TUESDAY 13 JUNE 2000
_________
Members present:
Mr John Horam, in the Chair
Joan Walley
Christine Russell
Mrs Helen Brinton
Mr David Chaytor
Mr Simon Thomas
Sir Richard Body
Mr Neil Gerrard
_________
EXAMINATION OF WITNESSES
LORD WHITTY, Parliamentary Under-Secretary of State, MR LESLIE PACKER,
Head of Sustainable Energy Policy Division, MR DAVID VINCENT, Head
of Energy Efficiency Best Practice Division, MRS HELEN LIDDELL, a
Member of the House, Minister for Energy and Competitiveness in
Europe, MR GRAHAM WHITE, Director of Energy Statistics and Energy
Efficiency and MS SARAH EASTABROOK, Policy Manager, Energy
Efficiency, examined.
Chairman
1. Good morning to you. Thank you for coming, welcome to the
Committee proceedings. As you know, this is the second bite we have had of
Energy Efficiency. We published our report some time ago now and we are having
a second bite, for two reasons. In your response to it you pointed to a lot
of things that were actually happening and were not finished, like the draft
Climate Change Programme, like the negotiation over the Climate Change Levy
and the Renewable Energy proposals, the Utilities Bill, which is still going
through Parliament and the new electricity trading. There is a lot (?), and
we have taken that into account. Secondly, the general reaction to the
Government's response to our report was rather lack lustre, if I can use that
reasonably friendly phrase, which prompted you to come forward with a second
response, if you recall, a follow-on from the first one you put out. On both
those grounds we thought it would be sensible to continue the process of
discussing energy efficiency, which is a very important and central issue in
the whole environmental sustainability debate. That is why we are here again.
Thank you, once again, for coming this morning. Before we begin asking you
questions is there anything either of you would like to say by way of initial
statement? Please be brief.
(Lord Whitty) It might be useful if we updated you with the things that
have gone on since the last note you had from us, and a number of things were
about to happen. We have seen many of these. We have the new HEES scheme in
operation from 1st June, we launched that the other day when we visited one
of the first installations in Herne Hill. We have not only published the
draft Climate Change Programme, but the consultation period has just ended and
we have had a fair number of responses we need to take into account on that.
On the Climate Change Levy, we have concluded a memorandum with ten major
sector associations and discussions are still going on with another
twenty-plus sector associations, with the aim of concluding negotiation
agreements on that front on CHP in April. We announced the perspective lift
of the restrictive policy with the local authority areas and we brought
together the local authority discussion paper on energy and efficiency and we
are calling together the local authorities in October. We also had the Energy
Regulator issuing his social programme in May and we have some of the utility
companies taking initiatives themselves in terms of the way they charge
consumers energy, the Earn Energy/Stay Warm tariff. All of these things have
happened, effectively, since our formal communication with you and since your
last consideration of these issues. I hope that the programme is going to be
slightly less lack lustre and hopefully we can further it today. Can I say
one other quick thing, it is very important we have joined-up Government. We
have the poverty dimension up and running and we are looking to develop a
programme by the end of the year, early autumn, hopefully. Helen Liddell and
I operate quite frequently together on this front, we have now re-instituted
the joint meetings that were held between our predecessors earlier. We are
here representing the total Government team, not only us but the Treasury,
Social Security and other departments who are involved in this issue.
Chairman: We want to start off by looking at the position on energy
efficiency in the total scheme of things. Mr Chaytor.
Mr Chaytor
2. Thank you. Good morning, Ministers, one of the issues that
concerns the Committee is the Government's response to the earlier report and
the lack of enthusiasm for the concept of an energy hierarchy. Do you recall,
the Committee suggested Government should adopt an energy hierarchy on the
model, a waste hierarchy in which energy efficiency would take first play,
followed by renewable, followed by CHP going through the different degrees of
fossil fuels and relying on nuclear as the least favoured option. The
Government's response to this was not enthusiastic. You rejected the concept
of hierarchy in favour of a policy of diversity, security and sustainability.
I wonder if you could say a little bit more about why you do not see the
value, as we do, of an energy hierarchy and how diverse the security deals
with that hierarchy?
(Mrs Liddell) We did look at it very closely, indeed, and the
reservation that we both share is that when you talk about an energy hierarchy
that suggests concentrating on one source at a time and when that is done let
us move on to the next one, and so on down. The reality of the modern energy
market is such that there is a need for a diversity of supply, to give the
security of supply, which has to be the main priority of the Energy Minister.
If I have a priority that overrides all others, that is keeping the lights on
and trying to get a mix of energy sources in the right balance. It is
something that we seek to do through the Utilities Bill. I can understand why
the Committee were attracted by that idea, given the Waste Management Model.
The Waste Management Model was, to some extent, to encourage people to look
at the different options for waste management whereas with energy there is
such a diversity in energy sources out there, it is bringing harmonisation to
the proper operation of the market and competitive prices. I cannot lose
sight of the need to ensure competitive prices, not just because of the issue
of fuel quality but also for industrial competitiveness as well. If we had
a formalised energy hierarchy with energy efficiency up there perhaps by the
time we got down to item four or five there may be a tendency to say that
energy efficiency has been dealt with and we do not need to worry and that
energy efficiency is something that is going to constantly be addressed, not
just by us as a Government, not just by energy companies but by many different
aspects of life from the manufacturing companies to the construction industry.
We felt that the Government's mission statement on security and diversity
supply was the way forward. There are also certain areas, particularly in
relation to renewables, where some of them are not ready for the market yet
and they are approaching market and we are seeking to help them approach
market even more quickly. We could not wait until we got to that point of
hierarchy to give that kind of assistance. There is going to be that kind of
assistance built-in to the nature of the energy market. That is what we have
sought to do but, simultaneously, also to look to research budgets as a means
of encouraging renewables. I am sorry if it seems as though we dismissed
that, we did not dismiss that without very serious considerations of the view
expressed by the Committee.
3. Are you saying that diversity, security and sustainability are
not compatible with the idea of hierarchy, can the two not co-exist? Can you
point to ways where there would be clear contradictions between the two? You
mentioned the cost of renewables, obviously that is a factor in the case of
some renewables. Why can the two not go together, given they are both
objectives we are striving towards not mandates for the immediate moment?
(Lord Whitty) We are not rejecting the energy hierarchy as a conception
at all when we are making decisions on policy. What we are saying is it is
not an overriding one. A different mix of energy, efficiency and source
measures will be appropriate for different ends and we not only have the
objectives that Helen Liddell was referring to in relation to the costs for
consumers we also have a social objective and a broader environmental
objective. A different mix will be appropriate for different situations.
Energy efficiency is the first one, if you discard that you assume that energy
efficiency measures do not imply, whatever the source, if you dismiss that as
the main choice then if you move on down your hierarchy in that sort of uni-
dimensional way energy efficiency no longer applies. That seems perverse. We
should not be allowed to use what may be a useful, conceptual framework as a
rigid policy.
4. If I can pursue the question of diversity, security and
sustainability and ask you if you can give a little more clarity as to how the
three concepts are defined? Is diversity defined by the actual, by type, by
country of origin and is sustainability not defined by environmental terms or
social job creation terms? If you can say a little more about the
definitions?
(Mrs Liddell) We certainly looked at a definition in the White Paper.
I will be honest with you, we shrank from defining diversity on the basis
there were so many different elements of the concept it was impossible to give
a single qualified definition that could embrace individual fuels, certain
technology, source routes, means of delivery, market structures and, indeed,
much more than that. However, the central concept was that of responding to
uncertainty and so underpinning security, so there was a range of options that
could be taken into account. In the White Paper there was the clear link on
the issue of security and the convenience of a failure in supply in terms of
the cost to industry and commerce. Of course to the domestic user, in
general, the Government looks to the market to ensure that security of supply
is maintained, although we have, as a Government, an overriding responsibility
to ensure that the framework and the market structure for energy enables the
achievement of energy security. That is one of the key issues that is
involved in the new electricity trading arrangement that will come into the
play in the autumn of this year. In the White Paper we also look at the
policy of ensuring sustainable energy supplies by minimising the environmental
impact of energy production transmissions, distributions, and so on. That
also has to take into account the social and economic resource management
issues that are all tied up within that. Although it is a tidy phrase,
security, diversity and sustainability is actually a broad concept that takes
into account all of the different parameters needed to be taken into account
in modern energy markets and one that operates as a free market but takes into
account social and environmental consequences as well.
5. Can you envisage conflicts between the three elements of the
strategy? How will the Government manage the trade-offs between the need for
sustainability and the need for diversity and security?
(Mrs Liddell) The Government set tools at our disposal by the
legislative route. The Utilities Bill is one aspect of that. The way that
Utilities Bill is configured the Secretary of State has the right to set
social and environmental guidelines for the Economic Regulator the new officer
general. It is also important that whenever we set the policy parameters for
energy myself and Lord Whitty are in agreement about the environmental issues
and the energy efficiency issues and these have to be brought to bear, in that
there has to be a degree of coherence and there has to be a degree of
cross-departmental working. We believe that we now put into play the kind of
legislative package that ensures that these tensions are reduced. One of the
reasons, for example, that we took the decision to reform the electricity
trading arrangements was because we were unhappy with the way the existing
pool was operating in a way that was not giving the diversity of supply, the
coal industry was the case in point, where the structure was discriminating
against the coal industry. We were also anxious that there was the
opportunity of plying the market, in effect, and that that could distort not
just security supplies but also the diversity and sustainability issues as
well. I believe as the Utilities Bill goes through the Parliamentary process
we are putting in place the kind of mechanisms that address the anxieties that
you raise.
6. Finally, if I can ask a question about costs. The underlying
theme of what you have been saying is that cost is almost the middle agenda
of the Government's policy and the ten per cent reduction that will come in
next year is something that will be highlighted as the great alleviate, to
what extent does diversity and sustainability overdrive that?
(Mrs Liddell) As well as the Energy Minister I am also the Minister for
Competitiveness in Europe. One of the key areas as Europeans and as the
United Kingdom we set out with a disadvantage against our main global
competitors. If you take the United States as an example, our energy is more
expensive than the United States, which makes industry less competitive
against our global competitors. From the point of view of fuel, purely from
the point of costs, we do not have competitive energy prices. I accept the
issue of the need for balance with environmental considerations, that is why
the Government has introduced instruments like the Climate Change Levy and why
the Chancellor introduced energy saving measures because the question of
balance has to be very important in feeding the balance, not just our economic
agenda and our environmental agenda but bearing in mind our responsibilities
under the Kyoto Protocol. It is a question of achieving a balance that is
seen more clearly in relation to energy and the environment than, perhaps, on
other aspects of policy.
Mrs Brinton
7. I would like to start off by turning our attention to the whole
business of the Consents Policy with a few factual questions to start with.
In your opening statement you refer to the fact that Mr Byer's had, in fact,
lifted the stricter Consents Policy - I have your statement here of 17th April
- can we take that as set in stone? Is it going to be lifted in October?
(Mrs Liddell) It is going to be lifted, I am not saying October. We
are, to some extent, dependent on the Director General to come back to us and
say, "Their aim is for NETA..." RETA became NETA, it has gone through a
number of name changes, I think we are now calling it NETA. NETA is on target
and the date of 21st November has been given as a lift-off day, although there
will be a window of opportunity on either side of that. I cannot say to you
on the something of October it will be lifted, it will be around that time.
8. Hopefully before the end of the year?
(Mrs Liddell) It is certainly our intention.
9. Secondly, following on from that, has Government been able to
estimate the total impact of this very, very strict consensus policy on our
environmental concerns, on our carbon emission, etc now we can see the end in
sight on environmental costs of that Consents Policy. Of course, the bulk of
the consents that were applied for, the actual power stations are not yet
built and whether or not these power stations are built will take into account
the conditions prevailing in the market and the costs of different energy
sources. However, a view of the stricter consents policy was formed within
the framework of the environment agenda that the Government is pursuing and
it raises quite important issues also about the diversity of supply. If one
casts one's mind back to the debate that took place prior to the introduction,
because the energy market had become distorted, there was bias built in and
it was to create, this clumsy phrase, a level playing field. It was only ever
seen as a temporary measure and it would only work as a temporary measure and
a permanent prohibition on gas fire power stations is unattainable.
10. Unless we lifted this stricter consents policy we would be
abandoning all of the needs to meet the Kyoto target that John Prescott fought
so hard for.
(Mrs Liddell) I think it would be wrong to suggest that the Government
would ever consider a stricter consents policy and in adopting it we are not
mindful of our environmental targets, one of the aspects of it was the bias
towards CPH. Indeed gave CHP quite a shot in the arm to have its own
headline in government policy. I believe that will stand us in good stead in
the long term. Issues of energy efficiency are considered by the Secretary
of State when he has to decide power station consent.
(Lord Whitty) There are 18 CHP schemes under this period to introduce,
the bulk of which probably would not have been, and that has had an immediate
effect on the Kyoto figure of about 1250 megawatts, roughly that sort of
order. So we are part of a scheme that has actually contributed in the
opposite direction that you required.
11. I think we are all very aware of that, and this Committee is very
much in favour of CHP as well. Going back to the question of striking a
balance, how do you feel that is going to effect gas? Are we going to have
more steam in the dash for gas? Are we going to have a considerable quantity
of new gas suppliers and power stations? How is that going to balance up with
government encouragement to CHP?
(Mrs Liddell) To some extent the Department will look at each power
station application as it comes forward, and it has to fit in with the overall
criteria that government places. We have talked about cost, but we have also
talked about our concern for environmental considerations as well. Changing
relativities in fuel prices actually has a significant impact in the nature
of the power station applications that come forward. The changing pattern of
that energy price at the moment I think will mean that some of the
applications that have recently been approved may not come to fruition. We
have already published our energy indicators as a working document. We have
a rough idea within certain parameters of what the future shape of energy
demand is likely to be, but in any given year or in any given set of
circumstances we do need to take into account not only what is happening
overall in the industrial community, but also in the environment as well.
12. I would now like to turn to Mr Byers' statement of 17th April.
It is something we were quite concerned about. He was talking about cost and
he said, "There has been speculation that the total aid to the coal industry
could be has high as œ100 million." He then said, "I am not ruling out the
possibility of expenditure at that level." That prompted a flurry of
completely over-the-top national newspaper accounts of resignations, or
sackings, or complaints by the Civil Service who decided that Mr Byers was
actually playing politics, particularly since this has always been all
governments' policy to very much fight against illegal state aiding in terms
of European countries. It just seems to me that that policy has been stood
on its head here, on the one hand saying, "I am not ruling out this huge
injection of state aid to a particular industry here", and on the other hand
maintaining that Germany, and wherever else, cannot do that. It seems very,
very contradictory and it give a very confusing message, particularly in terms
of political pundits.
(Mrs Liddell) There are a number of issues within there. Firstly, the
statement that the Secretary of State made was putting a global figure on how
much we thought a coal subsidy might cost. We remain, as a Government,
opposed to state aid and we will challenge illegal state aid where evidence
is brought to us that such illegal state aid actually exists. There is
absolutely no change in that. We also had to take into account the fact that
because other countries where in some cases very heavily subsidising coal
production, our coal industry was being very badly affected and because of
short-term difficulties we could end up losing a source of energy. Indeed,
we also have to take into account the fact that across government we are
anxious to regenerate the coal field communities, and that is another example
where the DETR and the DTI work very closely together. In the long term the
future of the United Kingdom coal industry will depend on that industry being
able to operate competitively, and also being able to operate within the
environmental parameters that we operate. Of course, the aid scheme that we
are currently exploring is short-term. It will rise in July 2002. It is a
temporary move to try to put in place a structure that will allow the industry
to compete. Industry has gone through 18 years of very, very bad times and
in some cases valuable reserves of coal have been left foul because of the
time---
13. Short-term aid?
(Mrs Liddell) It is extremely short-term. It will rise in 2002 and we
will continue to press the European Union for the lifting of state aid on the
whole, because the European Coal and Steel Community Treaty comes to an end
in 2002 and we do not believe that there should be state aid beyond that.
14. That would apply to us as well?
(Mrs Liddell) That would apply to us as well.
Chairman
15. What does that state aid consist of?
(Mrs Liddell) At the moment we are exploring a proposal with the
European Commission. We have to fit in with the roles of the European coal
and steel community, which take into account whether or not that aid will be
used in a way to reduce the cost of production and give a sustainable future
to a pit or coal face.
16. Will it be directly linked to RJB, for example?
(Mrs Liddell) No, it is non-discriminatory. Any company can come
forward with a proposal and provided it fits in with the ECSC rules it will
be looked at, and that takes into account open-cast as well as deep mining.
17. It will be help to companies rather than social aid?
(Mrs Liddell) It is help to companies rather than social aid, and help
to coal producers rather than to generators.
Joan Walley
18. When you said it would apply to deep pit and open-cast, were you
suggesting that that money from Europe could be a subsidy towards open-cast
coal mining?
(Mrs Liddell) The rules are that it must be non-discriminatory.
19. We could have money coming from Europe which would be going
towards open-cast coal?
(Mrs Liddell) It would depend on what proposals come from the industry.
20. Can I ask the Minister for the DETR what their proposal in
respect of the environmental implications of open-cast would be on that?
(Lord Whitty) There is always environmental advice in terms of new
open-cast operations, and there are often fairly restrictive planning
requirements on that which would be followed. Therefore, any such scheme
would have to be subject to that.
21. It is right that we have a presumption against open-cast on
environmental grounds?
(Lord Whitty) It is a presumption against most forms of open-cast, but
there is not an absolute presumption against it. The point Helen is making
is that the rules on the aid would have to be, on the face of it,
non-discriminatory. Of course, whether it was open-cast or deep mining there
would be various other environmental criteria also applying to them that they
would have, because any development of existing plant would have to go through
planning to the extent where these environmental considerations come into
play.
22. It would technically be possible to have - of that state aid that
will be coming in ostensibly to protect the social economic fabric of deep pit
coal mining communities - the scenario where we could have virtually 100 per
cent of that money coming in to enable the expansion of open-cast?
(Mrs Liddell) If any application for additional open-cast comes forward,
as Larry has been pointing out, it has to fulfil the planning requirements
anyway in relation to the environment. It is not a blank cheque to the
open-cast industry, just as it is not a blank cheque to the deep mine
industry. There are rules that have to be applied, but ECSC aid is
non-discriminatory.
Chairman
23. It is not just a question of adhering to the planning rules, as
you know, particularly Lord Whitty, since this is the DETR, we believe that
there should be a proper environmental appraisal of all significant policies,
and I think the DETR supports that view?
(Lord Whitty) Indeed.
24. The question here is whether there has been a proper
environmental appraisal of this proposed œ100 million subsidy to the coal
industry?
(Mrs Liddell) I think it is fair to say, Chairman, that at the moment
we are consulting with the industry on the nature of any application for aid
that will be put forward, so it is too early to say what the end gain will be
in terms of any aid that will be available to the open-cast industry. What
we have to be absolutely certain of in making any application is that it is
non-discriminatory. If we are discriminating in favour of one source of coal
against another it will not go through a coal---
25. What we want to know is that there is no adverse effect on the
environment. The point of Mrs Walley's question is; have you looked at this
whole policy and the impact it may have on the environment as apposed to not
having such a policy, or having a smaller policy, or having a different
policy?
(Lord Whitty) The way we are constructing the package and the way we are
consulting with the European Commission will mean that we take environmental
considerations into account. We cannot make it a full formal environmental
proposal until we know what measures are acceptable to the European Commission
and what are not.
26. Will you publish it at that point?
(Mrs Liddell) Yes, and in that context it may be useful to the Committee
to know that we are one of the countries that is in the forefront of ensuring
that European Union policy measures involve an environmental appraisal at the
same time.
Mr Chaytor
27. Would it, for example, be possible to tie elements of the aid
package to investment in clean coal technologies to provide for aid flue gas
de-sulphurisation products at power stations, because that would be a way in
which an improvement in environmental quality could be tied in with the need
to support the coal industry?
(Mrs Liddell) I am not sufficiently well averse to the detail of DCSC
rules on state aid, but, of course, we are anxious to ensure that we see a
state aid package put together that as well as taking into account the
environment also takes into account the long term future of the United Kingdom
coal industry. That inevitably means that there is a requirement to look at
flue gas de-sulphurisation and, of course, the generators are encouraged to
take that into account as well when they are using coal.
Joan Walley
28. Where you have guidance being given to operators who may have
both deep pit and open-cast coal mining operations will it be possible for
somebody making a bid ostensibly for deep pit to then switch it over in terms
of open-cast?
(Mrs Liddell) No. Any proposal that comes forward has to be very
specific. It is done pit by pit. We do not go in and say, "Look, let's do
all of our deep mining coal industry in this package", we have to put forward
a proposal that is pit by pit, site by site, and at the moment we are waiting
for the industry to come forward with their proposals.
29. Can I move onto the renewable energy and combined heat and power?
We have looked with interest at the 1999 Lords Committee Report on the
prospects for encouraging more renewable energy in the UK, and I think that
the recommendation there is that the 10 per cent, to say the least, is gloomy.
Can I ask each of you to tell the Committee what you see as the main barriers
to the success of the recently announced obligation on suppliers?
(Mrs Liddell) Let me start before passing on to Larry. 10 per cent is
a challenge. There is no doubt that the 10 per cent obligation is a
challenge, but there is no point in having an obligation unless it is a
challenge to the industry. One of the reasons why we are changing to an
obligation with the old arrangement is to bring renewable energy into the
mainstream. If I can make one point. I am a great supporter of CHP and I
think one of the great advantages of the straight to gas consents policy is
that it was a sort of coming of age of CHP and it then became headline. We
must do a complete cross from CHP to renewables. There are certain aspects
of CHP that are not necessarily renewable depending on the energy source that
is being used for the CHP. So the Chancellor making it clear in the budget
that quality CHP projects will be favoured by the Treasury, I think, is a very
important signal. In relation to overall renewables, I am anxious to see,
through the obligation, the creation of some economies of scale for the
renewables industry. We are consulting at the moment and will be consulting
through the autumn in relation to how the obligation is in practice put into
play, and I envisage a situation where you will have some generators who
concentrate exclusively on renewables. One problem with renewables, because
they cannot be stored in the way that other conventional energies can be, is
that they start out from a disadvantage. One way of helping that is if you
can get up to economy of scale. That is why I am not as pessimistic about the
achievement of the 10 per cent target. We are on target for the 5 per cent
by 2003 and I think if we can mainstream renewables I am hopeful that that
challenge will be met and it stays in place.
30. Could you also comment upon the likelihood that we are going to
have, by the year 2012, over two thirds of the nuclear capacity closed. I
think it is something like 16 per cent of the United Kingdom's current
generating capacity. In view of what you have just said, could you not
envisage a situation where support for renewables could go hand in hand with
that so that you can actually link targets from renewables without the phasing
out of that nuclear energy production?
(Mrs Liddell) I think if you do an either/or situation you limit the
prospects for renewables variation.
31. I am not saying either/or, I am saying phasing out, because as
one gets phased out you actually link the phasing in of renewables to match
that phasing out.
(Mrs Liddell) I think in terms of getting an exact match that would be
quite difficult to do given the fact that some aspects of renewables are far
from market. At the moment our main priority, and why we are doubling our
research fund to the renewables industry and renewables technology is to bring
renewables, those that are further from market, closer to market. In terms
of our overall energy projections in relation to targets, nuclear is in there,
and we also have to take into account where hydro fits into the renewables
picture as well. We have taken into account the phase-down in nuclear over
the next decade and beyond in terms of the targets.
32. Are you looking to link that more to renewables than to any
other?
(Mrs Liddell) Not as a direct lead, of course. We see the targets for
renewables as targets in themselves and ones that we will put the weight of
our commitment behind.
33. When you say that you are going to double the research budget for
renewables, can you just remind me what it is that the budget is at the
moment?
(Mrs Liddell) It goes up from œ9.7 million in 1998/1999 to œ18 million
in 2001/2002.
34. Do you know how that compares with other European countries,
Germany or Denmark?
(Mrs Liddell) I could not tell you off hand, but certain other European
countries have different ways of supporting renewables by a cost on
electricity prices. I think in Germany they call it pfennig law. What we are
anxious to do is state a change in our attitude to renewables and moving from
NFFO, which was purely technology specific, to something where we are saying,
"Look, governments are not good at picking winners. Let's look to the market
to help us generate these winners." What we have got to do now is mainstream
renewables, and not just government research going into renewables, we also
have to see the industries. One of the positive aspects is the extent to
which we see the major players in the industry now turning their attention to
various aspects of renewable energy. That is a sign that we are moving in the
right direction and that the industry itself is getting behind that.
35. Can I ask, insofar as the Government itself is a major player,
whether or not through the Green Ministers' Committee or through any other
mechanism you will be looking to mainstream increased targets for renewable
energy within and between each government department so that you will actually
look to really increase the amount of dependence upon renewable energy, and
how are you actually doing that?
(Mrs Liddell) There is one very important area. I spoke at the
photovoltaic conference in Glasgow at the beginning of May and, of course, the
Government is pushing our enthusiasm for seeing large building projects
looking at, for example, photovoltaics as a means of mainstreaming. I have
been meeting with Michael Meacher to discuss a number of these issues. There
are a great deal of processes for DETR with the construction hat on and local
government hat on. We need to talk to the opinion formers in relation to the
commissioning and design of large-scale public buildings, because I think the
big push will come there first rather than in domestic usage.
36. Does that mean that you will seek to establish 10 per cent
targets within each government department for renewables?
(Mrs Liddell) It would be very difficult to say every government
department has to have a way of reaching 10 per cent renewables. 10 per cent
renewables in what? Does the Treasury, for example, have to have 10 per cent
of its energy generated by renewables? They may actually be achieving an
awful lot more. There is a district heating system that operates in
Whitehall. I do not know off hand what the generation capacity is, but it is
not inconceivable that we would be able to move forward using CHP and using
district energy in great loops of public buildings, rather than just saying
to each government department. Some government departments may be able to do
much more than 10 per cent, particularly in the commissioning of new
buildings.
37. My concern is what is going to be the mechanism for achieving
that? Would Lord Whitty like to comment on the barriers that there are in
getting that 10 per cent achievable renewable energy target?
(Lord Whitty) You were concentrating very much on public buildings and
buildings in general. As far as buildings are concerned, the biggest barrier
is that the stock does not get renewed very fast, and, therefore, in terms of
improving the energy mix, a lot of existing public buildings will be looking
at CHP or district heating in some form rather than direct renewables,
although, of course, there is some overlap between the two in that some CHP
can be fuel from renewable sources. John Prescott was opening a couple of
those in Sheffield and Nottingham a couple of weeks ago. In terms of new
public buildings and the new building regulations more generally, they use not
only new materials, but different forms of heating. The use the renewable
sources, and the use of CHP is very much prioritised there, but how rapidly
you can achieve a target figure, whether it is 10 per cent for renewables or
a target for district heating, will depend very much on the existing building
style.
(Mrs Liddell) I think there is a simple way to meet Mrs Walley's point
about making sure that government departments can meet the 10 per cent
renewables; the actual electricity companies and the energy companies who
supply government departments must themselves meet the 10 per cent target.
So if we are on a district heating loop here in Whitehall and Westminster the
company or companies that supply that energy must meet the 10 per cent
obligation.
Chairman
38. Is that part of the procurement regulation, as it were?
(Mrs Liddell) It is part of the Utilities Bill that public electricity
suppliers must meet a 10 per cent obligation. So, if it is London Electricity
here, London Electricity must source 10 per cent of its output from renewable
sources.
Joan Walley
39. My concern is how we can measure that. How are we going to get
from here to there? How can we actually measure the progress that individual
government departments are making if we do not have a mechanism to chart that?
(Mrs Liddell) I think in terms of getting the electricity supply, it is
given now that the companies that are supplying them must supply 10 per cent
because of the obligation. In the longer term, whenever we look at a
building, if we ever get to the position where the Government is building new
offices in Whitehall, obviously we would be encouraging departments to look
at renewable sources of energy.
(Lord Whitty) It might be easier when we have buildings at 100 per cent
CHP. I think that will apply to a lot of the more modern buildings. I am not
entirely sure how quickly we can get Whitehall into that process.
Chairman
40. You have a problem with the Treasury.
(Lord Whitty) It is not the usual problem with the Treasury. There is
a heritage problem with the Treasury.
Mr Chaytor
41. Can I go back to the question of photovoltaics and your example
of new buildings being clad with photovoltaics? That assumes that in terms
of photovoltaics at least the renewable energy is cost effective, but what I
do not understand is how it can be cost effective in the construction of a new
building, but it cannot be cost effective in the cladding of an existing
building?
(Mrs Liddell) This is a very interesting point, and it is one that I
asked the industry as well. This is an emerging technology and it is one
where there is a degree of greyness about the actual costing. I have asked my
officials in the DTI to do some more exploratory work in relation to
photovoltaics. There are certain countries that are further ahead then we are
in relation to PV, but we need a proper handle in the economics of it and I
am not confident at the moment that we do have a proper handle, not just on
rebuild, but on restoration and refurbishment.
(Lord Whitty) The technology is moving on substantially in this field.
Although it may be the case that solar energy and photovoltaics are not
particularly cost effective in terms of replacement of whole chunks of your
roof, it may well be that as technology gets built into the tiling and the
design of roofs, then within this 10 year period it becomes much more cost
effective and much more competitive and we will be encouraging some of the R&D
to achieving those kind of built-in improvements.
Joan Walley
42. Can I follow up what you were saying earlier on about the
distance from market and the whole issue of competitiveness, and ask whether
or not there is likely to be further concessions possibly to be able to deal
with issues like net-metering so that in the UK we can be on a par with
Germany where it is possible to really help and assist and give a helping hand
to those new emerging technologies and perhaps get on a more equal footing so
that we can really take off on renewable energy? Have you any more specific
proposals in mind?
(Mrs Liddell) The Utilities Bill is neutral on the issue of net-
metering, because I think we are not at the end of the game yet in relation
to net-metering. I look with interest at some of the net-metering schemes.
In certain parts of the United States, for example, you can have domestic
net-metering where people may have PV panels and fuel sells. I do not think
we are necessarily at the end of the game on net-metering. We have not closed
the door.
43. We have got a situation where we have it in practice in the
United Kingdom, have we not? Could the Government not give more of a helping
hand?
(Mrs Liddell) There is a working group on embedded generation, which I
think is probably what you are thinking about, looking particularly in
relation to the new electricity trading arrangements and the difficulties that
certain aspects of renewables may face in relation to NETA feeding into the
grid, and we are consulting with the industry on that.
44. I was actually thinking about Eastern Energy's example by doing
it already. Can I go back to the electricity trading arrangements? This
Committee was just a little bit concerned that the Office of Gas and
Electricity Market in respect of Appendix 5 of the Environmental Appraisal
said, "The implementation of the new trading arrangements is likely to have
both positive and negative environmental impacts, but overall is likely to be
slightly negative." I just wondered what options the Government had considered
or suggested that the Office of Gas and Electricity Market considers in order
that that result, instead of being slightly negative, could actually come out
to be positive?
(Mrs Liddell) I think if you take NETA in isolation you do come to that
conclusion, but if you also put that in the overall package of government
proposals, such as the Climate Change Levy, the proposals for the new energy
saving standard of performance and the replacement of NFFO with the renewables
obligation, then you redress the balance. Of course, we cannot lose sight of
the fact that lower electricity prices help competitiveness and help people
on low incomes and the fuel poor, which is a priority, as you know, of the
Government. If you take it in isolation you will get a slightly negative
picture, but if you put it in the overall environmental package, it is more
than balanced.
(Lord Whitty) As Helen has indicated, it is part of the strategy to try
and switch the supply companies from being simply suppliers of electricity to
suppliers of energy services which of themselves actually deliver electricity
or gas more efficiently and saves fuel that way. We are particularly
focusing, in terms of government schemes, on the fuel poor, but that spills
over and we will increasingly get into the areas of mainstream users of
electricity. I think the electricity industry in particular welcomes the
concept that they are energy services companies, not electricity supply
companies.
45. Finally on this, can I just confirm that the NETA document has
now been referred back to the DTI? It is really for the DTI to further review
associated issues with this, including embedded generation? Is it now for the
DTI to further consider this whole issue?
(Mrs Liddell) This working group in embedded generation is still
meeting, and I think it will meet probably up until about the autumn because
of the nature of some of the issues that are taken into account. We work very
closely with the industry on this. The only way forward really is to do this
with the industry as a group and make it work.
Mr Gerrard
46. Can I start with a couple of points about energy projections?
We have seen the paper that came from the DTI, which appears to have the
status of a working paper. Can you tell us what you expect to do with this
paper? Is it going to be published at this point? Will it be approved by
ministers? Can you give us any timescales on that, because it looks like an
interesting and useful paper?
(Mrs Liddell) One of the reasons why it is published as a sort of
working paper and why energy and emissions projections are a set of parameters
is because of the sheer complexity of the work and the pace at which the
policy agenda is moving. For example, issues like that the Climate Change
Levy have to be taken into account. One of the reasons why we wanted to
encourage debate rather than giving tablets of stone on energy emissions and
energy projections is just because of the fact that we know there is a huge
amount of work being done on this and we want to take everybody's view into
account. I think we have had something like 300 responses to the working
paper projections. The consultation ended on 2nd June, so obviously I am not
in a position to say what the conclusions are, and what we are currently doing
is reviewing the responses. It is interesting that almost as many who think
our projections for certain fuels were too high is matched by almost exactly
the same number who think it is too low, which is an indication of the
complexity of the work. Once that is all done we will certainly publish it.
The whole issue of energy indicators I know is something that this Committee
has taken a great deal of interest in. The whole issue of energy indicators
is one where we are very much open to suggestion in relation to energy
indicators and to the development of new indicators to give a much better
picture of energy projections. We do that, not just within the United
kingdom, we are also encouraging the European Union to look in a more focused
way at energy projections.
47. You have talked about some of the changes in generations that are
going on now and the alteration to the consents policy, renewables, but in
that paper it is suggesting that the reduction in emissions up to 2010 is very
much to do with the reduction of emissions from power generation and is
associated with the shift to gas. What happens once the scope for more gas
generation disappears? The implication is for diversity, but also a
suggestion in here is that we could end up, between 2010 and 2020 with an
increase in emission, carbon dioxide emissions going up by between 5 and 8 per
cent between 2010 and 2020?
(Lord Whitty) This is clearly one of our concerns in the whole Climate
Change consultation. One of the reasons why we have set a domestic target
which is above that is because we could see a situation where carbon emissions
in total around about 2012 are beginning to go up again significantly. That
is why we have proposed, in the Climate Change consultation, some substantial
measures relating to other non-energy sources. In a sense, if you like, if
you look at it crudely, the energy sector has delivered a substantial carbon
saving in the transport, the industry and the domestic sector, and that needs
to be delivered and we need to intensify the programme so that it is
continuing to bite beyond having met the Kyoto target for 2010. That will
also have its effect in terms of energy efficiency on the energy generation.
So if you take that together with the switch in the renewables obligation and
so forth you have less demand coming from the industrial, transport and
domestic sectors as a result of our programme on those sectors, and you have
a change of sourcing in the energy sector itself, which should moderate any
tendency of the sort that you are looking at in the second decade.
48. Are you saying these figure are based on policy before some of
the changes?
(Lord Whitty) Yes, the terms of the Climate Change policy have of course
not yet been specified, but it is policy which is extant now. Some of the
energy savings which we are looking at in the Climate Change policy will build
on further developments of EESoPs, of fees, of the regulator's activities and
so forth, as yet undefined, but we will be accepting very broad terms. Those
are not taken into account in those projections, only in the specific ones to
which the Government is already committed. Even if they are not on the
stream, EESoPs 4, for example, there are other presumptions of improvements
in domestic energy use and industrial energy use which are not taken into
account in this.
49. Can I move on to the question of fuel poverty and HEES, which you
mentioned, and the new HEES scheme coming into effect? I know that is
something that we generally welcome, but there are one or two specifics that
I would like to ask about HEES. First of all the targets. The targets have
been expressed in terms of houses. Is there any question of looking at how
that target is defined, whether it is households, numbers of people, who is
actually lifted out of poverty or the types of people who are lifted out of
fuel poverty?
(Lord Whitty) The new HEES is essentially geared at doing precisely
that. It is looking at the priority areas in terms of fuel poverty so that
we are concentrating the help on pensioners on benefit and on families on
benefit. So the changes in the new HEES as compared with the old HEES are
very much focused on those two priority groups, and in particular on
pensioners who are 70 per cent of the fuel poor and 90 per cent of the deaths
and so forth. It is a very focused programme and it is household related, not
house related. I think some of the difficulties with earlier programmes have
been that they have been largely concerned with the social housing sector,
whereas actually the bulk of the extremely fuel poor are in the private rented
sector or the owner-occupied sector, where we are now focusing activity.
50. We have had a memorandum from National Energy Action saying that
the initial findings from some of the new HEES pilot schemes are suggesting
that some of the people who benefit from HEES have not actually been taken out
of fuel poverty. Is that something which you support?
(Lord Whitty) I think under the old HEES scheme because there was a
limitation on the amount of money you could pay on the heating side - there
was a limit of œ315, whereas under the new scheme we are able to introduce a
whole new central heating system and associated measures up to œ2,000 in
relation to pensioners - it probably was true that some of the benefits were
not sufficient, although there were improvements in the comfort and health of
the families, to take them completely out of the definition. That is what I
think the NEA comments relate to and we have addressed in relation to the
priority areas under the new HEES system.
(Mrs Liddell) If I can just come in there, it is also important to
recognise that in addition to HEES or using HEES as a lever, it is important
that the industry thinks imaginatively about ways of addressing fuel poverty.
That is one of the areas where, because the Government has given a high
priority to fuel poverty, we are now seeing projects coming forward from the
industry like Transco's "Affordable Warm", TXU's "Stay Warm" and Scottish
Power's "Nest Makers", all of which relate to ensuring firstly that people can
actually afford the fuel, but secondly that the fuel they can afford does not
disappear out into the atmosphere.
(Lord Whitty) It does have to be seen in that way. Within the new HEES
system itself we would expect all of the targeted group would be taken out of
fuel poverty, with very, very few exceptions, which might relate to people in
very large properties or, of course, at the end of the day it is voluntary and
people may refuse help. We are reasonably confident that the new HEES will
take all of those targeted groups out of the definition of fuel poverty.
51. I understand the point that it is not HEES alone and that there
are some differences, and we were very pleased with the changes that were made
from the old scheme to the new to widen what could be done, but actually the
comment from NEA did specifically say, "The new HEES pilot schemes", so can
we get some assurance that there will be monitoring of what happens on those
schemes?
(Lord Whitty) There will be very substantial monitoring and the full
report on the pilot scheme will be fully assessed. My understanding is what
has been measured relates to people who benefited largely from the old
schemes, even if they were also included in the pilot scheme.
52. One of the aspects of fuel poverty is the spending on winter fuel
supplements for pensioners, œ1.2 billion for the next year. How far is that
weighting the spending too far in one direction? What about children? We
have seen the report suggesting the extent of child poverty in the United
Kingdom and some of that must be associated with fuel poverty.
(Lord Whitty) Yes, but the figures speak for themselves. As I said just
now, 90 per cent of the winter deaths are actually in the pensioner category
and, therefore, in terms of winter fuel payments it is pretty clear that they
are the priority area.
(Mrs Liddell) In relation to reducing VAT on fuel as well, that helps
all families. The Inter-Ministerial Group on Fuel Poverty which Larry and I
co-chair involves colleagues not just from DETR and DTI - we are always the
departments that you will think of in relation to fuel poverty - but also
Treasury, DSS, because of the importance of not just fuel direct, but also the
whole range of policies and health as well, and also the Cabinet Office
because of their social exclusion agenda.
(Lord Whitty) And the devolved administration.
(Mrs Liddell) And the devolved administrations, because tackling fuel
poverty can never just be seen from the point of view of our two departments,
it is so all embracing, particularly when it relates to families and relates
to children.
53. Do you think you have the right balance yet between the sort of
spending that is going on with the winter fuel supplement compared with the
investment to actually improve properties and make it easier for people to
keep comfortable at a low cost?
(Lord Whitty) These things develop over time and clearly if new HEES
manages to take most of the pensioners out of fuel poverty, certainly in the
priority groups and younger families which are also targeted under HEES, then
the requirement for effective income supplements begins to diminish, but we
are not at that stage yet and we will not be at that stage for some years.
I think, therefore, we need to move on both tacks in terms of winter fuel
payments with effectively direct subsidy to income as well as physical
improvements to the house. The balance will change over time, undoubtedly.
Mr Thomas
54. I think you said in your opening remarks that the draft Climate
Change Programme consultation process has just ended. What has that
consultation process revealed? Do you have anything to tell us today about
the vulnerabilities?
(Lord Whitty) It finished about six days ago and we have had a
significant number of replies. I regret to say that I am not party to any
analysis and it will take a bit of time before we finalise that assessment.
It was a very commendable and high quality response, as I understand it. We
would intend, between now and the autumn, to assess that, look at the
programme again and publish the final programme in the autumn.
55. Can I ask you to reflect on your own initial feelings of moving
towards the final programme, particularly the relationship between the
domestic target and the Kyoto target and to say a bit more about whether that
final programme will be setting in train targets for us to meet that 20 per
cent commitment, or are you pitching 20 per cent in order to meet 17.5 per
cent? If so, are we not in danger, therefore, of pitching back from even the
17.5 per cent? Where do you see the final programme taking us?
(Lord Whitty) The programme is set out in terms of known programmes and
reasonable assessments as to how those programmes will develop, so we would
expect not only the committed EESoPs programme and the committed decisions in
relation to HEES and the regulations to be delivered, but for that to be
cumulatively improved on through that 10 year period. Those are all in the
17.5 per cent, but there are other areas where we have not included a precise
figure. I think if you look at page 115 of this and look at the end of the
summary table you will see that there are areas which are not included in that
17.5 per cent because they are unspecified. That actually includes some of
the activity by the devolved administrations where they are slightly behind
us in developing their programme. It excludes aspects of local authority and
excludes, rather significantly, I think, any real assessment of how far
changes in public awareness themselves make a contribution to this as distinct
from price mechanisms and industrial programmes. We do believe a substantial
effort on the propaganda side and education side will deliver significant
goods. Awareness is actually fairly low at this point in time and we need to
take substantial steps to tackle that issue, but there is no natural figure
in the 17.5 per cent for that.
56. Would you concur that the 20 per cent is an aspiration and your
17.5 per cent is a deliverable target?
(Lord Whitty) They are both aspirations and deliverable.
They are aspirations in the sense that you want everybody to focus on them---
Chairman
57. They are not commitments though?
(Lord Whitty) As I say, there are clear government programmes in there.
Not all of the details for those government programmes are yet extant. It is
a government commitment to adopt policies which will help meet that target.
In addition there is the other 2.5 per cent which is unrelated to specific
programmes, but that does not define the difference between aspirational and
achievable.
Mr Thomas
58. What are the vulnerabilities in the long-term about the
possibility of emissions rising after 2010? We are also a very carbon
intensive economy. Where are the growth sectors in terms of carbon intensity?
Where are the vulnerabilities? Where could the dangers come of not reaching
target aspirations, or whatever you want to call them today?
(Lord Whitty) I think in the domestic area which we have referred to,
if we do not proceed as rapidly as we intend by intensifying the HEES and
other programmes on that front and to building regulations and other
regulations in relation to new and refurbished building, there is a danger
that inertia might allow the domestic use to continue to creep up. The other
area, of course, is transport, and unless we have effective policies to both
restrain the growth of car based use and at the same time, given that we will
not restrain it entirely, a more rapid introduction of cleaner fuels both
through oil technology and attitude to engine design, through that period, I
think transport is a potential problem for us. We would aim to keep the CO2
emissions to no more than those in the early 1990s, but, nevertheless, that
is quite a difficult and challenging target and it does require a lot of
individual choice in the sense of how often you use the car and what the cost
of that is and in terms of the nature of the vehicles which are actually on
the market. As it happens, Helen and I have a session next week on the
alternative fuels, new fuels and engine design, bringing, for the first time,
the oil companies and the manufactures together, which I think we need to
build on. They are both engaged in this field, although they have not perhaps
talked to each other quite a frequently as they should, or talked to
government. We are hoping to get some serious benefit from that.
59. Will you be looking at green diesel as part of that?
(Lord Whitty) Green diesel is part of it. The green diesel is the front
ended part of it largely. We hope that we will be able to achieve green
diesel more or less 100 per cent in relation to lorries in a relatively short
period. We are looking beyond that to not only gas, but also fuel sells and
the use of other alternative fuels, because, as I say, although we can
restrain a bit by traffic management measures and demand measures and tackle
congestion, there will nevertheless still be a growth in traffic and that
means that the higher proportion of vehicles that are cleaner in terms of all
sorts of emissions, but in this context carbon emissions, the better we will
achieve the target.
(Mrs Liddell) That is where my bit of the food chain comes in, because
I have to be sure that the refiners are focusing properly on the need for
cleaner technologies so that it matches in with the car industry creating
cleaner vehicles.
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. I am 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 Levy, 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.
Chairman
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.
(Mrs Liddell) 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 were holding it in Nottingham, but this is to pool 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 Wally
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 goal
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 up 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 refereed 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?.
80. Yes.
(Lord Whitty) There may be particular milestones where we can do that.
As you will know, it is not always evident that we have reached the end of a
particular discussion with the Commission. I should think in the autumn we
will be able to give a clear up-date.
81. I look forward to that. In respect of the œ50 million energy
efficiency fund, can I just ask two things; are you happy that if it is energy
efficiency it is renewable as well? We only have an œ18 million research
project for renewables. Are you happy about œ50 million being sufficient or
are we likely to hear something in the Comprehensive Spending Review that that
could be increased at this stage?
(Mrs Liddell) Government departments are always making bids that fit in
with their main priorities and we are some way away from saying what the
conclusions of that will be.
82. Is increasing the œ50 million a main priority for the DTI?
(Mrs Liddell) It is a major part of our programme. We wish to see part
of that used to benefit renewables energy.
Mr Chaytor
83. I would like to move onto the Utilities Bill, which I think is
in consideration this afternoon, and ask about some aspects of it,
particularly the question of the role of the regulator. The new energy
regulator, as I understand it, is not terribly keen on taking social and
environmental responsibilities into his brief, but nevertheless the Government
will be issuing guidelines on social and environmental responsibilities for
the regulator. Can you give the Committee some indication as to what will be
in those social and environmental responsibilities?
(Mrs Liddell) I firstly make the point that the new regulator is not an
individual, the new regulator is an authority. In the past I think regulation
of the utilities has tended to be associated with a specific personality with
a specific point of view of how the world should operate, and in seeking to
set up a regulatory authority we are seeking to give greater certainty of
regulation and doing it in a way that fits with the parameters that the
Government has established. The main priority of the new regulator is the
consumer interest and we believe that that very much fits in with issues such
as energy efficiency and fuel poverty. These are not issue that are of
interest to the consumer. What is, other than the issue of price? In terms
of the kind of guidelines that will be given by the Secretary of State for the
social and environmental guidelines, it is right in principle, I believe, that
the Government should set out its stall in terms of the priorities of the
Government in relation to social and environmental matters, of course
consulting on these matters, because it is much more important to bring people
with you than to go into a situation of conflict, and that will guide the
conclusions that the regulatory authority must come to. The authority does
have duties in relation to the environment and to energy efficiency and will
have to take account of the guidance that is issued by the Government.
84. Will the consumer interest be defined purely in the short-term
in terms of price cuts, or will it be defined in a slightly longer
perspective?
(Mrs Liddell) It has to be seen within the context of divesting in the
security of supply and the sustainable agenda that the Government sets. One
of the reasons why a key part of the Utilities Bill is reform of electricity
trading arrangements is to take the different settings into the future. It
is not the short sharp hit. The regulatory authority, when they are looking
at licence amendments, has to take into account the long-term opportunities
for a company. For example, a licence condition that puts a company out of
business might jeopardise security of supply. All of these have to be taken
into account. It is not one particular point in time that the regulatory
authority has to look at, but the overall picture for the industry. We do not
want to be in a position of having to revisit gas and electricity utilities
regulation again for quite some time, we want to see a period of bedding down.
85. Moving on to the energy efficiency standards, the new EESoPs.
There has been consultation on these new standards, I understand. Can you
give us an idea as to what the response is to the consultation?
(Mrs Liddell) We have been consulting on the new EESoPs, as they are
called. It is a great area for acronyms and hopefully there are not too many
fables in connection with them. I had to get that out because I used it in
the Utilities Bill and it went down quite well there as well. At the moment
the consultation is on œ3.60. We are aware that the Electricity Association
has come forward with some questions about whether or not œ3.60 will actually
cover what is involved. We believe that we are trying to get apples and
pears, so we are in discussion with the Electricity Association. They welcome
the whole concept of EESoPs. EESoPs do lead to significant reductions in the
individual electricity bill, which equates to a saving of œ25 per year, which
is not inconsiderable. It is much more Larry's field in terms of the end
process than it is mine.
(Lord Whitty) The main feedback is supported in principle from all
parties. There will be some argument about costs and where they lie and what
is taken into account in those costs, but we are now assessing that
consultation and we have every confidence that we can reach agreement with all
parties on this scheme. The œ22 saving for those families within fuel poverty
spills over so that you get an average benefit of about œ11 if you take the
consumers as a whole. So, therefore, there is an enormous benefit for
everyone, and a particularly targeted benefit for those who the policy was
designed to focus on.
86. Has any consideration been given to using this benefit not as a
cash benefit but as a sum of money to be reinvested within energy efficiency
programmes through which the longer-term real benefits might have been greater
than the short-term cash benefits?
(Lord Whitty) The whole point of it is that the energy service
companies, in conjunction with the consumer, will be introducing measures to
save energy themselves. That is the whole point of it is. It is not at the
end of it you will only use that money, the whole process is to reduce bills
by introducing it in energy efficient household changes, insolation,
ventilation and heating.
Mrs Brinton
87. My understanding of the whole idea behind the EESoPs means that
actually 100 per cent of the EESoP funding will go to disadvantaged customers
or socially disadvantaged customers.
(Lord Whitty) The EESoPs, as with other programmes, will be targeted.
The belief is that half of the EESoPs' costs, if you like, would benefit the
targeted consumers, but there would be a spill over which would benefit
virtually all consumers. That is why I was referring to the price benefit or
the bill benefit of œ22 for the target. For other groups it would be around
œ7 with an average of œ11.
88. There are very, very key environmental as well as social
objectives behind the policy?
(Lord Whitty) Indeed, yes.
Mrs Brinton: That is for sure.
Chairman
89. The extra money which the ordinary consumer has to pay is in
effect a tax with a very good end in view, namely being transferred to improve
energy efficiency. In that sense it is rather like the Climate Change Levy,
which is also increasing prices, and you hope to put some of the money to some
good use. What strikes us is that there is a bit of a contradiction here
between what you said in response to our report, namely that you did not
regard high prices as an acceptable way of achieving energy efficiency, yet
here in two other areas you are actually increasing the prices?
(Lord Whitty) There is a time related issue here. If you take it in a
10 year period the cost will fall at the beginning of that period and
obviously the degree to which the cost is passed on will depend on decisions
by the energy companies, but beyond the first three years of the period the
consumer will be in benefit. Even if the whole of that cost and more was
added on they will actually be in benefit after the completion of that
programme. I have just been passed this. I do not know if you can see that,
Mr Chairman, but basically the cost falls in this period and the benefit,
assuming the cost was entirely passed, will develop in that period. There is
some argument as to exactly where that point comes between ourselves and the
energy companies, that pattern is understood between all of us. In that sense
it is not a tax, it is an investment to reduce bills in the medium-term.
90. Yes. Nonetheless, there is a difficulty here in that you are
reducing prices by 10 per cent and that will lead to an increase in the use
of energy. Will everything not be swamped, this is our point in the report,
by the course of energy prices? All the measures that you are trying to do
quite well to improve energy efficiency are really totally subject to this
broad movement.
(Mrs Liddell) In relation to, for example, the fuel poor, which is one
area of particular concern to us, yes, there will be an extent to which people
will go for comfort rather than saving. They will put two bars of the fire
on when they may only need one bar of the fire, but that soon settles down.
You will always have that escalating demand.
91. That is a bold statement, "I think it soon settles down".
(Mrs Liddell) There is some evidence from the past that it does settle
down and that people take a balance between comfort and what they are actually
paying. You can see it from the people who have had the benefit of the HEES
project at the moment. I come from a poor constituency so my constituents are
very enthusiastic about energy saving activities. They do put the heating on
maybe a little bit longer, but then it tails off. The key issue has to be
spending to save. You spend to save in the longer term. If we can encourage
people to do that I think there is a considerable benefit to all of us. It
means also that when we look at the other aspects of government policy in
relation to the Climate Change Levy, in ensuring that industry, who are the
biggest users of energy are themselves, are encouraged to find the most
efficient ways of utilising that energy, society at the end of the day is the
gainer as a consequences of it.
92. Have you any plans for taxing the fuel rich?
(Mrs Liddell) I am not quite sure who the fuel rich are.
93. All of us probably. Do we really consider energy efficiency when
we are looking at our own homes?
(Mrs Liddell) There is a growth in demand, for example, for energy
saving light bulbs and the fact that the cost of energy saving light bulbs is
coming down quite considerably. I may be Scottish, which might, to some
extent, determine my reactions, but I now buy energy saving bulbs and energy
saving equipment. Just because we have had some Parliamentary salaries does
not mean to say we do not count the bawbees.
Mr Gerrard
94. It is really that same point. If we are going to get people to
do that sort of thing, how do we get that message across? You said earlier
that you do not see much in the way of advertising, you do not see much in the
way of publicity in this country, and we had some comments from the Deputy
Prime Minister on this issue a few month ago which were a little bit sceptical
about how possible it will be to persuade people to take energy efficiency
measures.
(Mrs Liddell) I think the whole issue of publicity and marketing is
very, very important indeed. People need to bear in mind that energy is
something that has to be paid for, not just in financial terms, but also in
environmental terms as well, and I think the companies need to take that into
account in their marketing strategies. It is much more effective if it is
done in that way rather than public service announcements, "Switch off that
light." Let us engage the companies in energy efficiency. There are some
signs that they are responding to that.
(Lord Whitty) We are engaged in fairly substantial public advertising
as well. I do not know how many of you have seen the current run of
advertisements, you are working far too long hours for that.
Chairman
95. It was that advert that the Deputy Prime Minister had in mind.
(Lord Whitty) It needs up-grading.
96. He was sceptical about the effect of it.
(Lord Whitty) It has been fairly limited so far, which is why it needs
to be followed through by other measures. It does raise awareness and you are
doing your bit. The campaign has had some success, but it has a long way to
go. Unless it is supported by the kind of measures that Helen is referring
to, how you sell gadgets or your house or car, then it will not get
reinforced.
(Mrs Liddell) The other thing that we have been able to do is when you
walk into a store and buy white goods, nine times out of ten now the energy
efficiency of that white good will be quite plain to you, you will see what
degree of energy efficiency is available from that product. I pay tribute to
the Energy Saving Trust for the work that they do on that.
Mrs Brinton
97. If I can turn to VAT installations, you have announced, and I
really welcome this, that there is going to be a reduction on VAT for the
installation of some individual energy saving measures. What I would like to
ask you first of all is how this is chosen? Why, for example, have we got the
humble energy efficient boiler and some low emission glass actually excluded
when the rather exotic solar panel included?
(Lord Whitty) That is probably a question you should really address to
Treasury ministers.
98. We will come on to that in a moment.
(Lord Whitty) The issue is that the Treasury definition is that they
were prepared to make cuts in VAT in relation to materials whose primary
purpose was effectively energy saving. In relation to glass, that is not
actually primary purpose. The primary purpose of glass is to see through it
and stop drafts, which may have an energy saving benefit, but that is beside
the point. Likewise, the primary purpose of the boiler. I think one can
argue about exactly where the line in this slightly grey area is drawn, but
there is a principle point that a line must be drawn somewhere and that is the
line that they have taken in relation to installations.
99. You have really answered my follow up question. We have talked
a lot today, and it is really good to hear the DTI and the DETR both talking
about the really essential need for this joined-up government. It seems that
there is a lot going on between the DTI and the DETR in that respect, but how
joined-up was it in the selection of this list? What you seem to have said
is that choices and decisions on the list were not made jointly with the DETR
but it was the Treasury up to its usual bit of freelance.
(Lord Whitty) That is not fair to say and I would not wish to criticise
the Treasury in this respect. Clearly the Chancellor took on board the point
that both Helen and I, and our Departments, have been putting to you, that
some preferential tax treatment should be introduced in relation to energy
saving materials. It then comes to the point where you have to define it.
The objective way they decided to define it was the primary purpose of it,
rather than if it has a side effect. You can argue about a few different bits
as to which side of the line they fall and maybe those arguments might be
revisited at some point.
Chairman
100. It sounds rather theoretical, I must say.
(Lord Whitty) Nevertheless, it is quite a logical approach for the
Treasury to take, and in a joined-up response to us.
Joan Walley
101. I want to come back on that, because when we went to
Nottingham and we saw on the ground local new homes being built that were
energy efficient and we were told that the glass that was being used was being
imported because it could not be manufactured here, and it comes back to ways
in which we can provide the tax incentive to get the energy efficiency
standard which is going to drive the competitive agenda as far as British
industry and manufacturing is concerned. What can you say to us to convince
us that perhaps we need to look at ways of convincing the Treasury that they
cannot be making these decisions on an arbitrary basis, that we really have
to build in, perhaps with the Green Ministers' Committee or perhaps with the
Cabinet End Committee, I do not know, but if we cannot persuade the Treasury
to really incorporate soundly based energy efficiency measures in ways in
which it is actually introducing new tax, we cannot really take the whole
issue of competitiveness as far as British industry is concerned. What can
you do and what can we do?
(Mrs Liddell) Tempting though it is for any minister in the middle of
a public spending round to have a go at the Treasury, I think I have to say
in defence of the Treasury that the last budget was one of the most positive
for energy saving that we have ever seen. Larry is right, at certain points
lines do have to be drawn and agendas do change over time. One of the reasons
why the energy saving glass is not produced in this country is because no-one
has taken the initiative to produce that glass.
102. That is because we do not have the standards, because we have
not made it a priority.
(Mrs Liddell) There are other aspects of industry where we do get ahead
of the game, but to some extent government cannot say to any industry, "Go and
make this", the industry has to see that there is a market, and within the
European Union that industry can set up where it wants to.
103. It is going elsewhere, that is the problem, it is actually
going elsewhere and manufacturing it elsewhere and it is not being
manufactured in areas where we could really use it as far as the whole
economic regeneration is concerned.
(Lord Whitty) I am not sure you are right to say that. There may have
been very specific specifications in relation to this, but I am aware that
much of this glass is actually manufactured by one of my old friend's building
firms, so it is not true to say that there is no United Kingdom source for
much of this glass. Can I also mention that although the tax may not have
changed, such energy efficient glass is a potential candidate for benefit
under the EESoPs 4 Programme and we are certainly trying to promote it.
Chairman
104. Thank you very much indeed. We have had a very comprehensive
session and a very useful one from our point of view. Thank you very much.
(Mrs Liddell) Thank you very much.
