Energy Bill [HL]

Debate between Lord Whitty and Lord Grantchester

Wednesday 19th January 2011 Grand Committee

[Lord Whitty]

Yes, the role would be somewhat different in different cases, but I think that the new clause would provide for that. On the second new clause in the group, if we are to drop HECA—which many of us would regret; I acknowledge the noble Baroness as a prime mover of it—local authorities need to be aware that they can have a commitment in a broader framework to sustainability and energy efficiency in their area. Again, that is a facilitating provision, but it is broader than the Green Deal, and I would very much welcome some reference to it in the Bill. I hope that the Minister can say that that is also part of the Government’s thinking.

[Lord Grantchester]

My Lords, we are very encouraged that the noble Lord, Lord Teverson, is looking more widely than the simplistic interpretation of the Green Deal to make the greatest benefits available. We share his reflections on how local authorities can utilise their wide influence in the housing market to achieve added benefits.

As my noble friend Lord Whitty said, we were anxious when we looked at the drafting of the new clause that we should not overcomplicate the situation, because local authorities are involved in so many different facets of the local market, either as landlords, with other landlords or, under the wording of the new clause, acting as an agent for the building improver. We are concerned that that role needs to be clearly thought through: how they are working and interfacing with the different participants in the plan. For example, they may, through a housing association or through their managing agents, take on side or even employ an assessor in their area. That would put them straight in as a participant in the whole complex matrix of these arrangements.

However, we largely go along with the thrust of the noble Lord, Lord Teverson. Yes, we see that an added impact may be needed to bring the greatest benefits. To be fair, local authorities will be thinking how they can help their residents along the Green Deal plan to bring the greatest benefits to their communities. Under subsection (3) of the new clause they may be able themselves as landlord to offer rebates or think about incentives, but we think that if they are achieving added benefits by economies of scale, that may well be sufficient to provide incentives that will encourage a greater take-up of the Green Deal. We support the thrust of the amendment tabled by the noble Lord, Lord Teverson, and we would like the Minister to take it away to think about it, or tell us today what role she envisages in the matrix of the participants in the Green Deal that local authorities could be encouraged to take up.

--- Later in debate ---

[Lord Whitty]

I return now to the issue of fees and how they are referred to in a rather different context. Both this amendment and my next group of amendments relate to references to fees. Clause 30 covers powers to deal with special circumstances. The first of the special circumstances is the suspension or cancellation of the Green Deal. Subsection (2) refers to the provision setting out the procedure,

“for securing a suspension or cancellation (including the payment of an administration fee calculated in accordance with the regulations)”.

It is the bit in brackets that I am seeking to change. If a Green Deal arrangement is to be cancelled, it is presumably for one of two reasons: either because the provision under the Green Deal has not met the specifications—in other words, the provider has defaulted—or because the repayer, whether or not they were the original repayer, is now in circumstances where they cannot repay. In either of those circumstances, it seems inappropriate, in addition to cancelling the deal, to charge a payment. It is therefore odd that there is reference at that point to the payment of an additional fee. Even though it is referred to as an administration fee, in the circumstances it is an additional payment. It is conceivable that there are other circumstances than the two that I have suggested, but I cannot think of them. If the Minister’s imagination is better than mine, no doubt she will tell us.

The second such provision relates to subsection (2)(d), which goes back to the argument about early repayment. If the original agreement was clear, the terms of early repayment would be clear. As it stands, this runs into the same difficulty that I referred to an hour or so ago, which is that a new occupier or a new landlord might have to meet a repayment fee—to which they had not previously been committed, as they were not the original signer of the agreement—for deciding that on all other grounds they wished to repay early. It is not clear, as it is not clear in many other respects, why a fee should be paid for early repayment or exit. Because we have seen exit fees abused in other areas of energy provision, I would be deeply suspicious of the primary legislation referring to an exit fee in this form. No doubt we will return to this issue when we come to the details of defining the situations to which this applies, but in the primary legislation the apparent presumption that a fee is involved should be deleted. I beg to move.

[Lord Grantchester]

I support my noble friend in his Amendment 18 and his proposal regarding early repayment penalties under Amendment 19. My noble friend and other noble Lords spoke strongly about this issue when it was discussed earlier. The Minister replied that, if this provision was taken out, it could lead to an awkward situation in which it would be open for different people to charge different levels of fees. Perhaps the Minister could take this away. If she could propose that no penalty fees would be levied in this situation under the Bill, that would sort the problem out and not leave it to the providers to decide. If it is not covered, there would be a disparity in the fees and penalties that could be levied.

[Baroness Northover]

My Lords, Clause 30 allows regulations to be made that set out when and how a bill payer’s liability to make Green Deal repayments can be cancelled or suspended. Amendment 18 would prevent the regulations from making provision for a procedure to be followed for securing such suspension or cancellation of the repayments. Noble Lords have made the point about this being proportionate and not abused.

An example of when the bill payer’s liability might be cancelled is where the bill payer had chosen to make full early repayment of the Green Deal finance arrangement. In such an eventuality, there may be a need to include an administration fee. I will turn to why that might be in a minute. As discussed earlier, such a fee would be calculated in line with the rules of the Consumer Credit Act for the domestic Green Deal and in line with the regulations that we propose to set out in secondary legislation for the business Green Deal. This clause also gives us the flexibility to introduce a payment suspension mechanism for the bill payer in appropriate circumstances.

The legislation permits an administration fee to be requested for the arrangement of payment suspension. This is essential to balance the needs of the property owner to have flexibility while minimising the loss that the provider of finance might incur. The details of this—for example, when such a fee might be requested and the level of such a fee—will be subject to consultation later this year.

Amendment 19 would remove the ability to set out in regulations what should be payable in the event of early repayment of the Green Deal being required, including how any fee should be calculated. The effect of this amendment would be to prevent the regulations setting out the rules on early repayment from being set out in Green Deal plans.

The domestic Green Deal is subject to the early repayment rules set out in the Consumer Credit Act, which prevents consumers from being charged unreasonable fees when they repay early. However, business Green Deal providers are not subject to any existing regulations on early repayment fees. This amendment would remove the ability for the Government to set out regulations limiting the fees that can be charged when a business is required to repay the Green Deal early.

Early repayment fees are an important protection for the investor providing the finance. They have invested their money expecting a particular rate of return over a particular period. Being able to claim some compensation when an early repayment is made is an important element to keep the cost of finance low. This practice is not uncommon in the mortgage market.

However, we do not want Green Deal providers to charge disproportionate fees when early repayment is required, so the ability to set out some rules around this in secondary legislation is important. There is a danger that these amendments could remove that protection, which I think is far from the intention of the mover of the amendment. I hope that noble Lords will be reassured by my explanation and, on that basis, that the noble Lord will withdraw his amendment.

Public Bodies Bill [HL]

Debate between Lord Whitty and Lord Grantchester

Tuesday 11th January 2011 Lords Chamber

[Lord Whitty]

My Lords, I will pick up from where the noble Lord, Lord Phillips, has just left off. I have a past interest as a Waterways Minister, which is a fantastic job. I cannot remember if it is part of the portfolio of the noble Lord, Lord Henley, but if not, that is regrettable, because it provides a welcome relief from most of the rest of what one has to do. I also have a present interest as a member of the board of the Environment Agency. British Waterways is the dominant organisation for canals and the Environment Agency is the dominant organisation for rivers. An amendment recently tabled by the noble Lord, Lord Taylor, points the way that the Government are thinking of going in handing over British Waterways to a trust in the third sector and transferring the Environment Agency’s navigation and waterways responsibilities to that body.

I am, broadly speaking, subject to a few caveats, in favour of that sense of direction. Eighty to 90 per cent of British Waterways will probably be covered by that new organisation, which will make it a very dominant organisation. All the small navigation authorities to which the noble Lord, Lord Phillips, referred, supported by volunteers, charities and local efforts for relatively small stretches of canal and river, look to this body for technical advice and for a forum where they can sit and be treated equally with the representatives of British Waterways and the Environment Agency. They will be the people who will most miss out as a result of the abolition of this body. British Waterways, including the Environment Agency’s navigation aspects, will take care of itself, and the charitable status, I hope, will ensure that it does a good job for the public and the environment. However, the smaller navigation authorities need this body and we should seek to retain it for them, certainly for a significant period beyond any transformation of the status of British Waterways, as my noble friend Lord Berkeley suggested.

[Lord Grantchester]

My Lords, I compliment the speakers this evening on giving their thoughts on the Inland Waterways Advisory Council. I suggest that this body has been included in this part of the Bill to add some weight, but the timing has not been properly considered. In rural areas, the inland waterways are a thriving enterprise for a lot of people. Volunteers undertake restoration and development work, which offers enjoyment to many people along the waterways, reconstructing our industrial heritage and providing diversification opportunities in rural areas. I tease the Minister when I say that we are not looking at a dead parrot. This situation is working extremely well. I ask him to consider the thoughts of all the noble Lords who have spoken tonight, to clarify some of the background as to why British Waterways is one of only nine bodies in the Public Bodies Bill being made into a charity, to expand the Government’s thoughts on why they think that British Waterways is best suited to charitable status and to say how, given its activities, it is likely to be able to raise the funds necessary to continue to provide all these excellent opportunities in development and restoration in rural areas for our wonderful waterways.