Energy Bill [Lords]
The Committee consisted of the following Members:
Alison Groves, Committee Clerk
† attended the Committee
‘(1) The Secretary of State must take such action as he considers appropriate to improve the energy efficiency of residential accommodation in England so as to contribute to the Secretary of State fulfilling the duty under section 1(1) of the Climate Change Act 2008 (reduction of net UK carbon account by 2050).
(2) Section 2 of the Sustainable Energy Act 2003 (energy efficiency of residential accommodation) ceases to have effect.
(3) In section 9 of the Sustainable Energy Act 2003 (citation, extent and commencement) , in subsections (3) and (5) leave out “2,”.’.
‘(2A) In section 1 of that Act (interpretation) in the definition of “residential accommodation”, insert—
“(c) properties classified as Service Family Accommodation.”.’.
This amendment will require the Government to achieve a 29 per cent. decrease in emissions of carbon dioxide from residential accommodation by 2022 (based on 2008 levels), through energy efficiency measures.
‘(1A) The Secretary of State must increase the aim specified in subsection (1) if in his opinion it is desirable or necessary to do so in order to contribute to the Secretary of State fulfilling his duty under section 1(1) of the Climate Change Act 2008 (reduction of new UK carbon account by 2050).’
See amendment (a) to NC7.
‘(1) The principal purpose of Part 1 is to deliver energy savings from the building stock which will make commensurate contributions to—
(a) the achievement of the target contained in Section 1(1) of the Climate Change Act 2008 and the carbon budget set for each budgetary period under Part 1 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.’.
‘(1) The Secretary of State must prepare and publish a plan for achieving the principal purpose set out in section 1(1) in England.
(2) The plan must establish specific aims and describe the proposed means of achieving them together with methods for reporting on progress towards meeting them.
(3) In preparing the plan, the Secretary of State must take account of any plans produced under section 60(2) of the Climate Change (Scotland) Act 2009.
(4) Where an aim is designated under this section, the Secretary of State must take all reasonable steps to achieve the aim.
(5) The plan prepared under subsection (1) must be published no later than 12 months after the day on which this section comes into force.
(6) The Secretary of State must, as soon as reasonably practicable after publishing a plan under this section lay it before Parliament.
(7) 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.
(8) Where, following a review under subsection (7), the Secretary of State varies the plan, he must, as soon as reasonably practicable after so doing, publish the plan as so varied.’.
‘(1) Section 1 of the Sustainable Energy Act 2003 (annual reports towards sustainable energy aims) is amended as follows.
(2) In subsection (1) (sustainable energy report) after paragraph (e) insert “and (f) achieving the aims established by the plans produced under section 2 of the Energy Act 2011 and section 60(2) of the Climate Change (Scotland) Act 2009”’.
The new clauses work as a package. The intention is threefold. First, the new clauses would define the purpose of the Government’s energy efficiency and energy saving policies in part 1 and ground them in the Government’s existing climate and fuel poverty targets. The purpose provisions are designed to ensure that the Government set a credible level of ambition for the green deal policy. Secondly, the new clauses would place a duty on the Secretary of State to produce a plan for improving energy efficiency. That would require the development of a coherent cross-departmental strategy and provide greater clarity and certainty for businesses. Thirdly, they would create a means of reporting on progress towards achieving the aims set out in that plan. The
When we first tabled the warm homes amendment in the other place in January, we had only a few voices of support, but those voices and that support have grown. The present provisions are supported by more than 70 external organisations. Those include not just the usual suspects, but a broad coalition of non-governmental organisations, trade unions and businesses. It is not every day we find an issue that unites the WWF, the Federation of Small Businesses, B and Q, Greenpeace, Asda, the Co-operative group, Tearfund, Green Alliance, the Royal Society for the Protection of Birds, Unison, Friends of the Earth, the National Union of Students, the TUC and the Mayor of London. I could go on, because, as I said, the list has over 70 names, but I will stop there.
The proposals are also supported by the public. A YouGov survey in May found that more than half the population—54%—want their MPs to support improvements to the Bill to link the green deal to existing carbon reduction targets. A few weeks ago, I was invited to join a public meeting organised by Friends of the Earth in Liverpool. It was a Saturday, the sun was shining—it was a beautiful day—and both Everton and Liverpool were playing. Despite all that, I was amazed by the number of people who turned up to give me the same message: we must get the Bill right and we need to keep pushing Ministers.
People out there are really concerned about the state of our planet and current levels of fuel poverty. As my hon. Friend the Member for Ogmore noted earlier, it is estimated that 5.5 million people in the UK live in fuel poverty. That is why other Members will, like me, have been inundated by letters and e-mails from constituents urging them to back the proposals. I do not know whether anyone had the chance to look at Twitter at lunch time, but there was a whole tweet of support for the warm homes amendment.
It is not difficult to understand why people are so worried. Like all of us here, they know the huge challenges we will face in averting climate catastrophe. This task is so big that it transcends party politics. It is a question of morals; it is the right thing to do, and we owe it to future generations to leave them a better legacy than the one we inherited. The fact is that we are not doing enough. According to the International Energy Agency, energy-related carbon emissions reached a record level last year. We need to take tough decisions and bold action if we are to get on track.
When in government, the Labour party started to take the tough decisions needed to reduce our national emissions. The Climate Change Act 2008—a world first and supported by all the main Opposition parties at the time—commits the United Kingdom to reducing carbon emissions by at least 80% by 2050. It is important to remember that when the current Ministers were in opposition, they not only supported the Act but argued for us to go further. The tough talk did not come only from Conservative Members in Committee, but the current Secretary of State. The right hon. Gentleman was constantly telling anyone who would listen to be wary of Governments who set targets they would never have to achieve. He said:
“It is too convenient for ministers to set targets against which their efforts can be measured only once every five years, when the
The fourth carbon budget, which the Government agonised over before finally accepting just a few weeks ago, recommended that the 2020 emissions reduction target should be strengthened to 42%. We heard earlier that domestic homes are responsible for 23% of the United Kingdom’s greenhouse gas emissions, including through their use of heat and electricity, and that commercial buildings account for a further 12%. Without accepting our amendments and clearly stating that the green deal measures are part of how the targets will be met, they are little more than “nimto” targets.
The Government have high aspirations for the take-up of the green deal. We heard earlier from the Minister, when discussing the programme motion, about his aspirations for the green deal and its take-up; it is not clear how they will become a reality. Ministers have stated repeatedly that 14 million homes will benefit from the green deal by 2020. Starting today, that represents 1,500,000 homes a year, which equates to almost 30,000 homes per week—almost 4,274 homes each day. It is clear that the Government need to be ambitious with their energy saving policies; otherwise, the UK will fail to meet its climate and fuel poverty targets.
In meeting the Committee on Climate Change’s suggested figure, the level of retrofits and of carbon and energy savings are as important as the actual number of homes taking up the green deal, and that should be the Government’s primary focus. It is important to remember that, as well as reducing carbon, the Bill needs to be about reducing the cost of household energy bills and tackling fuel poverty. A better Energy Bill could minimise the anticipated rise in fuel bills, which would be vital, especially with the Bank of England predicting an increase in gas and electricity prices of between 10% and 15% between now and March 2012. Anything that mitigates such increases will surely be welcomed, especially by households whose budgets are already severely squeezed.
I shall address the Government’s amendments in a moment, but I want first to refer to a key business and investor concern: the uncertainty about the potential scale of the green deal market, which will act as the guide to the size of investment required. Without understanding the expected contribution that energy savings will be required to make to meet the carbon targets and the required depth of retrofit to properties, it is less than certain that such a market will deliver on the Government’s aspirations.
The Government tabled new clause 7, entitled the “Energy efficiency aim”, better to explain their ambition for energy saving policies. However, it would not be up to the task. There is no stated qualitative ambition within the new clause. It calls on the Secretary of State to take action as he considers appropriate on energy efficiency to contribute towards an 80% emissions reduction target by 2050. Such a contribution is not qualified, which means that businesses currently have little indication of what ambition is envisaged for the energy saving programme.
The new clause only references 2050 as the end date for necessary emission reductions. That ignores the five-year carbon budgets established by the Climate
Crucially, new clause 7 addresses only residential accommodation, while the green deal and other parts of the Energy Bill are designed to improve domestic and non-domestic buildings. There is no logical reason to exclude non-domestic buildings in new clause 7. It is clearly stated in the Energy Bill green deal impact assessment that the programme is to include households and non-domestic buildings.
Under new clause 7, the Government could do very little to promote energy efficiency—leading to delivery on the ground through the green deal and other policies—while still complying with the amendment. There is no additional driver for action. As such, new clause 7 provides little further clarity on what the Government expect to see delivered through their energy saving policies. That will fail to provide the certainty that businesses desperately want.
New clause 6, on the contribution to carbon budgeting, requires the Secretary of State to report to Parliament on the contribution of green deal policy and the energy company obligation to carbon reduction targets. We have repeatedly called for an annual report, so we are pleased with this movement from the Government. However, I am keen to learn from the Minister what level of reporting will be required by new clause 6. Will that reporting include information on emission reductions and not just on the number of homes? In new clause 6, there is no plan for delivery, which is what we are calling for in the warm homes amendment. There is also nothing in new clause 6 to ensure an implementation plan for the policy.
Our amendment—the warm homes amendment—seeks to provide more clarity and certainty for business by establishing a purpose for the Government’s policies, and by stating that the Government should deliver energy savings from the building stock that make a commensurate contribution to our carbon budgets and reduce fuel poverty. A more qualified level of ambition is set out in our amendment, one that directly supports the wider energy policy agenda.
Mr Steve Brine (Winchester) (Con): I feel bad for interrupting the hon. Lady, as she is flowing so nicely while she quotes a number of organisations. However, this Bill—this primary legislation—is about creating a 20-year market, which is a long-term project by any definition; it is certainly not within the terms of any single Parliament. Secondly, the green deal, although absolutely critical to this Government’s carbon reduction ambitions, is not the sole mechanism for achieving the carbon reductions that this, the greenest Government ever, will achieve during their time in office. Does she acknowledge those two points?
Luciana Berger: The hon. Gentleman says that this Bill is about a 20-year project, yet the Government’s new clauses 6 and 7 relate to 2050. If there is a 20-year project, at the very least we would like to see some
Mr Brine: I imagine that a sunny Saturday afternoon in Winchester would produce an equal number of people to talk about this issue. However, the green deal is not the sole mechanism for reducing carbon emissions. Also, the Minister’s having to come to Parliament annually to make a statement is one hell of a check on the Government’s ambitions in this area. That constitutes significant movement from the Minister on this issue, which, as he knows, I very much welcome.
Luciana Berger: I thank the hon. Gentleman for his contribution. All I will say in response is that the green deal is the policy by which the Government are proving their green credentials. They have professed themselves to be “the greenest Government ever”, and we want to see that reflected in primary legislation. I do not believe that it is enough to say that there will be an annual report that does not relate to our carbon emissions targets. Those are not separate entities or separate issues; they are interrelated and one cannot look at one without the other.
The warm homes amendment is important, because it links directly to carbon budgets, so it is possible to set out what action is necessary for each five-year period, which fits better with business investment cycles. I reiterate that point. Those in business say that we need that ambition enshrined in law to know what we should be doing to prepare, what opportunities lie ahead and what investment we should be making at this stage and every five years.
Finally, the level of effort undertaken on energy savings should be informed by advice from the Committee on Climate Change, so that it is sufficient and relevant to the wider challenge. Overall, and taken together with the second part of the proposals, which introduce a plan and a duty to take action on energy efficiency, the proposals would firmly ground the Government’s energy saving policies within the pre-existing targets on climate change and fuel poverty and would provide business with greater certainty on the action required.
We have heard the soundbite about the green deal, saying that millions of homes will be improved, that hundreds of thousands of jobs will be created and that this is an once-in-a-lifetime refit of the nation’s housing stock and the most ambitious energy-saving plan since the second world war. However, talk is cheap. In the five parts, 89 pages and 186 clauses of the Bill, there is no clear plan for how those ambitions will be realised. To even come close to achieving the hopes that the Government have for the green deal, Ministers need to set a clear level of ambition along with the plan for achieving it. The warm homes amendment will provide that, and I hope that Ministers will support it today.
Caroline Lucas (Brighton, Pavilion) (Green): I apologise for being late—I had a long meeting at the Treasury. I want to discuss new clause 7 and particularly amendments (a) and (b), which I have tabled. My concern about the new clause is that it is vague. It follows the Minister’s speech on Second Reading, in which he said that his Department will
“publish a formal aim—that is, on the face of the Bill—to take reasonable steps to improve the energy efficiency of the English residential sector by 2020”—[Official Report, 10 May 2011; Vol. 527, c. 1131.].
That is incredibly vague language, and it differs from section 2 of the Sustainable Energy Act 2003, which requires the setting of an aim for energy improvements in the residential sector—the aim required a 16% improvement by 2010. Section 2(4) of the 2003 Act required the Secretary of State to take reasonable steps to achieve that particular numerical aim, but that section will be repealed by new clause 7.
The new clause is also weaker than the further statutory aim under section 217 of the Housing Act 2004, which set a 20% improvement aim by 2010. As with the 2003 Act, section 217(1) of the 2004 Act requires the Secretary of State to take reasonable steps to achieve the 20% target, and time has superseded that. In new clause 7, we have something that is weaker than the two previous Acts of Parliament, both of which were supported by the Conservative, Liberal Democrat and Labour parties. In that respect, new clause 7 is step backwards, not forwards.
The new clause is also so vague as to be virtually unenforceable. “Reasonable steps” is such as a nebulous term that it is difficult to know how one would judge whether that has been achieved. Again, that compares unfavourably with the 2003 and 2004 Acts, which specified that reasonable steps had to be taken to achieve a specific percentage of improvements, rather than the unmeasurable and unstated amount in new clause 7. That is why it is unsatisfactory in terms of dealing with climate change and fuel poverty.
Claire Perry (Devizes) (Con): May I say that I rather like the hon. Lady’s explanatory statements and would like to see more of them, as they are helpful? More importantly though, given that the Government have presented a legally binding target for the overall reduction in emissions, the term “reasonable steps” has legal ramifications. Given that we have set the overarching legal requirement, which I support, a fairly heavy burden, with which I am comfortable, will be placed on the Minister.
Caroline Lucas: I have some sympathy with what the hon. Lady has said. To ensure, however, that timely and effective progress is made towards an overarching target, incremental steps need to be measured, or we will suddenly realise that the gap between where we are and the target that we need to achieve is too large.
Caroline Lucas: The annual report is certainly a help, but having a target of 29%—the figure in the Government’s own 2010 document—would concentrate minds and help us to be clearer about the objective we are trying to achieve.
Huw Irranca-Davies (Ogmore) (Lab): I thank the hon. Lady for her well-intentioned amendments. I, too, support the Government’s annual report—it is a good way forward—but I share her concern, which has been expressed by many people who want to see success in this area, that the absence of concrete targets, which would give robustness to the annual reporting, might allow slippage.
Caroline Lucas: I thank the hon. Gentleman for his support. In a sense, my amendments precisely try to achieve that kind of robustness behind a specific target, so that we can see that progress is being made. It is nice to hear warm words from Government Members, but we need to see real targets and timetables, which is what my amendments seek to achieve.
Mr David Anderson (Blaydon) (Lab): It is a great pleasure to serve under your chairmanship today, Mr Crausby. My hon. Friend the Member for Liverpool, Wavertree has said that some 70 organisations have come together around the warm homes amendment, and I will mention just a few of them—they are not the sort of people I normally support, given my background.
We could debate how we do this. The Minister has said that the process will be market driven, and although I think that it might be better driven through a public sector body, that is not where we are, and we have to take cognisance of what is being said by the markets. The people who have signed up to the World Wildlife Fund amendment are clearly people who are in the market. They want to make money—there is nothing wrong with that—but they also want to provide a service for the people.
“strongly supports the Government’s Green Deal and is committed to helping our customers reduce their environmental footprint…To help ensure we meet these important targets we would like to see the Government back WWF’s Warm Homes amendment.”
“A strong Green Deal is essential to make it easier and more attractive for everyone to take action and cut emissions in their homes…We’re backing WWF’s Warm Homes amendment to help ensure that the Green Deal supports the target to cut emissions by 80% by 2050.”
“The FSB is demanding a better Energy Bill because it currently lacks the ambition needed to meet our climate change goals and drive investment in the low carbon economy. The Green Deal has the potential to help realise these goals and create green jobs across the UK, but only if the Bill is given a clear purpose and direction. That is why the FSB is urging MPs from all parties to support the Warm Homes Amendment.”
I will be really interested to hear from our Liberal Democrat colleague today whether her party supports the amendments. Clearly, in the past they would have been the people at the front on this issue.
Zac Goldsmith (Richmond Park) (Con): I understand that the support from these organisations, which have been listed a few times, preceded the Government’s two late amendments, which we are now discussing. I suspect that those same organisations would support the amendments, because in all my discussions with them in many meetings in recent weeks they have said that they support the warm homes amendment, principally because they want a mechanism by which we, and people generally, can judge the Government’s success or failure in the green deal. Requiring the Secretary of State to report annually to Parliament will put such a mechanism in place.
The issue is not about enforceability. If the Government miss their targets, the targets will still be unenforceable under the proposals made by the Opposition and by the amendments tabled by the hon. Member for Brighton, Pavilion. The report will merely be a mechanism by which the Government can be shamed or embarrassed at the failure of their policies, which is exactly what the two Government amendments will do. I therefore do not see any difference.
Mr Anderson: Opposition Members are happy with the Government amendments. They go so far, but not far enough. If a target is set down, people will know that that is what the Government have to achieve. An annual report might tell us nothing, but if we have a target we can hold the Government to account, which is surely what we are all about in this place.
On the point raised by the hon. Member for Richmond Park, does my hon. Friend the Member for Blaydon share my disappointment that since Government new clause 7 was tabled not one of the 70 organisations has contacted me by e-mail or in any other way to say that it endorses new clause 7 and rescinds its support for the previous proposals. Why might that be the case?
Mr Anderson: I do not necessarily share my hon. Friend’s disappointment, because I am not sure why those organisations have not responded—perhaps they are happy rather than unhappy. However, they are very clear in the statements that we have all been sent copies of. We know where they want to be—unless the Minister has any pearls of wisdom, having had word from the 70 organisations. They are saying, “Thank you very much. We don’t want to push the proposals. If that is
Huw Irranca-Davies: May I suggest to my hon. Friend that one reason why there is such strong support for the proposals, and indeed for amendments (a) and (b), is the suspicion that whereas the previous Government were willing to be both praised and shamed, because they were held to account by targets and by organisations such as the Sustainable Development Commission, in this case we will have an annual report but we will not to be able to apply the targets rigidly, in the way that was proposed? That is why we are rightly being asked to hold the Government to account much more rigorously.
Mr Anderson: I agree entirely with my hon. Friend, because those organisations are acting for the right reasons—they want the new system to work. I will add two more comments, Mr Crausby, because it is vital that we listen to what such people are saying.
The Chair: Order. We have 108 clauses in the Bill as it stands. Your quotations may be relevant, but may I ask you to keep down the number of them? I know that we are at an early stage in our proceedings, but we need some discipline.
“the Government must be much clearer about what the Green Deal should achieve if it is to succeed…and…businesses of all sizes should be given the confidence to invest in the developing the capacity and skills required. Without a clear delivery plan the Government risks having no Green Deal in 2012.”
As we heard earlier, if we had started earlier, nearly 5,000 homes a day could be being improved. If the work does not start within the next year, it will be even harder to reach the targets that we already have.
To relate a local comparison, early in this century, the homes which were built early in the 20th century were nearing the end of their life. The local authority introduced a plan, saying to the people in those houses that it would pay for half the refurbishment of their home if they paid for the other half. When we went into details, people asked questions such as, “What happens if I want to move out of the house? What happens about interest rates, and who will set them? What will I be liable for?” The local authority could not give them the answers that they wanted. Ultimately, the people did not buy into the scheme and the houses were pulled
During the debate on Second Reading, hon. Members on both sides of the House gave a clear message that the ambition we have for our energy efficiency policies should be firmly anchored in legislation. Hon. Members also argued that such ambition would carry particular weight if delivered in a way that was transparent and open to parliamentary scrutiny. That can be ensured only if appropriate reporting arrangements are in place. I listened to the debate and was persuaded by the arguments that were made. As a result, I announced my intention to put a formal aim, together with specific reporting requirements, for our energy efficiency policies in the Bill. While I take on board the comments from Opposition Members, I am very pleased to be able to fulfil that promise with amendments.
New clauses 7 and 6 were brilliantly articulated by my hon. Friend the Member for Richmond Park. New clause 7 sets out a formal aim, which serves the same purpose as new clause 8, at least in terms of linking the purpose of green deal delivery to the delivery of our carbon budgets, which of course are the overarching framework to which my hon. Friend the Member for Winchester so rightly and accurately referred. I understand the wish for Government to set out a formal plan for the green deal and the ECO through new clause 9. As part of the forthcoming consultation, we will publish in detail how the programmes will be constructed, and that will give some of the market participants to which the hon. Member for Blaydon referred much of the clarity that they need.
I think there is still a fundamental pressure pulling members of the Committee in different directions. Labour Members, in their heart of hearts, yearn for a plan—a centrally organised Government plan like Warm Front. They yearn for, perhaps not an old style five-year plan, but a Government-driven and Government-owned programme of works. That is not the green deal; that is not how it will work. Nor are targets the way it will work, because we have been down that road before and it ended in failure. The previous Government legislated away fuel poverty.
Earlier, at the beginning of this century, the previous Government, with years ahead of them, legislated that fuel poverty would be abolished by 2016—by 22 November 2016, my hon. Friend the Member for Wealden reminds me. Yet the hon. Member for Ogmore has already reminded us that when the previous Administration left office, fuel poverty had risen year on year since 2004 to 4 million. The hon. Member for Liverpool, Wavertree said that 5.5 million are living in fuel poverty. We all know that we are nowhere near—certainly, if we had maintained the previous policy direction—abolishing
Graham Jones: I take on board what the Minister says about targets, although I do not agree with that point of view. In the NHS, we have seen that without targets, waiting times have gone up. I want to draw on the reality of why targets on fuel poverty are important. In my constituency, Hyndburn, there are 5,400 households in fuel poverty. That is not just a number. If hon. Members were to walk the streets, they would have the perception that there are many poor people living in fuel poverty, partly because of the condition of the property stock. We need to do something about it. This is 5,400 households with families, children and grandparents—real people, with real lives. I do not accept that there cannot be targets because energy prices are rising. Fuel poverty has risen because of rising energy prices, but that does not mean that we can neglect a target that involves the old Victorian stock, which is, by and large, the problem in my constituency. The Minister needs to take targets more seriously.
Gregory Barker: I take the point on board, because the hon. Gentleman is right: this is ultimately about people. It is about families and the houses they live in. On linking the green deal to the delivery for those families of our fuel poverty targets, I want to remind members of the Committee that the impending review of the fuel poverty target and definition will take all that into account. It would therefore be inappropriate to include a reference to the existing target and definition when we have already announced that we will be taking forward the review by Professor John Hills.
Huw Irranca-Davies: I am now totally confused. The Minister is saying that the targets are useless, but he is revising other targets into which this will fall. In his peroration he passionately spoke against target-driven cultures, so why is his Front Bench colleague accepting the renewables targets we have for 2020 and 2030, as well as our carbon reduction targets, if they are so useless?
Gregory Barker: Unfortunately, the hon. Gentleman has totally misquoted me. I did not say that all targets were useless, and the record will show that. I said that we should not overinvest in targets per se. A plethora of targets will not incrementally increase the efficiency and efficacy of a policy. A few simple targets are invariably much more effective than a whole plethora of targets, as we found under the previous Government.
Claire Perry: In his opening speech, the Minister alluded to the point that the targets have failed, despite all the efforts and all the money, because, fundamentally, we have a housing structure that means people move before they can extract the economic value of doing this and because the installers are not trusted. The beauty of this measure is that it overcomes the two fundamental bottom-up obstacles to change. Frankly, we should focus on that and stop shilly-shallying around with trying to target the reduction in fuel poverty. We all want to reduce it, but we have to understand why it has not happened and work with human nature to make it happen.
Gregory Barker: My hon. Friend makes an excellent point, which I entirely concur with. I want to reiterate, however, that we are not against all targets per se. We are against the overuse of targets and the simplistic belief that targets alone can deliver change. Targets are the easiest thing to set and the hardest thing to meet. That is why this Government are putting less focus on targets and a great deal more emphasis on road maps for delivery. It is the delivery and achievement of the aims, rather than setting ever more targets, that we are focused on.
Amendments (a) and (b) seek to amend new clause 7 to create a far more specific sub-target for our energy efficiency policies. Energy efficiency is certainly one of the most cost-effective means of reducing emissions at present. As hon. Members have said, however, this is a decades-long programme, and we cannot predict the future and say for sure that that will always be so. Committing ourselves, therefore, to a long-term carbon budget sub-target for energy efficiency might put us at risk of not following the most cost-effective pathway in future. Furthermore, targets are not the most important factor in ensuring transparency or accountability, which can be realised fully only through clear, robust reporting on deliveries. The reporting is ultimately the guarantee.
Caroline Lucas: Of course reporting is important, but it must report against something, which must surely be the target. I appreciate that targets are not the be-all and end-all, but even as recently as 2010, page 7 of the Government’s own document, “The Green Deal: A Summary of the Government’s Proposals” states:
Gregory Barker: We will certainly be creating the framework and the trajectory that will clearly indicate the progress. Ultimately, we all know what we are trying to achieve. As the hon. Member for Liverpool, Wavertree has said, 14 million homes by 2020 and 26 million homes by 2030 is the trajectory. New clause 6 will achieve as much by putting a specific requirement in the Bill to report annually on what has been achieved by
I assure the Committee that we will seek to report the carbon saved as well as the number of homes that receive measures. We will break down the types of measures that have been installed and report on our overall progress in reducing fuel poverty. All those things, about which the Committee is rightly concerned, will be part of the reporting procedure. As the green deal gathers pace over the course of the next decade, I dare say there may be other features that become a regular part of reporting as the programme gains traction and we understand, based on experience rather than conjecture, how it will be delivered.
Mr Anderson: May I ask about a specific point that was made by the hon. Member for Richmond Park? Have any of the 70 organisations that have signed up for the warm homes amendment been in touch with the Minister to say, “Thank you for new clauses 6 and 7; we no longer feel it necessary to pursue the warm homes amendment”?
Gregory Barker: No, I cannot give him that assurance, but it has been a relatively short period of time since the amendments were tabled. In politics, thank you letters are fairly few and far between. [ Interruption. ] In my experience—perhaps that says more about me than it does about politics. We will continue to have a strong dialogue with all the stakeholders and market participants that have been mentioned in the debate on clause 1, the vast majority of which are committed to the roll-out of the green deal.
I conclude by saying that we have announced an energy efficiency aim that will be directly linked to our carbon budgets. We made that promise on Second Reading. We do not believe that sub-targets would be the most efficient way to make savings; we do believe that we must offer transparent reporting, but we must wait for the findings of the fuel poverty review before making any further commitments about adding to fuel poverty targets. On that basis, I urge hon. Members to support the clause.
Dr Alan Whitehead (Southampton, Test) (Lab): When I serve on a Public Bill Committee, I always try to ask myself why we are here. What is the purpose of what we are doing? Why are we passing this Bill and not another? What is our aim? It is germane to ask such questions in relation to this Bill. Are we trying to bring about a green deal because we are not very happy with fuel poverty and would like people to have warmer homes? Do we think it a bit embarrassing when we see snug, warm homes in the cold climate of Scandinavia doing much better than ours? Perhaps we should do a bit better as far as our homes are concerned, so maybe that is what
There are various possibilities and they all have some validity. However, as I understand it, the overall purpose of what we are doing is that the green deal, if it is to be the success it is claimed it should be, will not just radically transform the energy efficiency of our homes up and down the country, but do so to the extent that it will make a substantial contribution—indeed, the major contribution—to bringing about a far more efficient domestic energy environment, with huge gains in relation to our climate change targets. Not only is that a nice aim, but it is vital inasmuch as we know that one of the key things that we have to do to meet our climate change targets is vastly and radically to improve the energy efficiency of our buildings up and down the country.
As things stand, this is about the only measure that will really get going on that particular target. I say “target” because the target of energy efficiency in relation to climate change is an integral part of the overall targets that we have all agreed to in the Climate Change Act 2008. Moreover, the other day the Government agreed, wisely, to the fourth carbon budget and its radical targets, a key building block of which are enormous increases in energy efficiency in buildings. Indeed, if that building block were knocked away, those targets could not be met, and neither could what we have signed up for in the Climate Change Act or what the Government have just signed up for in the fourth carbon budget. There is, therefore, a serious purpose to the Bill, but that purpose is integrally bound up with targets.
Huw Irranca-Davies: Part of the success of the Government’s laudable signing off of the fourth carbon budget is the absolute certainty that it gives to investors that the Government are wholly committed. They can charge headlong and go for what we need to do on carbon reduction. A similar thing applies here. If we are serious about the green deal and about having an army of people on the ground creating green jobs and doing work on the green deal, we should not be worried about putting our money where our mouth is and pinning it down to identifiable targets.
Dr Whitehead: Indeed. My hon. Friend makes an important point in relation, again, to targets. The question in my mind, therefore, is not whether we have targets or not. It may be the case that we have simplified and fewer targets and we can choose which targets we have. We have effectively already had a number of targets chosen for us by the Climate Change Act and what we have done since then. Those are not negotiable targets or targets that we can wish away. We cannot have an inquiry into whether they should be maintained or not. As far as I am concerned, we are signed up to those and we must stick with them.
Therefore, although a portfolio of contributions to that target can be made, the choice that the Government of any particular era have is to change how the palette of different elements that make up that target will look. Nevertheless, there has to be a palette of those ingredients to make up that target. Not only must there be a palette, but we have to know what that palette will look like. If parts of the palette prove to be less successful than
How that palette is made up may vary between Governments. Indeed, the Minister made the point a moment ago that the previous Government thought they could wish away various things by creating targets and believing targets had somehow been achieved by wishing them into existence in the first place. I think that was the purport of what he said. He is not right, but he believed that to be the case. He has said that a different way of achieving that goal is to go about this by using market mechanisms. The green deal is essentially a market mechanism for getting to those targets. That is why we are here. We are talking about different mechanisms but the same targets.
This is my thank you note to the Minister. In the other place, there was no talk of targets or of new clauses 6 and 7. Indeed, I am afraid there may have been apocryphal exchanges such as, “Well, it’s a market mechanism, so we don’t need to actually measure whether it works or not. The market’s going to deal with it. You wouldn’t go and tell Marks and Spencer how to sell its goods, so why should you tell people how to deal with this?” Even if it is a market mechanism, Marks and Spencer plans and looks carefully at how many jumpers it is selling. It has daily returns of what jumpers are selling in what stores. If the jumpers do not sell, it decides to sell different jumpers in different colours with different arrangements. It does so very quickly because it is concerned that its targets should be sorted out so that its market is working well.
First, we need to find out why we have introduced the Bill. I think we understand that. Secondly, having decided why we are doing it, we want to know whether it is actually working. Thirdly, if it is not working, we need to know what other things we should do to make it work, so that we can carry on reaching the targets that we decided we were going to reach in the first place. As I mentioned, my sort of thank you note to the Minister is to express my gratitude for putting in place some clauses that were not there before, as he said on Second Reading that he would. However, those clauses essentially talk about recording as opposed to relating what we are trying to do with recording and then looking at how we might do better if we are not doing as well as we might.
The previous Government’s fuel poverty targets might not have been reached due to fluctuations in energy prices on the world market over time, because fuel poverty is related to energy affordability. However, interestingly, from 1997 to 2010 the standard assessment procedure rating of UK houses rose by no less than 13 points. Over the last five years of that period, the SAP rating, averaged across all UK housing stock, increased 1.5 times as fast per year as in the first five years. One could say that an underlying target had been reached, inasmuch as a lot of progress was made on increasing the energy efficiency of UK homes.
If we do not keep to such targets and such a pace and give ourselves targets to reach on that key element by a particular date, we might as well have a SAP rating target to stand by: an average of 70 by 2020, or similar. If we do not have targets to adhere to and simply say, “It is a market mechanism and we will not bother to
New clauses 6 and 7 are good, but no cigar. New clauses 8, 9 and 10 get us towards the cigar. Whether we will get the cigar in the end we do not yet know, but we need to understand that knowing, by whatever measure, that we have increased the efficiency of homes radically by a certain period and on a certain trajectory, using methods that we can analyse and revise if they do not work, is essential to making the process a success. That is why I think that the new clauses are an essential part of the Bill. The Government can take their choice of which one they want, but the new clauses are supported by many organisations, as my hon. Friends have said, and point in the right direction in terms of the framework on which the Bill should be built. Putting new clauses 8 and 9 into the Bill is therefore important.
If my limited oratory fails to persuade the Committee that that should be the case, new clauses 6 and 7 are far better than where we were, but I do not think that the Bill is all the way there, and we want to get all the way there.
Caroline Lucas: While we are on the subject, I feel compelled to say a few words about targets, because we should bear in mind the wider context of the urgency of climate change and what the science demands. It suggests that the cuts necessary are far greater than anything that we are discussing. I feel compelled to put that on record. We should remember that the latest science makes it clear that the concentration of CO
2in the atmosphere, which has risen from 270 parts per million in the 19th century to about 435 parts per million today, must stabilise at 450 parts per million at most. To be safer, and to run much less of a risk, scientists are increasingly considering a limit of 350 parts per million.
The Government’s carbon budget targets, which culminate in an 80% reduction by 2050, are based on the aim of stabilising the concentration of greenhouse gases in the atmosphere at about 550 parts per million of CO
2equivalent. Worryingly, the former Government’s Stern report says that, at that level, there is still a 75% to 99% chance that the global temperature rise will exceed 2° C. If that happens, there is, as we know, a high chance of runaway and disastrous climate change. I strongly believe that it is imprudent and immoral knowingly to accept that level of risk. To achieve a much safer level of CO
atmosphere, global emissions need to drop by as much as 60% as soon as 2030. Industrialised countries with high emissions, such as the UK, can afford to, and need to, reduce their emissions much faster. A 90% reduction by 2030 means an annual reduction of about 10% per year from now until 2030.
I do not expect the Minister suddenly to get up and tell me that he is convinced by that, but it is important to put that wider context on the record, because according
Zac Goldsmith: I want to echo the call to arms from the hon. Member for Brighton, Pavilion. It seems that there is a cross-party consensus on the issue. There are concerns across the board about how rapidly the scheme will be taken up, but the reality is that no one can possibly know, because this is a new scheme and a world first. Hopefully, it will become something of a template for other countries to follow, but it is hard to make predictions about it.
It would be mad to imagine that the existence of targets will make the difference between success or failure; that is not the bit that will make any difference. However, I ask the Minister to acknowledge a point that I made on Second Reading. I urge all the Ministers at the Department of Energy and Climate Change to do everything they can to persuade the Treasury to allow them to introduce greater incentives into the Bill. There are things that could be done. For example, we could reduce VAT on a wider range of energy efficiency materials or provide stamp duty rebates for people who pass their homes on in the best possible environmental condition. I could also include some of the wider points that the hon. Member for Brighton, Pavilion made much earlier today, but those two incentives alone could make the difference between a runaway success and something that is less than a runaway success.
That is where we should put our emphasis. I know that the Bill does not allow an opportunity to make amendments to that effect, but I hope that the ministerial team will take the opportunity to hammer that message home to the Treasury, and I hope others will echo the point.
Luciana Berger: As Opposition Members have reiterated, we face a mammoth task. To reiterate, 43% of our domestic emissions come from households and commercial properties, so the green deal should be linked to the Climate Change Act and the target of an 80% reduction by 2050. Sadly, I am not reassured by the Minister’s response and I am very disappointed that he will not accept our proposals—I had hoped that he would reconsider.
We will not drop our proposals. We have not heard from the Liberal Democrats, but in the light of the many comments from Opposition Members, I would ask the Minister to consider taking his provisions away and coming back with something stronger. I ask him to reflect on that in his response. If not, we will be forced to have a vote, because all Opposition Members feel incredibly strongly about the issue.
Huw Irranca-Davies: I want to make a brief contribution on an earlier part of the debate. I want to thank the Minister for the fact that he and his team have listened and responded to earlier queries and worries that were raised. Some good amendments have been tabled to take us forward, but we are asking him to go a little
At this morning’s sitting, the Minister led the debate on how those who will benefit most from the green deal and who will be least penalised by the green deal element of their bills will be those who will, for whatever vagary, end up paying more. He reassured us that the green deal will come into its own in a winter spell. As the bills increase, the green deal will come into its own. If there is a different characteristic in the make-up of the household than originally stated, that will assist. I was fortunate to discuss with organisations and colleagues during the break the fact that matters seem to have the Bargain Booze mentality although other off-licences are available, when people bulk buy to save more, but have spent a tremendous amount to get those savings.
“But current modelling does not adequately reflect how consumers use their homes. Green Deal advice must be based on consumer behaviour, but also ensure that those who under-heat their homes get help and limit costs for subsequent residents. It must also recognise the different heating needs in different parts of Great Britain”.
That is exactly so, given that the temperature in places like Sennybridge, not far from my constituency, is typically at minus 4° or minus 5° when we are basking in 0° or even in plus 1° or plus 2°. Point 1 continues that
Will the Minister expand on the vagaries around the argument advanced this morning that the more people spend, the better the green deal, and give us some examples from his model about what that means in terms of an actual bill for someone? How will the system work in practice? I want members of the Committee to understand fully what he means by saying that people will not end up paying more when the cold snap hits and snow is outside the door or when a characteristic in the house changes from when the original green deal was set up. I look forward to hearing his comments because we are struggling to understand such matters.
Luciana Berger: On clause stand part, I wish to revisit briefly my earlier request. I hope that the Minister can reply to my request for submissions to the green deal call for evidence. Several members of the Committee are keen to know the response. We welcome the Government’s earlier commitments to discuss further the green deal payment on bills, although we need more clarity. Much debate has taken place about the variable interest rate, and we should appreciate the opportunity to discuss that further, too. We welcome the commitment to explore water efficiency with DEFRA colleagues, and we recognise the fact that the hon. Gentleman understands the serious worries of Opposition Members about the energy company obligation going to the able-to-pay sector. We want to flesh that out when we reach later clauses on the ECO, but it is raising much worry outside of the room.
Given that we are in the thank you card business this afternoon, I also want to thank the Minister. We are really pumping him up, but he listened to several contributions that we made to the debate on Second Reading and took them away. He was lobbied by several hon. Members and he has tabled amendments. New clauses 6 and 7 clearly anchor the scale of our ambition for the green deal in the Bill. Whether they are cigar or no cigar, as the hon. Member for Southampton, Test said, I do not know, but they go a lot further than they did several weeks ago, and certainly when we talked about the Bill on Second Reading.
I agree wholeheartedly with the hon. Member for Brighton, Pavilion and my hon. Friend the Member for Richmond Park: we must always aim higher. There is a climate crisis and we must always look beyond what we are doing, within the reasonable bounds of Government, and then go even further. Let us get this legislation on the statute book. Let us get the green deal up and running. Let us create this new market and motor on with dealing with one of the biggest causes of our carbon emissions, which is our existing housing stock. Let us also recognise, however, that the green deal is not the be-all and end-all of the Government’s ambitions for meeting their carbon budget. It is one element of that, and one element of that only.
Gregory Barker: I will endeavour to pull the wide-ranging and informed debate together and briefly argue the points. Ultimately, there will not be a total meeting of minds on the issue of targets, but I think we are much closer in terms of purpose and intent than this rather abstract debate around targets might suggest. We clearly know what we have to achieve. I listened very carefully to the hon. Member for Southampton, Test, who always has something worthwhile to say. I am grateful for the thank you card, which seemed to come with something from Marks and Spencer as well. I am afraid that I cannot quite offer him in return the cigar that was proffered, but I hope he will see that our clauses maybe represent a slim panatella, if not a great big Cuban proposition.
We are making progress and we are setting the framework for the Bill. I am sure that there will be further iterations and improvements to it down the years in the next two decades. For the very real and urgent reasons that the hon. Member for Brighton, Pavilion reminded us of, in a timely and articulate way, the science of dangerous climate change is becoming more urgent and more pressing. We need to grip that, but one should not in any way interpret the lack of targets or sub-targets in the secondary legislation as being in any way an underestimation of the important points that she made on the need for action. We recognise that, if we are going to meet our carbon budget, which the coalition Government have signed up to meet, and meet our statutory obligations under the Climate Change Act 2008, to which everyone in the Committee subscribed, then obviously, as 43% of that budget is made up of housing, we clearly must have the policies in place to drive that forward.
Gregory Barker: Not at the moment, if I may. We will need to drive that forward. It is not just targets or sub-targets that will be key. As my hon. Friend the Member for Richmond Park said, the biggest lever of
“The Government is committed to the success of the Green Deal and will act to encourage and incentivise take-up so that the Green Deal will appeal to households, businesses and prospective providers alike, before it is introduced in 2012”.
It is way above my pay grade to speculate on what the Chancellor has in store for the Budget, but the Department is engaged in a constructive dialogue with the Treasury about its options. The coming Budget will certainly not be the last opportunity for us to come forward with further means of incentivising take-up once we have the benefit of real-life experience to analyse.
Regarding the points that have been raised in the clause stand part debate, I can only repeat what I said this morning. I do not understand why the hon. Member for Ogmore, who is normally as sharp as a pin on these issues, cannot quite grasp what we are saying. We are saying that those who spend most on energy in the “leakiest” homes will benefit most from the green deal. I can assure him that there will absolutely not be a one-size-fits-all approach. The application of the golden rule will be cautious, as I said this morning, to ensure that it does not over-anticipate the savings that might come from any particular technological intervention or measure. Each house will be individually assessed for its location, the type of building that it is and the energy usage of its occupiers. A collection of those factors will not only trigger the green deal but the ECO. Where the occupants of a building are in fuel poverty, the green deal’s weighting of the ECO will be increased and the very poorest people will benefit most from the ECO. That stands to reason.
I am not in a position to spell out the exact split or ratio, even if I wanted to. But in all honesty, we are in sympathy with both sides of the Committee in what we are trying to achieve. I fully understand what the hon. Gentleman is saying about the need to ensure that we embrace fuel poverty within the ECO, but I do not think that this choice is a binary choice, or at least in many cases it is not a binary choice, as we said this morning. Many of those in fuel poverty live in these houses that are hard to treat. We will certainly not be prioritising Blenheim palace or Castle Howard as recipients of hard-wall insulation. [ Interruption. ] To the other place: sorry about that. We all have a shared appreciation of where this money needs to be spent. Ultimately there will be a finite resource in any given year, and we must ensure that it is used effectively and that there is both a carbon element and a social element to it.
I want to make a statement and respond to the request from the hon. Member for Liverpool, Wavertree, but it might make more sense, Mr Crausby, to do that as a point of order before we go on to the next part of our proceedings. If that is in order, it would be helpful to answer the point that was made.
In summary, I am grateful for the acknowledgment across the Committee that we have listened on Second Reading and that we have moved substantially forward.
The Chair: You will get the opportunity to vote on the amendments, but they will come in the correct marshalled order, not at this point. They have been debated—and we have dealt with clause 1 stand part—but we will deal with them later.
Gregory Barker: On a point of order, Mr Crausby. With your permission, I would like to make a brief statement about the request of the hon. Member for Liverpool, Wavertree for the disclosure of the responses to the Department’s call for evidence. The submissions that we received contain market-sensitive information about the costs of production, product performance and market share, which was provided to DECC as “commercial in confidence”. We as a Department would be happy to share that information with the Committee, but it is not within our gift to do so without the consent of the companies that gave it to us, as it would be a breach of confidence. However, what we can do—I undertake to do this for the hon. Lady—is to check with the companies whether they are content to have their evidence submitted to the Committee, and, having spoken to the companies, report back to her.
Huw Irranca-Davies: I wish to make some brief comments on clause 2. I would like to direct Members’ attention to subsection (5). We have not tabled amendments because I am confident that the Minister will clarify my queries—not concerns—on the matter. In the past few months there has been a great deal of debate on microgeneration, the green deal and particularly the potential of feed-in tariffs and the renewable heat incentive; indeed, they have potential. There has been debate particularly on how they would fit either within the green deal or alongside it. There is a significant difference
It is probably fair to say that this is an area in which the Minister and his team have been taking soundings, not only in the past few months, but throughout the past year. The situation has been fluid, and there has been a lot of speculation, so now is the time to see whether we can have some clarity, albeit that there is more work to do.
That is tremendous and is to be welcomed, because the two combined, taken with the definitions referred to in the 2006 Act, are up to date and quite wide ranging. Once again, the Minister is to be applauded for listening and for working hell for leather over the past few months to try to incorporate this in the Bill. This is the first opportunity we have had to discuss it.
However, the list of possible microgeneration technologies in section 26(2) of the Climate Change and Sustainable Energy Act 2006 differs from that in the Minister’s document of May 2011, entitled, “What measures does the Green Deal cover?” The Act refers to biomass, biofuels, fuel cells, photovoltaics, water, including waves and tides, wind, solar power, geothermal sources—of both types, I assume—and combined heat and power. The Minister may be able to tell me that, even though his document does not replicate that list, it actually covers the same things. I would like clarity. Perhaps I have misread, but can he confirm that the full range of microgeneration technologies in the original Act is replicated in the proposals? If they are not—they may well not be for a very good reason, because the Minister has done some impact assessments and has seen that some of them will not work in the green deal—which technologies are excluded and why is that the case?
It is laudable that the Minister and his team are thinking widely about how the various strands of DECC policy can be brought together in relation to energy efficiency and energy generation in individual properties. It is undoubtedly the case that that type of thinking has the potential to revolutionise energy by decentralising it. Perhaps it will also appear as a stronger thread—I look to the Minister’s colleague, the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden—in the evolution of the next energy Bill, which is much awaited, in relation to how
Will the Minister explain the Government’s thinking in relation to a phased approach—we have heard some speculation about this—to the introduction of some of the technologies to the green deal? Does the Minister want to see genuine trial, piloting and experiments, and learn from experience so that we have a graduated roll-out—that would make sense—or is this another Treasury-restrained area impacting on DECC policy? I would prefer the former, not the latter. If there is to be a phased roll-out under the clause, which of the technologies is likely to be first in line to move forward, according to the Minister’s current thinking? I know that he will not be able to give a precise answer right here, right now, but he must have some idea of the top two or three that will proceed—the Bill has been a year in fruition—and which ones will go later and which ones will not go at all. They may be the ones that I referred to earlier which do not seem to be replicated from the original list in the 2006 Act.
The microgeneration measures have been broadly welcomed by stakeholders, including Friends of the Earth, the UK Green Building Council and everybody in between. However, they have also called, as we do, for urgent clarity on how the green deal will integrate with feed-in tariffs and the renewable heat incentives in particular. I ask the Minister directly: in this green deal max, as he has described it previously, can the microgeneration technologies be included as part of the green deal package, or are they a bolt-on as part of the overall energy package? Are they integral to it, or are they separate but a lovely thing to add on? If they are to be considered as part of the green deal itself, do the household and assessor have to work through a hierarchy of energy efficiency measures, which is where the big wins are, to make sure that the home is at a suitable standard before they can even consider some energy generation? In simple terms, what would be the point of putting solar photovoltaic panels on a roof or of ground source thermal if the energy is simply leaking through the roofs, walls and doors?
I agree with that, because there is a big win for Members if we get the green deal right, not only in energy efficiency but in being able to say to householders and our communities, “You can metaphorically insulate yourself from rising prices by generating your own electricity and heat.”
The Minister is very familiar with the income that is derived from feed-in tariffs, which currently accrues to community schemes or individual householders. Will that income—or other income derived from measures that he might announce next year on domestic RHIs—contribute towards the financing of a wider green deal package, including energy efficient measures for a property, to make it stack up? If so, the plus side might be a boost in the attractiveness of the green deal for some people.
Huw Irranca-Davies: It has happened already. The downside of a capped, feed-in tariff pot of money as part and parcel of the green deal is that it increases the attractiveness for everyone. People who are in more modern homes that they have already insulated will grab at the scheme and say, “Hey, yeah—we’ll put in a little bit more of the thicker insulation and we’ll also have the solar panels on the top.” There will be a rush to the scheme, which might exhaust that pot of money much sooner than the Minister is expecting, and I know he has concerns about that.
In addition, the money may not get to those people who would benefit from it even more. It may not get to those communities in which we could not only upgrade insulation to a higher level, but we could say to people in those stone-built, terraced houses, “You’ve done all that—well done. You can also do this before the pot of money is used up.” If that is the case, will the Minister have to ration the FITs and RHIs under the green deal, or will he go back to the Chancellor to argue for more money in the next Budget or the one after that?
Many questions about the use of microgeneration in the green deal remain unanswered or unclear, and I have raised the issue to be genuinely helpful to the Minister so that he can put his initial thoughts on the map for us. We may have to return at a later stage in the Bill with some amendments to clarify the Government’s intentions, but I am hopeful that the Minister can answer those questions today and satisfy the Committee that he is clear about how we will integrate microgeneration into the green deal.
“The UK’s microgeneration sector is at the heart of a citizen’s energy revolution. In tough economic times, this rapidly growing industry is helping consumers to go green, has created thousands of jobs, aiding economic recovery, and attracting manufacturing investment here in the UK.”
He specifically paid tribute to the solar feed-in tariff that was introduced by the Labour Government a year ago with fairly strong cross-party support. The Minister’s response to that was poetic, if a little less restrained. He said,
In the light of the clause, I therefore ask the Minister whether microgeneration in the green deal is just the seed corn for reaping in future years, or whether we will get the harvest plentiful, and earlier. I look forward to his response.
Gregory Barker: I do not know whether I can match the poetic rhetoric of the hon. Member for Ogmore, but I shall do my best. Dylan Thomas, eat your heart out. I shall try to answer some of his questions, even if I do so in plain prose.
The clause is at the heart of the Bill, because it sets out what energy efficiency improvement means. It allows for a broad range of measures to be covered by the new framework, including measures relating to reducing energy consumption as well as energy generation measures. The clause is deliberately inclusive, allowing the greatest number of consumers and businesses to benefit from the new framework. It enables the Secretary of State to specify which types of measure will be eligible for green deal finance. The eligibility criteria will be set out in framework regulations.
The eligibility measures are being informed by consultation with experts and stakeholders and will be based on the latest science and evidence about the performance and quality of products. Indeed, the Energy Efficiency Partnership for Homes has just conducted a call for evidence on behalf of DECC on the performance and cost of the measures.
To give the hon. Gentleman some clue about our thinking, he is absolutely right. When we first conceived of the green deal, it was as an energy efficiency programme, but what became clear as we developed the policy in more detail was that, as the hon. Member for Brighton, Pavilion said earlier, householders will want a total, holistic, green prescription for their home. For many, that will mean taking advantage of microgeneration technologies. I share the hon. Gentleman’s passion for microgeneration, if not his eloquence. While in opposition in 2006, I wrote a pamphlet for my right hon. Friend the Member for Witney (Mr Cameron) on driving forward a decentralised energy economy.
One of the first things we will do to reform the feed-in tariff system we inherited from the last Government is make a direct link between energy efficiency in the home and the applicability of feed-in tariffs. We will use the early comprehensive review to do exactly that. The hon. Gentleman is absolutely right that there was no link. The scheme as we inherited it allowed people to bung solar panels on the roof without any regard to whether or not the home was energy-efficient. In terms of the hierarchy of measures taken, it must be right to look first at energy efficiency improvements, and then and only then to consider further microgeneration possibilities.
The green deal, at its core, is an economic model based on a payment mechanism through the Energy Bill. The mechanism is based on energy savings. Although microgeneration, at current costs, is complementary to the greening of a home in all the ways that we can easily imagine, in most cases it does not lead to energy savings, certainly if one does not include the benefit of the feed-in tariffs.
At the moment, it is difficult to envisage how to drive down the cost of somebody’s bills simply by including microgeneration technology. I have no doubt that that will change in due course as the industry scales up and microgeneration takes off in response to feed-in tariffs, innovation and consumer demands. There are early signs about both renewable heat and renewable electricity technologies—we must not forget renewable heat, as it is probably more important in carbon terms, ultimately, than generating electricity in the home—but they are still some way from being energy-saving in finance terms. There is some indication that heat pumps might be getting close to breakthrough point, but it is still early days.
That is why we have endeavoured as best we can, having listened to comments from colleagues on Second Reading and from stakeholders before drafting, to future-proof the Bill to ensure that when microgeneration technologies become more cost-effective, they can be met within the golden rule. However, at the moment, given the costs of such technologies and the feed-in tariff, I would expect a green deal provider or assessor to advise on the energy saving measures that could be undertaken in a home. I would expect those measures to be captured and paid for through the green deal mechanism in the Bill, with no up-front payment. It would be paid for through savings, subject to the golden rule, with potential support from the ECO. He or she will also point out the potential of these microgeneration technologies. There will also be, I hope and very much expect, competitive financing propositions, which will mean that there is another no-cost, up-front alternative so far as the customer is concerned, depending on the technology. Others may choose to pay something towards it and capture more of the feed-in tariff benefits for themselves, depending on their ability to pay. At the outset, we see them working in tandem. As the price of these technologies comes down, we hope that in due course there will be the potential to incorporate them within the green deal.
Huw Irranca-Davies: I thank the Minister for his lucid explanation. It is helpful for the Committee that, at least in the initial phase of the green deal, microgeneration technologies will stand as a useful extra and should be part of the assessment of people going into it. Those will not be part of the green deal financing mechanism, at least initially, until they come down in cost. That is a welcome clarification, which I thank him for. Perhaps we can further explore his thinking in some detail in separate meetings, before we get to the later stages of the Committee.
Gregory Barker: I thank the hon. Gentleman. Green deal installers will also be required, under clause 7, to adhere to any requirements in the installers code of practice on the standards of products installed; or, alternatively, to ensure that the products installed are listed in a document issued by the Secretary of State or an authorised person, identifying the products that are to be taken as meeting the required standard.
‘(c) to ensure through the use of regulation, the implementation of the code of practice, and audit, that co-operatives, mutuals, social enterprises, charities and businesses of all sizes have equal access to the market for supply and installation of energy efficiency measures under the Green Deal.’.
‘(12) regulations for fees payable under this section may establish a reduced fee for charities, social enterprises, co-operatives and mutuals applying for initial or continued authorisation as Green Deal participants.’.
Luciana Berger: Amendment 83 seeks confirmation from Ministers that the green deal market will not be confined to the big energy companies and big business. I am grateful that we have the opportunity to debate amendment 38 alongside it. Baroness Smith tabled an amendment similar to amendment 38 in Committee in the other place. Lord Marland agreed to take it away and discuss reduced fees with ministerial colleagues, with a view to bringing proposals forward at a later date.
The willingness of smaller and non-traditional players to enter the green deal marketplace will depend on how well they are able to compete and how easily they can access the new energy company obligation, and any administrative costs. We know that the ECO will make up a substantial proportion of the green deal market, and that companies of all sizes need to know that they can carry out an assessment of any house and be confident that, regardless of the household’s income, they can install energy efficiency measures. The draft document on the ECO recognises the need for an open market to ensure the maximum possible scale and range of energy efficiency delivery overall. It states that
“it may be difficult and expensive for smaller Green Deal providers to engage and negotiate with energy companies even when they can deliver energy efficiency improvements very cost effectively. Also, for equally natural business reasons, an energy company might also be a Green Deal provider and might have a preference for funding their own internal Green Deal activity. The company might prefer to provide ECO subsidy to its own Green Deal transactions, as this would allow it to grow the Green Deal side of its business and gain market share (at the expense of other Green Deal providers which had no such access to funding).”
It is important to highlight that there is a real danger that the green deal will become a closed marketplace, uncompetitive and dominated by the big energy companies, which is not unlike the retail energy market as it currently operates.
Concern has been expressed by several organisations, including the Builders Merchants Federation, that the green deal as it stands relies too heavily on big corporate names and favours vertically integrated businesses that will dominate the marketplace from the outset with a one-stop-shop approach. Retailers and the energy companies dominating the marketplace could jeopardise the green deal’s likelihood of success for two reasons: first, it would drive down competition and increase prices for customers; secondly, the suppliers that are least trusted by consumers would be the main drivers of the scheme.
According to the consumer advice group, Which?, only one in five of the public find their energy supplier trustworthy. Research by YouGov for the Great British Refurb campaign found that 46% of the public trusted their local authority to deliver a green deal scheme, compared with just 28% trusting their energy supplier and only 9% trusting DIY firms or supermarkets.
There are strong economic reasons for ensuring that small and medium-sized enterprises have equal access to the green deal market. The construction sector is dominated by small firms that have been particularly hard hit by the recession. Even despite some growth in the economy in the first quarter of 2011, construction activity fell by 4.7%—the sharpest decline since the first quarter of 2010.
As a Labour and Co-operative Member of Parliament, I am proud to be part of a movement not motivated purely by the pursuit of profit but by values of openness, social responsibility and solidarity. As well as being founded on strong principles, in practice co-ops and mutuals can be more efficient and are a positive force in our local communities. I am very pleased that the Government have also recognised the value of employee-led models. In a speech on 17 November, the Minister for the Cabinet Office and Paymaster General, the right hon. Member for Horsham (Mr Maude) Francis Maude, said:
The co-operative model also makes sense economically. Last year the co-operative economy across the UK stood at 12.9 million members, who were part of just under 5,000 co-operative businesses with a turnover of £33.5 billion, contributing 237,800 jobs to the economy. And there is clear evidence that the model is already thriving in the energy market. Baywind is a wind co-operative in Cumbria that has successfully carried out two share offers since it was founded in 1996, and currently has more than 1,300 members. It is clear that the green deal would benefit from having co-operatives and mutuals as part of a wide variety of green deal providers in the marketplace. That is why, in addition to ensuring access to the marketplace, we would like to see a reduction in the fee paid to participate in the green deal.
Ministers and officials indicated in my discussions with them that this fee is likely to relate to the administration costs arising from registering as an approved green deal participant. I want to make it clear that we believe it vital to have strong regulations in place to ensure that only reputable organisations are allowed to become green deal participants. However, that should not be done in a way that prevents organisations that are not purely driven by profit from entering the market, owing to excessive administrative costs.
I hope there is broad agreement among all members of the Committee that we do not want to exclude from the green deal the charities, co-operatives, mutuals and social enterprises that want to benefit our communities and focus resources on vulnerable people or households in fuel poverty. A reduced fee would not only lessen the financial start-up costs for those organisations but indicate to them that they have an important part to play in the green deal.
The green deal could be a catalyst for growth. The Minister has said that he would like to see 14 million homes transformed under the green deal by 2020—a task that would require work to be completed at the rate of almost 30,000 homes per week. Small contractors
However, the Federation of Small Businesses has highlighted that, under current proposals, small contractors are at risk of being excluded from delivering this work because there is no finance mechanism to allow businesses that are not tied to major green deal providers to offer an alternative service. Energy companies, major retailers and banks will therefore dominate the market, and the choice of providers available to consumers will be reduced.
A more desirable market would be one in which local businesses, co-ops, charities and social enterprises, particularly those with a focus on tackling fuel poverty, are guaranteed access to the ECO. The amendment does not seek narrowly to prescribe how that process should be carried out, as the matter obviously needs to be examined in some detail. It is easy to imagine a scenario in which the Government mandate that half the work done under the ECO should be carried out by small and medium-sized enterprises, co-ops, mutuals, charities and so on, either directly tendered by the energy companies or through a third party. I would be grateful if the Minister addressed that issue in some detail.
To what extent does the Minister think the Government will intervene in the marketplace through the regulation of ECO spending? We touched on that previously, but I am keen for more detail. Does he agree with the principle of co-ops, SMEs and charities being equally involved and having equal access to the green deal market? Will he acknowledge that if the green deal is dominated by the big energy companies and big businesses, it will not meet the ambitions he holds for it?
I mentioned at the start that in the other place, Lord Marland said he would bring in proposals for reduced fees. I am surprised that those proposals have not been introduced at this stage. Will the Minister say why that is the case and what consideration has been given to them?
Caroline Lucas: I should like to associate myself strongly with the hon. Lady’s words. These two amendments go to the heart of what kind of scheme the green deal will be and whether it will be something that benefits local economies, communities and businesses or whether it will be perceived as a top-down process that is done to people.
As the Minister knows and has said many times, there is enormous potential for job creation. Tens of thousands of jobs could be created in local economies around the green deal. In my constituency, there is huge excitement among local groups such as the local 10:10 group, the new Brighton Energy Cooperative, many local businesses and the local authority. All those groups are chomping at the bit to get on with doing this; they are very excited about it. It is important to signal at this early stage that we absolutely envisage that such groups will be strongly involved.
When an assessor goes to someone’s home, looks around and makes recommendations for the work that needs to be done, if people find out that the person
Claire Perry: I would like to support the spirit of the amendment, but I do not feel that I can do so wholeheartedly. We are all describing a situation that exists to some extent currently. A number of small operators—often building companies—are in the business and offer solar installations. Part of the problem is that people do not trust small operators or feel that they have the financial backing to do this. They are not sure that they will be there if there is a problem. There is the whole issue of customer care, which we will talk about later in the debate.
Having said that, I would very much like to hear the Minister’s comments on how we could include the not-for-profit sector or, indeed, small businesses as part of the overall contracting mechanism, as we have done in other areas—for example, in relation to the welfare-to-work reforms. It is absolutely right to say that a number of very good organisations could and should be involved, whether they are co-operatives, voluntary organisations or, indeed, small businesses. Perhaps the Minister could clarify whether there are some ways to include them and to ensure that there is trust and customer care behind the process.
Gregory Barker: I thank hon. Members for their points on amendments 38 and 83. Amendment 38 would ensure that where an authorisation fee was payable by green deal participants, it would be reduced for charities, social enterprises, co-operatives and mutuals. We fully endorse the enthusiasm of the hon. Member for Liverpool, Wavertree for co-operatives and we certainly want them to play an important part in the roll-out of community-level green deal programmes. We recognise that co-ops and other social enterprises will play an important role in delivering the green deal and therefore we need to ensure that we take appropriate steps to support their involvement, exactly as she says. We are also considering ways in which we can encourage other important social benefits to come out of the green deal—for example, encouraging local firms to take on more apprentices to help to bridge the skills gap that is evident in the sector. However, we need to carry out further work in consultation with those firms and organisations and with interested parties before specifying the details of how authorisation fees will be levied.
The hon. Lady asked why we have not followed through on Lord Marland’s statement in the other place. I can assure her that that stream of work is ongoing, but we need to do further work on how fees should be levied on the various green deal participants before making commitments to specific fee levels for different bodies. We want to be as open and flexible as possible about the way in which fees can be used to deliver wider policy objectives.
Gregory Barker: That is certainly what we hope to achieve and is very much in the spirit of the stream of work going on at the moment. This is not just about social enterprises or co-ops. We also want a fully engaged SME sector. We want to ensure that local green deals really do add value to the local economy. As much as we welcome the enthusiasm and support of the well known, national brands, we want to ensure that there is strong local participation. I was very pleased to be able to attend an event at Brighton university, in the constituency of the hon. Member for Brighton, Pavilion. We had a very constructive round table and were able to thrash out some of the issues that we would need to get over to ensure that there was local take-up. That work stream is ongoing in the Department. It would therefore be inappropriate to limit our flexibility at this point by being specific and placing details regarding the levying of fees in the Bill.
Amendment 83 would require the Secretary of State to ensure through regulation, audit and the code of practice that all types and sizes of organisation had equal access to the market for supply and installation of energy efficiency measures under the green deal. The green deal will stimulate the market in the UK, driving growth across the supply chain. We very much hope that there will be opportunities for all types and sizes of company in supplying and installing a broad range of measures under the green deal. We have been working closely with business representatives covering a wide variety of company types and sizes to ensure that our framework can work for as many as possible. I would be very happy to share that stream of work with my hon. Friend the Member for Devizes. If there are any contributions that she wishes to make or ideas that she wishes to share, I would welcome her input. We will continue to work with the sector as we set out our code in secondary legislation. However, we do not intend to regulate in this area.
Equally, the hon. Member for Liverpool, Wavertree is right to highlight the ECO as critical to a competitive green deal market. Additionally, we fully recognise that we need to include in our consultation how best to design the ECO to ensure that we promote an open and competitive market that will make the ECO’s opportunities available, including to smaller local participants.
Luciana Berger: I sense that the Minister is coming to the conclusion of his remarks, but I want to press him on one of the questions that I asked at the end of my contribution. Will he acknowledge that if the green deal is dominated by the big energy companies and big business, it will not meet the ambitions that he holds for it?
Gregory Barker: I perhaps would not frame it in those words, but for me a benchmark for the success of the green deal would be that it spurs a strong local response in communities throughout the country. We do not want to see only high street UK; we want to see
In summary, the Bill already contains all the necessary provisions to achieve what is intended by the amendment. I fully understand her motivation, which we share, and the sentiments behind them, but I hope that the hon. Member for Liverpool, Wavertree will withdraw her amendment.
Luciana Berger: I thank the Minister for his response, but I return to the Committee sitting in the House of Lords at which the point was initially raised. The amendment was raised in the spirit that we share, but in practice it should be made to the Bill to acknowledge the contribution made by SMEs, co-ops and mutuals in our economy and to ensure that they have a fair opportunity to participate in the green deal. On that basis, I will press it to a vote.
‘(da) for the use of a comprehensive assessment tool by green deal assessors that will reliably estimate the likely energy bill savings.’.
‘(12) Before making regulations or an order under this Chapter, the Secretary of State must, after consultation with industry, trade unions and key stakeholders, provide a plan for the recruitment and training of green deal assessors.’.
‘(12) Before making regulations or an order under this Chapter, the Secretary of State must report to Parliament with proposals on a specific Green Deal apprenticeships programme.’.
Huw Irranca-Davies: On a point of order, Mr Crausby. I should have done so earlier, but I now refer members of the Committee to my declaration of interest, which states that I am a member of the Co-operative party as well as of other organisations. I do not want to start a spate of declarations of interest, but I thought that it might be worth putting that on the record.
Luciana Berger: The three amendments that I will speak to deal with green apprenticeships, which we addressed briefly in our discussion of the previous clauses; the recruitment and training of green deal assessors; and the use of the comprehensive assessment tool by green deal assessors, which will reliably estimate the likely energy bill savings.
I will start with amendment 33, which deals with that comprehensive assessment tool. The aim of the amendment is to ensure that the green deal assessment method reliably estimates fuel bill savings. I expect the Minister will say that the assessment method will be part of the framework regulations. The amendment seeks to make the assessment explicit and to ensure that it will also be part of the green deal code of practice.
I am keen to press the Minister on a number of points. It is believed that the green deal will succeed or fail subject to whether the initial property assessment is conducted correctly. That is the basis on which the energy savings will be guaranteed or not and it is the basis on which people will know what options are available to them when someone comes to their home. We talked earlier about that episode—someone coming to people’s homes—being very important. It might not happen again until the person moves home, if at all.
There will be not only the golden rule calculation but the estimates of likely energy bill savings and the likely period during which the improvements will generate those savings. That requires assessment criteria to be based on a common standard that is approved and widely available to all participants.
I talked about the Builders Merchants Federation before. The BMF has also been very helpful with amendment 33, suggesting that there will be a software package based on the Building Research Establishment’s standard assessment procedure software or reduced data standard assessment procedure software. The assessment will need to encompass many factors, including the construction of the property, its condition, the function of the property and the occupancy, as well as the interaction of different energy efficiency measures. There are other factors that might need to be considered, such as variations in location and region. My hon. Friend the Member for Ogmore spoke earlier about towns that might not be very far from each other but that still experience different climates during the winter. There are different companies and different prices, but a standardised assessment scheme will provide a fair platform for comparison of the benefits of the green deal for each consumer.
However, given the lack of transparency in the energy market and fluctuating energy prices—only today we heard about a 19% price increase by one of the energy companies—with an upward trend in those prices, how does the Minister intend to ensure that each green deal fulfils the golden rule without an accurate and reliable estimate of the likely energy bill savings?
Without our amendment how will the Government protect consumers, when research shows that fuel bill savings calculated by standard assessment procedure can be, on average, 50% less than predicted? I want to reinforce that point. Fuel bill savings have been calculated in the past and they can be hugely inaccurate—they can be up to 50% less than predicted. A recent report by Which? revealed that in a trial comparing insulation assessments, on average consumers were given over-inflated estimates of energy savings. How will people assess energy efficiency improvements for low-income households, which currently under-heat their homes? Also, will each assessor work under a standardised assessment scheme?
Whether the green deal makes financial sense for a consumer will also depend on the price of energy; that point has already been made during today’s two sittings of the Committee. If energy prices are high, energy efficiency savings paid for by the green deal will be more cost-effective. If energy prices fall, the green deal may not make the savings on energy bills as quickly.
Estimating how much money households can save under the green deal is difficult, because it depends so much on energy prices, inflation, the type of retrofit undertaken and the state of the house involved. The main estimates for the domestic sector use central projections of energy and carbon prices. Changing those assumptions has a substantial impact on the overall cost-benefit balance. If low energy and carbon prices and high capital costs are assumed, the overall costs outweigh benefits by between £6 billion and £8 billion. With high energy and carbon prices and low capital costs, the net benefits increase substantially, to between £16 billion and £25 billion. Central estimates of the net benefits are between £6 billion and £11 billion. Those estimates were provided in the Library briefing on the Bill.
Domestic energy prices could rise by as much as 25% over the coming decade, as the big six gas and electricity suppliers warned the Energy and Climate Change Committee on 7 December. I alluded earlier to the Bank of England estimate of a 10% to 15% rise in energy bills by 2012. Those figures were echoed by Phil Bentley, the managing director of British Gas, who said:
We all know that that is the case. I reiterate that the point of the amendment is to ensure that we have a comprehensive assessment tool that considers all measures, particularly energy prices, so that green deal assessors can reliably estimate the likely energy bill savings that householders and tenants will enjoy.
The Minister spoke in debate on previous amendments about green deal apprenticeship programmes. People across industry have said that their immediate concern in the short term is to upskill the existing work force. They also want the number of trained individuals to match demand. Youth unemployment is an issue that the Bill could address, creating a long-term pipeline of individuals capable of doing the work required for sustained implementation of the green deal. The basis of the amendment is that currently, the Bill does not ensure that a well-defined apprenticeship programme will be prepared as a component of green deal implementation.
“The green deal is about the future, and it is important we ensure that future generations have the skills they need to take advantage of the opportunities of the green economy. These apprenticeships are a perfect example of how Government and business can work together towards a low-carbon future.”
Those 1,000 apprenticeships appear against the backdrop of the 350,000 apprenticeships already assured by the Government. They are a drop in the ocean, in terms of the Government’s wider apprenticeship ambition. The amendment seeks to ensure that a portion of those apprenticeships are designated for the green deal.
The subject was raised in the House of Lords by my noble Friend, Baroness Smith, in debate on amendment 20. She cited the Aldersgate Group report, “Mind the Gap: skills for the transition to a low carbon economy”, which makes some points that should be reiterated. One is that whatever the speed of our transition to a low-carbon economy, we must fix the skills shortage in those areas. I say “skills shortage” having spoken to the Union of Construction, Allied Trades and Technicians, which stated its concerns about the skills gap. The skill set is not completely new, so we do not need to build up new skills from scratch, but we certainly need training courses and further work to enhance the current skill set.
The biggest problem identified in the Aldersgate Group report is that because the debate on work force skills has moved on so quickly, people at various levels in engineering and manufacturing in the UK, including at the highest management levels, have not really understood the implications for the degree of change necessary. If we are to meet the significant challenges that we want the green deal to overcome, we must ensure that the skills are available. Companies want to understand the nature of the change and explain the required skills to the work force.
I mentioned UCATT; in 2008, together with Cardiff university, it prepared a report that highlighted that construction apprenticeship training is in crisis. Construction employers do not want to train anyone, and that leads to a lack of long-term thinking or planning. Half the industry is composed of a work force that is officially self-employed, and if companies do not want to employ anyone, they certainly do not want to train anyone. That worry has been echoed by many organisations and businesses. As the sector is made up of so many self-employed people, it is difficult to ensure that people are trained effectively to meet the scale of the demand that the Government are anticipating for the green deal.
The skills gaps and shortages in the industry are likely to be exacerbated by the fact that the construction work force is ageing. In its 2008 report, ConstructionSkills predicted that by 2010, the sector would need 500,000 new entrants and a major expansion in the four main trades: bricklayers; wood trades and interior fit-out; painters and decorators; and plasterers and dry liners. We are all expecting such people to be upskilled to meet the green deal.
I referred earlier to youth unemployment, and I repeat that the green deal will provide a fantastic opportunity to help our young unemployed people. According to the figures released in February by the Office for National Statistics, youth unemployment in the United Kingdom rose to almost 2.5 million and hit a record high. While UK unemployment reached a rate of 7.9%, youth unemployment was marked at 20.5%. Those figures mean that one 16 to 25-year-old in five is out of work—an increase of 66,000. The amendment would provide apprenticeships that would help those young unemployed people.
Huw Irranca-Davies: In light of the amendments, will my hon. Friend join me in encouraging the Minister—I am sure that he is minded to do this—to make certain that apprenticeships and skills enhancement measures are delivered not only by the very good academies in the big six, including British Gas Centrica, but by those linked to higher and further education colleges, such as Pencoed skills academy and those in Aberavon and elsewhere in the country? Training would then not be dominated by utility players, and a wider range of players could deliver the apprenticeships.
Luciana Berger: I thank my hon. Friend for his contribution. I know from speaking to one of the big energy companies that it has a skills base. It is training 1,300 people this year, although that will not meet the scale of the challenge that the Government are expecting. Having recently visited Liverpool community college in my constituency, I know the desire of its young people to be trained. There is no lack of young people who want apprenticeships; the challenge is to make such opportunities available.
Graham Jones: I wish to add to that list. We must involve the private sector. This debate gives me the chance to mention the training organisations in the north. We have talked about FE colleges, but let us not forget the training providers in my area, such as Training 2000 and North Lancs Training Group, which are as big as colleges. Does my hon. Friend agree that the private sector and private sector training organisations are keen to deliver what is a mammoth scheme?
Luciana Berger: I thank my hon. Friend for his contribution. The point of the amendment is to ensure that as many businesses as possible—be they in the private or public sector—offer such opportunities, and to ensure that the apprenticeships go beyond the 1,000 green apprenticeships that have already been announced. We would like more of the 350,000 apprenticeships that the Government have spoken of attributed not only to the green sector, but specifically to the green deal.
Under amendment 31, consultation would take place with industry, trade unions and key stakeholders to provide a plan for the recruitment and training of green deal assessors. Its aim is to ensure that the number of trained assessors meets demand, that those assessors are trained adequately, and that the best recruitment and training plans are implemented through the consultation of relevant groups, including trade unions. At present, the green deal does not guarantee that proper steps will be taken to ensure adequate recruitment to produce the necessary number of assessors to match anticipated demands. Likewise, the green deal does not include a solidified training plan for assessors, generated through consultation with expert groups, including unions and key stakeholders.
My earlier amendment on the assessment tool referred to the fact that the assessment requires skilled assessors. The green deal will require higher levels of assessment, and so more training for advisers and industry-recognised standards such as the energy performance certificate. The Government have talked about the army of assessors that will be needed if we are to meet the ambition of the scheme. Where will those assessors come from, if the planning has not taken place to ensure their recruitment and training? The Secretary of State has said that the green deal is likely to support 100,000 jobs by 2015, and up to 250,000 when it reaches its peak. Is there a plan to ensure that those people are appropriately trained?
I raise that point in the context of what happened in Australia. I am sure that hon. Members on both sides of the room will have heard of the Australian experience. We have heard many comments about it from the Secretary of State and the Minister. Australia’s green loan scheme was halted specifically by a lack of proper plans for training and implementation. The Auditor-General’s audit report No. 9 of 2010-11 stated:
“The primary cause for the administration problems encountered by the program was, to a very large extent, an absence of effective governance by the Department of Sustainability, Environment, Water, Population, and Communities during the program’s design and early implementation…and did not sufficiently identify and manage other key risks to effective program implementation in a timely manner. These risks included: the quality of assessor training posed by the absence of an accredited training course; the lack of policy or administrative measures to control assessment demand; and staff in the Green Loans team collectively not possessing sufficient skills and experience in key areas of program management”.
Underestimation of demand and lack of assessor recruitment led, in part, to the collapse of Australia’s programme. That collapse meant that trained assessors had wasted their money on a programme that left them without other job prospects.
In subsequent amendments, I will go into more detail on where the Australian programme went wrong, and what lessons we can take from it to strengthen the green deal. Some 100 people lodged claims for compensation after they were put out of work. I would not want the Government to undergo a similar experience. Those applying to be an assessor typically spent $3,000 on training, insurance and membership. With the scheme set to shut down early, their future was uncertain. The amendments seek to ensure that the Government consult effectively with industry, trade unions and key stakeholders to provide an effective plan for the recruitment and training of green deal investors.
Gregory Barker: I congratulate the hon. Lady on raising this issue. If nothing else, it serves to remind the Committee just how important the issues of training, standards and assessment are. I can say at the outset that we have absolutely no intention of allowing the green deal to go down the Australian route. I have been very mindful, since its inception, of the need for robust consumer safeguards, a strong regime around installation, and—this was the hon. Lady’s key point—a properly trained cadre of installers and assessors; I think that we are at one with her on that. The green deal will succeed or fail on the success and calibre of the people who are trained to recommend and then install the measures.
I would like to take amendments 31 and 33 together, because they relate to the need to ensure that the green deal is supported by comprehensive assessments carried out by appropriately trained assessors—that is one of the Government’s priorities. On amendment 31, I assure the hon. Lady that in clause 3, provision is already made for secondary legislation that sets out the qualification and training requirements for assessors.
The code of practice and the overall authorisation scheme will set out, in considerably more detail, the training requirements of assessors, and will involve full consultation with a broad range of stakeholders in their development. I must also clarify that, because the green deal is a market-led initiative, Government will not provide a plan for the recruitment of assessors, but will be laying down measures to ensure their quality.
On amendment 33, we certainly support the principle that the assessment must be of robust and high quality and able to deliver a reliable indication of suitable measures, including those likely to be eligible for green deal finance, to help enable householders and businesses to make informed decisions. It is also essential to deliver estimated savings that can be used by the green deal provider to provide their quotes and the final green deal plan. However, clauses 1 and 4 already require a qualifying assessment to be carried out, and secondary legislation will detail specifications for the standardised methodology and scope of those assessments. Members can be reassured of the intent that the specifications will address the need for a reliable and standardised approach.
Amendment 37 seeks to ensure that, before making regulations or an order, the Secretary of State must report to Parliament with proposals on a specific green deal apprenticeships programme. I confirm to the hon. Member for Liverpool, Wavertree that we have already announced funding for up to 1,000 green deal apprentices, and we will review that commitment as the green deal develops to ensure that we have enough skilled people entering the work force. We fully recognise the value of modern apprenticeships, and the coalition has made two significant announcements to boost the supply of apprentices across the whole UK economy.
I assure the Committee that we will continue to work closely with the sector skills council, other training providers and industry stakeholders to ensure that the supply chain is ready by the time the green deal launches at the end of 2012 and that industry can capitalise on the market opportunities that the green deal will present.
Gregory Barker: We have created a skills forum to bring together key industry players, who are in the process of building a model along those lines. Ultimately, it is much better that our assumption should be informed by the industry itself and by practitioners, not by—I mean no disrespect to my officials— Department of Energy and Climate Change civil servants. We are drawing on the private sector’s knowledge for that and it is working with us. I cannot give the hon. Gentleman a reliable figure at this moment, but the issue will feature in secondary legislation and I anticipate that further announcements will be made.
Mr Anderson: I am very pleased with the Minister’s response. He should also talk to local authorities, which, over the past five years, have gone through the decent homes work. Some of that is not just about being a craftsman, but about relating to the public in a way that people may not have in the past. There are the unforeseen circumstances such as going into a home to re-lay pipes and ending up disturbing asbestos. We can learn things from the experience of what has been a big programme of work over the past five years.
Gregory Barker: That is absolutely right—the hon. Gentleman makes a good point. If we go into those older homes and if we are going to be more ambitious, there will certainly be things such as disturbing asbestos. This is not just about simple installations. It is not like popping some solar panels on the roof. It is an intrusive process, into the fabric of the building. The hon. Gentleman makes another interesting point. It is not just about having the skills to do the job; it is also about having the interpersonal skills to reassure the householder of the merits of the scheme and to assure them as the work is going on. It can be intrusive or even distressing for people to see their home being knocked around. It is important that we have a range of skills and to not just think that this is about fixing certain products into the home. That is why we are working with the industry. The forum that we have created is mindful of those issues.
I understand that it is frustrating for members of the Committee that we do not have all the detail at this stage of the green deal process, but it is the very nature of how we are doing it, by bringing forward the broad framework in this legislation and the detail in secondary legislation. There will obviously be a whole process leading up to that, involving full stakeholder consultation. That is not just a glib nod towards standard consultation; we want to have a collaborative approach in building these regulations, in creating this framework and creating these robust standards. That means working closely with those who understand best practice in the industry and understanding how we can further drive that forward. I hope that the hon. Member for Liverpool, Wavertree will feel reassured by those points. On that basis, I urge her to withdraw her amendment.
Luciana Berger: I thank the Minister for his comments, but I will come back to amendments 33 and 37, on the green deal apprenticeship programme and the comprehensive assessment tool. Those two elements are so important that they should be enshrined in the Bill. The comprehensive assessment tool should be enshrined because the assessor coming into someone’s home is a once-in-a-lifetime opportunity, and if they do not give a reliable estimate of the energy that the person will save, the whole of their green deal is rendered useless. We want to see green deal apprenticeships work. I appreciate that the Minister has said that the Government will provide the plan for the recruitment and training of the green deal assessors, we want to see a bigger ambition. Although we welcome the 1,000 green deal apprentices, that is a tiny fraction of the 350,000 national apprentices. We want the Government to do everything that they can to challenge and address youth unemployment. This is a fantastic opportunity, and we want to see it enshrined in primary legislation.
“The code of practice issued for the purposes of the scheme may, in particular, make provision…as to the qualification and training of green deal participants;…their handling of queries or complaints;…requiring green deal participants to have such arrangements for insurance…the payment of green deal assessors by green deal providers or green deal installers and the payment of green deal installers…as to the circumstances in which green deal assessors may charge customers…as to the provision of information by green deal providers to improvers and bill payers and prospective improvers and bill payers;…as to marketing in connection with green deal plans.”
The purpose of the amendment is to ensure that we definitely have those things. We must have them to ensure that the framework regulations and the code of practice identified in the clause are set as the minimum compliance standards and that cowboy green deal providers are kept out of the market place. The reason for the amendment is that the word “may” obviously provides uncertainty. With the recognised mandate from the Government and industry support, customers would be able to remain confident that their green deal supplier is accredited, accountable and trained to a high standard, which is the basis for the amendment.
The Environmental Industries Commission, which represents more than 230 companies and organisations, of which 80 are active in its sustainable buildings and energy efficiency policy group, believes that the Secretary of State should regulate for a body to authorise persons to act as green deal participants to ensure that there is industry and consumer confidence in the scheme and in those providing related services.
We know that the intention is there. I reiterate that the point of the amendment is to ensure that those things definitely happen and that there can be no wiggle room. Does the Minister not agree that the word “may” instead of “must” provides wiggle room, and therefore cannot be classed as watertight? I use that word, because on Second Reading the Secretary of State said that the green deal will be
Graham Jones: I am extremely concerned about the big difference between “may” and “must”—I am not the only person—and, as my hon. Friend has alluded, about the quality of workmanship that may occur under the green deal.
One issue with the green deal will be its sheer scale and size. The overriding point is that the scheme will open the door to a large number of contractors. The pressure will be on to get so many contractors and assessors into it to deliver the Government’s target of 14 million homes by 2020. In doing that, there is a real danger that contractors will enter the green deal market and, even with the best intentions, fail to provide an adequate service, which will lead to ongoing problems. Qualifications and training are also important.
I want to draw the Committee’s attention to “The Consumer Protection Report”, published on 11 May, which highlighted the situation in the purchase of double glazing. People experienced poor workmanship by accredited double glazing merchants and fitters, many of whom had the industry marks and standards—some had dubious marks and standards. Under a statutory instrument, double glazing might be part of the green deal. The report highlighted concerns within the industry about the poor quality of installation and also of selling double glazing. I am sure that that is reflective of many trades where there are good and bad workmen, and we cannot necessarily rely on accreditation and some of the marks. I am concerned that we may be introducing a code of practice; I believe that we must introduce a code of practice.
I saw the Financial Times at the weekend. I understand that the Minister has tried to address the lack of trust that there might be in energy companies by offering assurances about the green deal. He said:
“The Green Deal will be the biggest home improvement programme since the second world war, shifting our outdated draughty homes from the past into the future, so it’s vital people can trust it. I have heard too many cases of shoddy workmanship or dodgy technology from government schemes in the past, so from day one there will be strict rules about standards, information will be readily available and there will be a proper route for complaints.”
Many of the schemes that have been introduced are undertaken not by the public sector but by the private sector. Private sector delivery is what concerns me. If there were schemes that did not provide what people wanted in the past, it is important that a code of practice reinforces high standards and that the problem with double glazing, for instance, is not repeated with private purchasers on the open market.
When we speak to people on the doorstep, they tell us that there is real concern about the delivery of home improvements and contractors. The Government may argue that a code of practice is more bureaucracy, but this confidence issue will not go away. It is important that there is a safety mechanism and that people who engage in the green deal know that there is a robust code of practice, which will give them confidence.
Some of the people who will be most affected are those in fuel poverty. They will have the greatest nervousness about the lack of a code of practice, or a code of practice that may or may not be introduced and that the Government are not really committed to. That causes real concern. At the bottom end, there must be consternation among those wishing to buy into the green deal about the safeguards in relation to the contractors who may do the work. Without doubt, there are contractors who will not provide the same standard of work as other contractors, and there needs to be redress. Consumer confidence in delivering the green deal is really important. That is the point that the Minister was making.
That reinforces the point about the security that people want in the qualification, the training and the provisions within the code of practice. One could make that argument for paragraphs (b) to (g), but I do not wish to prolong the debate, because I think I have made the point. If the Government want the scheme to be successful, they need to give people trust in the system, which is a key element.
The purpose of clause 3(4) is to set out the likely provisions that may be included in the code of practice. However, it is not correct to say that we may not have a scheme to accredit green deal participants. In another place, we have already agreed that the Secretary of State must have a scheme. There will be strong accreditation and a code of practice, but we are seeking to retain some flexibility.
Amendment 39 would make it compulsory for the code of practice to make provision for every matter listed in clause 3(4). However, it may not be necessary or suitable to include all the provisions that are specified in the Bill. Decisions on exactly what provision should be made in the code of practice will be made over the coming months and in light of the consultation that we plan to conduct with the industry and stakeholders in the autumn.
Clause 35 defines the parliamentary procedure in relation to the code of practice. I assure hon. Members that a draft code will be laid before Parliament and will not be issued if either House resolves not to approve it. That procedure accords with the recommendations of the Delegated Powers and Regulatory Reform Committee, and I hope that that addresses hon. Members’ concerns.
Moving on to amendment 40, it is our current intention to enable installers and assessors to be authorised via membership of authorised bodies, for example an installers’ trade body. Where that is done, we will look to regulate those bodies. However, it is possible for the Government to choose not to offer authorisation via such bodies if they do not meet our requirements. If so, it will not be necessary to make provision to regulate them. We would therefore like to retain the Bill’s current, more flexible, formulation, particularly as we enter discussions with those bodies.
Consumers will be protected by the green deal code of practice. That will require green deal providers, installers and assessors to adhere to high standards, and also robust accreditation and certification of those standards throughout the delivery chain. In the event that green deal providers fail to meet those standards, the Bill enables us to provide for redress for consumers. That could include the withdrawal of authorisation to carry out green deal work, the cancellation of a customer’s obligation to make green deal payments, the award of compensation or the imposition of a financial penalty.
I hope that I have allayed the fears, which might have rested on a misconception on what was intended. I hope that I have been able to explain the situation in a little more detail and have been able to clarify it. I hope that hon. Members have found my explanation reassuring and that the amendment can be withdrawn.
(f) withdraw authorisation from a body authorised for the purposes of subsection (1)(a) as a body whose members are authorised to act as green deal participants’.
‘(f) withdraw from a body specified or authorised for the purposes of subsection (1)(a) authorisation to act as a specified body under the scheme.’.
See explanatory statement relating to amendment 84.
Gregory Barker: I thank the hon. Member for Brighton, Pavilion for tabling amendment 98. It seeks to ensure that the Secretary of State can withdraw from a body authorisation to collectively authorise its membership to be green deal participants.
I agree that appropriate regulation of green deal participants is vital if the consumer is to be able to trust in the quality of the green deal. It is also appropriate that where umbrella bodies are authorised we should have the power to withdraw authorisation from such bodies. A similar amendment was tabled in the other place, which we promised to consider. As a result, we are tabling a Government amendment to address the issue.
Our amendment will allow the Secretary of State to withdraw the authorisation of these umbrella bodies and at the same time the authorisation of all of their members if the bodies should fail to meet the requirements of the scheme. I therefore commend the Government amendment to the Committee, and I hope that the hon. Lady will feel able to withdraw her amendment.
Huw Irranca-Davies: I can say right at the outset that we will support Government amendment 3 and amendment 98, which was tabled by the hon. Member for Brighton, Pavilion. They are very sensible extensions of the protection of the consumer. In fact, I welcome this latest movement forward by the Minister and his team, who are to be complimented for trying to bring some certainty to areas of the Bill that lacked clarity and depth before, including this aspect of consumer protection.
I should also say that the amendments build on the welcome, if very recent, new document—it was published as recently as last week, on 2 June—entitled, “Consumer Protection in the Green Deal”. In that document, the Department of Energy and Climate Change set out its plans for consumer protection and redress. There are other parts of this particular clause that we have had some difficulty with, but we are fully behind the Government in this regard. The plans that they set out in that document last week to set up the new green deal code, the new green deal advice line and the appointment of the United Kingdom Accreditation Service—I seem to remember “UKAS” in previous incarnations—are all to be welcomed.
I simply say to the Minister, “Keep the progress going and keep listening”. I must say that it is dangerous when Ministers listen and respond. We are still hoping that he will listen as we go through this Committee, because we must accept a great deal of this framework Bill on trust that the secondary legislation will provide more detail. It is not jam tomorrow, but lashings of consultations and statutory instruments to look forward to in the autumn. Meanwhile, these amendments are a very useful step forward.
Caroline Lucas: I thank the hon. Gentleman for his intervention and, of course, the Minister for introducing a Government amendment that has wording that is almost identical to that which I would have wished for. Nobody will be surprised that, in the light of that, I will not press my amendment to a vote. As the hon. Gentleman said, I thank the Minister for listening and indeed acting on this issue.
Mr Brine: I will be brief because time is pressing. There has been lots of talk on clause 3 about ensuring that the green deal ushers a flourishing of suppliers, especially when we discussed amendments 83 and 38. The hon. Member for Liverpool, Wavertree particularly mentioned that. She knows I agree wholeheartedly with that point. In his response, the Minister referred to wanting to see a strong community response to the green deal and that flourishing of suppliers.
It might be helpful if I briefly mention on the record an organisation with which I have been working in my constituency that is a good example of such an approach. That organisation is called GreenWin and is part of Winchester city council’s climate change programme. GreenWin is essentially building a district-wide network of suppliers and installers that are affiliated to it. The idea is to build a database of local suppliers and installers street by street. As the hon. Member for Brighton, Pavilion rightly said, that is exactly how we want the green deal to work: street by street. That database will be created on the basis of moderated customer feedback. GreenWin will then act as a quality check on delivery, but that delivery will be majority community based. It is about establishing a sustainable catalyst for the green deal—a district-wide hub—that brings together suppliers, consumers, residents and locally qualified and obviously approved trades in a way that is independent and unbiased. In short, that organisation provides a place for someone to take their green deal assessor’s prescription.
That is how I see this working. The GDAs will write someone a prescription—in the same way someone would get one from an optician, to use the Minister’s term—and they will take that to their supplier through organisations such as GreenWin in my area. I hope that will become a blueprint that other parts of the country can copy. I have not heard of any other organisations like it. People can take their prescription to an organisation such as GreenWin, which has moderated independent customer feedback, and they can use that to allow them to make an informed choice as they pursue their green deal choices. That is exactly what a strong community response is about.
Huw Irranca-Davies: As we look back over the clause, on which there has been an excellent debate from all parties, it is worth considering what we are trying to do and what we are trying to avoid. Just for a moment, I want to cite once again the Australian experience. People talk about trying to avoid the Australian experience in the abstract. Let me give one clear example. This is from a publication called The Australian:
“When it comes to safety, consumers and workers rightly expect their governments to protect them. So when Peter Garrett rolled out a $2.5 billion scheme to insulate nearly 2 million homes in two years, it was fair to assume the Environment Minister had done his homework. Instead, despite repeated warnings from the electrical industry, he bulldozed ahead with his pet green scheme without ensuring all the safeguards were in place. A man was
I cite that quote in full because the debate has shown that the Minister is committed to completely avoiding that example and to getting things right. Subsequent to the Committee’s deliberations and the primary legislation, if additional consultation is required—perhaps we might revisit some of the issues we have talked about in considering the amendments—that is the way to do it. We must get things in place in the right way, so that we avoid such a situation.
We have a good industry of various contractors in the UK across all sorts of skills and disciplines. It is quite something, however, to pull them all together into a green deal provider of various different skills under one individual man or woman who goes into a house. We must get that absolutely right and I know that the Minister is committed to doing so. The Committee must be assured that by the end of our deliberations and by the time the Bill is enacted, we have considered the matter properly. That is why this afternoon’s debate, with all its to-ing and fro-ing, has been good.
In relation to the new clauses and amendments that are under discussion, and to other parts of the clause that have not been dealt with, I put to the Minister the questions that have been raised by Consumer Focus and other organisations. On the trigger, where measures have already been installed, how will the charge be communicated to prospective tenants and property buyers? How will disclosure be proved? Who will carry the risk of non-disclosure? I am sure that the Minister will provide a straight response to that. On the advice, people have asked about the relationship between the final quote by the green deal provider and the charge placed on the bill when new costs arise as part of the installation. The Minister will have a direct response on that matter. On financing, what information will the consumer be given about finance options and the cost of the green deal? How will options differ for consumers in fuel poverty on pre-payment meters—the issue raised by my hon. Friend the Member for Hyndburn—or in hard-to-treat homes? On installation, how will the work be signed off as complete and added to the consumer’s bill or pre-payment meter?
We dealt with some of those matters this morning, but the Minister will want to take the opportunity to put his clarifications on the record. With those comments, I thank Committee members for their contributions to an excellent debate on clause 3.
Gregory Barker: I agree that the debate has been extremely useful and I am grateful to all hon. Members for their contributions. Government amendment 23 and new clause 5 amend clause 3, which gives the Secretary of State powers to establish in regulations a scheme for authorising persons to act as green deal assessors, providers and installers, and for regulating their conduct and
I assure the hon. Member for Ogmore that we have absolutely no intention of repeating the Australian experience. The hon. Member for Liverpool, Wavertree was right to highlight the lack of assessor accreditation in Australia, which was a key flaw in its programme. The Committee may be interested to know that my officials recently met the lead reviewer of the Australian programme, who reassured us that the provisions in the Bill responded well to their experience in Australia. We are not, therefore, going into the scheme blind; we are engaging with the Australians to try to learn specifically from their unfortunate experience.
At the heart of the clause is the power to issue a code of practice, with which green deal participants must comply as a condition of their authorisation. The clause sets out overarching provisions that may be contained in that code, which will be in place to protect customers. Those will include requirements covering qualifications and training, insurance, customer information, marketing and redress. All participants must meet those requirements as an absolute minimum.
Customer protection is at the heart of the measure, which provides further powers should participants not comply. Subsection (8) specifies that the provision entails powers to remove authorisation to act as a green deal participant, as well as a number of other options, including cancelling the liability of a bill payer and requiring a green deal participant to pay compensation or a financial penalty.
Amendment 23 and new clause 5 also provide that the Secretary of State can incur expenditure on preparing the green deal authorisation scheme before secondary legislation is made. It is vital that we have the necessary authority to undertake preparatory work, to ensure that services are in place and to deliver best value for the taxpayer before the launch of the green deal in autumn 2012. From the timetable, it is likely that we will be engaging the stakeholders to develop secondary legislation in late summer or early autumn, and in October we hope to launch the formal consultation and draft statutory instruments. We will probably, therefore, lay the secondary legislation before the House in March 2012, so it is important that we have those powers before the launch.
To conclude, the powers established by the clause, and the amendments to it, will enable the Government to put in place the nuts and bolts of the operation of the green deal and to ensure strong customer protection through robust standards. On that basis, I hope that the Committee will accept the clause, and I commend the amendment and new clause that are grouped with it to the Committee.