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Home Energy Rating Surveys Bill [H.L.]

7.6 p.m.

Lord Ezra: My Lords, I beg to move that this Bill be now read a second time.

The purpose of the Bill is to promote greater energy efficiency in the home. Although many people have already taken steps to achieve this in their homes--no doubt noble Lords who are to speak have done so--all the evidence suggests that the larger proportion of homes in this country are still relatively inefficient in terms of energy. There are two important reasons why this should be put right. First, the threat of global warming is still regarded as serious and the reduction of emissions into the atmosphere, particularly from energy usage, remains a major objective of government policy. Secondly, improvements in energy usage can substantially reduce costs and therefore this is a valid objective in itself. The Energy Efficiency Office estimates that a typical medium-sized semi-detached house without any insulation might cost around £500 a year to heat. With good insulation and heating controls up to half that expenditure could be saved and of course there would be greater comfort and warmth.

The difficulty is that in the present state of the energy market there is reduced incentive for consumers to save. There are abundant supplies of energy available and increased competition has brought prices down. In the wider environmental interest, it is necessary to counteract these market signals. This Bill proposes one way in which that might be done through the more widespread use of the energy rating of homes.

Fortunately, the way in which homes can be energy-rated is now well established. In July 1993 the Government published their standard assessment procedure or SAP. This is the Government's standard system for home energy rating developed by the Building Research Establishment in discussion with other rating professionals. Some time before this, a number of independent home energy rating procedures had been developed. For example, one was initiated by the National Energy Foundation, of which Dr. Mary Archer is chairman. The Government rightly, in my opinion, decided that co-ordination between the different systems was necessary. The SAP provides that co-ordination and enables the other systems, of which there are four main ones, to be readily converted to the SAP rating. Equally, the SAP rating can be used on its own. The SAP assesses the energy efficiency of a home through an energy audit using a scale of one to 100. The higher the score the more energy efficient the home.

If the system were applied widely, as it is in similar form in some other European countries, it would enable potential home buyers to take energy costs into account when choosing a home, make comparison with others

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and carry out appropriate improvements. Since July 1995 there has been a requirement under the building regulations for SAP ratings to be applied to new houses and conversions. If the rating falls below 60, the builder has to review the energy efficiency proposal and come up with a better figure. The National Housebuilders Council launched a campaign among its members for achieving SAP ratings of 80 plus in February of this year. We can therefore conclude that effective steps have been taken to achieve energy ratings of 60 per cent. or more in newly built homes.

However, the trouble is that the majority of homes in this country are not new and so far there has been no equivalent regulation to bring about a widespread use of energy ratings in these older properties. A number of initiatives have been taken to stimulate the voluntary application of the system. The Energy Efficiency Office have put out some very effective leaflets describing the system. However, for an individual householder to have a rating made would cost between £50 and £150, depending on the size and nature of the residence. This sum could no doubt be recovered over time when the remedial action was taken and energy savings achieved, but there has so far been relatively little offtake of this service.

The Department of the Environment have been in touch with building societies in an endeavour to see whether they could stimulate the application of energy ratings on a larger scale. Two building societies, the Nationwide and the Halifax, responded positively and carried out exercises in conjunction with the department. In a Written Answer dated 7th November 1996 in another place, it was stated that a total of 4,000 SAP ratings were issued by the Nationwide Building Society in 1995 under a joint initiative with the department, and under a similar initiative with the Halifax Building Society in 1996 6,500 SAP ratings were issued.

The results of these exercises are now being studied by the department. They are not aware of any statistics or estimates indicating the percentage of other mortgage lenders who may be providing SAP ratings. In presenting a home energy rating certificate to two Halifax customers in 1996, Mr. Robert Jones, MP, the Minister for Energy Efficiency, said that the certificates contained the overall energy rating of the home, together with recommendations on energy efficiency improvements. This of course is a very important part of the certificate, which indicates to the purchaser or home owner what steps they can take to improve their home from the energy point of view. Mr. Robert Jones urged other mortgage lenders to follow the lead of the Halifax Building Society.

As I have indicated, unlike new house-build, where energy ratings are mandatory, there are no similar arrangements for the existing housing stock. This Bill attempts to fill that gap. I very much hope that building societies and other mortgage lenders will support this proposal. Building societies in particular have a tradition of serving the community. That is how they started in the 19th century. Here is another way in which they can contribute to the wider interests of the community. As I stated earlier, private individuals who have the energy

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rating surveys made at their own expense could be involved in sums of between £50 and £150. This can act, and has acted, as a major deterrent. On the other hand, if building societies incorporate the energy rating in the valuation surveys which they have to carry out anyway before they make a loan, the additional cost can be very small. Figures as low as £10 to £15 have been mentioned.

Recently I had a discussion with Mr. Peter Hales, who is the chief executive of Countrywide Surveyors. They provide a valuation survey service to mortgage lenders and cover about 200,000 homes a year. They have incorporated the SAP procedure in their surveys, and for an extra cost of £15 can provide a SAP rating and a three--page report on the improvements which could be introduced as a result of that rating. A Which? report found that 60 per cent. of people, in a survey conducted by them, said that they would have liked information on heating when buying their new house. The proposals in this Bill would provide a very simple way of doing that.

I should now like to go through the three clauses of this short Bill. Clause 1 lays down that every mortgage lender, before granting a mortgage, shall as part of or in addition to any valuation, carry out an energy rating survey. A copy of this survey, together with recommendations for improvement, would be handed to the mortgagor. A reasonable charge could be made for this service, although, as I have pointed out, the costs would be very small and some mortgage lenders might simply take it into account in fixing the mortgage terms.

Clause 2 lays down that the Secretary of State shall, as soon as is practicable and not later than six months after the passing of the Act, issue guidance to mortgage lenders to carry out their duties under Clause 1. Clause 3 defines the various terms used, and in particular makes it clear that an energy rating survey means a professional survey and assessment of the energy efficiency of a building using the Government's standard assessment procedure and containing a list of recommendations for cost-effective improvement. This Bill could, with no public cost and very little private cost, contribute substantially to the improved energy efficiency of houses in this country. It would complement the measures already in force under the building regulations affecting newly-built houses and conversions. I commend it to the House.

Moved, That the Bill be now read a second time.--(Lord Ezra.)

7.17 p.m.

Lord Brabazon of Tara: My Lords, I should like briefly to support the Bill moved so ably by the noble Lord, Lord Ezra, and thank him for having introduced it in such a clear way. I should also like to pay tribute to the noble Lord because over the years, as your Lordships will know, he has done so much on energy efficiency matters.

I believe it is a small but sensible Bill, although possibly slightly less controversial than the Bill we have been dealing with up until now. Nevertheless, it will affect many more people in a beneficial way. The noble Lord mentioned that energy prices are probably cheaper

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than they have been for many years in real terms; and they are, I believe, likely to fall even further next year when competition from gas will be available all over the country. The same will apply in the year after when there will be competition from electricity for domestic supply. With the strong pound at the moment, and with many prices being expressed in dollars, I think that we are going to see cheap energy.

Therefore it is an extremely sensible time to do something about energy savings, because the financial incentive to save energy is probably less than it has ever been or than it has been for many, many years. As the noble Lord said, it is not just the cost saving which the consumer can make as a result of these measures; there is also an increase in comfort, warmth and so on, which is extremely useful. I do not believe that the story is all gloom and despondency, because through my London letter box not so long ago I received an offer from London Electricity for a package of energy savings. I did not take them up because I already had most of them. At least the power companies offer that kind of service.

As the noble Lord has said, the cost of the survey should be minimal. It must be minimal if it is to be acceptable to the house buyer. It is no more than a survey that any sensible person would request when intending to buy a property. Nevertheless, not everyone is sensible in these matters. The noble Lord has referred to a survey cost of between £10 and £15. That sum of money could be saved by the prospective house buyer in a short space of time. One is aware that house prices are beginning to rise again. Bearing in mind house prices in London and the south-east, a sum of £10 or £15 is not likely to make much difference to the prospective buyer.

I was interested to hear the remarks of the noble Lord about the standard assessment procedure. I was not aware of that. It sounds a very useful measure. Presumably it covers such matters as loft insulation, hot water tank lagging, cavity wall insulation and other aspects. I do not know whether it covers gas boilers. Perhaps it should do so. If one buys a new gas boiler today, one can recover the cost of replacing an old and inefficient one in a remarkably short space of time. I am sure that a good number of people are unaware of that. I do not suppose that it covers energy-saving light bulbs. One is aware that the last thing some people do when leaving houses they have just sold is to remove light bulbs from sockets.

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