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Keith Hill: I see that the hon. Gentleman is bestirring himself; and, of course, I give way to him.
Matthew Green:
I thank the Minister for giving way, but does he accept that not all the 230,000 households
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that he says will be raised to the decent homes standard will necessarily reach the SAP 65 rating? Many of those homes may well have to be revisited in future to get them up to that level. In fact, we are talking about guidelines, so some councils—perhaps those facing financial pressures—will not go the whole hog; they will do just enough to meet the decent homes standard without hitting the higher rating.
Keith Hill: Unusually for the hon. Gentleman, he is labouring under a misapprehension. He is usually very precise. In fact, very few of those 230,000 homes are likely to reach the SAP 65 level. That is exactly why I explained that the requirement for SAP 65 would not only embrace the 1.5 million so-called non-decent homes that we propose to tackle using the decent homes programme up to 2010, but entail a return to a further 1.7 million social sector homes that do not attain the SAP 65 level. The important thing to remember is that fuel poverty relates to the percentage of income that is necessarily expended to achieve a decent level of thermal comfort.
8.45 pm
Many householders who live in homes that do not have a SAP rating of 65 are not in fuel poverty because they do not spend a sufficiently high proportion of their incomes on the issue. It is terribly important for all hon. Members to bear it in mind that fuel poverty is a factor of not the physical fabric of a property, but the relationship between thermal comfort, or the need to compensate for heating loss, and income. The truth is that only a small proportion of those in fuel poverty live in social homes that are below the decent homes standard—about 120,000. Many people who live in fuel poverty might live in homes with a SAP 65 rating, which is why our fundamental argument is that it would be an immense over-reaction to insist on the SAP 65 standard across the board to lift households out of fuel poverty. It would be like using a JCB to smash a nut.
Brian White: Tackling fuel poverty is a key objective for the Government. However, they have several other objectives, such as reducing CO 2 emissions, which SAP 65 would help us to achieve. The Minister is missing the interaction between the objectives.
Keith Hill: I disagree with my hon. Friend, although I do not often do that because we have a good relationship both inside and outside the Chamber. We have dealt with such matters already. I have demonstrated that the Government are clearly committed to, and on route towards, achieving their carbon saving and energy efficiency targets. We mislead ourselves if we confuse energy efficiency and fuel poverty because they are different issues that we must separate in our minds.
The Government's argument is that the small numbers of households in fuel poverty should be dealt with individually. Interestingly, such households are characteristically not made up of senior citizens. They tend to be made up of people on low incomes living in three-bedroom houses. It is clearly possible to devise
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strategies to deal with such individuals. Indeed, the fuel poverty action plan has been designed to ensure that fuel poverty will be eliminated in such vulnerable households by the year 2010, and a report is due later this year. For all those reasons, although I take my hon. Friend's point about energy efficiency on board, we need to focus carefully on the precise sources of fuel poverty.
David Taylor: My right hon. Friend is one of the more lucid, rational, thoughtful and, especially, numerate Ministers—he is no doubt set for further promotion. Does he agree that if the only available options to address local authority tenants facing fuel poverty are stock transfer, the private finance initiative and arm's-length management organisations, all of which are more expensive than conventional local authority methods of raising houses to a decent standard, fewer houses will be tackled with the available pot of money than would have been the case if he had delivered option four, as he told the fringe meetings at the party conference that he would?
Keith Hill: I am grateful to my hon. Friend, who teases me. Although I know that there is an undercurrent of great seriousness in his observations, I sometimes feel that the fourth option is to him what King Charles's head was to Mr. Dick in "David Copperfield". I decline to be sucked down that vortex.
We have issued guidance that is designed to improve energy efficiency. The effectiveness of what is being done to improve heating and insulation under the decent homes programme is demonstrated by what our tenants say about it. A tenant in my hon. Friend's and mine beloved east midlands said:
"At last I have decent heating and a radiator in every room, meaning my home is not only warm and cosy but actually cheaper to heat than before."
Another tenant in Chelmsford—I like to demonstrate a regional reach in my examples—described how her heating bills dropped from £35 a week in winter to £8 a week all year round.
We are working very hard to ensure that the Government meet their target on alleviating fuel poverty and improving energy efficiency, but I recognise that about 120,000 householders who live in homes that are above the decent homes threshold are in fuel poverty. However, it is not necessarily the very poor energy efficiency of the homes that is the main problem. As I have said, most of the households are single non-pensioner households on extremely low incomes living in three-bedroom homes. There are other issues to tackle beyond work to the physical fabric of the home.
Matthew Green: Will the Minister give way?
Keith Hill: If the hon. Gentleman will forgive me, I will make progress because other colleagues want to contribute. I am conscious that I have spoken at some length on this amendment and others. I dare say that he will have his opportunity later.
Amendment No. 190 wants us to tackle the problem of having around 120,000 households in fuel poverty in the social sector by increasing by 1.7 million the number of homes that would need work in accordance with the decent homes standard. Those homes are
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currently decent but below SAP 65, and they would more than double the number that we still have to tackle under the programme. The amendment would require the minimum standard that triggers action to be SAP 65. That would cost—I say this in all earnestness—£28.5 billion to solve a problem in 120,000 homes. That is roughly equivalent to 8p on the basic rate of tax. This is more than a sledgehammer to crack a nut. The amendment is a JCB. Indeed, a JCB might be the only solution for many homes if all social housing is to achieve a SAP 65 rating. An estimated 400,000 homes could not be brought up to that level of energy efficiency. For those, demolition and rebuilding would be the only solution at a cost of more than £20 billion, excluding any costs of re-acquiring property.
For the homes that could achieve SAP 65, some would require additional work over and above basic measures to improve their energy efficiency. For example, we would have to carry out insulation to the solid walls. That would cost £6 billion. Then there are those homes that would not be in the decent homes programme since they already meet the current levels of thermal comfort required. Work in those homes would include replacing boilers that are still functioning, modifying electric immersion heaters and installing double-glazing, which would cost £2.5 billion.
The grand total comes to an astonishing £28.5 billion. Demolition and rebuilding would cost more than £20 billion. Tackling hard-to-heat homes would cost £6 billion. To cover homes that do not currently come under the decent homes programme would cost £2.5 billion. That extra expenditure would cripple the budgets of local authorities and many housing associations. It would mean that work on wider regeneration work, including security measures and environmental improvements, would go undone. Those things matter to tenants, and how would we explain to them that those priorities would no longer be addressed? The new target would amount to moving the goalposts for social landlords who have been working hard to achieve the decent homes standard. Planned programmes of works would need to be rescheduled, which would disrupt not only landlords but tenants.
Even if it were possible to achieve SAP 65 for the social sector at a reasonable cost, it would still be unwise to fix that in statute. The standard assessment procedure measures energy efficiency on an index calculated by considering the annual space and water-heating costs for a standard heating regime. It is a constantly evolving mechanism that will change in response to new energy efficiency technology and changes in fuel prices. We have a huge range of social housing stock in this country, and a SAP target of 65 would be expensive, unachievable and inflexible. We prefer action on achievable targets to aspirations that, frankly, have not been properly thought through. We want to deliver on our decent homes programme by 2010, not see it jeopardised and perhaps put back to 2016. Above all, we cannot choose one part of our decent homes programme and promote it above everything else. We have a duty to tenants, and must provide them with the improvements in their living conditions that really matter to them. While energy efficiency may be the primary concern for some people, it is certainly not the primary concern for all social sector tenants. Our efforts in this area should
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remain focused on delivering the essential work needed to make all homes decent, and in doing so we must always maximise energy efficiency and promote the alleviation of fuel poverty. However, to put those two concerns above all else would be unrealistic.
In conclusion, a target of SAP 65 for all social sector homes would cost the taxpayer about £28.5 billion. The Government are committed to dealing with fuel poverty and to improving energy efficiency. However, we are not committed to doing that in an impractical and ludicrously expensive manner, as the amendment suggests. It is for those reasons that I invite the House to disagree with the amendment.
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