I beg to move amendment No. 21, in page 51, line 11, leave out from 'acquisition"' to end of line 12 and insert
'means the acquisition of a dwelling when it has not been previously acquired by a buyer'.
With this it will be convenient to discuss the following amendments: No. 13, page 51, line 12, leave out from 'acquisition' to end and insert 'as a zero-carbon home.'.
No. 4, page 51, line 12, leave out 'occupied' and insert 'acquired by a buyer'.
No. 14, page 51, line 12, at end insert—
'(2A) In section 58B omit subsection (6).'.
No. 20, page 51, line 26, at end add—
'(8) The Treasury shall, by regulations, define a "zero-carbon home".
(9) Regulations under subsection (8) must have regard to the desirability of ensuring that all new homes should be zero carbon by 2016.
(10) Regulations under subsection (8) shall be made by statutory instrument.
(11) A statutory instrument containing regulations under subsection (8) may not be made unless a draft of it has been laid before and approved by resolution of the House of Commons.
(12) Regulations under subsection (8) shall be laid not later than 31st December 2008.
The Government and the Chancellor claim to be concerned about the environment. In this year's Budget statement, the Chancellor said:
"our greatest obligation to the future must be to tackle climate change."—[ Hansard, 12 March 2008; Vol. 473, c. 295.]
The Government claim that they want a meaningful reduction in the UK's carbon emissions and that their zero-carbon homes initiative will kick-start the market for new, highly efficient technologies in homes. They talk about how the policy will set a gold standard for green homes.
I do not think that we are quite there yet, so my amendments are a helpful start. They try to explore and challenge whether the Government's zero-carbon policy, as it stands, can ever be truly fit for purpose. Amendment No. 21 aims to clarify what could be an ambiguity in the current drafting of the policy. Amendment No. 20 aims to prevent a likely problem from occurring, which, if not stopped, could really damage the Government's chances of meeting their already challenging ambition of ensuring that all new domestic homes are zero-carbon by 2016. We Conservatives also support that target.
Let us not forget that the zero-carbon homes policy was enacted by regulation only eight months ago, in October 2007. Even so, Treasury Ministers are already changing their own policy, less than a year after it went through Committee. In October 2007, the original statutory instrument specifically excluded flats and maisonettes from being eligible for the relief. At the time, my hon. Friends and I questioned the sense of that exclusion; we now know from later statistics that nearly half of all new homes built in Britain are flats.
Just months later, by the time of the Budget, the Chancellor was already announcing that, after all that, the zero-carbon homes policy would be extended to include flats as well as houses. We very much welcome yet another adoption of a Conservative proposal and I hope that my amendments today will, similarly, be adopted—although without the eight-month delay. I have no doubt that the Government's ambition, which we support, for zero-carbon homes by 2016 will be better achieved if the amendments are adopted.
Amendment No. 21 is a redrafting of new subsection (2)(b). It aims to define better and more carefully what constitutes a first acquisition. My understanding is that the provision is drafted to ensure that stamp duty relief may be claimed only the first time a home is bought. During our debate on the statutory instrument in Committee, the Minister responding said that extending the relief to second and subsequent sales would provide no value to the taxpayer. However, the proposed Government definition in the Bill covers a dwelling that
"has not previously been occupied."
In practice, that could allow for multiple stamp duty land tax relief claims on the same property, if that property were sold again but never occupied in the meantime. For example, somebody could buy a newly built zero-carbon dwelling from a developer for their elderly parent to live in. They would gain stamp duty relief from the developer because their parent would not yet have moved in, although they were planning to; the residence would never have been occupied. Under clause 90, if, unfortunately, the elderly parent died prior to occupying the dwelling, the next purchaser would presumably also be allowed to claim stamp duty relief, as the home would still not have been occupied. The amendment would clarify the definition of a dwelling in respect of providing stamp duty relief to mean one that has not previously been acquired. It would remove the ambiguity of the current drafting and would deliver the Bill as the Government intend it.
I can imagine no objection from the Minister to amendment No. 20. It simply provides an insurance policy—that there will be a clear definition of a zero-carbon home by the end of the year, just as the Chancellor promised in the Budget. Crucially, amendment No. 20 would also require the Government to use a consistent definition of what constitutes a zero-carbon home across Departments, in a joined-up way. That definition would have to be approved by the House, and any anomalies between the definition arrived at after the summer's consultation and the existing definition in the relevant Treasury statutory instrument would have to be identified. Those differences could then be debated and voted on, so that a single, workable definition could be achieved.
The lack of joined-up government between the Treasury and the Department for Communities and Local Government is a critical failure, as it means that we still have no clear definition of what a zero-carbon home is—even though the Government first announced their policy on such homes in December 2006. That means that, by the time a single policy is arrived at, it will have taken more than two years to get the definition that we need.
The Government say that the aim of stamp duty relief on zero-carbon homes is to stimulate demand for such homes, but it is almost inevitable that the present uncertainty, as long as it exists, will hold back both demand and supply. How can industry and buyers aim for a target when that target's definition is not established or keeps changing? No wonder there is so much uncertainty in the building profession. The Government have told builders and developers that they want all new homes to be zero carbon by 2016, even though they—the Government—do not know what that means. That is why they are having to launch a fresh consultation.
A recent survey by the National House-Building Council found that most of those surveyed did not know what a zero-carbon home was. The lack of explanation and education about zero-carbon homes means that, according to the council, there is a
"distinct possibility that purchasers will decide against buying newly-built, low carbon properties."
Another cause of uncertainty in the existing Treasury statutory instrument needs to be resolved. It is not clear whether the energy required to power day-to-day appliances used when a zero-carbon house is finally occupied can come from renewable sources via the national grid, or must come from a renewable source connected to the property directly and exclusively by private wire. I think that that is what the statutory instrument suggests, and it would be helpful—certainly for the building industry—if the Minister cleared up that confusion.
Even if we succeed in tying down the Treasury definition of a zero-carbon home, there are other dangers with the approach announced in the Budget. By the end of the year, after the consultation process, we will have a new definition of what constitutes a zero-carbon home, but that definition may well be different from the one contained in the statutory instrument. Any such difference would be even more confusing and damaging: for instance, developers might develop, build and market new houses in the quite proper belief that they were meeting the definition of zero-carbon homes agreed after the consultation, whereas buyers might not be aware that those homes did not fulfil the Treasury definition of zero carbon for stamp duty relief purposes. That is a recipe for unhelpful uncertainty, and it is certainly no way to kick-start the market.
Under amendment No. 20, the Treasury definition contained in the statutory instrument would be amended to ensure consistency with the final definition agreed following the summer consultation proposed on page 105 of the Red Book. Getting rid of the uncertainty matters, but the signs are that designing and developing zero-carbon homes will be a challenge.
So far, the Government's stamp duty relief policy has been less than impressive when it comes to kick-starting the market. In the eight months between the start of October 2007—when the statutory instrument giving stamp duty relief on zero-carbon homes came into force—and the end of March this year, a grand total of just 10 homes qualified for zero-carbon stamp duty relief. In fact, there were six homes last year and four this year, with just one in March, so the run rate of zero-carbon homes qualifying for stamp duty relief seems to be tailing off, if that would have been thought possible at the end of 2007. Given the lack of homes that are qualifying for the relief, will the Minister enlighten us as to the carbon savings that have resulted from the zero-carbon homes that have qualified so far? What research is the Treasury doing to find out whether the stamp duty relief for zero-carbon homes, as it currently operates, is really making a difference to buyers' behaviour?
I have a suggestion for the Minister. Given that so few people have qualified for zero-carbon home stamp duty relief so far—just 10—what about getting them all down to Westminster to have a round table discussion about these issues? There are so few of them that it would be perfectly feasible. If she would give me their contact details, I would be happy to organise that meeting so that we could all learn from the minimal transactions thus far—or perhaps we could do a conference call, which might be more environmentally friendly. I would be happy for the Minister to sit in on that.
There is a serious point here. We need to understand which people and which homes have already qualified for the relief. Are the people claiming the relief major developers who have just sold their first prototype building to someone and are perhaps therefore in a position to start being able to mass-produce, which would clearly be very good in terms of reaching the 2016 ambition; or are they, as I suspect, individuals who are keen to play their role in tackling climate change and have had themselves a zero-carbon home built to a more individual specification, which may suggest that we are less likely to see mass production of such homes? I would love to be able to sit down with those people and talk to them about whether they felt that the current stamp duty relief policy had influenced their behaviour in relation to buying a zero-carbon home and, if not, what policy would have positively influenced their behaviour in order to cut emissions further.
I must question the Minister about whether the Treasury's zero-carbon home stamp duty relief policy joins up effectively and more broadly with the ambition of the Department for Communities and Local Government to have all homes built as zero carbon by 2016. I have discovered through parliamentary questions that the 10 zero-carbon homes that have qualified for stamp duty relief so far were all in a 1 per cent. stamp duty band, which means that they probably had an average cost of £187,500. We can therefore broadly assume that their average stamp duty would have been 1 per cent. of that—£1,875. If so, the £15 million budget set aside to fund the policy from now until 2012 will fund a total of 8,000 homes—fewer than 2,000 a year. If we are to hit our zero-carbon homes ambition by 2016, we should by then be building 240,000 zero-carbon homes a year. These things do not seem to match up with one another. When I questioned the Minister in the statutory instrument Committee when the regulations first went through the House, she was unwilling to explain how the £15 million budget had been arrived at. I am pretty confident, and perhaps she can confirm, that the assumptions behind that budget were that 8,000 homes within the 1 per cent. band were receiving an average of £1,875. Will she have yet another go at clarifying the underlying assumptions as regards the £15 million that is currently set aside for the policy?
Perhaps the Minister could also confirm that the original budget of £15 million was set in 2007—before this year's Budget announcement allowing flats also to qualify. If nearly half of all new properties built are flats, we should have expected the Treasury to double the amount set aside for the policy. Instead, as far as I can see, it has added no new money whatever to pay for the relief, suggesting an assumption that the Budget change in 2008 will have no impact on the amount of relief it expects to be claimed. Again, that does not make sense.
That brings me to my final point. As with vehicle excise duty changes in the 2008 Budget, which the Government now admit will make virtually no impact in reducing CO2 emissions, the zero-carbon homes stamp duty relief policy came with much fanfare, but as far as the behaviour change it desires to achieve is concerned, it seems destined to fail. Even the Government have said that they expect the original stamp duty relief policy on zero-carbon homes to reduce emissions by 1.6 million tonnes by 2020, when household emissions in 2006 already stood at 155 million tonnes. In this year's Budget, Treasury Ministers did not even try to pretend that they thought that the Budget would cut emissions. Page 107 of the Red Book describes the environmental impact of the zero-carbon homes change as including flats. It refers to a
"Small reduction of carbon emissions."
Perhaps the Exchequer Secretary can tell us just how small.
Yet again, a Budget measure has been announced that is designed to reduce carbon emissions, but is in reality a shambles. We have no definition for zero-carbon homes, no idea of the real budget needed by the stamp duty relief policy, no idea of the number of homes that will claim relief and no idea of the reduction in emissions that the policy will lead to. The Treasury may talk a good game when it comes to environmental taxes, but its rhetoric is way ahead of its practice. The only way that things will get better is under a Conservative Government because this is not zero carbon—it is zero credibility.
I am grateful for the opportunity to follow Justine Greening, because I agree with the central thrust of her analysis—the Government's provisions are gimmicky, inadequate and do not start to deal with the scale of the problem that confronts us. Where I depart from the line taken by Conservative Front Benchers is in the conclusions that I draw. I conclude that the Government need to be far more ambitious and visionary. The criticism made by the Conservative party always appears to be that the Government are gimmicky, so we should abandon all hope and not venture down the path at all. As far as I am aware, its central criticism reflects the fact that the party whose leader has a propeller on his roof that does not work thinks that the Government are too gimmicky.
Our amendments aim to make the policy more successful, although I have flagged up some serious concerns about whether it will ever be able to work.
I am grateful for that intervention, because the hon. Lady made a criticism that the Government have not allocated anything like enough money to reflect the scale of their policy. However, I have not heard financial commitments from the Conservative party to fund such policies. The Conservatives seem extremely reticent about giving hard, cast-iron financial assurances that are designed to change behaviour and reduce CO2 emissions in this country. I have seen the leader of the Conservative party riding his bike to this building, with an England flag on the back of it when England is doing well in football matches. I know that he has a propeller on his roof that does not work. I have seen all that imagery and gimmickry from the Conservative party, but I have not seen any concrete policies.
On the contrary, the hon. Lady, whenever she makes a political point at the Government's expense in this Chamber—a legitimate thing for her to do—says that the Government's efforts, which I accept are timid and insufficient, will not make any difference, or make only a negligible one. Her conclusion seems to be that the Government should not be venturing down that path at all. However, perhaps she would like to intervene to say that the Conservative party's position is that vehicle excise duty rates and petrol taxation should be much higher and the number of wind farms should be much greater.
The hon. Gentleman claims that we have made no progress on our environmental agenda, but he is wrong. For example, the Conservative party suggested a tax on a whole plane rather than air passenger duty, and we proposed feed-in tariffs, which the Government are eventually adopting. We do not have to demonstrate our credentials—
We will consider the subject that I mentioned later in our deliberations.
In our amendments on homes, we share Conservative Members' analysis that the Government lack vision and ambition, but we go on to urge the Government to adopt a more visionary and ambitious set of policies rather than simply throwing up our hands in despair. It is worth sharing some statistics, which show the urgency of the position and the inadequacy of the Government's proposals.
The current housing stock of 25 million homes in the United Kingdom accounts for around 27 per cent. of the country's total carbon emissions—approximately double the amount of carbon dioxide that cars in the UK produce. It is worth dwelling on that momentarily because transport gets singled out—not unfairly, because it is a major contributor to CO2 emissions. However, if one stopped the average person in the street and asked whether domestic households or transport was the much greater contributor to global warming CO2 emissions, the reply would overwhelmingly be, "Transport." Yet the energy produced in our homes is a major contributor. [Interruption.] The hon. Lady says from a sedentary position that the public perception is that transport is not a major contributor to CO2 emissions. [Interruption.] The hon. Lady is giving a running commentary from a sedentary position. If she has something to say, she can intervene.
I did not intend to interrupt the hon. Gentleman's speech, but I did not claim that the public did not think that there were emissions from transport. I said that many people in my constituency are also aware that their household emissions are even greater than those from transport. That is not to say that they do not believe that transport emissions are a problem.
I am grateful for that intervention. Perhaps we can resolve the matter only through opinion polling or asking a sufficiently wide cross-section of the public. I was not trying to be especially controversial—I simply observed that transport attracts far greater attention in the debate on CO2 emissions than domestic households, yet the latter contribute significantly to the total amount of CO2 emitted in the United Kingdom.
I suggest that—I stress that I am not citing actual statistics—in 20 years, 80 per cent. of current homes will still be used, whereas 80 per cent. of the road transport fleet will not. There is much higher turnover of transport stock and it is therefore much easier to tackle transport emissions than to deal with emissions from homes. I say that as someone who has lived for 25 years in a property that was built in 1888.
I am grateful for that intervention because that takes me—you will be relieved to know, Sir Alan—to the amendments that the Liberal Democrats have tabled. They try to widen the scope of consideration so that the Government do not concentrate only on new homes, which are clearly important, but focus on the UK's housing stock as a whole. In any given year, roughly 1 per cent. of the houses occupied in the United Kingdom will have been built in that year, while 75 per cent. of houses in 2050 will have been built before 2007. If we concern ourselves solely with newly built houses, we will address the situation only incrementally.
Indeed, I would like us to go much further in that regard, too. It distresses me that large new housing developments are built on the edges of towns throughout the country with the car in mind. It is hard for the people living in those houses to buy a pint of milk or beer without getting in their cars. Such developments are often built without shops, pubs, village halls, churches, post offices or other amenities, which people cannot reach without driving a car. The houses are quite well insulated, but they could still incorporate large numbers of building features that would improve their carbon emissions.
There is a lack of ambition among builders in that regard. However, if we neglect the existing housing stock, we will not tackle the problem with anything like the urgency that it requires, particularly given the interesting cultural dimension in this country, whereby people often aspire to live in older houses. People in the United States, for example, would think that the best house that one could buy would be a brand new one, in the same way that people in this country would, by and large, like to buy a brand new washing machine, car or whatever else.
The most expensive and desirable houses in the United Kingdom are often those built, say, 200 years ago. There is not quite the market drive towards new house building in this country as there is in some countries. Whether because of a cultural or social dimension, it is seen to be desirable to live in an older house, often with not very well insulated windows, for example. We therefore need to turn our attention to how we improve such matters.
"much clearer focus on what must be done to bring existing housing up to required energy efficiency standards".
She also said:
"We need the Government to go further and do much more to help householders radically cut carbon emissions from their homes, whether they were built in 2007 or 1707."
That is the position of my party, too. We have put forward large numbers of policies to try to accelerate the level of home insulation, as well as other measures that can be put in place to try to reduce CO2 emissions both in Britain's existing housing stock and in newly built houses. That is the scale of the ambition that we urge the Government to adopt. We have no problems with the measures in the Budget; we just think that they do not go far enough.
The speech that Justine Greening gave was interesting, as is her amendment No. 20. Unfortunately, however, as sometimes happens, she leavened her speech with too much righteous indignation. I will bear that in mind when I think of the reports of the views of Conservative party activists on eco-towns, for example, which the Government are putting forward and which are so important.
I want to distinguish between the construction and the occupation of new properties. If we are talking about zero carbon, the first thing that I would like to do is change the terminology. It is a little late for that, because the terminology is already in statute, from the Finance Act 2003, but we are almost certainly not talking about zero-carbon homes. Rather, we are talking about zero-CO2 homes. I venture that almost no home will be built in the United Kingdom in the next 100 years without any carbon in it, because wood is carbon and the architraves around the doors, if nothing else, are likely to remain wood.
The reason I stress that point is that it highlights the use of language and whether we are talking about emissions when we talk about zero-carbon homes—I will use that phrase, because it is in the legislation already and in the proposals before us. However, we need to distinguish between emissions from the construction and emissions from the occupation of such homes. That is why amendment No. 20 is interesting. Indeed, I shall be interested to hear what my hon. Friend the Exchequer Secretary says about definitions and the need for definitions.
I find it difficult to envisage the construction of a new home in the United Kingdom in the next 20 years involving zero CO2 emissions, if only because for many years to come it is quite likely that some of those building the home will drive to the site in a car fuelled by fossil fuels, not by electricity. They will use electric saws to cut wood, and sometimes electric concrete mixers, and some of the electricity might well come from fossil fuel. We might move to mass renewables. We could move to nuclear, but the building of nuclear power stations involves CO2 emissions. Construction workers might drive to the site in a vehicle powered by electricity from a renewable resource and plug in rotary saws that are powered in the same way. A consideration of zero CO2 emissions during a home's construction depends on how far one wants to take things towards the absurd. If we are to avoid reaching an absurd situation, the definitions must be clear and we must distinguish between construction and occupation.
On the occupation of houses, should we require those seeking the tax exemption to guarantee that their washing machine will be run only on electricity from renewable resources? How far should we take things when we consider zero CO2 emissions for occupation? I am worried that we will move towards bringing into the equation CO2 offsetting, which is one of the biggest boondoggles around. My hon. Friend Alan Simpson has mentioned in the Chamber—wittily, as usual, but quite rightly—that there is an adultery offset website. Allegedly, the person behind it is a rather spotty youth called Kevin from somewhere like Plymouth. He agrees to remain chaste and not to engage in sexual relations—certainly not adultery—so that someone who signs up to the website can engage in adultery absolutely guilt free because of the adultery offset— [ Laughter. ] That might produce a laugh, but it highlights some of the problems with CO2 offsetting. Although this is being exposed, CO2 offsetting is often a complete con. It is said that Coldplay chose 10,000 trees in somewhere like Indonesia to carbon offset one of their world tours, but that all the trees were dead.
I raise this point regarding the definition of a zero-carbon home under amendment No. 20. Will CO2 offsetting come into the definition on the occupation side of the equation—when someone is living in the house—and when measuring whether the occupation leads to no net use of CO2? We need tight definitions and a clear political direction, preferably with cross-party consensus, to determine exactly what constitutes a so-called zero-carbon home.
I am following the hon. Gentleman's argument carefully. I am aware of his concern about the issue and he is right to ask for clear definitions. However, when carbon offsetting is done properly, sensitively and in sufficient volume, it can genuinely offset the carbon that we use. Would he want to discount it completely from a definition?
I would not want to discount it completely from a definition, but one would have to be careful about bringing carbon offsetting into the definition of a zero-carbon home. There have been carbon capture and storage projects in Norway for several years and in Saskatchewan, Canada. Most people would regard CCS, when properly carried out, as suitable CO2 offsetting. However, planting trees that then die—either naturally or prematurely—is not really CO2 offsetting. We need to be careful with the definitions. I urge the Exchequer Secretary, bearing in mind that she is a Treasury Minister—she is a very able Minister—to try as best she can to give the Committee some clarification, with regard to amendment No. 20, about what a zero-carbon home really is.
I rise to support my hon. Friend Justine Greening. Her amendment makes a lot of sense, and I hope that the Minister will simply concede that. I am sure that the Government intend the tax exemption to be available only on the first sale-and-purchase transaction. The drafting in my hon. Friend's amendment would ensure that rather more accurately than the drafting in the Bill, so it would make sense to accept it.
Like Rob Marris, I wish to concentrate more on amendment No. 20 and what constitutes a zero-carbon home. I approach the issue from the proposition that it is better to try to change people's conduct using tax incentives than through tax impositions or compulsion. The principle in the amendment is therefore welcome. It is right that the Government should try to address emissions related to the home environment as well as transport emissions. We well know why that is important: many more of the typical family's emissions come from the family home. The problem is a difficult one, but it can be addressed using a series of incentives and proposals, of which this would be just one.
I understand my hon. Friend the Member for Putney's worry that the measure will have a small impact. Part of the reason it will have a small impact is to do with the definition, which lacks clarity about what is a zero-carbon home. There might be a feeling out there in the marketplace that zero-carbon homes are unachievable, and that we should move our targets to what might better be called low-carbon homes as technology develops and the marketplace responds. That is what we do with motor vehicle manufacturing, the regulation of which is tightened progressively over the years, so that each generation of cars is successively better. As a result, exhausts have been cleaned up, and there have been changes regarding the production of fuel to give a certain level of performance. We could have a similar trajectory with housing and the improved performance of our homes, preferably through an incentive scheme.
The hon. Member for Wolverhampton, South-West rightly said that the zero-carbon home of the Government's imaginings is not truly zero-carbon because the construction process will entail a certain level of carbon dioxide emission. He could add to his list the emissions of vehicles used on a site to dig the ground and move the earth, as well as any pile-driving and concrete mixing required to provide the foundations and a stable platform on which to build.
Another aspect of all building processes that causes perhaps even more carbon emissions is the manufacture of building materials. Most of the building materials going into a typical British house have been produced using energy-intensive processes. The cement industry is a big energy user, as is the brick industry. That consideration needs to be fashioned into a policy. Although it will be good news for those who wish to cut carbon emissions if homes can be constructed that emit few or no carbon emissions, it will not be such good news if the building materials used to achieve that degree of insulation and that carbon-free standard were produced using energy-intensive methods or if they had to be transported quite far. Such homes would take many years to break even on the carbon account.
These issues are difficult. Carbon accounting is a rudimentary science at the moment, and all too many people considering it think that there are silver bullets and easy answers. They think, for example, that stopping people driving would make the problem go away, but it would not. The issue is more complicated than that. All sorts of processes and circumstances involve carbon dioxide emissions, and a sophisticated carbon account is needed before sensible policy conclusions can be reached. I hope that the Minister will produce rather more sophisticated research—perhaps not today but in the months ahead, as this policy develops—so that we can have a better idea of what the true carbon account would be on a so-called zero-carbon home. I hope that the Minister will be able to provide a little more definition today, as my hon. Friend the Member for Putney requested. If the policy is to have any chance of working, the wider world, interested in building new homes, needs a clearer idea of what is required, and we need a clearer idea of whether it is achievable.
I would regard as a failure a policy under which only 10 homes qualified in more than half a year, and, if I were a Minister, I would regard it as my important duty to tweak and change it until I had a decent number of homes coming forward, so that I could claim that the policy was some kind of success. I put it to the Minister either that it is a problem of persuading the market that what she has in mind can be done—the Government are meant to be good at putting out messages through the media—or that perhaps more work needs to be done on the sort of home that is envisaged, working in conjunction with the industry, so that we can roll out a policy for the hundreds and thousands rather than the one and twos as we seem to have at the moment.
I think that a stamp duty tax break is a very attractive tax break, as stamp duty is very high on the more expensive houses and still a lot of money on the relatively cheap houses because house prices have increased so much. We would expect to have something for the expenditure of tax revenue forgone; we do not seem to be getting it at the moment, so I hope that the Minister will use amendment No. 20 as an opportunity to clarify and improve the definition so that it delivers on the carbon front, taking into account the production of carbon in building the house as well as in subsequently living in it, as well as delivering the number of homes needed to fulfil the targets.
I am delighted to return to the subject of stamp duty exemptions on zero-carbon homes, as provided for under clause 90 and the amendments proposed by my hon. Friend Justine Greening. I have some interest in the issue, having been fortunate enough to encounter it during the Committee stage of last year's Finance Bill and, by happy coincidence, when I joined my hon. Friend during the subsequent debate on the statutory instrument in December. Some members of the Committee may also have been present last year and will remember that we had great fun in the debate, largely at the expense of the then Economic Secretary, Ed Balls. However much we teased him and laughed at his ability to tie himself in knots, there was a broad consensus that we wanted the policy to work in practice.
Stamp duty is a considerable expense for anyone trying to get on the housing ladder and last year's revenues reached some £6.4 billion—a 40 per cent. increase on the previous year. It is quite right for the Government to seek to influence behaviour by reducing some of the burdens of that huge rise in taxation. In that respect, the potential benefits of the policy are wrapped up with how it is perceived by home buyers—and, of course, home builders.
In the same constructive spirit, I welcome the change proposed in clause 19, which will extend the relief to registered flats—something that I asked for when we debated the statutory instrument and the then Economic Secretary gave the Government's favourite answer: that it would be reviewed. To give credit where it is due—it is right to do that sometimes—it has not only been reviewed but acted upon and duly extended, so I am delighted that once again the Government seem to be listening to the Conservative party; but it is a shame that neither the Economic Secretary nor the Chief Secretary, who I am sure would have been particularly well briefed on the subject, could be here for today's debate. It is a shame because there is already a sense of discontinuity creeping into the way in which the zero-carbon homes agenda is being dealt with and there is a sense in which the Government's lofty aspirations are not being matched by the reality of delivery.
As my hon. Friend the Member for Putney has already mentioned, parliamentary questions have done what endless questions in Committee could not: they have elicited the number of zero-carbon certificates that have actually been issued. Unfortunately, it is a very small number indeed—my right hon. Friend Mr. Redwood made that point. Will the Exchequer Secretary update us as to what the latest number is?
That matter worries me less, however, than does the caveat that appears at the end of a couple of parliamentary answers. As the Exchequer Secretary stated in one of them:
"We expect the number of qualifying transactions to rise as more properties eligible to claim the relief go on the market."—[ Hansard, 19 March 2008; Vol. 473, c. 1223W.]
I am sure that the number of transactions will rise given that we are starting from a very low base, but it seems that the Government expect some magic exponential effect to occur, and they always seem to expect it to occur soon rather than now.
Last year, the then Economic Secretary proposed the same kind of optimistic but ill-defined acceleration as is now appearing in such parliamentary answers. He said—in the way that only he can—that
"there will be a non-linear, progressive, accelerating build-up over time on the basis of which we will get to a figure of 200,000 by 2016."—[ Hansard, 26 June 2007; Vol. 462, c. 198.]
However, he also admitted that the pace of the acceleration depended on the definition that was adopted for zero-carbon homes.
I do not wish to plough the same ground too many times, but the Government have never given satisfactory answers in the repeated questioning over the costing of this measure. There still seems to be a disparity between the £15 million that was set aside for stamp duty rebate and the 200,000 houses that the Government hope will benefit from it by 2016. My hon. Friend the Member for Putney made that point in her excellent speech at the beginning of the debate. Can the Minister confirm the total value of the stamp duty land tax relief for new zero-carbon homes that has so far been claimed, and whether that figure fits in with the projected cost to the taxpayer of £15 million by 2011-12? Moreover, since clause 90 extends eligibility for the relief to flats, may we have an updated costing? It will, presumably, be in excess of £15 million, but by how much? I ask that as there does not appear to be a figure in the Red Book that reflects the extension.
Given the low initial take-up, the ongoing scepticism about the definition, the uncertainty over costing, and the damage that all this does to the public perception of the policy, do the Government propose to undertake a full review of the operation of the policy in its first six months, and will they publish the results? We called for regular such reviews last year, but the only information on progress since then has been provided by sporadic parliamentary questions. The Government's seemingly boundless optimism cannot compensate for lack of detail on how the policy is working in practice and how it is expected to evolve over time.
I shall now return to the question of the public perception of the zero-carbon standard. The National House-Building Council Foundation has recently published a research paper entitled "Zero carbon: what does it mean for homeowners and housebuilders?" which presents a detailed investigation of public expectation and reaction. The first challenge that the Government face is that only 4 per cent. of those polled had any knowledge of the stamp duty exemption that we are discussing today. The NHBCF also suggests that that is unsurprising, given the very low uptake revealed in parliamentary answers. If the policy is to be a success, awareness and uptake will need to feed off each another, and raising awareness is a huge challenge. Part of the reason for these issues is simple scepticism about what the standards mean, what they will cost to implement and how they will affect homebuyers' lifestyle choices.
"It is vital for homebuyers to actually want to live in zero carbon homes if they are to be a successful reality. If this does not happen, there is the distinct possibility that purchasers will decide against buying newly-built, low carbon properties."
The report found that home owners tended to view the 2016 zero-carbon aspiration as laudable, but did not believe it to be at all realistic.
Furthermore, home buyers tend to view energy efficiency in stark economic terms; if it saves them money, they will buy it. For example, nearly half those polled were open to the £700 additional cost of meeting the code level 1 standard, because it generates savings of about £50 per annum, but fewer than one in 10 believe that a £400 saving is sufficient return on the £35,000 additional investment needed to meet the code level 6 standard, which reflects a true zero-carbon home. If the cost of qualifying for the zero-carbon stamp duty exemption is an additional £35,000, as the Government estimate, and the maximum stamp duty rebate is £15,000 on a £500,000 property, clearly a significant amount of additional cost must still be met from elsewhere.
Perhaps that gap explains why opinion on the house builders' side is, if anything, less favourable. Although there is widespread awareness of the code for sustainable homes, the report found that
"the perception of the industry is that, whatever the merits of the Code itself, it is being severely undermined by the muddled and incoherent way in which the Code agenda is being driven."
The construction industry will ultimately determine whether the zero-carbon aspiration is a success or a failure. When confidence in the 2016 target was assessed, only 26 per cent. of house builders polled believed in their technical ability to deliver the standard and just 14 per cent. had confidence in the commercial sense in doing so. The following quote from one builder is indicative of the tone of the study:
"I have no confidence in it whatsoever. We are currently involved in building a Code Level 6. If the Government expects Code Level 6 houses in 2016 with the technology that's available today then there won't be any houses built in 2016. It's so complex and expensive."
That is the background to this issue, and it is the challenge that the Government must meet. The process of meeting that challenge is not helped by the level of uncertainty surrounding both the zero-carbon standard and all the Government's sums, which are contingent on it. Perhaps that is why the report concluded that many builders wanted to pause for breath at the code level 4 standard, and that they tended to view the huge additional investment required to create a genuine zero-carbon home as impractical and inefficient.
The Government have committed to review the operation of the stamp duty incentive in 2012, which is midway between now and the 2016 deadline for all new homes being zero-carbon. May I draw the Minister on whether the Government will reconsider offering graded reliefs to properties that meet one of the intermediate code levels but are not strictly zero-carbon? Such an incentive structure might help builders to commit to further costly investment in new technology.
The Budget announced new pump-priming funding for a new 2016 delivery unit to guide, monitor and co-ordinate the zero-carbon programme. That is welcome, but will the new unit have within its remit the ability to re-evaluate the operation of the incentive structure? Even more importantly, will the unit act decisively to end the confusion about the zero-carbon standard?
The NHBC Foundation found, rather like Rob Marris, who had his own non-linear, progressive, accelerating build-up to this point, that
"some confusion does exist, however, with the fundamental issue of what 'zero carbon' actually means".
That is the focus of today's debate. I appreciate that the draft Stamp Duty Land Tax (Zero-Carbon Homes Relief) Regulations 2007, which the House approved in December, had been amended to bring them in line with the code for sustainable homes and that issues such as connection to gas mains were cleared up. Nevertheless, there is evidently still a degree of confusion within the industry, which is why it is paramount that the Government act quickly.
One house builder in the NHBC Foundation study is quoted as saying:
"The Building Research Establishment...assessors do not know whether a 2016 carbon neutral home is carbon neutral for the whole house or is it just for the energy and lighting in the house. If the BRE assessors don't know, how are the housebuilders supposed to know?"
The Red Book does include a commitment—in the Treasury's usual and modestly named "utopia-regular" font—that a definition of a zero-carbon home for the purposes of the 2016 ambition will be forthcoming at the end of the year following further consultation. But that being so, I see no reason why the Government will not accept amendment No. 20, which would commit them to laying regulations on the long-term definition before the House by the end of December.
This policy and its associated definitional problems have now had a very long gestation period and things are still changing in fits and starts. In its first six months of operation, the stamp duty exemption has been used a mere handful of times. Nevertheless, it has already been the subject of one backdated statutory instrument, in December, and now another backdated clause in this Bill to extend its remit. We have now debated it several times and come at it from so many angles that I am beginning to feel as though this is groundhog day.
Every month that goes by without certainty is a month in which the confidence of the building sector and the general public in this policy will be further eroded. This policy is becoming the very definition of spin over substance. The time has surely now come to make a commitment in the Bill to get the long-term definition right once and for all, and I welcome our amendment to that effect.
We have had an interesting debate. I have been struck by the good will on both sides of the Committee towards making progress to achieve the desired outcome—the existence of zero-carbon homes, whatever the definition—and to ensuring, by 2016, that all new house building is zero-carbon. That is very positive.
My hon. Friend Rob Marris made a point about the turnover of housing stock being much slower than the turnover in, say, transport. That has a direct bearing on the carbon savings calculated from the existence of zero-carbon houses. By definition, those savings start slowly and increase as zero-carbon and low-carbon homes, which are not the same thing, are built and have an increased presence in the housing stock. The benefits in carbon savings from the existence and development of such homes will start off as minuscule and rise slowly. If the process is successful, the carbon savings will be much greater at the end than at the beginning. Clearly, they will have to be much greater by 2050 if we are to reach the 60 per cent. or 80 per cent. savings that the Stern report demonstrated were necessary to achieve climate stabilisation. I thank my hon. Friend for bringing that point to the Committee's attention.
The other point that needs to be borne in mind before I get into the detail of the debate was made during a very good speech by Mr. Redwood. He said, to quote him, that carbon accounting is a very rudimentary science at the moment. That is true, and it will evolve and develop as we go along. We cannot expect to have the same level of sophistication in how we do something this new and novel, even though it is important, as we can in other accounting methods.
Hon. Members in all parts of the Committee will have to be patient as we develop our measurements and standardise them for reporting back to the House. We also need to avoid the problems that we have had with the more ordinary accounting methods for companies, which were developed a couple of hundred years ago. They were developed all over the world on different bases and it has taken 200 years to standardise them.
We need not only to develop our standards of carbon accounting for our economy, but to do so in a way that can be standardised across the globe if we are to develop emissions trading systems and ways of measuring life-cycle carbon emissions. That is what my hon. Friend the Member for Wolverhampton, South-West was talking about in his speech. Although it is an aspiration for us all, and although these are important tools, we cannot pretend that we have all the answers now. If the Government are to be criticised for keeping coming back to definitions and for making minor savings in carbon emissions at the beginning of an important but long-term process, as a Minister I will have to put my hands up to that.
Hon. Members from all parties need to understand, as some have made clear they do in their comments today, that the situation is evolving. Standards have not yet been set and they need to evolve. Global standardisation also needs to evolve. Carbon accounting is a rudimentary science that needs to become much more sophisticated very quickly if we are to be effective. I hope that hon. Members will bear those issues in mind as we deal with the detail on the amendments, as well as with the new clause.
Before I deal with the amendments in more detail, let me say that much fun has been had with the number of zero-carbon homes that are in existence, and people have said that the carbon savings are so minuscule that they will make no difference. The stamp duty exemptions that we are debating under clause 90 and the amendments to it are important, but they are only one part of the work that the Government are doing.
By definition, since the exemptions are attempting to create a different standard for the emissions of a house over its general life, such houses will form a tiny part of the housing stock and will have to be in the new-build areas. Hon. Members should not forget that the Government have a raft of other policies that deal with existing housing stock and make it more energy efficient. Those policies include the carbon emissions reduction target regulations and Warm Front regulations, which are doing so much on energy efficiency. We have a whole range of retro-fitting activity, if I can lump it all in that phrase, that attempts to deal with our existing housing stock.
It is true that we need to go for housing with low carbon emissions and to try to retro-fit some of our stock in order to bring that about, but the strict definition of zero-carbon would require most existing houses virtually to be demolished and rebuilt for them to reach code 6. When we consider the work that the Government are doing, we should distinguish between new build and how important it is to have radically more energy efficient, very new buildings that people can live in, of which I know there are only 10, although I hope that there will be very many more soon. However, it is not surprising that the process has taken this long, when we did not start with definitions that people agreed on and when a lot of this work is new and being done for the first time. Therefore, I crave the indulgence of the House in saying that such work is front-end loaded and that the results are back-end loaded. I hope that people will accept that, by definition, that must be the case.
Clause 90 has two purposes, the first of which is to ensure that the relief from stamp duty land tax for new zero-carbon homes is extended to cover new flats. I perceive that that has a general welcome around the House. The relief will apply to any new flat that meets the stamp duty land tax zero-carbon standard that is purchased from
The original explanatory memorandum to the statutory instrument excluded flats and maisonettes. So will the Exchequer Secretary confirm that, when she talks about flats, she means that flats and maisonettes are now included?
Yes, that is my understanding. Clearly, the delay was caused by checking how common parts and other issues could be dealt with to maintain a definition of zero carbon that was robust enough to qualify for the relief. Again, that was done to ensure that silly mistakes are not made in new areas. The hon. Lady had fun criticising the Government for not including such provision originally, but the work had to be done to find out whether it was doable in principle, and I think that she welcomed the extension to flats under the clause.
The clause will also create the power to introduce regulations that permit Departments that are carrying out assessments of whether homes meet zero-carbon standards to charge reasonable fees for providing such a service. Regulations that provide for fees will be made immediately after Royal Assent has been granted to the Bill. The clause will amend sections 58B and 58C of the Finance Act 2003 to ensure that the relief from stamp duty land tax for new zero-carbon homes introduced in October 2007 is extended. The relief will apply to any new flat that meets the stamp duty land tax zero-carbon standard that is bought from
As with new zero-carbon houses, the relief will provide for the complete removal of stamp duty land tax liabilities on all new zero-carbon flats up to a purchase price of £500,000. If the purchase price of a flat is in excess of £500,000, the stamp duty land tax liability will be reduced by £15,000. The relief will help us meet our 2050 climate change targets by encouraging house builders to build homes that are more energy efficient and that maximise renewable technology. The stamp duty land tax incentive is designed to help to kick-start the market for new methods and to support the 2016 ambition of all new homes being built to a zero-carbon standard.
Justine Greening was under the impression that there were two definitions of zero carbon. In fact, there is only one Government definition. The Treasury definition and the code for sustainable homes definition are the same. The Department for Communities and Local Government will consult in the summer on the 2016 definition of zero carbon, but we believe that larger developments can meet the current definition and that it is harder for small city infill developments to meet it. Clearly, when practical issues to do with the definition come to our attention, it is important that we are flexible in how we respond, so that we do not disadvantage particular areas.
Is the Minister saying that in 2016 people who think that they have bought a zero-carbon home will discover that they did not do so—they just bought a zero-carbon home as defined in 2008?
No. The stamp duty land tax relief applies to the first sale of a house. The emissions-related benefits of that house are then thought to be important enough in themselves to be worth having; I hope that all Members in the Committee agree. The stamp duty land tax exemption is important in making it more attractive for house builders to build new zero-carbon houses—new, more radical, energy-efficient houses—and for buyers to purchase them. It is important to ensure that our existing housing stock becomes zero-carbon over time.
I said earlier that although it is important to be certain about the definition of zero-carbon homes as there is more sophistication in terms of what is available, how such homes can be produced and built, and what materials are used, it is important that we are flexible, and the hon. Member for Putney nodded. I hope that she will accept that point. It would be absurd if I were to say, "We will define zero-carbon homes as we did in the regulations. The definition will not change in the next 20 years, no matter what new technologies, building methods or ways of measuring or defining zero-carbon come along; we must stick with the definition that we first made." I hope that she will realise that it is important for us to accept that the definitions could evolve. However, there is already a definition with which house builders know they can work; many are already doing so. I can tell the House that two developments are now being planned that will result in the building of 400 homes that meet the current definition of zero-carbon, so there are already signs that house builders are beginning to engage positively with the process.
Moving on to the amendments that we are debating, I detect that no matter what scepticism there may be, the extension of the zero-carbon homes provisions to flats and maisonettes is supported by Members in all parts of the Committee. The Government have considered the amendments to clause 90 that deal with extending stamp duty land tax relief. Amendment No. 4 would change the definition by replacing the word, "occupied" with the phrase "acquired by a buyer". We believe that, in practice, a relief that is restricted to homes that have not been previously occupied will have the same, or virtually the same, scope as a relief restricted to homes that have not been previously acquired by a buyer. The amendment is therefore unnecessary.
Amendment No. 13 would extend the relief to all acquisitions of a zero-carbon home, whether new or old, and regardless of whether the home has changed hands before. As I have said, the Government believe that the relief should be restricted to the first acquisition of a new zero-carbon home. That fits in with the key objective of the measure, which is to kick-start the building of zero-carbon homes by stimulating consumer demand. Once the homes are built, we expect the benefit in terms of energy savings to remain in the home for many years. We do not believe that it would provide any value to the taxpayer if the relief were extended to cover second and subsequent acquisitions of a home, as is envisaged under the Liberal Democrats' amendment No. 13.
On the issue of existing homes, I hope that Mr. Browne will recognise the fact that the Government have a range of policies in place, including the carbon emissions reduction target and Warm Front, that provide for the retro-fitting of energy efficiency to existing homes. The standards associated with zero-carbon homes are designed to accelerate the provision of new energy-efficient technologies in new build, rather than to be applied to existing houses. New developments can meet the standards more cost-effectively, as it is possible to use special new building materials and techniques to reduce a home's energy consumption to close to zero, and to deploy larger-scale, development-wide generation technologies to fill the gap. That is not possible in the same way in a retro-fit scenario.
Amendment No. 14 would remove the sunset clause in the Finance Act 2007 that ensures that the relief will not apply on or after
Finally, let me turn to amendment No. 20, which has a number of parts. In the amendment, it is suggested that the Treasury should define a zero-carbon home through regulations by no later than
The Government will conduct an interim review of the stamp duty land tax relief by 2010. That review will provide an opportunity for examining the effectiveness of the tax relief in stimulating the innovation that is necessary if we are to realise the ambition of all new homes being zero-carbon by 2016. I therefore propose that the amendment be withdrawn.
I will not withdraw my amendment; I will press it to a Division. I do not feel that the Minister has addressed the issues behind my amendment sufficiently well to make me seek to withdraw it. Her response suggests that people who are in right-to-buy contracts with a developer, and who may occupy a zero-carbon home before eventually buying it, would not qualify for stamp duty land tax relief, which seems unfair. On that basis, and because of the uncertainty about the definition, I will press amendment No. 21 to a vote.