I thank the Minister for his introduction to the order before the Committee today. As he explained, it introduces a completely new energy efficiency programme—ECO 3—focused essentially on those in fuel poverty but with elements of ECO 2 and 2T. Indeed, the first ECO order, made in January 2013, was itself a successor to previous government energy efficiency schemes such as Warm Front, CERT and CESP. These previous schemes were more centrally funded, whereas ECO is an obligation on energy companies to fund and finance energy efficiency measures using their own resources and without additional government support. In that regard, austerity is still continuing.
The order extends to 2028, which, as I mentioned last week, is only four years short of 2032, the end period for the fifth carbon budget. We note that the Government are at risk of failing to meet that. The new ECO 3 measure, as suggested, replaces the wider remit of former ECO schemes, which were based on a carbon-saving metric and encompassed a number of programmes relating to energy efficiency for carbon-saving purposes, where only a minority of the overall funding was directed specifically towards people in fuel poverty. The main programme therefore restricts measures to those households in band E, F and G properties. For these reasons, I cannot fully endorse the order before the Committee today. I also detected a slightly less than encouraging response from the noble Lord, Lord Teverson, and perhaps some criticism.
The order is a continuation, reducing and restricting policies that fail to address the wider issue of energy efficiency on a more comprehensive basis. Nevertheless, it does contain some good measures in response to previous Labour criticisms. The Government should be commended for reducing the obligation threshold for suppliers from 250,000 to 150,000 accounts over time, and for looking at the problems encountered by customers when switching from a company above the threshold to a smaller company operating below the accounts threshold.
Also to be welcomed is the Government’s response to extending the 25% of the suppliers’ obligation to be met by local authority flexible eligibility. It is, in effect, a nominations scheme in which local authorities can participate, whereby area-based activity can be undertaken to improve similar properties in a location. Another important aspect of this measure is the focus on innovation and the benefits it can bring—for example, Q-Bot, which undertakes the laying of insulation in inaccessible places.
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The fuel poverty measures contained in the order are also welcome, especially the extensions to further participants in the scheme and the measures to maintain at least 15% of the obligation to rural households. They are important. However, concentration on the problems of fuel poverty is certainly important, but whether this should be to the exclusion and at the
expense of all other aspects of energy efficiency is a matter of concern. This would fundamentally alter the carbon savings brief of the original obligations programme. When it was first introduced in 2013, ECO represented a change from the previous Government’s programmes—namely, the carbon emissions reduction target, the community energy saving programme and the Warm Front scheme.
In the context of the Clean Growth Strategy, which the noble Lord and others have mentioned and which I quote:
“We will need to ensure existing buildings waste even less energy”.
This order reduces the overall envelope of the ECO programme for 2018-22 and onwards. The rate of improvement in properties can only diminish. This order represents a continuing substantial cut in overall obligation requirements, from £1.67 billion per annum in 2013 for CERT, CES and Warm Front, to £1.12 billion for the ECO replacement, to £0.87 billion per annum for ECO2, reducing now further to £640 million under ECO2t and the ECO3 measure. This represents a more than 60% drop in energy efficiency funding through government schemes, however funded, since 2013—and a regrettable lack of ambition. This obligation level falls well short of what is required to meet statutory fuel poverty targets. Indeed, the Committee on Fuel Poverty has indicated that even this order’s concentration on fuel poverty will not be sufficient to meet current poverty reduction targets—a reflection of the overall size of the scheme and its ambitions within the overall setting.
Labour is committed to a programme of insulating 4 million homes in a period of one Parliament, and to repeating that commitment for another two Parliaments to reach the level of domestic energy efficiency required to meet contributions to the fifth carbon budget by 2032. This commitment, including both state funding and the accompanying company obligations, will enable both carbon obligation targets and fuel poverty targets to be met, including specifically through a prioritisation of measures relating to fuel poverty within the overall programme.
Even after refocusing ECO3 to deal exclusively with households in fuel poverty, this measure falls short, even in its own terms, to meet statutory fuel poverty targets. It does not deal with the carbon reduction imperative, provides no new public sector funding and does not deal with the challenge to improve energy efficiency requirements for the UK’s housing stock. I can approve the order only on the basis that it is a starting measure while the Government consider more comprehensive measures to bring forward.
The memorandum provided with the regulation states that one of the core aims of the instrument is to contribute to carbon reduction targets. Bearing in mind the assessment of the Committee on Climate Change in achieving the fourth and fifth carbon budgets, what action will the Government be taking to meet the UK’s target?