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Energy Bill [HL]

Volume 724: debated on Wednesday 19 January 2011

Committee (2nd Day)

My Lords, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and will resume after 10 minutes.

Clause 4 : Assessment of property etc

Amendment 10A

Moved by

10A: Clause 4, page 5, line 22, at beginning insert—

“( ) An assessment made and provided under this section must clearly detail those energy efficiency improvements that qualify under the green deal.

( ) In making an assessment, the assessor must include all energy efficiency improvement options that qualify under the green deal.

( ) Nothing in this section prevents green deal assessors from identifying energy efficiency improvements in their assessments that—

(a) sit outside the green deal; or(b) collectively exceed the total amount qualifiable under a green deal plan, where this is clearly identified on the assessment.”

My Lords, I apologise to the Committee for my late arrival. The Chair will have saved me by indicating that sittings in the Chamber take precedence and, unfortunately, Questions went on beyond the scheduled start of this Committee. I hope that government business managers will look at that difficulty, which has been the source of a little embarrassment to me today and, more than that, a disadvantage to the Committee.

The amendment is concerned with giving consumers choice. It would enable consumers to have the benefit of a more comprehensive range of options, so that those who are motivated or who can afford a range of energy efficiency options can think about installing measures that go above and beyond the Green Deal. Providing a range of such options helps consumers to think more intensively about which measures they would like to install, as some measures will be better suited than others, according to the circumstances of the building that is due to be treated.

We have heard in Committee arguments in favour of thinking beyond what may strictly be provided through the Green Deal. We all appreciate the importance and significance of the Green Deal. I am not in any way, shape of form doing anything other than commending the objectives of the Green Deal, but there are possibilities beyond it. We all have a major job in educating the public and our fellow citizens about how they can respond. We all know what a challenge that will be because, in all circumstances, despite the fact that the arrangements for payment are so skilfully done through energy bills, costs are involved and we all know people’s natural response to additional costs, particularly when, in the immediate future, household budgets are likely to be constrained.

We want to make sure that as much information as possible is available and that we emphasise the necessity of both hitting the targets and ensuring that individual citizens and consumers sign up to the proposals in the Bill. This amendment builds on the momentum in this House for a more comprehensive energy perspective. I hope, therefore, that the Committee and the Minister will look on it as a constructive proposal to assist in the general objectives of the Bill. I beg to move.

I had hoped that the noble Lord would have given some indication of the range of improvements and benefits that might be available under the Green Deal. It seems to me that, if one were to list the entire range, including appliances and all the other things that now qualify under the Green Deal, that could in many cases be misleading to a householder, as it might be that only two or three of them could possibly be relevant to his or her house. I just wonder what the purpose is of listing the whole lot if inevitably the assessment will be that, within the price and given the nature of the building concerned, numbers 1, 2 and 3 are really the only ones that will be applicable. What is the purpose of listing, as the amendment suggests in the second subsection, all energy efficiency measures, if most of them might not apply to that house?

Following a slightly similar line of thought, but not exactly the same one, I think that, if you are going to have people in undertaking works to improve the energy efficiency of your building and you are able to do works outwith the scheme, why should that not all be done at the same time? I would hope that the Green Deal might set a minimum standard and a financial limit of the funding available and that, within that financial limit, as much work as the individual owner and improver wishes to undertake can be undertaken. After all, it is a financing arrangement that we are talking about; if the property owner or housing association or whatever wants to go the whole hog and really do the whole job, I do not see that the upper limit matters. What we want is the security of a scheme and it must have a minimum standard. We do not need the rest of it, so I think that the idea of listing it all is completely unnecessary. The only thing that needs to be totally determined is the minimum standard. After that, let it rip.

The attraction of this amendment is that it affords flexibility. A range of options will be available and, if an assessment is being done, it would be sensible to have a clear list. Let us face it, there may be a number of people who, having become interested in the Green Deal, will be able to purchase some of the items that are outwith the terms and purposes of the Green Deal but which might come cheaper if they get the whole job done at the one time. If a tradesman is visiting a house, it could involve just one visit and a person would have to pay only for another hour. Other pricing mechanisms might involve a second visit, with the first hour costing so much, et cetera.

It is important that we get an idea of the ideal deal as well as the Green Deal so that we can see all the requirements of the household and so that, when the assessment is done, the individuals, within the criteria of the Green Deal, are able to pick and mix. Within certain guidelines and appropriate standards, we should provide a range of options. This amendment may be unnecessary, but I would hate to think that this deal, as I have already characterised, is perhaps in reality more limited.

The Minister and I were not quite in dispute, but he noted his disagreement with me when I said that a number of properties will probably be too expensive to fall within the Green Deal. I identified the solid-wall rural household outwith the gas network, which would be very difficult to fund. The savings may not be sufficiently large to make the loan repayable over a 15-year period, but that should not mean that at least part of the work could not be done in the household under the Green Deal.

If people have enough money, they could take on a private financial arrangement with a bank, add to their mortgage or do whatever to carry out the other improvements. It would be helpful if the Minister could indicate whether he envisages the system being, in the first instance, capable of accommodating a whole list of possible options and being sufficiently flexible before the contract is signed to include some of the options, if not all, on the original list. The system should allow the individual, if they see fit, to have the other works done at their own expense and paid for by whatever means they can privately arrange, whether that be the credit card, the bank loan, adding to their mortgage or simply hard cash.

If we had that, we would get a clearer idea of the potential for flexibility. We do not want so much flexibility that people could be ripped off by cowboys, but qualified tradespeople, good assessors and a wide range of options would be a selling point for the Green Deal. That will not do everything, but it will help. It will perhaps free up resources for people so that they can do the things that they would like to do but otherwise might not consider to be a possibility.

My Lords, as one who enjoyed spending Monday night in your Lordships’ House reading through every clause, including the details of the impact assessment, the Explanatory Notes and everything that goes with the Energy Bill, I may have overlooked something but I think that my noble friend’s point is, in effect, already answered. A request to list all the energy efficiency improvements that may or may not fall within the Green Deal would be fairly simple because it is already covered by the Bill. It was made clear by the Minister that under Clause 1(4) there would be an order made by the Secretary of State setting out the qualifying energy improvements. Anyone would be able to see those energy improvements. We would be at risk of repetition if we were now to add into this clause, and lift from the order, all those improvements that would qualify under the Green Deal.

My Lords, although I do not entirely agree with this amendment, or the way in which it is written, I think that it is important that the Green Deal plan is put within a broader context. In some ways, the Bill allows for that. In our last session in Grand Committee, we discussed the clauses that refer to the Green Deal plan and/or energy plan and I think that it is that broader energy plan that we could include in this.

As we will see in the next group of amendments, there will be occasions when there will be a much better deal available because more than one property is involved in the decision. This should also be pointed out in the Green Deal energy plan. I like what we are trying to achieve, because I believe that there is a broader issue.

There is another issue that has been left out. The biggest part of any energy plan is not the hardware or the physical changes that are made but how you use energy in your house. I would like to see an obligation in the code of practice—it is not appropriate for the primary legislation—that requires the assessor to ask whether it is possible to run a dishwasher or heating overnight off-peak rather than during the day. Your use of energy can be more effective in ways other than making physical changes to a building. I would like to see that included in recommendations in any energy plan.

This group of amendments includes Amendment 11, tabled by the noble Lord, Lord Whitty. Although I do not agree with all of the amendment, I agree with the end of the sentence, which says the improver should have,

“no bias towards any one green deal provider”.

That comes back to the issue of ensuring that the improver gets a fair choice and option and that there is no bias within the system.

Prompted by the noble Lord, Lord Teverson, I rise to speak to the amendment in my name. Amendment 11 would require the assessor to inform the householder or landlord of the full range of possibilities and the flexibility within any recommendations. The assessment should be subject to clear, objective criteria. I know that some noble Lords dislike the reference to “standardised assessment”, but we need some objectivity and we need to give the householder some choice in how they take the assessor’s recommendations. We need to indicate some flexibility, even within the Green Deal, if we assume that there is a financial limit. This is before you consider the possibility of other arrangements to go beyond the provision of a new deal.

On the point made by the noble Lords, Lord Jenkin and Lord Moynihan, it is clear that there will have to be a detailed code of practice and it may be that some of these issues will be dealt with in that. However, those issues covered by the code of practice in Clause 3 do not include the listing or the objectivity in that listing of recommendations. While I accept that it may be more appropriate for this to go into the code of practice, the primary legislation has to make clear what the Secretary of State will have to bring forward when that code of practice eventually appears.

Finally, I underline the point that the noble Lord, Lord Teverson, made about the importance of there not being any bias towards any particular provider. This goes back to who is doing the assessing and what the qualifications for the assessing are, which we discussed at our last sitting. These things are quite ticklish. Obviously, we wish to encourage innovation in this area and we wish to encourage new entrants in the provision of energy-saving installations, ventilation equipment and so on, but these things get roguish at times. It is important to recognise that there is no point in going for the latest super-duper micro CHP system in an individual house if the roof is still not properly ventilated and the windows are not properly fitted. There is a hierarchy of things that you need to do, both in terms of cost and in terms of the most appropriate treatment of those premises. The code of practice and, in broad terms, the primary legislation need to make that clear. Otherwise, we will—I go back to the point that I made when I first spoke in Committee—get back to a situation where, in the very early days, there will be some bad publicity about what people have been lumbered with and the inappropriateness of the work that has been carried out. That would be very dangerous to the success, which we all want to see, of this Green Deal scheme.

My Lords, in view of the concern that some noble Lords have expressed over the difficulty of achieving a uniformly high level of competence in the assessors, it ought to be explicit in the Bill whether or not individual householders will have the opportunity to go to a different assessor if they feel that the job has not been done properly by the first.

My Lords, this is the first time that I have spoken in Committee, so I should declare that I am a landlord in the private rented sector. The assessors will obviously need paying, but who pays for that? Is it the household or is the cost added to the Green Deal and then paid off over time?

My Lords, I welcome the noble Lord, Lord Davies of Oldham, who seems to be indispensable to the Labour Party at the moment—two Questions and then running in here and doing this. I congratulate him on the energy and commitment that he shows to this great House. I just warn him of the words of the noble Lord, Lord Winston, who said that statistically, out of the Members of your Lordships’ House, 140 would die from a heart attack. All of us clutched our chests at that time. Seriously, I welcome him and thank him for leading from the opposition Benches. I send the noble Baroness, Lady Smith of Basildon, our good wishes as she sees her medical experts. I hope that we will welcome her back next week. I also thank all those noble Lords who are here, as usual, making their very good and committed contributions. I say just for reference that the noble Lord, Lord O’Neill, and I rarely disagree on things, as he always makes very valuable remarks for us to listen to. I do not want us to be under any illusion on that front. Some valuable points have been raised and I shall try to pick them up as we go through.

Clause 4 is central to the Green Deal. It sets out key conditions that must be met before a Green Deal plan can be taken out on the property. In so doing, it defines the circumstances in which the Green Deal can be offered to the customer, which is fundamental. Subsections (2) and (3) require that an accredited Green Deal assessor has assessed the property in accordance with standards. To comment on the remark made by the noble Lord, Lord Oxburgh, if an assessor has failed, he has clearly failed the assessor regulation; all the usual consumer protections are in place and the householder would be entitled to use another assessor, as people would be able to in anything. To pick up on what the noble Lord, Lord Whitty, said, standards are completely fundamental, as we have said on several occasions. I worry—as he does, rightly—about the bad publicity that might ensue if we do not do this properly. That is why the noble Lord’s valuable comments are correct.

In many cases, we envisage the Green Deal provider employing or contracting the assessor. The assessor would identify the potential for energy savings using the standardised methodology. This assessment will be used by the provider as the basis of an offer of Green Deal finance. Subsections (4) and (5) require that an accredited Green Deal provider—the body seeking to contract for the work—should give the customer an estimate of the savings on the energy bills that are likely to result from the proposed energy efficiency improvements and over what period these are likely to accrue. The Green Deal provider is required to base these estimates on a standardised methodology to be set out in regulations, thereby ensuring consistency and rigour in the process.

Subsection (8) requires that, in offering the service, the provider meets conditions, set out in regulations, regarding the relationship between the estimated total cost of the repayments and the estimated savings potential of the improvements. In short, we will use the regulations to create a golden rule that providers will not be able to tie customers into a Green Deal repayment schedule where the costs outstrip the likely savings. As an aside, I pick up on the point raised by the noble Lord, Lord O’Neill of Clackmannan, about this being an ideal deal, which I think is a nice phrase to use in terms of the range of options. Clearly, this is a market-driven deal. It is up to the market to provide the opportunities for customers and the range of competitiveness within the market. The Government would be wrong, in my view, to overregulate the ability to put competitive terms into the market, thereby choosing on customers’ behalf, as the noble Lord said, whether to have it all done at the same time, either because they may not be able to afford that, or because they may not be able to get it competitively priced, or because they may be waiting for prices to come down. We must allow the consumer to make the choice, but we must ensure that the choice that he makes is regulated with proper standards.

The golden rule sits at the heart of the Green Deal and is a key protection mechanism. Satisfying the golden rule at the outset will protect bill payers and enable the charge to transfer automatically from one bill payer to the next. The golden rule will take account of the total cost of the Green Deal package, including the cost of finance, labour and products. With this in mind, we expect households to be able to install measures worth up to £10,000. I hope that that responds to the concern expressed by the noble Lord, Lord Dixon-Smith, in that area.

Turning now to Amendments 10A and 11, I thank noble Lords for their concern that assessment is carried out in a standardised manner and provides the consumer with details of these measures that qualify for the Green Deal, as I referenced earlier. The initial advice and assessment provided by the Green Deal assessor will act as the pathway to the Green Deal and, as such, it is absolutely essential that it is robust enough to meet the needs of the customer and of the Green Deal process.

Clause 3 currently requires that a qualifying assessment is carried out in accordance with any requirements set out in the framework regulations, while Clause 4 makes it clear that it must be produced by an accredited Green Deal assessor. In addition, Clause 4 sets out that the assessor should make recommendations for improvements of the property and enables further detail to be set out in secondary legislation. I want noble Lords to take that last sentence on board. Furthermore, only certain measures will be eligible for Green Deal finance. These powers will be used to ensure that only measures that are appropriate for a property will be recommended for Green Deal finance and that no bias is shown towards a particular Green Deal provider. Amendment 10A also proposes to enable assessors to identify energy efficiency measures that sit outside the Green Deal. The Bill already contains powers at subsections (7) and (9) of Clause 3 that can be used to provide for this.

The detailed requirements for this standardised assessment will be set out in more detail in secondary legislation, but I hope that noble Lords are reassured by the nature of the current clauses and the intention to set out a standard assessment methodology for all Green Deal assessments that I have just described. I hope that my explanation provides noble Lords with sufficient reassurance that their amendments are not required.

I am not sure whether this is the right point to raise this issue, but it certainly has a bearing on some of the Minister’s comments and the points raised by the noble Lord, Lord Whitty. Giving householders a firm estimate of what their savings are likely to be seems to me to be a recipe for tears. A crucial element is the future cost of energy, but frankly no one can say what that will be. Might it be worth while to think of a formula similar to those used from time to time in selling life insurance, for example? We could say: “If the price of energy is so and so, your savings will be X, but if the price is so and so, the cost will be a little higher”. In other words, we could give a range of savings, so that consumers would know the risks, which would be associated with the future price of energy.

Another difficulty, which I referred to in our previous sitting, is that the householder faces a choice—whether to have a warmer home or lower bills. It will be difficult for anybody to estimate what the bills will be if the consumer decides that they have been cold and that they want the temperature to be a couple of degrees higher in their house. The problem is in quantifying. I totally support this whole proposal, but one has to make sure that it is realistic and workable. The noble Lord suggested an estimated range, making it clear that the estimate depends on whether the householder wants a warmer house. In many cases, one of the best things to do is to wear another layer of clothes. My granddaughter shares a flat. She is a sensible girl but one of her flatmates is not and their bills are higher because the flatmate chooses to wear pretty skimpy clothes. One has to take account of these human foibles.

Perhaps I could intervene as well at this point. This illustrates the classic difficulty of legislating in a way that is dependent on regulations, which we cannot possibly see at this stage. A critical issue is whether the Green Deal has a fixed rate of interest. Each individual deal must be based on a fixed interest. If the system fails to have a fixed rate of interest, a deal may show a clear saving when it is begun—particularly because interest rates are low and one could probably get financing for this sort of thing at 3 or 4 per cent—but, if interest rates rise to 5 per cent and the borrowing rate goes up to 8 per cent, that could completely take out the effect of the savings over a period of time. There is a real issue, which comes back to the fact that we are, as with all legislation of this sort, flying blind. We need to think seriously about interest rates. If the deals vary with interest rates, their attractiveness will be considerably eroded.

I asked my noble friend whether the cost of the assessor could be rolled up within the Green Deal loan. The assessor may charge £100 or £120 plus VAT, which, if the cost is up front, may be a deterrent to the very people whom we want to take up this deal.

Noble Lords have made good points about how we should evaluate this. I am sure that many young women will feel well advised by my noble friend Lord Jenkin of Roding about how they should dress in a cold climate; we should encourage them not to wear skimpy clothing in these snowy conditions.

The central point is a good one and we must look closely at it, but we are talking about companies that are used to dealing with the consumer. It is not as if they are going to pass a standard accreditation not having been used to dealing with the consumer. We would not want to prescribe to a Green Deal provider such as British Gas or Centrica how it should interrelate with the customer, because there are all sorts of customer protections available. The Consumer Credit Act quite clearly lays down the relationship between the consumer and the provider. Whereas we must ensure at all turns that this is not taken advantage of, and that there is a creditable method, it is up to the providers to come up with the method so that, in turn, the consumer has recourse against them, to challenge them if that method is wrong. The noble Lord, Lord Oxburgh, has much greater experience than I have in these matters, but I have experience in the insurance industry—I think that he mentioned life insurance. I could point to many life insurance predictions made by actuaries that are utterly wrong, so we have to be very careful about being overly prescriptive in this area.

It is hard to think too far out—I speak as a consumer myself—because most of us at the time are thinking about today: what we can save today, what we can do to benefit our housing today and what the effects are. A lot of us sit and think that prices may well go up; we live in a world where prices have traditionally gone up as, traditionally, have taxes, as most people think. That is not an excuse, but it is the mental approach that I personally would take to this Green Deal. I take on board the general points that everyone has made. It is vital that we protect the customer. This is fundamental to the Green Deal and the approach that we are taking. All of us in this Room feel exactly the same and, as we take this Bill through its various stages, the standard words that go underneath the Bill will be “consumer”, “assessment”, “accreditation”, “customer” and “must be protected”.

Does that mean that the form of the recommendation to the consumer will not be prescribed and that this will be up to the assessor? It is important to know to what extent and how far the procedure is to be standardised.

The methodology for the golden rule will be standardised and it is fundamental that it is. That is a good cornerstone from which to start. I hope that that answers the noble Lord’s question.

I would rather pick that up later on, when we come to Amendment 15. If the noble Lord does not mind, I would be happy to deal with it then. As for rolling up the costs of the assessor, we would not encourage that, but there may be a framework in which it could happen. We will need to look into that further.

I am grateful to the Minister both for his response and for his good wishes to my noble friend Lady Smith, which I will convey to her; we anticipate that she will be back for the next session of the Committee. I will bear in mind his good wishes to me. He shares with me an interest in cricket and, as long as our cricket side is doing well internationally, I am sure that my heart will still continue to beat strongly. That ought to take us through this Committee in any case.

On the questions that have been raised in the debate, I am grateful to all noble Lords who have participated, particularly the noble Lord, Lord Oxburgh, for his supportive comments. I agree with the noble Lord, Lord Jenkin, that, if a household were to get the full list of potential measures as a result of this amendment, it might chill the blood somewhat. People would be overwhelmed by the prospect of the enormous amount of expenditure that could be involved if they followed a range of options. Of course, I wanted to emphasise—and perhaps I did not make it explicit enough in my breathless opening remarks—that we are talking about specific proposals in regard to the property, so that the customer would be looking only at a range that was relevant to what he might expend on the property.

I understand the noble Lord’s more general points, although I still subscribe to the opening statement that I made in support of this amendment. We need to engage in a major exercise in effective communication in order to make this scheme work. Ultimately, the householder will recognise that costs are involved and there will be some anxiety and scepticism. I emphasise that it should be made clear to the householder what is within the Green Deal and therefore within the framework of the scheme. If there are other proposals that might improve the property but are not within the scheme, that should be clear so that there would not be confusion.

I listened carefully to what the Minister said about the ability of the consumer to challenge the method if the method proved to be wrong. We are dealing with specialisms and technical skills. I do not know about other noble Lords but I am a dummy in the hands of quite a number of specialists who come to my home and seek to advise me on the improvements that I could effect at absolutely minimal cost and at huge benefit to me and probably the wider community if I listened to the spiel long enough. At times, such presentations are difficult to analyse effectively and to refute where they need to be refuted. This will not alter the fact that consumers will have a degree of scepticism.

I also want to emphasise that we are not suggesting at any stage that the assessor or the installer is doing the choosing. The responsibility, obligation and right rest with the property owner who is having the improvements. That is central to our amendment.

I am not quite sure whether the Minister responded to the contribution made by the noble Lord, Lord Oxburgh, as well as I would have hoped. I was feeling my way to that position and the noble Lord expressed it more precisely. My noble friend Lord O’Neill, who is not in his place, also contributed on this. We need to be clear. I understand the issues with regard to the code of practice but we also know the vagueness and generalities of the code of the practice. The noble Lord expressed anxieties about how this would impact on the consumer, as did my noble friend Lord Whitty in his contribution.

Nevertheless, the purpose of Committee stage is to identify areas of uncertainty, which the Minister will have recognised. I am sure that some of these questions will re-emerge in our debates. At the moment, I am happy to withdraw the amendment.

Amendment 10A withdrawn.

Amendment 11 not moved.

Clause 4 agreed.

Amendment 12

Moved by

12: After Clause 4, insert the following new Clause—

“Local housing authorities(1) Local housing authorities shall be empowered to arrange, with green deal providers, energy saving schemes that cover the whole or a part of housing estates, roads, districts or other local communities.

(2) Local housing authorities will negotiate on behalf of improvers to obtain savings that arise from economies of scale, which will be passed on to individual improvers.

(3) Local housing authorities will be empowered to award council tax rebates to participants in such communal schemes as incentives; and the rebates will be reclaimed from the Energy Company Obligation.”

My Lords, this amendment brings two different subjects and two different strands to this debate: the role of local authorities and the ways in which we might incentivise the great British public to take advantage of the Green Deal. Ultimately, the measure of success of this scheme will be whether people sign up to see an assessor and say, “That’s a great deal for me. Go ahead”. I believe that they will and that they should.

Something that surprised me when I first read this Bill—I was going to say that with pride, but its sounds as though my noble friend Lord Moynihan has read it in much greater detail than I managed—was that local authorities do not seem to be covered until we get to the need to make sure that landlords behave themselves and participate. They seem to have disappeared from the concept of the Bill. I know that that is not the case, because the Government are heavily into localism, which I strongly applaud.

However, in the Bill and in the massive task nationally to deliver energy savings across the nation, we need allies. Natural allies in this are local authorities—the ones with a track record. They have previously been involved in this area and have shown their keenness. More importantly, they know the lie of the land and more about communities, housing estates and roads than do central government or the Secretary of State, and they know more than individual utilities, deliverers or providers within the scheme. That is why it is important to involve them.

Another theme that needs to come out with which local authorities could be very helpful—I refer to housing authorities in particular—is the achievement of even greater gains and possibilities as regards energy efficiency and saving, and help as regards fuel poverty. That can be done not only by looking at individual properties and flats or individual business units, but by looking at the opportunities that exist to act together. I do not propose that we substitute individual households participating in the scheme—I am sure that that will always constitute the major part—but I suggest that we bring together communities, streets, housing estates and those in flats of multiple occupation to form a single deal. That will bring better value to individual households and will enable us to complete this task more effectively.

This is a probing amendment. I would not for one minute expect it to appear in the Bill because it is not written in the correct language and probably would not work. However, I shall be interested to hear the Minister’s comments on, first, how local authorities can be involved and, secondly, on how we can ensure the rollout of a number of schemes that would be more effectively done on a community basis. As things stand, we will have a scattergun effect, where individual households make their decision about whether to participate. It will be like looking at the Milky Way, or the stars at night, where they appear all over the place with some areas of concentration. I think that it will be extremely effective to have individual street or housing estate action.

My noble friend is speaking with characteristic eloquence and expertise on this subject, but I wonder why he has not included housing associations in the amendment.

That is a very good question. It is because, as a result of a lack of forethought, I did not think to include them. They would be an excellent addition to the list. Housing associations and social landlords would be the right types of organisations to be involved in such a scheme.

Finally, I turn to incentivisation. In talking about how we involve households in these schemes, I should mention that a couple of the more successful schemes that arose under the CERT programme involved a rebate through participation, particularly to do with council tax. I know that British Gas has successfully operated a couple of these schemes. Households will know that the Green Deal will mean that their energy bills will come down and that they can invest in their house in the long term without there being an immediate cost.

Nothing attracts people better than a bargain and something off the price when they sign up on the deal. I would like the Minister to use his imagination to think what we might do to ignite excitement about the Green Deal. Much as I support local government, I have to admit that there are few better incentives than knowing that you are going to have to pay less council tax. This has a track record as an incentive and I think that, if that sort of scheme could be included in some way, it would work well.

I realise that there is a problem about this and that I have solved it in a very imperfect fashion. The Green Deal is clearly self-financing through private finance rather than through other ways. To achieve the participation with local authorities and maybe the council tax rebate, which needs to be found from somewhere, I have taken the easy route and suggested the energy company obligation, which I am sure the energy companies will not thank me for. That is roughly how the CERT system works at the moment and it could potentially be a way through this as well, although I realise that that itself would effectively add to household energy bills.

Those are the areas about which I would be very keen to hear from the Minister. I very much look forward to this Bill finally passing and to the start of this scheme. It would be good to involve local authorities more and it would be good to have a community aspect to this. I believe that using incentives, however much we might look down our noses at them, are a way in which to ignite this plan, make it work and make it successful. I beg to move.

My Lords, in rising to speak about local authorities and to support my noble friend, I declare an interest as a vice-president of the Local Government Association. Like my noble friend, I am concerned about the role of local authorities. If we are going to succeed in all our efforts around climate change and reducing our energy consumption, we have to involve citizens and their local communities and councils. The purpose of the new clause proposed in Amendment 31, which is grouped with my noble friend’s amendment, is to do just that. It is not specifically about the Green Deal; it is about energy plans and local authorities. Although it would be placed later in the Bill, for the purposes of our debate it is about the role of local authorities.

I am particularly concerned about the role of local councils, as Clause 102 of the Bill repeals the Home Energy Conservation Act 1995, an Act that, as I said at Second Reading, I was successful in getting through when I was a Member of another place. I believe that that Act has successfully driven a lot of local authority action since 1995. It has had very good results. Involvement, for me, means the active empowerment of citizens and of their local authorities; it is not just about consultation.

Noble Lords may ask why this is so important. I think that it is because local authorities have been seen to have very good ideas. Indeed, it is probably what is driving the localism agenda, which is something that I and my colleagues have believed in for a long time and which now nearly everybody seems to believe in. It has become clear that not everything can be driven from the centre and that the centre is not the only place where there are good ideas. I believe that, unless we involve and empower people—my noble friend touched on this in talking about his amendment—we are not going to succeed. If people do not understand what they are doing and do not feel that they want to be involved, this whole thing will not work.

I do not intend to speak at great length. The new clause is long. It sets out one way, in the framework that we have, of involving local authorities and making sure that they are looking at sustainable energy in their area. It will give councils a power to draw up sustainable energy plans and to some extent fill the gap left by the repeal of the Home Energy Conservation Act in a way that fits in with the thrust of this Bill as a whole and, indeed, with the whole agenda that this Bill forms part of. Many might say that the power is not sufficient and that only the keen will act on it. However, there are some carrots and sticks that I hope will give a greater chance of action. As I say, I do not expect the Government to pick up the whole of this new clause, but I will be pleased if it sets some ideas running about how we can involve local authorities.

The carrots are that the council can put in its plan a request for a transfer of powers, or a new power, to help to achieve energy policy objectives, to which the Government will need to respond. The presumption is that, if the plan is good, the Government will respond positively. Perhaps even more attractively, in these cash-strapped days, if a plan contains measures that are more cost-effective than current measures, the council will get the money to implement those measures. This is not a spending pledge, because the council will not get the money unless the new measures are more cost-effective than the others. It has been suggested that this could perhaps create a market in cost-effective measures. The stick is that the proposal is bottom-up, not top-down, and the power to draw up sustainable energy plans becomes a duty if a percentage of voters petition a council to do so. This is very much in keeping with the philosophy of the Government’s Localism Bill.

I know that my noble friend the Minister is keen to involve local councils in energy efficiency, so I hope that he will be able to explain a little more, as my noble friend said, how the Government see local authorities’ involvement in this field. I was pleased to read in the Newcastle Journal this morning that the Department of Energy and Climate Change has awarded almost £250,000 to Northumberland County Council to develop work in connection with carbon reduction in local communities. I know that the Government are keen on this. We are also keen, as part of that Government, that local authorities should play an important role. I hope that the Government can take away this amendment and see whether they can use it in any way. I certainly look forward to hearing what my noble friend has to say about the important role of local authorities.

My Lords, my best line has been taken by my noble friend Lord Moynihan, as I was going to accuse the noble Lord, Lord Teverson, of speaking far too conservatively. He has neglected to take note of the change that has altered public sector housing enormously over the last decade and a half, which is, of course, the advent of housing associations. Housing associations are now responsible for a very large proportion of public sector housing, but they do not have the opportunity to offer things such as rent rebates.

Speaking as an old local authority man, I am not entirely sure that if I was still there I would like the thought of somebody committing my ratepayers to having to pay for something, however beneficial, by way of an added inducement. We need to be extremely careful to make sure that what is done in a scheme such as this is self-justified entirely within the scheme. If somebody else wants to add further inducement, there is nothing to prevent a local authority from doing it.

However, we should not begin to assume that any aspect of this scheme is going to be dependent—or might become dependent, which would be even worse—on some other outside source of funding. If the schemes are not justified in their own right, standing entirely within the terms of reference that will be established in this Bill, then frankly they are not worth having. We absolutely have to stick with that, as a primary rule in what we are doing here, without expecting others to make other commitments to support it.

My Lords, we will come to the question of the energy company obligation later, but at this stage I must say that I was relieved to hear my noble friend Lord Teverson qualify the proposal in the third subsection of his Amendment 12 by saying that this is a bit of a cock-shy and may not necessarily be the right way ahead. At Second Reading, I remarked favourably on the energy company obligation because it was going to be more targeted on the fuel-poor than is the comparable measure under the CERT programme, which provided for a priority group covering about 11 million people, including every pensioner. It seemed to me that that was a very broad scattershot and made the cost to the energy companies that much greater. As I understand the Bill, the ECO is firmly linked with the question of fuel poverty; it is aimed at providing benefits for those who are classified as fuel-poor.

I am entirely with my noble friends in their assertion that local authorities have a major role to play in ensuring the success of the Green Deal. I recognise the value of incentives in the form of reduction of council tax or whatever. For instance, this is being offered by the Government in the case of communities that accept onshore wind farms; for a limited period they will be able to keep the additional rateable value coming to them, which will help the councils. On this occasion, however, it would be difficult to justify putting on to the energy companies the cost of any council tax rebates that may be awarded under subsection (3) of my noble friend’s Amendment 12. I was grateful to hear that he was not hooked on that as a solution to his problem.

I support the thrust of these amendments and I am grateful that we are discussing the role of the local authorities this early. Both as movers and shakers and as facilitators and providers of a framework or catalyst for movement, they will be extremely important.

In most parts of the country, opinion polls show that local authorities are relatively trusted. They are certainly trusted more than central government and energy supply companies. Whether the reasons for that are right or wrong, it is important that we mobilise that general good will. Local authorities have a role in a number of different respects and while it is true, as the noble Lord, Lord Dixon-Smith, has said, that the social housing stock has largely moved to housing associations, that is by no means totally the case. There will be many situations in which the local authority is still the landlord, although it may have a management company to run things, and it will have a responsibility for fairly substantial parts of the social housing stock and its maintenance and improvement.

It is regrettably true that the early stages of the last Government’s decent homes programme did not have a very strong energy efficiency dimension. That improved as time went on, but an opportunity was missed; a substantial amount of expenditure went on upgrading social housing stock, but improved energy efficiency was not one of the prime objectives. Local authorities as landlords can take that on.

Of course, there are also landlords of estates that are no longer a single form of tenure. Some of the occupants may well be tenants, but some of them may be owner-occupiers and some may be leaseholders or on a sublease, while some properties may be run by housing associations within the same estate. We have a complex and largely beneficial mix of types of housing on some of our larger estates, but the local authority is still the landlord and therefore in a strong position to try to persuade those on all forms of tenure to take advantage of the Green Deal, which probably individually they might not.

It is wrong that some improvements on estates have applied only to one form of tenure, because the economies of scale, to which the noble Lord, Lord Teverson, referred in a wider dimension, apply whatever the form of tenure. The totality of the provision and use of energy in those estates means that economies of scale will be achieved if the majority of the residents participate. The local authority is by far the best body to ensure that that happens.

Where housing associations are the landlord, of course they also have to have a role, but that is a slightly different role from what the amendment envisages for local authorities. Housing associations are no different from any other landlord that could effectively take advantage of this scheme and negotiate better terms, because they deal with substantial properties. It may be, however, that the Bill also needs to refer to housing associations in this regard.

Of course, local authorities can go beyond their role as the landlord or as a body that has an indirect interest in the property to a role in which they can help to persuade landlords of private tenanted property—that will include a significant number of the fuel-poor, but not necessarily only them—and owner-occupiers to operate this scheme on a street-by-street, similar-property-to-similar-property basis, again achieving economies of scale.

That role of local authorities is important. Some will be more prone to take up this cause and will be better at it than others, but that is the essence of devolution. Indeed, I assume that the essence of localism is that you will have different patterns in different areas. It is important that the Bill recognises that.

As for subsection (3) in the amendment, it is true that the new ECO commitment will be largely focused on the fuel-poor, but local authorities will be able to negotiate—not only with the householder but also with the energy supply companies—different ways of incentivising the adoption of the Green Deal. As I said early on in our proceedings, we have to recognise that this is a voluntary thing. It is not something that the Government, the energy company or your landlord can impose on you; take-up is voluntary. That may require some incentives. As the noble Lord, Lord Teverson, said, it is already the case in a number of areas that, by dealing with the energy supplier—British Gas, mostly—local authorities have already provided an incentive, so presumably they already have the power to do so. Subsection (3) suggests that we need to legislate for the link with the new energy company obligation, but I believe that local authorities already have the power to do this. If, by agreement with the energy supply companies, they can reach an accommodation that delivers the Green Deal on a wider scale, they certainly should not be inhibited from so doing. Amendment 12 is important in that it recognises these proactive and direct roles of local authorities, so I hope that the Government, if not agreeing with every word of it, will accept the general thrust.

Just to clarify, the noble Lord is absolutely right. I have written this amendment so that the local authority would be the catalyst that makes things happen. Who the freeholder of the property or the land is is irrelevant to that—whether they are a private landlord, a public landlord or a registered social landlord, this would apply to them. This is not just about local authority estates. It is about any estate or group of houses geographically, not about tenure, exactly as the noble Lord has pointed out.

Yes, the role would be somewhat different in different cases, but I think that the new clause would provide for that. On the second new clause in the group, if we are to drop HECA—which many of us would regret; I acknowledge the noble Baroness as a prime mover of it—local authorities need to be aware that they can have a commitment in a broader framework to sustainability and energy efficiency in their area. Again, that is a facilitating provision, but it is broader than the Green Deal, and I would very much welcome some reference to it in the Bill. I hope that the Minister can say that that is also part of the Government’s thinking.

My Lords, we are very encouraged that the noble Lord, Lord Teverson, is looking more widely than the simplistic interpretation of the Green Deal to make the greatest benefits available. We share his reflections on how local authorities can utilise their wide influence in the housing market to achieve added benefits.

As my noble friend Lord Whitty said, we were anxious when we looked at the drafting of the new clause that we should not overcomplicate the situation, because local authorities are involved in so many different facets of the local market, either as landlords, with other landlords or, under the wording of the new clause, acting as an agent for the building improver. We are concerned that that role needs to be clearly thought through: how they are working and interfacing with the different participants in the plan. For example, they may, through a housing association or through their managing agents, take on side or even employ an assessor in their area. That would put them straight in as a participant in the whole complex matrix of these arrangements.

However, we largely go along with the thrust of the noble Lord, Lord Teverson. Yes, we see that an added impact may be needed to bring the greatest benefits. To be fair, local authorities will be thinking how they can help their residents along the Green Deal plan to bring the greatest benefits to their communities. Under subsection (3) of the new clause they may be able themselves as landlord to offer rebates or think about incentives, but we think that if they are achieving added benefits by economies of scale, that may well be sufficient to provide incentives that will encourage a greater take-up of the Green Deal. We support the thrust of the amendment tabled by the noble Lord, Lord Teverson, and we would like the Minister to take it away to think about it, or tell us today what role she envisages in the matrix of the participants in the Green Deal that local authorities could be encouraged to take up.

My Lords, this group of amendments addresses the role of local authorities in relation to the Green Deal. We are very grateful to noble Lords for laying the amendments. We want and expect local authorities to exploit the opportunities that the Green Deal presents to them and to their residents. As the noble Lord, Lord Teverson, says, local authorities are indeed natural allies in this—as are housing associations, as the noble Lords, Lord Moynihan, Lord Dixon-Smith and Lord Whitty, observed.

I shall speak to Amendment 12 first. Section 2 of the Local Government Act 2000 already provides local authorities with a power to take any steps which they consider are likely to promote or improve the economic, social or environmental well-being of their local community. Local authorities are empowered to undertake a wide range of activities for the benefit of their local area and to improve the quality of life of local residents, businesses and those who commute to or visit the area. So certainly this could include local energy efficiency initiatives.

Moreover, the Green Deal will provide strong natural incentives and varied opportunities for councils to engage with and deliver it, in particular, the incentive of attracting new and additional sources of finance into their local areas to benefit local residents. Councils may, for example, choose to become Green Deal providers themselves operating on a commercial basis. Others may want to form partnerships with Green Deal providers working with them to ensure the widest possible availability and take-up of offers in their community. As trusted local brokers with knowledge of their housing stock, local authorities will be attractive partners for Green Deal providers. They will therefore be in a good position to negotiate advantageous programmes for their residents—for example, to deliver economies of scale and incentives, as the noble Lords, Lord Teverson and Lord Whitty, noted.

Many local authorities are currently working with the energy companies and others to deliver the community energy saving programme, which specifically targets whole-house, community-wide delivery of energy efficiency measures. We are carrying out a formal evaluation of this programme, which will complete in March of this year. That will therefore feed in. Anecdotal evidence to date suggests that CESP is delivering projects ranging from 100 to 1,200 properties, and because of this is achieving significant economies of scale. This experience is informing and will continue to inform the development of the Green Deal.

As the noble Lord, Lord Teverson, notes, a number of local authorities already use council tax rebates as incentives. British Gas has worked with around 70 councils to offer a rebate on council tax bills for households who take up their CERT cavity wall or loft insulation offers. The rebate is funded by British Gas, although in some instances the council also match-fund. Local authorities will also often contribute resources for marketing, such as council-branded leaflets. Rebates, which are limited to one per household, vary from £50 up to £125 depending on the council involved. However, I note the comments of the noble Lord, Lord Jenkin, on CERT and fuel poverty.

We fully expect local authorities to build on this experience and work with Green Deal providers and others to deliver schemes to whole communities. We are working closely with local authorities to understand and develop the roles that they might play in delivering and promoting the Green Deal and how to disseminate good practice, including thinking about how best to enable and incentivise such methods in delivering the Green Deal

Moving on to Amendment 31, the well-being power in the Local Government Act 2000 could already enable local authorities to propose, plan and deliver energy efficiency measures and programmes for their communities, and we will explore this further with CLG Ministers. Indeed, many councils already have a strong track record in delivering in this area, working in partnership with energy companies and others. As I have noted, the Green Deal will further incentivise this, and we are aware of a number of councils which are already considering how they might deliver the Green Deal. The noble Baroness, Lady Maddock, has a long track record in this area, and I note her concern to ensure that the take-up of this scheme is as wide as possible, building on the work of the Home Energy Conservation Act.

This Government fully support local residents in having a strong influence over their local council. I note that that principle underpins this amendment. My right honourable friend the Secretary of State for Communities and Local Government has brought forward the Localism Bill to provide councils and local residents with a greater ability to deliver local priorities without necessarily having Whitehall direction on what they must do or how they should deliver locally. For example, the general power of competence proposed in the Localism Bill is based on a fundamental assumption that local authorities should be free to act in the interests of their local communities, except where restricted by statutory limitations or restrictions. We believe that freeing local councils to act and working to create the right incentives is the way to ensure that local authorities and local residents take up the opportunities presented by the Green Deal and the future energy company obligation.

While we are sympathetic to these proposals in terms of local government involvement in the Green Deal, incentives to use the Green Deal, and encouraging take-up, all of which are extremely important, we hope that the noble Lord will withdraw his amendment. But I hope that noble Lords will be reassured by our continuing exploration of the role of local authorities in this area and by our recognition of how important they are in this regard, and how best to encourage take-up of this scheme.

My Lords, we are continually told that we are not in normal times at the moment. What confidence does the noble Baroness have that local authorities, under the present budgetary controls, will take up the empowerment clauses about which she has just told us?

As the noble Lord will have noted, obviously there are economies of scale when local authorities are dealing with this. Therefore, there is the incentive in that of being able to provide for local residents a better deal if they access these funds and we expect that they would see this as the route to go down. All these areas will, of course, be looked at carefully to try to ensure that the Green Deal is as effective as possible, which is what we all, in any party, even in these tight financial circumstances, wish to see.

My Lords, I thank my noble friend for that response. I am delighted to hear that local authorities have a number of those powers already. I omitted to declare that I am a member of a housing authority in terms of Cornwall Council, so I should declare an interest in that now, although I have absolutely no influence on what that council does, being a back-bench member of the opposition there. This important area is key to the success of this scheme. I am delighted that the Government recognise that and I am sure that we will have more conversations about this prior to Report stage. In the mean time, I beg leave to withdraw the amendment.

Amendment 12 withdrawn.

Clause 5 : Terms of plan etc

Amendment 13

Moved by

13: Clause 5, page 6, line 19, at end insert—

“(ia) the structure of repayments over the length of the green deal plan, which, must be equitable to the bill payer and any subsequent bill payer in accordance with a methodology to be in the form specified in the framework regulations;”

My Lords, I beg to move Amendment 13 and speak to the other amendments in this group. One could argue that the first three amendments could appear in the code of conduct or some form of secondary regulation, but the fact is that the primary legislation does not specify that such arrangements should do so. Therefore, one way or another, these amendments aim to ensure that these principles are followed in whatever regulations cover the delivery of the Green Deal.

Amendment 13 aims to protect those who effectively inherit a Green Deal arrangement. It is attempting to ensure that, because the Green Deal attaches to the property and not to the current occupant, subsequent occupiers are not unfairly prejudiced by the nature of the deal. In other areas of financial arrangements, we know that a significant number of deals start at a relatively low level of repayment and rise over time. Indeed, one could argue that the sub-prime mortgage market in the United States based on those principles almost brought the whole of world capitalism to its knees, but it is used in more respectable circumstances as well. However, in this case, it is important that subsequent occupiers are not disproportionately penalised. The golden rule should apply to the totality of the deal, but if the golden rule is delivered by low payments at the beginning, then subsequent occupiers, while they are required to pay a larger proportion of it back, may well not benefit from the golden rule.

That is the intention of this clause. There may be better ways of expressing it but it is a principle, I would have hoped, that the Government could adopt.

Amendment 14 requires Green Deal providers to be up-front about the costs of the deal and to inform consumers of the total cost. This relates not only to the immediate cost of the various measures that are to be taken but also to the terms of the repayment; in other words, the rate of interest and annual repayments. This suggests the APR should be calculated in the same way that is provided for under the consumer credit regulations. It would be better if the Green Deal offered a fixed rate of interest for the totality of the deal, as provided for in Amendment 15. This may go a little far for the Government and a little flexibility might be required. I would prefer Amendment 15 but, if the Government are not prepared to accept that, Amendment 14 will ensure transparency and clarity regarding the rate of repayment interest.

Amendment 16 deals with the fees. My consumer champion antennae always go off in any context when there is a separate reference to fees. There are some later amendments which deal with this in a slightly different context and perhaps this would be best considered in that light. However, the reference to “any fee” in this context seems odd to me. It is a reference to any fee over and above the cost of the Green Deal arrangements. If the fee referred to here relates, for example, to the fee of the assessor, surely that should be included in the Green Deal arrangements. If it relates to a fee from the financial institution providing for the Green Deal, that also should be clear as part of the Green Deal arrangements. So what does “and any fee” relate to over and above those arrangements?

A suspicion may be that it includes things like exit fees. If there is to be an exit fee—as has existed in the energy market to the detriment of consumers—we need to be clear about that. This has to be made clear to the consumer at the point of entry and also to anybody taking on the obligations. An exit fee is not appropriate here. You have established a deal at the beginning which is attached to the property rather than the individual. If the occupier or a subsequent occupier wishes to pay off the whole deal early, it should be open to them to do so and the potential cost should be reflected in the deal’s totality. If this relates to something down the line, like an exit fee, it needs to be dealt with separately. If it relates to a fee incurred at the point of assessment, it ought to be included within reference to the Green Deal arrangements. The Government’s comments on that and how they will deal with these aspects would be very welcome. I beg to move Amendment 13.

The noble Lord, Lord Whitty, may be pleased to hear that when I read through the Bill I put a question mark against the reference to a fee in subsection (5). Like him, I would like to know what this is about. I would envisage, particularly if there is a change of ownership, that a new owner might prefer and be prepared to pay off the debt that is on the house so as to be shot of that. I would be very distressed if that were going to attract a fee. Like the noble Lord, Lord Whitty, I am not clear what this fee refers to and I look forward to hearing what my noble friend has to say about that.

Having said that, I think that if one is entering into an agreement that may well last 25 years, it is asking too much to expect any provider to offer a loan at a fixed rate of interest over the whole of the 25 years. The noble Lord, Lord Whitty, did realise that that might be difficult for the Government to accept. One inevitable consequence is that the interest rate on the loan would have to be higher than it might otherwise be. He knows much more about this than I do, but you can have tracker bonds that will follow the rate of interest, and obviously, if interest rates are low, you will start very low. However, you are actually recognising that if interest rates go up—and whether we will face this later this year remains to be seen—inevitably then the rate on the loan goes up. It will be for the provider to propose a rate of interest for the loan and for the improver to agree. Simply starting from the proposition that there would have to be a fixed rate over the whole period may, I think, be going, as the noble Lord indicated, a bit too far.

My Lords, I was wrestling with an amendment—it was going to be a probing amendment—to the effect that a landlord of private rented property should not be liable for the Green Deal if the property becomes vacant. I realise that this amendment might better be put in Chapter 2, when we are discussing the private rented sector, but it did not seem to fit there and seems to fit much better in Clause 5, which deals with the terms of the plan and in particular the persons liable to make any payment under the Green Deal.

When a private rented property becomes vacant between lettings, does liability for the Green Deal loan repayment fall to the landlord, bearing in mind that energy bills are likely to be minimal between lettings? It seems obvious that if the property is vacant, it would fall to the landlord to carry on paying any energy bills for the duration of the vacancy, even though they are minimal, but does he become liable for the Green Deal? And if so, does the repayment of the loan instalments get adjusted downwards, bearing in mind the very small energy bills while vacant and the golden rule? Secondly, what happens if the landlord cuts off the energy supply and reconnects when a new tenant arrives? The energy bill would be zero but there would still be interest to pay. Would this fall on the landlord and what about the golden rule here? Could this act as a disincentive to landlords to take up the Green Deal, or do the Government think it will act as an incentive to landlords to reoccupy the property more quickly, bearing in mind that the landlord may have to carry out repairs, maintenance and redecorations between lettings?

There is a provision in Clause 15(3)(d) of this Bill to suspend Green Deal payments. Does this suspension provision apply when a property becomes vacant, and, if so, what would this do to the repayments? Would it increase the term of the agreement and increase total liability due to interest accrued during the suspension? I ask all this because it does not seem to be at all clear as to how this would work and what the figures would be like for the landlord in the event of his property becoming vacant. I would be grateful for clarification.

My Lords, the Minister will be relieved to hear that I do not have a great deal to add, as he has quite a bit to answer from his noble friend Lord Cathcart, who has identified issues which concern us all. Whether the answers come down in relation to the landlord or in any other respect, there are anxieties also about the tenant. We need a clear position with regard to that. We have our uncertainties and I am grateful to the noble Earl for having identified those.

The noble Lord, Lord Whitty, will accept what the noble Lord, Lord Jenkin, had to say about the fixed rate of interest. I once had a friend who took out a fixed-rate mortgage with a London authority just two years before the oil price rise in the 1970s. We can all recall inflation running at staggering figures at that time and interest rates going well into double figures. If you had a fixed-rate mortgage of 2 per cent, you reaped considerable advantages from that. With regard to a scheme that has any length of time attached to it, the question of fairness over a period of time has to be addressed.

My noble friend Lord Whitty raised the obvious question of what those costs will be and the interest which will bear upon the initial person living in the property. Consumer rights need to be safeguarded. We want clarity on that point too. Our amendment requires clarity on the changeover, to which the noble Earl, Lord Cathcart, also referred, with regard to whether the relationship between the improver and the person paying the Bill could change to the disadvantage of one or the other. How will the scheme work to guarantee that there is fairness over the considerable period of time involved in this exercise? That was the burden of the questions addressed earlier today.

I do not really need to add my voice to this matter because, if my noble friend Lord Whitty and the noble Lord, Lord Jenkin, are worried about the word “fee”, I am too. I, too, had also identified that. So that is a question for the Minister to answer. Is he not lucky to be in the place that he is?

I thank the noble Lords very much. Just before I respond to the amendments put forward by the noble Lord, Lord Whitty, among others, I want to clarify some comments on the previous amendments relating to Clause 4 about the Green Deal providers deciding how they would apply parts of the Green Deal, such as the assessment or the golden rule. I hope that I did not give the impression that firms could pick and choose. I hope I gave the impression that customers could pick and choose. Nevertheless, I want to be clear about that and that the prescribed methodologies for these steps, including expected savings, are very much part of the Bill.

I hope that I highlighted the beneficial flexibility, which experts and customer insight will have to present information in a useable format, as well as communicating accurately in line with the regulation. I want to emphasise another important protection. It covers all credit arrangements. Let me put on record that for consumers the Green Deal will need to meet the requirements of the Consumer Credit Act with only limited exceptions. For example, all communication on the terms of the plan would need to meet responsible lending rules.

I turn to the excellent amendments in the name of the noble Lord, Lord Whitty. Clause 5 sets out requirements for what terms must and must not be present in a Green Deal plan. In doing so, it builds on Clause 4 by further specifying the basis on which a Green Deal can be offered. Clause 5 ensures that, through the terms of the plan, key consumer protections are in place about the financing as well as the advice, the measures and the installation. Subsections (2) and (3) ensure that no charge over any person’s property may be taken away by way of security. Early repayment cannot be required of the bill payer, except in conditions to be set out in regulations, and a bill payer’s liability for maintaining Green Deal repayments cannot be extended beyond the period for which they are the bill payer for a property. This ensures that the Green Deal does not become a personal loan and remains a charge on the energy bill.

The noble Earl, Lord Cathcart, wishes us to expand on this point, particularly on when the property becomes vacant. As regards the person then liable for the bill at the end of a tenancy, that obligation would usually revert to the owner. Clause 2(10) also makes provision for where there is no energy bill because supply and connection charges have been suspended. We will provide in regulation that the person who would otherwise be the bill payer, usually the owner, is liable for the charge. I hope that that answers the question posed by the noble Earl.

I have just been passed a note saying, “Be fast if you can” and I am trying my best. I thought that I was being quite fast. Amendment 13A proposes a further element to the terms of the plan to provide for confirmation of the ownership and maintenance of the Green Deal improvements.

Sitting suspended for a Division in the House.

My Lords, I think that we should restart, but I should say that there is very likely to be another Division immediately after this one is decided. I will try not to interrupt the noble Lord, Lord Marland, in the middle of a sentence this time.

I shall start the sentence again. I will rely on Hansard, as I always do, to dig me out of any holes that I have got into.

Amendment 13A proposes a further element to the terms of the plan to provide for confirmation of the ownership and maintenance of the Green Deal improvements when the bill payer and improver are different people. I am grateful to noble Lords for raising that issue. It may need to be provided for within the terms of the Green Deal plan. However, I resist the amendment on the basis that we have already provided for further compulsory conditions to be specified in the framework regulations under subsection (1)(b). If the issue needs to be addressed, we already have the power to add it to the terms of the plan.

Sitting suspended for a Division in the House.

My Lords, on a point of order. I do not know if one can do this on this Committee, but we are breaking for 10 minutes but the vote has not finished yet. I realise that you have exercised a degree of flexibility, but we are going to have a number of Divisions. Surely we should have breaks commensurate with the length of time it takes for the Division to be held and announced next door, because, at the moment, we are having a Division on closure followed by a Division on substantive amendments, and the two follow one after the other.

I appreciate that. I am afraid that I had to call the noble Lord, Lord Marland, between the two Divisions. I recognise that there is a problem when we get Divisions back-to-back like this. I have given some leeway; I gave about five minutes on the last Division.

Amendments 13 to 16 all deal with the financial terms of Green Deal plans. However, before I address the amendments, let me put on record that the Consumer Credit Act applies to the Green Deal plans in full bar a few essential amendments in the Bill in Clauses 23 to 27. This provides a high starting point for consumer protection. Clause 5 gives the Secretary of State power through regulation to put additional protections into the Green Deal regime.

Amendments 14 and 16 are closely related to the Consumer Credit Act. Amendment 14 seeks to apply one specific aspect of the CCA: the presentation of the terms of the plan. This means that Green Deal providers would need to set out the total credit payable, the amount of the regular payments, and the annual percentage rate—APR—calculated in accordance with the rules. However, it is not necessary to include the amendment, as the relevant legislation already applies in full to Green Deal arrangements for consumers.

The purpose of Amendment 16 is to remove the ability to set out, in secondary regulations, how the fee for early repayment should be calculated. The effect of the amendment would be that no provisions about early repayment fees could be set out in regulations for Green Deal plans. Domestic Green Deals would be subject to an early repayment rule, which would be set out in the Consumer Credit Act. However, business Green Deal providers are not subject to any existing regulations on early repayment fees. This amendment would remove Government’s ability to set out regulations limiting the fees that can be charged. This means that the business Green Deal providers could be free to determine their own fees for early repayment of the Green Deal and could lead to inappropriately high fees being charged. For small businesses in particular, that could be a concern when signing up for the Green Deal. I therefore respectfully request that the noble Lord withdraw the amendment to allow us to put in place in secondary legislation the appropriate protections for businesses taking out Green Deal plans.

Amendments 13 and 15 go further than the Consumer Credit Act in seeking to limit the range of repayment structures allowable under the Green Deal. Amendment 13 proposes a general power to regulate through a prescribed methodology so that Green Deal plans only offer repayment structures that are equitable to both initial and subsequent bill payers. Amendment 15 would specifically prohibit any form of variable interest rate.

Clause 5 already provides sufficient powers to restrict the permissible terms of the plan in the framework regulations. As part of these conditions, we will seek to ensure that initial benefits for the improver do not turn into a burden for future bill payers. That could include specifying a particular methodology for assessing whether a proposed structure is equitable or prohibiting all structures save those that are specifically approved. We already accept the purpose of Amendment 13: to ensure there is power to regulate the terms of the Green Deal plan and give both initial and subsequent bill payers confidence that the likely savings will be greater than the cost.

The noble Lord, Lord Whitty, doubts whether Amendment 15 is appropriate, but I will speak to it none the less. Amendment 15 is more specific, prohibiting in primary legislation any terms that vary the rate of interest. It may be that in order to protect consumer confidence, we decide in the framework regulation to authorise only fixed-rate deals. However, it is not straightforwardly obvious that this is the only equitable financial structure for customers. Some variable structures may be in consumers’ best interests. First, we wish to ensure the lowest finance cost for consumers—a concern of the noble Lord, Lord Dixon-Smith. That means ensuring that financial institutions want to invest in Green Deal. As several large pension schemes demand an index-linked payment structure, we wish to explore further whether it would be reasonable to allow Green Deal payments to vary with an appropriate index. We would not allow this if we believed it would compromise confidence, but we do not believe that we should rule this out in primary legislation.

Secondly, it may be that a structure whereby the cost of finance rises as prices rise is fairer to the initial bill payer, since it would spread the real savings more evenly over the lifetime of the Green Deal. We intend to consult a range of stakeholders on permissible financial terms and will set them out further in framework regulations. As the Green Deal is a market-based mechanism, the Government are keen not to rule out options for finance providers unless necessary to ensure consumer protection. Equally it is not straightforward to ensure an equitable balance of payments between the initial and subsequent bill payers. I hope that this explains the situation and that on that basis the noble Lord will withdraw his amendment.

Can my noble friend give some indication of what level of fee—I made the point about early repayment, perhaps a successor owner wishing to pay off the whole bill and not have it hang over them—he thinks is likely to be charged under the arrangements that my noble friend has outlined? There really is an argument for keeping that as low as possible.

I totally agree with my noble friend Lord Jenkin. There is always an argument for keeping everything as low as possible. However, we are not at the stage of the Bill where we should be able to predict or prescribe how additional fees are charged. I think I have spoken to that; I hope that my noble friend feels that I have. We have a lot of discussion, dialogue and consultation to have with the financial institutions who may well be providing that finance.

To assist the Minister on this, can he clarify to the Committee that the Government intend for there to be the flexibility that my noble friend is looking for?

I am grateful to my noble friend Lord Moynihan for assisting me in this regard. Absolutely—we have to allow the framework to take its course and we have to be open to consultation and views to find the best method of dealing with this.

My Lords, I am not sure that my noble friend answered my questions quite as fully as I might have hoped. I asked whether the suspension provisions in Clause 15 might apply to the landlord of a vacant property. It seems that repayments of the Green Deal are fixed at the outset—or am I wrong? Is there flexibility? What happens if one tenant does not use much energy and the next one does? Does the Green Deal repayment change under any circumstances? What if a tenant defaults on paying his energy bills, does the landlord become liable?

I am not asking the Minister to answer everything now—I do not want to regurgitate my previous remarks—but would he consider writing to me once he has considered the issue?

I am grateful to my noble friend for asking me to explain again. A lot of this will be picked up in the group of amendments that relate to the rental sector. When we reach that point we will be able to clarify the situation.

My Lords, I am grateful to the Minister for spelling out some of this, but I am still puzzled by bits of it. For example, there is the reference to the consumer credit regulations. He seems to be saying that they apply by default, but then referred us forward to Clause 23, which provides for some exemptions from it. It is not clear, as his words implied, that all such credit arrangements are covered by the Consumer Credit Act, except where specifically excluded. As he said himself, some of the organisations which will be Green Deal providers—with whom the householder actually has the deal, as distinct from the financial vehicle behind it—are not covered by the Consumer Credit Act. I am not necessarily asking for a detailed reply at this point but it would be useful for the Committee to have spelt out how and to whom the Consumer Credit Act applies and what, if any, are the exemptions referred to in Clause 23.

Perhaps I may clarify that question for the noble Lord. Our legal advice is that the protection is in place. I am happy to debate the subject with him afterwards, but that is our legal advice.

It would probably be helpful to us to have that legal advice—or the gist of it—in writing, otherwise we may return to this.

The issue in Clause 13, equity between the original occupier signing up for the Green Deal and a subsequent occupier, is still important. I agree that aspects can be covered by secondary legislation or the code of conduct, but it is obviously key that any potential payment needs to be spelt out—this is where it links to Amendment 16 with relation, for example, to an exit fee. If you sign up for an agreement, and there is an exit fee included, you are going in with your eyes open—or you should be if everything is transparent and spelt out. However, the agreement is not with the person who may subsequently pay the exit fee; other things being equal, on acquiring the property, a subsequent owner will have calculated that it is better to pay off the debt early. If there is a fee attached that is not included in the deal, it is important that contingency is covered. Transparency, caveat emptor and a search on acquiring the property or taking up the tenancy or lease must all be taken into consideration, but if a subsequent owner is to be liable for such fees down the line this must be spelt out.

To some extent, I accept the view that Amendment 15 is not appropriate in that it would prescribe a fixed rate of interest. On the other hand, it is difficult to calculate, even within the range of outcomes we discussed on the earlier amendment, whether the golden rule works unless you have some understanding of the interest implied in the total package. Some will be marginal, and a fixed rate will give you at least the minimum rate of return and benefit, whereas with a variable rate it will be difficult to assess whether the golden rule has been met. We will have to assume certain things about energy use. As the noble Lord, Lord Jenkin, said, some people will use more energy because it is cheaper, for obvious reasons. However, on the basis of equal use and equal interest rates, you can make a reasonable stab at a calculation on the golden rule. If both of those are variable, it is more difficult to say how it applies.

I realise that we have to have flexibility, and therefore Amendment 15 in its absolutist sense is probably not appropriate. The previous amendment, with the clarification on compensation and Consumer Credit Act provisions, is needed. We need to protect consumers from the possibility that the whole structure of repayment is either to their detriment or unclear when they sign up.

Although I will withdraw the amendment at this stage—

My noble friend will have recognised from the contributions of Members of the Committee the anxiety about the concept of the fee. I wonder whether he will withdraw his amendment before we have made a great deal of progress, as I heard from the Minister’s reply, on how that issue is to be resolved. We have expressed anxieties on it.

I apologise to the Minister if, in the disturbance caused by the Divisions, I lost track of his replies. He may have covered the matter. I know that my noble friend was exercised about this, but so were other Members of the Committee and we all gave voice to it. We certainly have anxieties, and I wonder whether, before withdrawing the amendment, my noble friend will press the Minister on the matter.

I will press the Minister for communication with Members of the Committee who have taken an interest in the matter, on both the legal point and on any fee that applies.

Given that there has been disruption and that not everyone heard what I said, I am happy to communicate with other Members of the Committee to clarify these things and carry on with the dialogue. That is the spirit in which this Committee, including the contributions of all noble Lords, is operating.

It would be relatively easy to say what any fee does not cover, which would provide some clarity. I would also welcome any communication from the Minister between now and Report. I would hope that that clarification indicates that fees paid up-front are not included, even if there is need for flexibility about fees paid later. On the understanding that we will be hearing from the Minister, I beg leave to withdraw my amendment.

Amendment 13 withdrawn.

Amendments 13A to 16 not moved.

Clause 5 agreed to.

Clause 6 : Consents and redress etc

Amendment 16A

Moved by

16A: Clause 6, page 7, line 14, at beginning insert—

“(A1) Before any improvements are installed under section 7, or a plan is confirmed under sections 8 to 10, the improver must consult—

(a) the bill payer, where the improver is the owner of a property; or(b) the owner of a property, where the improver is the bill payer, about the assessment undertaken and options outlined in the assessment, and receive the consent of that person to the intended improvements.(A2) At the time of consulting a person about the assessment and intended improvements under subsection (A1), the improver must provide the person with a copy of the assessment undertaken.

(A3) Where a person is consulted about intended improvements under this section, they must not unreasonably withhold their consent to those improvements.

(A4) The framework regulations shall make provision for an appropriate period for a person to consider and consent to intended improvements under this section.”

My Lords, the amendment seeks to clarify some important aspects of the clause and identifies just what the Opposition’s anxieties are. I hope that the Minister will be able to reassure us on this. It is quite clear that necessary consultation will take place between the improver and any potential bill payer. It is important that we appreciate the obvious fact that whoever is saddled with the additional costs that are reflected in energy bills knows exactly what is going on in relation to the property.

The issue does not arise with regard to the householder for obvious reasons, but we are also concerned with kinds of property entirely different from properties inhabited by the owner-occupier or a single tenant. We are concerned with the situation where there are improvements going on across a number of flats, for example, where the improver is the landlord but the individual tenants are going to be the bill payers. We want to make sure that, in any such exercise, everybody is fully informed and knows what is going on.

We also recognise, and I hope that we have included this satisfactorily in the amendment, the enormous danger of the awkward one person putting a veto on desirable improvements right across the range of the property. That would lead to a situation in which proposals were vitiated simply because one had no framework at all to deal with the minority—not that I am against minorities, nor do I think that at any time the individual’s rights should be overridden. However, we have to take the interests of the generality into account in circumstances where someone, for all sorts of reasons that we do not dare to presage, might be awkward.

Of course, there is the obvious fact that, with regard to bill payments, some may consider that they might be in for the shorter term because they might be a little older than other people in other properties and that any costs at this stage—anything at all that puts up a fuel bill—is disadvantageous to them, while at the same time they might not think that there is much in the way of long-term benefits for them because they may not think that their own term is very long. Such difficulties must be overcome.

This is a probing amendment. It merely asks the Minister to identify both the process of consultation and how he thinks the difficulties that may occur from time to time should be addressed. I beg to move.

My Lords, this clause enables the framework regulations to require that the energy bill payer consents to the adding of the Green Deal charge to their bills. This is important in cases where the Green Deal plan is set up by someone such as a landlord who does not pay the bills for the property. This clause will enable the framework regulations to prevent, for example, landlords from imposing charges on to tenants’ bills without first obtaining their express written consent. The clause also enables the framework regulations to provide for redress in cases where it transpires that the necessary permissions or consents to the improvements have not been obtained—for example, that the improvements have been made without consulting the freeholder.

I am grateful to the noble Lord, Lord Davies of Oldham, and other noble Lords for Amendments 16A and 16B. As I have outlined, there is adequate provision within this clause for the framework regulations to set out more detail on the issue of consent where the improver and bill payer are different people. It is important that such detail is contained within the framework regulations, as the detailed arrangements may be subject to change as the Green Deal develops. These regulations will be subject to the affirmative procedure.

In addition, it is not our intention to force the Green Deal on to any party. It must be allowed to work on a voluntary basis, even where the improver and the bill payer are different people. We are proposing powers under the private rented sector chapter that would ensure that a landlord does not unreasonably withhold consent to a tenant’s request for a Green Deal. However, these powers would be used only if the sector as a whole does not take advantage of the Green Deal and improve properties voluntarily.

I turn now to Amendment 16B. The Bill contains powers to provide for redress in cases where an improver incorrectly confirms that he has obtained all necessary consents to the improvements. We do not consider that it is necessary, as this amendment seeks to do, to provide for redress in respect of matters agreed to by the improver, as the improver will himself confirm consent by signing up to the Green Deal. I hope that this gives the noble Lord reassurance, enabling him to withdraw his probing amendment.

My Lords, I am partially satisfied. I am pleased to note that the noble Lord says that the regulations will be subject to the affirmative procedure, so we recognise that the Government appreciate the importance of this. However, surely the matter of the principle of consultation and the certainty that attends on it is of such importance that it ought really to be on the face of the Bill. I understand that the details ought to be in regulations and I accept entirely his point about changes over time. We all appreciate the obvious fact that you cannot have excessive detail in primary legislation. However, I am not pressing him on the detail at this point; I am pressing him on the principle underpinning the operation of the clause and I am not certain that the clause is clear enough. I hear what the Minister says. As I said, it is a reassurance that the regulations are going to be before Parliament, but we have some anxieties and so might return to this at a later stage. I beg leave to withdraw the amendment.

Amendment 16A withdrawn.

Amendment 16B not moved.

Clause 6 agreed.

My Lords, noble Lords had indicated their intention to oppose a series of clauses and my instructions were that I must take each clause individually, but I understand that that opposition has now been withdrawn. Are noble Lords willing to discuss the clauses en bloc? If not, we start with the question whether Clause 7 should stand part of the Bill.

Clause 7 : Installation of improvements

Debate on whether Clause 7 should stand part of the Bill.

I am sorry, but we had a few concerns over some of the clauses. We did not want to draft a specific amendment, but we wanted to raise our concerns under the stand part debates. The first concern indeed relates to Clause 7. On our team’s side, having debated this clause, we are a little concerned whether we have identified an inconsistency. I will explain and the Minister can then perhaps satisfy us that we have not misread the situation. Clause 7(3)(a) requires that,

“the improvements installed meet the standard specified in the code of practice”.

The debate on Monday seemed to us to suggest that there was not a standard specified in the code of practice. Nevertheless, we want consistency and a consistent approach. We understood from the debate on Monday that there was not a standard to be specified in the code of practice, so we were concerned to clarify whether we misunderstood or whether there has been an error in drafting on that principle.

I am grateful to the noble Lord for raising this matter. Perhaps I may take it away and respond to him later. It is a technical matter and, rather than reading the answer now and taking up the time of other noble Lords, I will commit to doing that. I thank the noble Lord for bringing the matter to our attention.

Clause 7 agreed.

Clause 8 agreed.

Clause 9 : Confirmation of plan: supplementary provision for England and Wales

Debate on whether Clause 9 should stand part of the Bill.

Perhaps we may be indulgent for a few minutes more. We looked at Clause 9 to see how it fits with Clauses 10 and 11 in referring the confirmation of plan, and how this applies in England, Wales and Scotland and in updating information. I speak only to Clause 9; the point is echoed in Clauses 10 and 11. Together with my noble friend Lord Whitty, our antennae prick up when under Clause 9(3)(c) appears the imposition of a requirement to pay a fee. That is replicated in a similar fashion. Perhaps the Minister could clarify why there is a fee, the level to which he thinks a fee may be appropriate and who will be liable to pay that fee under this clause.

I am informed that mention is made of this simply for administrative purposes. Your Lordships will note that Clause 9 provides that framework regulations may allow a fee to be imposed. No doubt that is simply an enabling thing, but if I am wrong about it I shall come back and clarify.

I thank the Minister—that is most helpful. It has opened up the possibility of a dialogue so that we can understand better.

Clause 9 agreed.

Clauses 10 and 11 agreed.

Clause 12 : Disclosure of green deal plan etc in connection with sale or letting out

Debate on whether Clause 12 should stand part of the Bill.

Perhaps I may ask the indulgence of the Committee yet again, rather than introduce a specific amendment. I want to pick up the principle as outlined in Clause 12. It has a crossover into Clause 13. It relates to our discussion of the disclosure of a Green Deal plan in connection with the sale or letting out. I well understand the clause and go along with the thrust of it. Previously in Committee, we identified that there could well be an energy plan put forward on a property in respect of which the Green Deal plan is a subset. We wonder whether it would make sense for the Minister and his team to go away and think about whether, if an energy plan attaches to a property, it may be attached to a Green Deal plan such that there is clarity on the property that passes from one occupant to the next. That seems sensible to us. If under energy conservation a landlord, tenant or bill payer may undertake a wider energy plan of which an element of the Green Deal may not apply, it would make sense if that could attach to the disclosures under Clause 12.

I thank the noble Lord for raising that. This relates specifically to a Green Deal plan. I am sure that anyone selling a property in the circumstances that he mentioned may want to emphasise the additional work that has been done. This relates specifically to the Green Deal in trying to ensure that there is transparency and clarity for anyone buying a property or anyone taking up a tenancy on a property. It places an obligation on sellers, landlords and licensors of properties to disclose the existence of a Green Deal plan. It is fairly specific, with the intention that there is the clarity and transparency that the Opposition and the Government are keen to see.

I am grateful to the noble Baroness for clarification. It may be in our dialogue outside when we explore further.

Clause 12 agreed.

Clause 13 agreed.

Clause 14 : Sanctions for non-compliance with section 12 or 13

Amendment 16BA

Moved by

16BA: Clause 14, page 11, line 40, after “penalty” insert “not exceeding £100 in the case of an individual and £500 in the case of a company or body corporate”

I note that the noble Lord, Lord Jenkin, also looked on this clause and also saw that there was an issue with regard to the appropriate penalty. I appreciate that he is looking at it slightly differently from us, as we distinguish between the individual and the body corporate. We are concerned that we need an order of magnitude with regard to the nature of the offence. Here we are, involved in an exercise when we all know that we want, as far as possible, to see provisions go through on the basis of consent and mutual amity. We also know that things can go wrong. When they do so, we need to have some feeling of the order of magnitude which is attended on the wrongdoing, consistent with the overall objectives of the scheme. I look forward to the contribution that the noble Lord, Lord Jenkin, will make to his amendment. I beg to move.

I was inspired to table my amendment by the proposal of the Delegated Powers Committee. In paragraph 11 of its report, it drew attention to the absence of a limit in the Bill and of the penalty that could be imposed. It took the view that as the affirmative procedure would be required, it would not regard the derogation of the power as inappropriate. However, it suggested that there should be a maximum penalty.

Looking at this provision, and applying my little skill and dubious judgment, I suggested a figure of £500. My amendment was tabled before that of the Official Opposition, and I am intrigued to see that they tabled the same figure for corporate bodies but a much lower figure for individuals. I would like to know what the Minister has in mind as an appropriate level of penalty. Mine is an entirely probing amendment.

I thank noble Lords for their suggested amendments to Clause 14 to limit the level of financial penalty on individuals and companies for failure to comply with the disclosure and acknowledgement provisions. This clause provides the powers of the Secretary of State to make regulations to ensure that sellers and licensors comply with their disclosure and acknowledgement obligations. The clause allows for the following specific provisions to be made: sanctions for non-compliance, including civil penalties; requiring the Green Deal provider to cancel the liability of a bill payer to pay Green Deal plan instalments; requiring the Green Deal provider to refund any payments already made; and requiring those at fault to pay compensation to the Green Deal providers.

I understand noble Lords’ desire to protect individuals and businesses from excessive penalties. However, the disclosure and acknowledgment requirements are vital to the effective operation of the Green Deal and indeed to protect the customer, so we need robust and transparent sanctions to ensure that they are all complied with. We will work with relevant industry stakeholders to develop options as to how these provisions will apply in practice to minimise instances of non-compliance. I wish to emphasise that we will consult before setting out these arrangements in regulations.

Our aim will be to use existing and well established systems of sanctions and redress where possible. Further consideration is necessary to determine what level of civil penalty would provide sufficient deterrence to ensure compliance, but I trust noble Lords understand that it would be premature to make a decision on an upper limit at this stage. In conclusion, I assure noble Lords that we will seek to ensure that penalties are proportionate. I hope that this assurance will enable the noble Lord to withdraw the amendment.

I do not wish to pre-empt the noble Lord, Lord Jenkin, but my amendment, too, was a probing one and I am satisfied with that reply. I beg to withdraw.

Amendment 16BA withdrawn.

Amendment 16C not moved.

Clause 14 agreed.

Clause 15 agreed.

Clause 16 : Power to modify energy supply licences to make provision as to default in green deal payments

Amendment 16D

Moved by

16D: Clause 16, page 13, line 29, leave out paragraph (6)

I should announce that there is an error in the wording on the Marshalled List. It should say “Page 13, line 29, leave out paragraph (b)”.

I am grateful for the clarification on the terms of this amendment. The purpose of the amendment is to draw attention to the additional ways in which the Government are intending to disconnect someone’s power. We need to be clear about this. We all know the controversies of the past in relation to disconnection, and we also know that the major energy companies are careful about disconnection issues, particularly with regard to winter disconnections and vulnerable households. However, of course that refers to the big providers; and it is merely a code of practice and therefore not in legislation. We are concerned that here is a cause for potential disconnection and we want to know the circumstances in which disconnection would take place.

We are not quite clear whether we are creating with this legislation something that detracts from the existing protection that so many consumers have, and that would render vulnerable those who are not at the present time, because of the nature of the scheme. We think that this issue is of such importance and that we ought to get this right in primary legislation. All noble Lords will of course fully appreciate the problems for a household if disconnection occurs at any stage. It is of sufficient import for the Minister to give us greater assurances than we have in the Bill on the issue of disconnection. I beg to move.

My Lords, Clause 16 permits the Secretary of State to modify gas and electricity supply licences to make provisions as to the steps that can be taken by energy suppliers when the customer defaults in making Green Deal payments. We intend that the existing procedures employed by energy suppliers in the event of a non-payment by a customer will also be used to collect Green Deal charges. The clause also enables provision to be made in licences regarding disconnection of a customer who has defaulted on the Green Deal charge. However, we expect that disconnection will, as is currently the case, be very rarely used by energy suppliers and only in the last resort when all other means of collecting payments have been exhausted. Furthermore, licences prohibit energy suppliers from disconnecting households in the winter months where they know, or have reason to believe, the customer is, for example, a pensioner or lives with other pensioners or those under 18. In addition, the larger energy suppliers have developed their own safety net procedure, which is a commitment to never knowingly disconnect a vulnerable consumer at any time of the year.

Clause 16 also allows provision to be made in licences enabling suppliers to require a deposit as security for Green Deal payments in specific circumstances. We intend to exercise this power to ensure that, if a customer is required to provide a deposit in respect of energy supply charges, that deposit can also be used as security for Green Deal payments. We do not intend to allow suppliers to request a deposit solely because a customer has a Green Deal finance arrangement. As is currently the case in the domestic market, a security deposit should only be requested from a domestic customer in specific circumstances. For example, when a customer has a poor credit history and a secure method of payment, like fitting a prepayment meter, is not feasible.

All these provisions are necessary to ensure that the Green Deal charge part of the energy bill can be treated equally with the energy component by suppliers when the customer defaults on payment. This will in turn help to secure low interest rates on Green Deal finance, as debt recovery rates on the Green Deal charge should closely match the high historical recovery rates observed for an energy bill. I therefore invite the noble Lord to withdraw his amendment.

My Lords, I am largely satisfied with that reply. Can the Minister clarify one issue? When he talks about the special deposit, is that specific and unique to this legislation or is he building upon a power that exists elsewhere and applies to deposits where there have been problems with failure of sustaining payments? If this is novel, he has not relaxed my anxieties about this power. If he is saying that in order to protect the Green Deal we are merely buttressing the provision which exists in other circumstances, I have no quibble, but I would like reassurance on that.

I am grateful to the noble Lord for pressing me on this. There is a practice in place in the non-domestic sector and we are building on that here in the Green Deal. I hope that satisfies the noble Lord; if he wants us to specify how that works, I would be happy to do so during the course of proceedings.

I am grateful to the noble Lord; I would like a note from him on this point, because we have real anxieties.

This is a power that stretches across the board, so I want reassurance in both instances. The noble Lord has been entirely reasonable, as he always is, but we are anxious that this is originating in primary legislation a concept which is merely practice elsewhere thus far. If it is built on precedent in other Acts to which energy companies or other providers respond, of course I am entirely reassured by his response. I just want a note to clarify that point. As the noble Lord has indicated that he will reassure the Committee on that point, I beg leave to withdraw the amendment.

Amendment 16D withdrawn.

Debate on whether Clause 16 should stand part of the Bill.

I raise a point on this, because it is relevant to a question that I asked on Second Reading. If there is a default on the repayment of a Green Deal loan by a bill payer, which of the parties bears the cost of that default? Is it the energy supplier, whose job it is to collect the repayment as an addition to the energy bill, or is it the provider who put up the money in the first place? I am not sure that I have yet had an answer to that question. I know that it is one that worries suppliers. Many of them are energy companies, which are likely to face considerable strain on their balance sheets due to the huge investment which they will be making in generation and transmission equipment over the next few years. They are anxious that if they find themselves liable to bear the costs of default under the Green Deal scheme, that may affect their balance sheets and the perception of the financial markets.

I do not know whether this is an appropriate point to raise that question, but we are talking about defaults, and that is a question which really needs an answer. My noble friend may well not yet be in a position to answer. I think that I am right in saying that it was not answered on Second Reading, but it is a question which is causing concern and to which, at some stage, there will have to be a full answer.

We will develop this theme as the Bill goes through. Of course, in the first instance, it is the consumer to whom we would go in the event of default. Then, my noble friend rightly asks, will it be the Green Deal provider or the electricity provider? We are consulting on that issue at the moment. It is a very important thing to consult on, and when the consultation is over, we will bring it in to the Green Deal.

Clause 16 agreed.

Clauses 17 to 20 agreed.

Amendment 16E

Moved by

16E: Before Clause 21, insert the following new Clause—

“Additional green deal payments: gas and electricity meters

Bill payers who are asked for their consent for green deal plans under section 6 or who are subject to payments under green deal plans under section 1(6), and have pre-pay meters installed must be provided with details about any extra payments that they incur as a result of—

(a) meters being installed, and(b) intended or existing green deal plans.”

Amendment 16E concerns prepayment meters. We wish to highlight the fact that there should be transparency to to help overcome any disinclination of poor households in fuel poverty to try to improve their heating. As we all know, a prepayment meter requires cash to be paid before energy can be consumed. Some meters take cards or tokens on which cash can be credited.

PPMs are used by energy suppliers as an alternative to disconnection and are routinely fitted to recover outstanding bills. As the financial crisis worsens, we are worried that more and more consumers with PPMs are going without electricity or gas under self-disconnection even in the coldest months of the year. This research sought to understand the extent of self-disconnection among PPM users and the effects that it can have. In research undertaken by Consumer Focus, the majority of households welcomed their prepayment meters for the control that they offer over budgeting and debt. This control comes at the price of inconvenience in managing and topping-up meters. Some consumers resort to going without heating, or without even the most basic of everyday essentials to ensure that they have enough money to keep their meters topped up. For some households this is an ongoing struggle. Around 16 per cent of PPM users self-disconnect at least once a year. That could affect as many as 1.4 million people, some of whom are highly vulnerable.

The tariffs charged for prepayment meters are more expensive than direct debits or online tariffs. Yet, despite the relative high costs, the majority of families on PPMs have an annual income of less than £17,500. Thirteen per cent of households pay for their gas and electricity using prepayment meters, with almost two-thirds of these households using them to pay for both gas and electricity. More than half of households on such meters receive a means-tested benefit or benefits for disability.

Ofgem’s own investigation found that prepayment meter customers were paying more for their energy than it costs energy companies to supply. To ensure that the tariff was cost-reflective, Ofgem introduced new licensing conditions for energy suppliers. Since September 2009, the new conditions have required energy suppliers to ensure that the price paid by prepayment meter customers reflects the cost of this form of supply when compared with direct debit or standard credit tariffs. Ofgem has concluded that the new conditions have led to the average premium for prepayment meters compared with direct debit falling to £69 from £111 since October 2007.

Nevertheless, an investigation by Consumer Focus has shown that the cost of poverty premium, based on a real-life example, reveals a differential of £250, which has caused us to raise the problem with the Minister in Amendment 16E. We are seeking clarity for people who wish to use prepayment meters and may wish to disconnect. There should be clarity that the extra charges which could be levied under this are separate from the extra charges that they could pay for Green Deal, such that the benefits that we would wish them to seek under a Green Deal application are not undermined. I beg to move.

I discussed the whole question of consumers with prepayment meters at some length with the body representing electricity producers. It was in the context of the CERT scheme, which we debated several times over the past two or three years. The point that they made very firmly was yes, of course, there are a number of consumers with prepayment meters who are fuel-poor. As the noble Lord properly said, it is one way in which the companies can make more certain of securing the cost of the energy they supply. But the companies also made clear to me that it is a very poor surrogate as a test for who are the fuel-poor. I found this surprising, but they were quite clear: a surprising number of consumers actually prefer to pay by prepayment meter so as not to be faced with bills at the end of a month or three months. One needs to bear that in mind: it is not an accurate indicator of who is likely to be fuel-poor.

My Lords, will the noble Lord bear in mind that these same electricity and gas companies have the postal codes of their consumers, and that it does not take a computer genius to link the postal districts with areas of great disadvantage and social vulnerability? It is quite clear that there are a number of people in second homes who find it very convenient for understandable reasons to have prepayment meters. However, the argument advanced by the energy companies that they do not really know who the poorest people are, is self-serving, because they make a lot of money out of charging a higher rate for these meters. It has been one of the great sources of antagonism for many of us against the power companies, that they have disadvantaged people who are already vulnerable. The ones who have second homes we can understand; but the correlation between the postal codes of poor neighbourhoods and the fact they are on prepayment meters is simple to establish, but they never want to do that because they hide behind so-called Freedom of Information provisions, which I do not think stand up to close scrutiny when they are set against the disadvantage of the people exploited by this form of charging, in many instances.

The noble Lord is perfectly entitled to make his point, but it does not refer to the point I was making. My point was that, yes, prepayment meters are used by many poor households and of course the gas and electricity companies have a very clear idea of who they are. Under the previous arrangements, they had to get 40 per cent of their carbon dioxide savings from people in that priority group, so they had to find out who they were, however difficult it was. That is not the point that I was making; my only point was that the presence of a prepayment meter in a dwelling is not of itself a good surrogate for who is fuel-poor. As the noble Lord himself has recognised, there may be many people with second homes; there may be people doing short-term lets who prefer to put in a prepayment meter, but whose tenants, the bill payer, may be miles from fuel-poor, but that is one of the ways that a landlord can make sure he is not landed with a bill at the end of the day. It is just not accurate to say that all prepayment meter households are inevitably fuel-poor or poor. They are not, and I think it is very important to recognise that fact and not take refuge in abusing the companies, which the noble Lord is so fond of doing.

My Lords, I am not sure of the relevance of this argument to the actual clause before us. The issue here is that prepayment meters have a history, whether you are fuel-poor or not, of having significant charges over and above the cost reflectivity and over and above the degree of security which the supplier can assume on other means of payments. In other words, if you are on direct debit, there is a reasonable degree of security, but it is slightly less than on a prepayment meter, which is an almost absolute security of payment, because you do not get any electricity unless the meter is turning.

Historically, the issue has been pretty appalling. Frankly, the regulator denied the problem for many years. I declare my previous interest as former chair of Consumer Focus. Consumer Focus and Energy Watch banged on for years about that before the point about cost reflectivity was finally accepted by Ofgem. It does not matter whether the reason that you have a prepayment meter is because you are fuel poor or because your landlord, in various tenancy situations, insists on you having a prepayment meter. It does not matter whether it is a second home. It does not matter whether you are in a mansion block in Kensington, where many are on prepayment meters—generally speaking, the income of that particular subgroup is somewhat higher than the fuel-poor. The point is that they were being ripped off.

As I understand it, the new clause is proposed by my noble friend because we do not want a similar nontransparent rip-off to occur by clobbering the structure of tariffs on prepayment to hide the fact that, as a result of having a prepayment meter, you have a differentially poor repayment profile under the Green Deal.

The new clause also touches on a substantial point that, had I been present on Second Reading, I would have made: the fact that, at the same time as we are introducing the Green Deal, we are mandating energy supply companies over the next 10 years to install smart meters in every household in the land. The energy companies will have to carry out that provision, over which the landlord, the tenant or the owner-occupier has no real control. Whereas the Green Deal will be a voluntary sign-up, smart meters will not. I happen to be in favour of smart meters for energy efficiency, carbon saving and behaviour change reasons, but we could get those three things muddled up. It may be that the same supplier who is offering you a Green Deal is at almost the same time proposing to put the smart meter in, as they will be required to do, and perhaps negotiating with you the terms of your operation of a prepayment meter.

The point of the new clause, as I understand it, is to separate those different elements so that there is no distortion for the consumer. The wider point is whether the rollout of the Green Deal can in a conscious, planned way relate to the rollout of smart meters. The reality is that, on the one hand, people are going to go into every home in the land under the smart meter installation programme; and, on the other, somebody will be offering a deal under the Green Deal.

A lot of householders will be seriously confused as to which bit they have to accept, and the repayment for that, and which bit they have some option and flexibility about, and they do not have to take the deal at all if they do not want to. I assume that paragraph (a) in the new clause relates to any meter being installed, including the new requirement that smart meters be installed. We have to separate those things in terms of repayment; but in terms of delivery, there may be some benefit in associating them. I would like the Minister to comment on that point, and particularly to endorse the point lying behind my noble friend's amendment: that those three separate issues must be disentangled.

There are two extremely valuable points here. If I may, I should like to defer the discussion on smart meters because there are a number of later amendments about them. As the noble Lord, Lord Whitty, said, it is important that we focus on this part of the Bill, Which is about the prepayment meter. It is fundamental that we get this bit right, and get smart meters right later. Of course, we need to have in our mind on joined-up thinking, and the two interrelate.

Through the Green Deal, people who pay bills through smart meters first receive information about extra payments that they incur as a result of meters being installed or existing Green Deal plans. We intend that the Green Deal charge can be collected by energy suppliers through all existing payment routes, which include prepayment meters as well as quarterly credit cards, which were mentioned earlier.

A number of licensing conditions are in place to protect customers who receive their energy supply through prepayment meters, including changes to prevent unfair price differentials between payment methods. We will ensure that all relevant protections extend to the Green Deal charge and we are working with Ofgem to make sure that that happens. I hope that that gives enough information for the noble Lord to withdraw the amendment.

I thank the Minister for his reply. I also thank all noble Lords who have spoken for their contributions. They realise the vulnerability of many of our citizens to energy companies using meters. I thank my noble friend Lord Whitty for further clarifying the purpose of the amendment to the Committee on my behalf. His interpretation is entirely correct and I am disappointed if I did not make it clear. We are greatly concerned that the Green Deal should work for the fuel-poor in all households, because they see that not only will they save money but that they will heat and warm themselves far better if they undertake the Green Deal. With that in mind, I would like to think clearly and look at the matter again, especially in relation to amendments that may be tabled and our discussions about smart meters. I beg leave to withdraw the amendment.

Amendment 16E withdrawn.

Clauses 21 to 27 agreed.

Clause 28 : Delegation and conferring of functions

Debate on whether Clause 28 should stand part of the Bill.

My Lords, now we are in stand part discussions again, I draw to noble Lords’ attention some thoughts regarding Clause 28. When we look at the Green Deal and everything that is happening in it, the Minister has said many times that the market will provide. We are most anxious that the Green Deal is taken up and proves to be a great success, and are under debate on Clause 28 pressing the Minister to understand how the Green Deal will work and what he has in mind under delegation and conferring of functions. We are beginning to wonder whether the Green Deal needs a promoter. Lots of people are involved in the Green Deal. We have mentioned the participants, the assessors, the providers, the bill payers and the landlords, as well as situations that occur as properties change hands and the circumstances of bill payers. There does not appear to be a one-stop shop—if I may call it that—unless the Government are going to provide it. Under Clause 28 we may consider whether we need a one-stop shop and who can put out overarching material and promotion to explain and promote the Green Deal. The Minister may be thinking that his department may be that promoter. We have been thinking whether the Energy Savings Trust could be such a valid promoter.

What are the Minister’s thoughts on the need for Clause 28 and what it might pertain to? If it was thought that our financial constraints—which we are forever told about—make it inappropriate, we have in Clause 32 funding for energy efficiency advice. The Minister gives himself powers to spend money; would that allow a promoter to take up this opportunity? What would that delegation be? Does he agree with me that a promoter could help the uptake of the Green Deal? I beg to move.

The noble Lord asks a very good question, which I will seek to clarify. This clause gives the Secretary of State power to delegate Green Deal functions to one or more public bodies, and to fund the work they do. It is a key clause allowing us to create the most effective oversight framework for the Green Deal.

Where public bodies are tasked with creating codes of practice required to support the Green Deal, the codes must be approved by the Secretary of State before they are issued. Codes of practice will be one of the key mechanisms by which we govern the Green Deal and create consumer confidence in it.

The clause also allows the Secretary of State to delegate administrative functions connected with the licence modification powers contained in Clause 15(3). An example would be where a public body was appointed to administer an administration fee payable to energy suppliers, as in Clause 15(3)(f). This is a key clause in the Bill, allowing us to create the most effective delivery and oversight framework for the Green Deal, and to give Green Deal participants and customers confidence in the deal as a whole. I hope that that answers the excellent question asked by the noble Lord.

I thank the Minister for his reply, and it could well be that I am wide of the mark. He has explained the key purpose of the clause. We will reflect further on the idea that I proposed.

Clause 28 agreed.

Clause 29 agreed.

Amendment 17

Moved by

17: Before Clause 30, insert the following new Clause—

“Annual report(1) The Secretary of State must lay before each House of Parliament an annual report on the operation of Chapter 1 of Part 1 of this Act.

(2) Such an annual report must include appropriate indicators to assess whether the targets for emission reductions are being met.”

This amendment provides for reporting on meeting our carbon reduction targets—an issue I raised at Second Reading and one also raised by the noble Baroness, Lady Smith of Basildon, in Amendment 1. The Minister was not minded to accept her amendment, although I am hoping that it was the bulk of issues that she packaged together which made it rather too heavy for the Minister’s taste. I am proposing a rather more simple reporting structure on the success of the Green Deal in meeting our carbon reduction targets.

The Green Deal is the Government’s flagship policy for ensuring that we reduce carbon emissions from our homes, which account for 25 per cent of total emissions. We know that if we do not meet it through efficiency it will be a lot more expensive to meet it by other measures.

In response to the amendment of the noble Baroness, Lady Smith of Basildon, the Minister suggested that an annual report was unnecessary because it was provided for by existing legislation. My noble friend specifically referred both to the departmental carbon plans and fuel poverty targets. With respect, I contend those are separate issues; worthy of monitoring and reporting but unable to provide the level of information about how much carbon savings would be achieved solely by the Green Deal.

Such reporting would not require of companies the release of commercially sensitive information. We are not asking them how many loft insulations they are installing, or how many boilers they are fitting. We are asking for the total carbon savings that they estimate will be achieved by the provision of these home improvements. This is not commercially sensitive information that would be inappropriate for Parliament to be made aware of. Without this information it would be hard for the Government to make it clear how much carbon reduction is being achieved by the Green Deal. Indeed, we could miss a very important opportunity on an annual basis to promote to the public just how much this Government is doing in order to deliver a low carbon economy. I beg to move.

My Lords, the Committee is grateful to the noble Baroness for her amendment. She will see that we agree with her in terms of intent; but we think there are advantages in the annual report having some more specific dimensions to it. We agree with her entirely that the more general reports that are referred to will not monitor the success or otherwise of this significant scheme. As she rightly says, it does not raise the issue of commercial information; it is a question of the householder, the dweller and the landlord making their contribution in an important way to our carbon targets. We think the country will benefit from a close monitoring of this scheme.

That is why we think there are advantages in ensuring that local authorities keep a check on progress and that they ensure that as much progress as possible is being made in their areas. This is going to be a scheme, after all, to which the energies of the nation will have to respond. Therefore, all agencies that are capable of promoting this scheme should be brought on board. That is why we think the local authorities have a role to play and that small-and medium-size enterprises and local community groups can play their part. I respect the point that there may be issues involving commercial confidentiality, but we are talking about small units here and not major companies. We therefore think it is appropriate that we ask them to make their contribution. Certainly local community groups are going to be the cheerleaders of some of this work. I can think of those who will set a fine example by the community premises they hold, where they will be first into the field. We should not underestimate the extent to which progress can be made almost by word of mouth and by encouragement and example. That is why we want local communities involved.

We also think that it important that we should monitor this issue geographically across the nation. It would be very sad if it proved to be the more prosperous areas which were able to engage in the Green Deal because they had less anxiety about the additional costs. So we need to know the balance of the scheme, and whether we need to address the failure of take-up, given that the whole nation needs to contribute to this. That emphasises the obvious fact that we would need some analysis of the response by different sections of community in terms of socioeconomic groups. This scheme is not going to be successful if only those who can take the risk with extra cost are going to play their part; we need everyone to be involved in it. Therefore an annual report identifying progress in some detail would be an enormous advantage to what we all appreciate—as opposed to all our other activities aimed at carbon reduction—is the activity to which we are all committed, is among the most imaginative and requires engagement by so many people. That is why we hope the noble Baroness responding on behalf of the Government will give a fair wind to the concept of an annual report on this scheme.

An amendment of mine is in this group. I support what has been said about the importance of looking at how successful things are and looking year-on-year at figures. Mine is a more general measure. Indeed, I had placed it much further on in the Bill, but it was obviously seem to be convenient to debate it at this time; I do not mind that. Mine is about the assessment of the costs and benefits of energy saving, as opposed to those of energy generation.

Energy saving is universally acknowledged on all political sides to be the cheapest and cleanest way to achieve our energy policy objectives. That view is behind the Green Deal. As I understand it, an assessment of the costs and benefits of investment in energy generation capacity compared to the costs and benefits of demand-reduction policies has never been carried out. As noble Lords have said, I have been involved in the area for a number of years and have worked closely with the Association for the Conservation of Energy. I therefore know that it has pursued the issue but has never received a satisfactory answer. Over the years, as I have looked at, sat through and taken part in all sorts of legislation—a lot of it reforming legislation—I have learnt that reviewing and taking note of what has happened before moving on to the next piece of legislation is something that Governments seem to be bad at, particularly in the area of energy efficiency.

That is important when you have a lot of sceptics around and people argue about what is the best way to do things. The European Climate Foundation reports that emissions from buildings can be reduced by 95 per cent. It breaks it up into a 40 per cent as a result of reduced demand and 45 per cent as a result of the electrification of heating. Its predictions of energy efficiency mean that overall electricity demand increases only by about 40 per cent with full electrification of heating and, largely, of transport. That is in stark contrast to DECC figures, which predict a doubling, and possibly a tripling, of UK electricity demand. It is therefore important, when debating an Energy Bill, to consider that.

I hope that I can get a positive response from the Minister that he will take the issue seriously. I am not saying that the amendment has to be in the Bill in this form, but it is an important issue—particularly now that we are moving ahead with the scheme.

I support the amendment. We have had repeated statements from the Minister to the effect that, in many ways, the Green Deal will be market-driven, that there is little public funding but that there is a great deal of public provision, in the sense that the Bill will mark the paving of the way for the Green Deal. I think that, therefore, it is important that there is a degree of public reporting of what we are trying to do so that we can measure its effectiveness, whether in environmental terms or the penetration—which parts of the country respond better. We would anticipate that continuing for many years, so it would be desirable for us to have proper indications of take-up rates, the environmental impact and, in particular, who is getting it and where they stay. While we are not asking for a street-by-street report, it would be useful on a regional basis or a local authority basis to get an indication of what is happening. It might even be useful to see the take-up within the devolved Administrations and see whether they are playing their part alongside the Whitehall-driven part of the exercise.

I take the point that the first line of defence of most Ministers, when faced with amendments which seem to be rather good in intent, is that the wording is wrong, or it is not properly drafted. That is why the ministries have masses of civil servants; not necessarily to do the drafting themselves but to instruct those who do it to do so. Therefore, before we get any feeble excuse that it is not properly worded, many of us would be very happy if the Government were prepared to take the amendment away, look at it in some shape or form, and see whether we can achieve that. As we have said in respect of so many aspects of this Bill, while it is very ambitious and wide-ranging, it is not rocket science. This information will be held somewhere. It is just a question of making sure that we can get it from that somewhere into the public domain so that on a draughty Friday morning we can have one and a half hours of debate on it in order to subject the whole proposal to some kind of public scrutiny and public accountability. While we might not be spending much public money on this, we are going to be investing a great deal of, I think, Westminster prestige. There is not a lot of that going about at the moment, but what is there, if it is to be effective in this instance, ought to be reported. If it is not as effective as it should be, we ought to be doing something about it, not on the basis of prejudice but on the basis of hard information, which I think a report of this nature would provide.

My Lords, I suggest that, if we were not repealing the Home Energy Conservation Act, it is precisely under that Act that the figures could be got together by local authorities.

My Lords, we fully support the underlying principles of these amendments, which are all about ensuring transparency—and maybe even Westminster prestige, as the noble Lord, Lord O’Neill, has indicated. The Green Deal is the Government’s flagship energy efficiency scheme, and much will hang on its success, so it is right and proper that Parliament should have the information it needs to hold the Government to account. Of course decisions need to be based on evidence, which demands proper analysis.

Amendment 17 proposes an annual report. The Government are already obliged to report annually to Parliament on progress towards our legally binding carbon budgets, as referred to in response to the reports of the Committee on Climate Change. These reports include a sector-by-sector account of the carbon savings achieved; and the Green Deal, once under way, will be a key element of these reports. As my noble friend Lady Parminter recognises, we have argued that the aim of this amendment is already provided for through these existing reporting arrangements; but I note her reaction to that argument.

Amendment 20DA seeks to enhance reporting requirements for the Green Deal. Again, we believe that the principle of this amendment is sensible and laudable, although we feel that the case for specific reporting from Government may be stronger for the energy company obligation than for the market-led Green Deal. This is the subject of Amendment 30A, which we will discuss later. I would point out to noble Lords—and we will be coming on to this later as well—that the Green Deal will be reviewed early in its life. Therefore I believe that the issues raised by the noble Lord, Lord Davies, will be addressed as part of that review. While still agreeing with the principle of these amendments, it is important that we do everything we can to encourage the take-up of the Green Deal, as we all wish to make sure that this is as widespread as possible.

We will be publishing a report on meeting the fourth carbon budget this autumn, which will provide this type of whole-economy assessment. The costs of particular technologies are assessed through extensive consultation, so we believe that the aims of this amendment are provided for already by published impact assessments. However, we hear what the noble Baroness, Lady Maddock, says about learning from past experience and proper analysis. We note what noble Lords have said and are indeed very supportive of the principles of what they are aiming to do. In the mean time, we hope that noble Lords will be willing not to press their amendments and that we can discuss this further.

I thank my noble friend for that very positive and reassuring reply, in terms of understanding both the spirit in which the amendment was tabled and what we hoped to achieve. I am certainly happy to withdraw.

Amendment 17 withdrawn.

Clause 30 : Power of Secretary of State to deal with special circumstances

Amendment 18

Moved by

18: Clause 30, page 19, line 32, leave out paragraph (a)

I return now to the issue of fees and how they are referred to in a rather different context. Both this amendment and my next group of amendments relate to references to fees. Clause 30 covers powers to deal with special circumstances. The first of the special circumstances is the suspension or cancellation of the Green Deal. Subsection (2) refers to the provision setting out the procedure,

“for securing a suspension or cancellation (including the payment of an administration fee calculated in accordance with the regulations)”.

It is the bit in brackets that I am seeking to change. If a Green Deal arrangement is to be cancelled, it is presumably for one of two reasons: either because the provision under the Green Deal has not met the specifications—in other words, the provider has defaulted—or because the repayer, whether or not they were the original repayer, is now in circumstances where they cannot repay. In either of those circumstances, it seems inappropriate, in addition to cancelling the deal, to charge a payment. It is therefore odd that there is reference at that point to the payment of an additional fee. Even though it is referred to as an administration fee, in the circumstances it is an additional payment. It is conceivable that there are other circumstances than the two that I have suggested, but I cannot think of them. If the Minister’s imagination is better than mine, no doubt she will tell us.

The second such provision relates to subsection (2)(d), which goes back to the argument about early repayment. If the original agreement was clear, the terms of early repayment would be clear. As it stands, this runs into the same difficulty that I referred to an hour or so ago, which is that a new occupier or a new landlord might have to meet a repayment fee—to which they had not previously been committed, as they were not the original signer of the agreement—for deciding that on all other grounds they wished to repay early. It is not clear, as it is not clear in many other respects, why a fee should be paid for early repayment or exit. Because we have seen exit fees abused in other areas of energy provision, I would be deeply suspicious of the primary legislation referring to an exit fee in this form. No doubt we will return to this issue when we come to the details of defining the situations to which this applies, but in the primary legislation the apparent presumption that a fee is involved should be deleted. I beg to move.

I support my noble friend in his Amendment 18 and his proposal regarding early repayment penalties under Amendment 19. My noble friend and other noble Lords spoke strongly about this issue when it was discussed earlier. The Minister replied that, if this provision was taken out, it could lead to an awkward situation in which it would be open for different people to charge different levels of fees. Perhaps the Minister could take this away. If she could propose that no penalty fees would be levied in this situation under the Bill, that would sort the problem out and not leave it to the providers to decide. If it is not covered, there would be a disparity in the fees and penalties that could be levied.

My Lords, Clause 30 allows regulations to be made that set out when and how a bill payer’s liability to make Green Deal repayments can be cancelled or suspended. Amendment 18 would prevent the regulations from making provision for a procedure to be followed for securing such suspension or cancellation of the repayments. Noble Lords have made the point about this being proportionate and not abused.

An example of when the bill payer’s liability might be cancelled is where the bill payer had chosen to make full early repayment of the Green Deal finance arrangement. In such an eventuality, there may be a need to include an administration fee. I will turn to why that might be in a minute. As discussed earlier, such a fee would be calculated in line with the rules of the Consumer Credit Act for the domestic Green Deal and in line with the regulations that we propose to set out in secondary legislation for the business Green Deal. This clause also gives us the flexibility to introduce a payment suspension mechanism for the bill payer in appropriate circumstances.

The legislation permits an administration fee to be requested for the arrangement of payment suspension. This is essential to balance the needs of the property owner to have flexibility while minimising the loss that the provider of finance might incur. The details of this—for example, when such a fee might be requested and the level of such a fee—will be subject to consultation later this year.

Amendment 19 would remove the ability to set out in regulations what should be payable in the event of early repayment of the Green Deal being required, including how any fee should be calculated. The effect of this amendment would be to prevent the regulations setting out the rules on early repayment from being set out in Green Deal plans.

The domestic Green Deal is subject to the early repayment rules set out in the Consumer Credit Act, which prevents consumers from being charged unreasonable fees when they repay early. However, business Green Deal providers are not subject to any existing regulations on early repayment fees. This amendment would remove the ability for the Government to set out regulations limiting the fees that can be charged when a business is required to repay the Green Deal early.

Early repayment fees are an important protection for the investor providing the finance. They have invested their money expecting a particular rate of return over a particular period. Being able to claim some compensation when an early repayment is made is an important element to keep the cost of finance low. This practice is not uncommon in the mortgage market.

However, we do not want Green Deal providers to charge disproportionate fees when early repayment is required, so the ability to set out some rules around this in secondary legislation is important. There is a danger that these amendments could remove that protection, which I think is far from the intention of the mover of the amendment. I hope that noble Lords will be reassured by my explanation and, on that basis, that the noble Lord will withdraw his amendment.

My Lords, I understand and accept part of that argument. These regulations are going to be subject to consultation. It may be appropriate that in some circumstances an administration fee is charged. A reference was made to the mortgage market, but in that context this is not just an administration fee but effectively—the noble Baroness used the term “compensation”—a major disincentive to people repaying their mortgage early. There is a certain amount of consumer dissatisfaction about this from people who, under all other calculations, would repay their mortgage early but who have been put off so doing by the size of the early repayment charge. I do not know that the analogy with the mortgage market is particularly helpful; I would hope that, at a maximum, any fee would reflect the real cost of the administration of cancelling early rather than the potential loss. After all, the finance provider would get the money back and could then reinvest it in as good a deal as they could. I do not think that the compensation issue should arise in these circumstances.

My main point is that this is primary legislation. The noble Baroness referred to the fact that this is subject to consultation. I suspect that the issue of fees will arise during that consultation among potential providers and finance companies as well as among consumer groups. The fact that the Bill is written in this way suggests that the procedure must include provision of a fee. Clause 30(2)(a) refers to,

“the procedure to be followed for securing a suspension … including the payment”,

as if the payment is an obvious matter. Similarly, paragraph (d) says, “including a fee”, not “a possible fee” or “there may be a fee involved”. It is worded as if the regulations are going to have to provide for a fee.

I would prefer to keep that open until we come to the consultation on the regulations. I think that in this case the primary legislation—I am using the opposite argument to the one to which the ministerial Bench usually resorts, which is that we do not have to prescribe so much in primary legislation because we can leave it to the consultation on regulations—is too prescriptive or could be seen to be too prescriptive.

Perhaps I may reassure the noble Lord that what is being sought here is a balance between bringing providers in and the very important aim of encouraging people to take up these schemes and for them not to think that their fingers are going to be burned if they pay off what they owe early. What underlines these provisions is the attempt to find a proportionate way to deal with that and to protect people through this legislation. However, as my noble friend Lord Marland has indicated, we will be discussing the subject of fees further.

Clearly, one of the points where someone might want to repay is when there is a transfer of the debt—for example, when the house is sold and the next person takes it on. Is the Government’s proposal for an exit fee or whatever to apply all the way through or does that particular circumstance make a difference?

I may need to come back to noble Lords on that but, as I understand it, if people choose to repay early the expectation is that they would pay a fee. However, I do not think that I have fully answered what the noble Lord has asked, so I will need to come back to him to clarify that.

Amendment 18 withdrawn.

Amendment 19 not moved.

Clause 30 agreed.

Clause 31 : Appeals

Amendment 19A

Moved by

19A: Clause 31, page 20, line 17, leave out subsection (3)

Amendment 19A draws attention to the lack of detail in this clause in respect of appeals. While we acknowledge that it may be appropriate to include some issues in regulations, such as the fee payable, we do not consider that other issues—specifically who has the right to appeal, where they can appeal, the grounds for appeal and the powers of the court or tribunal in making a determination—are suitable matters to be left to further regulations that the Minister may draft. Surely, the class of person who is eligible to appeal under the clause is not likely to change during the course of time and there is no obvious reason why this should be flexible. We are interested to hear what the Minister of Justice and his officials might have advised in this area as it appears to breach fundamental issues of access to justice. It is an equally important point of principle that people should have the protection of primary legislation. We ask the Minister to put down amendments to take these comments on board and to seriously consider amending the Bill in this area on Report. It is an issue that we will be turning our minds to in the next couple of months. I beg to move.

I thank the noble Lord for his suggested amendment to Clause 31. This clause requires the Government to provide the right of appeal when a sanction has been imposed by the Secretary of State or their delegate. This clause provides a right of appeal against sanctions imposed for any breaches relating to consent, disclosure and acknowledgement, or requirements set by a scheme regulating and authorising Green Deal participants, such as any future schemes for registration and accreditation and their codes of practice. This clause enables an appeal to a court or tribunal. Subsection (3), which noble Lords would omit through their proposed amendment, clarifies that we can address issues such as who can appeal, under what circumstances and to what body, and the powers to suspend the sanctions originally imposed. These are all matters that would need to be dealt with in establishing a fair and workable right of appeal against any sanctions imposed and it is important that the Bill clarifies that these can be included in regulations.

Clause 31(5) enables the Secretary of State to revoke or amend any subordinate legislation governing the jurisdiction, process and powers of any existing tribunal system that may be used to enable this right of appeal. The Government will consult fully and set out details in regulations about who may appeal and under what circumstances. These regulations will be subject to the affirmative procedure.

In conclusion, I assure noble Lords that we will seek to develop a transparent and workable appeals mechanism and I hope that with this assurance the noble Lord will feel able to withdraw his amendment.

Sitting suspended for a Division in the House.

I thank the Minister for his reply but, with respect, he has not addressed my point. We do not feel that regulations sufficiently take account of these concerns which should be under primary legislation. We are mindful that consumers must have confidence in the situation facing them and that this is something that should be upfront in the Bill. That is the most appropriate place and it is where these aspects should be dealt with, rather than in regulations. Nor did he take up my point about whether he had consulted the Ministry of Justice over any of these aspects.

I thank the Minister for clarifying that. In his answer he referred to subsection (5), which is that regulation may be introduced that,

“may revoke or amend any subordinate legislation”.

Under subsection (6),

“‘subordinate legislation’ has the meaning given in … the Interpretation Act 1978”.

We are concerned about the overuse of regulation in this Bill and ask how far, under subsection (5), it is justified or appropriate that there should be powers to revoke or amend any subordinate legislation. We ask for clarification of the extent of those powers. I understand the Interpretation Act to merely interpret terms and not cover any policy issues. Finally, I should like to ask whether this part of the Bill been commentated on by the Merits Committee.

There is no greater authority on these things than the Secretary of State. He is responsible for delegating powers. Every intention behind the Green Deal is that we get it right, which is why in matters involving disclosure, breaches relating to consent or any sanctions, the top-down authority will come from the Secretary of State. I hope that that clarifies that point.

As to whether this has been through the correct procedural process, I am not at liberty to answer that question now, but I will respond later rather than put officials through the mill now.

I thank the Minister for his consideration. He no doubt understands that we take this matter extremely seriously and will consider further. In the mean time, I beg leave to withdraw.

Amendment 19A withdrawn.

Amendment 20

Moved by

20: Clause 31, page 20, line 22, leave out “(including any fee which may be payable)”

My Lords, since I packed my bag before we gave up, I will be brief. This group of amendments relates to fees, on which I have expanded at some length already. Some of these simply follow through from those that we have already discussed. Some relate to appeals, and I think that a disincentive to appeals is an area of significant concern. Some relate to other details of the way in which the Green Deal will be delivered. However, they all raise the issue of fees. I think that it would be helpful to the Committee—it would certainly be helpful to me—if, before we come to the next stage, the Minister could arrange for someone to set out why the issue of fees has to apply in these various situations. That can probably be done more logically than going through clause by clause, because some of them obviously hang together. There are only three or four subjects, but there are a lot of points where fees arise. If the Minister would commit to doing that, I would be prepared to withdraw the amendment.

My Lords, at this point in the proceedings the noble Lord’s views on fees are well known, and he has our assurance that we will look at the issue very carefully. As we have already said, the level of any fee will be set out in secondary legislation. I think that the noble Lord is making the point that he would like us to develop a thinking process before we get to that and that, between us, we can develop it further before we get to that point. I look forward to discussing the matter with him in the near future.

Amendment 20 withdrawn.

Clause 31 agreed.

Clause 32 agreed.

Committee adjourned at 8.06 pm.