Lord O'Neill of Clackmannan
Main Page: Lord O'Neill of Clackmannan (Labour - Life peer)Energy Bill [HL]
Lord O'Neill of Clackmannan Excerpts(13 years, 11 months ago)
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Lord Whitty
My Lords, I support this amendment. As suggested by the noble Baroness, Lady Noakes, this subsection may be deleted because the second subsection still leaves it to the judgment of the Secretary of State as to whether regulations are necessary. Clause (1)(b)(i) would be part of those regulations in any circumstances; the Secretary of State would need to be convinced the regulations would increase the energy efficiency of the buildings in question. Any Secretary of State who failed to do that would be perverse.
The remainder of subsection (1), which the amendment is designed to delete, makes it time-specific; it requires the review to have been completed and it requires the Secretary of State to consider how the supply of privately rented accommodation would suffer as a result of the regulations, whether the effect would be neutral or whether the quality would increase, therefore having an effect on the rental market as well.
The Secretary of State needs these powers, irrespective of the report and the timing. Subsection (1) permits the Secretary of State to use them if he or she decides to do so. We are not jumping immediately to regulation as a sledgehammer to crack a rather large nut; however, the constraints on so doing in subsection (1) are unnecessary and I therefore support the amendment.
Lord O'Neill of Clackmannan
My Lords, I support this amendment. In the past I may have conveyed the impression that all landlords were bad. That is not true and it was not my intention to do so. There are, however, too many landlords who are not very good and some of them go up the Richter scale to very awful. We know that some of them will not be moved by the spirit of this Bill, either to get people’s homes well insulated or to save the planet. We recognise that it is preferable not to be unduly prescriptive when legislation is being introduced, but if we find there are abuses which we could more speedily remedy through regulation, we need not necessarily have that within the agenda of the review committee, worthy though its endeavours may turn out to be.
We know that there are landlords who do not enter into the spirit of even the existing legislation and if they are shown to be as recalcitrant following the new legislation as they have been in the past with the old, then we should move with all reasonable speed. That does not necessarily require us to make their activities the subject of a review procedure, some aspects of which may not be relevant to the problem and may require a more leisurely and rigorous approach to dealing with it.
If there are abuses and there are remedies available to deal with these abuses, it should be incumbent on the Government of the day to move with all desirable speed to address these challenges. Even with the best of endeavours, we are not going to produce an ideal piece of legislation which will inspire the desire to follow on with the good work or inspire fear in the part of the more recalcitrant landlords whom I consider, for the benefit of the noble Earl, Lord Cathcart, a minority. Sadly, the nature of their abuses makes them a significant minority in a number of instances when we realise the pain they impose on, very often, vulnerable and disadvantaged families.
Lord O'Neill of Clackmannan
I have a question for the Minister on the Scottish section of the Bill. It was put by the Association for the Conservation of Energy that its people in Scotland had been looking at the Climate Change (Scotland) Act 2009, which was passed by the Scottish Parliament, and their feeling was that most of the provisions of this section relating to Scotland were covered by that legislation, perhaps in a more rigorous fashion. Has there been extensive consultation between officials, the Scottish Government and DECC on this issue, and are the Scottish officials on all fours with this? I am not making any point about one institution against another, but the impression conveyed to me was that it seemed that the prevailing Scottish legislation more than covered the area, and perhaps did it in a slightly better way than is suggested in the Bill. I would be interested to hear what the position is.
Lord Marland
My Lords, I am grateful to the noble Baroness for this valuable contribution which should be considered carefully. The idea of a new chapter in this Bill for energy efficiency in the social rented sector is a good one but I suggest that it should be inserted elsewhere in the Bill as a new chapter. However, that is by the by.
The intention of Chapters 2 and 3 of the Bill is to provide powers to improve the energy efficiency of private rented properties, should they be required. It is not the intention to intervene in the same way in the social housing market which we believe has made some of the biggest energy efficiency gains in recent years due to the priority that has been given to the investment in social housing stock. For example, the social housing stock is 10 points higher than the private sector, which answers the point of the noble Baroness, so it is already ahead of the curve.
To pick up on some of the concerns of my noble friend Lady Noakes that we should not regulate unnecessarily, if the social housing sector is leading the market, which it is, we should not start imposing regulation on it now but we should review it at a later stage to see whether it is still ahead of the game.
I am grateful to the noble Lord, Lord Whitty, who as always makes a valuable and learned contribution in this area. Decentralisation is a big issue and is a subject for local authorities as well as the housing authorities but I do not think it is a matter for this Green Deal. We should take it into consideration in the overall scheme of things for some interdepartmental progress and I take on board what he said. I invite the noble Baroness to withdraw her amendment.
Lord O'Neill of Clackmannan
I am disappointed by the Minister’s response. Would he be prepared to assist in the drafting of something that would go in after Clause 2A, as he suggested this is the shortcoming of this amendment? The fact that local authorities and social housing organisations have been in the van of improving their housing stock does not mean that they should be left to take care of themselves. Funding arrangements of an easier kind may well become available. One would have thought that, if we are to continue to encourage them in their good endeavours, it would be desirable to include them in this, and for us to know—if not exactly, then a little better than we do already—the state of the stock and the work that is still to be done. Therefore, a review of energy efficiency would be very helpful. In other parts of the UK, including Scotland for many years, there have been regular housing reviews, which have been extremely helpful in determining the policy of the former Scottish Office and now the devolved Scottish Government. We are able to track over time the changes in the character of the housing stock and the shift in housing standards. Therefore, it would be unfortunate for people in the social rented sector, who tend to have longer-term tenancies than many privately renting tenants. People in the socially rented sector are usually long-term tenants; very often, they have in the past done work for themselves. As they get older they have fewer resources and, in some respects, greater need for energy efficiency and to keep their houses windproof, waterproof and well insulated.
The Government are missing a trick here by rejecting—out of hand, it would appear—the possibility of a review. If they are not rejecting it out of hand, perhaps they would be prepared to table an amendment on Report so that it could be inserted at an appropriate part of the Bill. It would appear that this is not the best part. I imagine that would be one of the arguments that my noble friend will make when she seeks leave to withdraw the amendment. It would be wrong to set aside a sector of the housing market that has been very successful so far in meeting many of the objectives that this legislation seeks to include.
Lord Marland
I will explain the Government’s thinking behind this to the noble Lord. This is a market-driven opportunity. The Government are not trying to be prescriptive. If two people were running a race, which one was winning easily by quite some margin, as the social rented sector is doing, you would train the runner who was not quick enough and encourage him to compete in the race. Here we have the social rented sector, which is by some margin ahead of the scale. It would be wrong to bring in legislation at this point that said, “Sorry, you’re not far enough ahead, despite beating the others. We intend to make sure that you get even further ahead”. The main aim of the Bill is to let the market drive the situation. At some point—the noble Lord is quite right—we will review the progress that the market has made and use any powers that are necessary.
The social rented sector should be congratulated. The noble Lord, Lord O’Neill of Clackmannan, said as much and I totally agree with him. That sector has led by example; we should encourage, not discourage, it. It is not my intention at this point to redraft part of the Bill to be prescriptive about this sector. I take on board that it is a critical area, which continues to make progress. Through this Bill, we will ensure that it does.
Lord Teverson
I was glad to note in that last exchange that the Minister had moved far more towards the Opposition than the Liberal Democrats, as happened earlier in Committee.
We now move on to Chapter 4, which is headed “Reducing Carbon Emissions and Home-Heating Costs”. It seems to me that we have moved on psychologically from the paramount area—as the Government have recognised—of trying to retrofit and bring up to a reasonable standard of energy efficiency the existing building stock. Having moved on through the Bill from that stage, we now have an opportunity to look to the future, and I hope that this amendment will be particularly useful and helpful to the Government.
We have to make sure that in 25 years’ time we do not have to go through another Green Deal process with all the houses that we are currently building which will not be up to the standard that we require in the future. Instead, it would be much better to build these houses now to the right standards of energy efficiency and carbon emission levels. The Minister has perhaps recognised that in the area of energy and climate change there is a great deal of agreement among reasonable people and political parties. One area on which I certainly congratulated the previous Government was that they put a marker in the ground saying that by 2016 building regulations should effectively lead to carbon-neutral domestic dwellings. I do not think they said anything further regarding industrial buildings but that was what they said in respect of domestic dwellings. I tried to find out about it before the Committee, but my understanding is that Ministers in the present Government have endorsed that and have said that that will be the case.
We know that one important thing for industry and for people who have to build these Houses and ensure that regulations have been met is to have a degree of certainty in the market. We have heard how red tape and bureaucracy can be negative in legislation, but politicians and legislation should be able to give certainty to industry and the people who have to deliver policies, in a positive way. One of the best and most effective ways of doing that—the way in which we show true intent—is to put something in the Bill. Once we do that, that certainty of provision—the certainty that the Government mean that to happen—increases so that actions can take place, the target is met and the effect is achieved. In this case, it is not just for 2016 but for all the years ahead, when we are trying within this economy to reduce our carbon emissions and fuel poverty, so that they are history as well.
I tabled the amendment because it gives the Government an opportunity to confirm that target and to ensure that business, industry and the other various actors in producing these homes can make full plans for these measures so they can be delivered. The domestic sector is not the only sector. In fact, something that we truly welcome from the Government in terms of the Green Deal is that it includes a commercial aspect, which we have not discussed or debated much to date. The industrial sector is more difficult, so I have given the Government discretion to set a date, but it is important that the Secretary of State should set a date at some time.
Another area that I have emphasised or been careful about in my amendment is to avoid being overprescriptive. I hope that I have achieved that in two ways. It is not necessarily sensible for individual dwellings to be carbon neutral themselves, because the technology for renewables and low-carbon technologies are for groups of dwellings. They focus on ways in which a development as a whole can be carbon neutral in its broadest aspect, rather than an individual house, which is probably too big an ask, even for those who really want perfection in this area. There might be a renewable energy part of an overall housing development, which might be the travel plan that goes with it; there might be a district heating system or ground-sourced heat pumps put in across the whole estate that allow the larger unit to be carbon neutral, rather than the individual dwelling. That should be even truer of the commercial developments.
Another part of this amendment gives the discretion to the Secretary of State to define what carbon neutral means, because that definition is clearly something that we could debate for ever. At the end of the day, after proper consultation, it should be left to the Secretary of State to make that definition—one that is practical and will never be fudged.
The amendment introduces an aspiration for certainty by putting it into the Bill, which would ensure that we achieve it. I beg to move.
Lord O'Neill of Clackmannan
I support this amendment, which I realise is probing. One of the major reasons why we have an inadequate housing stock in the United Kingdom is that the incoming Government of 1951, charged with the ambition of building 300,000 houses, sought to achieve that by reducing housing standards. That was the way in which Harold Macmillan, as Housing Minister, achieved his obligation. It is as a result of that we have so many substandard houses in comparison with our European counterparts. In that fantastic period in the 1950s and early 1960s, when hundreds of thousands of houses were built every year, properties were more often than not built to standards which were less than desirable in terms of what could have been achieved. They were not bad but they could have been a lot better, and if they had been we probably would not have half of the problems we have today. It is useful, however, to give the Government an opportunity to make quite clear that they are signed up and prepared to take the appropriate steps to achieve the 2016 target.
The kind of pragmatic and flexible approach suggested by the noble Lord, Lord Teverson, in respect of different forms of heating and the combination of different forms of accommodation, is an appropriate way in. We do not want to be overprescriptive, but there are areas where we have to be prescriptive—not only prescriptive but prescriptive in a fairly tight, legalistic way. These regulations tend to be a mixture of the consultative processes which are implicit in secondary legislation. They can afford that degree of flexibility.
As in this decade we address the challenges of climate change and the environment, in some respects we are parallel to the post-war reconstruction challenges which were being addressed in the 1950s. I would like to think that this Conservative-led Government will not make the kind of mistakes made by the Churchill Administration, under the responsibility of Harold Macmillan as Housing Minister, in the early 1950s. I would like to think the Government could clearly and explicitly embrace the desirable environmental objectives set out by the previous Government and which appear to be supported by the Liberal part of this coalition.
Lord Jenkin of Roding
I have listened to this debate with some sense of nostalgia. From 1961 to 1963 I was chairman of the housing committee for Hornsey Borough Council, later to become the London Borough of Haringey. This was a period even later than that referred to by the noble Lord, Lord O’Neill, and my clear recollection is of the overwhelming pressure to build more houses and flats. To digress for a second, we had the problem of a large number of tenants who were sitting in houses which were badly needed for social housing. I think I was the first housing chairman to propose we should offer them a sum and a mortgage to move elsewhere, within 10 miles of the borough, to get some vacancies, clear some slums and build more houses. To imagine that at that stage we should have been building more energy-efficient—and therefore fewer—houses is unrealistic. It is easy to be wise after the event. Others may have longer memories than I do, but having been a housing chairman at that time, I know that was the overwhelming pressure.
I turn to the amendment. Of course one must broadly support the intention but, even with the caveats that my noble friend Lord Teverson has included in his amendment, it verges on the unrealistic. Indeed, recent research by one of our leading professional bodies, Knight Frank, has said that to make sure that all the new houses being built by 2016 are carbon neutral is, in its words, “looking increasingly unrealistic”. I have some hesitation about writing this into legislation when extremely well informed people are saying from the outset that, however good the intention, it looks increasingly unrealistic.
Next, there is the question of cost. I am told that to build a carbon-neutral domestic dwelling now—it may well be that the differential will narrow in the years ahead—will add £30,000 to £40,000 on to every unit produced. If housing budgets are constrained, as they inevitably are in our situation at the moment, that means that there will be fewer houses, because with any sum of money fewer houses will be able to be built. In those circumstances, that too might be an undesirable consequence of trying to pursue and put into the Bill an unrealistic environmental objective.
My third anxiety about my noble friend’s new clause lies in subsection (5). He has said that it is an advantage that he is not being prescriptive but leaving the determination of what is a carbon-neutral construction to the Secretary of State, following consultation. I am told that the question of what is a zero-carbon house is highly technical and that there is as yet no agreement between the various bodies involved. I suspect that this includes the Minister’s department and CLG, the other housing department. A conclusion has not yet been reached on this. The question of indoor air quality is also poorly understood, and it is essential on all these issues that time is allowed to ensure that we have sensible definitions if we are going to pursue these objectives.
To have an undeliverable target and a completely uncertain definition of what you are trying to achieve is not appropriate for inclusion in legislation. As my noble friend indicated, what he is trying to get is in the Bill, but it is not very sensible to put it in a Bill when there is such a high degree of uncertainty about it. It may be possible, perhaps at a later stage of the Bill, to frame something that really is an aspiration and something to be aimed for, but without putting in firm dates or such firm details as saying that it has to be zero carbon.
I understand that this is desirable and that over the years ahead more and more carbon-neutral buildings will have to be built; that is part of the process of fighting climate change, to which we are all firmly committed. I say to my noble friend on the Front Bench, though, that I hesitate to accept my noble friend’s suggestion that this new clause should be included in the Bill.
Lord O'Neill of Clackmannan
May I ask the noble Lord about a simple point? Britain is not the only country that is building houses, or has been building houses since the 1950s. One of the great sadnesses and shames of being British is that when one travels, particularly in northern Europe, one sees houses of a far higher standard that were built in the days when Haringey Council could not afford to build decent houses, because of the scale of the challenge. It seems that in these other countries, such work was done without undue economic penalty. It seems even now that those countries are meeting that challenge with a great deal more alacrity and success than we are. In Finnish and Scandinavian houses generally, where conditions are more extreme, the quality of housing is vastly superior.
Lord Jenkin of Roding
I yield to the noble Lord and any others, such as my noble friend Lord Deben. I am not as familiar as they are with the quality of the houses in Scandinavia. All I would point out is that winters in the Scandinavian countries and in many parts of northern Europe tend to be very much harsher than they have been over the decades and centuries in the United Kingdom. We get the benefit of the Gulf Stream, and so on. Last winter and the winter before were widely seen as exceptions to the trend. If you are not facing the same pressures from the climate as those faced by other countries which regularly have much harsher winters, I can well understand that perhaps we have been a bit slower in adopting the same standards as they have. All I am saying is that I do not think it is a realistic target that all new houses built after 2016 should be carbon neutral. It is certainly not realistic when no one seems able to agree—although they have been trying for quite a long time—what is actually a carbon-neutral house. I sound these notes not because I have any doubt about the bona fides and intention of my noble friend Lord Teverson, but because of the practicality.
Lord Deben
It is most important that we should consider these three amendments as one because they are seeking to do the same thing. I do not have any pride of ownership for my own amendment, I just want to raise some of the issues which the noble Baroness, Lady Smith, has brought forward.
It is right to say that this is a cross-party concern. There is no division between us on this and it is supported by all sorts of places, some of them not wildly likely. I would like to take up the comment of the noble Baroness about the word “resist”. There is another part which happens before that, as all of us who have been Ministers know, and that is when civil servants say, “Better not, Minister”, a phrase I remember very well. This seems to be one of those areas.
My only disagreement with the noble Baroness is this: perfectly rightly, the Government saw the particular way of reporting that we have had before with local authorities having a number of drawbacks and fitting into a pattern which the incoming Government were unhappy about. But because one gets rid of something one is unhappy about does not mean that it is better not to put something in its place, where that seems sensible. Here it is sensible. The first reason for this is because of the Localism Bill. If you get rid, absolutely rightly, of regional government and the rest of it, you are going to ask local authorities to co-operate with each other. They need a framework within which they can co-operate. This is one area where they will have to co-operate. In the borough of Ipswich, for example, much of the urban area of Ipswich is in the Suffolk Coastal district council area. To do the thing properly, local authorities will have to co-operate over the boundaries. Therefore I support this kind of structure which will enable people to start off with the same basis, so they know how they are going to do it.
I shall have the pleasure of chairing the Suffolk-wide green conference which we have every year to promote exactly these things. In an entirely Conservative-controlled local authority, county and district, everyone believes that this is a necessary part of doing what they want to do. Suffolk wants to become the greenest county because it wants to force other people to compete with it, and that seems a good thing. The Minister may have been advised that it is not necessary because this is all voluntary and we will all be doing it happily together. We are not asking for compulsion, we are asking for a framework within which people can use their several and different talents to do this job properly.
All the amendments, certainly mine, show the need to take seriously the fact that we will not meet national carbon budgets unless we meet local carbon budgets. I have spent most of the past 10, 12 or 13 years trying to help big businesses change so that they become much more corporately responsible and concerned about these issues. I have become more and more passionate about the practicalities of doing this rather than the high-flown rhetoric. The more one does it, the more one wants to say, “Can I tell you how you can cut your energy by 13 per cent simply by using some kind of regulator of the voltage? Can I help you to do these things in a simple, basic way?”.
When I looked at the Bill it seemed that the one failing I wanted to correct is that we need to engage local authorities so that they feel that they have a real part in the achievement of the Green Deal. That is why this is so important. It is to get the local authorities to think that the Government have said that if they are going to achieve these things, if they are going to do these things, local authorities are an essential part of it. A lot of the practical nuts and bolts, which is what the Federation of Small Businesses is saying, have got to be put together at the local level by the local authority working with its own community. That is why my amendment refers to working,
“in partnership with local residents, businesses and”—
I hate the word “stakeholders” but it seems to be compulsory—
“stakeholders including schools and hospitals in drawing up and carrying out the strategy”.
The joint strategy referred to specifically in subsection (2) of the proposed new clause draws attention to that co-operative element which the Localism Bill will have and points out that CO2 is not a respecter of county or district boundaries. It is very important to make this part of the way in which we proceed.
Lastly, I have suggested that we should ask the Secretary of State to introduce the local carbon budget scheme to begin at the start of the second national carbon budget period.
I would like to pick up something that the noble Lord, Lord Judd, said. We do not have a long period of time to decide when it might be convenient for this or that to happen. The timetable before us is dictated by the climate change which we have caused. I will not get back to housing, but if we had known about this at the beginning of the Industrial Revolution, we would have done things rather better. But we did not. Now we are having to pay the price for what was vastly beneficial for the United Kingdom. We have a bigger responsibility than any other country because we got a bigger profit out of it earlier on. What is happening now is something that we caused—not quite alone, but certainly we were the leaders in what has caused the climate change that we have, because it takes that much time to work through. Therefore we have a huge moral responsibility to put this right.
There is an urgency here. In everything we do we should be asking the Government to sign up to that emergency by putting dates on it. We have had too many pieces of legislation. I remember a White Paper on energy in which the only date was 2050; every other date had been taken out. I think that even the noble Lord, Lord O’Neill, will accept that, if you take out every date which the Government are unlikely to live to see, it does not make for a sense of urgency. I am very keen on having things that everybody in this Room will see. Therefore I ask the Minister to take this extremely seriously.
Lord O'Neill of Clackmannan
I am very happy to follow the noble Lord; I broadly support his amendment, along with the other two. There is a degree of repetition, but that in itself is not a problem. As we were listening to his remarks, I was almost tempted to do an AV Bill-type speech here—but I am not going to. As I think I have said before, those of us who laboured in the Augean stables of Scottish legislation in the past have over the years learnt how to make a rather thin line go quite a distance.
I am interested in something that the noble Lord, to an extent, alluded to in his remarks about the start of the Industrial Revolution. When you have been in the House of Commons for a time, boundary changes become a regular feature of your life as a politician, and quite often you move with the changes. Over the years, as a Member of Parliament, I had dealings with about five different local authorities. I do not want to go through them in great detail, but I had five coal mines in my constituency which fed coal into a power station in a different local authority, and that power station generated 2,400 megawatts of electricity. That is an awful lot of smoke going up the chimney and a fantastic contributor to pollution within Scotland. The coal mines have closed, but the power station is still generating.
Across the River Forth was the petrochemicals complex of Grangemouth, which was in Falkirk local authority; and adjacent to that was Bo’ness and one or two other places where there were petrochemicals and hydrocarbon facilities. Then you had Clackmannanshire, where there was, I think, the biggest bottle-making plant in Britain—again, spewing out industrial waste of all kinds. We also had timber-processing plants near Stirling, and the like. Therefore, in an area of 40 to 50 square miles, you had an incredible amount of pollution. The local authority is trying to keep tabs on this. It does not have a clear and specific obligation to try to reduce the pollution, although it has a kind of moral obligation to do so. However, I think that authorities would be anxious about co-operating on a collective basis to reduce carbon emissions and enhance the energy efficiency of these communities, because very often the pollution moves from one area into another simply with the wind gently pushing it along.
Lord O'Neill of Clackmannan
My Lords, I missed the opening remarks of the noble Baroness, Lady Noakes, but I have heard her speak on this subject before. As I said at Second Reading, I am somewhat surprised that we are in broad agreement, although her concerns may not necessarily reach the same conclusions as mine. Nevertheless, we can make common cause in our concerns about this part of the Bill. As has been pointed out, we are affording ourselves the opportunity to pave the way for secondary legislation of an unknown kind. It is highly irresponsible for legislators or the scrutinisers of putative legislation to go down this road. This is not just a matter of partisan bleating; this is a serious constitutional issue.
The last point that my noble friend made, relating to Ofgem, is a serious one. A significant point about the handling of complex markets that are, in effect, oligopolies—not quite monopolies but dominated by big players—is the requirement that we have a credible quasi-judicial market regulator to protect the consumer and, equally important, to sustain competition if that is the road we go down. A shortcoming of the original privatisation processes was that we went from state monopolies to private monopolies. It took a while for the market to kick in. Indeed, it could be argued that we initially went down an overly simplistic route in respect of the competitive market. Certainly, in relation to electricity companies in England and Wales, the market structure was akin to pre-Cavour Italy—a series of city states fighting each other and, as a consequence, leaving themselves open to other invaders. That is what we have at present: five or six major generating companies, of which only two could be regarded as independently British. We live in a global economy and these things happen. However, it is dangerous when too many of the natural resources on which we so depend are in the hands of people who do not necessarily regard our national priorities as their first concern.
However, I do not want to go down that road tonight. All I want to say is that we must be exceedingly careful if we afford Governments of any stripe the right to change quasi-judicial organisations, such as the Gas and Electricity Markets Authority, by a process that affords no real opportunity for parliamentary scrutiny. We are delivered a statutory instrument that, although it has been the subject of extensive consultation, is the final article that we can accept or reject. If the changes were almost emergency measures but there was a difference of opinion, we could well have to defeat the thing and have another lengthy period of consultation before the Government of the day, regardless of party, got it right. So in terms of some of the powers which we are delivering to government here, if they were to stop and think about it they would not want to assume that kind of responsibility.
As far as the ECO is concerned, there were a number of points. First, there is the manner in which we allow electricity and energy companies to introduce new forms of subsidy by imposing what is, to all intents and purposes, an energy poll tax on the households of this country. There is not a great deal of difference in the imposition of the revenue-raising that takes place in these circumstances. The average charge to households is of the order of £80. We are talking in terms of introducing changes in market structure which have been calculated as being anything between £400 and £800. It is a fairly arbitrary means by which that is going to be imposed over a number of years.
We have to be exceedingly careful, therefore, if we are going to dress up support for the Green Deal, the energy and environmental improvement parts of the Green Deal and the financing of it as something that does not involve the Government or taxation but hits every household in this country, regardless of financial circumstances. If there is any group in this country that is entitled to feel that it is paying more towards this scheme through its electricity bills as a matter of course, it is those who live in hard-to-heat houses and those who are the most vulnerable, either in their health or their financial circumstances. It is to them that we have the first responsibility. That is to say, if we are to have an ECO, its fruits should go to the people who are either the most disadvantaged or the most vulnerable.
It would be helpful for us this evening to get something more than platitudes about market solutions. Markets are not perfect. If they were perfect, we would not need any form of regulation at all. The fact is that they need to be structured and nudged at particular times. What we need in these circumstances is recognition that if we do not have Warm Front or CERT, we still need some form of directed effort towards helping the disadvantaged. At the moment, my understanding is that the disadvantaged, whether they go in for the Green Deal or not, will still have to make their financial contribution through the ECO. It is my contention that they should not be required to pay for something from which they will not get very much, if that is because their local authority, social housing authority or private landlord—which we have discussed at length—is not prepared to enter into this deal in the way that we would like.
As we are giving Government the power to introduce a number of changes by secondary legislation, we are entitled tonight to get reassurances that fairly soon we will see the colour of the Government’s money in the form of some explicit draft statutory instruments. They will obviously be doing the rounds at the moment. It would be foolhardy to suggest that somehow they are going to emerge after Third Reading but before Second Reading in the Commons. They will be in pencil form somewhere, stamped with “Draft”, and it is not unreasonable for us to ask for that this evening.
We do not divide in this Committee and it is not our intention to gum up the works but such constraints do not apply when we get to Third Reading. A number of people will be concerned about this, not just within the ranks of the Cross-Benchers and the Opposition; we know that in both parts of the coalition there are people who have anxieties about this. Therefore we need a lot more assurance, a lot more clarity and a lot more detail than we are being offered here.
Lord Marland
My Lords, I am grateful for these comments. Obviously I am a new boy and this is my first Bill, so I do not really know what the procedure is; I bow to my noble friend Lady Noakes, who knows more about it than I do, as do many others in this Room. Knowing how you do this should mean that you are a bit careful and recognise what the Government have to do. Here we are, sitting in this Room, while in the Chamber there have been 14 days of Committee. What is that doing? It is preventing the Government bringing forward legislation.
In this legislation, therefore, we are setting out a framework Bill that allows us to add bits of legislation, allows us time to consider carefully what needs to go towards them and, of course, allows us to bring them back to this House, as a revising Chamber, and indeed to the House of Commons for approval through statutory instruments, which the noble Lord, Lord Whitty, kindly recognised has been normal practice and, I fear, will become normal practice if we have to sit for hours when there is a log-jam in the Chamber. Noble Lords should recognise that government is actually about trying to get things done.
Why are we doing the ECO? The noble Baroness, Lady Smith, is right: the answer is that we have a problem with fuel poverty. It has gone up year on year despite CERT, Warm Front, CESP and every other possible and genuinely well intended attempt by the previous Government to reduce fuel poverty. I am not sitting here criticising the endeavours or saying, “You did this or that wrong”, but the fact is that fuel poverty has gone up significantly.
Lord O'Neill of Clackmannan
Before the Minister leaves that point, we should put this in its proper context. When energy prices were low, fuel poverty was falling quite dramatically. When energy prices went up, fuel poverty rocketed. There are three reasons for fuel poverty: inadequate houses that are badly insulated, the poverty and disadvantage of the households and the price of energy. The single most critical factor over the past eight years has been the changes in energy prices, which in large measure are beyond the capabilities and the control of individual companies. Indeed, it can be argued that energy prices in Britain are in fact in the lower part of the European basket. If we are going to change the circumstances of fuel poverty, insulating houses is a major consideration, but not the only one.
Lord Marland
I am grateful to the noble Lord for his intervention because he has just mentioned what I was about to say. There are three criteria. The first is inadequate homes and house insulation, and that is what we are seeking to tackle with the Green Deal in a very strong initiative. That is why it is fundamental that we link the Green Deal and the ECO but that we are sensible and take a measured approach to how we create the ECO, given that CERT and CESP have largely failed in their endeavour.
Secondly, there is the price of energy, which is a separate debate; we will doubtless hit that at various times. This Government are doing everything that we can to deliver energy security. The noble Lord and I would agree that our endeavours to recreate the nuclear industry, which has had no activity for 23 years, and various other endeavours to generate electricity in this country and regenerate our grid system, which has had no investment for many years.
Then, of course, there are the genuine poor. That is what the ECO must be targeted at. Every person in this Room feels desperately concerned about the genuine poor and how we get them out of fuel poverty. As such, we have telegraphed that we will lead a review of fuel poverty to see how we can target them. We are doing several other things in the mean time to eradicate fuel poverty. There are winter fuel discounts and we have come up with the warm home discount; we are now looking for a contribution from energy suppliers to ECO.
The noble Baroness, Lady Noakes, rightly asks, in fine Conservative tradition: who will pay for it? What about value for money? That is at the heart of this Government: who will pay for it and how will people provide for it? It is not as though they are not paying for it at the moment. Energy companies are responsible for delivering CERT and CESP and will be responsible for delivering the ECO. It is up to this Government and future Governments to ensure that there is competitiveness in the market so that companies, in selling their products, try to get a competitive price, which will come largely, we hope, from their profits. Similarly, the noble Baroness, Lady Smith, reasonably quoted my honourable friend Gregory Barker in the other place. He said that £1 billion would be spent on this. In our analysis that is only an initial figure. You would not expect me to go wider than that in this instance until we have developed this further.
The noble Lord, Lord Whitty, rightly says that we are reviewing Ofgem. It is right that we are doing so. I will not come to any conclusions on Ofgem yet because the consultation is taking place. It will conclude in March, which is before the autumn, when we start our consultation on the ECO and so will be able to take the findings into account and link them together, as the noble Lord, Lord Whitty, would expect us to do. Because the result of the Ofgem will be available in March, we hope to be able to take it into account in the passage of this Bill.
Noble Lords should be under no illusion. There is a very good document, which we have put in the Library and should explain clearly what we are trying to do in the ECO and every measure in the Green Deal. It is an excellent summary. It must be good because I can understand it. This is to explain what we are doing. Make no mistake: we are not trying to railroad a new policy through.
Baroness Smith of Basildon
I am not clear which Bill the noble Lord was talking about. The Bill that I am talking about is the Energy Bill before us today. However, in both cases the Opposition are fulfilling their legitimate and proper role in effective scrutiny.
I have a couple more questions. I know that the noble Lord has tried to answer the question, but I will re-read the Green Deal document as it addresses the issues that I have on the ECO. I am merely seeking clarity. I am genuinely not able to work out from the impact assessment, the legislation and the Explanatory Notes exactly how the ECO is going to work. That was the first of my questions. I am disappointed that I did not get answers to all of them, but I am sure that we can return to them. Perhaps the Minister could work with his officials and, before we get to Report stage, if there is more information available on the operation of the ECO, it would be very helpful to have that.
While it would be nice to have the actual statutory instruments before us then, I appreciate the Minister’s position. I have been a Minister. I have taken through legislation with statutory instruments. I have taken through a number of statutory instruments. However, if we were to have some of the information detail prior to that, it would assist this Committee and your Lordships’ House in being able to make a proper judgment. It is impossible to do so on what we have before us. I do not think that there is a person in this Committee who does not want the ECO to do exactly what the Minister wants it to do—address the issues of the fuel poor and the hardest-to-treat properties.
It would be very helpful to have clarification on two particular points. One is the cost to the consumer. That comes back to the idea of the consumer levy. I appreciate that CERT and CESP both included the consumer levy, but there was also Warm Front at that time, which was substantially greater than it is now. Perhaps the Minister can come back to us on that one.
The Minister also said that the energy companies would pay for large amounts of the ECO through their profits. Has he consulted the energy companies on that and what has there response been? If they intend to absorb the cost of the ECO through their profits, that would interest the Committee and the House, unless the energy companies intend to pass on the additional cost as well to their customers.
The final point is the one I made a moment ago about the report from GEMA, the Gas and Electricity Markets Authority. The Government are still consulting on what to do. That is why I understood it was in the Public Bodies Bill and that it could be moved from Schedule 7 to other schedules. But in this Bill it does seem that a more specific point is being made—I hope the Minister is listening and not just using his mobile phone—and I wonder if it is possible to give us more information on that, though I may be wasting my breath in raising the questions. I am not sure if the Minister is taking note.
Lord O'Neill of Clackmannan
I have had the opportunity to read this document and the three paragraphs referring to the ECO. It gives some detail but not a lot. Perhaps before we get to Report stage, if there is a delay and if things do take a long time, the civil servants will have the opportunity to provide us with the information we are asking for. It says that the ECO will be focused on houses needing support over and above the Green Deal. Can he tell us the manner in which this focusing will take place?
Secondly, he said the ECO will be able to combine legal powers to incentivise ECO support and Green Deal finance. Perhaps we could get some indication of how the incentivisation process will be carried out, because it would appear that the Government realistically anticipate in this document that something could go wrong. They are saying that these legal powers would be introduced only following a review of the company’s behaviour, if there was evidence that the households would lose out. We would want to know what losing out meant. If we can get some idea of the focusing process, if we can get some idea of the legal powers and the incentivisation mechanisms, and if we could get some information about how the Government would assess the means whereby companies would lose out, this would meet a number of our concerns, even if it was not in draft statutory instrument form. It would help if there was a slightly more explicit note.
I was rather surprised when the Minister referred to this document because we have all seen it before. It was a nicely produced thing but it was sufficiently insubstantial never to have appeared on the desk with the other papers. If the briefest reading and not a great deal of analysis under closer scrutiny can throw up four points like that, and if this is to be the defence of the Green Deal—the last but final word—then frankly we need rather more than we have at the moment.