Electricity and Gas (Carbon Emissions Reduction) (Amendment) Order 2010

My Lords, I welcome what my noble friend said. He explained briefly the reason for the urgency of the measure; that point has been made to me by some of the interested parties. They desperately need to know where they stand at the end of the existing second phase of the CERT programme. As my noble friend said, the order provides a continuation up to the end of 2012. However, perhaps my noble friend will comment on one of the consequences of the urgency with which the Government have brought forward the measure. I have in front of me the Merits Committee’s report. Under the heading, ““Other instruments of interest””, it refers to this order. The paragraph ends: "““However, given the speed with which the Government wishes this SI to proceed, the Committee has not had the opportunity to make any detailed assessment of the instrument””." I say with kindness to my noble friend that that requires some explanation. It is not satisfactory that this House should have a Merits Committee, which examines matters in the field of statutory instruments which are of interest, but which is precluded simply for shortage of time from being able to offer its comments. We will have to do the best that we can. The report was published only last Thursday, on 22 July. It has been quite difficult to keep up with what has been going on. Obviously, I will have to do my best. There has been very little opportunity to consult with those outside, but it is a very complicated issue—not so much the changes that my noble friend has outlined, which are themselves quite complex, but the documents that accompany the order are very large. We have had the summary of consultation responses and the government response, a document running to no fewer than 50 pages, and the impact assessment, which runs to 77 pages. Like other noble Lords who have been faced with those documents at short notice, my questions to the Minister may seem naive and ill informed, but I shall have to do my best. I found it a depressing experience to read the order, the consultation document and the impact assessment with which we have been supplied. That is not because the CERT scheme is undesirable; when we have debated the order’s predecessors, I have made the point firmly that the need to attack and deal with the poor quality of much of our existing housing stock is of huge importance, both to make life a bit more comfortable for the inhabitants and, as the Minister rightly pointed out, to achieve higher energy efficiency. What depresses me is its extremely complicated and bureaucratic method of achieving that. I have had occasion to criticise that in the past and, although I have the copies of Hansard here, I promise noble Lords that I will not repeat what I have said on previous occasions. If anyone doubts whether it is bureaucratic and complex, just skim through the 77 pages of the impact assessment. That must have required a huge number of man hours to prepare for publication. One really has to wonder whether all that is necessary. I shall return to that point towards the end of my remarks. In the mean time, I have a few more detailed questions to address to my noble friend. I turn at once to the major change in the order—the new super priority group. I can well understand the aim and have a good deal of sympathy with it. I should declare an interest: I am a member of the priority group. As such, I was able to get my house insulated—both loft and cavity wall insulation. I shall not repeat the horrors of that experience, but it filled me with a strong impression that the biggest single barrier we face is household hassle. Under the priority group, 40 per cent of the carbon savings must come from people who enjoy a range of benefits or are pensioners aged over 70. The noble Lord, Lord Hunt of Kings Heath, will recognise that we have frequently had to complain about the difficulty for the suppliers who have to operate the scheme identifying the households that qualify for that treatment. I dealt with that two years ago under the 2008 order and again last year under the 2009 order. One concession was made by the Minister's predecessors. Under the Pensions Act, we had an order which allowed information to be shared on what was a very limited category of those in the priority group—namely, pension credit beneficiaries. No doubt that has been helpful. The data protection rules make it impossible for there to be a general exchange of names and addresses of people who fall within the various categories of beneficiary under the social security legislation. Therefore, the companies which have to operate the scheme are reduced to other methods to try to find the people in the priority group, including cold calling and, much more intelligently, looking at areas and cities where they might expect to find a higher concentration of people in receipt of the various benefits. The point was made to me again this morning that that is a very unsatisfactory process which costs them a lot of money. It increases the cost of administering the whole scheme. In the order, we are now faced with a new category, the super priority group. If anyone is any doubt about that, paragraph 3.2 of the order spells out the definition of those who are in the super priority group. It is nearly a full page long. Does my noble friend have a better answer than did his predecessors as to how on earth the companies are supposed to find out who those people are, so that they can approach them and, if they agree, insulate the houses in the way we all want? I turn to the consultation. I will not weary noble Lords with the detail, but at paragraph 8.4 of the results of the consultation, there were many conflicting answers on how that problem should be tackled. I do not see any advance in the order on what has gone before. That is my first question. My second question relates to the concept of market transformation measures. Again, there is an elaborate definition of that in subparagraph (4) of paragraph 3. Paragraph 7.4 of the Explanatory Memorandum spells that out in some detail. The second point in that paragraph states: "““CERT supports innovation and energy saving products and appliances””—" which my noble friend very properly mentioned in his speech— "““by providing a 50% increase in carbon score to qualifying products. The market transformation baseline””" is set out in the 2001 order, thus going back some years. "““This means that a measure which saves carbon but was not promoted under the 2001 Order can be promoted as a market transformation action under the CERT order. However, we will increase the baseline to measures which have not been promoted under the …Order 2004. This will mean that suppliers need to come forward with new products or similar products which are no less than 20% more efficient than products promoted under the previous scheme to March 2008””." I have hunted through the order, I hope with care, but I cannot find where the figure of 20 per cent comes from, so I would be most grateful if my noble friend could explain where in the order is the uplift, as it were, of 20 per cent which needs to be met. It is set out in the Explanatory Memorandum but I am quite unable to find it in the order. My third question relates to costs, which have been a frequent refrain during these debates. I refer to the costs that suppliers will incur. At paragraph 8.2, the Explanatory Memorandum refers to the potential costs falling on consumers. That, of course, is an inevitable consequence. The suppliers incur the costs but it is the consumers who ultimately will meet them in their bills. Paragraph 8.2 goes on to state, "““given the potential costs falling to consumers. Keeping the costs of the scheme passed to consumers at a reasonable level was a key concern of respondents, whilst varying degrees of challenge were called for as part of the headline objectives””." The press release and my noble friend have mentioned the possibility of 3.5 million more homes to be lagged. The document describes it as, "““a massive and urgent increase in home energy insulation””." Yet this is to be achieved at a reasonable cost to consumers. Can my noble friend say a bit more about how one can reconcile these perfectly legitimate ambitions with the desire to keep the costs reasonable? Again, this is a problem which has emerged with each successive order. My fourth question goes back to the super priority group. I have been asked to find out whether it is the Government’s intention that every single domestic energy user should request any measure in writing. Would that preclude, for example, social landlords or local authorities performing improvement works to buildings? It would also be useful to know about the Government’s intention regarding existing schemes and whether those could run as they are until March 2011 or, if not, are the Government concerned that changes to existing schemes at this point might drive up the cost of the obligation? I come now to my main and final point, and here I return to the complexity and bureaucratic nature of this scheme. Paragraph 2.5 of the Explanatory Memorandum explains that the target period was extended to 31 December 2012 to align this programme with the period in the Climate Change Act. I can understand that from the point of view of maintaining a statistical consistency with the various programmes. However, the more I have looked at this policy, the more I have been forced to the conclusion that, because its primary motivation has been to help to meet climate change targets through the reduction in the emission of greenhouse gases, its concept is very remote from the perceptions and needs of millions of individual householders. They simply do not identify with that. My noble friend knows that I have previously referred to the Hartwell paper. I have a copy of it here, in case anyone has any doubt about it. The paper was prepared by an international group of distinguished academics who proposed an approach to the problem different from this one. They accept the need to fight climate change; that it is caused by an increase of greenhouse gases in the atmosphere; and that it is largely manmade. However, instead of making the reduction of carbon the principal objective in a way which clearly leaves billions of people behind—the Copenhagen conference is only one example—they argue for measures with a more popular appeal that people can understand and that will have the incidental consequence of reducing carbon emissions and so fighting climate change. We have a particular example which my noble friend mentioned in his speech: that people can understand savings in fuel costs and living more comfortably. If the approach were stated as, ““This is the way you can cut your bills. This is the way you can live in a warmer house””, rather than saying, ““You’re going to save the world by doing this and you’ll meet the climate change targets””, it might be a great deal easier and, if I may say so, a great deal less bureaucratic. That objective would be easily understood, and if presented attractively, could prove popular and achieve the Government’s targets. In addition, it would surely render much of the turgid and complicated bureaucracy, to which I referred a few moments ago, largely unnecessary. It is simply because every action that is done by every player in this field under this scheme must be measured in relation to its carbon savings. One is faced with massive tables of figures to whose completion suppliers must contribute and which leave the public totally untouched and out of it. They feel that they have nothing to do with it, yet it is right at the heart of the programme. In those circumstances, it would be much better if one could follow the proposals in the Hartwell paper. One could detach this scheme from its absolute fixation on measuring the actual reductions in carbon emissions and doing so solely in terms of the carbon reductions achieved. I think that it might be easier and less costly to administer and could therefore result in more home insulation, more microgeneration and all the rest that is currently being promoted. For instance, there could be simple grants for home insulation. The rest could be made far more attractive for suppliers and householders than this over-elaborate structure based solely on measuring the carbon emissions. I end by pointing out that there really is some hope. My noble friend explained that this order is to pave the way for the longer-term measures that will come under the energy Bill, the so-called ““green deal””; indeed, the summary of the responses, interestingly, is headed: "““Paving the way for a green deal””." The Government have an opportunity to look again at this and see whether or not something could be done. The green deal—one can look at the coalition policy document, which I have somewhere here, and see that there is some recognition in it of this—has to deal with this in a more effective and user-friendly way than has been done in the past, and I hope that it does. This offers us some hope for the future. I have here what was said during the election in the Conservative manifesto, but that has been replaced by the coalition deal. We have a chance now of making this a simpler and, in the end, a more effective programme to achieve the Government’s aims.