New Clause 10 — Green deal installation apprenticeships

Part of Oral Answers to Questions — Prime Minister – in the House of Commons at 2:30 pm on 14th September 2011.

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Photo of Gregory Barker Gregory Barker The Minister of State, Department of Energy and Climate Change 2:30 pm, 14th September 2011

The hon. Lady makes an indisputable point. We are mindful of the mistakes made by the previous Labour Government, which resulted in a succession of levies being put on consumer bills without any thought to the long and short-term impact on the vulnerable. That is one reason why we saw such a steep rise in the number of people living in fuel poverty, which increased by millions during the last Parliament alone. It is a difficult balance to strike, and I can understand why Ministers took those decisions, because they had to find the money from somewhere. We are certainly very mindful of the point she raises, which is why, as the hon. Member for Brent North said earlier, we have taken steps to remove the levy for CCS and the renewable heat incentive levy from the bills. The Treasury will insist on clear value for money and due consideration of the impact on those who are least able to pay when we finally settle on the exact figure of the ECO, which will replace the CERT funding.

Amendment 27 tabled by the hon. Member for Brighton, Pavilion, and amendment 45 tabled by the hon. Member for Manchester, Withington, deal with the collection of green deal payments. Allowing either energy bill to be used to collect the green deal charge looks attractive. I asked the very same questions myself and got exactly the same initial response as the hon. Lady, but the devil is in the detail and close analysis reveals significant problems. Requiring gas suppliers as well as electricity suppliers to facilitate the collection of green deal charges, which seems the obvious thing to do, given that heating is the larger element, would substantially increases the implementation costs.

I really pushed back on that in the early stages of policy implementation, but our findings indicate that it could increase the implementation costs by up to 50%, which would ultimately be passed on to consumers. mainly because most energy suppliers have separate gas and electricity billing systems. Introducing a choice between collection of the green deal charge via electricity or gas, however desirable—I am all in favour of greater consumer choice—would require regulating two groups of companies rather than one, which would increase the risk of implementation failure and potentially cause a delay to the launch of the green deal in autumn 2012. Auditing payment flows would also be more difficult, because there would then be two possible routes through which the funding might flow.

The idea of allowing the occupier of a property with a green deal plan to switch collection methods at any point also prompted considerable concern in the industry. It would increase the possibility of billing inaccuracies, which in extreme cases could increase disconnections, which I know we all want to avoid, as well as increase the overall risk premium and push up interest rates, which we obviously want to keep as low as possible. I will return in a minute to the issue of disconnection.

That leaves collection only by electricity or by gas; fundamentally, it comes down to an either/or situation. I agree with the hon. Member for Brighton, Pavilion that gas seems the obvious choice, but collection via gas bills would automatically exclude the possibility of billing in that way the 4.3 million households that are off the mains gas grid when they access green deal finance for energy efficiency measures. Many of those properties are in rural communities, and it is important to the coalition that the green deal be available to both rural and urban communities. In contrast, almost all properties in Great Britain are connected to the electricity grid.

The change proposed would also raise the possibility of customers paying summer gas bills that are significantly higher than those before the green deal plan was taken out, which could be very difficult for many low-income families who are prepayment customers and not used to paying large amounts on their gas bill over the summer months. Many breathe a sigh of relief as they reach spring and have that little extra give in the family budget as a result of not having constantly to load their gas prepayment meter. It would be most problematic for prepayment customers on gas, who would then be expected to carry on paying charges equally through the summer, when normally they do not.

We still have a lot more work to do to deal with the iniquity of billing, whereby people on prepayment meters and low incomes often end up paying higher tariff, so for the foreseeable future it makes sense to ensure that the charge is levelled out across the electricity bill, where we see far fewer lumpy payments, spikes and troughs.