Relevant documents: 5th, 6th, 9th and 11th Reports from the Delegated Powers Committee.
Clause 122: Designation of statement
Moved by Lord Whitty
92A: Clause 122, page 92, line 11, at end insert “including the strategy and objectives to be designated in relation to fuel poverty under section 136 of this Act”
My Lords, we now come to an issue which concerns the final impact of the whole superstructure of energy policy on the lives of millions of people, because we are dealing here with the issue of fuel poverty.
I shall speak also to Amendment 92B. These two amendments seek to insert a reference to fuel poverty into the section of the report which deals with the statement of policy for energy. When we think about it, it is very odd that that reference is not already there. Energy policy has economic objectives and security and environmental aspects, but also a very important social aspect that should appear in the statement. My first two amendments in this group address that issue.
Amendment 104C is, in a sense, more substantive, along with the amendments in the name of my noble friend Lord O’Neill. They relate to the one clause in the Bill that really deals with fuel poverty—Clause 136. However, it is also important that we ensure that fuel poverty features in any statement of policy on energy in the future.
Before I go any further, I should declare a small interest in that I am the chair of a small charity which conducts research into fuel poverty and energy efficiency.
It is actually a bit depressing that right up to Clause 136 we cover almost every aspect of the energy market and do not mention fuel poverty at any point. Fuel poverty is the inability of millions of our fellow citizens to heat their own homes to a minimum standard of comfort. It is also true, I regret to say, that Clause 136 was introduced by the Government at only a very late stage in the Commons procedure, almost the last stage, and received virtually no consideration. The policy statement which backed it up following the Commons procedure—the blue document which the Government issued—set out aspects of their fuel poverty strategy.
The Government have come to this a bit late, in any case. The first period of this Government was a pretty disgraceful one, when they cut back on efforts to help bring millions of households out of fuel poverty. The Warm Front programme, which was taxpayer-funded and treated the homes of 200,000 low-income households every year, was first cut and then abolished, although parallel schemes still exist in Scotland, Wales and Northern Ireland. The Government also cut back on the decent homes expenditure for improving the stock in the social housing sector. They also made clear at a pretty early stage that the aim to eliminate and eventually abolish fuel poverty was being abandoned. This aim, set out originally in the Warm Homes and Energy Conservation Act, had been pursued by the previous Government with growing difficulty over the past few years as global oil and gas prices rose. Not until this Bill and the document to which I have already referred was that abandonment formally acknowledged.
The Government also closed the CERT scheme—previously known as EEC—which placed an obligation on the supply companies to provide energy efficiency improvements and was skewed towards the fuel poor. Admittedly, the Government have replaced that with the ECO provision, which is reflected in this Bill and the earlier legislation, but the ECO is supposed to do a multitude of things. It is supposed to replace Warm Front and CERT, but actually the feedback we get—and I am sure the Government get—from the ground is that it is not achieving anywhere near its targets. The feedback from the supply companies, the installation companies, the insulation companies, consumer groups, fuel poverty campaigners and the Government’s own fuel poverty advisory group is that what is supposed to be conducted under the ECO is less in volume and more expensive per item than under the previous system.
I am not blaming everybody in the Government. I am not even blaming every DECC Minister, because I know DECC has fought quite hard on this front from time to time. I know that it was Her Majesty’s Treasury that forced Chris Huhne to abandon Warm Front. I also know that there are attacks on Ed Davey and the DECC position which are now expressed in terms of removing green taxes, but one of the items that is described as a green tax is actually an allocation to help the fuel poor and to tackle the problems of fuel poverty. There is talk that the Government believe that that should come no longer from consumer bills, but from general taxation. But the first thing the Government did was to abolish the scheme which was paid for by general taxation. Can the Minister let us know what she thinks is now the prospect of HM Treasury agreeing to a new major scheme funded by taxation to address fuel poverty?
Of course, the Government do have some money. A little remarked fact about the latest developments over the past few years on energy prices is that one of the beneficiaries has been HM Treasury, with VAT on energy prices and on a lot of the so-called green taxes and, of course, with the VAT consequences of introducing the carbon floor price. The estimate is that upwards of £4 billion is going out of higher energy prices into the coffers of the Treasury and not one penny of that has yet been allocated to addressing the acute problems of fuel poverty.
I accept also that the Government have done one other thing: they have introduced a warm homes discount to override the tariff so that there is a cut in the energy bills of the fuel poor. However, that is not a solution. It is a welcome cushion for those people but it does not tackle the basic problem. The Government have not only dropped or seriously curtailed all previous energy-efficiency programmes, but also, during the course of this Bill, rejected propositions from myself and others that we should try to get a structure of tariffs which help the fuel poor.
In Committee, they rejected my proposition of a standing charge and removal of discrimination against people who pay by prepaid meter, which hits the fuel poor particularly, or having any structure of tariffs which favours the low-paid and the fuel poor. All were rejected by the Government in Committee and in another place. It is also true that one of the effects of the Prime Minister’s intervention in this—the so-called simplification of tariffs, aspects of which I approve of—has led to a number of supply companies dropping their specialised tariffs directed to the special needs of pensioners, who form a substantial proportion of the fuel poor.
I accept that it is not entirely DECC’s fault but the net effect of all this is to aggravate a seriously dreadful problem in our society. From about 2005, rising energy costs have made it very difficult to make a dent in fuel poverty. I know that Chris Huhne came to government in the first instance wanting to look at a new strategy. Indeed, it is no secret, because someone told the press that at one point he approached me as a former Minister in this area to conduct an assessment. I was flattered and surprised, and slightly tempted, by the proposition. But eventually I found out that DECC was under pressure to redefine fuel poverty so that it was not such a problem or such a requirement on government energy policy. I rejected the approach on that basis, as did others, because it was clear that whatever happened and however you defined fuel poverty, it is a big number which is going up under present world conditions.
I am glad that Professor John Hills took on this task. He has produced a very solid document in terms of strategy for tackling energy fuel poverty, very little of which appears in the Government’s blue book. He produced a new definition of fuel poverty, which has some merits and addresses some of the problems of the previous definition, but in my view is not adequate. It has knocked a few million off the total figure of fuel poverty but it is still, as I said at the time, a big number which is growing. The gap facing the fuel poor to keep their families warm is growing all the time.
This whole Bill is about how we run, regulate and provide for energy supply to our population and to our businesses. All we have is the pretty feeble Clause 136 as a hook on which to hang an as yet undefined and weak fuel poverty strategy. The first two amendments in the group try to make sure that fuel poverty is up there with the other objectives of energy policy in the Government’s statement of policy. I cannot see how they can possibly object to that reference. The third amendment relates to the strategy. It attempts to turn a very woolly clause into one which has targets—and clarity of those targets—that relate to the improvement and efficiency of the dwellings of the fuel poor, as well as to the reduction and eventual elimination of fuel poverty in this country. If the strategy does not have ambitions and targets, it will not receive the priority and future consideration in energy policy that fuel poverty deserves.
I accept that the Government probably need to do more work on that strategy, and that is why my amendment does not specify exactly what those targets should be, but it does require the Government to set out those targets for 2020 and 2030. My noble friend Lord O’Neill is more specific on that in his amendments in this group. Either way, to give any confidence to the millions of people who are in fuel poverty out there, and the many more who are aware of the problem—who are sympathetic and demanding action—the Government need to accept that the policy and the strategy they come up with should actually mean something.
We need to refer to fuel poverty clearly in the policy statement. I hope, therefore, that the Government can accept the first two of my amendments without any great difficulty. I also hope that they will accept either my third amendment or that of my noble friend Lord O’Neill, or at least commit themselves to coming forward at Third Reading with something very like it which gives a structure and a framework for fuel poverty. As we know, fuel poverty is a terrible curse on our country. It causes people to skimp on food, and to not buy necessities for their children. It causes serious lung and heart conditions in thousands of our citizens at an estimated cost of £1.3 billion a year to the National Health Service. It causes whole families to live in discomfort, in anxiety, in the cold, and in distress. It is shocking that this Bill and the energy policy of the Government do not give greater prominence to the need to tackle this curse.
These amendments, if the Government can accept them, would go some way to deal with this. The Government need to accept the first two amendments as they are, because they do not of themselves present an obligation but they indicate a commitment to tackle this issue. I hope that the Government will also accept something like my third amendment, so that we can start making it clear to the rest of Government and to the population out there that this Government do care about fuel poverty, are prepared to do something about it, and will do so as rapidly as they can in the context of the big reform of the energy markets. I beg to move.
I am pleased to follow my noble friend. In addressing his amendments he covered, in part, some of the points I will raise in relation to my own. It is fair to say that the four amendments I tabled seek to add a bit of muscle and detail to the Government’s commitment. I will talk about this more in my later remarks, but the rather late insertion of concerns about fuel poverty into the Bill mean that it is rather late in the day for some of the amendments that we put forward, which are of a probing character. Therefore, one would hope that the spirit of these amendments will be carried into secondary legislation: that is, statutory instruments, of which many are likely to be forthcoming.
The existing legislation, namely the Warm Homes and Energy Conservation Act 2000, was steered through this House by the noble Baroness, Lady Maddock, who I regret is unable to be here today. All credit should be given to her for her efforts in that area, although I was always a little bit dubious about plucking a date out of the air. I know that the date was the subject of some arm-wrestling between the then Labour Government and the Back-Benchers. However, the fact is that it was an attempt. At the time there was a degree of optimism because, as noble Lords will recall, energy prices, particularly gas prices, were falling. We could see households moving out of what was known at the time as fuel poverty in quite considerable numbers. Not only were gas prices falling and thus people’s disadvantage in the energy market diminishing, there was also a sense that the general economic prosperity of the time meant that the situation of the poor would become easier and, as the Americans say, all the boats would rise together. Unfortunately, all the boats did not rise but the price of energy subsequently did, and the poor were left stranded in their inadequately insulated and poorly built homes.
Amendment 104D deals with housing conditions in two steps. Priority would be given to the homes that are hardest to heat, and where the household income is less than 60% of median income after housing costs. That is the Government’s own definition of poverty. The objective is for those householders to be helped by 2020. Over the succeeding 10 years, the remaining housing stock would be brought up to level B of the energy efficiency ratings. Rating B is the level that a new house is currently expected to meet when it is constructed. This is an ambitious target that would take some 17 years to meet. We are told that 70% of fuel-poor households are living in E, F and G-rated buildings, so we are talking about improving something like 1.7 million homes over the next six years, from 2014 to 2020.
It is certainly the case that houses with SAP ratings of E, F and G are where most of the fuel poor live. Moreover, only 7% of them have, for example, a condensing boiler. It is not just a question of insulating the houses; it is equally important to have more efficient means of heating water and providing central heating for these families. We know also that some 6 million households are not connected to the gas grid. These households are the ones where the fuel poverty gap, where it exists, is likely to be twice as wide as it is in households with gas boilers and central heating. Much the same can be said for a number of houses solid-walled accommodation.
The point of using the SAP rating is that it is probably the most up to date definition of disadvantage in respect of fuel costs. If you live in a house with an E, F or G SAP rating, it is likely that your home is very expensive to heat. The concept of low income, high cost is the basis of the Hills report, which defines fuel poverty and the fuel poverty gap. My noble friend has already referred to the fact that, according to the Hills report, we have seen a reduction in the number of households in fuel poverty from 4.5 million to 2.4 million. My colleague suggested, perhaps somewhat cynically, that this was an easy way of massaging the statistics. Frankly, there is a bit more to it than that, in so far as we now have a method of calculation that is not as vulnerable to fluctuations in price, which was the kind of problem that we had in the early part of the last decade. When gas prices were falling, the problems seemed to be decreasing, but in fact we know that the people who were living in these homes were not really very much warmer because most of the heat that they were paying for was still going out of the window or under the doors or not being properly contained within the building itself.
It is not unreasonable to use the SAP rating as the basis to do this, because one of the things about heritable property is that you cannot hide it. One of the things about local government taxes is that people do not really like rates, as we used to call them, and they do not like revaluation because you cannot hide property. The fact is that these homes, which are inadequately constructed, will not disappear because the price of gas goes down, as they seemed to do in the early part of the past decade.
This amendment is suggested as a means of tackling the issue of fuel poverty. Most of the fuel poor live in the most poorly insulated houses that are the hardest to heat. If we were to treat them in a step-by-step manner, we could be serious about tackling this problem. We need to get far more from the Government than the quite understandable expressions of concern about this social problem. We need a programme that will indicate how they propose to address this. They have had the Hills report for many months. In the summer we had the acceptance of the report and its incorporation within this legislation. I would have thought that five months later we should have the beginnings of some kind of programme or plan to address the issue.
I understand that these amendments are not perfect, but they enjoy the backing of a wide range of community, faith and campaigning groups that have been engaged in addressing this issue for many years. These groups are not expecting the Government to embrace these amendments tonight, but what they are looking for are clear indications that we are getting beyond the definition of the problem and moving towards a clear commitment to solving it. In this process we want to see clear reports, and also proper cognisance of our responsibilities under the 2008 Climate Change Act. We realise when we hear talk of green taxes, changes in ECO and the possibility of direct taxation being the means of funding some of these programmes, that we need to get assurances that we will not throw the environmental baby out with the bathwater.
We also have to recognise that we have come a long way. When I first came to Westminster more than 30 years ago, fuel poverty was not a given. It was an item of dispute and debate. The conversation around the Hills report suggested that the problem of fuel poverty was largely one of definition. Of course it was a rough and ready definition that was dreamt up by a young researcher in the 1970s who was doing work on poverty in Kensington. He was a man called Malcolm Wicks who went on to become a very distinguished Energy Minister in another place. Much of his work was given over to looking at how we could address this problem. Nearly 40 years after Malcolm wrote his first report—in which he quite starkly laid down the choice of “eat or heat” for the elderly of Kensington—we should be dealing with this in a far more organised and programmatic way than has been shown in the rather well intended but often ill directed scattergun approach that successive Governments have had.
I like to think that my amendments provide some milestones on a route that could be taken towards resolving this. I shall not press them, because they are in many respects of a probing character, and I know that on Report we should be a bit further advanced than that, but I should like some indication from the Minister of the Government’s thinking on the specifics of handling this problem. The excuses that we had in Committee on other matters about awaiting statutory instruments coming out of the air—coming out of the heavens—are not good enough. We know what the problem is.
We know that there are means whereby its resolution can be easily identified—not always easily resolved but easily identified. Let us use the inadequacy of our housing stock and the manner in which we are currently grading that inadequacy, as the means whereby we set out priorities which, over a period of 17 years, could probably eliminate the best part of 70% to 80% of fuel poverty in this country by a definition which, I think, is now accepted as being clearer, more robust and more statistically sound than Malcolm Wicks’s figure out of the air. If we could do that, we would do a great deal to enhance the memory of a colleague of many of us for whom we had great respect. One of his life’s causes was the resolution of that problem. I am not saying that we should do it for Malcolm Wicks; I am saying that we should do it for the people who will be cold and miserable in what will probably be a serious winter. Their health will be endangered and they may not see another winter after this because of the houses in which they live.
My Lords, I apologise for seeming to arrive into this very important Bill and debate at a late stage, but the plain fact is that on the afternoons when the Bill has been taken before, I always had to chair a Select Committee elsewhere, and I could not be in two places at once. I also declare interests as president of the Energy Industries Council, chairman of the Windsor Energy Group and an adviser to the Mitsubishi Electric company. I am very glad to have a chance to enter the debate at this stage and to follow the noble Lord, Lord O’Neill, whose persuasive eloquence I remember from distant days in the House of Commons. It does not seem to have deserted him now.
Of all the impacts of high prices—due to what I believe to be over-rapid application of decarbonisation strategies and the scramble, which we have been told the Bill is about, somehow to persuade new investment to replace all the plant that is being closed, but only by offering eye-wateringly high prices—the most painful and deplorable, and the one that fills me with the greatest concern, is the impact on low-income families and, in particular, the elderly and vulnerable in this climate, which can sometimes be very cold and cruel.
I am not against the amendments in spirit; behind all of them is a noble intention. Anything that can ameliorate the present situation—people always use the phrase, “We are where we are now”—for the elderly and low-income families and ease the ugly prospects which face people as cold winters descend on us is commendable. Although I think that the Government’s measures, also in the same spirit, have gone some way to meet the problem, it is perfectly natural that, in a very noble way, additional amendments to do still more should be moved. That is perfectly reasonable.
However, I urge your Lordships to understand that all this is only patch and mend. It is far from getting anywhere near the roots of the problem or taking the effective action that could be taken to ease some of the threats of fuel poverty, which is alleged to be exceptionally high in this country. It is patch and mend. Clause 136, which is paraded as a strategy, is not a strategy. It is the Secretary of State’s patch-and-mend list of hopes and intentions. The warm home discount and other excellent efforts like the cold winter payments which operate between November and March—people seem to have forgotten that April can be very cold for many elderly people—are good moves in themselves, but they are not anything like a strategy.
The real strategic cause of the suffering over which we do have some control is, as I have already suggested, the over-rapid decarbonisation programme—not that I believe that decarbonisation is the right objective, but its handling has been deplorable under both Governments. Certainly its handling was deplorable under the previous Government, and I am not particularly thrilled by the present Government’s continuation of some of these efforts. It is turning out to be incredibly expensive—much more expensive than the original experts insisted that it would be. It is challenging us at a time when wholesale prices for primary hydrocarbons have risen as well. So on top of everything, we are dealing with far greater expense and far higher prices than many of the experts and expert reports anticipated.
The truth is that in Britain but also in Europe as a whole, we are a pursuing a policy of expensive power. It may be for good reasons—if power is made expensive and bills are high people will move more quickly towards taking out these excellent schemes and towards energy efficiency—but that is what we are doing. Some of us believe that that is the wrong way to deal with global warming, the wrong way to reduce CO2, the wrong way to ensure the prosperity of people and the wrong way to help the elderly in their suffering. The best green route, and the best way of justifying the green route, would be through cheap power, not expensive power.
I am frankly astonished at the ruthlessness—perhaps I should modify that and say the lack of compassion—that some folk show in their zeal in pursuing a policy of expensive power and high prices. I cannot understand why that was done. I shall make a party point now. The leader of the Labour Party, an extremely able man, was, as Secretary of State for Energy and Climate Change, the architect of these higher-price taxes—the green taxes which I shall come to in detail in a moment. Now he has gone the other way; he has seen the effect and is calling for a price freeze. It reminded me of the legend of the sorcerer’s apprentice. He unleashed the brooms and the buckets in his green policies, and now he cannot stop them and is calling for a freeze, which is probably going to be ineffective.
So this is regression on a grand scale. The poor and the vulnerable are, through various means, having to pay for a substantial transfer of funds from the consumer to various causes, to encourage investment in new, greener capacity to replace all the mothballed and coal-fired stations and so on. As your Lordships may see, this is a three-pronged assault on the poor.
Recently there has been talk not only of freezing prices but of rolling back green levies. However, one must understand that that is not the only aspect. First, one of the reasons that the energy companies kept indicating, when they were being given a going-over by the Select Committee in the other place the other day, for raising their charges and having to make a substantial profit—I think 5% is the figure they all cited—is the need to finance extra plant to replace the plant closed down because it was deemed to be higher-carbon or unsuitable in accordance with EU regulations. We can accept that reason or not accept it. However, even before we get to the green levies, that is the first charge that arrives on the budget of the poor—on the budget of everyone, of course, but for the poor it is 15% or more of their disposable income. That is layer one of the challenge on prices.
Then, of course, there are the levies themselves, which fall into two parts, as we all know. One part is to finance and subsidise the new very high-cost renewables and the draw-droppingly expensive electricity from wind farms, which, as we know, is half as much again as the amount being offered to EDF for Hinkley Point C for the next 35 years, which in turn is half as much again as we are paying now, which is considerably more than we used to. The other half, oddly enough, is for good social and compassionate reasons: it is to redress the effects of the first two levies. The effect of the social programmes and the compensation is to offset the effects of the levies that finance the subsidies on the investment required because the pace of decarbonisation is just too fast and mishandled, and to offset the effect of the prices being charged by energy companies. It is an odd situation where the total cost is designed to offset some of the total costs that other measures have just pushed up.
More insulation is of course an excellent thing. There has been talk about woolly jumpers and that may help the younger folk, but all I can say for oldies —I think I can speak for them now; I used not to be able to, but I can now—is that cold limbs in a cold room or a cold house or flat really are extremely unpleasant and may lead to a very grim outcome. There are chilling estimates of how many will die of cold this winter in the UK, which make me personally quite ashamed.
The whole decarbonisation programme behind all this inflation of prices is paved with good intentions, as is the insulation programme. I lived in a house that had additional insulation. It had a thinner attic layer of carbon fibre over it and an additional three or four inches was added over the beams. I cannot say that it affected the bills very much but it may have held the warmth in the house for a little while. However, first you have to heat the house up before you can contain the heat within it, and that costs money. Those are the good intentions, and we all know what destination good intentions pave the way to. A cold house and an inability to meet these high bills is, frankly, hell for elderlies and families.
There is another issue here that we have not discussed because it is in other parts of the Bill: the so-called massacre—which is what the European Commissioner calls the effect of high energy prices in Europe, compared with other parts of the world—of industry and jobs, which means more distress in many more families. I do not vigorously oppose these amendments; I just warn that neither they nor Clause 36 are any cure at all for the real problem, which we should have the honesty to face and address in a sensible and balanced way.
My Lords, I do not disagree at all with everything that my noble friend Lord Howell has just said, but it is worth noting that heating in most households in this country is by gas or, for people like me who are off the mains, by oil. None of the green taxes applies to either gas or oil.
My Lords, I think that, when we are making these decisions, we ought to be particularly careful about the figures that we use. We must also understand why we are decarbonising at this rate. We are doing so because the economic advice from the best economists that we have is that it is the cheapest way to decarbonise. If we were to put it off, the cost would be considerably greater, so we should do it at this pace. We can disagree with this, but to do so would be to disagree with the best advice that we have been able to get. I must say, on behalf of the climate change committee, that, if I thought that there was a cheaper, more cost-effective way of doing it, I would do that. I am proposing this and have been pressing it because it is, by all the evidence, the best thing to do.
I think that we also ought to get the figures right. The average cost of decarbonisation for payers of the dual tariff—about 80% of users—is £60 per year at the moment. I am not suggesting that £60 is an unimportant matter, but when the average payment for fuel bills is £1,300, I think that we have to be careful about overemphasising the influence of the one thing upon the other. By 2020, the amount will be £100—and the figure will rise accordingly between now and then. I do not know what the average fuel bill will be in 2020, but the idea that £100 will be the major reason why the fuel bills will be high is not true.
We must take these figures seriously. This is one of the problems that we are facing. People are using figures that are clutched from the air. I have been watching Twitter and I find that people—sometimes, I am afraid, from my own party—are busy putting out tweets saying that if we had had a decarbonisation target after 2020 it would have increased our bills by £125 per year. This is totally untrue. The figure is £20, and the climate change committee has spent a great deal of time trying to get the best and most accurate figure possible. If the TaxPayers’ Alliance or others want to pick a figure out of the air, it is not for us to quote it. We are faced with a real issue here.
If, despite evidence mounting all the time—today we have been told of the highest increase in surface temperatures that we know of for a very long time—you still do not believe that climate change is immediate and dangerous and say that it is something that can be put, if I may use the phrase, on the back burner, then of course you can always say that this is not the moment to do this. However, I must say to my noble friend, that in that case it will never be the moment to do it, because that is always true at any given moment. However, if you see that climate change is the most serious material threat to our society, as happily this Government do—and it is a common view across the House—the £60 being charged for the insurance against it seems a reasonable amount.
There is an argument, although it is not for the climate change committee to make it, that we might change where the money comes from. However, I do not think that there is an argument to say that we should not be spending the money. Therefore I think that we ought to be very careful when we are having these discussions that we do not talk in a way that distorts the argument, either by the size of the price that we claim or by forgetting that most people’s heating does not come from electricity—it comes from gas and other sources—and therefore they are not paying this. Neither ought we to forget that other countries are doing more than we are. Germany is doing more than we are and much of Europe is doing at least as much, as we can see by looking at the Danes. The rest of the world is moving in this direction in a very serious manner; whether it is today’s announcement from Mexico or the changes in China, we can see that this is happening all around the world. It is not that Britain is doing better than others or is out of step, but that we are doing what the world is doing, because the world recognises the threat. That means that we have to be very considerate about the condition and situation of vulnerable people.
I am not sure that these are the right amendments, but I have listened very carefully to what has been said about introducing this measure into the Bill in a more pronounced way. I think that the Government have probably got it about right, but I have listened with some care. However, it does not help the argument to use the poor as an argument against fighting climate change, because the people who will suffer most from climate change are the poor throughout the world—not just here but in Bangladesh, the Pacific, India and elsewhere. I find this argument about the poor really very upsetting.
I do not want to upset the usual eloquence of my noble friend but he did refer to me. Given that he believes these burdens are necessary, ought he not explain a bit more clearly how this really does lead, in this country, to fighting climate change? He says we must be careful with figures—that applies as much to some of his figures as to others that are bandied around—but it appears that the pace of CO2 growth generated by mankind is so large in other parts of the world that our only contribution can be by example. I would love to hear from him a rather more persuasive message as to why we should bear the pain we are bearing at the pace we are bearing it, although the destination is right, in the contribution we are making to controlling climate change and violence in the future, which I accept is very likely and is a great danger. But has he got the pace right?
I can see the Whip looking at me with some care so I will be very quick. First, we have a moral duty because much of the climate change that is happening at the moment has actually been caused by us because we were the first in the Industrial Revolution. Secondly, if we want other, much less well-off people to follow, we have to set an example. Thirdly, 11% of the emissions in the world are made by organisations that are headquartered or sold on the London Stock Exchange, so we must realise how big our reach is.
Fourthly, because we have led the world—although we do not now—other countries are now doing significantly more than we are. The President of South Korea is here on a visit today. He comes from a country that has a programme of very considerable remit which will end up with it being carbon-neutral by 2050. China is moving from a carbon-intensity target towards a carbon-reduction target for the mid-2020s. It has already been shown that by leading the world, the world is changing. But if we stand aside and say, “After you, Claude”, nothing will actually happen. That is why we have to do it. We do it for the poor. To use the poor as an argument against doing things on climate change seems close—although I am not saying this about my noble friend—to reprehensible.
My Lords, I shall be extremely brief because I sense the House would like to come to a conclusion on the amendments.
I reread that debate and his first words were that he thanked the Minister for having brought fuel poverty into the Bill. You would not have guessed that from what he said this afternoon.
I have much more sympathy with the points made by the noble Lord, Lord O’Neill, but he, too, had his words of congratulation in Grand Committee. He said:
“The amendment goes some way to mitigate concerns that have arisen about that. It sticks in my craw to say this but the Government must be praised for obtaining support for the measure from Derek Licorice, the chair of the Fuel Poverty Advisory Group, and Jenny Saunders of the NEA”.—[Official Report, 11/7/13; col. GC 135.]
One must recognise Clause 136 is a considerable step forward. In Committee, I said that it was very worthwhile. Of course, the meat of this is going to be in subordinate regulations. We shall obviously want to watch that very carefully indeed. I totally understand the argument that my noble friend on the Front Bench advanced for not putting all the detail into the Bill, but wanting it in the regulations.
The impression I was given by the noble Lord, Lord Whitty, was that the Government were not doing anything for the fuel poor. In fact, he has had a copy of the letter that was sent to all of us from my noble friend on the Front Bench setting out the details of fuel poverty spending. The total resources spent in 2010-11 at 2012 prices—these are common prices all the way through—on fuel poverty spending was £821 million. The current year has gone up, at constant prices, to £841 million and the next year the estimate is £845 million. That does not take account of the fuel allowance, which is paid under the social security arrangements. These are arrangements under the carbon emissions target, under the energy company obligation, the warm homes discount and so on, which are specifically aimed at the poor. So I rather resent that.
I have one question for my noble friend. John Hills’s report made the hugely important point—indeed, it has been referred to earlier in the debate—that it is our uninsulated homes, particularly for poor people, which are the biggest single cause of cold homes and fuel poverty. He quite rightly says—and this has been widely welcomed—that we must change the definition to take account of that. What I hope to hear from my noble friend is what is now happening to our main programme, the Green Deal, which is supposed to be the main instrument for increasing the amount of insulation of homes? One has heard gloomy tales that so far very few people have been able to take advantage of that. What is happening on that? We must know. To my mind that is the most important thing we can do to reduce fuel poverty.
My Lords, I start by thanking all noble Lords for a very full and informed debate. I thank my noble friend Lord Jenkin for reminding the House of the warm welcome from the opposite Benches for us taking forward this measure. It is really important that we all agree that something must be done. What has been done in the past has not been enough. We need to be working far more constructively together to get solutions, particularly for those who are most vulnerable and least able to respond. I also thank my noble friend Lord Deben. He is absolutely right: any measures that we take here will have an impact somewhere else in the world. It is really important that we are mindful that this Bill is in part there to help decarbonisation. The bigger picture is to play our role in helping other countries, which can look at how we are putting those measures in place.
I also thank the noble Lords, Lord Whitty and Lord O’Neill, for their amendments, because they enable me to clarify a little further points that I made in Committee so that they feel reassured that this Government really take seriously the issue of fuel poverty. We take the issue no less seriously than the previous Government did, but the measures that were put in place were not working well enough. We need to make sure, therefore, that what we are doing gives better results.
Noble Lords have rightly highlighted the seriousness of fuel poverty; it is because of this that we are committed to tackling this. This is why we made the amendments in Committee which will set a new target and put in place a new strategy for tackling the serious issues around fuel poverty. This framework will allow us to maintain a concern for fuel poverty beyond the current date of 2016. That concern needs to be set out in legislation. However, the right balance must be struck between what is set out in primary legislation, what is subsequently laid out in secondary legislation and what is included in the strategy, to maintain an appropriate use of parliamentary time and level of government accountability.
I turn to Amendments 104C, 104D, 104E, 104F and 104G, which would put a specific target for fuel poverty in the Bill, and limit the changes that can be made to the target as well as proposing a review of that target every two years. We proposed setting the target through secondary legislation as we felt that this struck the right balance between the certainty of legislative targets and the need for flexibility in the future. The flexibility will, for instance, be important to reflect changes in the way energy efficiency is measured over time. The setting of the target, and any changes to it, will be subject to full parliamentary debate and the importance of that debate is why we have proposed that these are subject to affirmative resolution by both Houses.
We know from Professor Hills’s independent review that the way in which we understand the problem, as well as the best ways of tackling it, can change over time. Primary legislation is not the appropriate vehicle, given the importance of a nuanced, flexible approach to tackling fuel poverty.
I agree with noble Lords that we must be ambitious if we are to be successful in tackling fuel poverty, and the strategy must be a comprehensive one. However, it is neither sensible nor appropriate to put this level of detail into primary legislation. We will bring forward proposals on both the fuel poverty target as well as the strategy in due course, both for public consultation and, subsequently, for a full debate by both Houses.
In the mean time we will continue to deliver policies to tackle one of the main causes of fuel poverty, which, as noble Lords have already mentioned, is living in cold, draughty homes. The energy company obligation is set to deliver permanent energy savings in 230,000 households by the end of the year, including for the hardest-to-treat homes. We anticipate the ECO affordable warmth and carbon saving communities obligations should generate investment in home thermal efficiency improvements equivalent to around £540 million per year. As a result of the ECO, we should see more than 60,000 boilers—which were mentioned by the noble Lord, Lord O’Neill—being installed in fuel-poor homes, as 60,000 have been installed since the policy was launched in January.
Before the noble Baroness leaves this point, I accept the procedural point she makes, that it is difficult to put detail of the character of which we were talking in the Bill. However, we are entitled, some five months after the initial welcome that we gave to the incorporation of the Hills principle, to some greater detail than a simple rehash of what we are doing this year. We want an indication of what will happen in subsequent years, in advance of the consultative document being produced. At the moment, from what the Minister said, the Government do not seem to have a clue what they are doing in that respect.
My Lords, that is very harsh of the noble Lord. I am trying to lay out clearly the direction that the Government are taking. The measures that we are taking are crucial to addressing concerns which he raised. I have addressed the issue he raised about boilers. Of course we are taking measures now but we need to make sure that, although there is ambition on all sides of the House to do more, we get it right in the long term.
Amendments 92A and 92B specify that the strategy and policy statement and the Gas and Electricity Markets Authority’s duty in relation to the statement must include the strategy and objectives on fuel poverty. The Government take the need to address fuel poverty seriously, and are already bringing forward proposals to do so. These amendments are therefore unnecessary. The contents of the SPS will be subject to consultation and parliamentary approval. Placing a particular priority in the Bill would pre-empt this consultation and the ability of the Secretary of State to start with a clean sheet in considering the full range of energy policy.
I will try to touch on issues that were raised by the noble Lords, Lord Whitty and Lord O’Neill. Before setting a position on where we need to take these proposals we need to fully understand the proposals, the cost of the proposals, how they will work and what period they will work over. It may be very easy in opposition to say, “We want this now”, but we have already had 13 years of proposals that have not worked. We need proposals that have some meat—some body—and work. That is why it is really important that we do not get rushed into things because it makes a good political headline tomorrow. It is in the interest of all those who are suffering in inefficient homes, with the cost of energy going up, that we have a clear, proper strategy that works and that addresses those with low incomes but high costs around energy. I hope that noble Lords will be reassured that I, particularly, take these issues very seriously. I look forward to working with noble Lords to ensure that we put forward something that is not political but is a remedy to help the most vulnerable in our country. I hope that, on that note, the noble Lord will withdraw his amendment.
I thank all noble Lords who have taken part in this debate. It proved to be rather more wide-ranging than I had anticipated, largely thanks to the first intervention by the noble Lord, Lord Howell. I agreed with some of it, but he provoked a debate we have already had several times in the course of the Bill. I disagree with his central point and I think we need to take advice from the noble Lord, Lord Deben. It serves nobody’s interest to trade off the interests of the fuel poor against the objectives of reducing carbon in our energy. We have to tackle both as far as we can: it is not a trade-off. Indeed, many of the measures we are talking about to help the fuel poor, in particular improving the energy efficiency of homes, also help to reduce total demand for energy and reduce carbon. There is no conflict: they are synergetic, if that is the word, in many respects. It was a bit of an unfortunate diversion, but at least it livened up the debate.
The noble Lord, Lord Jenkin, and the Minister, to some extent, accused me of a volte-face. Certainly when the Government—between proceedings in the Commons and the Lords—came up with Clause 136, there was a sigh of relief, which I shared, that fuel poverty was being addressed in this huge reorganisation of the electricity market and energy policy generally. I have no doubt that other noble Lords on this side shared the relief that fuel poverty was at least appearing in the Bill. The problem is that it appeared at a rather late stage and that, as I said and maintain, it is a rather thin clause. It refers to the Government “setting out an objective” at some date “for addressing” fuel poverty—it does not even say “reducing fuel poverty”. We therefore want a little more meat on the bone. Some of it can no doubt be done by secondary regulation, but it would be better, frankly, if the Government were open to strengthening Clause 136.
The issue immediately before us is slightly different. Amendments 92A and 92B suggest that we should clearly signal within the statement of energy policy that fuel poverty is one aspect. Indeed, the programme, the policy and the strategy that the Government intend to bring forward under Clause 136 should be seen as part of that. It needs specific mention because it was not there for most of the Bill’s existence, it does not appear in most of the Bill, it was not there at all for the whole of the Commons procedure on the Bill and it needs to be clear now. This is our last opportunity in consideration of the Bill to make sure that fuel poverty is a major dimension of overall energy policy.
That is a fairly simply thing for the Government to accept. I am sorry that the Minister thinks that it is superfluous or otiose, as it is very important. If the objective of fuel poverty is not in the minds of not only DECC Ministers but those who are concerned with social policy and health policy, those in the Treasury and those who determine the priorities of this Government when we come to energy policy, we are in some difficulty.
My Lords, I make it very clear to the noble Lord that the amendments that we have tabled give a clear timetable for bringing forward proposals for a new target and a strategy to achieve it. Therefore noble Lords can have great certainty that we will put in place a comprehensive framework within a fixed time of the Act coming into force.
My Lords, I accept the Government’s good faith—and certainly the Minister’s—in this respect. Certainly, Clause 136 gives the Government the opportunity and the requirement to do that. However, my point on these first two amendments is that we cannot ghettoise fuel poverty into one clause of the Bill and one aspect of government thinking. All approaches to tariffs, investment and the source of energy, as well as to measures to improve the energy efficiency of homes and other direct measures to help the fuel poor, need to be seen in the totality of energy policy as part of the Government’s obligation. That is why Amendment 98A proposes that a reference to fuel poverty should be written clearly into the policy statement. It is nothing more than that, but it is very important that that is reflected. I would have thought that the Government could have accepted it, but given that the Government are clearly not prepared to accept it I wish to test the opinion of the House.
My Lords, I shall also take the opportunity to speak to Amendments 94, 95 and 96. I declare an interest as a vice-president of the Campaign for National Parks, a patron of the Friends of the Lake District, and a member and supporter of the Campaign to Protect Rural England and other environmental agencies. In the context of this amendment, I pay special tribute to the John Muir Trust, which has done outstanding work in this area and with which I have been incredibly fortunate to co-operate in the preparation of what I want to say.
We must never forget that we are custodians of this planet for future generations. Our responsibility to safeguard the environment, especially those parts of it that our generation has not so far severely damaged, must always be at the forefront of our minds and policy-making. We must never fall victim to misguided, damaging and unnecessary short-term measures, whatever our commitment to what is regarded as essential growth. I fear that some government policies that are intended to protect the environment are instead driving action that is damaging it. In particular I think of the deployment of energy infrastructure on our most precious and wild landscapes.
My amendments are certainly not intended to challenge the Government’s climate change goals and their efforts to move to a green energy system. As I made clear in
Committee, I fully support these but I remain firmly of the view that, in certain respects, we are losing sight of the purpose behind them. We cannot safeguard the environment for future generations by targets alone. Here and now—right now—we must give equal regard to upholding and enhancing existing hard won protections for the UK’s natural environment—its landscape, ecosystems, habitats and biodiversity. Energy is not an end in itself; we need it to have a society worth living in, but sadly we seem to be in an era of public policy -making where protections for landscapes and the environment are seen as an obstacle to growth and to keeping the lights on. It should not—and indeed need not—be a case of having to make a choice. The present Government pledged to be the greenest ever but, in reality, safeguards for the environment are being systematically weakened.
The Bill, in its current form, is no exception. Energy infrastructure has huge impacts on the environment. These amendments seek to prevent the Bill eroding environmental safeguards and to ensure that they are meaningful and effective. The first amendment would ensure that the strategy and policy statement places a responsibility on Ofgem to demonstrate compliance—and I emphasise those words—with its general environmental duties. This includes duties to have regard to the purposes of national parks, areas of outstanding natural beauty and the Norfolk and Suffolk Broads.
When I put forward a similar amendment in Committee, the Minister sought to reassure me that the strategy and policy statement would not override Ofgem’s existing duties to contribute to sustainable development, and that those duties would still apply. In the Minister’s view, therefore, the amendment was unnecessary. I understand her point and I also appreciate that she may wish to avoid a detailed amendment listing all the various duties. However—noble Lords must forgive me if I did not make this clear at an earlier stage—that is really not the issue. The point is that, while there are indeed existing legislative duties that would not change, there is currently no explicit requirement in the Energy Bill for Ofgem—again I underline these words—to demonstrate compliance with them. The amendment would also require the authority to demonstrate compliance with its obligations under the conservation of wild birds and habitats directives, which is crucial given the perilous state of the UK’s biodiversity.
The second amendment, also to Clause 123, would insert on page 92 after line 39:
“The Secretary of State shall issue guidance on social and environmental policies to which the Authority shall have regard in carrying out its functions”.
The purpose of the amendment is to ensure that the Government issue social and environmental guidance to Ofgem. At the moment, Clause 129(1) repeals, and does not replace, sections in the Gas Act and the Electricity Act that provide that the Secretary of State shall issue guidance on social and environmental matters to which the authority, Ofgem, shall have regard when carrying out its functions. In the Explanatory Notes, the Government argued:
“The strategy and policy statement will replace existing guidance for the regulator on social and environmental matters”.
However, surely replacing existing guidance on social and environmental matters means precisely that: replacing it—that is, providing new guidance and not removing all reference to it, which is what has apparently happened.
Specifically, Clause 123(1) requires Ofgem to,
“have regard to the strategy priorities set out in the strategy and policy statement when carrying out regulatory functions”.
As I understand it, these include functions to which the principal objective duty is applied. This duty is to be found in the Gas Act 1986, with equivalent provisions in the Electricity Act 1989. These provisions make it clear that the principal objective is to protect the interests of existing and future customers of gas and electricity and, wherever appropriate, to promote competition.
Therefore, Ofgem’s commercial responsibilities are clearly defined. However, because there is no explicit requirement in the Bill for the Secretary of State to set out social and environmental guidance to Ofgem, such as exists at present, the priority given to social and environmental factors in public policy will be significantly weakened.
The repeal of the Electricity Act and Gas Act clauses will result in another significant change that will weaken environmental protection. Currently, these clauses ensure that any guidance on social and environmental matters issued by the Secretary of State is on an equal footing with the principal objective duties: namely, the protection of customers and the promotion of competition. However, once they are repealed, any guidance that the Secretary of State deems it appropriate to issue in future will be subordinate to the principal objective duties in a way that is not the case at present.
I am afraid that the Minister’s responses in Committee failed to reassure me that there will be equivalent social and environmental protection if Clause 129 is passed into legislation. In fact, to be honest, they further convinced me that it is the Government’s intention to subordinate environmental considerations to the commercial imperative.
The Government may well feel that there is no need for this amendment as Ofgem’s existing duties to,
“have regard to the effect on the environment of activity connected with the conveyance of gas through pipes or with the generation, transmission, distribution or supply of electricity”,
remain intact because Section 3A(5) in the Electricity Act and Section 4AA(5) in the Gas Act are not being repealed. However, surely without guidance from the Secretary of State on the meaning of “have regard to” and the policies to be followed, compliance with the duties is left to the discretion of the regulator. Surely the interpretation of this duty is not a matter to be left to the regulator; it is for the Government to determine the social and environmental factors that should be considered by the regulator and the value that should be placed on them. The amendment would ensure that provision for the Secretary of State to issue social and environmental guidance to Ofgem remained in primary legislation in accordance with what, I submit, was the original intent as set out in the guidance to the Bill.
The third amendment in this group is to Clause 125. It proposes that the words,
“and in accordance with any guidance issued under this section”,
should be inserted at the end of line 36 on page 94. The fourth amendment seeks to insert, also on page 94 after line 36:
“The Secretary of State must issue guidance about arrangements for wider public engagement including consultation on social and environmental matters”.
Again, I refer to the original DECC background note to the Bill. This states that the Government intended that there would be a wide public consultation in drafting the strategy and policy statement. Indeed, it emphasised:
“Consultation will be important given the effect of this instrument, to ensure the priorities and outcomes are well-chosen and do not have unintended effects”.
Obviously, I wholeheartedly support the aspiration for wide public consultation on the strategy and policy statement. However, in the absence of a clear prompt in the Bill, I am, frankly, doubtful that this will happen effectively. In order to avoid unintended effects, it will be vital to ensure that a broad range of stakeholders, including technical experts, consumer groups, land managers, planners and NGOs concerned with environmental issues are involved.
In Committee, the Minister felt that the Bill already made provision for wide public consultation and that it was inappropriate to list specific consultees in the Bill. However, the Bill makes no reference to wide public consultation, merely referring to,
“such other persons as the Secretary of State considers … appropriate”,
which could of course mean no one at all. The Secretary of State needs to issue clear guidance about how, and with whom, consultation is to take place. This is surely a necessary provision if, as the Minister stated during discussion in Committee, the Government wish to,
“engage fully with all … stakeholders, including, where relevant, those who represent an environmental perspective”.—[ Official Report , 9/7/13; col. GC 52.]
The House will note that the amendment as worded no longer lists consultees. This, I hope, addresses the Minister’s concern. However, it does require the Secretary of State to issue firm guidance to cover arrangements for wider public consultation.
My Lords, I declare my interests in various forms of energy as listed in the register. Before I turn to the topic of the amendment of the noble Lord, Lord Judd, it has been drawn to my attention that when I spoke on the Bill at Second Reading I perhaps should have declared a potential interest. Having taken advice on the matter and satisfied myself that a shareholding was declared in the register, I do not believe there is a conflict. However, for the sake of good order, I am happy to declare that I have a shareholding in a company called the Weir Group, one of whose divisions supplies equipment to the oil and gas industry. I was unaware of Weir Group’s activities in this area at the time but I am happy to add the declaration now if it is thought necessary.
I have a lot of sympathy for what the noble Lord, Lord Judd, has said. I hope that my noble friend the Minister can reassure us that we can close some of the loopholes through which developers can currently drive what is nothing less than the despoliation of many of our most beautiful parts of the countryside in the name of supposedly saving the planet. In particular, I would like to seek reassurance that the Bill will not weaken but will strengthen the guidance issued in June by the Department for Communities and Local Government to ensure that renewable energy does not automatically override environmental protection. Reaction to that planning guidance has been disappointing. The wind industry boasted in July that the national policy has not been changed by recent ministerial statements. It seems to me that there is insufficient protection at the moment for the most treasured landscapes of this country from the blight of wind farms. It is, to quote a spokesman for the Council for the Protection of Rural England,
“a bit of a free for all. The general view held by developers is to have a go—to put in an application and see what happens”.
Some 188 onshore wind farms were approved in the first eight months of 2013. Applications have trebled this year. National parks are affected either directly or indirectly, areas of outstanding natural beauty as well, and in Scotland, national scenic areas. We read this week of the threat to Hardy country near Tolpuddle. Navitus Bay off the Isle of Wight—the New Forest is seeing a connection to this—mid-Wales, Snowdonia, the Llyn peninsula, the Meifod valley, are all affected by enormous numbers of applications for wind farms. All too many parts of the highlands of Scotland are seeing what is effectively the industrialisation of the countryside. It is not just the turbines but the pylons that connect them to the grid which are marching through people’s most favourite views.
Already many of the most beautiful parts of this country have been scarred. In my native Northumberland my view of Simonside is now affected by wind farms, as are the Cheviots and the Wannies. Above all, the sensational view of the Northumberland skyline from Lindisfarne has been turned into a Golgotha. To quote the right reverend Prelate the Bishop of Newcastle, who is not in his place:
“There is no evidence that I have seen that wind farms will ever provide the reliable controllable energy this is required by our society, however many there may be. It is a basic Christian truth that we all have a duty and a responsibility to care for and exercise wise stewardship over God’s creation, which has been entrusted to us”.
That echoes what the noble Lord, Lord Judd, said about our temporary stewardship of the planet.
The right reverend Prelate made a crucial point because this might all be worth while if these things produced worthwhile amounts of electricity, but they do not. This morning, about 6% of our power was coming from wind, which is about 1% of our total energy. There is a feeling that wind seems to be exempt from the normal rules. If I were to erect a structure 140 metres high, doubling the height above sea level of the hills alongside the valley of the Stinchar in Ayrshire, for example, there would rightly be an outcry. If I were to kill hundreds of birds of prey every year, there would be outrage. If I were to kill thousands of bats, I would go to gaol. How can it be that the wind industry uniquely is allowed to ride roughshod over the environmental rules that protect the rest of us from anyone spoiling the view, killing eagles, decimating bats, and pouring concrete into peatland?
The wind industry has proved uniquely insensitive when it comes to looking after the countryside. These amendments are a chance to put environmental safeguards in place to ensure proper consultation.
My Lords, I would like to record my support for this group. I declare an interest as president of the South Downs Society. I, too, thank the John Muir Trust. Environmental protection does not go by default. It cannot be left to arrive on its own. The whole history of our relatively commendable standards of environmental protection is vigorous, defensive and positive action by individuals, associations and states. State action, state confirmation of the quality of our environment, is necessary to protect the future. I hope that the Minister will accept these amendments.
My Lords, I am grateful to my noble friend Lord Judd for tabling this group of amendments and for his incredibly detailed explanation of the points that he seeks to raise. He not only gave an incredibly detailed explanation of why the group is so important; he also very commendably addressed some of the answers that the Minister gave in Committee. We are very grateful for that.
It is absolutely clear that, at the moment, we talk about an energy trilemma—the difficulty of marrying up the needs to tackle change, to keep bills affordable and to keep the lights on—but actually it is a quadlemma, if noble Lords can bear my coining a new phrase, because in the process of meeting those three objectives we cannot see the sacrificing of social and environmental standards in the process. For that reason, this group of amendments is very important.
I came into environmental campaigning through an interest in the natural world and the natural environment. The Countryside and Rights of Way Act was one of the first pieces of legislation that I worked on because I care passionately about preserving areas of beauty, species and habitats and the diversity of the natural world for future generations. But that is not incompatible with moving forward into a low-carbon energy system.
The noble Viscount, Lord Ridley, has singled out wind for particular opprobrium in terms of despoiling our landscape. It is easy to forget that one of the major sources of despoiling our landscape is industrialisation in general. This includes mining, particularly opencast mining, and the new form of industrialisation which may well be coming upon us in the form of gas fracking. If you want visual disturbance, then the rigs that will need to be placed for fracking will also have an impact.
The noble Viscount was correct in also highlighting pylons and grid connections as an issue. However, those apply to all forms of generation, not just wind. The reinforcement of the grid for nuclear will also be an issue that needs to be taken into account.
We are very supportive of the principle behind these amendments. It is important that the first amendment is about demonstration of compliance. If noble Lords read these amendments, it might be easy to dismiss them and say, “Of course they have to comply with laws. That is why we have laws”. However, I think that my noble friend’s point is about the degree to which the authority is required to demonstrate compliance.
The very important point is that the Bill seems to be removing and repealing existing guidance and replacing it with a second-order replacement. I look forward to hearing the Minister’s reassurance that that is not the case and that social and environmental guidance is not being made subordinate to other primary concerns.
The final amendment on public consultation is also very important. I look forward to hearing the Minister’s reply. We are sympathetic to this. It is rather late in the day and other forms of wording might be more appropriate but I very much support the principle behind these amendments.
My Lords, I thank the noble Lord, Lord Judd, for his amendments. The Government recognise that energy production and consumption should be sustainable. That is why Ofgem has been given duties to contribute to the achievement of sustainable development and to have regard to the effect on the environment of activities connected with the conveyance of gas and the generation, transmission, distribution and supply of electricity.
Ofgem can also consider sustainability implications when it carries out impact assessments for important regulatory decisions. The amendments before us would require Ofgem to demonstrate that it has complied with its general environmental duties. We agree that Ofgem should be accountable. It already has to produce an annual report on matters that fall within the scope of its functions, including its environmental obligations. This accountability will be reinforced by the strategy and policy statement as Ofgem will be required to set out its strategy for implementing the statement in forward work programming. It will also be required to report annually on its contribution towards furthering the delivery of the policy outcomes.
The amendments would also require the Government to issue social and environmental guidance. It may help here if I explain why the Bill removes the guidance provision. The Ofgem review found that the guidance has not achieved coherence between the Government’s energy strategy and the regulatory regime. They recommended that it should be replaced by a strategy and policy statement. This statement will set out the Government’s strategic priorities, the main considerations which have informed their energy policy and the policy outcomes which are to be achieved to implement this policy.
Ofgem must have regard to the strategic priorities when it carries out its regulatory functions and it must carry out these functions in the way it considers best calculated to further delivery of the policy outcomes. This is a stronger requirement than applied in the guidance, to which Ofgem only had to have regard. The Bill therefore goes further than the noble Lord’s amendment and the statement will be a fitter mechanism for achieving coherence between energy policy and regulation. The strategy and policy statement can include material on social and environmental matters. We will take the current guidance into account as we develop its contents but keeping the guidance alongside would dilute the value of the statement.
The amendments would require the Secretary of State to publish guidance on wider public engagement, which would apply before he decided either to leave the strategy and policy statement unchanged or to withdraw it after a review. The Bill already provides for the Secretary of State to consult Ofgem, Scottish and Welsh Ministers and such other persons as he deems appropriate. In practice, when the Government review the statement, they will consult a range of stakeholders before deciding how to proceed. Guidance on wider public engagement, as proposed by this amendment, is therefore unnecessary. I should also stress that the strategy and policy statement will not be used to introduce new policies. It will reflect on established policy, which would have been consulted upon previously, as appropriate.
The noble Lord, Lord Judd asked whether the repeal of the social and environmental guidance would reduce protection for social and environmental matters. I hope that I have reassured him that social and environmental matters will be taken into account in identifying which policy outcomes should be included in the strategy and policy statement. Ofgem already is required to have regard to social and environmental matters as part of its existing remit.
The noble Lord also asked what practical difference the strategy and policy statement would make. I hope that he is reassured that it clearly lays out the strategic priorities of the Government’s energy policy and that the policy outcomes are expected to be achieved as a result of implementing that policy. Ofgem will have new duties to have regard to those strategic priorities when carrying out its regulatory functions and must carry out these functions in a way that it considers best calculated to further the delivery of a specified policy outcome.
I hope that the noble Lord feels reassured that the Government have taken very much into account his concerns on sustainability. Ofgem has a range of powers and duties, including its principal objective to protect the interests of existing and future consumers in relation to electricity conveyed. These statutory duties are applied through the price controls that regulate the monopoly networks. The aim is to drive real benefits for consumers and to provide companies with strong incentives to meet the challenges of delivering a sustainable energy sector at a lower cost.
Perhaps I may ask the Minister a question, because her answer would be immensely helpful for me in considering what to say in my reply. Will she reassure me that she will write to me a letter, which can be placed in the Library and elsewhere, setting out precisely how the Government will satisfy themselves that Ofgem will pay due regard to the effect on the environment of activity connected with the conveyance of gas through pipes or generation, transmission and the distribution or supply of electricity? What measures and benchmarks, and associated matters, will be taken into account and used in establishing those benchmarks?
My Lords, of course I am absolutely happy to ensure that I write to the noble Lord on the points that he has raised today. I also say to my noble friend that I hope I have reassured him that planning decisions are as they have been laid out and that we will take very much into account the views of the local communities, as has been laid out by the Secretary of State for the Department for Communities and Local Government. I hope that on that note I have conveyed enough reassurance for the noble Lord to withdraw his amendment.
My Lords, first, I thank those who have spoken in support of my amendments. I particularly welcome the strong support from my Front Bench. The Minister certainly has reassured me that she takes these issues seriously. I think that she is a civilised person who sees the force of what I have been arguing. I just would like to make several observations. First, we all bemoan, and English literature is full of references, what happened in the Industrial Revolution. Without in any way undermining the drive and everything that was so important in the Industrial Revolution, with the benefit of hindsight we can see that things could have been done much better. We would not have seen the same degree of rape and misuse of valuable rural, scenic assets in the country.
My second observation draws on the OECD report that has just been published. One of the reasons why the UK apparently scores relatively highly as being a good place to live is because of the environmental considerations of living here. We should jealously preserve that quality in our life. I have no doubt whatever that, in the context of what I have come to regard a very ideological age with its total commitment to the market, the quantative issues in forward policy will be very well put forward and strenuously advocated. If we really take seriously the preservation of our heritage, the landscape and all that makes for a wonderful country in which to live, those arguments will not necessarily automatically by market mechanisms come forward in the same way, because these are public goods. Therefore, from this standpoint, a much stronger argument about just what it means to take into account these considerations and who should be involved in representing and presenting them should be in the Bill. At the moment, because she is a very reasonable person, I am sure that the Minister will understand that however much aspiration there is in the drafting of the Bill, it leaves an awful lot to the subjectivity of the regulator. To be told that the regulator is going to have to report annually on the fulfilment of the objectives is, again, a nice aspiration; it is full of good intention, I am sure. But against which precise benchmarks is he going to report? That is why the letter could be so important, and why I hope—I am sorry, I should have stipulated this—that it will be with us before Third Reading.
From all the standpoints, it is important to recognise that we are talking about what the right reverend Prelate the Bishop of Newcastle expressed so well, as put to us by the noble Viscount, Lord Ridley. We are talking about our duty to the future. I am sure no noble Lords want their children and grandchildren to grow up in an age in which we have enshrined in law and legislation the need to know the price of everything, but in which we have allowed the decline of knowing about the value of things. That is why the considerations before us are of such importance.
I do not question the Minister’s goodwill, but I suggest to her—because we are friends, I can put it to her bluntly—that in the light of experience it could quickly look like an awful lot of waffle. What matters is to have some muscle in the Bill, supporting the excellent aspirations of the Minister, and that we ensure that the right course is taken. At this stage, in thanking those who participated in this, I beg leave to withdraw the amendment.
Amendment 93 withdrawn.
Amendment 94 not moved.
Clause 125: Review
Amendments 95 and 96 not moved.
Clause 130: Power to modify energy supply licences: domestic supply contracts
Moved by Lord Roper
97: Clause 130, page 100, line 16, at end insert—
“(ba) require information to be provided in a form that is clear and easy to understand;”
My Lords, on behalf of my noble friend Lady Maddock, who is away from the House with her Select Committee today, I shall move Amendment 97 and speak to the other amendments in this group. At Committee stage, she tabled an amendment to the tariff reform clauses in the Bill which we are now considering, suggesting that suppliers should provide details of their cheapest tariff on bills,
“in a clear and easily understood format”.
She developed that in her speech in Grand Committee. For those who were not in Grand Committee, I recommend that they read it, because she made her argument extremely effectively. The clauses in question provide the power to require suppliers to provide a message on bills telling customers if they offer a tariff which could save them money, and how much money they could save by moving the tariff.
In Committee, my noble friend Lady Maddock raised concerns that suppliers would make this confusing on their bills, and gave examples of how much difficulty people had in reading their existing bills. She suggested that her amendment, which indeed is being proposed again at this stage in a slightly amended form, would prevent them from doing this. My noble friend the Minister agreed with the sentiment of the amendment during Grand Committee, and said that she would consider it. I know how grateful my noble friend Lady Maddock is that the Minister gave a great deal of attention to it and has been able to add her name to the set of amendments which we are considering today. Although this amendment is not exactly in the same place as originally envisaged by my noble friend Lady Maddock, it sits within the same clause and has the same intent and legal force as the original proposals.
The remaining amendments in this group are minor and consequential to ensure consistency in the terms used throughout the clauses. I look forward to these amendments being made to the Bill. I beg to move.
My Lords, I would briefly like to add our support to these amendments. It is very good that the intentions of the noble Baroness, Lady Maddock, have been taken on board by the Government, and it should lead to a significant improvement in the way in which consumers understand this market and their own bills. At the end of the day, with the massive changes that are expected in energy policy, unless consumers are themselves convinced that this is all part of a coherent and positive strategy there will be serious political problems down the line for the Government in power, whoever they are. I therefore think the Minister has been very sensible. I congratulate her on taking this initiative and making it her own, and give my thanks to the noble Baroness, Lady Maddock, and the noble Lord, Lord Roper, for pursuing it in the first instance.
My Lords, I will comment briefly on this clause because in my life hitherto I have spent a great deal of time trying to help the great British public understand some of the contracts that have come their way. I am afraid to say—and I do not think anyone in the House will disagree—that a good deal of cynicism has been employed by some of the very large energy suppliers, and indeed other suppliers in recent years, designed expressly to confuse the consumer with a view to preventing ordinary folk from understanding what their best tariff, for example, might be. This is a clause of great virtue, which should be supported.
My Lords, I thank all noble Lords for their support for this amendment and the noble Lord, Lord Roper, for speaking on behalf of the noble Baroness, Lady Maddock, to her amendment. These amendments would place in the Bill a requirement that information in consumer energy bills must be,
“provided in a form that is clear and easy to understand”.
My noble friend Lady Maddock raised the importance of this at Second Reading and in Committee, and the Government agree it is vital. Ensuring consumers are provided with clear and simple information regarding their existing tariff and others available to them is one of the key aims of the powers in question, and of Ofgem’s retail market review. I am therefore very grateful to my noble friend for bringing forward these amendments and I can confirm that the Government are happy to accept them.
My Lords, in the circumstances, there is nothing I need to say.
Amendment 97 agreed.
Amendments 98 to 100
Moved by Lord Roper
98: Clause 130, page 100, line 18, leave out from “information” to “about” in line 23
99: Clause 130, page 100, line 24, after “terms” insert “to be provided”
100: Clause 130, page 100, line 24, at end insert—
“(c) make provision about the way in which information is to be provided, which may in particular require information to be provided—
(i) by means of a code or otherwise using a format readable by an electronic device, or
(ii) in a way which facilitates processing of the information by means of an electronic device.”
Amendments 98 to 100 agreed.
Moved by Baroness Verma
101: Clause 130, page 102, line 9, at end insert—
“(13) A statutory instrument containing an order under subsection (10) is subject to annulment in pursuance of an order of either House of Parliament.”
My Lords, Amendments 101, 103 and 104 make the order-making power relating to domestic tariffs in Clauses 130 and 131 subject to the negative resolution procedure. This was a recommendation of the Delegated Powers and Regulatory Reform Committee. I again thank the committee for its consideration of the Bill. The Government agree that the recommendation would be an improvement, so I will move these amendments to give effect to it.
My Lords, the House is rightly wary of allowing wide discretionary powers without being able to suitably assess their application later. Your Lordships’ Delegated Powers and Regulatory Reform Committee expressed concern about the powers in the Bill. In Committee, on
Amendment 101 agreed.
Moved by Lord Forsyth of Drumlean
102: After Clause 130, insert the following new Clause—
“Transparency for consumers
The power under section 130 to modify energy supply licences may be exercised so as to make provision requiring a licence holder to provide information on a consumer bill that breaks down the total cost charged to the consumer by showing each of—
(a) the amount that goes to Government environmental levies or programmes;
(b) the amount that goes to administration costs;
(c) the amount that goes to wholesale energy costs;
(d) the amount for raw energy costs; and
(e) any other categories of cost.”
My Lords, my noble friend Lord Marlesford is doing his duty with the European Union Sub-Committee in Berlin and has asked me to move this amendment, to which I have added my name with some considerable enthusiasm. I find it quite extraordinary that my noble friend put her name to the previous amendment, the first line of which refers to requiring,
“information to be provided in a form that is clear and easy to understand”.
In preparing for this amendment, I looked at a selection of energy bills from various providers. They are almost impossible to understand. Some of them provide information about the amount that is being levied in order to meet the Government’s green agenda, while some do not. Some provide the information in the form of percentages. But surely an absolutely basic example of justice for consumers is that they should know what they are paying for. If you take your car into the garage to be serviced, you expect to see what the items were that make up the bill at the end of the day. What we have here, I am sorry to say, is a kind of conspiracy within the political classes to load on to people’s bills the cost of the green agenda in a way that is not transparent.
Although the Government’s rhetoric is continually about the need for transparency, as people go about their day-to-day business and receive their electricity and gas bills, they are not able to see how much is going on subsidising windmills and how much is being used to provide for the transfer of electricity by building huge pylons and other infrastructure programmes. For example, a line of pylons is being erected all the way down the A9 in Scotland, going past Stirling Castle, in order to deliver power from windmills which are themselves being subsidised. I believe that most consumers in the country have no idea that all this is being levied on their bills, and as such it is a highly regressive tax that is being paid by the poorest. At the very least, whichever side of the argument one is on, it is right that people should know exactly how much of their bill is going towards government environmental levies, how much is going towards wholesale energy costs, how much relates to raw energy costs, and the various other elements.
During the course of what has been a frustrating day—I am most grateful to my noble friend Lady Verma, her special adviser and her officials for discussing this amendment with me—I have found it impossible to understand why the Government are not prepared to ask Ofgem to ensure that all of the providers of gas and electricity break down their bills in a way that is consistent and comparable. It should not be done in percentage terms, but in financial amounts. If the bill is £300 for the quarter, it should show how much of that was spent on the various added components but which are hidden in the bill at present. I have a horrible feeling that there is, among those who are keen on pursuing the green agenda, a desire to keep this quiet because of the concern it would cause among the electorate and in the population; namely, that we are asking some of the poorest people to pay what is a highly regressive tax.
I know that my right honourable friend the Prime Minister has promised to roll back these green taxes on people’s bills, which were originally the idea of the leader of the Opposition, Mr Miliband, when he was the environment Secretary. I would respectfully suggest to my right honourable friend the Prime Minister that if he wants to get any credit for rolling back the green levies on people’s energy bills, it would be a good idea to identify them before they are rolled back, because they are likely to be subsumed into the price increases that are being brought forward by the energy companies. Consumers will then be unaware of the impact of the policy, which presumably would mean yet another burden being placed on taxpayers. In the light of recent experience, that actually means the people in the middle, who are bearing the brunt of the additional tax burden which is already being levied by this coalition Government.
I hope that my noble friend will feel able to accept this amendment. If she is unable to do so, I hope that she will at least give us a clear statement of the Government’s policy on this matter. Is it the Government’s intention that every consumer of electricity and gas in the country will receive a bill that is broken down in explicit terms, showing how it is made up and what the costs of the Government’s policies are? They should include the policies in terms of insulation and the policies that are paying for additional, expensive offshore and onshore wind generation. If the Government’s position is that consumers should not have that information, can they explain exactly why they feel that this should not be a priority? I know that my noble friend will say that the Government are in favour of transparency and that they would like to see less complex bills, but we already know that the utility companies are capable of producing them. What we need is a conductor to make sure that they do so on a consistent and comparable basis.
My right honourable friend the Prime Minister has also said that it is important that people should be able to switch in order to get value for money. If you do not know how much of your bill is being spent on, say, insulation programmes—one energy provider may be more efficient than another—how can you choose between different providers according to their efficiency if that information is not made available to you? A cursory scan of some of these bills reveals that the regulator requires all sorts of information to be included. That may be of interest, but not, I suspect, to many customers. What they want to know is how much is their bill and how much of it actually relates to keeping the lights on in their homes and how much relates to other desirable or undesirable policies. I hope that my noble friend will feel able at the least to give a commitment that this shambles, because shambles it is if one studies the way in which these bills are presented, will be put right quickly. I beg to move.
My Lords, unlike the noble Lord, Lord Forsyth, I am a strong supporter of the green agenda. This is an amendment about transparency, and I like it. I like it a lot and I strongly support it. It appeals to a belief that stands at the heart of my politics: transparency shapes conduct, knowledge and understanding. However, the current arrangements for utility billing make understanding impossible in precisely the way the noble Lord, Lord Forsyth, has set out in his speech—much of which I support but, of course, much of which I do not.
In the last Parliament I moved a whole series of amendments on a number of Bills. I call them the transparency amendments as they were all based on a simple principle: shine a light, expose the truth and trust the people to make the right judgment. I believe that the issue of transparency will dominate the politics of this century. It will transcend partisan, party political debate. It is the principal driver behind justice, fairness, honesty in administration and personal conduct, integrity in politics, restraint in exploitation—which is what we are considering here—and general enlightenment. It will help restore public confidence in our public institutions and ultimately the private sector.
This amendment is adventurous because it is about the private sector. The response of my party should be a knee-jerk “yes” to this amendment. We have everything to gain from it. It would be a worthy component in the series of Miliband initiatives which are now regularly being announced. The reality is that there has been a undignified assault on the whole spectrum of environmental taxation, much of it based on untruths. Those attacks need a response. We are not winning the argument. The tabloids are slaughtering our case in the absence of readily available information which the public understand. The amendment by the noble Lord, Lord Forsyth, seeks to make information available which the public can readily understand.
If we want to win this argument, let the people decide for themselves on the basis of the facts, not partisan political tabloid fiction. The provision of this kind of information will lead to a far more sensible, informed debate. It will reveal the truth behind green taxation. The noble Lord, Lord Marlesford, is to be congratulated. I am sorry that he is not here today to hear this debate which he will no doubt read. I strongly support this amendment and I hope many of my colleagues do as well.
Normally when we have bills, either from supermarkets or other places, we do not actually have a breakdown of those costs but in an industry that is regulated as much as energy has become, I think this is a really excellent idea. It is something that would become a myth-buster. My noble friend Lord Forsyth is right that there has been an embarrassment in terms of trying to shield some of these costs or sweep them under a carpet. That has backfired because they have been used as an excuse by energy companies to justify major increases when clearly they are not the major cause of the increases. One way of breaking that myth about the extent to which green taxes—or however they are described—have contributed to the rise of energy bills would be to have this level of transparency.
Which?, as noble Lords will know, is one of the major consumer campaign organisations and puts the green tax at 5% of total electricity bills. If you add in all the other government initiatives it comes to about 9% of the total. I think that is the most trustworthy of organisations because it is consumer-focused. I would also like to see on regulated industries’ bills how much UK corporation tax they pay in relation to their total turnover and profit. I am not saying the electricity industry is particularly bad in that way, but such a scheme would be particularly interesting in an industry which, through its bills, receives a fair degree of public subsidy towards the generation it undertakes.
In principle, I think that this amendment is excellent. I am not saying I would vote for it if it came to a Division but more transparency would break the myths and anti-green propaganda that we have seen, particularly over the last couple of years.
That is because I feel there are some proposals that are even more important. If the noble Lord wanted to test me, I suppose it would be interesting to see what I would do. Perhaps he can put me on the spot. It would be interesting in terms of gas bills but of course the figure would actually be zero.
My Lords, I support the amendment of the noble Lord, Lord Forsyth. There is no doubt that the policy of putting green subsidies on to consumer bills was designed to disguise and hide the costs and hope that we would not notice. We can disagree about whether the results are going to be pleasing or not, but we have noticed that the consumer has rumbled the ruse, so it is time, as the noble Lord, Lord Campbell-Savours, said, to be transparent and honest. It would help to resolve some of the disagreements we have heard again this afternoon about how much green levies are adding to bills.
There is an infographic on the Government website that says that £286 will be added in 2020. The Department of Energy and Climate Change says that the figure is £199. The Committee on Climate Change, as we have heard this afternoon, says it is only £100. A lot of these calculations leave out VAT, upgrades to the grid and system integration costs. They often make unreliable assumptions about wholesale gas prices and how they are going to change but above all these calculations leave out the indirect bill—the cost of green levies that is added to industrial and commercial users of electricity who then pass it on to individual consumers through the cost of goods and services. A pint of milk will be more expensive because of green levies paid by the dairy and the supermarket. If you look at the quantums involved, this roughly trebles the cost of green levies, two-thirds of which fall on commercial customers.
The way we have of doing things at the moment is underhand, regressive—as has been said—and unfair. Those who heat their homes with electricity are hit the hardest by these green levies. Contrary to what has been said today, 2.9 million people in this country heat their homes with electricity and those include many of the poorest people. Ideally we would remove these costs altogether and put them into taxation. Then the rich would pay more of them and the poor would pay less. If we cannot have that, then let us break it out honestly and transparently and see what there is. To those who say that it cannot be done and that it is too difficult, the noble Lord, Lord Marlesford, has shown me one of his own bills where it has been done very nicely. I think it is definitely possible and it should be done.
My Lords, I would like to follow up on that point and also agree with the noble Lord, Lord Forsyth. I feel I represent people in mid-Wales—another area which is profoundly threatened with pylons and wind farms. When I get my council tax bill, the police, the fire services and everything else is listed in just the way the noble Lord, Lord Forsyth, is suggesting. I do not really see any problem in bringing greater transparency which we would all like to see and which might help us to understand how these bills are put together.
Some years ago I moved amendments to an energy Bill to the effect that the bills should actually show the breakdown of the costs on the supplier that is then charged on the bill. I was therefore quite pleased when I found that my electricity bills—I draw my supplies from British Gas—in fact do that. They do not show the details of what it paid up but have the total cost of government, environmental and social schemes. It is 11%. I can understand the desirability of providing people with an opportunity to break that down and find out how that figure is made up.
When we debated this in Committee, the right reverend Prelate the Bishop of Chester made this case very strongly. As it was in Committee there was quite an exchange between him and my noble friend on the Front Bench, at the end of which my noble friend said very firmly:
“My Lords, as I said earlier, I am taking the amendment away and shall reflect on what the right reverend Prelate the Bishop of Chester has raised. Like noble Lords, I am very keen that information is available, simple and understandable, but I am also keen to ensure that I can deliver what I am able to. Part of that is by taking this away and giving it further consideration”.—[Official Report, 9/7/13; col. GC 80.]
That she did, and subsequently sent a letter to those of us on the Committee. I will not read the whole passage, but it is headed “Information on consumer bills” and states:
“I undertook to reflect on”— the right reverend Prelate the Bishop of Chester’s—
“suggestion that companies should be obliged to include information on consumers’ bills about Government environmental levies and programmes”— thereafter pointing out that the bills are pretty crowded documents. My bill not only tells me what I have incurred during the quarter in question but what my estimated total consumption will be and how that compares with the estimated total consumption of the previous year. All those things are quite interesting, but one feels, how far does one go?
My noble friend continued:
“I agree that we must be transparent about the impact of Government environmental levies and programmes on consumer bills and that is why the Government has committed to publishing this information annually, through the Price and Bill impacts Report. In addition Ofgem produces fact sheets that provide a breakdown of costs which make up a typical energy bill”.
How many consumers are aware of those documents? Even if they were aware, how would they get hold of them? I understand the difficulty in seeking to break down that 11%. If someone is really interested in that, no doubt they can pursue it by looking it up on the internet, where I am sure that the figures are available. I hope that my noble friend can give us some reassurance about the information. As my noble friend Lord Ridley said, the public have rumbled that already; they now know that that is what is happening; hence the suggestion from the Prime Minister that some of it should be placed on taxation and not on the bills. That will no doubt be considered.
My noble friends Lord Forsyth and Lord Marlesford have a point here. I am not entirely sure that the letter from my noble friend Lady Verma has dealt with that. Can we not be told how people can best get hold of that information if they want to? Why is it not possible for every energy supplier to do what British Gas does on my bills and what Southern Electric does on a sample bill which it has given to me, which shows the cost of government, environmental and social schemes to be 11%. That does not seem an unreasonable thing to ask for, and I shall listen to what my noble friend says with considerable interest.
My Lords, it is probably quite unnecessary to add to the avalanche of support for the amendment of the noble Lord, Lord Forsyth, which I am sure that the Minister will accept. Just in case she is still in any doubt, I will add my support for the amendment, which is absolutely right. Of course, this is the anti-hypocrisy amendment. It is much needed today, when we have spent a lot of time discussing fuel poverty. One very good way to deal with fuel poverty would be to keep prices down and finance environmental and social objectives through general taxation. That would be socially wise and would assist in dealing with the problem of fuel poverty.
I should say that my interests recorded in the register include the fact that I am the director of a power company. I am delighted not to hear boos and hisses—although I think that there was a silent one. There is hypocrisy in the current criticism of the power companies, given that this year sees the introduction of the Energy Companies Obligation and the Green Deal. The energy companies are obliged to spend huge sums of money on insulating domestic property. Then they are criticised for putting prices up.
I do not know exactly what number would be shown if a breakdown of that kind showed the amount that goes to government environmental levies or programmes. I do not know what is the correct number among those listed by the noble Viscount, Lord Ridley. Like him, I think that it would be far better to have none of them and do all this through taxation. It is right that the public should know what the levies are. I know that you can work it out company by company if you are very clever and use the website, but I do not see why it should not be in the Bill. I therefore agree with the noble Lord, Lord Teverson. He and I might dispute what is myth and what is reality, but let us have it all out there. Let us get away from all the hypocrisy. I totally disagree with the noble Lord, Lord Phillips, who talked about deliberate obfuscation in energy bills. That is absolutely not the case. If the regulator required the companies to produce information as set out in the amendment, the companies would, in my view, be delighted to do it.
My Lords, I hate to see my noble friend Lady Verma surrounded, as though she is having to defend the OK Corral. She has defended the Bill, with its many complexities, with superb clarity and energy, but in this case, I see the walls closing in around her. It seems to me that the case is nearly unanswerable. I will give her one defence.
We all have our own experience. I am currently resident in London. My gas bill specifically says that 19.3% is added as a result of green levies, charges and taxes. I imagine that that includes VAT. That probably sounds too much. Some clarity would make clear whether it was too much or too little. On the other hand—this is possibly the only argument against the amendment—it does not show all the other green elements locked into the charge that the energy company makes as it delivers the gas or electricity before all those identifiable levies and taxes.
My noble friend Lord Ridley reminded us that the costs involved in the accelerated decarbonisation programme—driven by various EU directives, among other things, I cannot resist saying—the closing down of coal-fired power stations and our need to replace our nuclear fleet at colossal cost to the consumer in future, are already incorporated in the final price of the gas or electricity product before any of those additional taxes. The real cost of the whole programme—which may or may not be worth it; we are not debating that now, although I have my views—is not in the same league as the very small figures we heard earlier from my noble friend Lord Deben and others for the marginal additional cost of the identifiable levies.
We really need to take a step forward on that front. My noble friend Lord Marlesford has, rightly, been arguing about these things for many years. The time has come when, if there is to be a sensible debate about the price being paid, who should bear that cost, how regressive it should be and how much of the burden the poor, and particularly the older poor, should bear, the case is almost unanswerable for requiring energy suppliers to say what charges they are making, what is the origin of the charges and how they make up the total bill.
My Lords, I, too, support my noble friend Lord Forsyth. I do not think that anyone can disagree with this amendment—although, sadly, I suspect that the Minister may. It has been striking that there has been no disagreement on any side of the House, and support on all sides, for this transparency amendment. Indeed, support has come not merely from all sides of the House but from all sides of the green debate. Everybody agrees that there should be transparency. Everybody agrees, as the noble Lord, Lord Kerr, suggested, that there should be no hypocrisy. There is no argument against this amendment other than a desire for concealment. A desire for concealment is not a very reputable position for the Government to take. As a strong supporter of this Government, I regret that they should be in the business of promoting concealment, for that is what this is about.
If the amendment is not carried and the Government do not get the credit for introducing this transparency, sooner or later—I suspect it will be sooner rather than later—one of our great newspapers, maybe the Daily Mail, will run a great campaign, saying that the Government are concealing the position and that consumers should be told. Eventually the Government will have to give in. It will be a great triumph for the Daily Mail, or whichever newspaper it is, and it will be a great defeat for the Government. It is very foolish for the Government to go into this knowing they will get—I do not know whether this is a parliamentary expression—a bloody nose. So I ask my noble friend to think again. She is skilful and politically aware. Her officials are not—that is not their job. She should have the nous to accept this amendment, which has been so reasonably proposed by my noble friend Lord Forsyth and so widely, indeed universally, supported on all sides of the House.
My Lords, very briefly, I, too, support this amendment. My only regret is that perhaps it does not go far enough in suggesting that all the various environmental levies should be broken down to show how much has been spent on wind power, and what percentage of electricity consumed and paid for came from wind. If that were revealed to the general public through this amendment, it would hasten the end of the absurd and socially unfair wind farm project.
My Lords, this has been an interesting debate. Nobody who spoke was against transparency of costs. In passing, as an avid reader of the Daily Mail, I say to the noble Lord, Lord Lawson, that the Mail has made a pretty good job of drawing the consumer’s attention to the fact that there are such charges—although not always accurately, as the noble Lord, Lord Teverson, implied. It may be that from all points of view that a different form of transparency would make things clearer.
My noble friend Lord Campbell-Savours hoped to get a knee-jerk reaction from his Front Bench in support of this, and that was my initial inclination. I am in favour of transparency for consumers. I am not in favour of concealing any costs which make up the bill, including those imposed by the Government, whether the charges were started under the previous Government or were, like the carbon floor price, started by this Government. The problem all Governments have with this is that it is all very well to argue for this all going onto direct taxation—intellectually that must be the case and in terms of fairness one can argue it—but I am afraid that there are those in government, one of whom is not unknown to the noble Lord, Lord Howell, who would object to significant amounts of money coming from direct taxation. To be frank, I do not think any Government would easily be persuaded, having put these charges on consumer bills, to move them back to direct taxation. However, that option is always there.
The other, less drastic option is to make these charges less regressive, because they are effectively a poll tax. However, I am not completely joining the surrounding of the Minister on this because, while it is right to seek transparency, it is not right to do so in order to attack the Government’s green or social charges. We should look at the totality of costs which make up the consumer bill. The noble Lord, Lord Teverson, is right, but it needs to go further.
The corporations have used the green charges to explain price rises. Sometimes they have been right and sometimes they have been, at best, misleading. There are other things which go on within supply companies. We do not know the cost of the network. Network charges are a significant part of costs. Nor do we know how the internal finances of the energy companies operate. Some of these companies are vertically integrated. Are they buying from themselves? What is the actual price that is reflected in the bill?
The Minister should take this away and look at how we would break down all costs in a way which consumers could understand, and which did not highlight just one aspect of them. With my noble friend Lord Campbell-Savours and the noble Lord, Lord Teverson, I support green charges. I do not think they are geared in the proper way, and perhaps schemes funded by taxation might be better, but I am in favour of green charges. I am also unafraid of scrutinising them and getting greater transparency, but that should be done in the context of looking at all the costs which make up a bill.
The list here is incomplete. If it had been a longer list, or if it had stopped as a general principle at the word “consumer” in the last line of the main paragraph, I think that the Minister could accept it and I would support her. I hope she—
Because it draws attention to the first four, which relate to other matters. It does not allow for the lumping together of tax costs and environmental charges, as some companies voluntarily do. Rather than end with a vague, catch-all phrase we should be balanced, we should look at the totality of costs and we should list them. I hope that the Minister will take away the spirit of this amendment and the wording of the first couple of sentences, and look at it in a rather wider context, perhaps coming back at Third Reading with a rejigged amendment. However, I cannot support the amendment of the noble Lord, Lord Forsyth.
My Lords, I thank my noble friend Lord Forsyth for moving the amendment on behalf of my noble friend Lord Marlesford and the right reverend Prelate the Bishop of Chester. I sympathise with the aims behind this amendment. Consumers have a right to know what they are paying for, particularly when it is a basic essential, such as energy. The Government recognise the importance of providing clear and consistent information about the content of bills. Every year my department publishes a breakdown of costs that make up an energy bill along with a detailed assessment of the impacts of our policies. We feel strongly that suppliers should be open and honest about the costs that they incur, and noble Lords will have heard my colleagues in the other place repeating this call in recent weeks.
Our priority is to make bills as useful as possible for consumers and to ensure that they have the clearest information possible to help them engage in the market. We want to see key information presented clearly and simply, including information on the cheapest tariffs available to them. We want the information that suppliers provide on bills to prompt consumers to consider whether they are getting the best deal that they can and to empower them to shop around. Ofgem’s retail market review proposals are designed to do just that, and have required suppliers to make a major overhaul of their bill design in order to comply with the new requirements.
I do not want to pre-empt the work that is going to be done by the Cabinet Office as laid out by the Prime Minister in the context of the competition test. My noble friend is aware that I am sympathetic to the idea of ensuring that consumers know exactly what they are paying for.
I have listened very carefully to arguments from across the House. Given the strength of feeling shown in today’s debate, I would like to take away the arguments that have been made and perhaps follow through with noble Lords who are happy to discuss with me how to better look at this amendment. In the mean time, my noble friend needs to recognise that I and the Government have a commitment to transparency and clarity on bills. While I undertake to take my noble friend’s amendment away, I reassure noble Lords that it is not about not wanting clarity and greater transparency; it is also about ensuring that consumers do not get an overload of information on their bills that will make it even harder for them to disaggregate what they are actually paying for. With that undertaking to take this away and to work with noble Lords, I hope that my noble friend will withdraw his amendment.
My Lords, I am most grateful to my noble friend and to colleagues around the House who have spoken in support of this amendment. It is a remarkable thing to have an amendment that unites the noble Lord, Lord Kerr, with the noble Lord, Lord Pearson of Rannoch, and I do not think that even the speeches from the Front Benches could quite bring themselves to oppose it.
I am grateful to the Minister for agreeing to take this away, think about it again and talk to people about it. Of course, the very last thing that I want is to create a Division and thereby put my noble friend Lord Teverson, not to mention many of his colleagues on those Benches, in a position where they might have to vote against something that they thought was the right thing to do.
Rather wisely, my noble friend Lord Lawson pointed out that this matter has considerable strength of feeling in the country behind it, and it would be a pity if this cause were taken up by a tabloid newspaper, for example. It would be an even greater source of concern to me if that proved to be more influential than the combined voices around this Chamber. If it were taken up by a tabloid newspaper, judging by the brief that the Minister has been given by her department, I would not want to be the press officer responding to the inquiries because the Government have nothing to say on this.
This is not an issue about whether we are for or against decarbonisation or whether we are sceptics or enthusiasts—it is an issue of trust and transparency. I welcome the Minister’s comments that she is sympathetic, that she believes in transparency and that she would like to get there, but she is sounding a touch like St Augustine. Still, I take her commitment seriously, even though it is a commitment that she made earlier, in Committee. Therefore, while giving notice that we will return to this at a later stage in the Bill if no beef is produced following what has been a widespread consensus position in the debate, I beg leave to withdraw the amendment.
Amendment 102 withdrawn.
Clause 131: Section 130: procedure etc
Amendments 103 and 104
Moved by Baroness Verma
103: Clause 131, page 102, line 13, leave out paragraph (a)
104: Clause 131, page 102, line 21, leave out subsections (3) and (4) and insert—
“(3A) Before making modifications under section 130(1) the Secretary of State must lay a draft of the modifications before Parliament.
(3B) If, within the 40-day period, either House of Parliament resolves not to approve the draft, the Secretary of State may not take any further steps in relation to the proposed modifications.
(3C) If no such resolution is made within that period, the Secretary of State may make the modifications in the form of the draft.
(3D) Subsection (3B) does not prevent a new draft of proposed modifications being laid before Parliament.
(3E) In this section “40-day period”, in relation to a draft of proposed modifications, means the period of 40 days beginning with the day on which the draft is laid before Parliament (or, if it is not laid before each House of Parliament on the same day, the later of the 2 days on which it is laid).
(3F) For the purposes of calculating the 40-day period, no account is to be taken of any period during which Parliament is dissolved or prorogued or during which both Houses are adjourned for more than 4 days.
(3G) The Secretary of State must publish details of any modifications made under section 130(1) as soon as reasonably practicable after they are made.”
Amendments 103 and 104 agreed.
Moved by Baroness Finlay of Llandaff
104A: After Clause 132, insert the following new Clause—
“Carbon monoxide detection
(1) The Secretary of State may make regulations to ensure—
(a) any particular class of residential premises is fitted with an appropriate carbon monoxide alarm where any carbon fuel burning appliance is in situ,
(b) the supply, sale and fitting of a carbon monoxide alarm may be undertaken by any registered carbon fuel burning appliance engineer, smart meter installer or by local authority fire and rescue service personnel.
(2) Regulations under this section shall be contained in a statutory instrument which shall be laid before Parliament and subject to annulment by resolution of either House of Parliament.”
My Lords, the amendment before the House today is greatly simplified from the one that I tabled in Committee. It is a regulation-making power, and that is all. It would allow the Government time to gather information from the review that was helpfully announced today. Northern Ireland and Scotland have already introduced a requirement to fit carbon monoxide alarms when new or replacement boilers or heating appliances are installed in a dwelling. In England and Wales a domestic carbon monoxide alarm is required only when a new or replacement solid fuel appliance is installed, and does not apply to other types of fossil fuel.
So far as we know, there has never been a death from carbon monoxide in the UK when an audible alarm has been present. The first part of the amendment concerns a recommendation from the inquiry by the All-Party Parliamentary Carbon Monoxide Group, which I chair, which recommended that the Gas Safety (Installation and Use) Regulations 1998 be amended to require all rented properties to be fitted with an audible carbon monoxide alarm, manufactured to European Standard EN 50921. The amendment’s wording would ensure that any property, including local authority housing, rented housing, holiday lets, rented static caravans and other high-risk properties received attention around carbon monoxide that they currently lack. All carbon fuels, including biomass, are covered in the text of the amendment.
As I said in Committee, recorded figures on carbon monoxide poisoning are the tip of an iceberg. The true morbidity and mortality remain unrecorded. The current increases in fuel prices, along with the increased cost of living, mean that many are likely to forgo the annual servicing of appliances. Initiatives to increase home insulation have decreased draughts in houses, effectively making them sealed units, so that if carbon monoxide is produced the concentration steadily rises and thereby endangers life.
The second part of the amendment relates to fire and rescue services, such as the Chief Fire Officers Association voluntary Blue Watch scheme, which attempts to address the national absence of carbon monoxide alarms. It would allow others who fit or service fuel sources or appliances or meter fuel usage to supply, sell and fit an alarm. A co-ordinated fire rescue service response was shown with smoke detectors. Before the regulations changed, about 8% of homes had smoke detectors; now over 80% of households have a working smoke alarm.
The final part of the amendment would require a statutory instrument to be laid. That would ensure that Parliament was aware of the progress being made in addressing this silent killer, and would demonstrate how seriously the Government were taking the issue of these preventable deaths. I beg to move.
My Lords, I support the noble Baroness. I speak as president of CO-Gas Safety. Like the noble Baroness, for many years I have been concerned about the lack of action in relation to carbon monoxide poisoning. As she said, the official figures disguise the true extent of the problem. Because the official figures have not really reflected the size of the problem, various agencies, particularly the Health and Safety Commission, have never really been prepared to take this issue seriously. The noble Baroness has found an ingenious way to bring this to your Lordships’ attention within the Energy Bill.
This afternoon, the Minister gave a very welcome announcement in relation to a government review. However, we would like to see this issue go further. All that my noble friend is doing is setting a framework within which the Government can take action following such a review. I think it particularly important that it gives the Government a regulation-making power. As the noble Baroness has said, not only are the figures just the tip of the iceberg but there is a real concern at the moment about the cost of servicing appliances. If people put that off, particularly because of concerns about the cost of living at the moment, the risk to many people will be greater. For that reason, I hope that the Government might be sympathetic. If not, perhaps the noble Baroness will decide to press this at some point. I hope that she does.
Regrettably, my Lords, as has already been mentioned, my noble friend Lady Maddock is in Berlin on an EU Select Committee. It seems to be the place to be this afternoon. I know that she is very keen to support this amendment.
We hear of many tragedies that have happened because of this silent killer, often, but not exclusively, within rented accommodation. It is perhaps worth reminding those of us who are landlords in any way that we are already under an obligation to have our gas installations checked. I think it would make sense for a way to be found, without requiring more bureaucracy or a lot of extra work, to include carbon monoxide indicators through a clause of this sort.
I had a new wood-burner fitted in my house recently. Although carbon monoxide is often thought about in connection to traditional gas boilers, I was reminded by my installer that wood-burning stoves can be far more dangerous than gas boilers in this area. They took it upon themselves to install a carbon monoxide indicator and alarm in that room before they left. I thought that that was excellent; the industry was starting to get ahead of the problem. However, I hope that the Government will pursue this agenda in whatever way they feel is appropriate in order to ensure that more of the tragedies which have happened in the past do not happen in the future.
My Lords, as I said at Oral Questions this afternoon, I am very grateful to the noble Baroness, Lady Finlay of Llandaff, for raising this issue, both at Questions and by bringing forward this amendment this evening. She has given us a clear description of the effects of carbon monoxide poisoning and the terrible consequences that it can have on victims and their loved ones. As I think I indicated at Questions today, this is something that the Government take very seriously indeed.
I will start by reminding your Lordships, as some noble Lords who have contributed tonight have reflected already, that the most important element that we must ensure is in place is effective public awareness and education of the risks around carbon monoxide poisoning and of the fact that safety measures apply to people whether they live in homes that they own or homes that they rent.
As time is short, and noble Lords are keen to move onto other business, I will not go through the measures in detail, but they have been increased recently and are quite extensive in ensuring that the public are aware of the risks. As I mentioned at Questions today, there are now warnings on the sale of disposable barbecues, for instance, and Ofgem has placed a requirement on gas distribution network operators to ensure that they raise awareness. One of the important reasons why they are the right people to raise awareness, rather than the suppliers, is that the network providers are constant in the supply of gas to people’s homes as they are in charge of the pipes, while consumers are encouraged often to switch between suppliers in order to get the best deal that they can for their energy bills.
Of course regulation has its place. Following a comprehensive review of building regulations by the previous Government, new regulations were brought in in 2010 that require the installation of a carbon monoxide alarm when a new or replacement solid-fuel appliance is installed. I note what my noble friend Lord Teverson said about the installers of his wood-burner. The new regulations actually require the noble Lord to have a carbon monoxide detector.
Very good. All new gas appliances are subject to various standards laid down by the European Union. People in rented accommodation are covered by the requirement on landlords in the gas safety regulations to ensure that there is an annual gas safety check
As discussed at Questions today, we in Government feel that the real risk is to those people who live in rented accommodation where their landlords are not reputable or do not take care properly of the property that they rent out. We are putting in place a package of measures that we think will lead to greater safety for those who are in rented accommodation. As I said earlier today, I am pleased to announce that we have decided to extend the scope of the review announced a couple of weeks ago, so that it considers whether there is a need to require the installation of carbon monoxide alarms in privately rented housing. We are working on the matters to be covered in this review but I envisage that they will include questions as to whether the actions that I talked about earlier today are sufficient to raise and maintain awareness or whether other approaches, including regulation, might be needed.
When we think about regulation, we need to consider how any regulatory approach sits with building regulations, fire safety rules and housing standards regulations, because there are overlapping regulatory regimes. We will certainly want to look at the interaction with regulations on smoke alarms and perhaps include the scope for promoting combined carbon monoxide and smoke alarms.
Clearly, there are a lot of technical issues to consider, but once we have completed the review, if regulation is considered to be the right course of action, we must take all the necessary steps so that it is done in a proportionate and targeted way and interested parties, including housing groups and landlords, are properly consulted. The last thing that we would want would be ineffective regulation that did not result in the outcomes that we all want—reduction in deaths and in the effects of carbon monoxide poisoning—and that made the situation even worse by forcing up rents or discouraging good landlords from being in the market, thereby limiting choice to renters.
My Lords, I am very grateful to the Minister for her constructive response up to this point, when she came to the noble Baroness’s actual amendment. Surely it is not the contents of the regulation that are being determined here; what the noble Baroness is seeking to do is to give the Government a regulation-making power that can then be constructed in the light of the review that they have undertaken. Of course, the Minister says that if it were decided that regulation was needed in the future, she would find the vehicle for it. We all know the difficulty of finding suitable legislative opportunities in this area—now is the time. I really hope that she will give this further consideration.
As much as I was very happy to give way to the noble Lord, and I had finished the point that I was making at that time, the noble Lord still managed to intervene before I had finished making all the points that I wanted to make today. I hope that by the time I finish—in what is going to be a matter of seconds—he will feel a bit more reassured by what I have to say.
Before I conclude, it is worth repeating that the noble Lord’s Government did a very comprehensive review of building regulations in 2009 and concluded that the regulations they should introduce are the ones that I have just spoken about, which apply to the new wood-burner that the noble Lord, Lord Teverson, has had installed in his house. I commend the work that his Government did, but the point that I am making, while he is pressing me, it that it is not so long since his own Government did a very thorough piece of work and concluded that the regulations should be limited as they are currently.
All that said, I am very grateful to the noble Baroness, Lady Finlay, not least because of my recent arrival in this post and this being the first opportunity I have had to consider these points and respond to a debate on this matter. I am happy to reflect further on this in light of today’s debate. Of course, I will discuss this matter further with my ministerial colleagues and, if the noble Baroness is willing, have a further conversation with her before we reach Third Reading. On that basis, I hope that she feels able to withdraw her amendment.
I am most grateful to the Minister, who has already met with me prior to this debate and been most helpful. I accept her offer to look at this again, discuss it further and come back at Third Reading. Therefore, I will not be pressing my amendment tonight.
Amendment 104A withdrawn.
Consideration on Report adjourned until not before 8.52 pm.