Homes Bill

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Mr. Foster: We come to the important issue of energy efficiency. In addition to speaking to my amendments, I shall comment on amendments Nos. 27 and 28, tabled by the Conservative Party. I shall attempt to be brief, but the issue is important, so I hope that the Committee will not mind if I detain it long enough to cover some of the complex matters that arising from the amendments.

Amendment No. 51 provides a definition of energy efficiency, which fits in with the other definitions of the terms in the legislation. Amendment No. 23 would add a requirement to include an energy efficiency report in the list of items included in the seller's pack. Amendment No. 24 would add the energy efficiency report to those items that may be specified by regulation; it would also require that a potential buyer should be told what needs to be done to improve the energy efficiency of the property and why it would be financially advantageous to carry out such work. We hope that it will be possible to show individuals that they can make enormous financial gains by acting on the energy efficiency proposals contained in such a report. We also hope to persuade them that not only will they benefit, but everyone else will as well.

The sort of home energy efficiency report that I propose is a relatively simple matter. I have an example that shows the current energy rating and estimated running costs of a typical home. The report would list energy efficiency measures currently installed, such as double glazing or good heating control; it would then make a series of recommendations tailor-made for the property and detail the cost to its prospective owner of such measures being installed, the annual savings and, crucially, the estimated payback time. From that information, it would be possible for the prospective home buyer to have a clear idea of the annual financial benefits and the initial outlay. Amendment No. 25 is a technical amendment required to alter numbering and lettering.

New clause 4 and new schedule 1 are different from the other amendments, which would amend the contents of the seller's pack. There will be a period before the introduction of the seller's pack and because 1.5 million transactions involving homes being bought and sold take place each year, it would clearly be sensible to have in place measures to ensure that energy audits took place in the interim. New clause 4 empowers the Secretary of State to bring into effect new schedule 1, which would comprise the interim measure.

In Committee, such matters are often highly controversial, but on this occasion, I am delighted to say that there should be no controversy, given that the measures I propose have, in one form or another, been supported by bodies as diverse as the Council of Mortgage Lenders, Friends of the Earth, the Association for the Conservation of Energy, the Conservative party, the Government and the Liberal Democrats. The vast majority of Members of Parliament have supported similar measures, with the notable and sad exception of the right hon. Member for Bromley and Chislehurst (Mr. Forth).

Such proposals have a long history. In May 1984, Lord Walker of Worcester—then Peter Walker, Secretary of State for Energy—proposed that mortgage companies should include energy efficiency advice in their required surveys. The Select Committee on Energy concluded in 1989 that it

    believed that a standard, uniform and mandatory labelling system for appliances and domestic buildings should be introduced.

That statement was made in paragraph 115 of its report ``Energy Policy Implications of the Greenhouse Effect''. In 1993, in paragraph 102 of its report on energy efficiency in buildings, the Environment Select Committee recommended that

    the Government consider a mandatory scheme for home energy labels, to be introduced at the point of sale.

I am delighted to see the Under-Secretary of State, the hon. Member for Sunderland, South (Mr. Mullin), in his place and I look forward to our deliberations over the coming weeks. He, too, has indicated his views on this subject. In 1997-98, before the strictures of being a Minister were placed upon him, he signalled his support for such measures when he signed early-day motion 165, in which he stated his belief that

    houses should be rated for energy efficiency

and that

    an excellent time to achieve this desirable end is at the point of sale.

We clearly have his support.

In 1997, when she was Energy Minister, the current Under-Secretary of State for Social Security, the hon. Member for Wallasey (Angela Eagle), spoke to the fifth annual national homes energy rating conference. Her words were particularly apposite, as I shall show. She said:

    I support energy rating...the question from where I stand is: Is there is a viable voluntary which would ensure that all mortgage lenders provided tailored, reliable energy efficiency advice along with a rating and estimates of energy costs savings and the likely cost of improvement measures. Or having worked on this for several years to no significant effect, is legislation the only option?

Shortly thereafter, the hon. Lady made clear which of those options to go for. The Government of which she is a member supported the Energy Efficiency Bill proposed by my hon. Friend the Member for Torridge and West Devon (Mr. Burnett), from which many of these measures are taken.

Mr. Raynsford: I am following the hon. Gentleman's remarks carefully and I agree with much of what he says. Do his remarks refer to the entire group of amendments, or does he exclude new schedule 1? He will be aware that the latter would not require mandatory information to be provided at the point of sale.

Mr. Foster: I am grateful to the Minister and I shall return to that point later.

I hope to have shown that there is broad support for such measures. Indeed, I would say that there is considerable support, even among Labour Members. We should examine the early-day motions that have been raised on this and related subjects; excluding the Government Whip, the Minister for Housing and Planning and the hon. Member for Clwyd, West (Mr. Thomas), all the Labour members of the Committee have supported more than one early-day motion that directly relates to the matters referred to in the amendments. I should add one more exception—the hon. Member for Wigan (Mr. Turner), who was not elected until 23 September 1999 and would therefore not have been able to sign any early-day motions save the last, and he would have needed to be remarkably quick to sign that, as it closed fairly soon after his election.

There is clear support for the broad principle and I hope that all members of the Committee will acknowledge that the benefits would be significant. It would take but a few additional pounds to carry out the sort of survey that I propose—between £5 and £15—yet the expected savings are thought to be significant. The Energy Saving Trust estimates an average saving of about £250 a year per property. Every year, 1.5 million mortgages are taken out and 1.5 million homes are transferred. If those 1.5 million homes were to benefit from such a survey we were to assume an average saving of £250, the total saving would be roughly £250 million. That calculation involves an additional assumption, which is that not everybody who received such an energy efficiency report would act on it.

A 1991 Which? survey found that at least 60 per cent. of people were keen to have such information provided. If we assume that the other 40 per cent., despite having been given advice on how they can save money, choose to ignore it, we arrive at the figure of £250 million. Were everybody to take the recommendations on board, the savings would be even greater.

12.15 pm

Mr. Clifton-Brown: The hon. Gentleman is making some constructive remarks, with which I broadly agree. However, in fairness to the purchasing public involved in those 1.5 million transactions, may I ask whether he has considered the compliance costs of the amendments? He has said that the benefit will be £250 per house, but what does he think the average cost of producing such a survey would be, and how many extra consultants would have to be employed to produce those 1.5 million surveys?

Mr. Foster: I am grateful for that intervention. The hon. Gentleman said that he was listening carefully, but perhaps he missed my earlier point—[Interruption.]

The Chairman: Order. There are too many private conversations taking place in the Room. Would hon. Members please conduct such conversations outside?

Mr. Foster: Thank you, Mr. Gale. I said earlier that the estimated additional cost of such a survey, assuming that it was carried out by the same person who carried out the survey that was already required, would be between £5 and £15. The cost of the work that the home buyer may want to have done in the light of the advice will vary according to the kind of advice. For example, if it is advised that a cylinder jacket is installed, the cost would be roughly £20. The annual saving would be an estimated £16 a year, so within less than a year and a half there would already be a payback, and from then on there would be real benefits. With a more expensive item such as cavity wall insulation, the installation is estimated to cost, on average, £360, and the annual saving is estimated at £110 a year. That would mean a longer payback time but, in less than three and a half years, real benefit would accrue to the house buyer. We should not forget that the nation as a whole also benefits from reduced energy consumption. The scale of the problems that are associated with our high level of energy consumption would be reduced.

Amendment No. 23 would help to bring about such a reduction. I hope that the wording of the amendment will find favour with the Government, because it follows closely that of the Energy Efficiency Bill that was presented by my hon. Friend the Member for Torridge and West Devon but, in effect, was drafted by the Government. We have also been careful to ensure that amendment No. 24 is likely to be supported by the Government. Its wording is taken directly from a parliamentary answer provided by the Minister to the hon. Member for Plymouth, Sutton (Mrs. Gilroy) on 21 December 2000. Hon. Members can check the wording of the amendment against what he said, which was:

    It is currently intended that Regulations prescribe the inclusion of an energy report in the seller's pack, and that this will include generic advice on measures to improve energy efficiency, and an indication of the cost and payback period of each of those improvements.—[Official Report, 21 December 2000; Vol. 360, c. 313W.]

I hope that the Minister acknowledges that we have carefully drafted the amendments to tie in closely with commitments and undertakings already given by the Government.

I have already outlined the need for interim provisions with reference to new clause 4 and new schedule 1. An interim measure is clearly needed to bring about the benefits more quickly than would be permitted by waiting for the introduction of the seller's pack. I can imagine the Government responding along the following lines: they will argue that, even if the new schedule is passed, it will be about a year before it is in force, whereas the Government's measures will be in force by 2003, so that only a relatively short period will elapse between the two. Why go to all the fuss and bother to deal with such a short time?

My first response is that, even if I had confidence that the Government's regulations for the seller's pack could be passed in time, something in the region of 1.5 million transactions would be made in the relevant period. That could produce a saving of at least £250 million in energy consumption. That is well worth aiming for. In addition, during the introductory period, many lessons could be learned, which would prove enormously beneficial with respect to the final arrangements for energy surveys to be carried out as part of the seller's pack. Practical experience would have been gained.

What I have said is based on a generous view and the assumption that the Minister will really be able to realise the proposals by 2003. However, I am not that optimistic about his chances of success. I hope that the Minister will not take my remarks in the wrong way, because we understand the difficulty that he and the Department face in establishing complex regulations, but perhaps we should examine what they have said about other, similarly complex, regulations, in particular the updating of part L of the building regulations, relating to energy efficiency, in which respect, as the Minister has often pointed out, we are light years behind other countries. There is an urgent need to update those regulations. When the Minister has consulted on the issue, he has received wide-ranging support from all political parties and all the bodies that he has consulted. However, the Minister's suggested date for bringing in the regulations failed to bear fruit.

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