Select Committee on Environmental Audit Minutes of Evidence

Examination of witnesses (Questions 60 - 79)



  60. Although we are getting cleaner we are not necessarily getting less energy usage. That is one of the problems that we have.
  (Lord Whitty) Well, you are, because part of being cleaner is—

  61. But there is more traffic as well.
  (Lord Whitty) You will get some more traffic. Clearly in the urban areas with fairly intensive policies we may be able to restrict the growth of traffic. It is unlikely that there will be, in terms of inter-urban traffic, negative growth. I think that is probably an understatement. We are therefore talking about trying to change the mix of vehicles on the road, both lorries and cars, so that they are cleaner in relation to all sorts of emissions. That does have a direct carbon benefit because we are talking about engine fuel efficiency.

  62. That is transport. The other area that you mentioned was buildings and the domestic front as well. Can you say anything more about anything that you are doing with the Building Regulations to change the way, not only for new construction but also for refurbishment, that puts a much more energy efficient emphasis within the Building Regulations process?
  (Lord Whitty) The Building Regulations apply primarily to new build or renovation, it does not relate to repairs. We have been through a pretty long consultation on the Building Regulations.

  63. Is there a good link with home renovation grants there with the Building Regulations?
  (Lord Whitty) Not a direct link in terms of the Building Regulations because the Building Regulations, as such, relate to new buildings, or effectively new, or relate to existing shells being renovated. The renovation grants can themselves specify the form of renovation for which grants might be made. In relation to Part L of the Building Regulations I have had a fairly lengthy consultation and my colleague, Nick Raynsford, is on the point of announcing a full consultation with specific changes now being proposed. In terms of new build and renovation, I think they will begin to make their impact felt. Am I allowed to say that Nick Raynsford's announcement on this will be on 15th June? We are a few days off on that, but we will see that. The other side is house purchase, which does involve existing buildings, where the housing Green Paper indicated that we want to introduce a system whereby not only does the vendor have to produce a survey themselves to speed up and help the quality of choice and advice to the buyer, but also, within that survey, has to have, very specifically, fuel efficiency indicators and, coupled with that, suggest how improvements can be made. We are piloting such a scheme in Bristol now and we should have the results of that within a few months. That should perhaps help not only to gear buyers to the fuel efficiency of their housing in a similar way to that which they do when they buy a refrigerator these days in terms of fuel efficiency, but it will specifically spell out changes that will be made to encourage repairs in a generally fuel efficient way.

  64. Finally, on the whole issue of devolution, which is something you touched on briefly, it is, of course, mentioned in the report that it is quite difficult to pick out the different contributions from the devolved administrations now; we have a European bubble and a United Kingdom bubble. Are there discussions at that level within the devolution of the other administrations? Are you meeting any resistance, for example, on trying to meet the target on renewables from areas that have large up-land areas that might be covered with windmills and, therefore, people may be saying to you, "We are not very keen on these targets because we will have local difficulties with them"? In what way are you progressing at that devolved level as well as the UK level?
  (Lord Whitty) Some of these issues, like the negotiation on the bubble or taxation issues, are, of course, reserved. Others are clearly devolved and there will be slight differences in the approach between the various devolved administrations. Broadly speaking we are moving in the same direction. There are marginal differences, for example, on how we approach the HEES scheme in Wales, but they move broadly in the same direction. As I mentioned earlier, the Joint Committee that we run has the devolved Assemblies on it in relation to poverty, so there are no policy clashes, it is just that they are gearing some of the same measures, or similar measures, in a slightly different way.
  (Mrs Liddell) I think from the energy point of view I can certainly confirm that. I met with my opposite number from the Scottish Parliament two or three weeks ago to talk about renewable energy, because there are certain issues, for example, relating to off-shore wind—which is not as near to market as on-shore wind—that we are both very interested in. Of course, one area that I think all of us who are interested in environmental matters in relation to energy share a desire to see the public more engaged in the need, for example, to choose green energy where an option for green energy exists. Together with my opposite number from the Scottish Parliament we hope to do some joint visits to highlight the importance of renewables not just to the Scottish economy, but also to our overall environmental goals.

Mr Chaytor

  65. Before we leave Climate Change I would like to ask one very specific question that has not been touched on so far and that is the fuel duty escalator and its role, or lack of role, in the Climate Change Programme. If the fuel duty escalator remains in a state of suspension, does it not follow inevitably that there will be a significant increase in consumption? Does it not send the wrong signals to people about the use of a private car?
  (Lord Whitty) The total cost of motoring is, of course, an issue that we have to address. It is actually the price of the fuel, not the taxation on the fuel, that is the issue. Over the period up until we suspended the operation of the fuel duty escalator for most of that period the real price of oil was falling and therefore the tax was making up for that. Since that we have had a significant fuel price rise in the system. So what actually alters behaviour is the price that people pay for petrol at the pumps. That is why we are keeping it continually under review. If it appears that the fuel price goes down, it may well be that we will then trigger a form of the fuel duty escalator again. One of the important things of that discussion is that if we do control it again and have a real increase in the fuel duty escalator itself we have a degree of hypothecation back into traffic saving transport measures, either on public transport, on new roads or more control of road systems. We have a mechanism not only to maintain price signals which will, at the margin, limit the use of the car, but also a mechanism that recycles that into measures which will themselves be energy saving.

Joan Walley

  66. I would like to go back to the comment which our DTI Minister just made in respect of public awareness and the talks that you were having with your Scottish counterpart. One of the things which has really hit me in the face when talking about the whole issue of renewables has been the huge opportunities for competitiveness in terms of new jobs that could be created if we could overcome this distance from market of the emerging renewable technologies. I understand that quite a lot of work has been done on this, specifically in Scotland, and that in itself that could be one way of getting across the public awareness agenda simply because we can create, as has been the case in Denmark and Germany, so many new jobs if only we could get round this problem of ensuring the competitiveness that much quicker and that much sooner of renewable technologies.
  (Mrs Liddell) I think that is one of the reasons why I am heartened by the extent to which some of the major companies are becoming involved in renewable technologies, because they are much better at marketing that than we are. We are amateurs at this game compared with the professionals. I was pointing out to one oil major just the other day that as I travel around Europe and watch BBC World or Sky News I see items on renewables by that company in other parts of Europe but I never see them on British television. I think all of us need to work together to try and get the green agenda higher up and also to make it clear to people that they do have green options and they do have options of choosing renewable energy. I know, for example, with the decline in activity on-shore as a consequences of the maturity of the United Kingdom continental shelf a number of the large fabrication companies are looking at the opportunities that renewables may bring along, and off-shore winds springs immediately to mind, but there is still a way to go in terms of the research effort that is required on that. I am optimistic, and I am not by nature an optimist, that the industry is addressing the opportunities that are there for them.

  Chairman: You are a politician, you must be an optimist, surely?

Mrs Brinton

  67. Can I take us very, very briefly back to the issue of the fuel duty escalator? I was sitting here and I do not think I quite believe what I actually heard from Lord Whitty, because certainly when the Chancellor announced the scrapping of the fuel duty escalator I actually thought, and I think everybody else thought—MPs from all parties and the general public, many of whom have been very exercised against the fuel duty escalator—that in fact that was it, dead and buried.
  (Lord Whitty) That is not what the Chancellor said. The Chancellor said that decisions will be taken on a year by year basis and if we raise them over the rate of inflation that money will be hypothecated back into transport purposes. So he is clearly envisaging that there will be certain price situations and fiscal situations where we would indeed use the fuel duty over and above the rate of inflation. What has gone is the automatic escalator which, in any case, was only going to run for another 18 months. That is what has gone.

  68. Can we assume that any change will be open and transparent consultation?
  (Lord Whitty) Exactly the same level of consultation and transparency as all fiscal decisions are taken.

  Mrs Brinton: Thank you very much.

Christine Russell

  69. I think both of you this morning have emphasised in a number of points the need to have cross departmental working when it comes to energy policy and energy efficiency programmes. You will obviously know that in the Committee's report we actually recommended a small dedicated unit to tackle energy efficiency implications because of the spread across all the ministries. In your response you actually said that the matter was under review. Is it possible for one of you to give us an up-date this morning? I believe you said that all the arrangements and programmes for promoting energy efficiency were under review as part of the discussions on the Climate Change Levy.
  (Lord Whitty) Yes, they are under review in relation to better Climate Change Programme, to which we will return following this consultation in the autumn, and in relation to the fuel poverty programme, which again we will be issuing the strategy on in the autumn. There may be institutional aspects of that. In terms of your specific proposal, it was not so much a dedicated unit partly within one or other ministry or within the Cabinet office, it was actually talking about the Sustainable Energy Agency. That did not find favour amongst them.


  70. We actually rejected a sustainable agency per se. What we said was that there was a need for inter-departmental co-ordination because one thing we found when we were in Nottingham and places like that was that very active local authorities and group partnerships in the private sector and so forth were trying to bring about energy efficiency schemes, but they said the paper work, and the need to get lots of different bits of money from different parts of the Government was so huge that many people would simply not carry on, given the difficulty, and, therefore, as a unit it was necessary to speed willing people through the system.
  (Mrs Liddell) You are right that this is an area that does require a great deal of government focusing. I have to say that I have not found any shortcuts from direct ministerial involvement. Larry and I work, as I think you can see, very closely together, but it is getting that to the end product as it interfaces with the public or with industry that is important. I am not necessarily convinced that setting up a special unit would fulfil the function that you quite rightly wish to see achieved. I think there might be a bit of a tendency to assume that everything can be shuffled off into that unit. For example, we talked about the work that I have to do within the Government in relation to ensuring that fuels are available through the DETR for the cleaner car technology initiatives that we are seeking to progress. So my anxiety of having a specific unit is that it might end up as a corral that lets everybody else off the hook rather than seeking to put in place better structures right across the board, not just in this area, but across government. I think we still have to get a much more acceptable way of dealing with regulation, with bureaucracy, with form filling and making sure that people have single routes into government structures and energy efficiency. Obviously as structures change and as work goes on new ways of delivering have to be found. At the moment I am comfortable that my officials liaise effectively with DETR officials, and I hope vice versa, but the end result, in terms of the interface with the public, is perhaps the area that requires greatest concentration.
  (Lord Whitty) We are very anxious, for example, in relation to those small firms and in relation to the households that are supposedly being targeted under various programmes, that when somebody is identified as potentially eligible for HEES the person who transmits the information also makes them aware, and are themselves aware, of other programmes which they might also benefit from. Similarly, in relation to the small firms and energy efficiency best practice and making sure that that is all in one place and not have several different fancy names which have different routes to achievement. We are aware of the problem and it would be fair to say that we have both experienced the same amount of feed back as you have from potential end users.

  71. I am glad that you are aware of the problem, because this is essentially about identifying the barriers which customers, ie the local authorities, the public at large or the private sector may find in utilising the schemes that you have. I am glad you both feel that there are barriers and difficulties, because we certainly got that impression from talking to people. If that problem can be addressed we might make more rapid progress.
  (Mrs Liddell) I think it is also true to say that the industry itself has to take that into account. It is important that the energy companies actually liaise with local authorities. There have been some good initiatives that we have seen, whereby meter readers can be trained to identify the signs of fuel poverty, health visitors can keep us informed about which homes are not adequately insulated, so it is not just a question of DETR and DTI co-operating on a policy level, we need to flag these issues up as a mainstream part of government thinking, not least in relation to social exclusion.

Christine Russell

  72. Can I ask Lord Whitty what the purpose of the meeting in Nottingham with the local authority was that you referred to in your opening words? Although it was before my time on the Committee, when Members of the Committee went to Nottingham they were very impressed by the energy efficiency partnerships that they found there. Can you tell the Committee what the meeting in October is going to be about, what attitude you have towards these partnerships and whether you are activity seeking to develop them further?
  (Lord Whitty) The answer to your last question is yes. We were impressed with Nottingham's own initiatives in this area and it may be one of the reasons why we are holding it in Nottingham, but this is to pull together the local authority leaders and chief executives of all local authorities in England so that we can get the focus on the totality of energy efficiency responsibilities of local authorities for their own buildings and methods of operation, for their advice systems to small businesses in particular, and for their tenants and other householders who fall into fuel poverty and could benefit from some of the schemes, and also that they can learn from each other. This is primarily, in a sense, a local authority meeting and we will need to ensure that we are there listening to the experiences of local authorities, because I am sure we do not at present know everything that has been undertaken by the local authorities themselves and the kind of partnerships that they have set up. Until I came into this job I was certainly not aware of the sort of innovations that Nottingham had taken, and I am sure they are repeated elsewhere. It is a question of raising the average standard to the best, learning from each other and getting a more cohesive message across between government and local authorities. We have had quite a good response to that from many local authorities and there are very keen offices in that area, but there are other areas of the public sector to which we would wish to extend this generalisation of best practice, for example, hospitals, who are huge users of energy. I visited one hospital in the West Midlands not long ago where the enthusiasm of one particular guy had made huge savings in their energy bills which were not repeated elsewhere, even within that health trust's area of operation. I think the public sector, in terms of its direct responsibilities, does have a lead function here as well.

Joan Walley

  73. I cannot help but comment on that. I agree with you that the public sector does have a responsibility, but I do feel that the Government missed an opportunity when it issued guidance in respect of health authorities. It could have included very specific guidance on that so that we could have helped many hospitals. I think that was an opportunity missed. If I can turn to the Climate Change Levy, you mentioned in your opening comments that we are at the stage where we have 10 agreements and 20 in the process of being agreed. Give us an idea of when this is likely to be completed and finalised.
  (Lord Whitty) Let me just correct you. We have 10 memoranda of understanding. Those discussions are still going on in terms of the final agreements.

  74. When is that final agreement likely to be?
  (Lord Whitty) It will take a few months yet to get the first ones of them.

  75. When was it originally envisaged that it would commence from, and are we on target?
  (Lord Whitty) In terms of the presumptions of the Climate Change Programme we are still on target. We expected these to be quite difficult and complex negotiations and we are, therefore, negotiating with those sectors and there are different considerations in each of them. It will take a bit of time to finalise all of the agreements. The presumed target in the Climate Change Programme, which we think is still achievable, is April next year. Hopefully it will be done before then.

  76. Can I refer to a little bit of disquiet that some Members of the Committee are picking up from those who are now engaged in these negotiations which relates to the Parliamentary question which Mr Meacher answered on 17th May, which is the whole issue of whether or not this now needs to be referred to Brussels for compliance in respect of the state aid laws. Can you put the issue straight for us on that, please, and the timing as well?
  (Lord Whitty) There is an issue in relation to state aid and we are in discussion with the European Commission on it. We submitted the whole scheme and the outline proposals in February and we have been discussing with the Director General since then. Clearly the Commission needs to be assured that this is not a state aid by another form to those high intensity energy sectors. We think we have pretty good arguments to put to the European Commission that this is desirable and not anti-competitive and, therefore, should not fall foul of the EU general approach to these issues. At the moment I am not able to assure you that we have concluded those discussions. We have been reasonably encouraged by the recent changes and we need to make sure that we reach an adequate conclusion, because the state aid guidelines are currently under review with a view to moving them to be more sensitive to environmental objectives in any case. We believe that as we move down the line these will become even more compatible with EU guidelines on state aid and the kind of questions that were being raised with us in the first place would not, therefore, be relevant. However, we are not yet able to report success, but we are reasonably confident.

  77. Given that you just said that April 2001 was the date when you expected to have the agreements in place, what is the worst scenario in terms of getting agreement from Brussels in respect of this aspect of it? Bearing in mind that the actual environmental aspect of it is up for reconsideration any way, what is the worst scenario in terms of timetable?
  (Lord Whitty) One can envisage unlikely worst scenarios, but our intention is that the understanding with the Commission is that their consultation and assessment process will be finished by the end of this year and we will be fully on target for the April 2001 position. The absolute worst scenario I will not spell out.

  78. What is the best one then?
  (Lord Whitty) We believe we will not be in that situation and our understanding of the views of other countries and of the environmental competition people within the Commission is that we should be able to reach a positive solution within that timescale.

  79. In view of the report that our Committee has done on energy efficiency and the difficulties that we have had because of on-going issues which we refered to earlier, would it be possible for our Committee to be kept up to date on whatever basis?
  (Lord Whitty) With the relationship with the Commission?.

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