Energy Efficiency and the Clean Growth Strategy

Debate between Charles Walker and Claire Perry

Thursday 8th March 2018 Westminster Hall

[Claire Perry]

The hon. Gentleman and I debate Acorn and St Fergus frequently. I will double-check the numbers, but my understanding is that the UK Government have put in £1.6 million and the Scottish Government have committed a welcome £100,000. We are absolutely keen to support those projects and we continue to be a major investor in all sorts of levels of carbon capture and storage; I will address CCS and its future in my closing remarks. I will double-check those numbers and write to him, but I am confident that we have already committed several multiples of what the Scottish Government have to that project—and quite rightly.

[Mr Charles Walker (in the Chair)]

We are all looking forward to the Minister’s closing remarks.

--- Later in debate ---

[Claire Perry]

My hon. Friend is absolutely on the money, but I would like to do both. I do not want it to be sequential. I cannot remember which of my hon. Friends talked about energy as a service. I thought it was my hon. Friend the Member for Ochil and South Perthshire, but as I say that, I think it might have been HEEPS—my hon. Friend the Member for Wells. He is never going to live that down.

If someone running a small business is trying to do payroll and deal with potential changes in the regulatory structure for export, are they really going to sit down and think about energy efficiency? They might—I agree with my hon. Friend the Member for Eddisbury that if someone has installed an energy efficiency measure in their home and has seen a material change, they might do that—but they might not. What incentives can we create and what market structures are already there that can help those businesses to focus on their energy efficiency? Many of the challenges in the rented sector that apply in the homes market also apply in an even greater way in the energy market. It is a real challenge that many firms occupy premises where energy is just part of the service bundle they receive, so it is not within their control to install such measures.

We are consulting later this year on a package of measures to help businesses improve how productively they use energy. We are focused on trying to do things that work, and that work locally.

Many Members referenced green mortgages and finding a way to finance such initiatives. There has been some excellent work, such as the “Levering economics for new drivers to energy reduction and sustainability” project. My hon. Friend the Member for Wells talked about being asked about utility bills. Actually, the way the market works now is that, whether someone is in a home rated A or G, they input the same number, which is crazy.

Work is already under way on mortgage lenders who might pick up on the fact that someone could save £700 on their energy bills by having a better energy performance certificate. The green finance taskforce that I set up with the Treasury last year will be reporting shortly. One of its strands of work is how we get green mortgages to be a proper retail offering. Some lenders have taken steps to support energy efficiency improvements. Last November, Barclays launched the first green bond from a UK bank, on the back of the work that the taskforce was doing. That is being used to fund domestic assets, which it plans to use to refinance mortgages for the most energy-efficient properties. That is a testament to the data available and the bank’s desire. It is common sense to reward that sort of behaviour.

I have talked a little about the savings and what we are doing. Now I will mention briefly the most vulnerable households, which have come up often, especially given the recent cold snap. As my hon. Friend the Member for Eddisbury said, it was really cold in many homes. Turning up the heating was an option for many of us, but we might not have realised that others who do so feel extremely worried about what their bills will look like.

I want to reassure colleagues that the warm home discount programme—£140 a household—continues to operate. Winter fuel payments are being paid, and the cold weather payment was triggered by the cold snap. It is absolutely right for the Government to continue to support the most vulnerable and to help them make improvements to their homes. Such people do not necessarily have financial choice. I was therefore pleased that we committed £3.6 billion to ECO. Going forward, that will upgrade more than 1 million homes. We will extend that out to 2028 with funding at least at current ECO levels.

I take the point about the landlord challenge. The problem, frankly, is that 95% of landlords have four properties or fewer—they are us. We asked them to sign up to something that at the time we had underpinned with a green finance offer, but now they are potentially required to raise capital to do it. We have to do things that are fair and proportionate if we want the country to come with us. The measure is still incredibly important. We do not want people living in the least fuel-efficient homes and we are determined to do something about that. In fact, compared with 2010, there are 835,000 fewer homes rated E, F or G in the UK, so we are making progress at the least efficient end of the market.

I hope that I am not trying your patience, Mr Walker, but I have two more quick points to make. The first is on smart meters. I think we are on the cusp of something really exciting with smart meters. We are absolutely in the world’s vanguard by offering every household a smart meter by 2020. I accept the concerns about technology. People say, “Why would I install one of these when I’m going to get a better one?” The point is that if someone installs one now, they get all the benefits immediately of understanding what their energy consumption looks like, and can work out ways to cut their bills. Furthermore, they will automatically be upgraded through the technology that we are putting in place to the next generation, so when they switch suppliers they will not lose any of that functionality. That is a vital step forward.

More needs to be done to work on the consumer proposition. I am desperate to put in a smart meter, but not to take a morning off work to do so. It is really difficult to find the time, which is a problem that many people face. We will be working with industry and the organisation rolling the meters out to see how we can make them more consumer flexible, and how we provide incentives, because plenty of money is being spent on advertising them. We are on the cusp of something very exciting.

I also wanted to mention fundamentally changing the way in which we build and think about homes in the construction process. It is astonishing that the way in which we build homes has not changed much since the 1890s: we build the foundations, and then get the trades in. We can build really high-quality modular homes—homes that are built off-site and installed—in a far more effective and resource-efficient way. We are working closely with the construction sector to see what we can do to turbocharge that.

We can also do retrofits in a modular way. Nottingham City Council and Melius Homes are taking a prefabricated approach to retrofit homes to 2050 standards, and improve their energy performance. A lot of innovation is happening in this area that I am extremely keen to support. That is how we create a new market for what needs to happen, while rightly focusing on building regulations. All colleagues will be aware of the challenge in the post-Grenfell world of ensuring that there are no unintended consequences to what we do with building regulations. We are working very closely with our colleagues in the relevant Department, and have reconstituted the inter-ministerial clean growth group, because so many of these challenges span across Government.

There is a huge amount more to do. We have heard lots of sensible ideas today, many of which are extremely attractive and that we want to take away. All of us want to get the costs and consumption of energy down, reduce carbon emissions, make our homes warmer, and make the transition to low-carbon energy less risky. This is not an either/or question; in order to meet our carbon targets, and to create a housing stock that is fit for the future, we absolutely need to do this. That is why the clean growth strategy is so important, and why the industrial strategy has clean growth as one of its four major pillars: things that we know that we can lead the world in, and that have to be done.

It has been a pleasure in today’s debate, as in so many others in this area, to work with colleagues across the House who are so committed to this agenda, and have so much knowledge and interest in it. It will really help us to accelerate the work going forward, so I thank hon. Members for the opportunity to respond this afternoon.

[Mr Charles Walker (in the Chair)]

I think colleagues were almost heading for the door, but we have up to two minutes for the proposer of this great debate to wind up.