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Joan Ruddock: When I was speaking about the partners, I may have left out B&Q, which is also participating in the pilots. We certainly had a similar scope of possibilities. We knew and said clearly that primary legislation would be required. We said clearly that we would need to legislate to link the finance to the property, not to the individual, and that is what we were working through. We also believed that in order to motivate people it would be necessary to present a financial package which meant that when they paid their energy bills, they were paying back the upfront costs. So there were no upfront costs, and that is why we called it pay as you save. To that extent, the kernel of this is something that we prepared for and intended. I am delighted that the Minister is going ahead with it. There is no question about that. We will certainly support him as the plans come forward and examine them in great detail. We clearly believe that this is a way forward and we want it to work.
None the less, there are questions that the Minister must answer. In opposition, the Prime Minister spoke of an entitlement. How will an entitlement be created? How many households does the Minister expect to undertake what the Labour Government called an eco-makeover by 2020? Our best-informed target was 7 million. What is his target for 2020? I would be grateful if the Minister could make that clear when he winds up, bearing in mind that people have to opt in. This is not something that they are being given without their own participation. It is unclear whether it is £6,500 or up to £6,500. Ministers know that a single-glazed, solid-walled house would cost at least £10,000 and could be much more. Is there an upper limit to the scheme that can be accommodated in the payback plans, and how many years would it take to pay back if that kind of money is being provided?
That brings me to fuel poverty. The Minister talked a lot about helping vulnerable people, but there was little mention of any concrete action to tackle fuel poverty. Warm Front, the Labour Government's scheme for the fuel-poor, helped more than 2 million vulnerable households across England from June 2000, including 500,000 households in the last two years alone. It provides grants of up to £3,500, or up to £6,000 for those off the gas grid. Do the Government intend to scrap grant payments for central heating and insulation? I hope the Minister will be able to give us a precise answer to that question today. What evidence does he have that people in poorer households will be able to get help with insulation and improved heating under his green deal?
National Energy Action is sceptical. It has seen the details of the Government's scheme and it says:
"The overwhelming majority of fuel-poor households currently underheat their homes and the beneficial effects of energy efficiency improvements would generally be in the form of a warmer dwelling rather than in financial savings. NEA is deeply concerned about how these people would be expected to service loan repayments, let alone gain access to loans at commercial interest rates given their often precarious financial circumstances."
The Minister will say, "But they are not loans." But somebody has to put the money up front, albeit that it is the energy companies, and somebody has to pay back, so we must know what will happen to the most vulnerable people. How many pensioners and poor families does he think will be able to take out the green deal?
We have discussed energy efficiency in the context of reducing the energy used by better insulation. But climate change dictates that we not only reduce our use, but decarbonise what we do use. That is a much more comprehensive strategy.
Christopher Pincher (Tamworth) (Con): The right hon. Lady speaks about fuel poverty, which is terrible for many people. But despite what the Labour Government did in terms of CERTs, CESPs and Warm Front, all of which are laudable, can she explain why fuel poverty increased?
Joan Ruddock: It was because there were unprecedented fuel prices. No Government could have instituted a programme that could have erased the effect of the dramatic global increase in oil prices.
Let me continue with my case that we need a more comprehensive strategy-a point that was made by a number of my hon. Friends, intervening on points of interest at the beginning of the Minister's speech. Heating accounts for three quarters of home energy use. No matter how much we improve our insulation or reduce consumption by our appliances, we will inevitably still use considerable amounts of energy. At present, we depend on fossil fuels-natural gas, liquid gas and oil. That cannot continue indefinitely, which is why we planned to introduce a renewable heat incentive from next year. That would guarantee payments for those who install technologies, such as ground source heat pumps, air source heat pumps and biomass boilers.
Under our proposed tariffs, the installation of a ground source heat pump in an average semi-detached house with adequate insulation would be rewarded with £1,000 a year, and lead to savings of £200 a year if used instead of heating oil. The heat incentive would help thousands of consumers who are off the gas network to lower their fuel bills and gain a cash reward for greening their heating supply.
In government, we were pleased to achieve a wide consensus for our Climate Change Act 2008 and Energy Act 2008. We were gratified by the enthusiasm with which our 10-year transition plan for low carbon was received, particularly by the CBI and the TUC.
Today, I can promise our broad support for coalition Government plans that reflect and continue on the path that we have set, and I can promise that we will scrutinise fairly the details of any legislation. But the big question remains: will they will the means? Can they resolve their differences, or will Tory ideological cuts totally undermine the critical progress that needs to be made- [ Interruption. ] The Minister laughs, but he said not a word about public sector housing, or private sector housing where landlords are completely and utterly unwilling to assist with energy conservation. There is so much that needs to be addressed by proper public policy, but ideological cuts cut across that.
Government is about leadership, setting priorities and, yes, making hard choices, but it is also about holding one's nerve and seeing things through. The coalition had a choice. It could have balanced deficit reduction with investment in the future, investment in manufacturing, such as Sheffield Forgemasters, and investment in decarbonising the electricity supply. However, it clearly lacks the vision to do so.
The Minister promised to make his Government the greenest ever. All I can say is that he has made a shaky start. We will judge him on his strategy to deliver a low-carbon future that tackles climate change, on his record of creating green jobs and on whether the transition to low carbon is made fairly.
2.11 pm
Martin Horwood (Cheltenham) (LD): I thank the Minister for his statement. He was absolutely right to highlight our collective failure to address energy efficiency adequately, but he seems so keen to do something about it that I could almost mistake him for a Lib Dem- [ Interruption. ] Not quite, perhaps. On the green deal, the ministerial team has imaginatively built on proposals. Obviously, I shall claim that the Lib Dems were the very first to produce such a scheme, but the Conservatives did, too, and towards the end the Labour Government were- [ Interruption. ] We will check whether the Green party was ahead of the Lib Dems.
Caroline Lucas: Will the hon. Gentleman give way?
Martin Horwood: Not on that one; I am sorry.
All the parties, and even the Labour Government in the end, were working on variations on that scheme, but the one that the ministerial team has come up with is truly imaginative, and its unique financing raises the ambition for energy efficiency in this country in a way that, if successful, will represent a step change in energy efficiency. As the right hon. Member for Lewisham, Deptford (Joan Ruddock) pointed out, it is not guaranteed to be successful, and we do not know exactly how many people will take it up. The point, however, is to wish it well and for all Members to promote it, support private companies, communicate the scheme's success and hope that it achieves the step change that we are looking for. I congratulate the ministerial team on coming up with that proposal.
Mrs Main: I thank my hon. Friend for giving way on that point, because under the previous Government communication problems were often among the reasons why some very good schemes did not take off. I therefore wish this scheme well. Does he agree that this Government's big effort to introduce a scheme instantly is a positive move, and that all parts of the House will welcome improved communication?
Martin Horwood: I am sure the hon. Lady is right to emphasise the importance of communication. I was going to go on to pay tribute to the outgoing Administration, and in particular to the right hon. Members for Doncaster North (Edward Miliband) and for Lewisham, Deptford, who towards the end of the Labour Government brought some urgency to the issue and improved things. However, it is true that at times they were tempted to take credit for things that were the result of larger factors, and that, given the number of consultations and pilots in which they indulged, they did not get round to implementing some of the schemes that they had contemplated. It now falls to the coalition to increase the pace of change, and the early signs are good.
The need is urgent. If we are to achieve throughout Europe a target of 30% cuts in greenhouse gas emissions by 2020, which I believe should be the target for the
whole European Union, we will have to make those radical step changes in policy. Indeed, we need to do so if we are to have any chance of reducing the concentration of atmospheric CO2 to 450 ppm or lower, which I believe is absolutely necessary. If we do not do that, the chance of global warming increasing by more than two degrees above pre-industrial levels rises, threatening food production, conflict and, ultimately, the economies on which we depend to finance public sector and Government programmes.
In that respect, energy efficiency is no panacea. Not long ago, I visited a company near my constituency called Messier-Dowty, which provides world-class aircraft parts, particularly undercarriage. I remember having a conversation with its staff, in which they extolled the virtues of those parts and the aircraft industry's efforts to make aircraft more efficient and lighter, and use less energy as they flew. However, I pointed out that eventually the industry would have to adjust to a world in which people learned to fly less and used alternative means of travel and communications. The same analogy is true for the whole economy. Energy efficiency is the first and most cost-effective area to address, but it is no substitute for the wholesale decarbonisation of our economy, which we also need to work on.
I shall focus on three areas of energy efficiency: first, energy efficiency in buildings, especially the skills needed to deliver it; secondly, smart metering; and finally, energy markets and pricing. In the first area, it is right that we concentrate on buildings. Throughout Europe, apparently 90% of our time is spent indoors and 30% of our energy consumption is devoted to heating and lighting buildings, so the green deal is an important step in trying to address that scale of energy use. However, there are traps ahead, and I have spoken to training suppliers in the further education sector and those hoping to run apprenticeships in architecture and building trades in and around my constituency. They point out a severe lack of skills in those new building technologies, particularly the skills needed not just in isolated instances, such as the installation of renewable technologies or the provision of insulation, but in new building materials, in the different approach that we need to take in the building trades and in architecture, and in constructing and retrofitting buildings. Such skills must be fundamental to training in those sectors.
Thomas Docherty (Dunfermline and West Fife) (Lab): I am slightly confused. Given that the hon. Gentleman supports deep and savage cuts to the training budgets of our colleges, how does he expect them to produce those vast numbers of desperately needed skilled workers in order to bring about that step change that we all want?
Martin Horwood:
I am grateful to the hon. Gentleman for his intervention. One answer is clearly the green deal, which will incentivise private companies to invest in such training themselves. Apprenticeships might be part of the solution, too. However, when I asked Gloucester college, a forward-looking and innovative FE college based partly in my constituency and partly in Gloucester, what was the single biggest step that could be taken, the answer was not to fund extra courses. It suggested allowing FE colleges that provide such training to accredit their own courses, rather than having to defer constantly
to universities. I commend that recommendation to Ministers and their colleagues in other Departments. The college believed that that would enable it to respond much faster to market situations and to design courses much more flexibly, and that it was the single most important change that could be made. I hope that provides an answer to the hon. Gentleman.
On new buildings at least, the other possible pitfall is the rather prescriptive and increasingly complex code for sustainable homes. I welcomed the code when the previous Government introduced it, and generally, as an instrument of policy, it is a welcome development. However, it has been painfully slow at raising energy efficiency levels in new buildings, and it risks becoming so over-prescriptive that it defeats our objectives.
I know the Secretary of State well, and he is no friend of over-prescription; he prefers the creation of the right market environment, which would avoid the need for such complexity and enable the process to move faster. Instead of having standards of such complex design, perhaps we should reinforce one or two simple measures-for instance, a measure of kilowatt-hours per square metre for every building, old or new. To follow up the point made by my hon. Friend the Member for St Albans (Mrs Main), that would be easy to communicate to the public and easy for estate agents, politicians and everybody else to understand. It might become a powerful measure of energy efficiency, with no need to prescribe such complex details as we find in the current code.
This morning there was a round-table discussion hosted by The House M agazine, and one point repeatedly came up. Examples were mentioned of earlier civilisations-even the Romans-that were very good at preserving openness and light in buildings and making them energy-efficient through the communal use of heat; the renewable heat issue has already been mentioned. More traditional wooden buildings within the Arctic circle still seem to require less energy to heat than many buildings in this country. I know from my own experience of villages in India where buildings made basically out of mud were beautifully cool in summer and beautifully warm in winter. They were very energy-efficient, but used materials that would probably not be allowed under current building regulations. Incidentally, I am not suggesting that we should all start living in yurts or anything like that; that would be a bit too Liberal.
Gregory Barker: That did not quite make it into the coalition agreement.
We should be wary that over-complication and over-prescription could risk the defeat of our own objectives, and lead to our prescriptions to the industry for low-carbon homes being too inflexible and therefore too expensive. More flexibility might enable the private sector to deliver some of the objectives more simply and efficiently.
I shall now talk about smart metering. I was a shadow environment spokesman under the previous Government, and assorted people lobbied me heavily-as they did my opposite numbers, I suspect-about their particular designs of smart meter. I am aware that the field is very competitive. I make no judgment between the different systems, but I am increasingly aware that smart metering
covers a multitude of sins. There are tough decisions ahead for the ministerial team about exactly which designs we might favour.
At the most basic level, we are talking about something that just generates information that can be read out on a display, and might be reflected on a bill. That would be useful, but rather limited. More sophisticated systems influence the timing of devices such as washing machines and dishwashers so that they operate at different times and improve the efficiency of the whole household.
The most interactive technology feeds real-time information back to the energy companies themselves and could improve the efficiency of the whole network. I would draw a line at the kind of systematic smart metering that enabled people to switch suppliers minute by minute, which I know has been suggested by some hon. Members. The machine itself searches for the best deal and tariff at any particular minute. That would lead to indescribable confusion over billing and might destabilise businesses from week to week. However, we need to look at the various different technologies and be ambitious about what smart metering can deliver.
On energy markets and pricing, the Minister rightly said that we suffered from a plethora of different energy efficiency programmes under the last Government. Many were well intentioned and individually well designed, but there was a lot of stopping and starting and different, confusing and overlapping requirements. Last Christmas I visited the Cheltenham Royal Mail sorting office and found postal workers falling over heaps of low-energy light bulbs as one energy company in particular had mailed out huge numbers of the things at the last possible moment. I am not surprised that the Minister said that 262 million had been supplied.
In a way, I suppose that the bulbs were a good thing, but they spectacularly missed the point. While price still rewards energy consumption, it will always be difficult to mobilise the energy companies really to get behind energy efficiency. For the longer term, I commend to the Minister one other Lib Dem policy that did not quite make it into the coalition agreement. It was to take energy bills and set a historic baseline amount for each household, taking into account the number of children and so on, which would be reflected in the historic consumption. Thereafter, the cost to consumers would rise if energy consumption rose, but the energy company would not be allowed to profit from that rise.
Instead, the surplus would be taken, for example, into a fund administered by the company for energy efficiency or environmental programmes. At a stroke, that would break the link between profit and increased energy use; it would actually cost the energy company money if energy use rose. The company would have a direct financial business case for increasing energy efficiency. That would be hugely simpler than all the complicated schemes in which the companies were set targets and sought various ways-some of them rather untestable and unverifiable-of trying to meet Government objectives. If the Minister adopts that policy, I really will think that he is turning into a Liberal Democrat.
If the coalition is to deliver on these ambitious targets, and on its ambition to be the greenest Government yet, we will need, in the Minister's words, to change the game and be really ambitious, bold and radical. I fully expect that we will be.
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