roding
Main Page: Lord Jenkin of Roding (Conservative - Life peer)Energy Bill
Lord Jenkin of Roding Excerpts
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, these government amendments propose a change to the Warm Homes and Energy Conservation Act in order to put in place a new, rigorous and flexible framework for measuring the Government’s progress in tackling fuel poverty in England. As we move forward with ensuring a safe, low-carbon future we must ensure that everybody is able to benefit from our policies.
Last year, Professor Hills completed his independent review of fuel poverty and concluded that we had been measuring the problem in the wrong way. Our concern about how we measure fuel poverty has been driven by wanting to address the problem more effectively.
High levels of fuel poverty a decade or so ago were masked by official figures that suggested the problem had been solved. The sensitivity to energy prices of the definition, creating an ever changing picture of the households who are fuel poor, makes designing and implementing effective policies extremely difficult. We want to learn the lessons of this.
We will therefore be adopting the new definition of fuel poverty proposed by Professor Hills. This finds a household to be fuel poor if it is below the official poverty line and if it has higher than typical energy costs. It is a more accurate measure of the problem. It brings the major advantage of telling us not only how many fuel-poor households there are but how badly affected each household is. This will help us target policies much more effectively, as our recently published Fuel Poverty: A Framework for Future Action attests. Although this new definition is rightly at the centre of our proposals, it is clear that a single indicator is not sufficient to give us an understanding of this complex problem. We therefore intend to monitor fuel poverty through a number of key indicators.
One of the important conclusions of the Hills review was that fuel poverty is a long-term structural problem, requiring an ongoing effort to mitigate it. The current framework does not reflect this, focused as it is on ensuring that no person lives in fuel poverty, as far as reasonably practicable. We want to address this problem with the current framework by adopting a new target focused on improving the energy efficiency of the homes of the fuel poor. In this way we can ensure that our efforts are directed towards a key cause of high energy bills and make a real difference to people who are struggling to keep warm.
Amendment 50J therefore sets a duty for the Secretary of State to have an objective to address fuel poverty and for the details of this new target to be specified in regulations, rather than in primary legislation as it is currently. The regulations must set out the form of that target, the level that will be achieved and the date by which this will be done. The secondary legislation must be brought forward within six months of the provisions entering into force. The amendment also maintains the duty on the Secretary of State to have in place a fuel poverty strategy but makes this duty consistent with the new objective.
Amendments 56A and 58 are minor provisions to be clear on the territorial extent of the amendments, where our proposals would apply to England only, and the commencement date for the provisions, which will be two months after the Act receives Royal Assent.
While we want to give the new target statutory backing, it would not be wise to set it in primary legislation. We need to be flexible in our approach to fuel poverty as we reform the electricity market, seek to drive the uptake of renewable heat in our homes, and bring about major improvements in energy efficiency standards through the Green Deal and ECO. We therefore think it appropriate for the details of the target to be set in secondary legislation, subject to parliamentary debate and the affirmative resolution of both Houses.
As part of this change, we need to be realistic about how quickly we can make progress. The current target is 2016. The interventions necessary to address the problem as we understand it cannot be undertaken within that timeframe. The needs of the fuel poor must continue to be championed after that date. A sensible approach for the future is to align our efforts on fuel poverty with the action we are taking more widely in tackling climate change. As my noble friend Lord Deben knows, the Committee on Climate Change already has a responsibility to monitor the Government’s approach to fuel poverty. The two issues go hand in hand.
Our amendments will allow us to bring forward proposals for a new target, including its precise form and level, and a date for its accomplishment. We will ensure that the determination and insights of those on the front line, working day in and day out to help alleviate fuel poverty, are reflected in our approach.
We want to make sure that the target bites. Our amendments therefore retain the key primary duty to have a fuel poverty strategy that sets out how we will meet our future target. Our amendments require us to set interim targets that will ensure that we stay on track along the way. Our recently published Fuel Poverty: a Framework for Future Action already sets out a direction of travel and underlines our commitment to tackling fuel poverty in a meaningful way.
I welcome the support that our announcements and proposed amendments received from the chair of the Fuel Poverty Advisory Group and the chief executive of National Energy Action, given their expertise on the issue. I understand that there may be some who are concerned by a significant change to the long-standing fuel poverty framework set out in the Warm Homes and Energy Conservation Act. By fixing a framework for the long term, the amendments ensure that, far from ceasing to be of concern in 2016, fuel poverty will remain high on the Government’s agenda throughout the delivery of our ambitious programme for energy efficiency and the energy sector in the UK.
Our amendments provide for an ongoing focus on helping low-income, vulnerable households keep warm, and will help them stay ahead in the energy efficiency market rather than fall behind. I trust that noble Lords will recognise the seriousness of our intentions to make real progress in tackling this long-term problem and will support the amendments. I beg to move.
Lord Jenkin of Roding
My Lords, I will make a few comments on what my noble friend said. The first is that we are extremely grateful to her and to the officials working with her for the briefing that some of us had fairly late last evening. All this was sprung on us at fairly short notice. The White Paper, Fuel Poverty: a Framework for Future Action, which is an immensely worthwhile document, contains a wealth of material. It is not always easy in a debate of this kind to do justice to it. It has been backed up by a paper produced in response to the consultation.
As the noble Lord, Lord Whitty, said in our debate on Tuesday when we discussed the problem of bills, not all of this is new. We have been aware of the Hills report, to which my noble friend referred, and the consultation paper. There were a good many responses to the consultation, which were referred to in the Government’s response. There is a wealth of material from which we can make an assessment of what the measures are likely to produce.
The first thing I will say on this is that the Government have been wise to recognise that the methodology of the previous fuel poverty target—how it was measured and what the appropriate responses were—has now really been shown to be wanting. That has inevitably meant that, in the light of Professor Hills’s report, that target and the methodology that accompanied it must be changed. I welcome very much what the Government now propose as the approach to this. It is not just a question of energy prices and relative incomes. There is far more to it than that. Without going into all the details, because I am sure noble Lords will have made their own studies of this, it is clear that there is much more to be done. Indeed, it is only if you measure the problem in an appropriate way that you can really devise and decide on the necessary measures to deal with it. That is an approach which I warmly welcome. If it continues to be measured in the wrong way, of course the authorities and the industry would be tempted to continue to use what have turned out to be often very ineffective policies to deal with this, and would give a false view of the size and severity of the problem.
This is a welcome new approach. I have read some of the documents which have been issued in the past day or two by the interest groups which represent the fuel poor. Although some of them wisely recognise the merits of the new approach, there has been an almost instinctive reaction of, “Well, you are abandoning the targets and not putting anything in their place”. My noble friend has indicated that her amendment will in fact lead to new targets. The other complaint is that it is not now going to be in statute, it will be in regulations. The fact is that you are going to advance this policy properly, it will have to be dealt with over time. That can only be done by regulations. My noble friend’s amendment would introduce the power to do so. I have never read an amendment which includes the phrase “The Secretary of State must” so many times. This will be a considerable reassurance to those who have been anxious that the Government are in some way weakening in their policy on this. They are not. It is a very real social policy leading to considerable hardship. Anyone who has represented constituents recently or in the past will be aware of the problem. Of course, it has got so much more difficult with rising prices.
Some of the methodology which stems from the Hills report is distinctly complicated. I found myself on Tuesday night trying to understand some of the charts in the White Paper. A particular chart on page 18 required having a fair number of towels around one’s head to try to understand it; I think that I fell asleep over it. The Minister’s officials were able to describe the meaning of some of this in our meeting yesterday. It illustrates the complexity of the problem that has been dealt with. There are all sorts of reasons why some households suffer from acute fuel poverty. They need to be examined in all their detail. This is what the department has tried to do with the help of Professor Hills’s report. We shall have to see how successful that is. I had not realised what a difference it makes whether you are connected to the gas grid or not. Yet the figures in the chart show clearly that that is a major factor. If you do not have access to mains gas, you are far more likely to be in serious fuel poverty.
Lord Jenkin of Roding
Perhaps I can help the noble Lord, Lord O’Neill. The point that has been put to me on behalf of the national grid is that it does not yet see what the change in the target would mean for their investment programme. I endorse very much my noble friend Lord Deben’s point that there is now an element of uncertainty. It is that which needs now to be resolved as quickly as possible. I am sure that they will respond firmly to the invitation which has been issued for discussions to take place. Certainly, I do not know and have not been told whether this means investment in different places for different communities. They do not yet know enough about it to be able to make that sort of decision.
Baroness Verma
My Lords, to continue with my responses, the noble Baroness, Lady Liddell, asked about ECO and what was contained within it. Within ECO, energy suppliers will provide fully subsidised measures under the affordable warmth obligation to low-income, vulnerable households. We estimate that around 230,000 low-income households can be supported each year through ECO, so there will be no up-front cost through the affordable warmth obligation to low-income households.
Again, I am extremely grateful for the support of the noble Lord, Lord O’Neill, although I would say that, rather than sticking in his throat, it was a gentle hiccup. Through the Green Deal and ECO we are endeavouring to reach out and get to those households that would benefit the most. Again, I point the noble Lord to the £540 million that is being made available though the affordable warmth obligation and the carbon-saving communities obligation. We also have the warm home discount, with the overall effect that all consumer bills will be lower than they otherwise would have been had these measures not come into place.
The noble Lord also asked about the reduction in government funding for fuel poverty. Funding for fuel poverty has not been reduced over the spending review. Total spending on fuel poverty is being increased and by 2014-15 we expect to see spending on the warm home discount at £310 million and spending on ECO will be at least the £540 million that I said—up around 10% on 2009-10.
My noble friend Lord Deben rightly recognised fuel poverty in poor rural parts of the country. I completely agree with him that we need to make sure that the measurements we take help us to respond to those in rural households facing fuel poverty so that they are also able to benefit from our measures. The average fuel poverty gap in poor rural areas is £558 compared with £361 in other areas. In underpinning the new target, we need to reflect in other strategy how we will approach the fuel poor in rural areas. When it comes to consultation, I hope my noble friend will be able to assist us in that.
My noble friend Lady Maddock asked about the private rented sector and fuel poverty. Again, I recognise as she does the importance of ensuring that we work closely on regulations so that the private landlord sector is not omitted. From April 2018, landlords will not be able to rent out any property that does not meet the minimum efficiency ratings, subject to the provisions already present in the Energy Act 2011.
The noble Lord, Lord Whitty, said that while he sort of welcomed the measures instead of shillings pennies were being dropped. I will try to convince him that rather than shillings we need to talk about pounds being dropped. We recognise that we have to eradicate any kind of poverty but current methods—targets—are not working. Realistically, we need to see how we can reduce it to get to the point of seeing poverty eradicated. I need to make it clear that we are not abandoning fuel poverty targets. We are improving them and enhancing our delivery of meeting them. Our amendments increase certainty that successive Governments will keep this issue at the top of their agendas. This is a cross-party issue. I think all those sat in the Committee today recognise that successive Governments have failed. We need to make progress.
On publishing fuel poverty statistics, I am happy to reassure the noble Lord, Lord Whitty, that we intend to use the Hills fuel poverty gap and publish the relevant statistics. We will also use our annual fuel poverty statistics publication to record figures using the old 10% indicator.
The noble Lord also asked about the operational aspect of our definition. Targeting is always difficult but we hope that the new definition will open up new improvements. We currently use a number of proxies for fuel poverty, such as receipt of certain means-tested benefits. That will need to continue for some time but we know, on the ground, that local authorities and others are using a range of technologies and techniques to identify fuel-poor households. We are currently evaluating the outcome of the £31 million fuel poverty fund that we made available to English local authorities last year, with a view to seeing what works best in terms of targeting.
The noble Lord also asked about devolved Administrations. The measurement of fuel poverty is a devolved issue. The devolved Administrations are able to measure the problem in their own ways. We continue to work very closely with our colleagues in the devolved Administrations and have explained our proposals to them.
To finish on the noble Lord’s question on the total expenditure on fuel poverty, we have recently made available information on our spending on fuel poverty, which is going up. That was in an Answer to a Question in another place, which I will share with the Committee in writing as soon as possible. With that, I hope noble Lords will accept this amendment.
Baroness Worthington
My Lords, I have proposed that this clause should not stand part, partly because this is a very odd part of the Bill. I read it and then read it again. Then I thought that I would go to the Explanatory Notes as they would help explain what it is all about. However, the Explanatory Notes simply repeated what was written in the clauses in the same language but with the numbers taken out. So that was absolutely hopeless. I then turned to the debate in the Commons when this clause was introduced. I was seeking some sense of why this was needed, how it was going to operate and what it was for. My colleagues in the other place pressed the Minister quite hard but, I am sad to say, I am still a little confused as to why this power is being taken.
It did not appear in the draft Bill, so it was not subject to any pre-legislative scrutiny. There is very little background information on it and there seems to have been no consultation. It introduces quite extraordinarily wide-ranging powers with almost no definitions at all. It allows the Treasury and the Government to raise money, but the amounts that are allowed to be raised do not even need to pass before Parliament; they can simply be determined by the direction of the Secretary of State. It is quite a profound, if small, piece of legislation. I was curious to know what it was for and I still am. Perhaps the noble Lord can provide us with his account. Is the noble Lord, Lord Jenkin, going to tell me that there is lots of background information that I have not read?
Baroness Worthington
In the other place, the Minister did try to give some explanation as to what these fees for energy resilience might be. My colleagues in the other place did press him quite hard, because one reading could see it as a way to discourage strike action in those sectors that deliver fuel or are connected with the energy sector. We were pleased to receive quite emphatic reassurances that these fees would not be applied to unions that sought to take strike action.
What seemed to emerge was that the fees are going to be levied on business in response to extreme events that it was almost impossible to predict. That could be anything but some examples were given. The Government might need to step in and provide personnel to companies in the event of an outbreak of a flu pandemic and would want to recover the cost in fees. Then there was the potential for equipment or vehicles that the Government own to be deployed in the event of extreme weather or of a clean-up. Then there are the unspecified assets that might need to be provided in the short term to business. Really, this is the Treasury seeking a power to regain costs for that. What have we come to? Is the government budget so tight that we are introducing powers to claw back money for disaster situations? In reality, if a disaster strikes you want the Government to be able to respond. You do not want there to be any quibbling about costs being passed on or who will pay for what. Why do we—and companies—pay taxes? The Government are there to provide a service in the event of national security issues.
Maybe I am wrong and there are plenty of precedents for the Treasury introducing specific powers to recover money for specific unintended events. If there are, I stand corrected. However, my reading of this is that it is an extraordinarily broad power with almost no definition and very little accountability. For that reason, it does not have a place in this Bill. Obviously, as we go forward we know that there will be an increase in natural disasters that could potentially interrupt energy supply. In fact, we have quite a resilient system for dealing with that. The power companies and National Grid are on the front line. Their licence requirements mean that they have to reconnect customers as soon as they can. When the large storms hit the Isle of Arran, SSE men in vans were out there fixing that problem. The Government were not involved. I suspect that the Government do not have the skills to address these issues.
It strikes me that this must be about military personnel. It can only be about military deployment because the department certainly does not have skilled engineers who can go and fix transmission lines. That is all done in the private sector. If it is about concerns about the military and the budget, this is quite a strange precedent to set, that there will somehow be fees applied to businesses. Are those fees voluntary or mandatory? How will they work? Does a company have to pay? As I said, when will all this be negotiated? If there is a natural disaster I would hope that we got on with fixing the problem and that the Government would be sufficiently robust and well resourced to do that, not that we would be quibbling about collecting these fees.
As I said, we are going into a world where there are likely to be more natural disasters. We should not shy away from that, but the Treasury would better spend its time getting to grips with climate change rather than preventing us from tackling it and introducing apparently innocuous but quite powerful bits of legislation that enable it to collect costs. It should be thinking about how it can act to stop the excessive increase of natural disasters and it should start taking climate change seriously.
Lord Jenkin of Roding
I apologise for appearing to interrupt the noble Baroness in mid-flow. I just have one question. I had the same problem as the noble Baroness did. I thought, “Why has this clause stand part question been put down and what does the clause say?”. I turned up the Ofgem consultation letter published on the same day as its recent capacity assessment report, which has of course shown that the margins will, by the middle of this decade, become very much smaller. It goes on making hopeful remarks that perhaps there will not be interruptions but an increasing number of people think that there might be. The letter consults on additional balancing measures for the grid. It proposes two of them. I will not go into this in great detail at this hour of the night—we are due to rise in two minutes—but does that have anything to do with this clause? There is nothing in the letter about fees so there may be no connection, but it proposes new methods to achieve resilience to avoid power cuts. It seemed that there might be a connection. The noble Baroness, Lady Worthington, seems not to think so. We will listen to my noble friend replying in due course.
Lord Roper
My Lords, I want to raise a slightly narrower point, but one related to that raised by the noble Baroness, Lady Worthington. The report of the Delegated Powers Committee raised very clearly a point about subsection (3)(b), where money can be specified or determined by the Secretary of State without any reference to Parliament. Your Lordships’ Delegated Powers Committee is very clear, and concludes:
“We accordingly do not find persuasive the explanations in the memorandum that the power conferred by clause 134(3)(b) is appropriate; and we recommend that, unless the House can be satisfied to that effect by further explanations from the Minister, paragraph (b) should be removed from clause 134(3)”.
I would be most grateful if the Minister could give us such a reply.
Perhaps, as I am dealing with the Delegated Powers Committee, I could raise a slightly wider question. We have, of course, had a new report from the Delegated Powers Committee this morning, based on a further memorandum submitted by the department to that committee. It is impossible to find a copy of that memorandum on either the department’s or the committee’s website. I would be grateful if it could in due course be made available to Members who have attended this Committee.