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Energy Bill [Lords]

I am grateful to have the opportunity to speak in this important debate. Let me say straight away that I welcome the Bill as I think it has enormous potential. The green deal could play a hugely important role in ensuring that we reduce greenhouse gas emissions from our homes and take serious steps towards meeting our climate change targets. The potential economic impacts could be almost as important as the environmental ones. At a time of economic crisis, one of the fastest ways of getting people back to work and stabilising the economy is precisely through a major programme of investment in energy efficiency and renewable energies. Retrofitting all our buildings would create well over 100,000 jobs over the next 10 years. If we were to have the right policy incentives, we could create many thousands more jobs in the renewables industries. The Bill also has a crucial role to play in tackling the economic and health scourge of fuel poverty. Fuel poverty overall has risen steadily since 2004, and according to the latest Government figures, dating back to 2007, it now affects about 4.5 million UK households. National Energy Action—the national fuel poverty charity—estimates that the figure is in fact closer to 5.4 million households. We can bandy figures about, but they tell only part of the story. My constituency has one of the largest private-rented sectors in the UK, and many of my constituents have shared with me their experiences of living in cold, damp rented property, and are happy for me to highlight them here today. Jack writes:"““I am currently living in a flat with no central heating and rotted wooden single glazed windows. Needless to say over winter my flatmate and I were horribly cold, and we were both very ill due to the weather.””" Jules writes:"““You know those thermal blankets paramedics use? Even with central heating, I had two of those on my bed, two duvets, four blankets, and I still had to wear jeans and hoodie to bed, and I was still shivering in my sleep.””" It is beyond doubt, therefore, that there is both a great need for improved household energy efficiency and a great opportunity to address fuel poverty, but in order to realise the full potential of the green deal, some significant changes to the Bill will be needed. My overall concern is that I am not convinced that the measures and mechanisms proposed in the Bill will be ambitious enough to meet the scale of the challenge we face. The Minister has talked both in the press today and at a seminar in my constituency yesterday about the aspiration for 14 million households to be insulated in the first phase of the green deal. I support that aspiration, of course, but it is hard to see how it will be achieved through the current proposals, and that is made even harder by the fact that so much of the detail of the green deal is, unfortunately, being left to secondary legislation. However, as the hon. Member for Angus (Mr Weir) has suggested, what we do know is that retrofitting 14 million homes by 2020 amounts to over 1.7 million homes a year, or about 145,000 homes a month, or about 4,800 homes a day. That will be a massive step change, which will require an extraordinary ramping up of the supply chain, of the training of engineers and so forth. Even the leading programme in Germany is only achieving 100,000 retrofits a year, and it is doing so by offering publicly subsidised interest rates of 2.65%. The green deal before us today is based on market interest rates, which will be a lot less attractive. Therefore, although it is very welcome that Ministers are sounding ambitious, those ambitions need first to be stated firmly in the Bill and, secondly, to be backed up by a far-reaching delivery system that will roll out the green deal in a much more comprehensive manner. It is not enough simply to state that a number of homes will be treated, since it is clearly far easier to make minimum energy efficiency improvements to 14 million homes than it is to deliver the whole-house, comprehensive retrofits, including micro-energy generation measures, that are needed. That is why we need to have stated in the Bill not just the number of households to be treated but, crucially, the minimum level of emissions reduction to be achieved. Maximising the take-up of the green deal involves looking again both at the finance mechanism itself and, crucially, the way it is delivered. Given that we know the most effective agents of change are likely to be local community-based organisations working alongside local authorities, the Bill needs to be clearer about the role of local authorities, and more explicit about the important role of co-ops and mutuals, such as Brighton Energy Co-op in my constituency. I believe that a national, publicly funded, street-by-street, comprehensive energy efficiency improvement scheme would deliver the greatest and quickest financial and CO2 savings, while also providing the largest boost to the development of a green economy. The effectiveness of such schemes has been seen at a local level across the country, driven by local authorities. Indeed, it was at the heart of the ““green new deal”” that a number of Greens and others put together some years back. That was a more ambitious forerunner of the Government's green deal and other proposals here. The Local Government Association has called for much greater clarity on the role that local authorities could play within the green deal, and the New Local Government Network argues for social landlords to have a prominent role in co-ordinating green deal measures across their estates on an area-wide basis, given that pilots suggest that costs can be reduced by as much as 20% per home when whole streets are improved collectively at the same time. That could be facilitated by ensuring that the energy company obligation fund is paid into an open pot that all green deal providers, including local authorities and registered social landlords, can bid into, in order to ensure that the green deal delivers on fuel poverty. I am very glad to hear that the Home Energy Conservation Act 1995 measures will now not be repealed, and I hope we will link that to calls for local carbon budgets. More than 40 council leaders have called for councils to be given a duty to set a carbon budget for their area, and to meet it through locally agreed and appropriate measures, with the support of central Government where needed. These two things should be going hand in hand. Local authorities have a unique role to play. They are a trusted brand, and they know where their hard-to-heat homes are and where many of those in fuel poverty live. Their knowledge, experience and reputation will be key to the success of the policy, and I think the Bill needs to be clearer about their central role. Even with local authorities and local community groups driving forward the delivery of the green deal, we will need to do much more to incentivise people to take it up. Part of the answer lies in getting the financial package right. I support proposals that would include looking at ways of incentivising that through reductions in stamp duty, and as the right hon. Member for Oldham West and Royton (Mr Meacher) said, it is crucial to get the interest rates right. The success of a home efficiency improvements programme in Germany has shown the value of using publicly subsidised lending. With Government backing, the KfW development bank raises triple A rated bonds for its energy efficiency household loan programme. The Government then subsidise those loans, which are offered to the consumer at a rate of 2.65%. With the support of some further grants and regulation, Germany is achieving 100,000 retrofits of residential homes each year. The current understanding is that green deal providers in the UK will only offer the loans at market interest rates, which prompts this question: where exactly is the ““deal”” in the green deal? To meet the ambitions stated by the Minister today of treating 14 million homes by 2020 it is clear that the Government have to go well beyond what is being offered and achieved elsewhere. They have to introduce something like 0% interest rates, linking this to the green investment bank. Unless we cut the cost of the up-front capital for the green deal, we risk limiting the measures that can be implemented under the golden rule. As I have said, fuel poverty is a crucial issue when it comes to ensuring that the energy company obligation works. I am deeply concerned that there is not enough money in the pot for the ECO and I am also concerned that it has two functions. On the one hand, we are asking for it to address those in fuel poverty and, on the other hand, we are asking it to address those in hard-to-heat homes. People in hard-to-heat homes may be able to pay, so if we provide them with funding from the ECO pot, we are using money that could help people in fuel poverty in order to subsidise residents who are able to pay. Such an approach does not make much sense. We also need to be mindful of the fact that the ECO will be funded through a levy on all bills, as that risks pushing more people into fuel poverty than it takes out of it. If we use a regressive mechanism, such as a levy on all bills, we run a real risk of it putting more people into poverty. The warm home discount is welcome but, again, there is a problem, because it is paid for in the same way—it is a levy on the bills of all consumers—and it tackles only the 50% of the fuel poor who are of pensionable age. There are plenty of fuel poor people who are not of pensionable age. So we need to make many changes to the Bill, but I repeat that overall it is very helpful. I hope that we will be able to improve it and that we really will have the kind of policy that we can be proud of in this country.