Electricity and Gas (Energy Company Obligation) Order 2012

Lord Whitty Excerpts

Monday 23rd July 2012 Grand Committee

[Lord Reay]

My Lords, the Green Deal seems to be a ferociously complicated and expensive bureaucratic edifice. It has the laudable objective of improving the energy efficiency of existing British homes and other buildings without requiring the taxpayer to fund it. If I understand the impact assessment correctly, the cost of the energy company obligation will be recouped by suppliers from customers’ bills generally, so that is a further cost to the consumer. As for the amount, I saw different references—a reference to a cost of £1.3 billion a year on page 187 of the impact assessment, but a reference to £540 million a year in the letter from the Minister that appears at the back of the report of the Secondary Legislation Scrutiny Committee. I do not know if the Minister might be able to comment on those figures.

The take-up of the scheme is of course unknowable. Much will depend, as the Government point out on page 131 of the impact assessment, on the trust that people learn to put into the scheme. Plenty of things could go wrong to affect or even destroy confidence and trust.

Two of the advantages of the scheme are said to be the saving of the CO₂ emissions as a result of less electricity being used, and greater thermal comfort for householders through enabling them, for the same cost, to enjoy high temperatures in the homes. However, each of those objectives is achievable only at the expense of the other.

I will refer to some interesting paragraphs on page 89 on the subject of health. The impact assessment correctly points out that the scope for improving health by alleviating cold living conditions is considerable. However, it goes on to point to the growing concern that the removal of ventilation can increase the incidence of disease. It expects more attention to be focused on this subject in future.

Finally, I will ask the Minister a question on the subject of external cladding. We read recently that another government Minister had declared that he wished to promote this form of energy efficiency. Will my noble friend give an assurance that this will not be done to listed buildings? We do not want beautiful buildings and streets being vandalised into eyesores in the name of energy efficiency. Enough damage is already being done to the countryside by wind turbines, as the Minister well knows.

[Lord Whitty]

My Lords, I have a number of points; I will try to restrict them to five. The first two follow up on what my noble friend Lady Worthington referred to as “joining up the dots”. The first is very straightforward and relates to the previous item. I do not understand, even at this late stage, why the Government’s programmes for smart meters and the Green Deal are not allied at least in their means of delivery and timing. Householders will be faced with two different initiatives, one compulsory and one voluntary, at the same time. They could easily be combined. I will leave it at that.

My second and most important point concerns how the ECO mechanism and the Green Deal mechanism join up, in particular in relation to tackling fuel poverty. I think that the Minister was being a little economic with the truth earlier when he claimed that this represented an increase in the number of the fuel poor who would benefit from government policy. Figures produced by my former organisation, Consumer Focus, indicate that the total spend on fuel poverty will fall from £1.1 billion to £540 million in 2013. The latter amount will be accounted for largely by the proportion of the ECO that will be geared to addressing fuel poverty.

As the noble Lord, Lord Reay, said, all consumers will pay for the ECO. It is more or less a poll tax and therefore regressive on those who cannot afford to pay. The offset will be geared through measures such as the warm homes discount, and will include the gearing of some aspects of the Green Deal to the fuel poor. It is not clear that the fuel poor will benefit, in particular those who are tenants either of private or social landlords. Because of turnover and the nature of the tenants, it is unlikely that many will sign up to the Green Deal. Therefore, it would be much more efficient to deliver it via the landlord. Questions of inherited obligations would begin to disappear, and so forth.

It is not clear that in net terms the Green Deal can be delivered easily to individual households in tenanted property. It is not clear how obligations such as the forward payment could be delivered, and it is not clear how the relationship between the landlord and tenant could facilitate the take-up of the Green Deal—the payback from which will take a number of years. My central problem is that a significant element of those who are in fuel poverty will be unconvinced, if they are in their own property, of the need to take up the Green Deal. If they are in tenanted property, they will be unable on an individual basis to take up the most cost-effective ways of achieving Green Deal benefits.