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few or no zero-carbon homes;
I do not know the answer. [Official Report, Finance Public Bill Committee, 15 May 2007; c. 139-41.]
I accept that the point is relatively minor, although the Chief Secretary had previously told that supreme constitutional authorityJeremy Paxman of Newsnightthat he thought there were a couple of dozen. On Second Reading, he said:
a development of zero-carbon homes is going forward at Galleons Park in my constituency.[ Official Report, 23 April 2007; Vol. 459, c. 661.]
A reasonable observer might assume that going forward meant that planning permission had been granted, but the Economic Secretary confirmed on 15 May that it had not yet been granted, so those with an interest in London planning matters should note that when Ministers say a development is going forward, they presumably meanto quote the Economic Secretary
The London Development Agency has earmarked the site.
we intend to get to the point where 200,000 such homes are built each year by 2016that is the ambition. [Official Report, Finance Public Bill Committee, 15 May 2007; c. 138-39.]
We also know, because it was announced last May, and re-announced this May, that the Chancellor wishes five eco-towns to be built containing 100,000 energy-efficientor if the Economic Secretary would prefer, zero-carbonhomes in total.
That returns us to whether the Government are likely to achieve those goals. My hon. Friend the Member for Braintree (Mr. Newmark), who is in his place, announced a rough calculation in Committee. Assuming that each new energy-efficient house went on the market at £200,000, he argued, the Treasury would lose a total of
£200 million in stamp duty if 100,000 of those houses were built. He then drew our attention to paragraph A2.10, on page 230 of the Red Book, which says:
The Exchequer cost is expected to rise to around £15 million by 2011-12.
As he said, that suggests that by 2012 only 7,500 energy-efficient homes will have been built, and by his calculation it will take 13 years in total to build the Chancellors 100,000 homes. My hon. Friends figures may be rough, but on the basis of the figure that he dug out of the Red Book, it is hard to see how there can be an acceleration from about 7,500 in 2012 to 200,000 only four years later.
James Duddridge (Rochford and Southend, East) (Con): Given my hon. Friends comments, does he believe that the proposal is simply a publicity stunt? If the Government were serious about taking action, would they not concentrate on tax measures to increase energy efficiency in everybodys homes, and not simply go for headline-catching zero-carbon homes?
Mr. Goodman: Certainly, the interest groups, whether house builders or green groups, have on the whole been pretty unenthusiastic in their responses to the proposals. Perhaps the Economic Secretary will be able to enlighten us on that point.
He asked me what my forecast was for 2012. We do not have a forecast.
the build-up will not be linear, or like a straight line, but ... there will be a progressive acceleration over that period,
we do not know what the pace of build-up will be. [Official Report, Finance Public Bill Committee, 15 May 2007; c. 142 -43.]
In summary, on the basis of the figure in the Red Book, the only reasonable conclusion to be drawn is that if we imagine the rate of building such homes as a line on a graph, the Treasury anticipates a slowly rising line until 2012, after which the line will dramatically and suddenly soar upwards until it almost ascends from the page.
Mr. John Redwood (Wokingham) (Con): The Government are vague in their legislation, as they point out that it may not relieve all the taxthey reserve the right only to reduce the amount of tax chargeableand that the regulations will not continue after 2012. They are then left with the perverse situation that when the incentive is taken away, more such homes are to be built.
Mr. Goodman: My right hon. Friend makes a vital point about the stability and certainty that any such scheme could reasonably be expected to provide and that those who might seek to invest in it would surely look for. I shall return to that in a moment.
It may well be that the target will be reached faster than in that non-linear projection; it may well be that that happens more slowly. [Official Report, Finance Public Bill Committee, 15 May 2007; c. 142-43.]
However, I have not risen to my feet today just to point to inconsistencies in statements by the Economic
Secretary. The key point is the one that my right hon. Friend the Member for Wokingham (Mr. Redwood) has just raised. For the scheme to work, investors in energy-efficient or zero-carbon homes will look for stability, certainty and predictability as a basis for planning and investment. They will look for some sign that by 2012, when the relief is planned to expire, it will have taken the Government towards their proclaimed target of building 200,000 energy-efficient homes a year by 2016. If those investors or interest groups look at the small print in the Red Book, however, they will find that, on any reasonable calculation, only a relatively small number of such homes will have been built. That in turn would lead any reasonable inquirer to question whether the Government are serious about their proclaimed targets and whether they are serious about extending the relief after 2012 if the targets do not look like being met. On the basis of what we heard in Committee, it is up to the Economic Secretary to persuade the House that the Government have a coherent plan for reaching their target for the scheme and for the future of the relief.
Mr. Redwood: My hon. Friend made a powerful case about the lacunae and missing elements in the Governments proposals. I look forward to hearing the Economic Secretary explain a little more about the extent of the relief and how he sees the profile of construction under the proposals.
It is a great pity that such a good opportunity has been missed in the Governments modest amendment and the current text. Many of us believe that one of the most important things that we could do to encourage energy conservation and reduce carbon dioxide emissions is to give people more incentives to save energy in the home. It is a crucial area, where so much energy goes to waste. I am sure that the way to do to it is not to penalise, hit and tax people more, but to give them tax incentives. I admire the way in which the Government are proposing a tax incentive for the construction of new homes, but it is a pity that it is limited to new homes and cannot be extended to the many people who would like to make their home more fuel efficient, but do not wish to move and buy a new property.
I hope that when the Economic Secretary thinks about how the Government might do more to promote zero-carbon homes among the general number of homes already constructed, he will also deal with the crucial question of what they mean by saying that the relief specified in the clause may be an exemption from the charge or it may be a reduction in the amount of the tax chargeable. As my hon. Friend said, it is terribly important that if the proposal is to work, there must be a strong and clear message from the Government about the exact nature of the exemption. That will require early and fuller statements from them about what a zero-carbon home is, how it can be measured, how a home can qualify, how much the tax relief will be and for how long it will be in place in practice. All those things are left in some doubt by the text as drafted.
In the meantime, I will support my hon. Friends proposals, because he is probing in the right way to get more certainty and sense into this strangely contentious area. I say strangely contentious because, as I understand it, all parties applaud the aim and wish more homes to
be more fuel efficient. I assume that all parties are united in believing that tax incentives, rather than tax penalty and regulatory penalty, are a better way of doing that and more likely to succeed. I hope that the Economic Secretary will explain more of the detail and perhaps be more ambitious, because we have a great opportunity to do something very positive, which will also help to tackle the problems of fuel poverty and the difficulties experienced by the elderly and those on low incomes, who often live in the least fuel-efficient homes.
Julia Goldsworthy: The most difficult part of the proposal is that it is likely to increase demand rather than deal specifically with those who supply housing. We need incentives for the people who develop property as well as for those who want to purchase it. The incentive will have an indirect effect if we go straight to the demand side. A significant number of new properties will be built in my constituency. We already have difficulty convincing the developers that there is a demand for energy-efficient properties. Although the proposal provides an incentive, I am not sure how much it will do to convince property developers of the case. There is so much unmet demand that they could simply build unenvironmentally friendly houses and still have no problem selling them. That is the core of the difficulty for me.
I welcome the Government amendment, because it means that we will be able to move on from the hypothetical and extended debate that we had in Committee, and are reliving today, to a more tangible one about what a zero-carbon property will be. I look forward to seeing the regulations, becausegiven my experience in my constituencythe Bill raises some key questions about what a zero-carbon property means. Does it mean zero-carbon in terms of running costs or the energy required to build the property in the first place?
The Mount Pleasant ecopark just outside my constituency undertook to try to build workspace with as minimal an impact on site as possible. It was constructed with materials already on the site, instead of by bringing in cement and other building materials. That was a brilliant initiative and the resulting workspace has been taken up quickly, but it met with huge difficulties, including in securing the permissions and in developing the technologies to do it. For example, the walls of the property are made out of rammed earth from the site, and the result is a beautifully coloured surface, but some bizarre tests had to be carried out to prove that it was strong and durable enough. The tests included dropping a piece of the earth from shoulder height and if it broke into between three and seven pieces, it was appropriate for rammed earth construction. The expertise and techniques involved could bring huge benefits, but it is not clear whether the Minister intends to develop it that far. That will need to be made clear in regulations, because if the proposal is to be truly ambitious it should include not only the energy use of the building after it has been built, but minimising the impact that new build has on the environment, not least because some ambitious targets have been set for meeting the demand for homes.
On the Opposition amendments, I agree that the regulations should include the method for claiming stamp duty relief, and I understand that that is the intent of amendment No. 6. I wonder whether the methods that have been mentioned will be affected by the Governments change in policy on home information packs. In Committee, it was pointed out that Cornwall is an objective 1 area, so there was an opportunity for new workspace to be part funded by that programme. Because of the huge demand, the opportunity was taken to set higher environmental standards. The problem was that there was no one within a 300-mile radius who was able to assess whether that workspace met those criteria. So we must not only set high aspirations but ensure that there is a way of delivering them. The obvious way would be through the home information pack process, but that has now been seriously undermined. We already know about the difficulties of finding the capacity to deliver that.
Amendment No. 7 would introduce a sunset clause of one year. I wonder whether it might have been more practical to have a mechanism for reporting back, so that we could judge the effectiveness. Key questions remain, including how many people will benefit. We have had contradictory information from the Red Book and what Ministers have said. Fundamentally, the issue is that if we are serious about making homes more energy efficient, we have to tackle the existing housing stock, because the majority of it will still be standing in 50 years time.
Unless we tackle that issue, people will find it difficult to make their own individual effort to tackle climate change. There are some good practical examples, such as social housing stock in my constituency that has been retro-fitted with a ground source heat pump which has reduced the environmental impact of those properties and is also saving the people who live in them hundreds of pounds a year in heating bills. If we do not look at existing housing stock, what we can achieve through this mechanism will be severely constrained.
Mr. Brooks Newmark (Braintree) (Con): I rise to speak briefly in support of amendment No. 7, which would introduce a requirement that the regulations on zero-carbon homes expire annually. We dealt with the proposal at some length in Committee, but I for one am not able to say that the debate caused the scales to fall from my eyes.
The Economic Secretary is fond of berating Conservative Members for cynicism. I am not a cynic, but I hope that the proposals in the Bill are realistic. It is for that reason that I support the proposed requirement that the regulations be reviewed every year.
In Committee, the Economic Secretary became a little discombobulated when he replied to a perfectly reasonable question from my hon. Friend the Member for Wycombe (Mr. Goodman) about such minor details as how many zero-carbon homes might be expected to make use of the tax relief on them. The Economic Secretary also had difficulty with the number of existing eco-homes. He said, staccato, that there were few or no zero-carbon homes today, then admitted that there were none. Then he softened again, and said that there may well be none. I think that his final offer was that the true number was low or zero. That is not a reassuring background to the introduction of the regulations.
Mr. Newmark: The hon. Ladys question makes my very point: the problem is that the Government do not create any definitions. They have grand schemes but do not define what we need to do or where we are going.
As I said, the background to the regulations introduction is not reassuring. We do not seem to know where we are now, let alone where we will be in 2012 or 2016. The Deputy Prime Minister once said, in an immortal phrase, that the green belt was a
Labour achievement and the Government intend to build on it.
consistent in their opposition to taking forward concrete action on the environment [Official Report, Finance Public Bill Committee, 15 May 2007; c. 134.]
My hon. Friend the Member for Tunbridge Wells (Greg Clark) has exposed how successful the Government have been at concreting over the environment. They are at the top of the class in that respect, but the foundations of their proposals on eco-homes are a little less concrete.
Such homes involve technology that is new and untested. Either it does not yet exist, or it is experimental and somewhat uncommon. The choice depends largely on the mood of the Economic Secretary. We are justified in feeling a little suspicious of the Governments record on using taxation to effect behaviour change.
I was concerned in Committee, and I remain concerned now, that the Government have proposed a tax relief that will chug along for several years without regular monitoring, and then simply stop. In addition, the relief is founded on the paradoxical assumption that it will contribute in some way to the Chancellors thrice-announced 100,000 new eco-homes for a magical total ofand I do not get the maths here 200,000 by 2016. According to the Red Book, those houses will come in at a cost of only £15 million by 2102. Either the incentive will be used widely, in which case it will cost more than the £15 million predicted by the Government, or it will not work and will need to be rethought.
I pointed out in Committee, and it is worth reiterating now, that some £130 million has been spent on seven millennium communities, delivering homes to the excellent standard. I was amused to seeI made this point in Committeethat one of the seven communities, in east Manchester, was, in true new Labour fashion, named New Islington. It is a wonder that the Chancellor did not go the whole hog and call a street there Granita or New Granita.
The fact remains that, after 10 years, the homes have not been delivered, so the idea that a large number of homes will be built in time to take advantage of clause 19 is optimisticor indeed over-optimistic. The Economic Secretary talked of a non-linear projection for uptake, but was unable to provide figures for the uptake of eco-homes by the 2012 cut-off point for the
regulations. Even using a curve rather than a straight line, it ought to be possible to extrapolate back from the aspiration of 200,000 eco-homes in 2016 and give us at least a ball-park figure for uptake by 2012it could even be a Galleons Park figure. In the absence of that figure, my hon. Friends have proposed the only workable answer to the Treasurys remarkable opacity and confusion on eco-homes by requiring an annual review of the policy to see whether it is having the intended effect.
The Economic Secretary offered the Committee a vague and open-ended commitment to review the regulations in or around 2012, if he is still around. That is not really a commitment at all, because it seems to depend on the prevailing circumstances. He also contends that this is a bold, innovative and radical policy, but let us hope that the Government have paid enough attention to his fourth adjective of choice and ensured that it is also coherent and that eco-homes will in future receive annual scrutiny.
The Economic Secretary to the Treasury (Ed Balls): I hope that I will be able to give some reassurance while speaking about the Government amendment and responding to the Opposition amendments, and provide some more detail for the right hon. Member for Wokingham (Mr. Redwood), including detail on the definition of zero-carbon homes, which I hope will reassure the hon. Member for Falmouth and Camborne (Julia Goldsworthy).
With the permission of the House, I do not intend to spend too much time repeating the debate in Committee about the costing and the number of zero-carbon homes. However, I want to set the record straight, because I have never been quoted as many times in the House as I have been quoted by the hon. Member for Wycombe (Mr. Goodman). This is exactly what I said:
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