Energy Efficiency

Martin Horwood Excerpts

Wednesday 30th June 2010 Commons Chamber

[Gregory Barker]

That is an excellent subject for an Adjournment debate, but perhaps we have just had it. I entirely accept the hon. Lady’s point, but ultimately the private sector is the best engine of ingenuity and growth, and it is not the role of Government to pick winners such as that company and give them special treatment. However, I agree that there is a role for Government in creating an enabling, encouraging and supportive framework for enterprise. I can assure her that increased cross-cutting work has been taking place across Government, involving colleagues from the Department for Business, Innovation and Skills, the Treasury and the Department for Education, to ensure that the right frameworks and the appropriate support are in place.

I shall now draw the House back to my speech. What needs to change? As a first step, I am announcing today my intention not only to extend CERT, but to refocus it radically. It obliges energy companies to carry out energy-efficiency measures in people’s homes and it has historically involved a range of other things too. CERT will be extended until the end of 2012, but the original scheme has not been without criticism, much of it justified. So CERT will be refocused on those most cost-effective measures that can make a real difference to the energy efficiency of our constituents’ homes, the most obvious being insulation.

Over the new extension period we will require the big energy companies to deliver far more insulation than originally planned, and the new target on lagging lofts alone will be the equivalent to covering Wembley football pitch more than 35,000 times. The new extension of CERT will work in tandem with the roll-out of our pioneering green deal. In order to bring greater focus to the project, I will insist that more than two thirds of this new carbon target must be delivered through approved, professionally installed loft, cavity wall and solid wall insulation. We will act to stamp out the mistakes of the past. We will introduce a complete ban on the subsidy of compact fluorescent lighting, thereby ending the farce of people having cupboards full of light bulbs which save no energy at all. We will go further. We are actively talking to industry about similar restrictions on other low-value gadgets and appliances. There will be no short cuts or get-outs for the big six under this Government.

[Martin Horwood (Cheltenham) (LD)]

I welcome the Minister to his responsibilities. On low-energy light bulbs, he is right to criticise aspects of the CERT scheme, but one promising new development was the inclusion of the replacement of halogen lights, which are extremely energy-inefficient, with new, more efficient forms of technology. I declare an interest, because two companies in my constituency promote alternatives to halogen lighting.

[Gregory Barker]

The hon. Gentleman is right to say that some very exciting developments are taking place in lighting, not the least of which will be light-emitting diode—LED—technology in the longer term. However, we must be brutal and realistic in the use of CERT; we must opt for the most effective, most value-for-money carbon abatement schemes. That means opting for loft insulation, because any exercise that one chooses to undertake shows that key insulation delivered to our constituents’ homes offers the best value for money and the best use in terms of carbon abatement. We have to be far more focused on that. I checked how many light bulbs had been distributed as a result of the previous CERT scheme and I found that the answer was a phenomenal number. This begs the old question of how many light bulbs it takes to change a Labour Government—the answer turned out to be 262 million.

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[Joan Ruddock]

I am so sorry. I was going to—I do—welcome the hon. Lady to the House, but her intervention is not welcome. We more than doubled—hon. Members know better than to laugh at this—our Kyoto commitment. At the last count, when I was in my place, we had seen a 21% reduction in CO₂ emissions over 1990 levels, and we were very much on target to achieve what we had set out. We introduced groundbreaking legislation that constrained us, with carbon budgets year on year—three budgets already in place and programmes that could enable us to meet those budgets.

[Martin Horwood]

In the same vein as the hon. Member for Brighton, Pavilion (Caroline Lucas), I must point out that the achievement of the Kyoto targets was due to other factors—in that case, the dash for gas, which transformed the pattern of greenhouse gas emissions in this country. That and the recession achieved far more than the previous Government.

[Joan Ruddock]

Again, I am sorry to say that the hon. Gentleman knows better than that. Nobody disputes the fact that the dash for gas was a factor, and more recently the recession has, indeed, been a factor, but the independent Committee on Climate Change has acknowledged the difference that Government programmes over that period made. Lord Turner, the chair of the Committee on Climate Change, said very recently that the last Government

“set out a whole series of policies, and as long as we drive those through we will make a difference.”

[Interruption.] The hon. Member for Cheltenham (Martin Horwood) mutters from a sedentary position, “That’s about the future.” Climate change and what we need to address is indeed the future. I pointed out our considerable achievements in the past. No other Government had made the leap forward that we made, and as I said at the outset of the debate, we left a very strong framework from which any Government could proceed to reduce carbon in the UK.

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[Martin Horwood (Cheltenham) (LD)]

I thank the Minister for his statement. He was absolutely right to highlight our collective failure to address energy efficiency adequately, but he seems so keen to do something about it that I could almost mistake him for a Lib Dem—[Interruption.] Not quite, perhaps. On the green deal, the ministerial team has imaginatively built on proposals. Obviously, I shall claim that the Lib Dems were the very first to produce such a scheme, but the Conservatives did, too, and towards the end the Labour Government were—[Interruption.] We will check whether the Green party was ahead of the Lib Dems.

[Caroline Lucas]

Will the hon. Gentleman give way?

[Martin Horwood]

Not on that one; I am sorry.

All the parties, and even the Labour Government in the end, were working on variations on that scheme, but the one that the ministerial team has come up with is truly imaginative, and its unique financing raises the ambition for energy efficiency in this country in a way that, if successful, will represent a step change in energy efficiency. As the right hon. Member for Lewisham, Deptford (Joan Ruddock) pointed out, it is not guaranteed to be successful, and we do not know exactly how many people will take it up. The point, however, is to wish it well and for all Members to promote it, support private companies, communicate the scheme’s success and hope that it achieves the step change that we are looking for. I congratulate the ministerial team on coming up with that proposal.

[Mrs Main]

I thank my hon. Friend for giving way on that point, because under the previous Government communication problems were often among the reasons why some very good schemes did not take off. I therefore wish this scheme well. Does he agree that this Government’s big effort to introduce a scheme instantly is a positive move, and that all parts of the House will welcome improved communication?

[Martin Horwood]

I am sure the hon. Lady is right to emphasise the importance of communication. I was going to go on to pay tribute to the outgoing Administration, and in particular to the right hon. Members for Doncaster North (Edward Miliband) and for Lewisham, Deptford, who towards the end of the Labour Government brought some urgency to the issue and improved things. However, it is true that at times they were tempted to take credit for things that were the result of larger factors, and that, given the number of consultations and pilots in which they indulged, they did not get round to implementing some of the schemes that they had contemplated. It now falls to the coalition to increase the pace of change, and the early signs are good.

The need is urgent. If we are to achieve throughout Europe a target of 30% cuts in greenhouse gas emissions by 2020, which I believe should be the target for the whole European Union, we will have to make those radical step changes in policy. Indeed, we need to do so if we are to have any chance of reducing the concentration of atmospheric CO₂ to 450 ppm or lower, which I believe is absolutely necessary. If we do not do that, the chance of global warming increasing by more than two degrees above pre-industrial levels rises, threatening food production, conflict and, ultimately, the economies on which we depend to finance public sector and Government programmes.

In that respect, energy efficiency is no panacea. Not long ago, I visited a company near my constituency called Messier-Dowty, which provides world-class aircraft parts, particularly undercarriage. I remember having a conversation with its staff, in which they extolled the virtues of those parts and the aircraft industry’s efforts to make aircraft more efficient and lighter, and use less energy as they flew. However, I pointed out that eventually the industry would have to adjust to a world in which people learned to fly less and used alternative means of travel and communications. The same analogy is true for the whole economy. Energy efficiency is the first and most cost-effective area to address, but it is no substitute for the wholesale decarbonisation of our economy, which we also need to work on.

I shall focus on three areas of energy efficiency: first, energy efficiency in buildings, especially the skills needed to deliver it; secondly, smart metering; and finally, energy markets and pricing. In the first area, it is right that we concentrate on buildings. Throughout Europe, apparently 90% of our time is spent indoors and 30% of our energy consumption is devoted to heating and lighting buildings, so the green deal is an important step in trying to address that scale of energy use. However, there are traps ahead, and I have spoken to training suppliers in the further education sector and those hoping to run apprenticeships in architecture and building trades in and around my constituency. They point out a severe lack of skills in those new building technologies, particularly the skills needed not just in isolated instances, such as the installation of renewable technologies or the provision of insulation, but in new building materials, in the different approach that we need to take in the building trades and in architecture, and in constructing and retrofitting buildings. Such skills must be fundamental to training in those sectors.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

I am slightly confused. Given that the hon. Gentleman supports deep and savage cuts to the training budgets of our colleges, how does he expect them to produce those vast numbers of desperately needed skilled workers in order to bring about that step change that we all want?

[Martin Horwood]

I am grateful to the hon. Gentleman for his intervention. One answer is clearly the green deal, which will incentivise private companies to invest in such training themselves. Apprenticeships might be part of the solution, too. However, when I asked Gloucester college, a forward-looking and innovative FE college based partly in my constituency and partly in Gloucester, what was the single biggest step that could be taken, the answer was not to fund extra courses. It suggested allowing FE colleges that provide such training to accredit their own courses, rather than having to defer constantly to universities. I commend that recommendation to Ministers and their colleagues in other Departments. The college believed that that would enable it to respond much faster to market situations and to design courses much more flexibly, and that it was the single most important change that could be made. I hope that provides an answer to the hon. Gentleman.

On new buildings at least, the other possible pitfall is the rather prescriptive and increasingly complex code for sustainable homes. I welcomed the code when the previous Government introduced it, and generally, as an instrument of policy, it is a welcome development. However, it has been painfully slow at raising energy efficiency levels in new buildings, and it risks becoming so over-prescriptive that it defeats our objectives.

I know the Secretary of State well, and he is no friend of over-prescription; he prefers the creation of the right market environment, which would avoid the need for such complexity and enable the process to move faster. Instead of having standards of such complex design, perhaps we should reinforce one or two simple measures—for instance, a measure of kilowatt-hours per square metre for every building, old or new. To follow up the point made by my hon. Friend the Member for St Albans (Mrs Main), that would be easy to communicate to the public and easy for estate agents, politicians and everybody else to understand. It might become a powerful measure of energy efficiency, with no need to prescribe such complex details as we find in the current code.

This morning there was a round-table discussion hosted by The House Magazine, and one point repeatedly came up. Examples were mentioned of earlier civilisations—even the Romans—that were very good at preserving openness and light in buildings and making them energy-efficient through the communal use of heat; the renewable heat issue has already been mentioned. More traditional wooden buildings within the Arctic circle still seem to require less energy to heat than many buildings in this country. I know from my own experience of villages in India where buildings made basically out of mud were beautifully cool in summer and beautifully warm in winter. They were very energy-efficient, but used materials that would probably not be allowed under current building regulations. Incidentally, I am not suggesting that we should all start living in yurts or anything like that; that would be a bit too Liberal.

[Gregory Barker]

That did not quite make it into the coalition agreement.

[Martin Horwood]

Indeed.

We should be wary that over-complication and over-prescription could risk the defeat of our own objectives, and lead to our prescriptions to the industry for low-carbon homes being too inflexible and therefore too expensive. More flexibility might enable the private sector to deliver some of the objectives more simply and efficiently.

I shall now talk about smart metering. I was a shadow environment spokesman under the previous Government, and assorted people lobbied me heavily—as they did my opposite numbers, I suspect—about their particular designs of smart meter. I am aware that the field is very competitive. I make no judgment between the different systems, but I am increasingly aware that smart metering covers a multitude of sins. There are tough decisions ahead for the ministerial team about exactly which designs we might favour.

At the most basic level, we are talking about something that just generates information that can be read out on a display, and might be reflected on a bill. That would be useful, but rather limited. More sophisticated systems influence the timing of devices such as washing machines and dishwashers so that they operate at different times and improve the efficiency of the whole household.

The most interactive technology feeds real-time information back to the energy companies themselves and could improve the efficiency of the whole network. I would draw a line at the kind of systematic smart metering that enabled people to switch suppliers minute by minute, which I know has been suggested by some hon. Members. The machine itself searches for the best deal and tariff at any particular minute. That would lead to indescribable confusion over billing and might destabilise businesses from week to week. However, we need to look at the various different technologies and be ambitious about what smart metering can deliver.

On energy markets and pricing, the Minister rightly said that we suffered from a plethora of different energy efficiency programmes under the last Government. Many were well intentioned and individually well designed, but there was a lot of stopping and starting and different, confusing and overlapping requirements. Last Christmas I visited the Cheltenham Royal Mail sorting office and found postal workers falling over heaps of low-energy light bulbs as one energy company in particular had mailed out huge numbers of the things at the last possible moment. I am not surprised that the Minister said that 262 million had been supplied.

In a way, I suppose that the bulbs were a good thing, but they spectacularly missed the point. While price still rewards energy consumption, it will always be difficult to mobilise the energy companies really to get behind energy efficiency. For the longer term, I commend to the Minister one other Lib Dem policy that did not quite make it into the coalition agreement. It was to take energy bills and set a historic baseline amount for each household, taking into account the number of children and so on, which would be reflected in the historic consumption. Thereafter, the cost to consumers would rise if energy consumption rose, but the energy company would not be allowed to profit from that rise.

Instead, the surplus would be taken, for example, into a fund administered by the company for energy efficiency or environmental programmes. At a stroke, that would break the link between profit and increased energy use; it would actually cost the energy company money if energy use rose. The company would have a direct financial business case for increasing energy efficiency. That would be hugely simpler than all the complicated schemes in which the companies were set targets and sought various ways—some of them rather untestable and unverifiable—of trying to meet Government objectives. If the Minister adopts that policy, I really will think that he is turning into a Liberal Democrat.

If the coalition is to deliver on these ambitious targets, and on its ambition to be the greenest Government yet, we will need, in the Minister’s words, to change the game and be really ambitious, bold and radical. I fully expect that we will be.