I am not at all relaxed about that, because I think it will lead to the pressurised mis-selling of products unrelated to energy efficiency, and that could completely undermine the green deal. There have already been similar problems

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in the small-scale renewables market, and they must be prevented in the context of the green deal. Sales in the home do not happen in a commercial atmosphere. Green deal assessors or providers are invited in because consumers are interested in energy efficiency. It is vital to ensure that commercial enterprises do not abuse the terms of those visits by pushing products that will not improve a home’s energy efficiency. I agree with the hon. Member for Brent North (Barry Gardiner), who pointed to the danger of some enterprises using the opportunity of being in someone’s home to try to persuade them to change to a different tariff as well.

Barry Gardiner: The hon. Lady will remember that when the financial services regulations were introduced, banks had to declare up front whether they were providing information and advice to their customers in an independent capacity or as a tied agent for themselves. Does she agree that it is also important in terms of the green deal that people who have gained a householder’s trust and entered their home on the basis that they are providing impartial and independent advice do not, once inside the front door, switch hats and start offering advice as a tied agent of another service provider?

Caroline Lucas: I completely agree. Trust is crucial if the green deal is to be successful. We want people to be talking about it, telling their friends and neighbours how great it is; we want there to be a real buzz and momentum behind it. If there are just a couple of cases of such mis-selling, the whole process will be undermined.

I also seek to extend the same consumer protections for the repayment of a green deal loan to energy advice services or energy plans that are not specifically green deal plans. If a householder decides after the initial green deal assessment to pay for the services up front without the need for a green deal loan, they ought to be eligible for the same kinds of protection they would receive if repaying the loan in a different way. If the clause in question is left in its current form, regulations regarding protection and redress will hang not on what a consumer buys, but on how they pay for it. That is perverse. If the consumer pays up front, the protections and regulations will not cover them. Only if they take the green deal loan will they have those protections. If people are not protected until they have signed a contract, how will that help consumers during the advice and contracting stage when they may not have decided to pay for green deal services yet, let alone how to pay for them? Also, who can the consumer complain to about pressurising sales tactics if they walk away before they have signed the contract? Will consumers choose the financial option that is best for them if they have to use green deal finance to get ongoing support from the advice line and redress scheme? I hope the Minister will address those questions in summing up.

My final concern in relation to this group of amendments is about the comparability of green deal quotes. It is vital that consumers are in a position to make an informed choice about which green deal is best for them, and that could be nigh impossible if the different quotes received are hard to compare. I should like the Minister to address this by ensuring that all green deal quotes are provided in a way that makes them very easy to compare with one another, to judge and to assess.

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I have detained the House for some time so I shall conclude. My final amendment in this group would give consumers the right to choose which energy bill their green deal loan repayments would be applied to. In 78% of occupied British buildings, heating and hot water are provided by natural gas, so that is the fuel most likely to be reduced after a green deal makeover. It therefore seems logical for customers’ gas bills, where possible, to carry green deal loan repayments because if the golden rule is working, their gas bills will not become more expensive after the green deal repayments have been applied. It is there that the advantage of the green deal will be most apparent to householders.

If the repayments are added to electricity bills, those electricity bills are not likely to fall so much after a green deal makeover unless a home’s space and water are heated by electricity, but far fewer homes are heated by electricity than by gas. That means that in the vast majority of cases, green deal customers will potentially have lower gas bills but higher electricity bills. That makes it harder to see whether the golden rule is working and risks undermining the central pay-as-you-save principle, as well as eroding customers’ confidence in the value of the deal. I hope the Minister will therefore consider allowing consumers to choose which bill they want their green deal payment to be applied to so that their management of the green deal is as straightforward as possible.

Barry Gardiner: I am delighted to follow my hon. Friend the Member for Brighton, Pavilion (Caroline Lucas), who has made a very informed speech about exactly the points at the heart of the measures. I, too, want to address the green deal to dig out more about the golden rule and the energy company obligation. We all agree that it is right that energy efficiency improvements should be provided at no up-front cost. That is a good thing that we all support across the House and want to see implemented. As has been pointed out, however, the loans will be provided at commercial rates through the green deal and will attach to the property, not the householder, for up to 25 years.

The golden rule has been introduced to require that all green deal loans are less than the repayment cost resulting from the installation of the measures. The qualifying energy efficiency improvements will be determined through the energy performance certificate. This means that any savings will be estimated and based on standardised use. As a result, there are no guarantees that actual savings will match or better the estimated savings, as I pointed out to the hon. Member for Brigg and Goole (Andrew Percy). The Bill’s central premise is that consumers will save more on their energy bills than they will repay in loan costs and that that will be enough to drive consumer demand. However, the Bill provides little detail about how demand for the green deal will be driven beyond that basic finance mechanism other than through the introduction of the new ECO, which will underpin the deal and subsidise properties that require energy efficiency improvements but for which the golden rule would not be met.

It is estimated that the green deal will reach more than 40 million homes by 2020 and a further 12 million by 2030. That amounts to the retrofitting of 1.7 million

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homes a year—that is 4,800 a day—between 2012, when the green deal starts, and 2020. The Committee on Climate Change has estimated that, between 2012 and 2022, we would need to insulate 8.3 million lofts, 5.7 million cavity walls and more than 2 million solid walls to meet the UK’s carbon budget. The Government’s expected take-up of those measures, through the green deal and the extension of the carbon emissions reduction target, misses those requirements by 3.8 million lofts and 2.7 million cavity walls.

Although I support the aspiration behind the green deal, it is difficult to see how it can be achieved under the proposals. Indeed, the Committee on Climate Change’s third progress report to Parliament concluded that the Government proposals should help to strengthen incentives for the take-up of energy efficiency measures. However, there is a significant risk that they will not adequately address the range of financial and non-financial barriers. I do not want to talk the measures down because Members on both sides want them to work, but it is important that we are realistic about their likelihood of success.

The economies of energy efficiency retrofits at today’s energy prices simply are not attractive, as my hon. Friend the Member for Brighton, Pavilion has pointed out, because of the gap between projected returns based on current energy prices and the cost of borrowing—a gap that can be met only if substantive subsidies are applied. Recent analysis by E3G has highlighted that at today’s prices and with the commercial interest rates that the Government intend to apply to green deal financing, the golden rule cannot be met on a 25-year loan. The Government have quite rightly identified that the up-front costs of improvement and access to capital are significant barriers to the uptake of energy efficiency, but we should be clear that the green deal alone will not overcome them. Without intervention to limit the cost of borrowing, consumer demand for green deal programmes could be very low indeed.

Furthermore, access to capital is not a universal problem. For those who can afford them, savings, mortgage extensions and personal loans have long been readily available to provide up-front capital for energy efficiency investments, yet they have not been used on any scale, despite the fact that many people are able to procure those borrowings at 5% or 6%, let alone at the 11% that the Government are suggesting. Financing through the green deal simply does not stack up for the rational investor, and particularly for low and middle-income households.

Let me give an example. The annual energy bill for an average household is calculated at £1,029 a year. A good whole-house retrofit would be expected to save approximately 50% on the average energy bill—in this case, just over £500 a year. Solid wall insulation was identified by the Committee on Climate Change as the main energy efficiency measure that could usefully be financed by the green deal, but according to DECC’s own analysis, the capital cost of solid wall insulation ranges between £7,600 and £12,600. Let us take the cost of £12,600 and the maximum saving of £500 a year; in fact, DECC’s analysis estimates that solid wall insulation would save only £400 a year, but I give it the extra £100. Through the green deal, if we pay back £500 a year, through the savings on the energy bill for that average

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house, against the £12,600 loan over 25 years, we still do not pay back the full amount. That deal fails the golden rule.

An energy company obligation is being introduced to subsidise the difference, reducing up-front costs to the point that they are less than the energy savings. The Committee on Climate Change estimates that up to £17 billion of support will be required through the ECO to insulate 2.3 million solid walls by 2022, but the Government estimate that the total ECO support will be only £1 billion. The fact that the golden rule cannot be met even before the cost of finance is factored in is a matter of huge concern.

The Government have calculated that the green deal’s financial cost will be cheaper than a market personal loan, but they concede that it could mean rates of up to 11%. At today’s energy prices, to drive demand by meeting the green deal’s golden rule, 25-year loans would need to be offered at rates of 2% or less. E3G’s recently published analysis concluded that a £15,000 loan at 0% over 25 years for changes that delivered a 50% energy saving and lifetime savings of £2,461 could meet the golden rule in year 8, but that the same loan offered at just 2% would incur losses of £1,747 over that 25-year period, whereas a similar £15,000 loan for changes that delivered just a 35% energy saving would not break even at all even with interest at 0%.

2 pm

At more commercial rates, the economies of the green deal are simply unmanageable. Households with access to capital—those with the option of using savings, mortgage extensions or personal loans—are not using it for this purpose and will not be incentivised to do so under the Bill. Low-income households could require up-front grants of 55% of the overall cost of making energy efficiency improvements, simply to reduce costs to a level where the remainder of the capital could be borrowed at commercial rates over 25 years without any negative impact on annual household outgoings. For many investments to break even over that 25-year period, they would need a significant subsidy via the ECO.

The ECO’s objective is to support low-income and vulnerable households and properties that need energy efficiency measures that do not meet the golden rule. The cost would be recovered from increases in consumer bills. That is a worryingly regressive means of funding energy efficiency measures, particularly given the likely subsidy that will be required to make the green deal viable. In my example, under the ECO, many households that do not benefit from energy efficiency improvements could subsidise those that do.

The ECO will be accompanied by the withdrawal of the Warm Front scheme by 2014. It will be replaced by the affordable warmth element of the ECO, the purpose of which is to provide up-front support to help households heat their homes affordably. In 2009-10, Warm Front delivered more than 21,000 cavity wall and 40,000 loft insulation measures, as well as 80,000 boiler replacements. I should be grateful if the Minister he clarified what proportion of the overall ECO will be targeted at the affordable warmth element and the criteria that he will apply to determine what low-income households will be eligible and how many retrofits the Government estimate will be carried out under the affordable warmth obligation.

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Luciana Berger: It is helpful at this point to refer to the Treasury levy cap, which has not yet been mentioned. We will not know for some time whether the Office for National Statistics will determine that the ECO should be considered in the same vein as the warm homes discount, the feed-in tariff and the renewable obligation. If it does, the ECO could be even more constricted and less than the figures that my hon. Friend is talking about.

Barry Gardiner: The shadow Minister is absolutely right that there has yet to be clarity on the issue, and clarity is vital. If we are to meet the targets that the Committee on Climate Change has set and the budgets, we must know that sufficient funds are available for the ECO to meet those targets. At present, my analysis and other analyses are quite clear that up to £22 billion is required, although an absolute cap of £1 billion might be provided under the ECO. As my hon. Friend suggests, that £1 billion might prove not to be a full £1 billion after all.

On new clause 9, the Secretary of State for Energy and Climate Change has estimated that the green deal will lead to employment in the sector increasing from 27,000 jobs currently to something approaching 250,000 jobs by 2020. That involves the creation of 27,875 jobs every year from the start of the green deal until 2020. Double the number of jobs that currently exist must be created every year. We heard earlier at Prime Minister’s Question Time about the latest unemployment figures and particularly the problems of youth unemployment. Of course, if those jobs were created, we would all welcome them, but there must be a doubt about these provisions.

In opposition, the Prime Minister called for a revolution in skills and training, so that the skills system responds far more effectively to the needs of individuals and businesses in a greener economy, but the recent green economy road map recognises the importance of that and refers to the introduction of new skills for a green economy and the grouping of sector skills councils to help businesses understand the changing skills requirement. It is crucial that that new grouping of sector skills councils supports the development of the additional 27,875 jobs every year between now and 2020. It would be of considerable interest to the House if the Minister explained what financial provision will be made to the sector skills councils to enable that sort of expansion—a tenfold expansion—to take place in the next nine years.

Gregory Barker: I should like to start by thanking the hon. Member for Brighton, Pavilion (Caroline Lucas) for tabling amendments 49 and 50 and my hon. Friends the Members for Manchester, Withington (Mr Leech) and for Brigg and Goole (Andrew Percy) for tabling amendment 28.

Amendment 49 would require that any energy efficiency services provided or products sold by green deal participants, in addition to those paid for with green deal finance, should be subject to the green deal regulatory framework. It is important to note that the green deal is an innovative form of finance agreement that is attached to the meter and therefore passes between bill payers. I think that we all understand that. So it needs specific protections, which are not necessarily relevant to those who do not take out the green deal.

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I should like to assure hon. Members that we intend to require customers to be made fully aware of the difference between offers that fall under the green deal scheme, with all its specific safeguards, and those that fall outside. However, many of the forms of mis-selling that rightly concern the House can be prosecuted already under existing general consumer protection legislation. We will not accept companies using green deal accreditation as cover for less appropriate goods and services.

Amendment 50 would ensure that recommendations and estimated costs and savings are clearly and transparently communicated to the consumer as part of the green deal plan, thus enabling customers to compare offers. I should like to reassure hon. Members that we intend to require green deal providers to set out clearly how the proposed savings and costs meet the golden rule principle, as enabled by the power in clauses 4 and 5. I urge hon. Members to look specifically at clause 5.

In addition, the Consumer Credit Act 1974 will apply to domestic green deal plans in full, bar a few essential amendments, thus ensuring robust consumer protection, and it already regulates the provision of information to consumers who enter into credit arrangements.

Caroline Lucas: I wonder whether the Minister can clarify things a little further. On amendment 50 and comparability, is he saying that there are some guidelines somewhere that will ensure that many different green deal providers will be required to present the savings that are likely to accrue from investing in a green deal package in a similar way, so that they are genuinely comparable? On amendment 49, if a green deal assessor goes in and after a big assessment the householder decides not to take a green deal finance package but to pay up front, will they be unable to access things such as an advice line?

Gregory Barker: Such people can certainly access the advice line. If people choose to pay in full and not to take finance agreements, they will not be any less covered by the accreditation of all green deal service providers and the protection and warranties that go with all green deal products. We must not forget that the green deal is not just about financial arrangements where consumer protection kicks in. We will set out in further detail in secondary legislation, which hon. Members will thoroughly scrutinise, and go to great lengths to ensure that there is a rigorous consumer protection element to the accreditation of all services that are green deal applicable. That will apply whether or not they are financed by consumer credit. Obviously, all products must be specified and approved for use under the green deal to ensure that they meet the golden rule.

Barry Gardiner: I welcome the fact that the Minister has said that customers and consumers will be protected by consumer credit legislation, and I welcome the fact that robust secondary legislation outlining further protections will be put in place. Will he tell the House at this stage whether he believes that consumers will be protected by the legislation that applies to the financial services industry so that an adviser can act either as a tied agent or as an independent agent, but not mix and match the two roles—at least not in the same consultation?

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If that protection is not provided by existing legislation, will he ensure that it is introduced in the secondary legislation to which he referred?

Gregory Barker: We will have to disagree on this. I understand the protections that the hon. Gentleman is trying to insert into the Bill, but I take a slightly more optimistic view of the potential both for introducing competition in the green deal process and for home improvement.

The biggest driver for take-up—and this is different from the German experience—is not concern about climate change and, surprisingly, it is not even concern about saving money on energy bills. The consumer research that our stakeholder forums have commissioned is revealing, because the majority of consumers said that the biggest factor in their taking up the green deal would be a desire to make their home nicer. That may seem counter-intuitive and surprising, given the high cost of energy, but more than half of respondents indicated that home improvement was the driving force. We need to harness that, and it is little wonder that people failed to respond to energy companies that were not in the home improvement game. They will be responsive, however to new entrants to the market such as B & Q, Marks and Spencer, John Lewis and so on, which excel in offering aspirational consumer propositions. Many people will seek to improve their house, and see no contradiction in making improvements by purchasing new wallpaper and carpets while, at the same time, undertaking energy improvements. I regard this not as an either/or conflict, but as an opportunity to ride on the back of that motivation. Rather than offering a hairshirt proposition, we should harness the inherent instincts of the British public to improve their home, and make it both nicer and warmer.

I welcome the arrival in the market of a host of new players offering additional propositions for home improvement that fall outside strict energy efficiency measures, because that will draw in more people and catch their interest, but—and it is an important but—we must ensure that the integrity of the independent assessment is upheld. We must ensure that there is no inappropriate cold calling or hard selling in the home, which is why we will thoroughly review the measures that are in place. If the evidence shows that they are not sufficient, we will introduce strong codes of practice and ensure that assessments are thoroughly independent. However, I do not share the pessimism of the hon. Member for Brent North (Barry Gardiner), or his reluctance to introduce the two measures alongside each other. As long as that is done in a thoroughly transparent and responsible way, it could be a benefit, rather than a negative.

2.15 pm

Barry Gardiner: The Minister has said that in his view the green deal is market driven—that is a fundamental difference from the German scheme—so investment by commercial companies will propel the scheme forward. He is telling the House that, in a sense, it is driven principally by the profits that those companies will make. It is not driven by the imperative of increased energy efficiency, or by the need to meet the carbon budgets set by the Committee on Climate Change, or by the need to address fuel poverty. It is driven by the

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profit motive. I am willing to capture the drive that the market can bring, but the focus of the scheme, as set out by the Minister, is fundamentally wrong.

Gregory Barker: I know that the hon. Gentleman is not quite an unreconstructed, planned-economy socialist, but he is confusing means with ends. The purpose of the green deal—our starting point and our end point—is to meet our carbon budgets and fulfil our legal and statutory obligations under the Climate Change Act 2008, which was introduced with the support of Members in all parts of the House. For decades, we have singularly failed to drive effective home energy efficiency and, come to that, energy efficiency in the business and industrial sectors. Given the size of the deficit and the burden on the public purse, we are living in cloud cuckoo land if we imagine that we would drive down carbon emissions and transform home and business energy efficiency if we left the private sector untapped. We will achieve our objectives only if we harness effectively the power of the private sector. Of course, people will make profits, but provided that that is transparent and fair, I do not have a problem with it. It is called job and wealth creation, and spreading that widely. We do not have enough wealth creation in the UK—we need more—and the green deal will be an incredibly important vehicle in helping us to rebalance our economy and making us more efficient.

We should not ignore that, but it does not detract from the fact that the central aim of the legislation is to allow us to meet our stretching carbon reduction targets. The coalition is absolutely committed to doing so, and the green deal is the means to that end, so we should not confuse the two as the hon. Gentleman did.

Amendment 28, which was tabled by the hon. Member for Manchester, Withington and my hon. Friend the Member for Brigg and Goole, seeks to ensure that we have powers to place restrictions on interest rates that can be offered as part of the green deal plan. I understand the concerns that my hon. Friend the Member for Brigg and Goole articulated in his thoughtful speech, but I can assure him and other hon. Members that clause 5(1)(b) already provides the power—we accept the point that the hon. Gentleman is making—to limit interest rate structures that can be applied to green deal plans. It will not be possible to create a valid green deal plan, unless it specifically complies with the conditions contained in, or made under, clause 5.

The green deal is a market mechanism, and the golden-rule principle will create a natural incentive to drive down costs, so the Government do not intend to place restrictions on the level of interest charged. However, we are considering broader restrictions to ensure that green deal plans are equitable not just for the first but for all subsequent bill payers. This could mean limiting interest rate structures offered to domestic customers to those with the greatest likelihood of the golden rule being met in the first and subsequent years, and we will be consulting on what is quite a complicated area, not just with stakeholders in the financial services sector, but with all concerned stakeholders.

I would certainly welcome the thoughtful input from Members on both sides of the House into this important area of how we ensure we get the most competitive interest rate for the consumer. I invite my hon. Friend the Member for Brigg and Goole, the hon. Member for

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Manchester, Withington, and other hon. Members who have spoken in the debate and expressed legitimate concerns, to meet my officials so that we can ensure that we take notice of their concerns and take advantage of some of their ideas. I hope that I have been clear throughout proceedings on the Bill that we do not have a monopoly on the best ideas. As we develop the fine detail of the green deal, I am more than happy to work with them.

We recognise that the interest rate is only one of the drivers of affordability. We do not want unnecessarily to focus just on the interest rate. The actual cost of the products, particularly things like solid wall insulation, will be a key driver. Replacement windows are in a very exciting place. For the first time, because of technical innovation and the increased thermal value of new glazing, and because prices are coming down, we can anticipate that we will be able to include glazing in windows. Consumer-facing home improvements will come within the remit of the green deal, and make it much more attractive. The green deal will not just be about out of sight, out of mind, hidden interventions in a household, but about things that people will really value on a day-to-day basis.

Ian Lavery: Will the Minister give a categorical guarantee that anyone who cannot pay the green deal part of the bill will not have their supply disconnected?

Gregory Barker: The hon. Gentleman’s question is predicated on a misunderstanding. It will simply not be possible for any consumer, poor or rich, to disaggregate their bill payments for the green deal, other charges and the energy consumed. There will not be that opportunity to withhold green deal payments, just as one cannot refuse to pay transmission charges or other levies that are included on the consumer bill. That will not be an option for them.

Caroline Lucas: Will the Minister confirm that he is still leaving the door open to using the green investment bank to support and subsidise the interest rates? I am not clear what he is saying specifically about the green investment bank.

Gregory Barker: That is a very important point. I do not rule it out completely. It is unnecessary to do so at this stage. But we do not anticipate that it will be necessary, and it is certainly not part of our planning and budgeting. Rather than the green investment bank subsidising interest rates at the consumer end of the journey, it is more likely that it will play a role in helping to pump-prime the liquidity in the bond market when we first see companies taking these aggregated packages of green deal finance and seeking to offer them into the bond market as new securitised products. In the long term, there is an exciting future, and there will be a lot of strong institutional demand for such products.

The conversations that we have had with the largest city institutions and banks have been encouraging and we have set up a working group. Short-term interventions to aid initial liquidity are more likely to be a fruitful use of green investment bank money. Although the coalition Government have promised £3 billion, substantially more than anyone anticipated at the general election, to fund this new important piece of financial architecture

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in the City of London, which will make a substantial difference to our economy and drive green growth, that money can be spent only once. The key to the green investment bank priorities must be to address market failure. We cannot keep spending that money time after time. There are many demands on the green investment bank funding, and if the market, as we believe, is capable of supplying competitive interest rates in a way that is affordable to most consumers, supported by the ECO subsidy, it would be quite wrong to use green investment bank money when we clearly need to prioritise other areas of the low-carbon economy as well.

Likewise, as the hon. Lady can imagine, DECC is pushing for an ambitious ECO. This is a huge opportunity that is extremely cost-effective, and in terms of the hierarchy of spend on the low-carbon transition, the ECO represents incredibly good value, particularly compared with forms of low-carbon generation; but, again, the ECO comes out of consumers’ bills, and there is a balance to be struck. We cannot keep pushing up the ECO, because ultimately that will start to become regressive. When the coalition came into government, we took steps to reduce consumers’ bills by taking off the cost of funding the CCS programme and taking it into general taxation. We took measures to ensure that the renewable heat programme would be funded not through consumers’ bills but out of general taxation, and that is a progressive measure. We have to ensure that we get the right balance and have an ECO that is good for consumers and does the job. We cannot treat it as a magic pot of money. It is paid by every energy bill payer, and more than ever, as world energy prices go up, they are scrutinising bills to ensure that they are getting good value for money.

Dr Whitehead: When the Minister says that he is pushing for a generous ECO, does he mean that he is pushing the Treasury to raise the cap that it has set on levies; that he is trying to ensure that the ECO is as generous as possible within the cap; that the ECO should remain outside the cap and therefore can be as large as he might wish to make it; or that the cap overall ought not to be referred further to the Office for National Statistics for a determination on whether the ECO is inside it at all?

Gregory Barker: All those issues are the subject of a constructive and thoughtful conversation between my Department and the Treasury.

Luciana Berger: The Minister has said that interest rates are just one element, and we have argued that it is integral and crucial to whether the green deal will deliver, not only because of the affordability of products—if the interest rate is 8% or more, very few products will fall within the golden rule, and if it is 6% or more, a few more will be added but some of the more ambitious measures would not be included—but most importantly because of public uptake. According to the Great British Refurb campaign study and polling of the public, just 7% of the public said that they would take up the green deal if the interest rate was 6% or more. The Government will not meet their ambition of reaching 14 million homes by 2020 if the interest rate is too high.

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Gregory Barker: There will be a commercial consideration involved, because those matters are not lost on participants who want to carve out a large piece of what will be a substantial market. The interest rate is only one element of the cost. If the product bought is expensive, it does not matter if the interest rate is low. If a product is £1,000 and one is asked to pay an interest rate of 7%, would that be preferable to a product that costs £600 on which one pays 8%? There are many more variables than the absolute interest rate.

Customers will be looking for the absolute savings, taking into account the overall desirability of the package that they are being offered. The industry and new entrants will be looking at which of the levers they are most responsive to. I have no doubt that some companies will offer zero interest rate propositions. It is already possible to grab a sofa in the market and pay nothing until Easter or bank holiday Monday next year, and even then it may be with 0% finance. However, we know, because we are not stupid, that we invariably pay more in such offers than the actual price being offered. A sophisticated blend of different costs will be taken into consideration.

2.30 pm

I understand what the hon. Member for Liverpool, Wavertree says, but ultimately consumers will want to know that the actual savings they make will be substantially greater than the cost of doing the green deal, and then of course they will want to unpick the green deal to ensure that they will get value right the way through the chain. Incidentally, I have here the latest draft of the new energy performance certificate, which I am really pleased with. It is still a work in progress, but I will happily share it offline with hon. Ladies and Gentlemen.

I think that the competitive market will be rather more sophisticated and will be able to fish out where consumers will look. I am not dismissing the hon. Lady’s claims. If borrowing is not available at competitive rates, that will clearly have an impact on the green deal, but our working assumption, which is based not on pie-in-the-sky figures formulated in DECC but on the detailed work done by our stakeholder working groups, with financial sector involvement and with my excellent officials, is that the interest rate, although challenging, will not be a barrier to successful take-up of the green deal.

Luciana Berger: We are obviously aware of the stakeholder groups and the consultations going on in DECC, but as far as I am aware only one or two consumer groups are involved, and the majority of organisations taking part in those discussions are businesses. None of the businesses I have spoken with has indicated that it will seek to present a 0% interest rate on its green deal package. Returning to the polling I just asked the Minister about, does he accept the polling from the Great British Refurb campaign, which indicates that only 7% of the British public would take up the green deal if the interest rate was 6% or more? All the organisations we have spoken with have indicated that the interest rate would be at that level or above.

Gregory Barker: I am afraid that the hon. Lady is wrong. We have a huge degree of engagement with consumer groups. All the obvious consumer groups

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have been involved heavily in formulating different parts of the green deal, and that work is ongoing. I have not seen the particular research she mentions, but we have certainly had involvement from Which?, Citizens Advice and Consumer Focus, as well as from sophisticated investors and institutions in the City of London. I do not expect offers to appear until October next year, and it is most unlikely that ambitious new entrants in the market will declare their hand so far in advance: they will wait to see how the market shapes up and look at their competitors before revealing their offers. That is my expectation, which is based on observing what else happens in the market, rather than on what stakeholders have said to me at DECC.

Barry Gardiner: The Minister has explained candidly that the ECO is a regressive measure that will be imposed on general utility bill payers and that it will be an additional cost for them. He has also alluded to the fact that the Government removed the cost of carbon capture and storage from those bills on coming into office. Will he give an undertaking that the additional amount he proposes to impose on bill payers through the ECO will not be greater than what he and his Government have already taken off bill payers through their previous measures? He talks of securitisation in the bond markets, but will he explain how a default rate can be estimated, given his assertion that there will be no possibility of defaulting on that part of the bill?

Gregory Barker: The default rate will be the same as the standard default rate for electricity bills generally, which is a very low percentage. It is probably higher in the present economic circumstances, but when averaged out over a decade, it is very low compared with other instances, and it will not be extrapolated out of that. On the ECO, the hon. Gentleman seems to be trying to have his cake and eat it. The bottom line is that there is no magic source of money; it all has to come from somewhere and ultimately that is the taxpayer and the consumer, who are basically the same person in this context. We have to be very responsible and we are constantly looking for ways to lighten the load for hard-pressed consumers, who are concerned about rising energy costs.

We will publish in the autumn our expectations of how DECC policies, taken together, will impact on consumers through to 2020. The results of the early work are extremely encouraging. These things must be seen in the round—one strand of policy cannot be taken out as though it was part of a Woolworths pick ’n’ mix. We have to take the energy efficiency measures, the levies and our other measures to encourage greater competition in the energy sector as a whole. We will publish that in the autumn, when I am sure the hon. Gentleman will have an opportunity to quiz the Secretary of State.

Caroline Lucas: The Minister rightly says that there is no magic pot of money, but there are certainly progressive and regressive ways of doing this. Does he agree that putting a levy on all consumer bills, irrespective of the financial situation of the householder, is inherently regressive? Indeed, the impact assessment of the 2009 extension of the carbon emissions reduction target showed that using a levy actually pushed more people into poverty than were pulled out as a result of the CERT money.

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Gregory Barker: The hon. Lady makes an indisputable point. We are mindful of the mistakes made by the previous Labour Government, which resulted in a succession of levies being put on consumer bills without any thought to the long and short-term impact on the vulnerable. That is one reason why we saw such a steep rise in the number of people living in fuel poverty, which increased by millions during the last Parliament alone. It is a difficult balance to strike, and I can understand why Ministers took those decisions, because they had to find the money from somewhere. We are certainly very mindful of the point she raises, which is why, as the hon. Member for Brent North said earlier, we have taken steps to remove the levy for CCS and the renewable heat incentive levy from the bills. The Treasury will insist on clear value for money and due consideration of the impact on those who are least able to pay when we finally settle on the exact figure of the ECO, which will replace the CERT funding.

Amendment 27 tabled by the hon. Member for Brighton, Pavilion, and amendment 45 tabled by the hon. Member for Manchester, Withington, deal with the collection of green deal payments. Allowing either energy bill to be used to collect the green deal charge looks attractive. I asked the very same questions myself and got exactly the same initial response as the hon. Lady, but the devil is in the detail and close analysis reveals significant problems. Requiring gas suppliers as well as electricity suppliers to facilitate the collection of green deal charges, which seems the obvious thing to do, given that heating is the larger element, substantially increases the implementation costs.

I really pushed back on that in the early stages of policy implementation, but our findings indicate that it could increase the implementation costs by up to 50%, which would ultimately be passed on to consumers, mainly because most energy suppliers have separate gas and electricity billing systems. Introducing a choice between collection of the green deal charge via electricity or gas, however desirable—I am all in favour of greater consumer choice—would require regulating two groups of companies rather than one, which would increase the risk of implementation failure and potentially cause a delay to the launch of the green deal in autumn 2012. Auditing payment flows would also be more difficult, because there would then be two possible routes through which the funding might flow.

The idea of allowing the occupier of a property with a green deal plan to switch collection methods at any point also prompted considerable concern in the industry. It would increase the possibility of billing inaccuracies, which in extreme cases could increase disconnections, which I know we all want to avoid, as well as increase the overall risk premium and push up interest rates, which we obviously want to keep as low as possible. I will return in a minute to the issue of disconnection.

That leaves collection only by electricity or by gas; fundamentally, it comes down to an either/or situation. I agree with the hon. Member for Brighton, Pavilion that gas seems the obvious choice, but collection via gas bills would automatically exclude the possibility of billing in that way the 4.3 million households that are off the mains gas grid when they access green deal finance for energy efficiency measures. Many of those properties are in rural communities, and it is important to the

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coalition that the green deal be available to both rural and urban communities. In contrast, almost all properties in Great Britain are connected to the electricity grid.

The change proposed would also raise the possibility of customers paying summer gas bills that are significantly higher than those before the green deal plan was taken out, which could be very difficult for many low-income families who are prepayment customers and not used to paying large amounts on their gas bill over the summer months. Many breathe a sigh of relief as they reach spring and have that little extra give in the family budget as a result of not having constantly to load their gas prepayment meter. It would be most problematic for prepayment customers on gas, who would then be expected to carry on paying charges equally through the summer, when normally they do not.

We still have a lot more work to do to deal with the iniquity of billing, whereby people on prepayment meters and low incomes often end up paying a higher tariff, so for the foreseeable future it makes sense to ensure that the charge is levelled out across the electricity bill, where we see far fewer lumpy payments, spikes and troughs.

Barry Gardiner: Does the Minister accept that, if we are really to reduce fuel poverty, we need to place the first units on the cheapest tariff, so that those who use least energy pay least for it, instead of, as happens now, their paying most for the first bundle and paying less the more they consume? They should pay least for the smallest amount and, as they increase their consumption, pay more per unit.

Gregory Barker: I am of course familiar with that argument of rising block tariffs, but that too has unintended consequences, which often hit pensioners in particular. However, I think I would be ruled out of order if I lurched into a discussion of tariffs, which are not necessarily the subject of the amendments before us.

We are left with collection via electricity bills as the only practical solution. The Government accept that that requires measures to strengthen the cognitive link between the green deal charge and energy savings, which in many cases will be realised on the gas bill. That is why the Government plan two requirements to increase the link between the two. First, for the 14.8 million households that receive their gas and electricity from the same supplier, the Government plan to introduce a requirement on energy suppliers to provide a combined energy bill, with the charges for gas and electricity supply and the green deal charge clearly identified on the front page. Secondly, the Government will introduce a requirement for electricity suppliers to reproduce the estimated savings from the green deal assessment on the green deal customer’s annual energy statement.

On the issue of disconnection, it is important that the green deal charge is treated in the same way as normal energy bill payments, so that defaults are kept to an absolute minimum and low-cost finance can be offered. I do not expect the green deal to increase disconnection, given the protection of the golden rule principle.

2.45 pm

Luciana Berger rose

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Gregory Barker: I shall give way to the hon. Lady, but then I really do need to make some progress so that we can get on to other parts of the Bill.

Luciana Berger: I am grateful to the Minister for stating the developments for those customers who have the same energy provider for their electricity and gas supply. He says there are 14.8 million of them, but my question, which came up in Committee, is about those customers who have different providers for electricity and for gas. What will happen to them? How will they be able to measure the savings across their two bills? My conversations with many energy providers tell me that their systems do not currently speak to each other, and that to make them to do so would cost a great deal.

Gregory Barker: There will be access to the energy annual statement, which will make that crystal clear.

Energy suppliers are already prohibited from disconnecting households in the winter months when they know or have reason to believe that the customer is a pensioner or lives with pensioners or with those under 18 years old. We plan to extend those protections to the non-payment of green deal charges.

We have had a very good debate. I have commented on the green investment bank to make clear the Government’s views on what appropriate interventions for the green investment bank would be. Although we understand the intention behind new clause 8, we will not support it. I hope that the hon. Member for Brighton, Pavilion is reassured by my explanation and will not press her amendments 26, 27, 49 and 50 or new clause 8; and that the hon. Member for Manchester, Withington and my hon. Friend the Member for Brigg and Goole are similarly reassured on amendment 28. I hope also that the hon. Member for Manchester, Withington found my explanation regarding amendment 45 equally compelling and will not press that, either. I urge the House to support Government amendments 29 to 34 and 36 and new clause 10.

Question put and agreed to.

New clause 10 accordingly read a Second time, and added to the Bill.

New Clause 11

Agreement about modifying decommissioning programme

‘(1) Section 46 of the Energy Act 2008 (approval of a decommissioning programme) is amended as follows.

(2) After subsection (3) insert—

“(3A) When approving a programme the Secretary of State may agree to exercise, or not to exercise, the section 48 power—

(a) in a particular manner;

(b) within a particular period.

(3B) An agreement under subsection (3A) may subsequently be amended by the Secretary of State and the other party to the agreement.

(3C) The Secretary of State may not make such an agreement or amend such an agreement unless satisfied that the agreement (or the agreement as amended) includes adequate provision for the modification of the programme in the event that the provision made by it for the technical matters (including the financing of the designated technical matters) ceases to be prudent.

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(3D) Provision in such an agreement (including the provision mentioned in subsection (3C)) may include provision—

(a) for a determination by a third party in relation to a relevant matter specified in the agreement, and

(b) for the Secretary of State to be bound by such a determination.

(3E) A “relevant matter” is a matter relating to the provision made by the programme for the technical matters.

(3F) Subsections (3A) to (3D) apply notwithstanding that the agreement or amendment fetters the Secretary of State’s discretion.

(3G) In subsection (3A) “section 48 power” means the power of the Secretary of State under section 48 to propose a modification of the programme or a modification of the conditions to which the approval of the programme is subject.”

(3) In subsection (4) for “(3)” substitute “(3B)”.’.—(Charles Hendry.)

Brought up, and read the First time.

The Minister of State, Department of Energy and Climate Change (Charles Hendry): I beg to move, That the clause be read a Second time.

Mr Deputy Speaker (Mr Nigel Evans): With this it will be convenient to discuss the following:

Amendment (a) to new clause11, line 5 leave out ‘, or not to exercise,’.

Amendment (b) to new clause 11, line 9 leave out

‘and the other party to the agreement’.

Amendment (c) to new clause 11, line 15 leave out ‘prudent.’ and insert

‘adequate to protect the interests of the public and taxpayers.’.

Government new clause 12—Adjustment of electricity transmission charges. Government new clause 13— Consultation.

New clause 17—Proposal for modification of approved programme—

‘(1) Section 48 of the Energy Act 2008 (approval of decommissioning programme) is amended as follows.

(2) In paragraph (2)(c) leave out “(provided that the site operator consents to the proposed modification)”.

(3) In subsection (3) leave out “, in particular,” and insert “only”.

(4) In paragraph (3)(a) leave out second “, or” and insert “.”.

(5) Leave out paragraph (3)(b).’.

Government amendments 35, 37, 38 and 39.

Amendment 51, page 93, line 33, in clause 115, leave out paragraph (a).

Government amendments 40 to 44.

Charles Hendry: We now move on to a series of technical and miscellaneous new clauses and amendments, which cover nuclear decommissioning transmission charging, the process of consultation and the Home Energy Conservation Act 1995 and how it applies in Scotland.

I shall first address the issue of the nuclear decommissioning programmes. In Committee, hon. Members raised concerns about how any agreement that sets out the manner in which the Secretary of State will, or will not, exercise his power to propose a modification to an approved programme will deal with “unforeseen circumstances” in the future. I have listened very carefully to hon. Members’ concerns, we have had very useful

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meetings and I am very grateful for the constructive way in which they have engaged to ensure that we have a new clause that is acceptable to both sides.

I recognise that the funded decommissioning programme and any agreement entered into under the new clause are very long-term arrangements, and that the arrangements will need to take account of “unforeseen circumstances” that may arise in the future.

In the light of the Committee’s concerns, we wish with new clause 11 to amend the relevant measure in order to require that the Secretary of State enter into an agreement only when he is satisfied that it includes adequate provision for the modification of a programme if the programme no longer secures prudent provision for the liabilities.

Let us be clear: we would not impose an additional test to the existing requirement that the Secretary of State must be satisfied that the programme and the agreement as a whole secure prudent provision for the liabilities. The new clause would make it explicit that, as part of ensuring prudent provision, the Secretary of State needed to be satisfied with the arrangements for making modifications to the programme when he entered into the agreement.

Caroline Lucas: Will the Minister be a little more precise about the exact definition of the word “prudent” in this context?

Charles Hendry: We have chosen to use the word “prudent” not only because it is a concept that is established in law but because it was important to give the Secretary of State the ability to decide, in future, whether something has ceased to be prudent. We looked at some of the wording that had been discussed in Committee relating to unforeseen circumstances and moved away from that because we were concerned that the legal debate would then be about whether something was foreseen or unforeseen. If people could point to one speech by a Minister who had talked about such issues, then nobody could say that they were unforeseen because they had been discussed in this House. I will clarify that further in a few moments.

It is clear that over the years foreseen and, potentially, unforeseen events will occur that may require modification of the arrangements set out in the programme. The new clause is not limited to unforeseen circumstances, but when the Secretary of State enters the agreement he will need to be satisfied with the arrangements for modifying the programme when it is no longer prudent, be that in unforeseen circumstances or those which were foreseen. The new clause also allows the agreement to set out matters that may be determined by a third party, and for the Secretary of State, if he so agrees, to be bound by that determination. This provides reassurance to operators that there can be a mutually agreed and mutually binding process between the Secretary of State and the operator where disputes can be resolved in an impartial manner. Such a third party would need to be impartial and independent of the operator and the Secretary of State. In addition, both parties would need to be satisfied that the third party in question had the expertise to perform the role required of them. The exact terms of the agreement, including any process for third-party determination, and the method for appointing

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a third party will be decided on a case-by-case basis with the operator and after taking into account the programme submitted by that operator.

I turn now to amendments (a), (b) and (c) to new clause 11, which are in the name of the hon. Member for Brighton, Pavilion (Caroline Lucas). Under amendment (a), the Secretary of State would not be able to set out in the agreement when he would not use his section 48 power. This would leave him with broad scope to use his section 48 powers and so render the agreement ineffective from the perspective of providing investor confidence, which is the whole purpose. Amendment (b) would have the same effect. Amendment (c), which would omit the word “prudent” and insert

“adequate to protect the interests of the public and taxpayers”,

would not provide further protection for the taxpayer. Arguably, it would reduce protection by introducing a looser term that could be subject to conflicting interpretations and be inconsistent with the rest of the Act, for which the test is prudence.

New clause 17 would amend subsection (2)(c) of section 48 of the Energy Act 2008. That would have the effect of allowing others with obligations under the programme to propose modifications to a site operator’s programme without first seeking their consent. It is clearly unreasonable, we believe, to expect an operator to agree to this. In any case, the Secretary of State would need to seek the views of the site operator and take those views on board before deciding whether to approve the modification.

There is also a legal issue involved in the new clause. The effect of modifying subsection (3) of section 48 in this way would probably be exactly the opposite of what the hon. Member for Brighton, Pavilion intends. Under the Act, if it were amended as proposed, the Secretary of State would be able to impose obligations only on an associate of the operator and not the operator itself. Modifying subsection (3)(a) and removing subsection (3)(b) altogether would mean that obligations placed on an associate of the operator could not be removed even if, for example, those obligations were no longer relevant because they had been fulfilled. This is clearly inappropriate and impracticable. On that basis, I hope that the hon. Lady feels sufficiently reassured to withdraw the amendments.

I will now speak to Government new clauses 12, 41 and 44, which relate to transmission of renewable electricity and the role that renewable generators in peripheral parts of Great Britain could play in meeting low carbon energy targets. Section 185 of the Energy Act 2004 allows the Secretary of State to introduce a scheme adjusting transmission charges in a particular area of the country to help to mitigate any material hindrance to renewables development caused by these charges. Section 185 was introduced to address concerns that a GB-wide charging regime for the electricity transmission network might hinder the development of renewable generation in a particular area of the United Kingdom—for example, in the north of Scotland and the Scottish islands. Under the regime, transmission charges are cost-reflective. In effect, the further electricity has to travel, the higher the transmission charges.

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Any scheme introduced under section 185 can be applied for up to 10 years—an initial period of no more than five years with renewal for up to five further years. Currently, any scheme must terminate by October 2024. The new clauses merely extend that time limit until 4 October 2034. This power has never been exercised, and it is possible that a review of the transmission charging regime currently being carried out by Ofgem under Project TransmiT will address any perceived problems in other ways. However, it is not certain that Ofgem’s review will address all such perceived problems in every case—for example, renewable generation on the Scottish islands, where forecast transmission charges are significantly higher than elsewhere in Great Britain. The lead times of proposed developments also mean that no renewable generators on the Scottish islands will be connected to the transmission network by October 2014, and so they would not be in a position to benefit from the full possible extent of any section 185 scheme. It therefore makes sense now to extend the sunset clause by 10 years to October 2034. This will allow maximum flexibility to take account of the outcome of Ofgem’s review and give developers time to bring forward renewable generation and associated transmission links without concerns of exceeding the current 2024 deadline.

Government amendments 43 and 51 relate to the Home Energy Conservation Act 1995. As hon. Members know, having listened to concerns raised during the passage of the Bill, the Government were convinced of the desirability of retaining HECA in England, and this was agreed in Committee on 21 June. Schedule 3 makes a number of amendments that were necessary when HECA was being repealed. However, with HECA being retained, the consequential amendments listed in schedule 3 are no longer necessary. Government amendment 43 is therefore a purely technical amendment that I hope raises no issues of concern for hon. Members.

Regarding amendment 51, I would like to reassure the hon. Members for Kilmarnock and Loudoun (Cathy Jamieson) and for Rutherglen and Hamilton West (Tom Greatrex) that we have fully consulted colleagues in the Scottish Government during the development and passage of the Bill. The intention to repeal HECA in Scotland was at the request of Scottish Ministers, who indicated that they believe that the Climate Change (Scotland) Act 2009, together with the local housing strategy guidance, will be sufficient to ensure appropriate promotion of energy efficiency and the opportunities that the green deal will bring to this. On that basis, I hope that the hon. Members can withdraw their amendment.

Mr Mike Weir (Angus) (SNP): Will the Minister confirm that the repeal was part of the legislative competence motion passed by the Scottish Parliament?

Charles Hendry: The hon. Gentleman is absolutely right. This is a devolved matter that we have discussed with the Scottish Government. We are implementing this measure as the easiest and quickest way of delivering on that.

Finally, I refer to a small set of Government amendments regarding consultation—Government new clause 13 and consequential Government amendments 35, 37, 38 and 39. The purpose of the new clause is to ensure that consultation with key stakeholders carried out before, as well as after, Royal Assent can contribute towards

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fulfilling the various statutory consultation duties that arise under, or by virtue of, the Bill. Consulting stakeholders is an important part of developing and implementing any policy. Throughout the Bill, there are several provisions that impose a statutory requirement to consult before exercising powers to make secondary legislation. These include, for example, consultation with devolved Administrations or energy companies. In many cases, the consultation requirement can be satisfied by a consultation that takes place before, as well as after, the passing of the Bill. The new clause seeks to ensure parity of approach throughout the Bill.

I hope that I have assured hon. Members that the Government have listened during the passage of the Bill, and I urge them to support our amendments. Similarly, I hope that I have reassured them sufficiently that they feel able to withdraw their amendments.

Caroline Lucas: I am seeking to amend new clause 11, which was based on a clause that was withdrawn by the Government in Committee because of cross-party concerns. I have not been fully reassured by what the Minister has said about the new clause, which has not met all those concerns. My amendments therefore seek to ensure that the Secretary of State cannot decide not to exercise his powers to modify a nuclear decommissioning programme; that a nuclear decommissioning programme can be modified only by the Secretary of State on his own, not working with an operator; and that we clarify what is meant by the word “prudent”. The Minister has helpfully expanded on that term so I feel a little reassured, although I still think that it is a little open.

3 pm

In new clause 17, I am seeking to amend section 48 of the Energy Act 2008 to ensure that a third party to a nuclear decommissioning programme can propose a modification of it without the consent of the site operator. I make it very clear that it is still the Secretary of State alone who can modify it. I am not suggesting that the associate to the operator can do so. I suggest that they should be able to propose a modification, but that it remains the responsibility of the Secretary of State to decide whether to go ahead with that. I am also clear that changes should not include a reduction of the requirements.

We are not debating the pros and cons of nuclear power per se. The Minister knows very well that I am not a great fan of nuclear power. The debate is about whether the Government should be subsidising, more or less with a blank cheque, a nuclear renaissance in the UK, either directly or indirectly. Ministers know very well that the UK faces a £4 billion black hole in unavoidable nuclear decommissioning and waste costs, which the Secretary of State revealed soon after coming to office last year. At that time, he said the crisis was such that

“my department is not so much the department of energy and climate change, as the department of nuclear legacy and bits of other things”.

It was well reported at the time that there would be additional costs from rising expenditure on nuclear decommissioning and falling income due to the closure of ageing power plants. The Secretary of State went on to insist:

“I do not think it is possible for anyone responsibly to stand aside and say we are not going to deal with it. We just have to, but

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what we are effectively paying for here is decades of cheap nuclear electricity for which we have suddenly got a massive postdated bill.”

I could not have put it better myself. What clearer evidence of the long-term subsidy of nuclear power could there be?

It is not clear to me how Government new clause 11 will seriously address this problem. By limiting the Secretary of State’s power to place greater responsibility on a nuclear operator to meet the costs of decommissioning its plants, the new clause could even make the situation worse. It is because of the unpredictable nature of nuclear clean-ups and decommissioning that the Secretary of State must retain the option of adding to the liabilities of companies such as EDF, which boldly lobbied Committee members in support of the original clause 102.

Of course, the cost of an accident could be even higher than the cost of planned decommissioning. The Financial Times reported in April that Toshiba and GE Hitachi have both submitted proposals to clean up and decommission the Fukushima site on the basis that the process is likely to cost billions of dollars. The German Government’s estimate for a severe accident such as the one at Fukushima is €1 trillion. These are unimaginable figures. As a result, there are serious ongoing discussions about the need to raise the EU and UK’s nuclear accident liabilities ceiling from €143 million to €1 billion. As one can see, that still falls well short of the total cost.

I believe that limiting the Government’s power to introduce greater demands on nuclear power companies to cover higher decommissioning requirements could place greater financial burdens on taxpayers and amount to a back-door subsidy for nuclear. The Minister may say that such agreements could still be added under new clause 11. Although that might be technically true, a nuclear operator agreeing to add to its own responsibility for contingency or cost would be a classic case of turkeys voting for Christmas—it would be very unlikely to happen.

I tabled my amendments because I want the Secretary of State to retain the power to modify a decommissioning agreement on his or her own, without requiring the agreement of a plant operator. I also want to ensure that a decommissioning agreement can be modified only to ensure that obligations are added, not removed.

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op): I will make a few remarks about amendment 51.

This will perhaps be a rare moment of solidarity with Ministers, as I welcome the position that they have taken on the Home Energy Conservation Act 1995 as it applies to England. The Minister has moved on this issue since the publication of the Bill to retain the statutory provision requiring local authorities to report on their activity with regard to climate change in England. The Minister gave a strong statement on that. I will focus on the importance of the statutory provision.

The situation in Scotland will, of course, be somewhat different if HECA is repealed. I am well aware of the legislative consent motion that was passed in the Scottish Parliament in December 2010. I have no wish to suggest that the Scottish Parliament should not have responsibility for those matters, which are devolved.

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In the Public Bill Committee in June 2011, the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker) made the following statement, which has been reinforced today:

“After we consulted the Scottish and Welsh Administrations, they asked that we continue with the repeal of HECA on their behalf, so it will not apply in Scotland and Wales. The devolved Administrations will, however, continue to work with their local authorities to progress the national energy saving initiatives that they already have in place.”––[Official Report, Energy Public Bill Committee, 21 June 2011; c. 366-367.]

I raise this issue today because some of the energy conservation agencies and environmental lobby groups in Scotland are concerned that what has been put in place in Scotland does not meet the test that statutory guidance would have brought, because the new approach uses voluntary arrangements. While I again put it on the record that the Minister chose to continue the respect agenda for the devolved Administrations, I have some concerns that the Scottish Government and the Scottish Parliament have not fully understood what they need to do to ensure that local authorities continue to act appropriately.

The supplementary guidance on addressing climate change through local housing strategies was last issued by the Scottish Government in March 2011. That guidance accepts that since 1995, the main legislative instrument for addressing energy efficiency has been HECA, which placed a duty on local authorities to set out and report on energy conservation measures in residential accommodation in their areas.

Under HECA, councils have taken a wide range of initiatives to improve the energy efficiency of housing stock in their areas. For example, Glasgow city council developed a comprehensive strategy that included funding programmes, technical assessment tools and staff training programmes. As a result, the council reported that over the 10-year period since HECA was introduced, it achieved reductions of 30.4% in the total energy consumption of housing in its area and a 32% reduction in CO2 emissions.

The guidance from the Scottish Government states:

“While the progress made by local authorities in reducing emissions under HECA is recognised, in line with a commitment to reduce local authority reporting requirements the Scottish Government and COSLA have agreed that councils should no longer be required to report under the Act, and that instead they will address energy efficiency planning/greenhouse gas emission reduction within their Local Housing Strategies, and where relevant, in Single Outcome Agreements.”

Essentially, what has happened in Scotland is that there has been no statutory provision and that has been replaced by the use of single outcome agreements. For right hon. and hon. Members who are not aware, those are non-binding agreements that the Scottish Government sign up to with each of the 32 local authorities, if indeed one can sign up to a non-binding agreement. Instead of local authorities being required to report, there is now voluntary guidance and a take-it-or-leave-it approach. One can see why some agencies are concerned.

Some of the areas that the Scottish Government, with all due respect to them, thought would be included in the local authorities’ single outcome agreements, perhaps because there was passing mention of them,

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such as class sizes, teacher numbers and the sale of playing fields, have proved simply to have been warm words, rather than things that were achieved.

Recently, the Scottish Government raised the issue of the future of HECA in their consultation on the energy efficiency action plan. There were a fairly small number of responses—only 28 in total. The majority of those understood that it was time to change HECA and wanted to replace it with a duty on local authorities to report on energy efficiency.

That brings us to amendment 51, which would keep the statutory provision for which HECA provides. I listened carefully to the Minister and I am sure that other Members from Scottish constituencies will have their own views on this. Perhaps it is time to update or replace HECA, as some people argue. I do have concerns about what has happened in Scotland. However, I have no wish to divide the House on this matter as I do not think that that would be helpful at this time. None the less, it is important to put the matter on the record.

Ongoing monitoring of strategies that will improve energy efficiency, reduce emissions and increase resilience to the consequences of climate change in the housing sector should be a priority in Scotland. I therefore hope that my former colleagues in the Scottish Parliament, and indeed the Scottish Government, who I am sure will be avid watchers of this debate, recognise that although they have gone a considerable way in the Climate Change (Scotland) Act 2009 and the voluntary guidance, they should none the less consider the issue again. The Scottish Government should recognise that the UK Government have listened to their request to remove HECA, take their responsibilities seriously, and look at reintroducing statutory provision in Scotland.

Huw Irranca-Davies (Ogmore) (Lab): I love it when we get to technical and miscellaneous amendments. They sound innocuous, but, as the Minister knows, there is a great deal of meat within the details—it is the sort of stuff that we love to agonise over. As we heard from both the hon. Member for Brighton, Pavilion (Caroline Lucas) and my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson), there are substantive issues within these proposals.

I shall turn my attention purely to one proposal—we support the Government’s proposals—because I want to pay the Minister and his team some compliments. In respect of Government new clause 11, there was a great deal of debate in Committee on the necessary balance to be struck between certainty for the investor community, and—this is paramount—protection for the taxpayer against the foreseen and unforeseen costs of decommissioning. After a great deal of debate and encouragement from the Committee, the Minister, quite worthily, agreed to remove his measure from the Bill and went away to discuss the options that he could bring back to the House.

I thank the Minister for the way in which he has engaged with Committee members and others, including my hon. Friend the Member for Southampton, Test (Dr Whitehead)—I must single him out. Some of his ideas, including on third-party engagement, have contributed significantly to the ideas behind, if not the drafting of, new clause 11.

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The new clause is not perfect, and it never will be, but it makes a very good fist of striking the right balance between looking after the needs of different stakeholders, and—I say this categorically—ensuring that we protect taxpayers. I look forward to the Minister’s response to the remarks of the hon. Member for Brighton, Pavilion, because she made some interesting points. I think the Minister has explained very well the use of the word “prudent”, but I am sure that he will address that and other issues that have been raised.

I thank the Minister, because this is how a Bill should evolve—through constructive engagement. Ministers should take measures away, think about them and listen to all the ideas on the table. He has come back with something that might not be perfect, but it is a massive improvement, on which he and his team are to be congratulated.

Mr Weir: I agree with my hon. Friend the Member for Brighton, Pavilion (Caroline Lucas) on nuclear power, which probably does not come as a great surprise to the Minister. I have nothing to add to what she said, because she made her case very well indeed.

I am glad to be able to support Government new clause 12, on transmission charges. It is a very sensible change. I await with interest the outcome of Operation TransmiT. Will Ofgem finally see sense and deal with transmission charges? I am not overburdened with confidence that it will do so, but one lives in hope.

I want to address the points that the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) made about the Home Energy Conservation Act 1995. I received a briefing on that from Friends of the Earth, the World Wide Fund for Nature, and the Association for the Conservation of Energy. I would normally be favourable towards those organisations, but I was not impressed by their briefing, which does not give a reason, other than an emotional one, on why HECA should not be repealed.

Very fairly, the hon. Lady said only that some organisations opposed the repeal of HECA, because some do not. Energy Action Scotland, for example, is much less convinced of HECA’s worth. That is the crux of the matter. She and I probably want to get to the same place, and my argument should be seen not as a political one, but one about the methods of getting there.

As I understand it, the Scottish Government want the repeal of HECA simply because they feel that it did not deliver. HECA places a duty on local authorities to set targets, but nothing over and above that. Out of the 32 local authorities in Scotland, only nine have set targets in the 16 years that HECA has been in operation. Despite the fact that the briefing I received describes HECA as the “main driver” for local authority action on energy saving over the past 15 years, the fact that so few local authorities set targets suggests that it was not particularly effective.

3.15 pm

Cathy Jamieson: One concern is that even if statutory provision did not act as a driver, a purely voluntary code of guidance would lead to local authorities putting energy saving even further down their list of priorities. Does the hon. Gentleman agree that it is important that the Scottish Government consider how to ensure that targets are set and delivered?

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Mr Weir: I agree that it is important that targets are set and delivered, but I do not agree that energy saving would necessarily be a lower priority under the guidance system, and I shall explain something about that. As the hon. Lady will know, the Scottish Parliament has often taken a different road from the UK Parliament—the central heating scheme is a classic illustration. Both the previous Administration in Scotland and the current Scottish National party Administration have taken different routes from the UK Government to deal with those matters.

The Scottish Government have decided that they will focus their efforts on each local authority’s housing strategy. As the hon. Lady rightly says, guidance has been issued. They are seeking to make it clear that that strategy and guidance are the driving force behind determining levels of investment in each local authority area—I believe that a significant piece of work was done in the highlands and islands on that basis.

The Scottish Government have also introduced Scottish housing quality standards, which every local authority and housing association must achieve by 2015, and for which an additional £1.5 billion will be spent over the next three years. In a recent case in my constituency, there was a difficulty with lack of insulation, and I took that up with the housing association. It is clear that it is very much aware of the need to react to the 2015 standard. I hope that that problem is resolved before the onset of winter, although time is running out.

The standard has already been achieved in 40% of housing in Scotland. There is still a long way to go, but that is a significant achievement. The standard assessment procedure rating achieved is 7, so clearly the standard is delivering what is necessary in those houses—it is much more effective than HECA in doing so.

In addition, the Scottish Parliament has passed the Climate Change (Scotland) Act 2009, which is acknowledged as world-leading legislation. The Act will drive much of what is done in Scotland. The £33 million energy assistance package has helped 150,000 people on low incomes to reduce their bills since 2009. One in six Scottish homes—a total of 145,000—have been visited for a home energy check, and there have been almost 18,000 installations. The EAP has been extended to help the most vulnerable. In addition to helping pensioners, the scheme has been extended to include disabled families with children under five, disabled children under 16, those with severe disabilities, and those who are terminally ill. The £50 million warm homes fund will also be introduced to help.

In addition to the EAP, the Scottish Government are providing £12.5 million in 2011-12 to support local councils to deliver area-based insulation to save households money, reduce emissions and tackle fuel poverty. It is hoped that councils will target areas across the country that are most in need of free insulation and other energy efficiency measures. The Scottish Government are working with local authorities to help to target the areas that are most in need, which is very much welcomed by Energy Action Scotland.

I am pleased to hear that the hon. Member for Kilmarnock and Loudoun will not press amendment 51 to a Division, but I ask hon. Members to realise that Scotland is doing things differently. In many ways, HECA has been overtaken by events in Scotland, which

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is why the Scottish Government want it repealed. They want repeal not because of a desire to avoid the implications of HECA, but because they have moved in another direction. Interestingly, the Scottish Government and the Labour Government in Wales have taken a similar view. We might be going in different directions, but I hope that we are all going towards the same goal of making our homes warmer and eradicating fuel poverty among our populations.

Dr Whitehead: I want to comment briefly on new clause 11 and, in doing so, echo the remarks of my hon. Friend the Member for Ogmore (Huw Irranca-Davies). With hindsight, it has been recognised that the clause concerned, which was originally pretty flawed, has been substantially strengthened and clarified as a result of its withdrawal, the discussions that followed and its emergence on Report as new clause 11. In Committee, widespread concern was expressed about that flawed clause on the grounds that it sought to replace an arrangement under the Energy Act 2008 that enabled the Secretary of State unilaterally to invoke sections 48 and 49 of the Act for the modification of a decommissioning programme regardless of any agreement made previously.

The original clause would have replaced that provision with an arrangement that appeared to enable the Secretary of State to waive the ability to make programme modifications, if circumstances changed, by making an agreement when the licensing agreement was first adopted binding him or herself in perpetuity regardless of the objective circumstances in place after the original agreement. That was clearly not satisfactory. I accept that, for logical reasons, it is difficult to place the words “unforeseen circumstances” in legislation—clearly we do not know what those would be—but I think that the question of when a programme ceases to become prudent could be better addressed.

I would be grateful if the Minister clarified a couple of issues relating to the wording of the new clause that might be referred to should a modification action be undertaken by people seeking to understand what the clause really means. I appreciate that, as I have mentioned previously, the background to the new clause is similar to the Marx brothers’ form-guide sketch in “A Day at the Races” in which they have to refer to a large number of separate documents to understand where they were in the first place. Nevertheless, I would be grateful if he confirmed that the Secretary of State may act, by him or herself, to point out that a decommissioning programme subject to the new clause had ceased to be prudent and say, “It appears to me that this programme has become imprudent and therefore needs modification.”

What those modifications might consist of would be a matter for negotiation and discussion with the site licensee. If points in the modification programme could not be agreed, a third party could come in, under proposed new subsection (3D), to determine how those points might best be resolved. When the third party—as the Minister emphasised, it would be an independent party—has resolved those previously unresolved issues, the Secretary of State would, under the proposed new subsection, be

“bound by such a determination”.

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It is clear, however, that under administrative law the Secretary of State would not be able to undertake an agreement unless he was satisfied that there was adequate provision for the modification of the programme, including the understanding that the site licensee would also be bound by what the third party had determined.

It would not be logical or reasonable for the Secretary of State to undertake a programme that would enable the licensee to escape being bound by the consequences of a determination of modification and therefore simply not undertake any action relating to those modifications, even after they had been agreed. That is my understanding of the new clause. I would be grateful if the Minister confirmed that and placed it on the record that the process would lead to an agreed modification programme that could be instituted by the Secretary of State, but mediated by a third party, after a programme had been judged to be no longer prudent on a different programme of decommissioning.

Charles Hendry: I am grateful to hon. Members for participating in the debate. I was surprised by how many of them paid tribute to the Government for listening so hard and making changes—I almost started to wonder whether we had done too much of it. Nevertheless, we remain firmly of the view that the Bill is better as a result of the changes made. I give particular credit to the hon. Member for Southampton, Test (Dr Whitehead) for his work with the hon. Member for Ogmore (Huw Irranca-Davies), and I thank them both for their constructive engagement in getting us to where we are, which, as I said, is better than where we started. It is perhaps an early birthday present for the hon. Member for Southampton, Test—I believe that his birthday is tomorrow—and the House can celebrate by recognising his contribution.

I am grateful to the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) for her comments about the changes that we have made to HECA. Listening to the discussions on the Opposition Benches about how best to address these matters in Scotland, I felt like we were intruding on family grief. However, I have no intention of doing that because they are matters that will properly be resolved by the Scottish Government. Nevertheless, we have to accept that the legislative consent motion is essentially an on/off switch. One either has to have HECA or get rid of it; one cannot have a little bit of HECA or have a different element within it. My understanding from our discussions is that the Scottish Government want to address these issues differently, using different mechanisms. We absolutely respect their right to make those decisions, and the changes in the Bill will simply make that possible.

The bulk of this debate inevitably focused on the nuclear clauses. The hon. Members for Brighton, Pavilion (Caroline Lucas), for Angus (Mr Weir) and I will never agree on the principles of nuclear, but we all want to make sure that if nuclear power stations are built in the United Kingdom, that should be genuinely without subsidy and we should have extremely strict controls on decommissioning, safety and a range of other issues.

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3.30 pm

There is also a fundamental disagreement between us. We recognise that if investors are to have confidence in the decommissioning programmes, they must feel certain that those programmes cannot be changed at will or on a whim by the Secretary of State at some subsequent date. That was the flaw in the earlier legislation, which we are trying to address. It gave a power at any time for the then Secretary of State to say, “We’re going to change these rules,” and there would have been no right for a company which thought it had a commitment and an agreed programme to resist that. What we sought to do, and what I hope we have achieved, is to agree the right balance between the powers of the Secretary of State and the guarantees and undertakings necessary for the companies involved.

Caroline Lucas: If the liabilities are fixed so that uncertain messages are not being given to the investors, but the costs rise in an unforeseen manner, how is that not a subsidy if the person who is going to meet the difference between the liabilities and the real cost is not the taxpayer?

Charles Hendry: The hon. Lady raises an entirely separate issue. A funded decommissioning programme is constantly reviewed. If there is evidence that not enough money has been put aside for decommissioning issues, that money will have to be increased. The operators entirely accept that if the costs rise, they will have to contribute more towards the decommissioning pot. The new clause is about whether the Secretary of State should be able to say, “You know, I’ve decided that rather than you putting that money into a pot over 20 years, I’d like it in 12 months.” That would be a fundamental change which, under the existing legislation, the companies would not have been able to challenge. There will be no change in the measures ensuring that enough money is put into the decommissioning pot. If that goes up or down, the amount put in will have to reflect that. That is not touched in any way by the changes that we are making through the Bill.

On the hon. Lady’s new clause 17, at present anybody can write to me as a Minister and say, “We don’t think this is adequate,” and we will consider that. That, as she says, would not be a legal power, but an advisory power. It would still be for the Secretary of State to decide whether to take it forward. The Secretary of State has a number of choices. He can choose to modify, to modify in part or to take no action, so considerable power rests with him.

That comes to the heart of the questions that we were asked by the hon. Member for Southampton, Test. There is something vaguely Rumsfeldian about the concept of unforeseen. What are foreseen unforeseen circumstances and what are unforeseen unforeseen circumstances? I think we have been wise to move away from that. A prudence test is a better one, which both Government and industry are more comfortable with. The Secretary of State will have the power to make those decisions, but we will also make clear in those programmes the role of the third parties.

We have had a considerable amount of discussion with the hon. Gentleman about the nature of those third parties. It would clearly have to be somebody who was acceptable both to the Government and to the

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operators and who was not prejudiced towards one side or the other. That is a role that the Government are used to developing. The Secretary of State would have significant powers but there would also be a role for third parties. Critically, the Government and the operator would be bound by the decision of the third party. This gives the extra degree of certainty and comfort that the hon. Gentleman sought. I hope we have been able to reassure him.

We have had a useful exchange. I thank the official Opposition for the constructive way in which they have engaged with the issue, so that the nuclear aspects of the Bill are stronger and more effective than they were before.

Question put and agreed to.

New clause 11 accordingly read a Second time, and added to the Bill.

New Clause 12

Adjustment of electricity transmission charges

‘In section 185(11) of the Energy Act 2004 (areas suitable for renewable electricity generation: end date for schemes adjusting transmission charges) for “2024” substitute “2034”.’.—(Charles Hendry.)

Brought up, read the First and Second time, and added to the Bill.

New Clause 13


‘A requirement for the Secretary of State to consult which arises under or by virtue of this Act may be satisfied by consultation before, as well as consultation after, the passing of this Act.’.—(Charles Hendry.)

Brought up, read the First and Second time, and added to the Bill.

New Clause 1

Energy efficiency aim

‘(1) The principal purpose of this Part is to deliver energy savings from the building stock which will make commensurate contributions to—

(a) the fulfilment by the Secretary of State of the duties under section 1(1) (reduction of net UK carbon account by 2050) and section 4(1)(b)(carbon budgets) of the Climate Change Act 2008; and

(b) the elimination of fuel poverty by the target date required by section 2(2)(d) of the Warm Homes and Energy Conservation Act 2000.

(2) In performing functions under this Part the Secretary of State will have regard to—

(a) the principal purpose set out in subsection (1) above, and

(b) the recommendations from time to time of the Committee on Climate Change where these are adopted by the Secretary of State.’.—(Luciana Berger.)

Brought up, and read the First time.

Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): I beg to move, That the clause be read a Second time.

Mr Deputy Speaker (Mr Lindsay Hoyle): With this it will be convenient to discuss the following:

New clause 2—Duty of the Secretary of State to improve energy efficiency

‘(1) The Secretary of State must prepare and publish a plan for achieving the principal purpose set out in section [Energy efficiency aim] in England.

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(2) The plan must establish specific aims and describe the proposed means of achieving them, together with methods of reporting on progress towards meeting them.

(3) Where an aim is designated under this section, the Secretary of State must take all reasonable steps to achieve the aim.

(4) The plan prepared under subsection (1) must be published no later the 12 months after the day on which this section comes into force.

(5) The Secretary of State must, as soon as reasonably practicable after publishing a plan under this section lay it before Parliament.

(6) The Secretary of State must, within one year of each order setting a carbon budget under section 8(1) of the Climate Change Act 2008, review the plan prepared and published under this section.

(7) Where, following a review under subsection (6), the Secretary of State varies the plan, he must, as soon as reasonably practicable after so doing, publish the plan as so varied.’.

New clause 3—Carbon emissions in local authority areas

‘(1) Within 12 months of this Bill receiving Royal Assent the Committee on Climate Change shall advise the Secretary of State about—

(a) the scale of action needed in local authority areas to help meet UK Climate Change Act carbon budgets;

(b) climate mitigation and adaptation policies that are effective when locally co-ordinated by councils.

(2) The advice given under subsection (1) should include but not be limited to—

(a) carbon emissions from a local authority’s own buildings and operations;

(b) carbon emissions from the local area;

(c) local renewable energy generation;

(d) national carbon reduction initiatives delivered at the local level

(3) The Committee on Climate Change may advise the Secretary of State on local level adaption to climate change to ensure that individual local carbon budgets are both appropriate for the circumstances of different local areas that the totality of all local carbon budgets is consistent with the requirements of subsection (1)(a).

(4) The Secretary of State must lay before Parliament a response to the advice given by the Committee on Climate Change under subsection (1) or (2), within six months of receiving the advice.

(5) For the purposes of this section—

(a) “budgetary period”, “carbon budget” and “national authorities” have the same meaning as in Part 1 of the Climate Change Act 2008;

(b) “local authority” means a county council or district council in England, or a London borough council, or the Council of Isles of Scilly.’.

New clause 4—Climate change strategy for local authority areas

‘(1) Local authorities must develop and promote a climate change strategy for their local area.

(2) In preparing the strategy, local authorities must take into account any advice given by the Committee on Climate Change on local action to meet carbon budgets.

(3) In preparing the strategy, local authorities must consult with local residents, businesses, social enterprises and co-operatives and other institutions.

(4) Local authorities must publish and promote their local climate change strategy, publish an annual report on progress towards carrying out the strategy and engage with local citizens and community groups.

(5) The Secretary of State must work with local authorities and the Local Government Association to assist them in producing and implementing their climate change strategies, taking into account any relevant advice from the Committee on Climate Change.’.

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New clause 7—Supplementing the Energy Company Obligation

‘(1) The Secretary of State must, within six months of this Bill receiving Royal Assent, report to Parliament with proposals on the ways in which the Energy Company Obligation could be supplemented by—

(a) revenues from the European Emissions Trading Scheme;

(b) revenues from the Carbon Floor Price;

(c) an additional tax on the profits of gas transporters and suppliers, and electricity generators, distributors and suppliers; and

(d) such other funds as the Secretary of State considers appropriate.

(2) In considering the supplement to the Energy Company Obligation that may be made by the sources of funds listed in section (1) the Secretary of State must include an estimate of—

(a) the extent to which the additional sources of funds listed in subsection (1) could increase the contribution made by a carbon emissions reduction target and a home-heating target to meeting—

(i) the carbon budgets established under the Climate Change Act 2008; and

(ii) the fuel poverty target established under the Warm Homes and Energy Conservation Act 2000.

(b) the extent to which the additional sources of funds listed in subsection (1) could allow the Secretary of State to increase the level of a carbon emissions reduction target and a home-heating cost reduction target without increasing the cost of household gas or electricity bills.

(3) The proposals reported under subsection (1) of this Clause must include an assessment of the extent to which the Energy Company Obligation could make a greater contribution to—

(a) the carbon budgets established under the Climate Change Act 2008, and

(b) the fuel poverty target established under the Warm Homes and Energy Conservation Act 2000

if charges levied on consumers’ bills under this obligation were levied on a per kilowatt hour basis.

(4) The assessment made under subsection (3) must take into account the effect on equity for those living in fuel poverty of levying charges on consumer bills under the Energy Company Obligation on a per kilowatt hour basis.’.

New clause 18—Disclosure of information for the purpose of reducing fuel poverty

‘(1) The Secretary of State may by regulations make provision authorising the Secretary of State, or a person providing services to the Secretary of State, to supply relevant persons with social security and tax credit information about persons in receipt of welfare benefits.

(2) In this section “relevant person” means—

(a) a person who holds a licence under section 6(1)(d) of the Electricity Act 1989 (c. 29) or section 7A(1) of the Gas Act 1986 (c. 44) (supply of electricity or gas to premises), or

(b) a person providing services to the Secretary of State or to a person within paragraph (a).

(3) Regulations under this section must specify the purposes for which information may be supplied by virtue of subsection (1), which must be purposes in connection with reducing fuel poverty or making homes more energy efficient.

(4) Regulations under this section may authorise the supply of information by a relevant person to the Secretary of State or another relevant person—

(a) for the purpose of determining what information is to be supplied by virtue of subsection (1), or

(b) to enable information supplied to a relevant person by virtue of subsection (1) to be used by that or another relevant person for purposes within subsection (3).

(5) Regulations under this section may—

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(a) make provision as to the use or disclosure of information supplied under the regulations (including provision creating criminal offences);

(b) provide for the recovery by the Secretary of State of costs incurred in connection with the supply or use of information under the regulations.

(6) In this section—

(a) “social security information” means information held by or on behalf of the Secretary of State and obtained as a result of, or for the purpose of, the exercise of the Secretary of State’s functions in relation to social security;

(b) “tax credit information” means information held by or on behalf of the Secretary of State and obtained as a result of, or for the purpose of, the exercise of the Secretary of State’s functions in relation to tax credits;

(c) “welfare benefit” means any prescribed benefit, allowance, payment or credit.’.

New clause 19—Additional information provided by energy suppliers

‘The Secretary of State shall make provision for energy suppliers to—

(a) ensure a generic signpost message is displayed prominently on all customer bills from 1 December 2011, detailing how customers may be able to reduce their energy bills,

(b) ensure a letter reaches all of their customers by 1 December 2011, clearly detailing the extent to which customers overpay or underpay compared to that supplier’s cheapest standard direct debit tariff,

(c) implement, by 1 December 2012, the findings of research undertaken on the efficacy of—

(i) a generic signpost message, to be displayed prominently on customers’ bills;

(ii) a more detailed message, quoting pounds saved depending on payment method and tariff, as influenced by the customer’s actual usage over a 12-month period where appropriate;

in encouraging customers to switch to that supplier’s cheapest standard tariff available.’.

Amendment 2, in clause 42, page 27, line 37, after ‘landlord’, insert ‘, or his appointed agent,’.

Amendment 3, page 28, line 4, after ‘may not let’, insert

‘, let on behalf of the landlord as his appointed agent or market to let’.

Amendment 4, page 28, line 7, at end insert

‘such that the property shall not fall below the level of energy efficiency specified in subsection (1 )(c).’.

Amendment 5, page 28, line 13, after ‘“let the property”’, insert ‘and “market to let”’.

Amendment 19, page 28, line 31, at end insert—

‘(5A) The first domestic energy efficiency regulations shall be made no later than 30 September 2012.’.

Amendment 47, page 28, line 33, leave out ‘April 2018’ and insert ‘January 2016’.

Amendment 6, page 28, line 33, leave out ‘2018’ and insert ‘2016’.

Amendment 48, in clause 45, page 30, line 36, leave out ‘April 2016’ and insert ‘January 2013’.

Amendment 7, page 30, line 36, leave out ‘2016’ and insert ‘2013’.

Amendment 8, in clause 46, page 31, line 4, at end insert—

‘(e) any protections to be afforded to a tenant making a request under the regulations, including, if the Secretary

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of State considers it appropriate, the circumstances in which no notice under section 21(1)(b) or (4) of the Housing Act 1988 may be given pending the outcome of the request.

‘(1A) In determining whether it is appropriate to make provision under subsection (1)(e), the Secretary of State shall take into account the advice of any relevant body or bodies.’.

Amendment 24, in clause 70, page 52, line 28, at end insert—

‘(ab) to publish a report setting out the intended impact of a carbon emissions reduction order or a home-heating cost reduction order on fuel poverty and on the energy efficiency of domestic properties of different tenures.’.

Amendment 25, in clause 73, page 55, line 11, at end insert—

‘(2A) The Secretary of State may in addition require the register referred to in subsection (1) to record information on—

(a) the tenure of each property; and

(b) in the case of a domestic PR property, the name and address of the landlord.’.

Amendment 23, in clause 74, page 55, line 43, at end insert—

‘(2A) The Secretary of State may in addition require the register referred to in subsection (1) to record information on—

(a) the tenure of each property; and

(b) in the case of a domestic PR property, the name and address of the landlord.’.

Amendment 1, in clause 107, page 88, line 33, after subsection (1) insert—

‘(1A) In setting out the extent to which the green deal plans under Chapter 1 of Part 1 and energy company obligations have contributed to the Secretary of State fulfilling the duty under section 4(1)(b) of the Climate Change Act 2008 (carbon budgeting), the Secretary of State must if necessary explain why the appropriate contribution has not been made and the additional measures he will bring forward.’.

Amendment 9, in clause 108, page 89, line 6, leave out ‘residential accommodation’ and insert ‘buildings’.

Amendment 10, page 89, line 8, at end insert

‘in such a way as to ensure that the energy efficiency of buildings makes its optimal contribution to the delivery of a low carbon energy system at least cost.’.

Amendment 11, page 89, line 9, leave out subsection (2) and insert—

‘( ) In subsection (1) “energy system” means the production, transmission, distribution, storage and consumption of energy.’.

Amendment 12, page 89, line 14, at end insert—

‘(5) The Secretary of State must within 12 months of the passing of this Act publish a report on the steps that he has taken and proposes to take to discharge his duty under subsection (1).’.

Amendment 21, page 89, line 14, at end insert—

‘(5) For the purpose of assisting the Secretary of State to fulfil his duty pursuant to this section, each energy conservation authority must—

(a) take reasonable steps to increase the installation of energy efficiency improvements in residential accommodation in its area;

(b) involve persons and communities in its area in seeking to increase the installation of energy efficiency improvements in its area; and

(c) include a description of the steps it has taken pursuant to this section in its report pursuant to section 2 of the Home Energy Conservation Act 1995.

(6) An energy conservation authority must also consider whether, as a means of assisting the Secretary of State to fulfil his duty pursuant to the Climate Change Act 2008, it would be cost effective to draw up a sustainable energy plan for its area.

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(7) In this section—

(a) “energy conservation authority” has the same meaning as in the Home Energy Conservation Act 1995;

(b) “energy efficiency improvements” are such measures as are specified by section 2(4), (5) and (6) of this Act; and

(c) “a sustainable energy plan” is a plan promoting energy from sustainable or renewable sources.’.

Luciana Berger: With so many households struggling under the weight of increased energy bills and fuel poverty at record levels, improving the energy efficiency of our nation’s building stock and reducing our energy use has never been more important. A successful green deal scheme would offer protection to worried consumers hit by unfair gas and electricity price rises and reduce our country’s damaging carbon emissions. As they stand, however, the Government’s proposals lack detail, fail to provide clarity to businesses and risk being inadequate. The new clauses and amendments that we have tabled for debate today seek to rectify the Bill’s weaknesses.

Since the Bill was first published last December, we have endeavoured to work constructively with Ministers to improve the proposals, not just because the green deal was born out of pilots begun under Labour in government, but because we recognise the urgent need to improve energy efficiency across our country. We are disappointed that the Bill did not receive Royal Assent before the summer recess, as the Government promised it would. Meeting that deadline was used by Ministers as a justification for expediting debate during the Bill’s previous stages. In addition, the large volume of secondary legislation involved calls into question whether the green deal will be up and running by October next year, which has been set as the Government’s deadline.

We offered a raft of proposals in Committee to increase consumer protection, boost small businesses and provide extra support for those struggling to heat their homes. Our vision of the green deal is one where co-operatives, small businesses, charities and social enterprises can compete equally alongside large companies that want to take part in the scheme. Our vision is of a scheme that supports Britain’s 2 million small businesses, rather than simply leaving them with warm words and empty order books, which is what the Government risk doing. The Government voted against our vision, although I am delighted that Ministers did not oppose our proposal for a green deal apprenticeship scheme. I assure the Minister that all of us on the Labour Benches will be joining him at the next general election to champion the Government’s policy—Labour’s green deal apprenticeship scheme.

Despite that victory, we still have huge concerns that the Bill will not be as effective as it should be. As a result, we have tabled the new clauses and amendments in this group, which, if passed, would define the scale and purpose of the green deal. They would incentivise councils and engage local communities in the fight against climate change, give businesses the confidence to invest by linking the scheme to the UK’s statutory carbon reduction targets, and end the misery for the hundreds of thousands of men, women and children who are left freezing, shivering under their blankets because they live in cold homes that are not fit for the 21st century.

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Labour’s new clauses 1 and 2 would address the lack of clarity in the Bill, better define the purpose of the green deal and ensure that businesses have the clarity and confidence they need in the green deal scheme. Together with amendment 1, our new clauses would explicitly link the green deal to meeting the UK’s targets in our carbon budgets and our fuel poverty targets. New clauses 1 and 2 would place a duty on the Secretary of State to produce a plan for improving energy efficiency and a duty on the Government to report to Parliament on the green deal’s progress towards achieving carbon reductions.

We have heard many soundbites from Ministers about the green deal, such as their description of it as “the biggest home improvement programme since the second world war”, but the Bill contains no strategy for delivering it. We have heard today about the 14 million homes to be improved by 2020, yet we have seen no way to measure whether the green deal is delivering the refit of 4,800 properties a day, or 145,000 a month. None of that is in the Bill. As it stands, there is a danger that the green deal will not live up to the hype. I do not relish saying that: the Opposition want the Bill to be better, not worse, and we want the green deal to succeed, not fail. That is why we believe the Government must go further.

We are not the only ones voicing legitimate concern. After Committee, 51 organisations, including the World Wildlife Fund, Asda and the Federation of Small Businesses, sent a letter to the Secretary of State setting out the concerns that they still had about the Bill. They wrote:

“the debate during the Committee Stage of the Energy Bill has left us concerned that the energy saving programme is not yet guaranteed to be a coherent and ambitious programme, and that the Bill requires further significant improvements. We believe there needs to be an over-arching energy saving plan from the Government to ensure clarity of what is needed to be delivered by the market…Business will find it difficult to be in a position to deliver towards the Government’s aspirations on the Green Deal without this further clarity and certainty.”

The letter concluded:

“It is our view that the Government amendments need to go significantly further and currently do not deliver on the principles reflected in the Warm Homes Amendment. They do not deliver a policy ambition equivalent to the Government’s aspirations or ensure the provision of a plan to cut carbon emissions from buildings and contribute to eliminating fuel poverty.”

The letter proposes three ways to improve the Bill. The first is that

“an aim must be clarified in the Energy Bill that is tied to meeting the target set under…the Climate Change Act 2008, and importantly the individual carbon budgets. The aim must also be tied to the elimination of fuel poverty.”

The second is that an

“amendment to prepare and publish a plan to deliver these aims must be included in the Energy Bill.”

The third proposal is that a

“reporting amendment should ensure…the energy saving programme is linked with other…requirements”.

All three improvements could be made today if the Government accepted our new clauses.

The letter is signed by organisations as diverse as B&Q, Marks and Spencer, Friends of the Earth, the Co-operative Group and the National Insulation Association—the very organisations and businesses that

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the Government hope will deliver the green deal. Environmental groups, businesses and trade associations are all telling the Government the same thing: “You haven’t got this right. You need to go further.” They are asking the Government to do what the Opposition have suggested in this House and in the other place, but we are now running out of opportunities for the Minister to listen and change his mind.

In Committee, the Government added clause 108 to explain their ambitions for the green deal better, but unfortunately it is inadequate. The clause contains no qualified level of ambition and excludes non-residential properties. By repealing section 2 of the Sustainable Energy Act 2003 and introducing clause 108 to the Bill, the Government are in fact diluting existing energy efficiency requirements. That is why we have tabled amendment 1, alongside new clauses 1 and 2, to ensure that the Government’s green deal definitely results in real carbon reductions. We will press new clauses 1 and 2 to a vote if Government support is not forthcoming, because they are crucial to the success of the programme.

New clauses 3 and 4 would ensure that Britain’s transition to a low-carbon economy is fair. They would place power into the hands of councils and give them the freedom and flexibility to engage with local communities in finding innovative solutions to tackling climate change. They would boost the economy and create jobs by encouraging investment in green businesses. In practice, they would establish a three-stage process. The first part would involve the independent Committee on Climate Change examining the carbon output in every locality and assessing what reasonable action could be taken to reduce carbon emissions; those data would then be used by councils and central Government to agree a local carbon strategy, providing a road map for how the area would reduce its emissions. The local authority could use the strategy to engage the local community and voluntary groups in efforts to reduce carbon emissions and improve energy efficiency.

That idea is not new. The previous Labour Government introduced a pilot programme involving nine councils in January 2010. I am pleased that the Minister announced in Committee that further pilots were to follow, but what we are proposing would allow us to take advantage of economic opportunities that we are failing to exploit. The Federation of Small Businesses, speaking in support of local carbon plans, argues:

“Small businesses are keen to go green…but are not getting the help or incentives they need to do so”.

It goes on to say that they need

“a framework that is flexible and supportive to encourage small businesses rather than penalise them.”

Our new clauses would provide such a framework. They would provide certainty about the scale of carbon reductions locally while allowing local authorities to retain flexibility on how they go about achieving the cuts. It is vital that businesses play an integral role in tackling climate change. According to the FSB, at least one third of the UK’s emissions are from businesses, and the Carbon Trust estimates that 20% of the UK’s emissions are from small and medium-sized enterprises. The FSB calculates that if all UK businesses and public sector organisations install energy-efficient measures, at least £3.6 billion could be saved every year, thanks to the reduction in

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energy consumption. As well as helping businesses to cut energy usage and reduce costs, estimates of the potential for low-carbon job creation are significant.

3.45 pm

Research by Carbon Descent estimates that 70,000 jobs in energy efficiency and renewable energy could be created across the country if all local authorities set about reducing emissions in their areas by at least 40% by 2020. It is easy to see why the proposals have a wide backing both from business and environmental groups, including Friends of the Earth, the Federation of Small Businesses, the TUC, Good Energy, B&Q, the Stop Climate Chaos coalition and, most importantly, local government.

Rather than being seen as a burden by local councils, these proposals have a broad range of backing across local authorities. In March, 40 council leaders from across the political spectrum called for the introduction of local carbon plans. For many councils, the plans build on work they are already doing. By pledging to cut carbon emissions by 40% by 2020 or rolling out grant-funded renewable installation schemes, councils of all political colours—in Liverpool, Manchester, Birmingham, Brighton, Islington, West Sussex and Bristol—are leading the way. Although some councils are making good progress, it is clear that others need to do much more. Any advice to councils from the Committee on Climate Change needs to be meaningful. The level of carbon reductions recommended must be in line with our national carbon budgets and we need to ensure that councils share best practice and policies that successfully deliver local emission reductions, as well as advise each council on the steps that it could take to meet its plan.

The proposals in the new clauses will empower local councils, engage local communities and enhance local economies. They offer a fair way to meet our national climate change targets. We recognise that not every part of our country is the same and that we all need to share the same aim. Ultimately, every one of us needs to do our bit to tackle climate change. We need to go further; we need local carbon plans.

Amendments 47 and 48 would bring forward from 2018 to 2016 the introduction of a minimum standard of energy efficiency in the private rented sector, in line with the UK’s legal target to eliminate fuel poverty. We welcomed the Government’s announcement on Second Reading that they would introduce a minimum standard of energy efficiency for the private rented sector, but we do not believe that a 2018 deadline is adequate; we need to go much faster.

According to the Government, half the properties in the private rented sector are not considered to be of a decent standard. It cannot be right in the 21st century that people are forced to live in unfit homes that they cannot afford to heat. About 1.3 million children live in cold homes. The Marmot review found that this makes them twice as likely to suffer from respiratory problems than children living in warm homes. Anyone who watched the recent BBC documentary, “Poor Kids”, will have seen the haunting footage of Sam who, at the age of 11, said:

“When the gas runs out, the whole house is freezing.”

We must urgently address that problem.

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The UK has a legally binding target of eliminating fuel poverty by 2016. How can the Government not introduce the efficiency standard in time to help reach that goal? We know that fuel poverty is at record levels. In July, uSwitch published research showing that a staggering 6.3 million homes across the UK are paying 10% or more of their disposable income towards their energy bills. That means that almost a quarter of all households—24%—find it hard to afford to stay warm. Most worryingly, those figures do not take into account the huge price rises announced over the summer. When those increases hit, the number of people in difficulty will increase dramatically. That should be a wake-up call to the Government. Instead, over the past year, the Government have systematically removed support for fuel-poor households—from scrapping the Warm Front scheme to cutting winter fuel payments by up to £100. They have an opportunity to go some way to rectifying their record by bringing forward the introduction of the minimum efficiency standard.

By ensuring that poor-quality F and G-rated homes are no longer allowed on the rental market, the amendments would improve the living standards of thousands, many of whom are forced to live in the cold simply because their landlords do not know what improvements can be made, or because the owners of properties refuse to improve them. The amendments would end that sooner rather than later, and we sincerely hope that Ministers will support them. The 2016 target still allows adequate time for landlords to be made aware of the changes and to improve their properties.

Amendments 23 and 25 would establish a national landlords register to ensure that the minimum standard is enforceable. A register tightly defined as being for the purpose relevant to the Act would reduce enforcement costs, increase compliance, and help landlords to gain access to appropriate information about the green deal and other schemes such as the landlords energy-saving allowance. It would also leave rogue landlords unable to avoid improving their properties, and with nowhere to hide.

I hope that Ministers will consider carefully the changes that we are proposing, which are intended to improve on what is already in the Bill. I thank the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker), for the way in which he has dealt with Opposition Front Benchers during the progress of the Bill. It was necessary for us to meet him on several occasions and although we did not always agree on the best way forward, he was always courteous in his dealings with us, and I thank him for that.

Our new clauses and amendments would substantially strengthen a Bill that lacks clarity and detail. They would make improving the energy efficiency of our building stock a key part of our strategy for meeting the United Kingdom’s carbon budgets. They would put local communities at the heart of tackling climate change, boost small businesses and non-profit-making organisations —particularly co-operatives and charities—and provide extra support for those who struggle to stay warm. I urge the Government to accept them.

Mr Deputy Speaker (Mr Lindsay Hoyle): I have now to announce the result of a Division deferred from a previous day. On the motion relating to access to a lawyer, the Ayes were 303 and the Noes were 192, so the Question was agreed to.

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[The Division list is published at the end of today’s debates.]

Mr John Baron (Basildon and Billericay) (Con): I want to speak to new clause 19, to which my name is attached.

There is much evidence to suggest that too many customers are overpaying for their energy and failing to take advantage of the best offers from energy suppliers. The coalition agreement rightly contains a commitment that energy suppliers will provide information about cheaper tariffs on the bills and statements that they send to their customers, but although energy bills have become longer, evidence suggests that the additional information has had only a limited effect in encouraging customers to switch to cheaper tariffs. What is required is much clearer information on tariffs, tailored to a customer’s actual usage and payment option, to help customers to move to a company’s cheapest tariff. New clause 19 aims to make that a reality.

The case for more clarity on bills is very strong. The average annual energy bill has doubled since 2004; bills have risen significantly this year alone, and may do so yet again before the winter. According to analysis by Which?, the cost of energy is the number one financial concern of nine out of 10 customers. It is of particular concern to the vulnerable in society, especially those who live in fuel poverty. Estimates of their number vary, but I do not think there is any disagreement on the fact that there are between 5 million and 6 million of them.

The problem is that tariff structures are too complex. According to Ofgem’s retail market review, well over 300 tariffs were available to customers at the beginning of 2011. Research by Ofgem and Which? has found that people are baffled by not just the number but the many components of energy tariffs, such as standing charges, tiered rates, discounts and cashback offers. Ofgem calculates that one third of those who switch do not achieve a price reduction, although the vast majority switch in order to save money. That fuels cynicism in the energy market. Only one in three customers trusts the supplier to sell them the best tariff, and Ofgem believes that as many as six in 10 energy customers are inactive, many being completely disengaged from the energy market and potentially paying over the odds.

A further complication is that different payment methods have different outcomes. According to Ofgem, a customer who at the beginning of last year had changed their payment method from standard credit—paying on receipt of a bill—to direct debit could have saved more than £120. Which? estimates that more than 11 million households could benefit from switching to a direct debit payment method. I do not claim that all such households would want to, or that all would be able to, because many do not have a bank account, but that figure is great enough for this issue to warrant closer scrutiny.

Jim Shannon (Strangford) (DUP): Clarification is needed on the green deal and prepayment meters, which are a method that households can use to manage their budget.