Energy Efficiency and Microgeneration Bill [HL]

My Lords, we have had an interesting and enjoyable debate. I am sure that the noble Lord, Lord Redesdale, will have some of the answers to many of the questions raised. I shall do my best to answer them from the Government's point of view. It has been a heroic debate, not least because the noble Lord is struggling with a sore throat. I hope that he is feeling better because of the warmth of support that he has received from around the House. We have also had a diversion into domestic arrangements. I can join the debate on new kitchens: I have just finished one. I have no idea when I can look forward to payback; in fact, I have almost given up already on any return. This is a very serious debate. I commend the noble Lord for his ingenuity and imagination, as well as his commitment to raising, and enabling us to address, such important issues. Noble Lords have already anticipated much of my reply. Although we are extremely sympathetic to the intention of the Bill, as many noble Lords have pointed out, I am going to say that the Government are doing much of what is in it; indeed, we are going further. I am especially glad to have the company of my noble friend Lord Whitty, with his long history not least in the development of the home improvement packs. He is now taking his expertise into other areas. We are well aware that the improvement of energy efficiency in housing stock is a fundamental battle against climate change. I understand that 27 per cent of carbon emissions come from homes, which account for a significant amount of the roughly half—47 per cent—of carbon emissions overall that come from buildings in general. We are right to want to draw those figures to the attention of every householder. We have had the beginnings of a very interesting debate about the nature of the public response at present and the aspiration that individuals are showing to take the matter into their own hands and do what they can, even in sometimes unglamorous ways, to address the problem. We are as one in recognising that microgeneration equipment has a crucial role to play in enabling us to do that and to reduce carbon emissions. I shall describe how much of the Bill is covered by anticipated changes in regulation and so on and by our work across the whole field of microgeneration in response to climate change. I am sorry to say that we do not believe that primary legislation is required at present. I shall also say a few words, although I am very grateful for the noble Lord’s restraint, about home information packs. I quite appreciate the division that exists between us in the House. We believe that home information packs will make a significant contribution to making the buying and selling of homes more rational, transparent, better informed and more effective for consumers, but this is an opportunity to bring noble Lords up to date before I address the Bill. I am very grateful for noble Lords’ support for home improvement packs, particularly for energy performance certificates, which are a crucial part. Last month, we published a home information packs update that outlined our plans for finalising the introduction. I assure the noble Lord, Lord Redesdale, that, despite continuing criticism—much of which is from people who have never been sympathetic to what we are trying to do—we will definitely introduce home information packs on 1 June and will lay regulations next month. That is part of the process. Last month’s update reflects our commitment to react to information coming in from the area trials and provides information on areas of policy that have been adjusted in response to such information. In particular, we propose changing the policy on the timing of the provision of searches and leasehold documents because they have proved to be sticking points in some areas during the trials. So we are responding to concerns. We now require that searches and leasehold documents are commissioned before the property goes on the market, which will eliminate the problem of preventing homes from being marketed quickly, while still reducing delays in the current system when these documents are not requested until after an offer has been accepted. In addition, we have also proposed making the provision of energy performance information in the packs more robust, which I will come to when I address the provisions in the Bill. In November, the first phase of the area trials got under way in six regions and we have adjusted our policy in response to that. In the past couple of weeks, those trials have moved to two new areas in London and north-west Wales. As we have made clear, these trials will also be subject to independent scrutiny, and we look forward to examining the results of that research as the roll-out of HIPs moves on. We also published the baseline research last month, which supports our view that the measures, when implemented, will improve the home-buying system in the way that I have described. The noble Lord, Lord Redesdale, mentioned curtilage, which I will come to when I talk about Clause 4. All noble Lords picked up on Clauses 1 and 2. This legislation would require that home information packs should include prominent information about the energy rating of the property. The noble Lord and I agree entirely about its importance. Of course, it will become increasingly important, which is why from 1 June all sellers will have to have an up-to-date energy performance certificate in their HIP before they put the property on the market. As the noble Lord, Lord Taylor of Holbeach, said, this is a requirement of the European energy performance of buildings directive and is a very important first step in the implementation of the directive. As we move towards January 2009 we will extend those duties to provide EPCs to include sale and rental of commercial buildings, and the rental of domestic properties. They will also be required on construction of all buildings. Public buildings and large buildings with public access will be required to display certificates that indicate how well the building is performing year on year. Not only will we provide what the noble Lord is asking for, but we will go further. Perhaps I may explain why. The noble Lord’s Bill would require that energy ratings appear prominently in HIPs; but under our regulations not only the rating but also a full energy performance certificate, including important recommendations about how to improve the energy efficiency of the property, will be included. As we finalise what these might look like, I would be very happy to share that with noble Lords. In response to the noble Lord’s query, of course my officials would be delighted to meet him to talk about the issues that he has raised on the Bill. The EPC will be prominent in the pack because it will be the first document and will be extremely visible; therefore, buyers are bound to be aware of the information contained. It will enable sellers to improve energy efficiency, and they would be advised about how that might be achieved. We all know how new owners set about altering properties after they move in, and this extremely important and useful document will inform them how they can make energy efficiency improvements. It will also enable owners to save money on their fuel bills, a point raised by my noble friend Lord Whitty. Several noble Lords addressed the issue of rising costs, and the Energy Saving Trust (EST) has shown that the average property owner will be able to save about £300 a year on energy bills if they follow the low-cost recommendations on their energy performance certificates. Anything that influences people to make positive decisions and choices is important. As my noble friend Lord Whitty said, price will do that. So that is all very good news about how we are facing up to the challenge of reducing carbon footprints. We are going with the grain of what people want. An independent survey of customers suggests that 75 per cent think that the EPC is a good idea. So, again, the proposal is extremely well intentioned but there is no need for primary legislation. On Clause 2, how will we ensure that the documentation produced is included in marketing the property? Again, we are in full agreement on this. It is important that this should apply not only to houses but to the contents of houses; we need to know where energy is being used, whether by fridges, cars or houses. This level of awareness is crucial as we attend to the pressures and speed of climate change. This is why in the HIPs update, to which I referred earlier, we have proposed that the details of the energy performance certificate should be attached to written particulars by estate agents. I am sure noble Lords will agree that, if we do this, we will have to make it practical and proportionate as well as informative. That is why we are consulting on the proposal, and the final decisions will be based on the results of consultation on the HIPs update. We are looking at ways to make the information as visible and accessible to consumers as possible while being consistent with the principles of energy efficiency. We do not want to end up printing reams of paper. It is an iterative process and how we deliver it through estate agents’ advertising material will be informed by the views of the industry. The noble Lord, Lord Taylor of Holbeach, asked about the number of inspectors. We are confident that there will be sufficient home inspectors and domestic energy assessors to meet the requirements of the market. Our constant discussions with stakeholders suggest that there is very high interest, particularly in the DEA qualification. Two awarding bodies have already had their DEA qualifications approved and another is close to receiving approval. We are demonstrating what we expect in a series of road shows and, as EPCs are extended to buildings for rent and sale and to all buildings, there will be an increase in demand. We estimate that there will be a need for between 1,600 and 4,300 inspectors for mandatory EPCs and voluntary HCRs for HIPs. At the moment we have 290 qualified home inspectors who can produce both and a further 1,100 still in training who have already completed enough of their course to be able to qualify by 1 June. Details of the DEA qualification can be found on the websites of the awarding bodies. Perhaps it will be useful if I write to the noble Lord with the information that he requested. Clause 3 is very important in relation to council tax. We are entirely at one with the suggestion that there should not be any disincentives to people from improving the energy efficiency of their home. We endorse that wholeheartedly. It again provides an opportunity to refer to the HIPs update document, which repeats the Government’s support for locally run incentive schemes such as the one piloted in Brentford, which encourages home owners to improve the energy performance of their houses. We expect the EPCs to encourage home owners and home buyers to improve their domestic energy performance. I want to make it clear to all noble Lords who have raised the issue that home owners installing energy-efficiency equipment will not see their council tax bills rise as a result. First, any change or improvements to a property that increase its value cannot result in a higher council tax band until the property is sold or any future evaluation of properties takes place, but even then the width of the banding system, which is very generous, means that only an improvement that significantly increases the value of a property is likely to push it into a higher band. It is therefore very unlikely that installing microgeneration equipment or energy-efficiency measures will affect the banding of the building, so we do not see that there will be much scope for these perverse effects. On the question asked by the noble Lord, Lord Taylor, about the non-domestic rates, the Valuation Office Agency similarly advised that installing microgeneration equipment might lead to no change, or a negligible one, in a business property’s rateable value, and hence the rates bill. Obviously the valuation officer would reassess the rateable value of the property at the time the equipment was installed and measure the effect on the rental value, but that is the best evidence we have had from the VOA. We have to remember, with regard to some of the other questions the noble Lord raised about the nature of the technology, that this is new technology. There is at present no evidence available to the Valuation Office Agency regarding, for example, the development of a two-tier market for commercial buildings with or without microgeneration equipment in the way that there is for buildings with or without heating. Again, we will have to wait and see and use our best intelligence to gauge how that might operate. I shall pick up some of the other questions on Clause 4 and the whole business of planning and microgeneration, an issue close to the heart of government policy. This might be the point at which I should address one more question from the noble Lord, Lord Taylor, on the business of the Government giving a lead on microgeneration in terms of its own stock. He is right that in June 2006, following the microgeneration survey, the Government set an aspirational target to reduce carbon emissions from central government buildings by 30 per cent by 2020. In fact, we have committed to making the central government estate carbon neutral by 2012, so we will be working with that challenging target in mind. I return to Clause 4. Our planning system does and should help to shape places with lower carbon emissions, places that are resilient to climate change. Our ability to respond to those challenges—the way we live and where we live—will pose new challenges to the planning system. That ability to respond properly will be at the heart of what we expect from good planning. Again, we have anticipated much of what the noble Lord wants. However, the microgeneration strategy in March 2006 identified that the installation of microgeneration equipment is currently constrained by uncertainty over its planning status, inconsistent treatment by local planning authorities and the costs and time involved in obtaining planning permission. We said in that strategy that we are committed to reviewing whether we should do anything further to facilitate the installation of microgeneration through the planning system, particularly through local plans and for householders. We followed that up on the two relevant fronts; first, through planning policy itself, and secondly through committed development rights. We issued a Ministerial Statement in 2004 that built on the existing planning policy statement on renewable energy, PPS 22, issued in 2004, which noble Lords will know is the core of our planning arrangements in terms of building renewable energies into our planning policies at spatial and local level. We have launched a public consultation on a new draft planning policy statement on climate change. We have carried out a review of permitted development rights for householders. I want to say a little bit about the chronology of what we have done in those two respects. We in the DCLG have worked closely with the DTI, and we continue to do so. The basis for our approach in the report, set out in PPS 22, has made it clear that planning bodies are expected to identify in their broad areas where developments of particular types of renewable energy may be considered appropriate. Areas in agricultural use will be considered as part of that process. On 8 June 2006 Yvette Cooper issued a Written Ministerial Statement, sent to every planning authority in England, reminding them of that guidance, urging them to take advantage of it and making clear that all planning authorities are now expected to include policies in their development plans which require a percentage of the energy for new developments to come from onsite renewables, where that is viable. That is an extremely important tool. Just before Christmas, we issued the draft planning policy statement on planning and climate change, which is currently the subject of consultation. That complements PPS22 and the statement, and makes it unequivocally clear that planning is a positive force for change. It includes strong expectations at regional and local level that low-carbon technologies must be properly planned for. Finally, and most important, we have been reviewing whether permitted development rights should be extended to domestic microgeneration equipment in accordance with Clause 10 of the Climate Change and Sustainable Energy Act 2006, to which the noble Lord, Lord Taylor, referred. We are aware of the size of the challenge and want to see as much innovation as possible. Following our review, we have been working out proposals for extending permitted development rights for householders to install certified categories of equipment without the need for planning permission. Given what noble Lords have said about their valiant efforts, it seems that everyone who has spoken is living in a particularly windy part of the country. We will shortly be issuing public consultations on those proposals and will look forward to your Lordships’ responses. That is the context in which we are considering the Bill. On the implications of this clause, I should like to mention the further action recommended by Kate Barker in her recent review of land-use planning, published in December 2006. She proposed that, to help to combat climate change, permitted development rights for the installation of microgeneration equipment should be further extended to other uses beside domestic. She specifically mentioned commercial uses, and we will want to consider the scope for including agriculture in our response to this proposal. We will make our intentions clear when we bring forward our planning reform White Paper. Encouraging the take-up of microgeneration through a clearer planning framework will help us to meet a significant proportion of our future energy needs. When we talk about extending permitted development rights, whether domestic or otherwise, we must not disregard our responsibility to protect neighbours, the wider community and the environment from adverse effects such as noise vibration. We must have a serious regard for that. Therefore, our proposals will be based on careful assessment of impacts. Any extension of permitted development that we consider will also use that approach and be subject to full consultation. On the specific point of curtilage, I agree that there is potential for agricultural land near to housing to meet domestic needs. We are seeing more of this but it generally requires planning permission. It is quite difficult in some areas to install even small turbines on agricultural land without planning permission. We would be happy to discuss this further with noble Lords. The noble Lord, Lord Taylor, asked about the low carbon buildings programme. Together with the £45 million committed under the previous clear skies and solar PV major demonstration programme, it will give an anticipated £125 million in support of the industry by 2009. I cannot answer the specific question about assessment but I would be happy to write to him about that and about his rather technical questions about the national grid. However, the noble Lord, Lord Redesdale, may have fuller and more detailed responses for him. While we cannot change planning matters overnight, I believe that in the period since 2004 we have moved very swiftly to address these issues and to take advantage of the potential. We intend to do so, as these processes move forward. Clause 5 would oblige mortgage lenders to offer reasonable-rate loans for energy efficiency improvements. This is again very much in the spirit of what we are trying to do, but the noble Lord will have anticipated the reply that I have to give: it must be for lenders to decide on the products they offer to consumers. While we would encourage green products, we cannot force lenders in that way. However, we are supportive of all the initiatives to encourage energy conservation which are being taken by the lending industry. We are working with the industry to find ways of developing them further on the back of EPCs. I hope that the noble Lord feels that, although we cannot go all the way with him, we are certainly on the same journey in many ways. We have overtaken him slightly in some ways, too. It has been an important and interesting debate because it has raised the visibility and the profile of the issue as a whole. From around the House, unique contributions have been made, which show that essentially we are all committed to the same direction of travel. I look forward to the next stages of the Bill.