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

Lord Teverson Excerpts

Monday 26th July 2010 Grand Committee

I have a final question for the Minister. How does this order relate to the Government’s so-called green deal, to which he referred, and to the loans that the green bank was supposed to be making to households to cover the installation of the same sorts of energy efficiency measures that are covered by this order? There seems to be considerable overlap. What would the green deal add to the effects of this order, and why is there a need for it?

[Lord Teverson]

My Lords, after those two speeches the Minister will be looking forward to that of the noble Lord, Lord Hunt, for some empathy. One thing I have discovered from being on these Benches is the picture opposite, which I have not seen before. I would stare for hours at “The Judgment of Daniel” in fear that one day it might be me. My sight is not good enough to see quite what that picture is about: it looks like a tragic circumstance with someone having befallen some terrible fate. Hopefully, that will not happen in this Committee.

I welcome the order as an interim measure. I very much agree with the noble Lord, Lord Jenkin, on that issue. It starts to improve a number of weaknesses of the original CERT scheme. The scheme had good intentions and was a good start, but a lot was still left to be desired. I hope that it will move on quite soon. I have said this before, so I shall say it only briefly, but it is counterintuitive to me that we have energy companies charged with reducing energy consumption. Somehow, life tells me that you get energy companies to be as efficient as they can by doing what they do well, which is producing energy, and get someone else to reduce consumption. However, the scheme is about energy saving, which has been the Cinderella subject of climate change and energy security, and I welcome it as an improvement.

There is one area that was put right by the previous Government, but the deal is sealed on this: light bulbs, of which I am sure that all of our houses are full. It was used as an easy way out by energy companies just to distribute them. I remember my fear of visiting my mother because every time I went to her house, she handed me a whole tray of energy-efficient light bulbs that she did not want but which had been thrust on her by her energy supplier. There was a bit of a farce with organisations going through the motions of energy saving that did not really happen. What we have instead is a much greater emphasis on insulation and the things that really make a difference. I am interested to see that microgeneration schemes are also mentioned.

On targets, I notice that there is a spectacular increase of 58 per cent, until you read down the bullet points and notice that the carbon budget extends over a much longer period. I would be interested to understand what the actual percentage uplift is pro rata in the overall targets for carbon reduction. The super priority group again sounds good, but I came up with exactly the same questions as did the noble Lord, Lord Jenkin: how do you identify this group and therefore how do you supply it?

The difficulty about the ongoing CERT scheme, which the order does not greatly improve, is the whole issue of value for money, of auditing and of transparency in how the money is spent. It is not public money because it never hits the public purse, the Chancellor’s piggy bank, but it is money that is paid compulsorily as a levy, effectively as a charge on individuals who use energy, which is all of us. It is not properly transparent in the way that it is used and whether energy companies do the work themselves or requisition it, where the margin goes or how the work is bid for. All of that is very unclear in terms of what in many ways would be seen as public money.

The figure that really struck me on reading the Explanatory Notes— no doubt it comes out of the elaborate cost estimates—is that of just under £9 billion-worth net present value of the scheme. My mind boggles as to how we get to that figure. It makes it sound a perfect and fantastic scheme if we are somehow all to receive that in our pockets. Net present values can be quite useful, but we must remember that although the super group is targeted here to reduce energy poverty, the scheme puts about £45 on every electricity bill in additional costs. It is well used at the moment, but we have to perform far better in the future than we have done in the past, and I look forward to further legislation.

Although I have enjoyed looking at the picture, what is more important is that I have the same view of the same people on the other side of the room, which is excellent.

[Lord Woolmer of Leeds]

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

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