Energy Bill

iii. In 2008 101 MPs, including Vince Cable, Lynne Featherstone, Andrew Stunell and Danny Alexander, signed EDM 727 urging the Government to take steps to prevent retaliatory eviction.

c. The minimum standard must be increased over time, to continue to help to meet carbon targets and tackle fuel poverty.

i. Raising the minimum standard to Band D by 2020 would ensure that even more households are permanently lifted out of fuel poverty and help to meet the UK’s carbon targets. Consumer Focus estimates that setting the minimum standard at Energy Efficiency Band D would mean 300,000 households would be able to afford to keep their rented homes warm who cannot today. [12] This would future-proof the legislation to help meet the UK’s carbon budgets.

d. The Bill must make it an offence for landlords and letting agents to market properties to let below the minimum standard.

i. Including letting agents and marketing of properties within the legislation will make the standard considerably easier and cheaper to enforce. The regulations should apply the first time a property is let after they come into force so that it works with the turnover of the lettings market.

e. The Bill should introduce a register of landlords so that they can be informed about the new standard and directed to information about the Green Deal and any other help that might be available to improve their properties.

f. Where a landlord has ignored a local authority demand to install energy efficiency measures or fails to meet the minimum standard the local authority should have the choice to carry out the work themselves, charging the landlord, as an alternative to simply issuing a fine with the property remaining unimproved. This will also give councils the flexibility to deal with properties where the landlord is based overseas.

g. The two measures already in the Energy Bill stopping landlords refusing reasonable energy efficiency requests from local authorities and tenants should be brought forward to 2014 rather than pushed back to 2016, so they commence a clear two years after the start of the Green Deal and two years before the date the minimum standard should come into force in 2016.

C. Accountability, ambition and a strategy for energy efficiency

18. Beyond the private rented sector, action is also needed more broadly to end the scandal of fuel poverty, in which well over four million people in the UK are estimated to live [13] , with the numbers rising. A major review of the evidence on cold housing by the Marmot Review team at University College London concluded: "not only that cold housing and fuel poverty have an impact on physical and mental health, but also that policies aimed at improving the thermal efficiency of homes and reducing fuel poverty can reduce mortality and morbidity." [14] Illness due to poorly insulated homes costs an estimated £850 million to the NHS every year. [15] Rising fuel bills look set to become one of the defining issues of this Parliament. In May 2011 the Governor of the Bank of England warned that in the coming winter gas prices are expected to rise by 15 per cent and electricity prices by 10 per cent. [16]

19. A coalition of over 60 organisations is backing the ‘Warm Homes Amendment’. [17] The Amendment would require the Government to produce what it does not currently have – an accountable and suitably ambitious plan for energy efficiency. The plan would deliver energy savings from the building stock commensurate with meeting:

a. the statutory target in the Warm Homes and Energy Conservation Act 2000 for eradicating fuel poverty by 2016, and

b. cuts in carbon from housing commensurate with an overall reduction of at least 42 per cent by 2020.

20. Without an overall strategy for energy efficiency, policies like the Green Deal appear in a vacuum. There must be a yardstick against which to judge the effectiveness of the Government’s policies at delivering comprehensive, genuinely once-in-a-lifetime whole-house retrofits. During debates on the Energy Bill in the House of Lords the lack of an overall strategic framework and targets for the Bill was criticised by peers. Friends of the Earth does not believe that it is good enough simply to, as Lord Marland said in summarising the debates, "set up the structure and see how we proceed". [18] Businesses are among the loudest voices calling for greater certainty from the Government’s policies on energy efficiency. [19]

21. The Government’s amendments commit the Secretary of State to

a. producing an annual report on the contribution of the Green Deal and Energy Company Obligation to progress towards the national carbon budgets, and

b. taking "such action as he considers appropriate to improve the energy efficiency of residential accommodation in England so as to contribute" to the duties under the UK Climate Change Act 2008.

22. Friends of the Earth does not believe that these amendments are strong enough. Annual reporting is a step forward, but reporting on two individual policies is not a substitute for a robust and accountable strategy on fuel poverty and decarbonising the housing stock.

D: The Green Deal and Energy Company Obligation

23. The Green Deal could play a valuable role in helping to cut carbon from those households for which it is suitable: those who are not in fuel poverty; those that are not already able to invest but choose not to do so; and those that live in relatively easy-to-improve homes. The strong focus on accreditation and consumer protection in the Green Deal is welcome, as trust in the scheme and the quality of work are vital factors in persuading householders to have work done to their house. But the Green Deal is not and can never be a substitute for a genuine energy efficiency strategy.

24. The Government is introducing measures to improve key aspects of the Green Deal, such as ensuring incentives and suggesting an early role for the Green Investment Bank to help drive market demand. [20] It has confirmed that it is interested in financial incentives to spur take-up of the Green Deal [21] - policies such as a Stamp Duty rebate have been suggested. As the Green Deal will not work for everyone, any financial incentives must be available for anyone who improves the energy performance of their building, regardless of whether they have taken out a Green Deal loan. The interest rate is also critical. Only 11 per cent would consider taking out a Green Deal package even if the interest rate was as ‘high’ as four per cent. [22] Keeping interest rates ultra-low is also the only way to make sure the more expensive installations such as solid wall insulation stand a chance of being paid for as part of a Green Deal package. [23]

25. There must also be a central role for regulation to underpin demand for the Green Deal: the Government has recognized this principle with the private rented sector (see below). Minimum standards must rise over time.

26. The Government has also recognised that the Green Deal is not effective for the fuel poor. Those who under-heat their homes would (rightly) use up to 50 per cent of the energy savings from improved efficiency to heat their homes adequately rather than paying off the Green Deal loan. [24]

27. The Government intends to ‘underpin’ the Green Deal with the new Energy Company Obligation (ECO). The ECO seems to be expected to do all of the heavy lifting needed to tackle fuel poverty and support measures in hard-to-treat homes. That is a Herculean task. A substantial proportion of the UK’s housing stock is ‘hard to treat’, requiring more expensive interventions [25] , and ending fuel poverty requires significant and concerted investment.
Using figures from Consumer Focus, which estimate that £9,890 per household is needed to improve the houses of the fuel poor to SAP 81 / EPC Band B [26] , and in the light of warnings that suggest that by the time the ECO begins operation in 2012 as many as six million households are predicted to be in fuel poverty in the UK [27] , a total required  spend of just under £60 billion is implied. Even assuming a 15 year programme – far too slow a pace –means an annual spend of approximately £4 billion per year.

28. ECO will be spread too thinly. At least £1.7 billion must be spent just to keep pace with previous spending [28] ; this is not an insubstantial amount of money. But the ECO cannot be big enough to do either job the Government expects of it, let alone both.

29. The supplier obligation must be backed up by significant extra money, to support both a comprehensive fuel poverty programme and also ensure all houses can access the funding they need for genuinely radical, deep retrofits. Support from the taxpayer has to be considered – for example, hypothecating the revenue from the carbon floor price and / or auction sales of EU ETS permits.

30. Until and unless more funding is brought in, the ECO must be ring fenced to tackle fuel poverty. Concerns about the cost of energy policy on bills can be mitigated by ensuring that those who are most affected also receive the benefits first.

June 2011