Energy Bill [HL]

Viscount Ullswater Excerpts

Monday 24th January 2011 Grand Committee

[Baroness Maddock]

My Lords, in moving Amendment 20P, perhaps I shall half come to the rescue of the previous discussion. Clause 37 refers to action by local authorities. My amendment would stop the introduction of some measures being conditional upon the outcome of the review to be established under Clause 36. My noble friend the Minister has said that he wants things to get going in this sector. We have had a view that perhaps we are trying to get going too quickly.

I agree with the Minister and with my noble friend Lord Teverson that we should do all that we can to encourage this to happen quickly. That is why I am anxious that some things can be done that are not conditional on the review. I think that my amendments in the next group will help us to get going quickly. Making regulations conditional on a review increases the likelihood that landlords will not do anything before 2015. However, if we set a clear minimum standard now to come into force after 2015, it would give landlords absolute clarity that from 2016 they would not be able to re-let a property with an F or G rating, thus allowing a significant time for preparation and encouraging voluntary uptake.

Crucially, the Government’s impact assessment admits that, because use of the powers to regulate is conditional on the outcome of the review, one would not expect landlords to install energy efficiency measures in significant numbers as a direct result of taking these powers. It is therefore assumed that there will be no pre-emptive action by landlords, but we could encourage action beforehand. If we set up a clear, timetabled, minimum standard of legislation now, it would maximise the opportunity for voluntary compliance by landlords and minimise the need for enforcement action later. The current legislation might achieve the reverse. However, a clear signal now will provide certainty for the market; will allow landlords to plan ahead; will allow the supply chains to get their supplies in; and possibly will allow new business models to be developed to serve the private rented sector. That is why I have introduced this amendment to stop the introduction of the measures being conditional on the outcome of the review established in Clause 36.

I will speak further to other amendments, which will give an idea of what else could be happening in local authorities to speed up action in the private rented sector, as many of us want. We are all saying how pleased we are that the Government have grasped the nettle. For goodness’ sake, let us try to be keen and encourage them to get on with it. I beg to move.

[The Deputy Chairman of Committees (Viscount Ullswater)]

My Lords, I must advise your Lordships that if this amendment is agreed to I will not be able to call Amendments 20PA and 20Q because of pre-emption.

[Lord Deben]

My Lords, I would like to suggest—

--- Later in debate ---

Amendment 20Q not moved.

[The Deputy Chairman of Committees]

My Lords, it has been suggested that this may be a good time for the Committee to adjourn for 10 minutes. We will return at about 6.08 pm.

--- Later in debate ---

I hope that I have demonstrated that there is a big role for local authorities. If we are careful about how we set out their duties in this Bill, we could get things shifting a little earlier, which I think is the will of many in the Committee and many of the people in the wider country. In particular, local authorities have for years been trying to deal with problems of poor private rented sector properties. I have not been a councillor for a few years, but many years ago I was a city councillor in Southampton. We used to struggle to bring the private sector properties up. This is a real opportunity and, given that landlords can see what may happen later, let us for goodness’ sake put something in this Bill to get them acting sooner rather than later. I beg to move.

[The Deputy Chairman of Committees]

I must advise your Lordships that if this amendment is agreed to I would not be able to call Amendment 20RA because of pre-emption.

[Baroness Smith of Basildon]

My Lords, I speak to Amendments 20RA and 20YA, which, in the new groupings list, are in this group. When I spoke to the previous group of amendments I mentioned the scale of the work that needs to be undertaken to improve the energy efficiency of our private rented sector and how many homes are affected. If we look at the information we have got from our own impact assessment report, from fuel poverty groups, from Friends of the Earth and from the Residential Landlords Association, we see that all are agreed that this is an enormous sector with enormous problems. The scale of the work that needs to be undertaken is huge. It is important that we discuss these amendments to ensure that we get it right.

Amendment 20RA seeks to take on board comments made last week on the issue of “shall” and “must”—that the Minister “must” make energy efficiency regulations. As the clause stands, it pushes back any intervention on private rented stock. I am not clear about when the timescale will start. I know when the review will start and how long it will roughly take, but we will not see any regulations in place until 2015. It is difficult to ascertain when the regulations will become effective and when that will come into play. We are talking about beyond the next election—four or five years away—before we see any significant improvements in the private rented stock.

One of my concerns is that that does not create the certainty for those involved to prepare to undertake the necessary work. At this stage, landlords do not know what is required of them. They do not know if and when, or to what level, they might be required to undertake work. In an earlier debate, the Minister talked about giving clarity to the private rented sector, but these regulation-making powers do the exact opposite. They give very little clarity because of the conditionality on them.

If the industry is to meet the needs of the Green Deal, it needs clarity, probably on the scale of the take-up, although I appreciate that that will not be easy at first. The industry will need to know what skills, training and employment will be required. Local authorities will need to know what is required of them. It is so far down the road that that will be very difficult and the conditionality will add to it. It could mean that this will have little impact and the worse properties—that is, the bands F and G-rated properties—being with us for many years to come. I am sure that that is not what the Minister intends. However, the wording of the Bill would have that effect.

There are a number of reasons why we might want to move more quickly. If we continue to have so many F and G-rated properties, the impact will be higher bills for those tenants and health issues. The Chief Medical Officer has estimated that the annual cost to the NHS of winter-related diseases due to cold housing is in the region of £859 million. That is a significant cost to the NHS and the Government.

I take on board the comments of the noble Baroness, Lady Maddock, about minimum energy efficiency standards. I have some sympathy with them. I would be grateful if the Minister would look at this. The costs of improving properties in bands F and G to raise them into band E are well within the Green Deal. That would give the critical mass needed for it to take off; it would give certainty to those involved; and a significant number of people in F and G properties—something like 40 per cent of tenants in these properties are in fuel poverty—could be moved into E-rated properties for less than £5,000 for each property. That is a significant issue.

I am unclear also about how the Minister can make regulations—it would be helpful if he would explain this to me, because I may have missed something—unless he knows what he is aiming for in terms of the kind and level of improvements that need to be made to those properties that are not energy efficient. How does he know that the correct regulations are in place? Owners will need to know what standard their properties must be brought up to. It may be a missed opportunity if we just look at the golden rule, which is arbitrary and will change over time—it is guidance more than anything else—and in two or five years find that those properties are still rated F and G because the work that has been undertaken has not been to the required level.

The Committee on Climate Change has recommended to the Government that there should be mandatory energy efficiency standards in the private rented sector. I do not often quote the Mayor of London, Boris Johnson, in support of proposals that I am putting forward. He stated:

“I agree that requiring landlords to meet energy efficiency standards when properties are re-let could be an important tool in improving the energy efficiency of the private rented sector in London. How these standards are communicated and enforced would be key to their success”.

There is a lot of sympathy for the view that landlords should know what is expected of them before they start on the process. It will be difficult for them to embark on it if there are no changes to the Bill before it passes into legislation. I am not clear what message that would send to landlords. Will they think, “This may happen later” or, “There will be changes. I should prepare for them now. What can I do?”? The issue is about giving certainty to landlords about whether they need to take action and, if they are to take action, what level of action they should take. The proposals point in the right direction, but are rather weak. If we are to see this critical mass, certainty must be given to those who rent out properties, to those who pay to rent them and to local government.

I will speak briefly to Amendment 20YA. I tabled this as a question to the Minister because I was confused. The amendment refers to Clause 38. I looked for an explanation of what it meant in the Explanatory Notes, which state that,

“the Secretary of State could provide that a landlord is not required … to make improvements if he cannot obtain consent which is required to be given by his freeholder”—

that is understandable—

“or if the property is likely to be worth less as a result of the improvements being installed”.

I cannot envisage what improvements to energy efficiency in the home would make the property worth less. Who would make the judgment that the property is worth less? This could be a get-out clause for the landlord to say, “If I do that, I won't get so much rent in” or, “If I do that, I couldn't sell it”. Will the judgment be made on rental income or the price that the property would fetch if it were sold? It would be helpful if the Minister would give us more information.