Energy Company Obligation

Nadine Dorries Excerpts

Tuesday 11th March 2014 Westminster Hall

On resuming—

[Nadine Dorries (in the Chair)]

The debate will now finish at 4.26 pm. That means that we will start the wind-ups at 4.5 pm, if that is okay, which gives everyone else an indication of how long they have to speak.

I call Lilian Greenwood to speak.

[Lilian Greenwood]

Thank you, Ms Dorries for calling me to speak.

I was speaking about my constituent, Ilona. She lives on the Wollaton Park estate in one of the 500 “white bungalows”, or Crane Composite houses, that were built in the 1920s by the Nottingham Corporation as part of a bold experiment in new building techniques. The bungalows are specially constructed, with steel frames and pre-cast concrete walls. They are really distinctive and are now part of a conservation area. However, they are cold and hard to heat.

Ilona suffers from fibromyalgia and chronic sinusitis, and she desperately needs a warm house; what she has is a cold and damp house with terrible mould problems. Her landlord, Nottingham City Homes, says that the only way to make her house really warm is solid wall insulation. Since the changes to the energy company obligation, that possibility has become more distant.

Kate lives about a mile away from Ilona on the Lenton Abbey estate, which was built by the council in the late 1920s. The 900 houses on the estate are of conventional brick construction. However, as was normal practice at that time, they were built with solid walls, so there are no cavities that can be insulated. About 500 of the houses are now privately owned, with about one fifth rented out. Kate says that since NCH fitted new doors—front and back—to her house, it has been noticeably warmer. However, her house is still cold and difficult to heat, and she worries about her bills. Lenton Abbey is one of the neighbourhoods that NCH had prioritised for energy efficiency measures under its greener housing scheme. However, the changes to the ECO mean that acting on those plans may now be years away.

Ennis is in his 80s. He lives across the River Trent in Clifton. The local claim that the Clifton estate was once the largest council estate in the country may be open to question, but there is no doubt that Clifton is a large example of the post-war drive to build. It is said that the Wimpey “no-fines” construction method of concrete walls allowed for a construction rate of 30 homes per week. Unfortunately, despite the fact this design type was popular across the country, the resulting homes are poorly insulated. NCH manages more than 1,200 of these properties in Clifton, but there are more than 3,500 similar privately owned former council homes whose residents exercised their right to buy but now face the same problems as Ennis—cold, damp homes and high fuel bills.

Ennis has seen his neighbours on the Clifton estate benefit from solid wall insulation, thanks to Nottingham’s pilot greener housing scheme, which was launched in the north of the estate last September. He has heard what a difference insulation has made to his neighbours’ bills, and how warm and cosy their houses now feel. He has also seen how good the insulation looks, as hundreds of tenants and owner-occupiers alike have taken up the offer of solid wall insulation provided by the scheme during the past six months.

Sadly, for Ennis the future is uncertain, because he lives in the first street in the southern half of the Clifton estate. The scheme was due to launch there in January, until the changes to the ECO that were announced in December allowed the funder—British Gas—to pull out, leaving Ennis and thousands more Clifton South residents to look enviously at their neighbours’ homes when they walk down the street.

--- Later in debate ---

[Lilian Greenwood]

My hon. Friend is right. It gives me no pleasure to tell the Minister that those are the effects of his changes to the energy company obligation. Right now in Clifton, the contractor VolkerLaser is working at an incredible pace to try to complete work for all those residents who have signed up and paid their contribution, but the 9 April deadline, when British Gas funding ends, is fast approaching. The Minister knows that. He met me and colleagues from Nottingham on 22 January to discuss the crisis we face. He promised to raise the matter with the chairman of Centrica, British Gas’s parent company. Can he tell us today whether he has held those discussions? If so, what was the outcome?

I also wrote to British Gas following our meeting to ask it to consider a grace period for private customers who have suffered financially, thereby allowing their properties to be completed beyond the 90-day notice period. In his reply, Chris Weston, the managing director of British Gas, said

“we cannot commit to an extension of the termination period”.

Does the Minister agree that those residents who have signed up and paid should have their contracts honoured? If British Gas will not provide that funding, is he prepared to step in to honour that commitment and ensure that my constituents receive the work for which they have paid at the price they expected?

The Minister also said in our meeting that Nottingham city council should amend its bid to the green deal communities fund, which has been increased to £80 million, and we followed his advice. As I anticipated, we have not yet had success, but I remain hopeful after his earlier comments. Can he say when the next tranche of green deal communities funding is expected to be announced?

When the Minister met us, he also suggested that the Government’s announced increase in green deal cashback might help to fill the gap left by the reduction in ECO funding. A few weeks later we learned that green deal cashback could no longer be used alongside ECO. I simply ask the Minister how we can plan for the future and work with him to deliver the energy efficiency measures that our constituents need, and that we all want to see, without some certainty on the policy and funding framework within which we are operating.

The Clifton scheme, which we believe is the largest area-based approach so far, has enabled Nottingham city council to learn valuable lessons about what works. Councillor Alan Clark, the portfolio holder for energy and sustainability, has led the city’s work, and he concludes that, to be successful, a scheme needs to: address the issue on an area-by-area basis; apply to all tenures equally; pay for green deal assessments, avoiding risk and up-front costs for households; identify a fixed price for works to bring certainty to residents; engage specialist contractors of the highest quality; and engage local councils as a trusted broker. Above all, there must be a stable national policy and funding regime.

Phil Angus, the manager of Nottingham Energy Partnership, puts it more bluntly,

“the Government’s stop start approach to funding policy is sending businesses to the wall along with hard working families left in the lurch”.

He illustrates the point with reference to a typical Clifton property for which the funding support available has changed, or is due to change, every few months as a result of policy changes since last December.

Ahead of the green deal’s launch last year, the Minister described it as

“the most transformational energy efficiency programme that this country has ever seen—a programme that is built for the long term.”—[Official Report, 16 January 2013; Vol. 556, c. 983.]

Clearly, as my hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) said, any scheme has to be reviewed and revised in light of experience but, as Phil Angus says:

“How is any small business connected to domestic energy efficiency services supposed to plan ahead and maintain consistency with customers, supplier and workforce…is this Government on the side of business?”

VolkerLaser, the contractor that has been delivering the solid wall insulation in Clifton, surely has to conclude that the answer to that question is no. Here is what managing director Mike Weaver had to say about the effect of changes to the energy company obligation:

“The recent events…and the uncertainty in the market have had, and will continue to have a devastating effect on the VolkerLaser business. We have had to suspend our forward apprenticeship scheme and staff recruitment programme, denying up to 50 young people the chance to get ‘a start’ in this industry.

The whole business has a cloud of insecurity hanging over it and for a Managing Director who started this business over 20 years ago this is particularly distressing. VolkerLaser prides itself on retaining good staff, with a large number of long serving employees enjoying their 20th year alongside me. It is now impossible to map out our employees’ future and it is inevitable that if current conditions persist, there will have to be redundancies.

Due to the collapse of the funding market it is now extremely difficult to plan a future order book. The proposed changes to ECO have swung the market so much in the favour of the energy retailers that even if funding becomes available, it will come with onerous conditions which will place enormous risk on contractors and clients alike.

No one in this industry believes they are owed a living, but it would be good for once to operate on a level playing field. Our staff and the residents of Clifton need some security and some reassurance that ECO is not just another flash in the pan. Or, to put it bluntly, yet another initiative the government asks thousands of people to spend millions of pounds gearing up for, only to see it decimated in one fell swoop.

The impact of the proposed changes to ECO, and in particular the 100,000 solid wall minima, will be significant and will undo all of the good work the partnership has achieved to date. 42% of the staff on the Clifton Greener HousiNG initiative are residents of Nottingham; ten apprentices have been inducted so far and are now working towards a nationally recognised qualification; and countless sustainable job opportunities have been created with local SMEs.

With a doubling of the minima to 200,000 measures (or 8 million tonnes equivalent) thousands more residents will be guaranteed a reduction in their fuel bills and be afforded the opportunity to live in warm and energy efficient homes. With the certainty of funding going forward, more and more employment opportunities and apprenticeships would be generated for the benefit of Clifton residents and the local economy.”

I do not doubt that the Minister wishes to see more energy efficient homes; what I doubt are the policies and funding support he has put in place to deliver on that aspiration. He says that the ECO will lead to insulation of at least 25,000 solid wall properties a year, but at that rate it will take 304 years to complete the task. Although he ramps up green deal cashback to persuade people that they want to take up energy efficiency measures, his funding changes are denying energy efficiency measures to my constituents who desperately want them. That simply is not good enough.

As Sally Longford, one of Ilona’s local councillors in Nottingham, says:

“Many of my elderly residents living in the Wollaton Park estate cannot keep warm without paying ridiculous amounts to the energy companies. Even then cold patches on the walls attract condensation and mould, they deserve better.”

She is right. What hope can the Minister give me that they will get it?

[Nadine Dorries (in the Chair)]

Order. At the moment there are about eight minutes each for those who want to speak.

--- Later in debate ---

[Gregory Barker]

I will not now, as I have very little time left. We must ensure that we deliver value for money, but the hon. Lady is right: a number of her constituents are making a contribution. It is not easy to say exactly what the right level of contribution is, but I think that the principle is important and I salute the work that is going on in Nottingham, as I said. I am increasingly optimistic that schemes such as that and many others across the country will be able to be rolled out, as a result of our green deal communities fund and the increased cashback prices that we have put in place. Those have been warmly welcomed by the supply chain. We have seen a very substantial increase in the cashback offer. Up to £4,000 per household is now available for solid-wall insulation. That is up from £650. It is not a bottomless pit or a blank cheque. It comes from a pot that we judge we can afford in order to get the market moving. We will announce shortly a further tranche of long-term incentives that will encourage people to improve the energy efficiency of their home. That will show that the coalition Government are a genuine partner in that move and that we are trying to build a long-term, sustainable market for energy efficiency improvements.

However, part of that must be green deal finance working together with private finance, subsidy through the ECO and other pots. There is no silver bullet; there is no easy answer, but the situation is simply not as bleak as it is being painted by the Opposition. I understand that every time the Government change policy, that is a challenge for any business that depends on Government policy. We do look, wherever possible, to avoid unnecessary changes and to provide certainty, but the very fact that we have now extended the ECO scheme out to 2017 and put the cashback measures in place, together with the fuel poverty strategy—the first time that anyone—

[Nadine Dorries (in the Chair)]

Order. I call Mr Tom Blenkinsop. Will other hon. Members please leave the Chamber quietly?