Home Energy Efficiency: North of England
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The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
It is a pleasure to serve under your chairmanship, Mr Robertson. I congratulate my hon. Friend the Member for Darlington (Peter Gibson) on securing this important debate. As ever, it is excellent to have so much good representation in the north of England from our party.
This Government’s unwavering commitment to decarbonise the country’s 30 million buildings has the welfare of those who most need energy-efficient homes at its very core. Getting to net zero is not just a legal commitment; it is the right policy for this and future generations. Improving the wellbeing and living conditions of northern communities is a key part of the levelling up of all our towns, cities and regions as we build a green Britain that works for every part of the country.
Underpinning all our work in that area is the heat and buildings strategy, a copy of which I have brought to this debate, published at the end of October 2021. It explores different options for low-carbon heating, from hydrogen trials to heat networks and increased use of heat pumps, to meet the challenges of each region of our country, recognising that there can be no one-size-fits-all approach.
At the same time, we are taking a fabric-first approach to retrofit, ensuring that emissions are reduced first, regardless of how buildings are heated. That will be supported through a commitment to invest £6.6 billion during this Parliament, which is funding technology trials and capital schemes such as the home upgrade grant and the boiler upgrade scheme. In the past year alone, we have committed more than £1.3 billion to domestic retrofitting schemes, which was one of the central points raised by my hon. Friend the Member for Darlington and, indeed, other Members.
We have prioritised the worst performing low-income homes to receive measures such as external wall insulation and clean heating systems. That has already lifted thousands of households out of fuel poverty, and future phases of home decarbonisation will upgrade over half a million more. Families who would not be able to afford energy efficiency improvements for themselves will be able to face future winters knowing that they will be warm, sometimes for the first time.
Our local authority delivery scheme and home upgrade grant empower local authorities, which know their communities and housing stock best, to decarbonise local homes according to specific needs. In the north, around £226 million of funding has been allocated to local areas through the latest phases of those schemes. As many Members have said, the north of England has benefited disproportionately from the energy company obligation. Since that scheme started under this Government in 2013, over 13% of homes in the north-west and over 12% of homes in the north-east have received energy efficiency measures. Indeed, 12.2% of households in Darlington have had their homes improved under the energy company obligation, compared with an average of 9% across Great Britain.
My hon. Friend the Member for Darlington, who is vice-chair of two relevant APPGs and knows the engineering heritage of his town so well, made an excellent speech. In researching it, he sat down with local housing providers such as North Star Housing, which quoted some striking sums regarding the costs of retrofitting a home relative to the value of that home. My hon. Friend made some thoughtful arguments about how we should evaluate the cost efficiency of those different measures. He also pointed out that 64% of properties in Darlington are rated below brackets A to C on energy efficiency, which shows that despite the progress we have made on energy efficiency—particularly over the past decade—there is still much work to do. That is why we are investing £6.6 billion over the course of this Parliament.
We had an intervention from the hon. Member for Hampstead and Kilburn (Tulip Siddiq), who is not in her place anymore, to say two things. She attacked the Government’s record on renewables, nuclear and energy efficiency. I found it startling, considering that when the last Labour Government started their period in office, they said that when it came to nuclear, they saw no economic case for new nuclear power stations in this country. That was at the start of their 13 years in office.
On renewables, we have taken the amount of energy generated from renewable sources since 2010 from 7% of the energy mix to 56%. That is an incredible increase in our renewable output as part of our energy mix.
Margaret Greenwood
The Minister is right that my hon. Friend the Member for Hampstead and Kilburn (Tulip Siddiq) is not in her place, but would he not agree, or concede, that it was a Conservative Government that pulled the funding for solar on people’s roofs, stymying an industry and making it much more expensive for people to install solar? Precious years have been lost, and we could have had many more solar panels on our roofs.
Greg Hands
I fundamentally disagree. Solar has done incredibly well in this country. We have a big capacity in solar—I think around 14 GW. Our ambition is to grow that to 70 GW. Part of that is thanks to the VAT reduction that we saw this year. I do not remember the hon. Lady supporting that VAT reduction on solar panels. The Government are taking active measures to increase and support solar energy.
On energy efficiency, when we took office in 2010, just 14% of properties in England were rated “energy efficient”. That has risen to 46%, which in 12 years is an incredible increase. However, that shows that 54% of our properties are still not sufficiently energy efficient, so we still have work to do, but we can only do it by making investment. The last Labour Government said there was no money left. Perhaps if they spent a little more on energy efficiency in those 13 years, we would not have been in a position where only 10% of homes were rated A to C when we took power.
My hon. Friend the Member for Darlington asked when the new energy company obligation scheme will begin. I think the shadow Minister, the hon. Member for Southampton, Test (Dr Whitehead), also raised that same point. A three-month interim delivery phase was introduced between 1 April to 30 June 2022 under the previous scheme rules to enable delivery to continue subject to some measure limitations. Obligated suppliers may choose to deliver under the new scheme rules backdated to April 2022, when the underpinning legislation was put in place. We are pleased to announce that we laid the draft Electricity and Gas (Energy Company Obligation) Order 2022 before Parliament on 22 June. We expect the regulations to be made and come into force in July.
My hon. Friend the Member for Darlington also asked about energy advice. Our simple energy advice service, launched in 2018 in response to the Government-commissioned “Each Home Counts” review, provides homeowners with impartial and tailored advice on how to cut their energy bills and make their homes greener. The service has been accessed by over a million users.
Greg Hands
I will make some progress and respond to the points made in the debate. My hon. Friend the Member for Darlington and the hon. Member for Weaver Vale (Mike Amesbury) raised the really important point of skills. I chair the newly established green jobs delivery group with Michael Lewis, CEO of E.ON UK. In 2021 the Government invested £6 million in a BEIS skills training competition, resulting in 7,000 more training places for heat pumps and insulation. The hon. Member for Weaver Vale also commended an event about skills attended by Andy Burnham and Andy Street. It is good to see constructive cross-party work. I only wish that the Mayor of London would follow such a constructive approach to cross-party work, as the Mayors for Manchester and Birmingham often do.
The hon. Member for Stockport (Navendu Mishra) asked about using legitimate builders, not cowboys. All insulations under Government schemes, including ECO, the social housing decarbonisation fund, the home upgrade grant and the local authority delivery scheme, must be completed by TrustMark-registered businesses, adhering to the latest requisite standards. These requirements are based on the recommendation of the “Each House Counts” review, an independent review of consumer protections and standards.
Greg Hands
If the hon. Gentleman has a specific case in mind, I would urge him to take that up with the local authority trading standards.
In an excellent contribution, my hon. Friend the Member for Sedgefield (Paul Howell) mentioned fuel poverty, which is actually falling in this country. Last year, it accounted for 13.2% of English households and this year it accounts for 12.5%. Obviously, that is not satisfactory, and we need to keep bearing down on fuel poverty, but that situation is improving. I am glad that he welcomed my ministerial colleague, Lord Callanan, to the north-east; he leads the ministerial team on energy efficiency.
My hon. Friends the Members for Sedgefield and for Darlington referred to retrofitting, as did other hon. Members. Our £1.8 million green home finance innovation fund, which completed in March 2022, was a key early step in supporting the lending community to design, develop and pilot green finance products for homeowners. The Government will provide up to a further £20 million to support the development of innovative green finance products and services that will diversify the green finance market and enable both owner-occupiers and private landlords to decarbonise their homes and improve thermal comfort.
My hon. Friend the Member for Sedgefield asked about VAT. We have introduced a zero-rating VAT for the installation of insulation and low-carbon heating for the next five years, which will give real certainty to the market. That will save between £1,000 and £2,000 on the cost of an air-source heat pump. My hon. Friend also raised the private rented sector, and I can tell him that we consulted on raising the standard to EPC band C for new tenancies from 1 April 2025, and for all tenancies by 1 April 2028. We have analysed the responses and we will be publishing a Government response in due course. In the meantime, we will continue to invest in energy efficiency and support homeowners outside such regulations. We also published the White Paper “A fairer private rented sector” on 16 June 2022, which sets out support for those in the private rented sector, including ending so-called “no fault” section 21 evictions, and giving all tenants a strong right of redress.
The hon. Member for Wirral West (Margaret Greenwood) asked whether we will give money to local regions, such as Liverpool City Council, to retrofit. I can tell her that phase 2 of the local authority delivery scheme allocated £300 million to the five local net zero hubs, which will work with their local authorities to continue to deliver energy efficiency upgrades to up to 30,000 homes across England to those most in need. In this Parliament £6.6 million has been spent on energy efficiency, and a great deal of that has been assigned to local authorities via the home upgrade grant, the LAD scheme and the social housing decarbonisation fund. In LAD 2 funding, the regional allocation of £52.8 million is going to the north-west—the hon. Lady’s region.
The hon. Lady also asked about new-build homes being built to passive housing standards to create lower bills. On new build, the Government have announced that the new future homes standard will be introduced from 2025. That work is ongoing, and in the interim an improvement to part of the loft building regulations came into effect on 15 June 2022.
The hon. Member for Weaver Vale asked about training providers and businesses. As I have already said, we have invested £6 million in the BEIS skills training competition, resulting in more than 7,000 training opportunities.
The hon. Member for Southampton, Test lauded the big increase in energy efficiency across the country. I think he argued that the figures are due to the better energy efficiency of new homes. We are not looking at an average figure—the increase from 14% to 46% of the housing stock—rather we are looking at the percentage of the total number of homes that are rated A to C. The fact that a new home will be particularly, staggeringly, energy efficient will only count as one home in the denominator. The key thing is moving homes in the numerator to make sure that more new homes are created energy efficient and that older homes are retrofitted to get them into the A to C bracket.
The hon. Gentleman asked what the Government are doing to support consumer bills. The Government have acted to protect the 8 million most vulnerable British families through a £37 billion package of support to help those households with the cost of living crisis. That includes at least £1,200 of direct payments this year, with additional support for pensioners and those claiming disability benefits. Three quarters of the total support will go to the vulnerable households who need the most help.
Later this year, the social housing decarbonisation fund is due to launch its second wave of funding to 2025, from the £800 million committed in the heat and buildings strategy to install energy efficiency measures in social homes. The first wave of that funding is investing £63 million in retrofitting around 8,000 homes in the north of England.
Improving the wellbeing and living conditions of northern communities is a key element of the levelling-up agenda that we have embedded across all Departments, with the ambition that by 2030 the number of non-decent rented homes will have fallen by 50%, with the biggest improvements in the lowest performing areas. We know there are significant regional variations in emission levels and communities will face different challenges when meeting net zero commitments. The north accounts for around a quarter of the UK’s emissions, so it is well placed to make a huge contribution to UK decarbonisation.
As Government-funded energy efficiency work rolls out in the coming years, there will be a need to scale up the supply chain and build a skilled workforce, which will take time. To meet that long-term challenge, we have provided £4.7 million of funding to test how we can grow the installer supply chain and a further £2.5 billion in a national skills fund, helping to support hundreds of thousands of green jobs.
The north is in a key position at the centre of net zero innovation, growth and opportunities for green jobs. For example, the new Lancashire Energy HQ, part of Blackpool and The Fylde College provides state-of-the-art training for excellence in energy standards; it was good to hear an intervention earlier from my hon. Friend the Member for Blackpool South (Scott Benton). Centres like that may provide job and skill development opportunities for many in communities benefiting from our domestic retrofit programmes. In fact, we expect the decarbonisation of buildings to support up to 240,000 jobs by 2035, resulting in £10 billion additional gross added value by 2035.
In my Department, we know that we need to remove virtually all emissions from buildings to reach net zero. We also know that we have a duty to protect those who are most vulnerable, and to support consumers and businesses as we decarbonise our buildings. I want to ensure that consumers will benefit from higher energy performance in homes and workplaces, from improved health and comfort and from lower emissions and lower bills. I thank my hon. Friend the Member for Darlington for proposing this excellent and well-informed debate.