Energy Efficiency Measures: Net Zero Buildings

– in Westminster Hall at 11:29 am on 26 February 2020.

Alert me about debates like this

[Mark Pritchard in the Chair]

Photo of Philip Dunne Philip Dunne Chair, Environmental Audit Committee, Chair, Environmental Audit Committee 2:30, 26 February 2020

I beg to move,

That this House
has considered energy efficiency measures in buildings to achieve net zero.

I am very pleased—I would almost go so far as to say that it is serendipitous—that for the second time in succession you, my constituency neighbour, are chairing a Westminster Hall debate, Mr Pritchard. I hope that you and other hon. Members will find the subject relevant. It is an important debate for colleagues on both sides of the House who share my enthusiasm for exploring a variety of routes to reach net zero emissions as soon as possible—certainly by 2050. One is the groundbreaking Environment Bill, on which I had hoped to contribute in the Chamber. Several colleagues who would like to join this debate are in the main Chamber. Should some of them succeed in arriving before I sit down, I hope you will be liberal in your interpretation of the rules, Mr Pritchard, and allow them to chip in should they wish to catch your eye.

Another important feature of today is that it is the first day of Lent. I am joining colleagues here and individuals from around the country in making five green pledges for Lent: to cut down food waste, to use less single-use plastic, to make more zero-carbon journeys, to buy less new and so support local charity shops and the excellent repair hub in Ludlow, which is open on alternate Saturdays, and and to litter-pick. I urge the Minister to join me in following one or more of those pledges if he is observing Lent.

Yet another important feature of today is this debate, in which we highlight the vital need to reduce fossil fuel use in heating the buildings in which we live and work if we are to achieve net-zero Britain. I declare my interest as a property owner, and I refer to my entry in the Register of Members’ Financial Interests. The debate is timely, as last month the consultation on minimum energy efficiency standards in the non-domestic private rental sector concluded, and earlier this month the future homes standard consultation ended. Given that the Budget is confirmed for next month and the comprehensive spending review is to take place later this year, this is the ideal time for the Government to set out their ambition to show global leadership in improving the energy efficiency of buildings in this country ahead of COP 26 in November.

Photo of Kate Green Kate Green Chair, Committee on Standards, Chair, Committee on Standards

I congratulate the right hon. Gentleman on securing this important debate. One important measure that we will need to adopt, including in Greater Manchester, is retrofitting our much older housing stock. That obviously costs money—he is right to allude to the opportunity that the Budget presents to discuss that need—but it also requires people with skills to undertake the retrofitting work. Does he agree that the Government’s new points-based immigration system causes concern about the construction sector’s ability to meet the needs of a very extensive retrofitting programme in Greater Manchester?

Photo of Philip Dunne Philip Dunne Chair, Environmental Audit Committee, Chair, Environmental Audit Committee

I absolutely agree that retrofitting existing housing stock is one of the biggest challenges we face in trying to reduce fossil fuel use in our buildings. Much of my speech relates to that, so I will go on to talk about it. I will not talk about immigration status, but the hon. Lady makes an important point when she says that we need sufficient skilled people to do the work right across the Government’s infrastructure programme. It does not apply exclusively to retrofitting homes, although that forms part of it. If the skilled tradesfolk I know in my constituency are anything to go by, most earn considerably in excess of the Government’s threshold requirements, so skilled tradespeople may well still be able to come here as they meet the requirements of the points system.

I am pleased that there has been some progress in building more efficient homes over the past 30 years. Overall emissions from homes have been reduced by about one fifth since 1990, despite the fact that there are approximately one quarter more homes now. That is ostensibly due to policies to improve boiler efficiency and basic insulation in the early 2000s, but progress seems to have stalled in recent years. Now is the time for this energetic and committed Minister, whom I am absolutely delighted to see retaining this brief, to make his mark by re-energising energy efficiency across the built environment in Britain.

Photo of Tulip Siddiq Tulip Siddiq Labour, Hampstead and Kilburn

I am glad that the right hon. Gentleman has mentioned the Minister’s energy and enthusiasm, because I want to ask about energy efficiency in social housing. I am sure he is aware that measures such as insulation, window glazing and low-carbon heating can be installed very easily and cheaply in larger buildings. There are some very good examples of local authorities building low-carbon social housing and slashing energy bills for tenants. In my constituency, Camden Council has been reducing carbon emissions in its housing stock, and it has used refurbishments such as Swiss Cottage library to make big energy savings and install solar panels. Does the right hon. Gentleman think it should be down to cash-strapped councils to carry out those innovations, or should the Minister and the Government be playing more of a part in investing properly in energy-efficient social housing?

Photo of Philip Dunne Philip Dunne Chair, Environmental Audit Committee, Chair, Environmental Audit Committee

I am glad that the hon. Lady has raised social housing, because I will touch on that in my remarks. I am sure the Minister will respond to that point, because there was a clear commitment in the manifesto on which we were just elected to provide funding for energy efficiency measures specifically in social and affordable housing. I think she will get some good news from the Minister when he responds to the debate.

What is the scale of the challenge? The built environment accounts for nearly 40% of national energy use and approximately one third of UK emissions, but progress in the decarbonisation of buildings has been limited. Enhancing the energy efficiency of the UK’s housing stock is therefore one of the critical steps in achieving our net zero target.

The future homes standard is focused on new builds. The Government have called on the industry to deliver a further 1 million new homes over the course of this Parliament, with a more ambitious target of achieving 300,000 new additions each year by the mid-2020s, so getting the regulations right will have a significant impact on the carbon footprint of millions of future homes. That is good news for the environment as we move to net zero, and for people who are fortunate enough to live in the more fuel-efficient buildings of the future. The homes we are building in this and subsequent Parliaments should last more than 100 years—way beyond the 2050 target date for net zero. We must ensure that the standard of homes being built now contributes to meeting that target. It would clearly be perverse and extremely costly to build homes now that require retrofitting to reduce emissions at a later stage. There should be plenty of opportunities from technical innovation in new build standards to incorporate in the future homes standard. I have no doubt that the Government, in their response to the consultation, will seek to address the challenges we face in ensuring homes become more energy efficient and encouraging new technology and innovation in house building. I would like to see them include the notion of embedded efficiency in the materials used for construction, and not just focus on the future annual running costs.

I have concerns about some elements of the proposals that were consulted on. There is, for example, the suggestion that the fabric energy efficiency standard will be removed, which would make it possible to build less energy-efficient properties and still get them to pass building regulations by fitting larger renewable energy systems; as a result, properties would become more expensive to heat, which could increase fuel poverty. Taken over a large enough area, additional renewable energy capacity might be needed away from the new housing, bringing additional cost. I hope the Minister will reflect on that.

The proposals explicitly remove local authorities’ right to set higher than minimum energy efficiency standards, as higher standards are likely to increase costs for home builders. That would restrict their ability to set their own ambitious targets to tackle climate change, with homes that are sustainable for the future, and remove the incentive for home builders to innovate and become market leaders in energy efficiency.

Photo of Daniel Poulter Daniel Poulter Conservative, Central Suffolk and North Ipswich

My right hon. Friend is absolutely right. East Suffolk Council has ambitious plans to impose higher energy efficiency standards on new build properties and would be disappointed by what it would see as a retrograde move in favour of developers, which already make large profits, by letting them off the hook on reducing carbon emissions.

Photo of Philip Dunne Philip Dunne Chair, Environmental Audit Committee, Chair, Environmental Audit Committee

I am grateful for that example. The Minister should be willing to show some flexibility and consider the councils that want to make progress, because it could have an impact on builders’ inclination to develop to a higher standard within a particular area. In my view, these matters should be determined by self-regulating local authorities.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Energy and Climate Change)

There are ambitious councils, but is the right hon. Gentleman not concerned that, were regulations determined by councils, developers would be drawn to the councils that do not impose higher standards, where their profit margin would potentially be higher?

Photo of Philip Dunne Philip Dunne Chair, Environmental Audit Committee, Chair, Environmental Audit Committee

That has happened where different rates of affordable housing were implemented by councils across England—in Scotland too, I suspect—and developers were drawn to the areas with the lowest standards. I am sure that the Government, in response to the future homes standard consultation, will seek to raise standards across the board, but say that if any local authorities wish to go further and faster, that will be up to them. That is a risk that we should be able to take.

The Government can assess in detail examples of how we can achieve more effective building techniques and of the associated costs versus the energy efficiency savings. One example from my constituency is in the town of Much Wenlock. The social housing provider Connexus— it is well known to you, Mr Pritchard—built a housing project there two years ago to a passive house standard, which through designer materials manages heat loss and airflow. Thanks to that efficiency, the residents save an average of £665 a year in reduced fuel bills and energy use has fallen dramatically, to the point that many tenants say that they barely need to turn on their heating. However, construction of the project carried additional costs. Connexus estimates that it cost 29% extra to build to a passive house standard compared with standard building regulations. The Government could step in to provide further support mechanisms to social housing groups and local authorities to deliver a very high standard of energy efficiency. It will be interesting to see whether the response to the future homes standard addresses that.

I will focus on the scale of the challenge of making existing housing stock more energy efficient, which, as I mentioned in response to Kate Green, will by definition require the retrofitting of a huge number of properties. Some 29 million homes in the UK account for 20% of UK emissions. According to the Government’s live tables, of those homes, only 20 million have energy performance certificate ratings. The remaining 9 million homes are presumably owner-occupied and have not yet been required to undertake an EPC rating assessment.

Of the 20 million homes with an EPC rating, more are rated D than A, B and C combined. In total, almost 12.5 million dwellings are rated at bands D to G, compared with just 7.5 million rated A, B or C. That equates to 1.7 billion square metres of space that needs to be heated or cooled, which gives some indication of the scale of the challenge for the construction trade. In addition, non-domestic floor space energy performance certificates cover a further 688 million square metres in 935,000 properties that are used as non-domestic lodgements, with C and D the most common ratings.

The Committee on Climate Change published analysis about reaching net zero emissions by 2050 and recommended that by 2035, almost all replacement heating systems for existing homes must be low carbon or ready for hydrogen, so that the share of low-carbon heating increases from 4.5% now to 90% by 2050. In 2015, the Energy Technologies Institute estimated that 20,000 households per week—over a million per year—would need to be switched from the gas grid to low-carbon heating between 2025 and 2050 to meet the then 80% emissions reduction target in the event that non-fossil fuel gas alternatives have not been developed by then.

Photo of Daniel Poulter Daniel Poulter Conservative, Central Suffolk and North Ipswich

My right hon. friend spoke about the importance of retrofitting existing housing stock, which makes up about 85% of the homes that we are talking about. Does he agree that one suggestion that the Minister could take away is that over time, we could increase the duty on landlords to ensure that their properties become more energy efficient? A requirement for their properties to reach an energy efficiency rating of D, then C, and so on, would not only give landlords time to adapt, but would help tenants in some of the poorest households to save on fuel bills and would also help meet our carbon emissions targets.

Photo of Philip Dunne Philip Dunne Chair, Environmental Audit Committee, Chair, Environmental Audit Committee

I will touch on that briefly later in my remarks. My hon. Friend is right, and the Government have already introduced requirements for landlords to get to an E rating for all properties other than those in the categories of exemptions—those include listed buildings, properties where the tenant will not allow the adaptation because of its intrusive nature, or where the cost makes the adaptation disproportionate. Those requirements come into effect from 1 April for all new and existing tenancies, and there is talk of progressively increasing the requirement to a C rating, as my hon. Friend alluded to.

That is absolutely fine for new builds and is probably fine for properties in which the work relatively simple to do, but the big challenge is for existing, and particularly older, housing stock. The work is extremely intrusive and most tenants would not be able to occupy the building while it was being done, so it can only really happen when a tenancy comes to an end. Of course, that does not affect the 9 million-odd owner-occupied houses that do not already have a rating, so about a third of the housing stock is not rated at all. It will not apply to those properties unless the Government choose to change the rules and make owner-occupiers upgrade their buildings as well.

Going back to my thread about the scale of the challenge in adapting our existing housing stock, the current level of gas boiler sales is over 1 million a year, while heat pump sales are only around 20,000 a year. The capital cost of heat pumps, and the adaptations to existing homes to make them effective through under-floor heating, wall insulation and double glazing, make them a very expensive and disruptive solution for retrofitting homes.

The issue of ensuring the heat efficiency of older homes is particularly pronounced in rural areas, such as my constituency and that of my hon. Friend Dr Poulter, where there are more older homes and—certainly in my case, in Shropshire—a higher proportion of listed houses. Those houses are exempt from EPC requirements at present, and they may also not be connected to the traditional gas grid. For example, only 3% of all off-grid homes are at the required minimum EPC level identified by the clean growth strategy, but rural off-gas-grid homes make up 11% of all UK homes. I encourage the Government to engage with industry to tackle that issue in working to meet the 2050 target.

We clearly face a massive challenge in adapting existing housing stock to reduce emissions and become more efficient. Some 85% of UK homes are heated through carbon-emitting gas heating systems. As I have already indicated, the pace and scale of adaptation to achieve net zero by 2050 will require a dual strategy of making homes more energy efficient and decarbonising their heat sources. The Government have taken action, including through the minimum energy efficiency standards for the private rented sector that we have just been talking about, which came into force for new tenancies in 2019. Those standards require landlords to contribute up to £3,500 to improve rental properties with an EPC rating of either F or G.

However, as I shall elaborate shortly, the experience of my constituents in rural Shropshire—and my own as a landlord—is that that sum does not reflect the actual cost of retrofitting most homes, such as three-bedroomed, semi-detached cottages in rural areas. I was surprised to discover a 95% decline in the installation of domestic energy efficiency measures since 2012, meaning that the rate at which homes undertake energy improvements needs to increase by a factor of seven to meet the targets set out in the clean growth strategy.

The Government can and must go further. For example, the market for zero-carbon heating technologies is still immature and needs further Government support to develop. The renewable heat incentive is due to end next year, in March 2021, and I sincerely hope that its successor arrangements will be included in the Budget next month. I encourage Ministers to consider replacing the RHI with a capital grant or an improved green finance loans scheme. That would better reflect the main barrier to heat pump uptake—the high up-front cost of capital equipment and adaptations required, such as underfloor heating—rather than helping to reduce running costs as at present.

I also hope that the Government will consider the recommendation of the January 2020 report of the Building Better, Building Beautiful Commission that VAT on housing, renovation and repair should be aligned with that on new build in order to stop disincentivising the reuse of existing buildings. The Government are in a position to take bold steps on retrofitting social housing. I welcome the Conservative manifesto commitment to invest £6.3 billion to improve the energy efficiency of 2.2 million disadvantaged homes, reducing their energy bills by as much as £750 a year over this Parliament.

Last year the financial scale of the challenge of improving existing housing stock was laid bare by the then Minister when answering a parliamentary question. It was made clear that the aspiration for as many homes as possible to be upgraded to EPC band C by 2035, as set out in the clean growth strategy, was estimated by the Department to have a total investment cost of £35 billion to £65 billion. If my maths is right and that applies to the 12.5 million properties at a D rating or worse, that would average between £2,500 and £5,200 per property. I have news for the Minister: from all our anecdotal evidence for the actual cost of conversion to get an EPC E rating to meet the private rental standards we have just been talking about, that seems to be an unrealistically low figure.

Whatever the figure, those are staggering sums. The good news is that, alongside doing the right thing for our environment, such investment could deliver substantial economic returns of up to £7.5 billion per year overall, and £275 per affected household per year by 2035. That would have a spin-off benefit of creating a large number of jobs to do the refitting work—estimated at 100,000—and saving the equivalent of six Hinkley Point C-sized power stations-worth of energy. There is therefore potential for a viable investment case to be made, but it needs to be credibly structured, which I am afraid some previous schemes were not.

The other significant challenge is that achieving net zero for our built environment will require improving not only domestic homes but non-domestic building stock across the country. The 2016 building energy efficiency survey identified some 1.83 million non-domestic premises in England and Wales, with vastly diverse usage and efficiencies, presenting a significant challenge in reducing emissions. In both rented and owner-occupied workplace buildings, five sectors accounted for 70% of total energy use—retail, storage, industrial, health and hospitality—and 67% of energy was used for activities that were not sector-specific, such as heating, hot water, lighting and the like. There is real scope to reduce energy consumption if the approach is correct.

The Government’s consultation set out two options outlining the energy cost implications of setting a target of achieving an EPC rating of B or, alternatively, an EPC rating of C. It is encouraging that the Government’s preferred approach seems to be to aim for the higher rating of EPC B, given the scale required to meet our emissions obligations, but that will of course require considerable investment, estimated at some £5 billion. The Government will need to reflect carefully on the delivery mechanisms used to stimulate the change required, not only using market mechanisms and support for new technologies, but enabling access for private sector businesses to green finance to facilitate adaptation.

The third area is the estate of the Government and public sector, which are of course substantial occupiers of buildings. The Government should lead by example to reduce emissions by tackling the energy efficiency of the Government estate. They have reduced emissions from the public building estate by 26% since 2009-10, but in reality that has been achieved mostly through a reduction in the estate rather than through improvements in efficiency.

Last year the Environmental Audit Committee took evidence on net zero government and learnt of interesting work going on through modern energy partners, a collaborative programme between the Department for Business, Energy and Industrial Strategy, the Cabinet Office and Energy Systems Catapult, working alongside the Crown Commercial Service and private sector specialists. MEP was launched in early 2018 and was expected to complete in April 2021, at which point the Government may consider the programme for adoption as business as usual.

The Conservative manifesto for the December general election committed to a public sector decarbonisation scheme totalling £2.9 billion over a five-year period, and to funding insulation in hospitals and schools. I trust that will be confirmed in the comprehensive spending review later this year. I do not want to pre-empt the conclusions of the MEP, but I hope that the Government will consider incentivising public sector organisations to invest in their own renewable energy sources wherever possible, which will deliver lower energy bills to help recoup their costs, as well as further reducing emissions and supporting the UK’s growing renewable sector.

I will also touch on the validity of the EPC ratings regime, since they have become the main tool for Government and those looking to buy properties to analyse the supposed efficiency of a building. I am afraid that I have serious reservations about the EPC regime. Its current methodology can produce perverse ratings that will hamper significantly our efforts to decarbonise existing building stock. For example, high carbon-emitting heating options can achieve higher scores because they are cheaper to run, which is clearly contrary to the ambition but a hangover from the legacy purpose of EPCs—they were originally introduced to help reduce fuel poverty, whereas their current use is primarily to assess energy efficiency. Thus, biomass boilers and wood-burning stoves often score badly in EPCs, as the number of models included in the database is limited, default efficiencies are poor and fuel costs can be higher than for heating oil, even though they generate a fraction of the CO2 emissions of oil, coal or gas per kilowatt-hour.

In assessing EPCs, the weighting of costly measures that can make a material difference in improving energy efficiency, such as replacing single-pane with double or even triple-glazed windows, can only score two points, in the case of double-glazed windows, since it may have a low impact on fuel costs. I encourage the Minister to take away this point and to engage with stakeholders on how the EPC ratings could be updated or amended to reflect better the ambition of meeting net zero by 2050.

In conclusion, I have five clear policy points, on which I hope the Minister will reflect. First, there is a need to strengthen the future homes standard, so that inefficient homes are not being built for longer than is necessary. Local authorities, as we have been discussing, should have the flexibility to set higher standards earlier if they so wish, to meet their own climate change targets. The Committee on Climate Change has called for the date to be moved forward to give certainty, and I hope the Minister will consider that.

Secondly, the Government must support zero-carbon heating beyond the end of the current renewable heat incentive schemes—beyond 2021—including financial support and targets for heat pumps and other zero- carbon heating options. Thirdly, householders should be incentivised to improve the efficiency of their homes, not only in fuel-poor homes. In rural constituencies such as mine, that will create jobs and keep heating bills lower, while cutting emissions and energy use, but Government support is required to get it moving.

Fourthly, in publicly owned buildings the Government have a real opportunity to lead by example. They should extend their manifesto commitment to improve schools and hospitals, by enabling public sector bodies to invest in on-site renewable energy sources. That would create jobs, reduce bills and emissions, and show the Government’s commitment to their world-leading ambition in cutting emissions. My final ask is that the Minister commit to a review of the EPC system, which has moved on from its original purpose and can create perverse anomalies, particularly for older, rural homes.

I welcome the Government’s future homes standard consultation and their clear target to reach net zero by 2050, with all the steps that will inevitably entail. I hope the Minister will reflect on the concerns of various organisations that will have submitted evidence through the consultation, and Members’ comments today, to ensure that the real opportunity to bring lasting change to the way we construct, insulate and heat our buildings does not slip through our fingers.

Photo of Jamie Stone Jamie Stone Liberal Democrat Spokesperson (Armed Forces), Liberal Democrat Spokesperson (Defence) 3:00, 26 February 2020

It is an honour to speak under your chairmanship today, Mr Pritchard. I listened to Philip Dunne with the greatest of interest, not least because I come from one of the coldest parts—if not the coldest part—of the United Kingdom. There is a village called Altnaharra in Sutherland, which is a great favourite of Jeremy Paxman—he goes to catch salmon there. People also have a very good chance of seeing a golden eagle there. However, every year Altanarra is the coldest place in the United Kingdom.

I have been increasingly worried by something that all right hon. and hon. Members know about: the terrible thought of a pensioner deciding to switch off their heating because they simply cannot afford it. I want to put on the record my gratitude to Councillor Richard Gale, among other colleagues, who has helped to spearhead the issue that the right hon. Gentleman spoke about in East Sutherland and the wider highlands and islands. Although we generate an enormous amount of renewable energy from our onshore and offshore wind farms, in actual fact many of my constituents have heating bills they simply cannot afford.

In absolute fairness to the Scottish Government, I want to put on the record my thanks to them; I may sometimes take a pot shot at them, but they have put tackling fuel poverty at the top of their agenda. Credit should be given where it is due. My wife comes from one of the six counties of the UK part of Ireland—let me get my history right—and I understand that similar moves are being made at Stormont, which we should be grateful for.

In my brief contribution, I will make a couple of suggestions. I live in a particularly cold, energy inefficient house, so I know all about keeping a house warm. Hon. Members will probably be shocked to know that I know all about lighting fires and trying to stay warm and trying to haul ancient shutters shut and getting them to stay shut. Oddly enough, old-fashioned wooden shutters were quite good at energy insulation, although I am not advocating that we step back to 18th or early 19th-century building construction. The right hon. Gentleman talked about retrofitting; that is the problem we face in the highlands. Notwithstanding the good measures undertaken by the Scottish Government, in some ways we were slightly better at these things 25 years ago than we are today.

That leads me to my next point. A long time ago, when I was a councillor in the 1980s and 1990s, home improvements could be undertaken in several ways. The Scottish Office—then part of the UK Government, not today’s Scottish Government—would allocate two forms of capital funding to councils, known as block A and block B. Block A was used to build, renovate or do up houses in the public rented sector—that is where council houses were built. Block B was for renovating or repairing properties in poor condition that should be lived in. That included spaces above shops, because there was a tendency for many living spaces above shops not to be used in quite the way they had been when the shopkeeper lived there, as a certain former Prime Minister of this country did.

The system worked extremely well; my own Ross and Cromarty District Council was able to say, “Right, we’ll take a particular part of a village in the highlands, and target the whole of one street where there are privately owned cottages and people do not have proper insulation.” We would call it something like a care and repair scheme, which worked extremely well. There was a dividing line between the rented and not rented sector—block A and block B—but all that was capital; it was borrowing as opposed to revenue, so it was easier for the Scottish Government, and ultimately the Treasury, to use the public sector borrowing requirement and the Public Works Loan Board to get the cheapest money in town and direct it at the problems that had to be sorted out.

Today, we know for a fact that money has never been cheaper, so in some ways it is easier for the Treasury to borrow a large amount of money at a cheap rate and direct it straight at what it wants to achieve, be that building ships or whatever. As the right hon. Gentleman said, it should be relatively easy for the UK Government to direct a chunk of money at housing, given that it does not come off the revenue budget—in other words, they do not have to raise taxes to spend. They will have to cover the borrowing costs, yes, but they are very cheap. That is one suggestion worth thinking about, as it worked well in the past. Perhaps we will hear more detail about what the Scottish Government do from Alan Brown—he will know better than I do. The Scottish Government are doing their best.

My final point, because this is a brief contribution, is that I have spoken in this place about trying to encourage people, for carbon reasons, to buy and use electric cars. However, even for those with lots of power points for charging, electric cars are expensive things to buy. A lot of people are put off by the cost. I have suggested some kind of tax break for people who buy an electric car, taken off their pay-as-you-earn code. That might be a constructive way of looking at it. To encourage householders to think about making their homes highly efficient, it might be worth making it work for them to do the work, as well as there being Government assistance. That would address the point that right hon. and hon. Members made about heat pumps. Heat pumps work, but they are fiendishly expensive to put in, and the disruption is something else. But if the goal for the house owner at the end is worth it, the game is worth the candle—I think that is the right expression.

This is an enormous issue for me, because it is so dashed cold up in my part of the world. I wish it was not so. Who knows? Climate change may have us all growing grapes on the straths of Sutherland and Caithness in the years to come, but I doubt it.

Photo of John Howell John Howell Conservative, Henley 3:08, 26 February 2020

It is a pleasure to serve under your chairmanship, Mr Pritchard. I thank my right hon. Friend Philip Dunne for his comprehensive assessment of the issue.

I wish to make a couple of points during my equally short contribution. It is worth reflecting that building regulations first included energy conservation as long ago as 1972. Since then, year after year, those regulations have been tightened up to achieve much greater energy conservation than before. The problem is that the last substantial upgrade of the regulations to achieve a very good energy conservation outcome was in 2013; there has been no substantial upgrade since that date. That is worrying. Minister, when will the building regulations next be upgraded and what will that include?

In 2015, the long-standing policy of the Cameron Government to achieve zero carbon for new homes was abruptly cancelled. That may seem like a little while ago, but it characterises a lot of the discussion about this issue. I hope the Minister can comment on that in his summing up.

The issue came up during the election campaign. I sat with a company that operates in the sector, in a village where a huge development is taking place. We worked out together how much it would cost to make the houses zero carbon as they were being built, from scratch. We calculated that the total increase in cost would be about £5,000; the total cost of retrofitting the houses was about £25,000. That is a huge difference, and retrofitting also comes with enormous problems—we have already heard about some. The firm I met specialises in alternative heating. Everybody wants a ground pump to be put in to get the best approach to heating, but that is not possible in many houses and is not the best solution. Other options, such as biomass boilers, should be considered, as we move forward.

We need to address this area in more detail, because there are significant opportunities for the UK. Residential and commercial buildings account for 60% of electricity consumption in the world today—a phenomenal amount. I have two points to make about that. First, there has been a lot of talk about increasing the ability of district councils to introduce regulations on net zero carbon. That is missing a trick. I invented neighbourhood plans that have gone out of their way to give communities the freedom to decide lots of important things about where housing should go. They have to work within a strategic framework that is set by the district council, but many neighbourhood plans are trying to achieve more than the district council wants. This is an opportunity to give them the freedom to take that forward.

My second point is about developing countries. Whether you support Brexit or not, we are a global player and we need to ensure that what we do helps in developing countries. Many such countries have a housing crisis—we must recognise that. Whatever we do there will have to involve sophisticated commercial financial options. Our international aid budget should reflect that, as well as the opportunities for British companies; many of the existing programmes will not sit very easily within that framework. Throughout my time as trade envoy to Nigeria, I have tried to encourage solar energy there, but the translation of that into better housing is quite a long way away. There is a lot that we can do to help that process.

The building in Africa that stands out as the best net zero example of its type is the Belgian embassy being built in Morocco. When that is the situation in a developing continent, we have to ask why, and what we can do about it.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health) 3:14, 26 February 2020

I congratulate Philip Dunne on securing this debate in Westminster Hall today and on his election as Chair of the Environmental Audit Committee. We look forward to many contributions under his chairmanship.

It is always a pleasure to follow John Howell. In debates in Westminster Hall, he and I often sit on opposite sides of the Chamber but say the same things. That will be the case again today, which is very positive.

I declare an interest as chair of the all-party group on healthy homes and buildings, which over the last few years has conducted a number of inquiries and made recommendations, but everyone, including councils, the Government, builders and householders, has a role to play in achieving energy efficiency in buildings. Many of us have taken the environment for granted for too long. My firm desire is that my grandchildren and my great-grandchildren will have an opportunity to enjoy the beautiful countryside that I have so enjoyed throughout my life. For that to happen, we have to make changes that are positive, constructive and mark the way forward. I sincerely believe that we have to be good caretakers of the land that God has granted us and that we hold in trust for future generations.

We must also all be conscious that a massive part of addressing these issues is to use our Commonwealth, diplomatic and trading partnerships to encourage big industrial countries to take decisions that reduce the size of their carbon footprint. We must be ambitious in our desire to achieve that, but we must always bring people along with us in our attempts to make a difference to this wonderful world that we live in. The Committee on Climate Change has highlighted that Northern Ireland contributed 4% of UK carbon emissions in 2016. That is a small percentage, but it does not mean that we do not have to do our bit and make sure that reductions happen. We have a key role to play in meeting the UK’s legislated emissions reduction targets and obligations under the Paris agreement. With a reconstituted Northern Ireland Assembly up and running, and functioning, there will naturally be a more formalised approach to how we can reduce our emissions in line with the rest of the United Kingdom. The Minister is always very assiduous in replying to comments and questions, so could I ask him—I probably know the answer, but for the record—what discussions has he had with the Northern Ireland Assembly at this early stage to see how we meet the targets?

I was interested to learn that the built environment contributes around 40% of the UK’s total carbon footprint. Almost half of that comes from energy used in buildings, for example plug loads and cooking, and infrastructure, such as roads and railways, and has nothing to do with the functional operation. Newly constructed buildings are more energy efficient, but 80% of the buildings we will have in 2050 have already been built, so a major priority is decarbonising our existing stock, the cost of which has been mentioned by previous speakers.

The UK Green Construction Board said:

“Direct emissions from fuel use in existing buildings rose for the second year running in 2016, mainly due to heating. Heating alone results in 10% of the nation’s carbon footprint and homes are more significant than all other building types put together. Decarbonising our heat supply is one of the big policy challenges ahead. Another major challenge is the carbon embodied through construction. Annual embodied emissions alone are currently higher than the GCB’s target for total built environment emissions by 2050.”

In a very interesting paper, the Royal Institute of British Architects notes:

“The built environment is responsible for around 40% of global carbon emissions and architects have a significant role to play in reducing UK greenhouse gas emissions to net zero.”

RIBA welcomes the commitments and the direction of travel signified by many of the measures proposed in recent Government consultations. It sets out six points, the first of which relates to using the metric of “operational energy”, or energy used at the meter. Operational energy is the actual energy use of a building, and includes both regulated and unregulated energy sources. We must look at what happens in homes. Energy performance certificates are not the most accurate measure of energy efficiency, as they only predict for regulated energy sources, including heating and lighting, not unregulated ones, including personal devices such as computers, refrigerators and coffee machines. The document suggests that operational energy should be validated through the post-occupancy evaluation at the completion of a project. POE is essential to ensure that a home is working as it was intended, which is important.

The second point is a recommendation of actual energy performance targets for buildings in line with the RIBA 2030 climate challenge. The current process essentially benefits buildings of poor shape and design, and we have to change that, because if we do not we shall have problems. Setting actual operational energy targets would encourage architects, developers and homeowners to be innovative and would reward good design based on form, orientation and fabric performance, rather than simply calculating an emissions reduction based on a generic building.

Thirdly, RIBA proposes introducing embodied carbon targets for buildings, in line with the 2030 climate challenge, and suggests giving encouragement for embodied carbon to be calculated in accordance with the Royal Institution of Chartered Surveyors whole-life carbon assessment for the built environment. Again, those are positive measures, and the Minister is probably well aware of those recommendations and suggestions, but it is important to have them on the record. RIBA also suggests promoting the use of post-occupancy evaluations, pointing out that a POE gives the building owner or tenant, the architect and the builder a chance to understand any areas that are not performing as expected, and to make changes. That is especially useful for energy efficiency.

The fifth recommendation is to close the loopholes in the transitional arrangements for the future homes standard. The document refers to evidence that housing developments are being built to energy efficiency requirements that have been superseded more than twice, as a result of changes to part L of the building regulations. It seems that the requirements may have improved, but people have not caught up with that. That is not acceptable and it will result in housing developments being built to different energy efficiency requirements. We need them to be built to the same requirements, so that the same process goes forward. RIBA suggests that where “substantial and meaningful work” such as physical construction work has commenced on an individual building within a reasonable period, the transitional arrangements should apply to that building—but not to buildings on which some building work has not commenced. It further suggests that a reasonable period within which work should have started is 12 months.

The last point is about introducing display energy certificates. As I have mentioned, EPCs are not an appropriate measure of energy efficiency. The use of the actual energy performance as a measure of energy efficiency through the implementation of a DEC programme would be more effective. That approach has been used in New York and Australia. Both disclose operational energy use for all buildings and in the latter case it has helped to reduce operational energy by some 70%.

There are things happening elsewhere that we should try to make progress with. The climate emergency demands urgent action and leadership by architects and the wider construction industry. It is important to reduce operational energy demand by at least 75%, and embodied carbon by at least 50% to 70%, before UK offsetting; and to reduce potable water use by at least 40%, as well as achieving all core health and wellbeing targets.

It is clear that there is a role in construction to help us to achieve our carbon goal. As with anything else of worth, what we want must be paid for in some way. There is no doubt that scaling back funding and incentives in the construction industry has meant that we are not achieving what we could achieve. We must focus our energy, attention and finances on encouragement to big constructors and small firms alike. It is important to make lasting change to the mindset of the construction industry to ensure that we meet and keep to targets and that we are an example to the rest of the world of how carbon-zero building can be achieved in an affordable and practical way.

I am sure that we are all aware of the story where a young boy of five or six years old on the shore is picking up starfish and a man is watching his antics. The boy picks up a starfish, puts it in his bucket and takes it out to sea. The guy looks at him and says, “Young man, you’re wasting your time. You can’t save them all,” and he answers, “But I can save this one.” We can only play a small part by what we do. We cannot change the world by ourselves, but we can bring about change if we do what we can at home. We cannot reduce the world’s emissions by our own efforts, but we can reduce the emissions in our reach and encourage other nations across the world to do the same.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Energy and Climate Change) 3:25, 26 February 2020

It is pleasure to serve under your chairmanship, Mr Pritchard. Like everyone else, I congratulate Philip Dunne on bringing forward the debate. I also congratulate him on his new role. He is clearly passionate about the environment. I wish him well in holding the Government to account, which I am sure is more fun than being an actual Minister. It was interesting that he started with five green pledges for Lent. Similar to the saying about puppies, those pledges could be for life and not just Lent. We can reflect on that.

The right hon. Gentleman set the scene very well, including the scale of the issue that faces us in achieving net zero for domestic buildings, and fact that the decline in emissions has stalled in recent years. It certainly struck home to me that about 20 million of 29 million homes have an EPC rating, and of those more are rated D than A, B and C combined, although I suggest that those figures are not reflected across the UK. I will give some statistics later.

I agree completely about the need to decarbonise our heating system. The bigger picture there goes hand in hand with the need for the UK Government to invest in carbon capture and storage and hydrogen production, with projects such as the Acorn project up in Peterhead. The right hon. Gentleman rightly highlighted the big challenge of rural off-gas-grid homes. That is a big challenge for the Government and I, too, look forward to hearing the Minister’s response on that and on the issues about the renewable heat incentive coming to an end. Looking at the bigger picture, that ties in with the loss of the feed-in tariffs for solar. There is now a 20% VAT uplift in solar. All those measures are prohibiting energy efficiency measures that would reduce energy demand and therefore the carbon emissions from homes.

There was a good statistic about the fact that if we achieve the EPC band C overall, that would be the equivalent of the removal of six Hinkley Point C power stations. We should bear in mind that the Hinkley Point C capital cost alone is about £22 billion. That shows how much money could be saved with direct Government investment to bring the entire housing stock up to spec. In the long run it provide value for money. The right hon. Gentleman highlighted the critical issue with the EPC regime, and favouring lower costs over carbon emissions. Jim Shannon touched on that as well, so it is clearly something that needs to be resolved. It would be good to hear what the Minister says on that and the five recommendations that were made.

Jamie Stone spoke about lighting fires, which took me back to my childhood when we had coal fires in the house and there would be ice on the inside of the single-pane windows when I got up. There is one blessing: things have moved on in the last 30 to 40 years. We also heard from John Howell on the big issue of cancelling the zero-carbon homes initiative and the fact that retrofitting will cost five times the original capital outlay. That again shows that changing decisions costs more money in the long run. The Government should look at the bigger picture. Of course, no debate would be complete without the hon. Member for Strangford giving us the Northern Ireland view within the UK context. He made some critical points.

It really is a no-brainer that greater energy efficiency measures can only assist in reducing carbon emissions at the point of use, as well as generation demand, further reducing overall carbon emissions. Energy efficiency can help to reduce fuel poverty and can be part of the green industrial revolution, creating additional jobs in various insulation techniques. Obviously, it is needed to get to our net zero target by 2050, so I must ask why the UK Government are not doing more in that field.

One simple positive measure that the UK Government could pursue is removing the 20% tax threshold on energy efficiency home improvements. Independent research by the Federation of Master Builders demonstrates that cutting VAT on energy efficiency improvements will not only improve the housing stock and generate thousands of jobs but significantly boost the UK economy by bringing empty properties back into use and reducing the incidence of fuel poverty. I suspect that it is too much to hope for that measure to be included in next month’s Budget, but the Minister should be talking about it with Treasury colleagues.

Others Members touched, implicitly or directly, on the fact that direct Government investment in energy efficiency is crucial. The UK Government need to follow the lead of the Scottish Government. Now, I would say that, but organisations in the sector say it as well. The energy companies say it, as do many third sector organisations. The BEIS Committee said it in its 2019 report, “Energy efficiency: building towards net zero”, as did the Committee on Climate Change in its 2019 progress report to Parliament, titled “Reducing UK Emissions”. The BEIS Committee report stated:

“We note that Scotland’s investment of four times more than England cannot be explained by a less efficient dwelling stock: the latest housing survey data demonstrates that homes in Scotland actually have greater insulation levels than in England. For example, in 2017, 49 per cent of homes in England had insulated walls, compared to 60 per cent of homes in Scotland… Scotland has made much faster progress in improving the energy efficiency of its fuel poor homes than England, where in some bands, progress has stalled.”

It was good to hear the hon. Member for Caithness, Sutherland and Easter Ross acknowledge the work of the Scottish Government on that.

Statistics show Scotland’s relative success: 44% of Scottish homes were rated as EPC band C or better in 2018, compared with just 34% in England, and only 20% in Wales. In Scotland, the proportion of properties in the lowest EPC bands of E, F and G has more than halved since 2010, going from 27% to 12%. In England the figure is higher, at 16%, and in Wales it is 20%—although the Scottish figure is measured slightly differently. It is therefore little wonder that the BEIS Committee concluded:

“The Government appears indifferent towards how public per capita spend in household energy efficiency in England compares to other parts of the UK” and

“the governments of the devolved nations treat energy efficiency as a much higher priority than the UK Government.”

The Committee’s description of the UK Government as “indifferent” is particularly damning. I would like to hear what the Minister has to say about that, and how the Government will address it going forward.

The Committee on Climate Change confirmed that policies are not currently in place to deliver the UK Government’s ambition to improve all homes to at least EPC band C. The CCC stated that regulations for the private rented sector prioritise costs for landlords over the costs for tenants to operate their heating systems, and that minimum standards for social housing are required. It then observed that the Scottish Government, by contrast, are demonstrating how an effective policy package for energy efficiency improvements in buildings might be delivered by setting out a comprehensive framework of standards, backed by legislation. That legislation includes private rented sector regulations, phased to set a date for when new tenancies have to comply, and a backstop date for all private rented properties. The Scottish Government also set a higher cost that landlords in the private sector might have to shoulder. There are proposals for all owner-occupiers to be required to meet EPC band C by 2040, with incentives to try to do it by 2030. In the social rented sector, the revised standard published in June 2019 requires all social housing to meet EPC band B by the end of 2032, and sets a minimum floor of EPC band D from 2025, below which no social house can be re-let.

It is time for the UK Government to follow suit and put in place a proper framework covering the private rented sector, social housing minimum standards and owner-occupiers, as the Scottish Government have. The Scottish Government backed those measures up by spending from 2009 to 2021 what is predicted to be more than £1 billion, and £145 million this year. If the Government invest in a long-term energy efficiency investment programme, it will create jobs, allow the programme to be delivered at best value, avoiding spikes in cost, and be part of the green industrial revolution.

Some 27 million homes need their heating systems decarbonised, so it is crucial that they are as energy efficient as possible. The Government have one live scheme for home insulation measures: the energy company obligation scheme. Yet the Committee on Fuel Poverty states that those measures do not target the right people, so that needs to be reviewed as well.

Another spin-off of energy efficiency measures can be the regeneration of social housing stock. We tend to think of energy efficiency measures as internal insulation, but they include external cladding. When external cladding is installed and re-rendered it can transform the appearance of housing schemes—I have seen that first hand in my local authority, where I was formerly a councillor.

The BEIS Committee also said in its report that the UK Government must not only match Scottish levels of funding but create a joined-up strategy, and that the

“weight of stakeholder evidence suggests that Scotland designating energy efficiency as a national infrastructure priority has helped to improve its policy impact, making energy efficiency policy better designed and funded, longer-term, as well as more comprehensively governed and targeted, than in England.”

Hopefully the Minister will acknowledge that, and step up to the plate by following suit.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Department for Business, Energy and Industrial Strategy) (Industrial Strategy) 3:36, 26 February 2020

It is a pleasure to serve under your chairmanship, Mr Pritchard. I congratulate Philip Dunne not only on securing this important debate, but on his excellent and comprehensive opening remarks, which set the scene very well. I also congratulate all other Members on their contributions, because the tone of the debate has rightly been very constructive—no pun intended.

Climate change is the biggest challenge facing us all, and as politicians we must rise to that challenge. I was reminded of that a couple of weeks ago, when speaking at Newcastle’s youth climate strike. The concern of the young speakers about the climate emergency was matched only by their lack of confidence in politicians’ ability to address it. I think, and hope, that we can prove that we have the ability to make real change and achieve net zero in time to save the planet. Today’s debate has touched on several issues that contribute to that objective, associated with energy efficiency.

Insulating our homes to a high standard is essential to tackling the climate emergency, and will ensure that we tackle the fuel poverty crisis in our country—a national scandal, with 10,000 people tragically having died last year because their homes were too cold. At the last election Labour put forward proposals to deliver warm homes for all, with the largest upgrade of UK housing since post-war reconstruction. That upgrade would have cut more than £400 off the average bill, thereby eradicating the vast majority of fuel poverty; reduced childhood asthma by more than half a million cases; and cut the UK’s emissions by 10%. The programme would have created 250,000 skilled construction jobs through the 2020s. Through a climate apprenticeship programme, the training and skills needed to access those jobs would have been available to all.

Labour will not have the opportunity to deliver those policies in this Parliament, but I urge cross-party co-operation on meeting our energy objectives. If we are serious about tackling climate change and fuel poverty, nothing less than a nationwide, large-scale programme will do. I was impressed by the suggestions made by Jamie Stone on how to achieve such a large-scale building programme, and the incentives in his constituency to succeed in it.

Unfortunately, since the election, details about how the Government will achieve their targets for increasing the energy efficiency of homes, schools, businesses and public buildings have been somewhat scant. I agree absolutely with Alan Brown that the measures in the clean growth strategy are not enough to ensure that we meet carbon emissions targets and move towards a carbon-neutral society.

Unfortunately, the Government’s pledge to invest £9.2 billion in improving the energy efficiency of homes, schools and hospitals does not go far enough. There is no real ambition about ensuring that homes are insulated. Plans introduced in 2018 to insulate 17,000 solid-wall homes are noble, but at that rate it would take 400 years to insulate all 4 million such homes in the UK. In its recent report, “Engineering priorities for delivering net-zero”, the Institution of Engineering and Technology—I declare an interest as a fellow of that institution—set out some of the challenges and emphasised that 80% of the homes we will be living in by 2050 have already been built, as Jim Shannon stated.

Current proposals to ensure carbon neutrality in new build homes through the future homes standard do not go far enough. They would eventually come into force in 2025, nine years later than previous plans were set to be implemented before they were scrapped in 2015. John Howell did well to emphasise the importance of building regulations and the retrograde nature of that measure.

MawsonKerr, an architecture firm in my constituency, raised with me a number of concerns that were also expressed by the London Energy Transformation Initiative, a voluntary network of more than 1,000 built environment professionals, including engineers and architects. It stated:

“The proposals will allow new homes to be built to lower energy efficiency standards than homes built today. This is a depressing step backwards rather than the huge leap forwards we need to take in the face of the climate emergency.”

Among other things, it criticises the fact that the future homes standard takes away local authorities’ powers to demand greater energy efficiency; that it targets not zero-carbon emissions but a reduction in carbon emissions, compared with the current part L of the building standards; that it does not prioritise energy efficiency but relies instead on bolt-on technologies to reduce emissions; that it fails to address fuel poverty or occupant health; that it makes no requirement for post-occupancy monitoring; and, as the hon. Member for Strangford mentioned, that it does not consider embodied carbon—the carbon emissions related to building the house.

The Government’s own Committee on Climate Change has said that the proposals do not go far enough to protect against overheating, flooding and water shortages. We have been reminded very effectively in the past few weeks of the importance of protecting against flooding.

We must be ambitious when it comes to any aspect of reducing our energy consumption. With the UK set to host COP 26 in Glasgow later this year, we have a chance not only to be ambitious for our own country, but to be an example of ambitious climate policy around the world. We need to look at how we can begin to move towards making buildings more energy efficient. As we heard, buildings account for 37% of UK carbon emissions. Ensuring that homes, the largest contributor to that figure, operate at their peak must be a priority. Ensuring that proper insulation is installed in all homes—particularly the homes of those with low incomes—would have many beneficial consequences. Not only does installing insulation increase the overall energy efficiency of homes and reduce their carbon output, but it reduces the pressures of high energy bills.

A report by Verco and Cambridge Econometrics found that bringing all low-income households up to high energy efficiency standards would not only tackle fuel poverty but generate a return of £3.20 for every £1 invested by the Government, improve relative GDP by 0.6% by 2030, and increase employment by up to 108,000 jobs a year between 2020 and 2030. Those are the concrete advantages of such a policy.

Another way to achieve greater energy efficiency is to bring all homes in the UK up to EPC band C. As we heard, to achieve that we need to look at upgrading millions of owner-occupied homes to make them more energy efficient. In addition, landlords should not be able to let out properties that are below acceptable energy efficiency levels. The remedy for that is enforcement at local level, but those standards have proven difficult to enforce given the strain on local authority resources.

Policies should be in place to ensure that landlords are given the assistance they require, above a certain threshold, to increase the energy efficiency of their property to the new standard. At present, the amount a landlord should spend on uplifting to band E is £2,500. If that were increased to £5,000, and a complementary system of grants were introduced to further uplift a property’s banding, the number of highly energy efficient properties in the rental market would increase. We must also normalise the idea that landlords should not be permitted to let properties that do not meet minimum energy efficiency requirements, and give local authorities the powers and funding necessary to follow up on that.

In conclusion, I have five questions for the Minister. Will he bring forward measures that focus on energy efficiency, which is vital not only to tackle the climate emergency but to reduce fuel poverty? Will he put in place a well-funded and ambitious plan to insulate existing solid-wall housing? Will he increase the amount available to landlords to spend on uplifting properties to band E? Will he put in place measures to improve energy efficiency in rented properties and new build properties? Will he give local authorities the power and resources to achieve more ambitious climate targets?

We face a climate emergency. This Parliament was the first to pass a motion declaring a climate emergency. We need action by the Government to ensure that we meet the challenge of that emergency.

Photo of Kwasi Kwarteng Kwasi Kwarteng The Minister of State, Department for Business, Energy and Industrial Strategy 3:47, 26 February 2020

It is a pleasure to take part in this debate under your chairmanship, Mr Pritchard. I thank my right hon. Friend Philip Dunne for bringing forward this important and timely debate, and congratulate him on his election as Chair of the Environmental Audit Committee. My first outing in this role was in front of his Committee—under a different Chair, who sadly was not re-elected. However, I am pleased to see that my right hon. Friend has taken her place.

I have taken part in a number of debates about these issues. This one covered many policy areas, including power generation, which is not really what the debate is about, but I will start with my right hon. Friend’s specific points about heat and the energy efficiency of homes. He presented five challenges, and I will address each individually.

First, my right hon. Friend mentioned zero-carbon heating beyond the RHI. We are absolutely committed to seeing how we can support the renewable heat incentive beyond the date on which it expires. He also mentioned the future homes standard. My hon. Friend John Howell raised the fact that the zero-carbon homes target was scrapped. The Government feel that the future homes initiative is much more realistic and better in terms of reducing carbon emissions in houses than the initial zero-carbon scheme. That scheme allowed for offsetting, whereas the future homes standard will concentrate on lowering absolutely levels of emissions. I think that is a much better way of approaching the problem, but I am happy to discuss that with him later.

The third item mentioned by my right hon. Friend is really key to the debate: incentives for householders to contribute in some way to upgrading the energy efficiency of their homes. When we look at the totality of buildings in the UK in terms of their carbon emissions, the vast majority—about two thirds—are owner-occupied homes: those inhabited by people who have either paid off a mortgage or currently have one. It is a big challenge to raise the energy efficiency of those homes. Drawing on his professional background, he spoke about the ability to have consumer finance and incentivise people to make such large investments. On that note, the Government have already started: we have a £5 million green finance initiative, working with banks to provide finance for precisely the reasons he mentioned.

Photo of Alan Brown Alan Brown Shadow SNP Spokesperson (Energy and Climate Change)

Surely the £5 billion of green finance is a bigger package that will not be going to individual householders. If it was, it would be like the green deal scheme, which the Government had to terminate because it was not working right.

Photo of Kwasi Kwarteng Kwasi Kwarteng The Minister of State, Department for Business, Energy and Industrial Strategy

It is an initial step. In Germany, KfW has a consumer finance piece that gives small loans for green initiatives. We had a green deal; my personal view and, I think, the Government view is that it did not work principally because the interest rate was too high. However, that does not discredit such initiatives.

I was struck that Chi Onwurah mentioned the Labour party manifesto and its commitments on houses. It was extraordinary but unsurprising that although she mentioned all the jobs that would be produced and carbon emissions, she did not say how much the policy would cost. That is a critical part of the debate. As my right hon. Friend suggested, a huge amount—in the order of £65 billion—needs to be invested in the next 10 years. That will not all come from the Government; some will come from consumers, who will rightly invest in making their homes more secure. Investments in those houses are not lost money; they will enhance property values, so they make commercial sense in many ways.

[Mr Virendra Sharma in the Chair]

The fifth specific point mentioned by my right hon. Friend was the EPC scheme. It is not a perfect measure, but it does capture something about what we are trying to do. It has an indicative value in forcing up the standards we expect not only of the Government but of private sector landlords, as was mentioned in the debate. In that space, I can announce that we are already consulting on tightening standards in the private rental sector. We aspire for private landlords not to get properties to EPC band E but to make investments to improve their properties to band B or C by 2030. That is a significant improvement and a step in the right direction.

The debate has shown that we still have a big task. Alan Brown highlighted the achievements of the Scottish Government, but he will appreciate that of the 27 million homes in the UK, 24.2 million are outside Scotland, in England, Wales and Northern Ireland. While I appreciate the successes of the Scottish Government, we cannot see it simply as a competition. In fact, colleagues of his in the devolved Administration are always telling me, “We have got to work together and co-operate.” They want negotiations, discussions and policy evolution in partnership with the Government in Westminster. That is a welcome development. I have meetings and calls with Ministers in the devolved Administrations and I have just spoken on calls to Diane Dodds and Edwin Poots, the newly appointed Ministers in Northern Ireland. This cross-UK approach is the best method.

There are so many other issues we could talk about. We clearly need joined-up policy in this area. We cannot improve the energy performance of our buildings without engaging with our friends at the Ministry of Housing, Communities and Local Government. I was struck that that Department, which has responsibility for the performance of local authorities, was barely mentioned, which led me to believe that BEIS has the sole answers to all these questions. I wish that were true, but we do have to participate and engage with colleagues across Government in Treasury and MHCLG.

Photo of Chi Onwurah Chi Onwurah Shadow Minister (Department for Business, Energy and Industrial Strategy) (Industrial Strategy)

I thank the Minister for giving way and for rightly challenging me on the costs of the proposals I cited from the Labour manifesto. Our manifesto was fully costed, and the cost was £60 billion. As we said, we have the lowest interest rates in history. Will he tell me the cost of the thousands who currently die from fuel poverty? What is the cost to the economy of not meeting the challenges of the climate emergency?

Photo of Kwasi Kwarteng Kwasi Kwarteng The Minister of State, Department for Business, Energy and Industrial Strategy

I fully accept that we have to deal with fuel poverty in this country. We do have the policies—

Photo of Kwasi Kwarteng Kwasi Kwarteng The Minister of State, Department for Business, Energy and Industrial Strategy

If she will not barrack me, I can say that we do have policies addressing fuel poverty. We have the energy company obligation, which we are completely committed to, and we committed billions of pounds in our manifesto to address fuel poverty specifically.

Photo of Kwasi Kwarteng Kwasi Kwarteng The Minister of State, Department for Business, Energy and Industrial Strategy

I have two minutes in which to wrap up and allow my right hon. Friend the Member for Ludlow time to conclude the debate, so, with due courtesy and respect, please allow me to finish my remarks.

I am pleased that we had the debate and I am sure we will have more of them. This will probably make too much work for me and my officials, but I suggest we could debate specific issues raised this afternoon such as EPC standards, widening consumer finance and publicly owned building strategy—there are so many issues. Salix, the finance company focused on providing funding to upgrade public buildings, was not mentioned in the debate. There are many different avenues and I am sure that hon. Members in the Chamber will come to subsequent debates to discuss them more fully.

Photo of Philip Dunne Philip Dunne Chair, Environmental Audit Committee, Chair, Environmental Audit Committee 3:58, 26 February 2020

Welcome to your place to conclude the debate, Mr Sharma. I thank hon. Members who made contributions—when we started, I was not sure whether there would be any. I was delighted that we had thoughtful comments from my hon. Friend John Howell and from the hon. Members for Strangford (Jim Shannon) and for Caithness, Sutherland and Easter Ross (Jamie Stone), who personalised his contribution with images of windows iced-up inside as well as outside all over his constituency. I am grateful to the Opposition spokesperson, Chi Onwurah, for the constructive way in which the Opposition approached the debate. This is a cross-party issue on which there is broad consensus—not necessarily on the detail, however, as one would expect, particularly having just come through a general election campaign—and it will continue to reverberate around the House during this Parliament.

I welcome the Minister’s invitation to colleagues to continue with these themes in the coming months. I was particularly pleased to hear his commitment to extend RHI in some form and his comments on the future homes standard. We will look carefully at the Government’s response. I share his view that, with innovation in the City of London and other financial institutions in this country, we should be able to come up with a green finance scheme to help householders fund improvements.

The one area on which I would like to press the Minister on another occasion is the EPC regime, which needs to be looked at. I was slightly disappointed that he did not volunteer that. I hope that we can take another opportunity to discuss that, perhaps outside the Chamber.

Motion lapsed (Standing Order No.10(6)).