Energy Bill [Lords]

Public Bill Committee, 7 June 2011.

Edward Leigh (Conservative, Gainsborough)

Welcome to the Committee, which I am sure will be very productive and good natured.

Before we begin, I have a few preliminary announcements. Hon. Members may, if they wish, remove their jackets during Committee sittings—I see that the Whip has already done so, which is the first bit of disobedience. Will all hon. Members please ensure that mobile phones, pagers and so on are turned off or switched to silent mode during Committee sittings? As a general rule, my co-Chairman and I do not intend to call starred amendments that have not been tabled with adequate notice. The required notice period in Public Bill Committees is three working days. Amendments should therefore be tabled by the rise of the House on a Monday for consideration on a Thursday and by the rise of the House on a Thursday for consideration on a Tuesday.

Not everyone is familiar with the procedure in Public Bill Committees, so it might help if I briefly explain how we will proceed. The Committee will first be asked to consider the programme motion on the amendment paper, for which debate is limited to just half an hour. We will proceed to a motion to report written evidence and then begin line-by-line consideration of the Bill. I call the Minister to move the programme motion.

Gregory Barker (Conservative, Bexhill and Battle)

I beg to move,

That—

(1) the Committee shall (in addition to its first meeting at 10.30 am on Tuesday 7 June) meet—

(a) at 4.00 pm on Tuesday 7 June;

(b) at 9.00 am and 1.00 pm on Thursday 9 June;

(c) at 10.30 am and 4.00 pm on Tuesday 14 June;

(d) at 9.00 am and 1.00 pm on Thursday 16 June;

(e) at 10.30 am and 4.00 pm on Tuesday 21 June;

(2) the proceedings shall be taken in the following order: Clauses 1 to 70; Schedule 1; Clauses 71 to 87; Schedule 2; Clauses 88 to 105; Schedule 3; Clauses 106 to 108; new Clauses; new Schedules; remaining proceedings on the Bill;

(3) the proceedings shall (so far as not previously concluded) be brought to a conclusion at 7.00 pm on Tuesday 21 June.

Thank you, Mr Leigh. I am delighted to see you in the Chair and I look forward to serving under you. The Committee is a particularly well-informed group of parliamentarians, and I look forward to the Bill having a constructive passage.

It might be helpful if I provide the Committee with an overview of the proposals that we will discuss today and with an update of what has happened since Second Reading. We will start with the green deal, which is the centrepiece of not only the Energy Bill, but the coalition’s ambitious plan for energy efficiency. It all adds up to the largest and most ambitious home-improvement programme since the second world war. It will provide an opportunity to transform the fabric of our building stock, to drive down fuel costs and to improve homes at no up-front cost to the consumer. Consumers will benefit from homes being insulated against the weather, and wallets will be insulated against rising energy prices. The deal will also stimulate thousands of new green jobs that will be created as industry and local suppliers become involved in upgrading homes throughout the country. That leaner, greener way of operating will be the foundation of our recovery.

There are two major reasons why we need to press ahead with the Bill. First, historically, people have been unwilling to pay for major works, particularly to a property that they might soon leave. Secondly, we know that people often do not trust salesmen and installers, or simply do not know where to start. Our solution is the green deal, which is what the Committee will scrutinise and amend first.

The green deal is a simple concept for the consumer and will be underpinned by a robust legal framework. Its benefits are threefold. First, the green deal plan will enable private companies to invest up front and enable individuals to repay through the savings that they should make on their energy bills. The contract will stay with the property, so that only the person benefiting will make the repayments. Secondly, the golden rule means that the green deal charge should not exceed the expected savings. Thirdly, there is the accreditation and redress system, which is the straightforward guarantee of quality and protection that consumers need. The green deal is an innovative market mechanism, funded by private capital. The Bill also provides a legal framework of consumer protections to ensure that advice, installation and finance can be used with confidence as part of a seamless customer experience.

The Bill provides a robust framework for that new market, but we believe that, to gain the maximum take-up, it is desirable to build as much political consensus as possible around that framework. That does not mean that we can accept every amendment that has been tabled. However, we have listened very carefully and, in consultation with colleagues and stakeholders, we have endeavoured to make the Bill as robust as we can. For example, in another place, we amended the Bill to accept all the recommendations made by the Delegated Powers and Regulatory Reform Committee, which scrutinises secondary legislation, so I come to the Committee having considered and assessed many of the positive suggestions that have been made, which I hope are reflected in the Government amendments. Nevertheless, we will need to expedite the Committee stage efficiently and stick to our timetable, which will allow us to reach Royal Assent before the House rises for the summer recess.

On Second Reading, hon. Members asked for more detail on our thinking. We organised a briefing the following week, and last week we published more details on how we plan to enhance consumer protections, how we plan to underpin the green deal with a new energy company obligation, and how measures could qualify for the green deal.

Several hon. Members asked about the scale of our ambition on energy efficiency. Let me be clear: the green deal will set a new paradigm and will certainly become the biggest home improvement scheme since the second world war. It is essentially a market framework that enables consumers to choose the right improvements for their properties; it is not a bureaucratic Government programme with a one-size-fits-all mechanism. That commitment to consumer choice does not conflict with a high level of ambition. We recognise that we need additional policies alongside the green deal, as with our proposals on the private rented sector.

As I have said, we have listened and we are prepared to go further in formalising our ambitions with amendments that will put an energy efficiency aim in the Bill. Government amendments will commit the Government to reporting annually on the delivery of both the green deal and the energy company obligation. We no longer propose to repeal the Home Energy Conservation Act 1995, but to re-invigorate it and make it much more effective.

Alongside the passage of the Bill we have continued our engagement with industry, financial institutions and other stakeholders to get their input and ensure that the scheme works efficiently and that costs are as low as practicable. I want to put on the record my thanks to everyone who has participated in the various industry forums, finance round tables and energy company working groups. In response, we propose amendments that, first, make it clear that energy companies can treat collection of the green deal charge in the same way as in the rest of the Bill and, secondly, clarify the respective rights and obligations of energy companies and green deal providers in the collection of green deal payments.

Energy suppliers will collect the green deal charge from their relevant customers and pass it on. Following advice from the industry and others, the Government will initially give that role to electricity companies only, not gas companies. That is consistent with the arrangements for the feed-in tariff scheme and warm home discount, and we hope that it will minimise the cost to energy companies and, importantly, consumers. Electricity suppliers will need to maintain a suitable database to facilitate collection of the charge, and they will work with us to find an appropriate way to communicate savings to the consumer when those savings additionally accrue on the gas bill.

From the outset, we have sought to lead the most collaborative form of policy development where possible, and our actions bear that out. We will certainly continue that approach, and we will consult on the detailed secondary legislation later this year. In the meantime, I look forward to the Committee’s scrutiny of the primary legislation before us.

Edward Leigh (Conservative, Gainsborough)

We have until 11 o’clock to discuss the programme motion. The Minister’s comments have ranged rather wider than the programme motion, so members of the Committee may want to debate that briefly, remembering that we will have a clause stand part debate. Does anybody wish to debate the programme motion?

Edward Leigh (Conservative, Gainsborough)

Copies of memorandums that the Committee receives will be made available in the Committee Room. We now begin our line-by-line consideration of the Bill.

Luciana Berger (Labour, Liverpool, Wavertree)

On a point of order, Mr Leigh. On 26 April, six weeks ago today, I made a freedom of information request for submissions made, in relation to the call for evidence on the green deal, by the Energy Efficiency Partnership for Homes on behalf of the Department of Energy and Climate Change. I received an e-mail on 25 May that stated that I would receive a response on 22 June, which is the day after the Committee finishes.

The information contained in those submissions would enable Members on both sides of the Committee to make informed contributions to the debate over the course of the next five sittings. While the Department is deliberating over releasing that information, I should be grateful if either Minister would agree to share those submissions with Committee members in confidence before our next sitting, so that we can properly engage with the detail of the Bill.

Gregory Barker (Conservative, Bexhill and Battle)

I will be happy to consider the hon. Lady’s request and will come back to her later today.

Clause 1 - Green deal plans

Caroline Lucas (Green, Brighton, Pavilion)

I beg to move amendment 84, in clause 1, page 1, line 9, leave out ‘energy efficiency’.

Edward Leigh (Conservative, Gainsborough)

With this it will be convenient to discuss the following:

Amendment 85, in clause 1, page 1, line 10, leave out ‘An energy plan is’ and insert

‘Parts of an energy plan will comprise’.

Caroline Lucas (Green, Brighton, Pavilion)

Thank you, Mr Leigh, for calling me to speak to the amendments, which seek better to differentiate between an energy and a green deal plan. As drafted, the Bill does not draw a clear enough distinction between measures that could be included in a broader energy plan, and specific measures that could attract green deal finance and might, therefore, form part of a green deal plan. Other amendments also seek to address that concern.

I recognise that the Government have published three papers seeking to clarify the functioning of the green deal and the energy company obligation, but more certainty is needed. My aim in the amendments is to ensure that when an energy plan is developed for a household as part of the consumer journey towards a green deal agreement, the plan includes all possible measures that might reduce CO2 emissions from that home, whether or not they would fit specifically in the green deal. Once a comprehensive plan had been made, the assessor could highlight which measures could attract green deal financing because they met the golden rule. The household could then decide whether to take on the measures that did not meet the golden rule outside a green deal financing agreement.

The amendments would ensure that the energy plan included all measures that might reduce a home’s energy consumption. Those might include not only insulation and energy efficiency measures, but on-site and community generation of heat and electricity, water conservation and smart metering. A good example is water efficiency measures, because although hot water efficiency measures might meet the golden rule, cold water efficiency measures could be financed by water companies, for example, and offered as part as a holistic package. I would like to see, therefore, a comprehensive assessment for the energy plan that would highlight measures that can be installed with support from other financing streams, such as the feed-in tariff, the renewable heat incentive scheme and water company funding.

Claire Perry (Conservative, Devizes)

May I say what a pleasure it is to serve under your chairmanship, Mr Leigh? I completely support the hon. Lady’s ambition of including water consumption reduction measures in this envelope, but in the absence of metering, it is very difficult to generate an economic model that would support that. Does she agree, however, that this is the perfect opportunity to raise awareness of the ability to reduce water consumption in the home, and perhaps to move to a voluntary code of practice that would allow companies to market water reduction measures as part of the process?

Caroline Lucas (Green, Brighton, Pavilion)

I am grateful for the hon. Lady’s intervention. That is exactly the kind of suggestion and advice that an assessor might be able to give when going around a home and looking at all the different measures that could be taken to reduce environmental impact. Water metering would make a good contribution. Again, however, unless a broader approach is followed, there is a risk that energy plans that are offered as the first step towards the green deal may highlight only measures that are likely to attract green deal finance. It would be wasting the opportunity fully to inform households about all measures that might reduce their energy bills and their home’s wider impact on the environment, which the hon. Member for Devizes has mentioned. The amendments intend to provide a clearer distinction in the Bill between the energy and the green deal plans. I do not consider that the legislation clearly defines energy plans. It also does not make clear that the first step to green deal financing is made via the assessment of a broader energy plan.

Amendment 97 would ensure that provisions made for the green deal accreditation through the framework and code would also apply to energy plans that are not green deal plans. That is crucial, because it would ensure that those undertaking measures that fall outside the green deal, or those who choose to fund, through other means, measures that are beyond the green deal—including by topping up from their own funds—would be guaranteed the same high-quality installation and delivery that will be expected under green deal accreditation, and will have the same means of recourse if the improvement works are not delivered to the required standard.

Finally, the amendments would provide an incentive to drive higher standards and enforcement by bodies authorised under the green deal accreditation scheme. I am pleased that Government amendment 3 does what I had hoped to achieve: it enables the withdrawal of accreditation from an authorised participant in the green deal if necessary. That is an important incentive in ensuring that all authorised bodies maintain high standards. I hope that the Committee will support the amendments.

Gregory Barker (Conservative, Bexhill and Battle)

Amendment 86 and related amendments 84 and 85, 87 to 89, 91 to 94, 99, 103 and 104 would allow water efficiency and smart metering measures to be covered by the green deal framework. The aim of the green deal is to encourage the installation of energy-saving measures. While certain hot water measures that are able to save energy may well be eligible under the green deal framework, water efficiency measures are not the focus of the scheme, for the very reason that my hon. Friend the Member for Devizes gave: without effective metering of water—the minority of the country is currently metered—there simply is not an economic model there, even if the savings could be transferred from a water bill to an energy bill, which there is not the facility to do. As a result, we would struggle to incorporate water savings in the green deal mechanism as it stands. That is not to say that there is not active thinking going on in Government on how we might progress with a blue deal as more of the country becomes metered, when more people will be looking to reduce their water bill payments.

We recognise, however, the importance of the efficient use of water. There may be opportunities for green deal providers to offer water efficiency measures and other improvements that complement the green deal, at the same time as offering the standard green deal measures. Those measures would be separate from, and therefore not covered by, the green deal framework. They would therefore need to be funded through an alternative route. Green deal providers may choose to partner with water companies to help them fulfil their efficiency obligations, which will potentially help them deliver a seamless package to the customer. It will be for the market, however, to develop those opportunities at this time. There may also be opportunities for green deal participants to signpost customers to further information on water efficiency.

Measures fixed to a property for the use of smart metering, such as controls that communicate with the smart meter, are likely to be met with green deal measures eligibility criteria. The Department of Energy and Climate Change will consult on the detail of eligibility criteria in the public consultation this autumn.

I thank the hon. Member for Brighton, Pavilion, for championing the wider opportunities that the green deal brings. We hope that there will be a more holistic approach to the whole home by green deal accredited installers. I hope that she has found my explanation reassuring and will, on that basis, consider withdrawing her amendment.

Alan Whitehead (Labour, Southampton, Test)

Page 4 of “What measures does the Green Deal cover?”, a document that the Minister’s Department produced, states:

“If a measure is capable of paying for its self because occupiers use less energy as result of the installation—then it can potentially qualify.”

Is that his blanket definition of a measure? Is it simply something that pays for itself because occupiers use less energy? If so, could pretty much all the measures suggested in the amendment qualify as measures under the green deal in one way or another?

Gregory Barker (Conservative, Bexhill and Battle)

In the broadest sense, the hon. Gentleman is absolutely right. However, there is an economic model that needs to be followed. Water comes under a different bill and is not a direct energy cost to the household. Given the way that bills are constructed at the moment—I think that only 30% of the country is currently metered—it would be nigh on impossible to construct a simple methodology for putting water on to the energy bill in a way that makes sense for both the construction of the bill and the efficiency payment mechanism, and to the consumer. However, there is a principle here—savings paying for energy efficiency improvement—that I think water companies will be looking at carefully. As I said, work is going on in Government with my colleagues in the Department for Environment, Food and Rural Affairs, to see whether there is potential for a blue deal; I am sure that there will be, as more of the country is covered by meters.

Huw Irranca-Davies (Labour, Ogmore)

Will the Minister get down to the real particulars? Water-efficient boilers would quite categorically fall within the green deal as envisaged. What about, for example, power showers? One of the things that we were looking at in the Department for Environment, Food and Rural Affairs before I left my post as a Minister there was the significant impact that the modern trend towards highly intensive water use and power showers has on energy efficiency. I am sure that he will say that we will look at those issues in the autumn, but is that the sort of discussion that he is having in detail with colleagues in DEFRA? Is he saying, “Well, that would fall within the green deal, but a brick in the toilet cistern would not, because that is purely water efficiency, as opposed to heat and energy efficiency”?

Gregory Barker (Conservative, Bexhill and Battle)

The hon. Gentleman is right. We will look at those issues in much more detail in the autumn. We want to ensure that we future-proof the Bill as much as possible, because we cannot anticipate the speed and scale of innovation that will come down the line. We want to ensure that the Bill is permissive; that is why a lot of the detail will be in secondary legislation, which will be easier to amend than the Bill as innovation comes down the line.

To answer the hon. Gentleman’s specific point, to qualify for green deal measures, there has to be an appropriate saving on the electricity or fuel bill of the dwelling to generate the savings that will pay for the intervention. I am not familiar enough with the economics of the power shower to answer his question with any certainty; we will certainly look at it in the autumn. My hunch is that that would be a water-saving measure, rather than an energy-saving one. However, we are open-minded about that, and we will look at it in more detail.

Huw Irranca-Davies (Labour, Ogmore)

I will seem like an anorak now on power showers. May I suggest two things to the Minister? The first is that before Committee stage ends, he looks at the aspects of water efficiency that have a significant impact on fuel bills and fuel poverty, and comes back to the Committee with his ideas on them. Secondly, will he place before the Committee, either today or by the next sitting, his ideas on the efficiency measures that are being talked about that go beyond the green deal but may well fall within it? I understand what he is saying—that we will have a lot of regulation to deal with in the autumn—but it is worth the Committee at least having a good look at the provisional ideas.

Gregory Barker (Conservative, Bexhill and Battle)

Of course it would be useful for the Committee to inform itself of the scope of the innovation and the potential energy-saving measures that may be applied to the green deal. However, it is not our intention to specify under the Bill whether power showers or power jacuzzis should be within the remit of the green deal. If the hon. Gentleman is saying that the installation of measures in those cases will provide a clear energy-saving benefit, they will qualify. Hot water measures will qualify; it is just a matter of how far they can be pushed. I am not expert enough—nor should I be—to say where the threshold should lie.

Claire Perry (Conservative, Devizes)

There is an important signalling element to bear in mind. Clearly, we do not have an economic framework that will allow us to undertake a net present value calculation for water reduction, but households will be thinking about reducing their energy consumption and greening up their home, and this is a perfect opportunity to suggest water consumption reduction measures and almost to give notice to the water companies that they should team up with the installers. Devices such as a hippo or a low-flow shower head are cheap. Many households could afford them, and it would be extremely helpful to the Committee if the Bill sent out a signal that, if people want to participate, there is a mechanism for supplying products to the consumers through the same installer channel, even if the household ends up paying.

Gregory Barker (Conservative, Bexhill and Battle)

What we are talking about is the realm of market opportunities for water companies to fulfil their energy efficiency obligations, and a precursor of what might come in the future—a blue deal. As my hon. Friend says, the potential for water companies to work constructively with green deal providers, local authorities or operators of other green deal schemes is clear.

Edward Leigh (Conservative, Gainsborough)

Order. Will the Minister face the Committee?

Gregory Barker (Conservative, Bexhill and Battle)

I beg your pardon, Mr Leigh. We certainly aim to frame the Bill in such a way that there will be every encouragement for water companies to work in that way. We very much want a holistic approach.

Alan Whitehead (Labour, Southampton, Test)

The Minister outlined the eligibility of measures for the green deal. I accept that it might well be inadvisable to have an exact definition of measures in the Bill, because that might exclude measures that have not been fully designated or designed and thus be exclusory, rather than inclusive, in the long term. However, the Department has, in general, produced helpful material to define better and underline what is in, for example, the green deal. I imagine that the documents that I have here will not just serve the purposes of scholarship in future years; they may well be referred to by people who are actively promoting the green deal once the Bill is implemented.

The definition to which I referred in a previous intervention clearly states that the ambition is extremely wide, as far as energy efficiency measures are concerned: if a measure that could be financed within the golden rule uses less energy—as a wide variety of measures could—it could potentially qualify. The word “qualify” is not qualified in the Bill under which the measure may be funded. Nor is the means by which it may be repaid. That is what the Bill states. I would have thought it important that, among other things, the further and better definitions of measures that might qualify, which the Minister could bring forward—as he was invited to do a moment ago—would include clarifying what would be a qualifying measure in relation to using less energy. Are there restrictions, as the Minister has suggested, or is there a golden rule of energy reduction, alongside the golden rule of financial saving, as a result of the implementation of green deal measures? At the very least I would have thought that an extended version of the document, to make that clear during the passage of the Bill, would be an appropriate early measure.

Gregory Barker (Conservative, Bexhill and Battle)

I think that the hon. Gentleman and I are pretty much in agreement. We will respond to his points, and make sure that the next iteration that we produce will take what he has said into account specifically. However, I think the golden rule is all-encompassing, and I cannot quite conceive how a measure that met the golden rule by creating financial savings would do so by any other way than reducing energy. They are two sides of the same coin, but if we need to spell it out I do not think it will be a problem. I will need to consider it a little more.

Amendments 97 and 41 would require that energy efficiency services provided for, or products sold by, green deal participants, in addition to those paid for through green deal finance, should also be subject to the green deal regulatory framework. I want to reassure hon. Members that we shall be able to require, through the overall scheme and code, that customers should be made fully aware of the difference between the measures being offered that fall under the green deal scheme, with all its safeguards, and those that fall outside it. We will not accept companies using green deal accreditation as cover for less appropriate goods and services. However, we will have the power, in clause 3(7), to ensure that, where appropriate, elements of the scheme or code could be made to apply to wider energy efficiency provision.

To be clear, our intention in subsection (7) is not to introduce new wide-scale regulation of the wider energy efficiency supply market. It is likely that some of the protections afforded by the green deal accreditation framework will not be suitable for other goods and services offered by green deal participants. Similarly, many of the forms of mis-selling that will concern the Committee could already be prosecuted under existing general consumer protection legislation. Requiring a blanket compliance with green deal protections for all other measures could therefore cause unnecessary burdens for providers selling a range of goods and services. I hope that that satisfies hon. Members.

Luciana Berger (Labour, Liverpool, Wavertree)

I shall respond to the amendment tabled by the hon. Member for Brighton, Pavilion, and my hon. Friend the hon. Member for Ogmore will speak to amendment 41. The hon. Lady made some important points about microgeneration and the fact that not only energy companies, but non-governmental organisations and consumers, are calling for the green deal to be linked to feed-in tariffs and the renewable heat incentive, and for energy efficiency improvements to be widened in scope. That would serve two purposes: increasing the scope of improvements to properties, and enticing people to take up the green deal.

The Secretary of State said:

“A once-and-for-all refit…will make every home in Britain ready for a low-carbon future. No more half-measures going off at half-cock.”

He made an important point.

Microgeneration has attracted a fantastic, enthusiastic response from consumers. People believe that the green deal would fund a wide range of measures. It is interesting that the most attractive measure to customers wanting to use the green deal is installing microgeneration. The figure is 56%, according to a survey carried out by E.ON. The installation of new heating systems is the next most attractive measure. There was some interest in loft and cavity wall insulation, at 26%, and solid wall insulation, at 22%. Interestingly, those numbers are lower because many customers believe that they already have such measures in place. The opportunities to engage people about making improvements to their homes are incredibly rare. The green deal should do everything to maximise its benefits by allowing other installations to be made if funding for including such measures is found by other means.

The hon. Member for Brighton, Pavilion and others made an important point about water efficiency, especially hot water. I want to reiterate some of the points. Hot water is obviously linked to energy saving, and the inclusion of water efficiency in the Bill has been called for by a number of external groups. DEFRA is due to publish a White Paper on the issue. I am glad that the Minister will think about this, and that we will see more during the discussions and consultations to take place in the autumn. Can we work with the Minister on the issue, because we, too, think it is important? Heating water is the second biggest consumer of energy in the home, after heating space. It accounts for 5% of the UK’s greenhouse gas emissions—a massive element—so we are keen for as much as possible to be done.

While the hon. Lady made some important points, and we are sympathetic to the spirit of her amendment, we believe it is too specific to be included in the introduction of the Bill. I echo that we are keen not to have to revisit and alter primary legislation. We want the provisions in the Bill to be future-proof, but the amendments are so specific that, if accepted, changes to the primary legislation would be necessary in the future, which is not currently the case.

Huw Irranca-Davies (Labour, Ogmore)

It is a pleasure to serve under your stewardship, Mr Leigh. I echo the sentiments of the Minister about the range of experience in all parts of the Committee.

On amendment 41, I agree entirely with the Minister and with comments by other colleagues about common sense. If we have a skilled, professional individual in a house, the opportunity is clearly there to give advice above and beyond the green deal. For example, people’s particular expertise might not be completely comprehensive—in electrics or water engineering and so on—but, while they are in that house, it would make absolute sense for them to say, “While I am here, rather than returning in three months or when you have the next problem, let me just say that I have just spotted this and that. You might want to deal with them as well, although it might cost a little more”—that would be above and beyond the green deal. The question for the Minister, who rightly identified it, is whether that is delivered front-facing, on a piece of primary legislation, or we revisit the matter, talking it through with Departments.

The issue is critical—dealing with the point at which the professional walks through the door of someone’s property and says, “Well, we’ve got a very good scheme, which the Minister took through Committee. There is a lot of confidence in it, and there are some great providers out there—you can pick from two, three, four or half a dozen of them.” The professional is in the house and can say, “I will now go through a hierarchy of things that will deliver real energy efficiency and, by the way, we can also give you a bit of advice on x, y and z.”

The individuals, whether a household or small business, are not looking at a green deal provider or assessor—whatever they will be called—plus someone else, but at one person, with whom they have developed a relationship, who is saying, “I will do it myself.” On such a basis, the individuals will trust the person, from whom they are already purchasing something, in particular something with a long payback time through bills, so any other advice would be taken from such a person as part of a package.

The purpose behind amendment 41, therefore, is to give belt and braces to the consumer. The Minister made the point about some of the protections for other products, including some energy-saving products that might not feature in the green deal but are dealt with under existing legislation. In that case, what is the problem with the amendment, because it is purely belt and braces?

When the Minister responds, will he give concrete examples of products or services that might not need to be covered by such protections? When he raised that matter, I was struggling to think what they could be. Whether at massive or only minor expense, everything that is sold to a consumer requires some sort of protection. We are getting into the issue of fear. If we are to deliver real confidence in the scheme—not just in Committee, but on the ground—people need to know that they are protected whatever is said to them.

The purpose of amendment 41 is to avoid the mis-selling of inappropriate products, and to ensure that customers are made aware of other possible energy plans as well as green deal plans. We do not yet know the detail—I am sure the Minister will come on to that—but where will FITs, renewable heat incentives and microgeneration fit in? I suspect that when we come on to that in Committee, the Minister’s thinking will have moved on, but we do not yet know. However, the consumer must be confident about any advice, whether that is within the green deal or just outside it. We must wait for the Minister to refer to that case in a later sitting, but I want such individuals to have exactly the same confidence that the protections will also be afforded to them. Alternatively, that confidence might also apply to eco-provision or matters that are not purely about energy efficiency, but about water saving. I will not mention power showers again, as I fear being labelled a right anorak—[Interruption.]Exactly.

We want to ensure that energy plans are arranged at the same time as the green deal assessment; it is wasteful to have someone with professional expertise in a house who disappears without the householder being able to benefit from such wider expertise. The other purpose of the amendment is to encourage such an approach, and to discourage the inappropriate mis-selling of products or services. Under the amendment, consumers would be able to decide to pay up front either to install measures that are eligible for the green deal, or to install measures that do not meet the golden rule but which would be classed as energy plans outside the green deal. Such measures should still be subject to the same guarantees and protections as those taken under the green deal.

Ideally, amendment 41 would have been grouped with our amendment 36, which we will consider later. Under amendment 36, the green deal assessor would be able to highlight measures that can improve a house’s energy efficiency but do not meet the golden rule—as an energy plan rather than a green deal plan, because not everything will fall within the green deal.

On Second Reading on 10 May, the Secretary of State said:

“Under the green deal, energy-saving packages worth thousands of pounds will be installed in millions of homes and businesses right across the country. There has never been anything quite like it.”

I highlight this part of the quotation, which is what our amendment 41 goes to:

“It is the most comprehensive energy-saving plan in the world. Green deal measures will be provided by trusted businesses, installed by accredited professionals, and backed up with a watertight legal framework.”—[Official Report, 10 May 2011; Vol. 527, c. 1055.]

We are merely asking the Minister to make good on what was said by the Secretary of State. The Minister has said that some products and services may not require that level of protection and that others are already covered, but the amendment would provide belt and braces for consumers by giving them the confidence that the Minister is interested in their having.

The Department of Energy and Climate Change paper “Consumer Protection in the Green Deal” states:

“The accreditation framework for energy assessment and Green Deal Advice will be underpinned by: a robust qualification and accreditation framework; more robust assessment methodologies; and effective redress routes, backed by professional indemnity cover, should anything go wrong.”

Amendment 41 very much goes to the heart of that and would be very helpful.

Finally, will measures taken as a result of a green deal assessment, but paid for up front—in advance—still have the same level of consumer protection? That is what the amendment seeks to address. We want consumers who pay up front to have the same level of protection. From the individual consumer’s point of view, the installer of the product—not the green deal assessor—is the person they want to come back to with a high degree of trust and confidence.

We believe, as the Minister does, that the maximum benefit should accrue from an assessment by a professional coming into the house at the point of contact with the householder or business. To give full confidence, the fullest protection must also accrue through applying the same standards and protections, through the schemes or codes that apply to the green deal itself. It appears to us wholly logical and right, so I am sure that the Minister will applaud this sensible amendment and support it.

Graham Jones (Labour, Hyndburn)

It is a pleasure to serve under your chairmanship, Mr Leigh. I will be brief and restrict my comments to amendment 84. Perhaps an opportunity has been missed to address definitions in the green deal, particularly in relation to the occupier or owner of the property. Will the Minister give due consideration to the wording that refers to owner or occupier? It seems straightforward—in the private rented sector, it is the occupier, and if it is owner-occupied, it is the owner—but I want the Minister to consider the clause, because it is not just one or the other. In the Bill and the statutory instruments that follow, we need to consider tenure and things such as shared ownership. I have read the Bill and did not find any guidance notes that mention such issues. Under this clause the Minister has an opportunity to reflect on what he means.

I congratulate the hon. Member for Brighton, Pavilion on tabling the amendment to try to improve the clause. We have concerns where there is shared ownership and where the owner can be the occupier—the wording says “or”. There needs to be clarification. There are also other areas with problems in the wording around short-term leasehold and who is the owner and who is the occupier. The wording is rather loose and badly written, and something needs to be done in relation to short-term leasehold.

Furthermore, there are complex management arrangements beyond short-term leasehold. Is it the owner, the occupier or both? It must be one of them. The Minister needs to clarify such issues. He also needs to consider length of tenure. There is no mention of duration before an owner or an occupier is entitled to the green deal. Will the Minister clarify that?

Edward Leigh (Conservative, Gainsborough)

I remind hon. Members that if they want to range more widely, there will be a clause stand part debate in which they can raise their points in an appropriate manner.

Gregory Barker (Conservative, Bexhill and Battle)

I apologise, Mr Leigh. I began replying to the hon. Member for Brighton, Pavilion and then we had further contributions, so I apologise if there was a little confusion. However, we got the key points and some sensible issues were raised. I thank members of the Committee for their contributions. I can assure them that we want “green deal max”. We want the green deal to be as transformational as possible, but there is a sensible balance to be struck. It is not self-evident where that balance should lie. On the one hand, we want absolutely robust consumer protection—we have been very clear about that. We have published a document spelling out the need for strong consumer safeguards, which have been welcomed by Which?, Consumer Focus and others. Equally, we want to ensure that we create a regime or framework that is accessible to small companies, individual traders, small and medium-sized enterprises and local firms, and not something so complex and onerous that only the big boys get to play in this market. I know that members of the Committee are concerned to get that right, and that the hon. Member for Brighton, Pavilion is equally concerned to ensure that we do not inadvertently fence out smaller participants, because their community engagement is critical. I understand the points that hon. Members have raised, and they are well based. We will be looking to pick them up in detail in secondary legislation in the autumn. We will look at what has been said today and try to include those points, where possible, in the consultation that will come as part of the secondary legislation. By doing things that way, we will be more inclusive. Framing the legislation that way will enable us to future-proof the policy.

Huw Irranca-Davies (Labour, Ogmore)

This is an important point. I empathise wholly with what the Minister is saying about the difficulty in finding the balance between what should be in the Bill and what burdens that would create, particularly for small businesses, which we want to see take advantage of the policy. However, in so saying, he hinted that he has made some sort of assessment of the regulatory impact on small businesses from different options—I am looking to his right—for example, consumer protection. Will he confirm whether he has done that? If so, will he share it with the Committee? We would be able to make much more valid judgments on what the Minister’s good words are saying if we had the detail in front of us. Has he made the assessment?

Gregory Barker (Conservative, Bexhill and Battle)

The type of assessment the hon. Gentleman is talking about will accompany the secondary legislation. We are not attempting—even though he is—to deal with the matter at this stage of the Bill. Getting down to such a granular level of detail, to the great power shower question, is something we will do in the autumn. To use a phrase that the Prime Minister is fond of, when it comes to power showers, we are all in it together. The hon. Gentleman is getting ahead of the game.

Huw Irranca-Davies (Labour, Ogmore)

There are so many jokes about power showers that I could use, but I will leave them alone for the moment. My intervention concerns not power showers but consumer protection. The Minister is clearly arguing that he does not want to take a belt and braces approach because of the impact that would have on smaller businesses, in particular, in taking advantage of the policy, and I understand that. However, if that is his stated aim at this moment, all I am asking for is the evidence on which he bases that decision, in order to see that it is not a gut reaction. If he says that extending consumer protection for the green deal across all elements at the point when the individual comes through the door, which I see as a simple thing, would impose too great a burden, will he give us the evidence as opposed to the words?

Gregory Barker (Conservative, Bexhill and Battle)

There is already consumer protection in place—a consumer protection regime in law that protects against mis-selling. We are trying to fashion, on top of that, an additional level of protection that relates specifically to the green deal. There has to be a cut-off point and a clear edge at which that begins and where other consumer protection laws kick in. We have to preserve that clarity. The opportunities for accredited green deal representatives, installers and providers to come in and cross-sell a whole range of products will vary from installer to installer, but they will still need to ensure that the selling is done reputably and legally. We cannot even begin to anticipate just how far some providers will seek to extend their sales proposition. That will be a matter for the market. Where appropriate, we will be consulting on secondary legislation. The regulatory impact on SMEs is important. We must ensure that we do not make it more difficult for new entrants. We do not want any unintended consequences, which is why we will properly consult on these measures later in the year, rather than just responding to an amendment in Committee. On that basis, I hope that the hon. Member for Brighton, Pavilion will withdraw her amendments.

Edward Leigh (Conservative, Gainsborough)

Before I call Caroline Lucas, may I ask Huw Irranca-Davies whether he will press his amendment to a vote. It will be helpful to know now.

Huw Irranca-Davies (Labour, Ogmore)

No, I will not press it to a vote; I seek only the further assurance of the Minister.

Caroline Lucas (Green, Brighton, Pavilion)

I thank hon. Members for what has been a useful debate about the scope of the green deal. I just want to re-stress that the aim of my amendments is to try to see this whole package through the lens of the householder and the consumer. When someone walks through their door, they want to know, “How can I make my home more energy efficient? What things can I do?” They do not want to know only those parts that meet the strict criteria of the green deal. Those are a sub-set.

I am still worried, despite what the Minister has said, that there is not sufficient stress on the wider energy plan, which many households may well be in the position to fund themselves or to fund from other funding sources. Currently, they only get to hear about those measures that meet stringent requirements for the green deal finance—in other words, those measures that come in under the £10,000 cap, that will be economical over the period of the green deal loan and that follow the golden rule by working on their fuel bills. That is a sub-set of everything else that needs to be done. The households would find it perverse if they did not have more information about the range of things they could do in their homes. Instead, they will only have information about those measures that happen to fit the golden rule criteria.

We can argue about water—I am glad that the Minister will look at that again and I would be interested to hear plans for a blue deal—but beyond paragraph (f) of amendment 86, my amendments go much wider than water. They would ensure that every time we discuss the green deal, we stress that it is a sub-set of a wider idea: the energy plan. In that sense, my amendments are in line with amendment 36, which has been tabled by the Labour Members sitting alongside me. For that reason, I am disappointed that they are not willing to support my amendments, because they would simply operationalise what amendment 36 would do.

Huw Irranca-Davies (Labour, Ogmore)

The hon. Lady is right: the amendments are trying to do the same thing. I wonder whether the Minister will intervene and indicate that he will give more thought to this issue and revisit it, in line with later amendments. We are of the considered position that we want him to do that, and would want to work with him. Perhaps he wants to work with the Committee, in anticipation of future amendments.

Caroline Lucas (Green, Brighton, Pavilion)

I found that intervention helpful. If the Minister intervened at a suitable moment to give us that guarantee, it would be helpful.

Gregory Barker (Conservative, Bexhill and Battle)

I cannot make any promises, but I will certainly reflect on this and look at it in more detail.

Caroline Lucas (Green, Brighton, Pavilion)

I thank the Minister for that. That will be helpful.

I will wind up by referring to amendment 97, which has the same goals as amendment 41. I reiterate that this is about confidence in the whole process, and comes back to the idea that when the assessor walks through someone’s door, they do not want to hear that the different measures they might put in place will have different levels of consumer protection. That consumer protection is not a burden; it is a guarantee for the whole package of measures.

I worry that if we have different levels of protection for different measures, we risk undermining the package as a whole. We need to have a seamless experience for the consumer, who will not be looking at it so minutely as to see which bits fall under which headings. They want to know that they are getting measures in their home, potentially funded by more than one source, that will be of a high standard, and which they have recourse to complain about if there are problems. That is why I stress amendment 97.

Nadhim Zahawi (Conservative, Stratford-on-Avon)

It is a pleasure to serve under your stewardship, Mr Leigh.

I hear what the hon. Lady has to say on the matter, and she has raised some important issues. However, she comes to the Bill with the view that all consumers will want to take an holistic approach to all energy savings. Part of what we are discussing is that the catalyst for the consumer to get someone to walk through their door is the green deal. Some consumers will not comply with her theory, but her important points should be examined when discussing secondary, not primary, legislation. She assumes that all consumers will take an holistic approach and want everything in their home looked at, whereas the tipping point for many will be the green deal itself.

Caroline Lucas (Green, Brighton, Pavilion)

I do not agree that the two matters are mutually exclusive. I agree that the financing option of the green deal will be helpful and attractive to consumers, but it would also be helpful if a wider assessment was undertaken when the person was in the house. We do not often make the effort of getting someone to walk through a person’s house to do an assessment. While such a person is there, it makes sense for them to undertake a wider assessment. However, I am reassured that the Minister will look at the matter again later in our proceedings.

Huw Irranca-Davies (Labour, Ogmore)

I welcome the Minister’s undertaking to look at the matter again. I want him to reconsider it because, in response to the hon. Lady’s point, the success of such a market-driven approach will rely on its attractiveness for savings in money as well as energy. It will be a missed opportunity if we do not also maximise the impact on carbon savings as well as purely on cost and energy savings. For the past decade, the Government have put forward such a policy, so I ask the hon. Gentleman to engage with us to achieve a much more joined-up agenda so that this is not purely a market-driven process of going to Mrs Miggins delivering x, y and z product, but also about the carbon agenda of the Government. Otherwise, it will be a sadly missed opportunity. I know that the hon. Gentleman is keen on such action, and I hope that he will work with us to ensure that such matters are clearly on the record.

Caroline Lucas (Green, Brighton, Pavilion)

I beg to ask leave to withdraw the amendment.

Caroline Lucas (Green, Brighton, Pavilion)

I beg to move amendment 101, in clause 1, page 2, line 22, after ‘property’, insert ‘except where the bill payer is recognised as being in fuel poverty,’.

Alan Whitehead (Labour, Southampton, Test)

May I underline the question that I think will come up throughout our proceedings? There is very little clarity at the moment—I suspect that we shall need much more before we are clear about where we are going—on exactly how vulnerable, fuel-poor people will fit into the way the green deal works. I take it that the purpose of the amendment is at least to introduce that issue centrally into our debate.

The document that the Department has helpfully produced about the energy company obligation provides an interesting chart giving the illustrative overall interaction between green deal finance and ECO subsidy. Under the ECO subsidy it points to measures providing affordable warmth for the vulnerable. There is a Venn diagram, showing part of what looks like the ECO subsidy being applied only to those who require affordable warmth and are vulnerable, and who therefore would not gain that affordable warmth under the green deal itself.

However, the Bill suggests that a number of people who might be vulnerable and in fuel poverty may well participate in the green deal, either directly, or indirectly through landlords or other parties. They therefore might not be included in the relevant section of the Venn diagram. There is a helpful warning—rather like the one on McDonald’s pies, warning that they are hot—saying that the diagram is not to scale. That is very helpful, but nevertheless it is essential to define the extent to which the ECO will come to the aid of people in fuel poverty, who do not necessarily require a simple cost reduction. Those people need affordable warmth and a great improvement in the energy efficiency of their properties, whether rented or owned, to help to bring them out of fuel poverty, with an effect on both their costs and their warmth. At present how that will work is very unclear.

There would of course be substantial difficulties in putting a simple exemption in the Bill, with respect to fuel poverty, as has been suggested. Those who are in fuel poverty may—among other things—move home. If someone in fuel poverty arrives at a home that has already had the green deal attached to it, that may affect the definition of whether they are in fuel poverty, under the present definition, which I hope will continue.

Nevertheless, the overall issue of what will be within the ECO, and what proportion of it will be dedicated to dealing with the homes of people who are vulnerable and in fuel poverty, remains pretty obscure. I hope that as the Bill proceeds we shall achieve much more clarity, which would be helpful in deciding what goes in the Bill in specific relation to fuel poverty.

Huw Irranca-Davies (Labour, Ogmore)

The amendment relates to fuel poverty, which goes to the heart of many Committee members’ concerns. The hon. Member for Brighton, Pavilion has said that she tabled the amendment to probe that matter and it is right that we do so. Despite the best efforts of previous Governments, who put a lot of commitment into tackling the issue, we know that the latest Government survey of poverty showed that 3.3 million households in England, and 4.5 million in the United Kingdom, lived in fuel poverty in 2008. It predicted that as many as 4 million households in England, and 5.5 million across the UK, would be living in fuel poverty last year.

The challenge is absolutely massive and it comes at a time when Warm Front funding is being phased out. For the first time since 1978 there will be no direct Exchequer funding for domestic energy efficiency improvements that tackle the very issue of fuel poverty. How do we deal with that? To echo comments that have been made by my hon. Friend the Member for Southampton, Test, we want the Minister to clarify, in his response to the amendment, what will happen with the ECO, which we want very much to see targeted at the fuel poor.

The measure raises important questions. For example, can ECO operate independently from the green deal so that it is targeted only at those households that are fuel poor, regardless of whether they take up the other green deal measures? Will the measure be driven purely by the market forces that the Minister has mentioned? Will market entities go into houses from which they think they will make the most lucrative 10-year, 15-year or 20-year deals? Such deals will not be made, for example, from the stone-built, 1870s terraced house at the top of the Garw valley.

Will the Minister provide clarity on what the ECO will be used for, as my hon. Friend has mentioned? I know that the Minister and his officials are working very hard to give us that clarity, but the Committee does not have it here and now as we deliberate. I hope that when the Minister responds, he can say that the ECO can be delivered independently of the green deal if necessary. In addition, how much—if not exclusively—will the ECO be targeted on fuel-poor households?

Gregory Barker (Conservative, Bexhill and Battle)

May I start by thanking the hon. Member for Brighton, Pavilion, for tabling the amendment, which seeks to ensure that households in fuel poverty will not be required to repay green deal charges? I do not agree with some of her arguments, but she makes an incredibly important point that is at the heart of the green deal. We must ensure that the green deal is an ambitious response to the need to reduce carbon emissions and eradicate fuel poverty; that is at the very heart of the Bill. However, through the ECO home-heating cost reduction target, the Bill already has provisions that are designed to provide substantial extra support to low-income and vulnerable households, so that they can heat their homes to a more suitable level without increasing their bills.

The hon. Member for Brighton, Pavilion, knows well that households on very low incomes tend to under-heat their homes far more than the rest of us, which can pose significant health problems, particularly for the most vulnerable. In such cases, the ECO will help people to meet the up-front costs of efficient central heating systems and insulation. That will help householders to heat their homes to a more suitable level without increasing their bills and, potentially, bring health and social benefits, too.

Returning to points that the hon. Lady made earlier, I certainly anticipate that a green deal installer or provider will look at not just conventional heating, but potential opportunities for the fuel-poor to access renewable heat incentives and feed-in tariffs, particularly where there is a partnership with a local authority, which has a duty under the Home Energy Conservation Act 1995 to bear down on and grip the issues; that duty will be reinvigorated. One of the most active users of feed-in tariff technology is social housing, and we want to see that technology rolled out much more ambitiously.

Graham Jones (Labour, Hyndburn)

I thank the Minister for his generosity in giving way. He briefly mentioned the responsibilities on and duties of local authorities; I suspect that issue may come up throughout the Bill. Will there be resources for local authorities to deal with the matter and execute the duty, or will they have to do so within their current budgets?

Gregory Barker (Conservative, Bexhill and Battle)

We will discuss those points in more detail later in the Bill. The hon. Gentleman raises a good point, but it cannot be dealt with in a simple answer, because in rolling out the green deal, there is a potential for local authorities to earn income, rather than simply expend resources. That requires a more detailed explanation than I think the Chair will give me latitude for in this debate on the amendment.

The ECO has been designed to offer further support in addition to green deal finance to ensure that those living in harder-to-treat properties can benefit from energy efficiency improvements delivered under the green deal. That support will be integrated into the green deal framework; where ECO financial support and green deal finance combine to deliver the improvements, the details will be arranged behind the scenes, so that there is a seamless offer to the householder. We propose that, as part of the assessment process, households will be encouraged to consider their actual energy use to ensure that the green deal is appropriate for them.

Caroline Lucas (Green, Brighton, Pavilion)

I want clarity on two things. Forgive me if I am not being clear. First, do we know how much of the overall ECO pot will be ring-fenced specifically for the fuel-poor? Secondly, will those in fuel poverty experience the ECO as a separate grant, or will it be tied into a green deal package, in which case they would still be paying it back?

Gregory Barker (Conservative, Bexhill and Battle)

I was about to come to those points, which were also raised by the hon. Member for Ogmore. We are not going to put a split into the Bill. The issue is a big one, and I would welcome more detailed contributions and thought from the hon. Member for Brighton, Pavilion, and other members of the Committee. We will be consulting on it. It is only right that we look not just to the Committee, but more widely. There is more work to be done in talking to stakeholders, non-governmental organisations and local authorities to come up with that split. We will do that as part of this autumn’s consultation. We may want a degree of flexibility on that issue, or want to move it over the lifetime of the deal. We are talking about a programme that could run for up to 20 years, and we cannot anticipate in Committee just how the market will unfold—where it will be most successful, or what the problems and barriers that I am absolutely sure it will run into will be.

Luciana Berger (Labour, Liverpool, Wavertree)

The Minister used the word “split” a number of times, and I would like some clarity on that. Is he implying that some of the ECO will be allocated to the able-to-pay sector?

Gregory Barker (Conservative, Bexhill and Battle)

Yes. The idea is that there are twin objectives: the hard-to-treat homes and the eradication of fuel poverty. We need to think carefully about that, and to take more evidence and work through what is a complex issue. However, we shall do that in the autumn, and it is right that we should consult properly on it.

Huw Irranca-Davies (Labour, Ogmore)

I accept what the Minister says about the need to consult all the various stakeholders engaged with the issue of fuel poverty, but we are struggling to get any idea of what the Minister feels. We are clear that a significant proportion, if not the entire amount, will need to be targeted at fuel poverty, and the Minister has not given any assurance that that is his intention, or that that will be achieved. Can he give more clarity on where the split might be? What are his initial thoughts?

Gregory Barker (Conservative, Bexhill and Battle)

I think it would be unhelpful of me to shoot from the hip with my initial thoughts. First, we have yet to agree with the Treasury the size of the ECO. We need to define the size of the cake before we start to slice it up. Secondly, once we have done that—and all help in that direction is gratefully received—it is right that the views of the Committee should influence and inform the consultation.

I also need to see some modelling of the various scenarios and splits, once we know the size of the cake, so that we can understand whether there are any perverse consequences. If we were to go for a very large weighting towards the fuel-poor—which is entirely possible—what would be the impact on our carbon targets? What is the impact on carbon emissions of skewing things overwhelmingly to the fuel-poor? Alternatively, is there a benefit to looking at things, in carbon terms, that automatically enhance the welfare of the fuel-poor? A lot more modelling and stress-testing needs to be done before I give any flip answers.

Alan Whitehead (Labour, Southampton, Test)

Perhaps I can help the Minister with some initial figures. In his document, “Extra help where it is needed”, he suggests that the Committee on Climate Change document, “Meeting Carbon Budgets: the need for a step change” states that 2.3 million solid-walled homes will need to have taken up solid wall insulation by 2022 for the UK to be on track to achieve carbon budgets. At £6,000 per property, that would come to about £13 billion by 2022, which would be £1.3 billion a year out of ECO, assuming it would be done under ECO. The Minister himself suggested a little while ago that ECO should be about £2 billion a year. That suggests that the vast majority of ECO would be taken up by solid wall insulation and not by help for those who are vulnerable and in fuel poverty—unless, of course, ECO is very much larger, and the Treasury gives him everything he wants for Christmas.

Gregory Barker (Conservative, Bexhill and Battle)

I think that the hon. Gentleman is assuming that those in need of solid wall insulation are not fuel-poor. I do not know the absolute answer, but I think that he would find that a very large number of the fuel-poor are those with solid-walled homes. Particularly in rural areas, the hard-to-treat homes are invariably the lower decile income homes—older properties that need solid wall insulation. The idea that there is an either/or, binary choice is a little misleading. Rather than making a quick choice, we need to do much more research and stress-testing for exactly the reasons that I have posited: to get to the bottom of the matter.

In response to the question on how the measures are to be delivered, and whether we can just rely on the market, I draw the attention of the hon. Member for Brighton, Pavilion, to the revitalised Home Energy Conservation Association. We will have an opportunity to debate this, but we anticipate that local authorities will take a leadership role in their areas, particularly focusing on energy efficiency improvements among the fuel-poor, and ideally they will do so in a range of partnerships most appropriate to their area. There is a great opportunity for big society-style collaboration between the private sector, the third sector and the public sector. We certainly do not want to be prescriptive in how that will operate, but as a result of the Bill we expect, in no uncertain terms, a clear focus on the fuel-poor in each local area.

Graham Jones (Labour, Hyndburn)

I again acknowledge the generosity of the Minister in giving way. I am sure that the point will recur throughout the debate, but it might be beneficial to make my suggestion now. The Minister mentioned local authorities having to deal with fuel poverty, and two local authorities in shire areas are addressing that issue at two different levels. I suspect that much of the enforcement and on-the-ground work is done by the district authority, but information held by district and shire authorities about individuals’ circumstances is often not shared; sharing it might help resolve some fuel poverty issues. Is the Minister looking into that, and will he address it in Committee?

Gregory Barker (Conservative, Bexhill and Battle)

The Department is very familiar with the issue of data sharing, which we have been looking at in the wider context of the energy sector as a whole, but the hon. Gentleman is correct. I have not focused on the problems of districts and counties, but I am happy to reflect on that matter.

We do not believe the amendment is necessary, because the Bill already provides support for households in fuel poverty. Clearly, the green deal will provide an opportunity to upgrade homes—whether privately rented, social housing or owner-occupied—and the level to which finance will be levied on the Bill as part of the green deal will depend on the savings that can be made. No one, whether they are fuel-poor or a high earner, should have their fuel bills increase; because of the golden rule, those bills can only decrease. It is precisely where people are unable to pay for the required measures, because of low usage, that the ECO will kick in. Other measures—the warm home discount and a range of other initiatives—are designed further to assist the fuel-poor, but the green deal is about upgrading the fabric of buildings and dealing with the root cause of fuel poverty, both in urban areas and in the overlooked rural areas. Only by dealing with the root cause of fuel poverty will we make genuine progress in turning it around.

Steve Brine (Conservative, Winchester)

It is a pleasure to serve under your chairmanship, Mr Leigh. I want to ask this question, probably not for the last time: as the Minister and his team work on the ECO and on how the green deal can assist the fuel-poor, will he keep park home owners, who are now part of the green deal—that was confirmed at questions a while ago—in the forefront of his thinking, because they often fall into the category of the fuel-poor?

Gregory Barker (Conservative, Bexhill and Battle)

Absolutely. They have been woefully neglected in the past. We know that park homes are inhabited by a high incidence of the fuel-poor. As my team have already been doing, we will try to find solutions to the specific problems faced by park home owners and dwellers.

Graham Jones (Labour, Hyndburn)

I, too, was going to address park home owners, but I thank the hon. Member for Winchester for raising that point. I wanted to ask the Minister about what he said previously about dealing with fuel poverty at its source. Reference has been made to such matters as solid walls insulation and we will move on to discuss F and G-rated properties, but as the debate goes on it is worth asking this now. The Minister talks about fuel poverty, but what about the health and safety rating system and category 1 and category 2 hazards? Are they part of the equation in dealing with fuel poverty? Will they be considered or will they be neglected and not included in the Bill? I want to understand the linkages and add a further linkage to the Bill.

Edward Leigh (Conservative, Gainsborough)

Order. Interventions are getting longer and longer. I am an easy-going chap, but give hon. Members an inch and they will take a mile. Please keep interventions crisp. Members of the Committee can stand up whenever they want and give a speech, but it is not fair to interrupt the Minister.

Gregory Barker (Conservative, Bexhill and Battle)

Thank you, Mr Leigh. I am grateful for your protection.

Huw Irranca-Davies (Labour, Ogmore)

Could the Minister at least tell us when we will have clarity? Do we have to wait until autumn or can he share with us the modelling or whatever on how he is going to target fuel poverty as early as possible? That is what concerns the Committee.

Gregory Barker (Conservative, Bexhill and Battle)

That will come out with the consultation in late summer or early autumn. On the points made by the hon. Member for Hyndburn, we will have an opportunity to consider his concerns at a later stage of the Bill.

Caroline Lucas (Green, Brighton, Pavilion)

I appreciate the importance of the consultation. All the non-governmental organisations, local authorities and stakeholders I have spoken to are deeply concerned that the fuel-poor could end up effectively subsidising consumers who are able to pay and who happen to live in hard to treat homes, because the ECO is being unduly directed at them. I appreciate that some of the people who live in hard to treat homes are fuel-poor, but not all of them are. Given that some of them are, could the Minister guarantee that they will be a priority within the part of the ECO that is looking at hard to treat homes? Instead of hard to treat homes as a category, it should be those living in fuel poverty who live in hard to treat homes. That would be a way of trying to combine two different ideas, which are causing us a lot of concern.

Graham Jones (Labour, Hyndburn)

Is the hon. Lady suggesting that the poor would perhaps end up subsidising people who are in grade I listed buildings because they are old?

Caroline Lucas (Green, Brighton, Pavilion)

I thank the hon. Gentleman for his intervention. Indeed, that is precisely the kind of mechanism that could be seen. Let us not forget that the ECO is actually being funded by a levy on all bills, including the bills of those who live in fuel poverty. If they see money from their bills going to treat grade I listed buildings, that will not be a great incentive to get involved in all this. There is an opportunity here for the Minister to consider not simply the idea of using the ECO for hard to treat homes but using it for fuel-poor people who live in hard to treat homes.

Steve Brine (Conservative, Winchester)

I make the point that just because somebody may live in a grade I or grade II listed building, it does not mean that they are the super-wealthy. There is the well-known term “property rich, cash very poor,” and someone can be both those things. Does the hon. Lady accept that?

Caroline Lucas (Green, Brighton, Pavilion)

I absolutely accept that. It does not contradict what I am saying. I am simply suggesting that we prioritise people who are in fuel poverty in hard to treat homes, who may indeed fall into the category that the hon. Gentleman describes. I do not intend to press the amendment to a Division. We have had a useful debate, because it has put on the record the concerns that many of us have. We are anxious to ensure that fuel poverty is at the top of the agenda, alongside energy efficiency. We want to make the best of the opportunity that we have here to ensure that we use the Bill as a way of addressing fuel poverty. However, I beg to ask leave to withdraw the amendment.

Gregory Barker (Conservative, Bexhill and Battle)

I beg to move Government amendment 1, in clause 1, page 2, line 22, leave out ‘and’.

Edward Leigh (Conservative, Gainsborough)

With this it will be convenient to discuss the following: Government amendments 2, 45, 4 and 20.

Government new clause 3—Early repayment of green deal finance.

Gregory Barker (Conservative, Bexhill and Battle)

This group of amendments deals with the fine tuning of the green deal model to optimise the supply of finance. First, I will speak to amendments 1 and 2, which are technical but important. They do not alter the basic framework of the green deal model. They merely clarify that energy suppliers can recover unpaid green deal charges as a debt through the courts, if necessary. These amendments do not constitute a change in policy; they merely reaffirm a basic principle of the green deal. That principle is that the green deal charge be treated as the same as energy debt, thereby delivering as low an interest rate as possible. These amendments will help provide the private sector with the confidence it needs to gain access to the lowest possible interest rate and the most competitive sources of finance. I urge the Committee to support these amendments.

Amendment 4 is an important technical amendment to facilitate the green deal model. It is possible that green deal providers will want to use their own capital to undertake energy efficiency works and recoup their costs through repayments. It is more likely, however, that they will instead look to financial institutions to provide them with the necessary capital and, in return, will sign over their rights to all or most of the income stream from green deal repayments.

We have always intended flexibility for both options in the model. Discussions with the finance community have highlighted the need for an explicit reference in the Bill. The amendment spells out that remittance of payment by the energy companies can be to green deal providers or any financial institution nominated by the green deal provider. In bringing forward the amendment, we are removing unnecessary administration costs for green deal providers who would otherwise need to forward on payment. I hope that the Committee will also be able to support the amendment.

Amendment 20 and new clause 3 are substantive. The green deal model allows property owners and occupiers to install measures that are paid for over time. It is therefore a form of credit, albeit a pioneering and exceptional one, as liability to make payments under the plan passes to future bill payers at a property, rather than remaining with one person. For green deal plans sold to domestic customers, the Consumer Credit Act 1974 will therefore apply. The 1974 Act allows customers to repay credit arrangements early and allows creditors to recover compensation in those situations. That is already a feature of most consumer credit arrangements. Under the consumer credit directive, member states can enable creditors to recover additional compensation in exceptional cases. As some green deal plans are likely to be exceptionally long in duration compared with standard credit arrangements for consumers, we consider that it is appropriate to enable green deal providers to recover a fair level of compensation, if they wish.

The amendment enables green deal providers to recover, within a tightly controlled framework, the losses resulting from early repayment. That will enable green deal providers to avoid having to price the risk of early repayment into every single deal, to reflect the fact that existing compensation provisions are inadequate. That could force green deal providers to raise the prevailing interest rate for all green deal customers.

The amendment does not create a carte blanche. Its application is limited to green deal plans and only those plans that meet requirements to be set out in secondary regulations. Moreover, compensation can be charged only if the provider can demonstrate that they will suffer an objectively justifiable loss as a result of the customer repaying early. In broad terms, we envisage that that will be based on a comparison of the agreed interest rate of a particular deal and the prevailing interest rate on the green deal market, at the time of any early repayment. Such compensation will only be available when the interest rate is fixed. It will not apply where the interest rate is variable and the interest rate can rise and fall with the market. That is a requirement of the directive.

We will set out in secondary legislation the conditions under which compensation may be claimed and how green deal providers should calculate the loss that they have suffered. When no loss can be demonstrated, providers will not be permitted to recover additional compensation. In addition, providers are free to choose not to charge exceptional compensation if they feel able to bear the loss, or mitigate its risk in other ways. Importantly, the green deal provider will not be able to recover compensation that is greater than the interest that would have been due had the agreement continued to its conclusion. Crucially, enabling green deal providers to recover additional compensation is in line with the consumer credit directive.

Amendment 45 deals with who should take liability when a customer defaults on a green deal payment. To ensure the lowest cost of capital for the green deal, which is a matter that has been raised by a number of hon. Members, it is important to eliminate as many risks as possible. Stakeholders and the other place have consequently pushed for a final position on default in the Bill, which will provide much greater certainty for all potential green deal participants and energy suppliers, and will allow them to develop their business models accordingly. I am pleased, therefore, to respond positively to that request by introducing the amendment.

The amendment has three objectives: first, to limit adverse balance sheet impacts for energy suppliers; secondly, to minimise costs to consumers and customers; and thirdly, to ensure that robust collection incentives are in place. The Bill currently allows liability for default to be placed on energy suppliers. However, it was confirmed that that would have a significantly negative impact on their company credit rating, which would materially affect their ability to raise capital and invest in other priority areas such as renewable energy generation. In addition, stretching energy companies’ balance sheets adds an extra level of risk for green deal providers, which impacts on the level of equity required, the credit rating of any bond issuance and, therefore, the overall cost of green deal finance to consumers.

Finally, placing liability on energy suppliers creates a potential moral hazard for green deal providers because they have no incentive to ensure that they lend responsibly, which might lead to an increase in the overall default rate. The green deal provider would be able to offset a significant portion of the default risk by implementing robust origination and assessment criteria, ensuring that they lend responsibly. We are therefore amending clause 17 and intend to make it clear in licence modifications that energy providers will not be required to make green deal payments to providers on behalf of customers who default; green deal providers will take ultimate liability in such situations.

It is important, however, to ensure that there is a robust incentive for energy suppliers to collect payments, so we intend to impose a revenue-sharing obligation on suppliers in default situations. We envisage that green deal payments will rank equally with other elements of the energy bill. That means that if the green deal payment is 20% of the total amount of the bill, suppliers will pass on 20% of whatever payment they receive from the customer. Suppliers’ obligations to collect and pass on payments will be implemented by changes to licence conditions, which will be enforced by Ofgem.

We are working with Ofgem on how we might strengthen its monitoring and compliance mechanisms for the revenue-sharing obligation. In addition, we will place requirements in the multi-party agreement that will give green deal providers a contractual method of recourse if energy suppliers fail to fulfil their obligations.

I believe thoroughly that such a solution will achieve the three aims of limiting adverse balance sheet impacts, minimising costs and ensuring an appropriate incentive to collect. I hope that members of the Committee will support it.

Luciana Berger (Labour, Liverpool, Wavertree)

I am grateful to the Minister for giving us so much information and detail about the amendments. I wish to speak about debt recovery and liabilities. At present, suppliers can disconnect a household only for failure to pay the charges associated with the supply of electricity and gas, and associated metering costs such as the standing charge. The ability to disconnect electricity or gas supply for unpaid charges is governed by primary legislation. Suppliers cannot disconnect consumers as a result of debt or unpaid charges for services or products other than the supply of electricity or gas.

Clause 16 gives the Government powers to direct the regulator to amend licence conditions. Such powers may afford suppliers the ability to disconnect consumers for non-payment of green deal charges. That is where my worry lies. Will the Minister deal with such matters in his response, because many organisations have rightly highlighted their concerns about the new power to disconnect? Consumer Focus strongly believes

“that the existing interpretation of existing SLC and Gas/Electricity Acts must remain in place, and physical disconnection of supply can only take place for failure to pay charges associated with the supply of electricity/gas.”

National Energy Action states that

“any changes to the current Licence Conditions to afford suppliers the right to disconnect consumers for non-payment of Green Deal Finance charges would significantly weaken consumer protections, particularly for the most vulnerable and marginalised consumers.”

It is on behalf of those consumers that I raise such points. It goes on:

“However, such powers are thought to be advantageous in convincing the finance community that the Green Deal represents a robust investment. Without such reassurance, it is argued that the rate of interest would be punitively high as would the resulting repayments.”

Will the Minister deal with those two points?

Data from Ofgem suggest that 2.5 million households in Great Britain are in debt to their energy supplier, which is a large number of households. What will the Government do to protect the marginalised, vulnerable customers such as the elderly and disabled and those whose circumstances change dramatically? As a result of redundancy and other such matters, the circumstances of many of my constituents are changing dramatically and it is on their behalf that I am raising such issues.

I am grateful that the Minister clarified liability. It was raised previously in the other place, and I am sure that all members of the Committee have been lobbied about where liability for default will fall. I am pleased that the hon. Gentleman used the pari passu model. He referred to variable interest rates. We have not had such a discussion. Will he elaborate further and explain what he envisages in respect of variable interest rates for green deal repayments?

Graham Jones (Labour, Hyndburn)

I welcome the comments of my hon. Friend the Member for Liverpool, Wavertree regarding the transfer of debt from the energy company to the creditor and the worries that that will cause in respect of consumer protection and the necessary changes in primary legislation that will result. We must examine the relationship between those circumstances and the ability of the customer to pay other primary bills such as council tax, a liability that could see them go to prison. There is a range of associated issues that the Minister must address.

I want to touch on one important aspect of the matter—card payment meters. With a card payment meter and the green deal a fixed payment will be paid by the recipient to the energy company. Of course, with card payments there is also a variable payment in relation to the amount of energy that the customer would require between charges of the card.

I am very concerned about how the relationship will work with card payment meters. I presume that the Government will make the green deal the first charge on the card payment reader, with the variable top-up subsequent to that. For instance, if a customer had a green deal worth £10 per calendar month and wanted £30 of energy it would be on top of the £10, and they would pay £40 under the green deal.

I accept that there would be a reduction in some of the energy costs, meeting the golden rule, but I want to clarify how things will work for people with payment cards, because it is not addressed in any of the literature that I have had from the Government or NGOs. I would like it to be addressed, because many people in fuel poverty have card payment meters.

I should like the Minister to go further, and deal with the issue of fluctuating energy costs. In winter the payments of someone with a card payment meter would rise significantly, whereas the primary charge—the green deal, which would come before that—would be a fixed deduction on the card. How will the green deal work? In what order of priority will it work for people with card payment meters?

What will happen in winter? Given that people require less energy in summer and more in winter, will we push more people into fuel poverty because we have a bad winter, for example, with months of snow? With the green deal the first charge on the card they may suddenly not be able to afford to pay. They may be able to afford it over the course of a year, but presumably if they are in fuel poverty their income is pretty tight and they do not have flexibility from summer to winter. Will they be pushed further into fuel poverty?

There is an issue about transferring the creditor debt on to the green deal company—how that will work for people on card payment meters.

Caroline Lucas (Green, Brighton, Pavilion)

I am concerned that there is a risk that the Minister’s amendments could mean people being disconnected for failure to pay the green deal component of their bills. I want to reinforce the point that there is a link with how the bills are presented. If an overall bill merges the green deal payment with the payment for the energy used it will become non-transparent, and difficult to see what is owed for which services. It is not right for people to be disconnected for failure to pay the green deal component. We should stay with the present situation, in which people are disconnected only for failure to pay the energy component.

Gregory Barker (Conservative, Bexhill and Battle)

First, on the point raised by the hon. Member for Brighton, Pavilion, which summarises some of the concerns raised by other members of the Committee, there simply will not be a way to distinguish in payment what is or is not the green deal. In the same way, at the moment, there are several charges apart from simple energy consumption on the electricity bill. It is not open to the consumer to decide which charges or levies they want to pay, and which they do not.

In exactly the same way, they will be able only to pay their energy bill. It will not be possible for someone to decline to pay the green deal while paying their energy bill, and to be disconnected for not paying their green deal charges, because the choice to disaggregate in that way will not be available to the consumer, just as they cannot disaggregate from any other charges or levies currently on their bill.

Luciana Berger (Labour, Liverpool, Wavertree)

I hope the Minister will forgive me, but we have had conversations about this before, and he previously said that people would be able to see a separate part of the bill setting out the green deal payment.

Gregory Barker (Conservative, Bexhill and Battle)

That is exactly right—people will be able to see it. Electricity bills do not have a one line item, but several line items, split out to show the various levies and range of charges. I might bring a bill to a future sitting in order to illustrate that. A bill is not one monolithic number, but there is one cumulative number at the bottom. That is the number that will remain and the energy companies will be obliged to connect. The consumer will not be able to disaggregate the green deal figure, any more than they can currently split out the line items on their bill.

That prompts the question: will the green deal increase the number of people disconnected? Almost certainly not, we can say with a high degree of confidence. The green deal is designed so that the repayments that a customer has to make are not more than the likely energy bill savings, and as long as that principle—the golden rule—is adhered to, the number of disconnections should not increase.

Graham Jones (Labour, Hyndburn)

The Minister did not really answer the question about card payment meters. Are we going to create fuel poverty?

Gregory Barker (Conservative, Bexhill and Battle)

If I might make a little progress, I will endeavour to answer the hon. Gentleman’s question. He will be pleased to know that we will certainly work with prepayment meters. It is our intention that the green deal charge will be able to be collected through all payment routes currently used by electricity suppliers, including prepayment meters. I hope that puts his mind at rest.

Graham Jones rose—

Gregory Barker (Conservative, Bexhill and Battle)

If I might make a little progress, I will then give way to the hon. Gentleman.

Making all those payment routes available is not quite as simple as it sounds, so we are working with the industry on the technical details of how it will work. We will provide a further level of detail and information in secondary legislation.

Graham Jones (Labour, Hyndburn)

The Minister is generous to give way. I am sorry to persist with this issue, but will he give his view on it? I am extremely concerned. Are not people facing high winter bills and an up-front charge for the green deal, which is a fixed amount, not a proportion, going to think, “I will need to cut back on my energy in December, January and November because I have the green deal”? Does he intend to fluctuate the green deal payments for prepayment card users? I think he will drive a lot of people into fuel poverty. Will he address that issue?

Gregory Barker (Conservative, Bexhill and Battle)

I am afraid that the hon. Gentleman has got completely the wrong end of the stick. The whole point of the green deal is to reduce energy bills. Far from going up, energy bills in winter will be lower than those in the previous winter, if the green deal is adhered to. The fuel-poor will receive additional support from measures subsidised directly by the energy company obligation. There are no up-front payments and it is simply wrong to refer to them. Regardless of the mechanism that pays for the green deal—whether it is prepayment or a monthly direct debit—the net effect will be that people’s bills should be lower, inclusive of any finance charges. Obviously, the finance charges for the fuel-poor will be significantly less than those for a comparable household that is not in fuel poverty, because of the additional help available from the ECO.

Graham Jones (Labour, Hyndburn)

Obviously, I was unable to make my point clearly. My point is that that is great over a 12-month period, but I am talking about the fluctuations and the pressure that the provision will exert on people on prepayment. There will be high demand in winter, and they will still have to pay a huge amount. There will be no fluctuation in the green deal payment either—that will be fixed over a lifetime, on a per-month or prepayment basis.

Gregory Barker (Conservative, Bexhill and Battle)

Again, the hon. Gentleman does not grasp the argument. The savings will be greatest in the winter. Savings will not be made on heating bills in the summer, and the lights will not need to be on for longer. The green deal will really kick in in the winter and, thinking about it logically, it is more likely that the green deal finance charges as a proportion of the overall bill will be higher in the summer months than in the winter months when the savings from having properly insulated—increased the thermal envelope of the home—kick in. In December, January and February the fuel-poor will feel the greatest benefits of the green deal and the supporting measures.

Tessa Munt (Liberal Democrat, Wells)

I want to check that when the Minister talks with the energy companies about charging he will ensure that people who are on prepayment meters and therefore pay a higher price for their electricity will not be disadvantaged. Their fuel costs are higher than those of anyone paying by direct debit. Will he ensure that there is the capacity for that balance, and that people who are paying a higher unit cost will still make significant savings?

Gregory Barker (Conservative, Bexhill and Battle)

I can go further than that. The more someone pays for their electricity, the greater their savings will be. The bottom line is that the whole purpose of the green deal is to reduce energy consumption. Someone on a very expensive tariff stands to make the greatest savings, while someone on a competitive one will, logically, save slightly less in absolute terms.

Tessa Munt (Liberal Democrat, Wells)

I accept that that might be the case if one does the calculation when someone is not in a difficult financial situation. I have to say that I have not thought this through absolutely clearly, but I would like some clarity about what happens if someone’s calculation about their savings is done by their assessor on a straightforward financial arrangement but they then move into a situation in which they need a card meter because they have other financial difficulties. Will the calculation still work?

Gregory Barker (Conservative, Bexhill and Battle)

Again, the situation moves in their favour. If someone goes into a prepayment situation and, as things stand, ends up paying more for their energy, they will be better off having done the green deal than had they not done it. The more someone pays for their energy the better off they will be—the greater the savings that will accrue to them, is probably a more accurate way of putting it—as a result of taking energy-saving measures. I apologise to the Committee that I cannot be more specific at this stage, but people in fuel poverty will obviously have the additional benefit of measures that are subsidised by or funded from the energy company obligation and therefore do not bear the full impact of conventional finance charges. The higher the cost of the energy, the more the customer benefits from the green deal.

Huw Irranca-Davies (Labour, Ogmore)

Will the Minister accept that the corollary of his argument is the situation of an individual living in what might be deemed, for the purposes of the green deal, an inappropriate property? For example, if a single parent—and we know how many single parents are in fuel poverty—lives in a home that is too large and the calculations have been done on the standard number of residents for that kind of property, the proportion going on repayment could well disadvantage them significantly.

Gregory Barker (Conservative, Bexhill and Battle)

Any green deal assessment will obviously take into account the personal consumption of the residents of a particular house or flat. My expectation is that the first thing the green deal assessor will do is look at the previous 12 or 24 months’ energy bills. That will be step one, and it will be the starting point for ascertaining how much financing is available for energy-saving measures.

Graham Jones rose—

Gregory Barker (Conservative, Bexhill and Battle)

Please let me make a bit of progress. I do not anticipate, therefore, that the situation that the hon. Member for Ogmore has outlined will arise. Some single mothers live in larger properties, but, I would imagine, not many; most of them are probably in cramped, poor accommodation. Those in larger properties or difficult-to-treat homes would necessarily qualify for ECO help. This is the “hard-to-treat homes versus fuel-poor” argument from a little earlier.

The hon. Member for Ogmore is right, however, to probe what happens when the residents of a building change. A family of five might move out of a house and a widow, or a single professional, might move into it and live there on her own. Clearly, in such circumstances, a judgment would have to be made before that person moved into the property to ensure that they could afford the energy bills. There would need to be proper disclosure of the basis on which the green deal had been calculated and the assumptions that were made around consumption. An intelligent and informed decision would need to be made before someone moved into such a property.

Huw Irranca-Davies (Labour, Ogmore)

I thank the Minister for his generosity in giving way. We are getting to the heart of the matter. The impact might be most significant when there is a change of resident and a change in the nature of a household. In a rational world, I—the Minister, anybody—would look at a full, good disclosure and make a choice. I would say, “Actually, I have seen the repayments on the green deal; that property is not for me. I thought I would go into a large property, but I’m not going to.” People might not do that, however. They might miss the opportunity, or they might not be as supremely rational as we are. What then for the widow who moves into a property and finds that the green deal repayment is crippling her financially?

Gregory Barker (Conservative, Bexhill and Battle)

As I have said, ultimately, there is a degree of moral hazard. We cannot legislate for all circumstances and not put some responsibility on consumers to make appropriate choices. That would not be the only decision that the person would have to make: a single person who moved into a large house would have to pay more council tax, would necessarily have a larger heating bill, and would have maintenance expenses that they would not have in a smaller property. We can go only so far, and we cannot exclude the choices that responsible adults must make; we can, however, ensure that they have the necessary disclosure and full information to make sensible, responsible choices.

Alan Whitehead (Labour, Southampton, Test)

I am attempting to make sense of “the more you pay, the more you save.” If someone has been assessed for green deal measures but has accumulated their energy bills from the previous year on the basis of an incorrect tariff, that would affect the golden rule and what work they could have done. If, subsequently, they went on the right tariff, not having been advised to do so by the assessor, they would not get the value that they might have done, and which the Minister described. Will the assessor have a duty to put people on the right tariff before the golden rule is applied and the energy measures are provided, or does the assessor simply go on what the actual bill was in the previous year and apply the golden rule on that basis?

Gregory Barker (Conservative, Bexhill and Battle)

The hon. Gentleman makes a sensible point. I reassure him that green deal measures will not be financed simply on the basis of the last tariff paid, for exactly the reasons that he posits. The golden rule will be a conservative measure based on a standardised model of consumption and energy costs. In addition, prospective green deal customers will have additional protections. They will have the protection of an obligation for responsible lending, an obligation to ensure due consideration for the role of the ECO, and an obligation on the part of the lender for full disclosure. In addition, the warm home discount scheme will be available to pensioners.

We have anticipated the different scenarios that various hon. Members have rightly raised. The golden rule must be based on a cautious assumption of the levels of ongoing—not just historical—and future energy costs. That will also mean that ECO is triggered sooner rather than later in the calculation of the ability of a home owner to pay. As I have said, however, we cannot take all moral hazard out of the equation; householders must have some responsibility when they choose a type of property in which to live.

Huw Irranca-Davies (Labour, Ogmore)

I return to moral hazard and the poor widow. If she has not discharged her normal duties of rationality and responsibility and has made an error, and finds herself in a property where she is lumbered with a bill that was designed for a different type of household entirely, does the Minister expect the green deal provider or the energy companies to deal with that compassionately? Would there be any recourse whatever for the unfortunate widow who has not spotted the moral hazard and has found herself unable to pay her bills?

Gregory Barker (Conservative, Bexhill and Battle)

I hope that they would deal with the case compassionately. The poor, unlucky woman would obviously have landed herself with a high council tax bill and high maintenance bills, and had moved into a property that she clearly could not afford. However, it is not the role of primary legislation to anticipate every single eventuality. As I say, the real defence lies in proper disclosure, responsible selling and a cautious model of lending under the golden rule.

Regarding interest rates, there was a question about other forms of credit. It is a priority to ensure that green deal repayments are as equitable as possible, not just for the initial bill payer, but for all future bill payers. The finance will run for decades. It is a complex area that needs to be looked at carefully, and we need to consult stakeholders in the financial community about it. It will not surprise the Committee to learn that we are still working on the detail of the permissible financial terms. We will consult on those in the autumn before introducing secondary legislation.

We will also consider whether to allow variable interest rates under the secondary legislation. We are mindful of the concerns raised by the hon. Member for Liverpool, Wavertree, and we will allow costs to vary only if the integrity of the golden rule is maintained—that is, if the consumer still sees higher savings as costs rise. We will not legislate to allow a situation where a variable interest rate might suddenly cancel out the savings that were hypothecated in the original green deal assessment. To ensure that we do not do that, we have to look at the matter more carefully.

Huw Irranca-Davies (Labour, Ogmore)

I understand that the Minister will consult on the matter, but I am struggling to see the logic of what he is saying about variable interest rates. As the bills fluctuate and, potentially, under the Minister’s argument, the savings become greater, one could see the interest charge increasing, because the savings to the consumer are greater. Will he expand on that? I know that he will consult on it, but it would cause us concern if that impacted on the individual who has entered into a deal. The original conception seemed to be about a fairly static level of payment, which would give certainty to the customer as well as the provider.

Gregory Barker (Conservative, Bexhill and Battle)

We need to try to move on, but this is an important point, and I will do my best to respond to it with the information that we have at the moment. A variable interest rate could be attractive for a consumer. However, we are mindful that such a rate will not be able to challenge the integrity of the golden rule. For the very reasons given by the hon. Gentleman, we will look to see what the variables within such a repayment proposition are. We cannot have arbitrary interest rates rising to capture unforeseen bonuses for companies; they should go to the consumer. However, in future years, when interest rates are at a different level, a more competitive form of finance might be more attractive to a consumer than a fixed rate. If interest rates are significantly higher in 10 years’ time, a variable interest rate might be a more attractive proposition to a consumer. In an economic situation where interest rates are abnormally high, consumers will not want to lock into a fixed interest rate, but might want a variable rate. It is that flexibility that we are trying to anticipate.

Again, I remind Committee members that the programme will run for two decades. We cannot anticipate with any certainty what the economy will look like in the 2020s. We are trying to future-proof the programme and allow for flexibility while maintaining the absolute integrity of the golden rule.

Huw Irranca-Davies (Labour, Ogmore)

Let us flesh that out a bit, because it is vital. In the Minister’s view, we might enter a situation in which a range of competitive finance deals are on offer. As we see with high-street financial services, providers could offer 1% or 2% below x for the first three or four years and then peg the rate to something. It is a fascinating proposal, but I urge caution. As he says, it will all fall within the golden rule. There is a level of competition, which is welcome, but also a level of complexity that has the potential to bamboozle customers.

Gregory Barker (Conservative, Bexhill and Battle)

We have said clearly from the outset that robust consumer protection will be at the heart of the green deal. We certainly do not want the financing model to deviate from that commitment, but I see no reason why it should. It is complex and will require further consultation, but I am happy to invite the hon. Gentleman to meet me and my officials to go through this complex proposition in more detail. Various models need to be considered and consequences stress-tested.

Luciana Berger (Labour, Liverpool, Wavertree)

I am keen to ask a further question. On Second Reading, the ceiling on interest rates was mentioned by both Government and Opposition Members. I was taken by how many Members raised it. We now move to the second element of the interest rate: whether it is fixed or variable. What measures are in the Bill to protect consumers and keep them informed, if the interest rate is variable, of changes in the cost of their finance deal package?

Gregory Barker (Conservative, Bexhill and Battle)

I am not absolutely clear what the hon. Lady means. If one signs up for a fixed interest rate, then it is fixed. If one signs up for a variable interest rate, it is variable. At the moment, we expect that it will be fixed. If there is an option for a variable interest rate, it must be communicated clearly to consumers. Ultimately, however, it comes back to the golden rule: the cap on interest rates. The golden rule will demand that the costs, taken together—whether the costs of installation, labour or financing—do not exceed the savings that will accrue to the home owner, whether the interest rate is variable or fixed.

The Consumer Credit Act 1974 has strong transparency requirements. The green deal, as I said earlier, is subject to the Act. A closer inspection of the Act would answer some of the hon. Lady’s questions. On that basis, I commend the amendment to the Committee.

Caroline Lucas (Green, Brighton, Pavilion)

I beg to move amendment 102, in clause 1, page 2, line 32, leave out subsection 9.

Gregory Barker (Conservative, Bexhill and Battle)

Subsection (9) provides that a property is eligible for the green deal unless it has been excluded by an order made by the Secretary of State. Our starting point is that all properties should be eligible in principle. Subsection (9), however, enables the Government to exclude properties for which the green deal is unsuitable, should it be considered necessary to do so. It is unlikely to be sensible, for example, for a green deal plan to be offered for a property that is subject to a compulsory purchase order. We doubt it would be in green deal providers’ commercial interests to offer a plan to that kind of property, because the provider has an interest in ensuring that the property is likely to exist for the duration of a plan. We want to consult, however, on whether we should rely on providers’ commercial instincts, or whether it is necessary to exclude certain properties under an order. It is important that we retain the ability to exclude certain types of property, if it is appropriate to do so.

Graham Jones (Labour, Hyndburn)

I take on board the Minister’s point. I thought that that was the reason. I would add planning applications to his example of compulsory purchase orders. I give that example not to help him, but to raise a real issue: what happens if people in the private rented sector, for example, use planning applications to prevent green deals going ahead? What happens if the mechanisms are used to exclude a property for the benefit of the owner, particularly in the private rented and commercial sectors?

Gregory Barker (Conservative, Bexhill and Battle)

If I have understood the hon. Gentleman correctly, that is not the intention behind the provision.

Graham Jones (Labour, Hyndburn)

Is it an unintended consequence that he is aware of?

Gregory Barker (Conservative, Bexhill and Battle)

It is not an unintended consequence that I am aware of. This is why we want to consult on the measure—to ensure that there are not any unintended wrinkles. It is not the idea that the Secretary of State should draw up a blacklist of properties that are to be excluded, except where there are good, rational grounds for doing so. Any order made under the subsection will be subject to the affirmative procedure. I hope that my explanation has reassured the hon. Member for Brighton, Pavilion, and that on that basis she will consider withdrawing her amendment.

Caroline Lucas (Green, Brighton, Pavilion)

I am indeed relatively reassured. I beg to ask leave to withdraw the amendment.

David Crausby (Labour, Bolton North East)

With this it will be convenient to discuss the following: Government amendment 27.

Government new clause 6—Contribution to carbon budgeting under the Climate Change Act 2008.

Government new clause 7—Energy efficiency aim—

‘(1) The Secretary of State must take such action as he considers appropriate to improve the energy efficiency of residential accommodation in England so as to contribute to the Secretary of State fulfilling the duty under section 1(1) of the Climate Change Act 2008 (reduction of net UK carbon account by 2050).

(2) Section 2 of the Sustainable Energy Act 2003 (energy efficiency of residential accommodation) ceases to have effect.

(3) In section 9 of the Sustainable Energy Act 2003 (citation, extent and commencement) , in subsections (3) and (5) leave out “2,”.’.

Amendment (a) to new clause 7, line 5 at end insert—

‘(2A) In section 1 of that Act (interpretation) in the definition of “residential accommodation”, insert—

“(c) properties classified as Service Family Accommodation.”.’.

Amendment (b) to new clause 7, line 4 at end insert—

‘(1A) The Secretary of State must increase the aim specified in subsection (1) if in his opinion it is desirable or necessary to do so in order to contribute to the Secretary of State fulfilling his duty under section 1(1) of the Climate Change Act 2008 (reduction of new UK carbon account by 2050).’

New clause 8—Purpose of Part 1—

‘(1) The principal purpose of Part 1 is to deliver energy savings from the building stock which will make commensurate contributions to—

(a) the achievement of the target contained in Section 1(1) of the Climate Change Act 2008 and the carbon budget set for each budgetary period under Part 1 of the Climate Change Act 2008; and

(b) the elimination of fuel poverty by the target date required by Section 2(2)(d) of the Warm Homes and Energy Conservation Act 2000.

(2) In performing functions under this Part the Secretary of State will have regard to—

(a) the principal purpose set out in subsection (1) above, and

(b) the recommendations from time to time of the Committee on Climate Change where these are adopted by the Secretary of State.’.

New clause 9—Duty of the Secretary of State to improve energy efficiency—

‘(1) The Secretary of State must prepare and publish a plan for achieving the principal purpose set out in section 1(1) in England.

(2) The plan must establish specific aims and describe the proposed means of achieving them together with methods for reporting on progress towards meeting them.

(3) In preparing the plan, the Secretary of State must take account of any plans produced under section 60(2) of the Climate Change (Scotland) Act 2009.

(4) Where an aim is designated under this section, the Secretary of State must take all reasonable steps to achieve the aim.

(5) The plan prepared under subsection (1) must be published no later than 12 months after the day on which this section comes into force.

(6) The Secretary of State must, as soon as reasonably practicable after publishing a plan under this section lay it before Parliament.

(7) The Secretary of State must, within one year of each order setting a carbon budget under section 8(1) of the Climate Change Act 2008, review the plan prepared and published under this section.

(8) Where, following a review under subsection (7), the Secretary of State varies the plan, he must, as soon as reasonably practicable after so doing, publish the plan as so varied.’.

New clause 10—Annual report on progress—

‘(1) Section 1 of the Sustainable Energy Act 2003 (annual reports towards sustainable energy aims) is amended as follows.

(2) In subsection (1) (sustainable energy report) after paragraph (e) insert “and (f) achieving the aims established by the plans produced under section 2 of the Energy Act 2011 and section 60(2) of the Climate Change (Scotland) Act 2009”’.

Government amendment 28.

Luciana Berger (Labour, Liverpool, Wavertree)

It is a pleasure to serve under your chairmanship, Mr Crausby. I will speak to new clauses 8, 9 and 10, which relate to the warm homes amendment.

The new clauses work as a package. The intention is threefold. First, the new clauses would define the purpose of the Government’s energy efficiency and energy saving policies in part 1 and ground them in the Government’s existing climate and fuel poverty targets. The purpose provisions are designed to ensure that the Government set a credible level of ambition for the green deal policy. Secondly, the new clauses would place a duty on the Secretary of State to produce a plan for improving energy efficiency. That would require the development of a coherent cross-departmental strategy and provide greater clarity and certainty for businesses. Thirdly, they would create a means of reporting on progress towards achieving the aims set out in that plan. The reporting provision would ensure scrutiny and appraisal of the relative contribution of the entire energy saving programme to meeting the Climate Change Act 2008 targets.

When we first tabled the warm homes amendment in the other place in January, we had only a few voices of support, but those voices and that support have grown. The present provisions are supported by more than 70 external organisations. Those include not just the usual suspects, but a broad coalition of non-governmental organisations, trade unions and businesses. It is not every day we find an issue that unites the WWF, the Federation of Small Businesses, B and Q, Greenpeace, Asda, the Co-operative group, Tearfund, Green Alliance, the Royal Society for the Protection of Birds, Unison, Friends of the Earth, the National Union of Students, the TUC and the Mayor of London. I could go on, because, as I said, the list has over 70 names, but I will stop there.

The proposals are also supported by the public. A YouGov survey in May found that more than half the population—54%—want their MPs to support improvements to the Bill to link the green deal to existing carbon reduction targets. A few weeks ago, I was invited to join a public meeting organised by Friends of the Earth in Liverpool. It was a Saturday, the sun was shining—it was a beautiful day—and both Everton and Liverpool were playing. Despite all that, I was amazed by the number of people who turned up to give me the same message: we must get the Bill right and we need to keep pushing Ministers.

People out there are really concerned about the state of our planet and current levels of fuel poverty. As my hon. Friend the Member for Ogmore noted earlier, it is estimated that 5.5 million people in the UK live in fuel poverty. That is why other Members will, like me, have been inundated by letters and e-mails from constituents urging them to back the proposals. I do not know whether anyone had the chance to look at Twitter at lunch time, but there was a whole tweet of support for the warm homes amendment.

It is not difficult to understand why people are so worried. Like all of us here, they know the huge challenges we will face in averting climate catastrophe. This task is so big that it transcends party politics. It is a question of morals; it is the right thing to do, and we owe it to future generations to leave them a better legacy than the one we inherited. The fact is that we are not doing enough. According to the International Energy Agency, energy-related carbon emissions reached a record level last year. We need to take tough decisions and bold action if we are to get on track.

When in government, the Labour party started to take the tough decisions needed to reduce our national emissions. The Climate Change Act 2008—a world first and supported by all the main Opposition parties at the time—commits the United Kingdom to reducing carbon emissions by at least 80% by 2050. It is important to remember that when the current Ministers were in opposition, they not only supported the Act but argued for us to go further. The tough talk did not come only from Conservative Members in Committee, but the current Secretary of State. The right hon. Gentleman was constantly telling anyone who would listen to be wary of Governments who set targets they would never have to achieve. He said:

“It is too convenient for ministers to set targets against which their efforts can be measured only once every five years, when the typical term of office is only four years. These would be Nimto targets—Not in My Term of Office targets—and would not be worth the paper they were written on.”

It is time he lived up to the high standards he has set himself.

The fourth carbon budget, which the Government agonised over before finally accepting just a few weeks ago, recommended that the 2020 emissions reduction target should be strengthened to 42%. We heard earlier that domestic homes are responsible for 23% of the United Kingdom’s greenhouse gas emissions, including through their use of heat and electricity, and that commercial buildings account for a further 12%. Without accepting our amendments and clearly stating that the green deal measures are part of how the targets will be met, they are little more than “nimto” targets.

The Government have high aspirations for the take-up of the green deal. We heard earlier from the Minister, when discussing the programme motion, about his aspirations for the green deal and its take-up; it is not clear how they will become a reality. Ministers have stated repeatedly that 14 million homes will benefit from the green deal by 2020. Starting today, that represents 1,500,000 homes a year, which equates to almost 30,000 homes per week—almost 4,274 homes each day. It is clear that the Government need to be ambitious with their energy saving policies; otherwise, the UK will fail to meet its climate and fuel poverty targets.

In meeting the Committee on Climate Change’s suggested figure, the level of retrofits and of carbon and energy savings are as important as the actual number of homes taking up the green deal, and that should be the Government’s primary focus. It is important to remember that, as well as reducing carbon, the Bill needs to be about reducing the cost of household energy bills and tackling fuel poverty. A better Energy Bill could minimise the anticipated rise in fuel bills, which would be vital, especially with the Bank of England predicting an increase in gas and electricity prices of between 10% and 15% between now and March 2012. Anything that mitigates such increases will surely be welcomed, especially by households whose budgets are already severely squeezed.

I shall address the Government’s amendments in a moment, but I want first to refer to a key business and investor concern: the uncertainty about the potential scale of the green deal market, which will act as the guide to the size of investment required. Without understanding the expected contribution that energy savings will be required to make to meet the carbon targets and the required depth of retrofit to properties, it is less than certain that such a market will deliver on the Government’s aspirations.

The Government tabled new clause 7, entitled the “Energy efficiency aim”, better to explain their ambition for energy saving policies. However, it would not be up to the task. There is no stated qualitative ambition within the new clause. It calls on the Secretary of State to take action as he considers appropriate on energy efficiency to contribute towards an 80% emissions reduction target by 2050. Such a contribution is not qualified, which means that businesses currently have little indication of what ambition is envisaged for the energy saving programme.

The new clause only references 2050 as the end date for necessary emission reductions. That ignores the five-year carbon budgets established by the Climate Change Act 2008 and the Government, which are of more immediate concern to businesses planning their investments. There is no clear trajectory for required energy saving or any clarity about what is needed to meet the requirements of the carbon budgets. The new clause also seeks to repeal section 2 of the Sustainable Energy Act 2003, which is arguably stronger legislation.

Crucially, new clause 7 addresses only residential accommodation, while the green deal and other parts of the Energy Bill are designed to improve domestic and non-domestic buildings. There is no logical reason to exclude non-domestic buildings in new clause 7. It is clearly stated in the Energy Bill green deal impact assessment that the programme is to include households and non-domestic buildings.

Under new clause 7, the Government could do very little to promote energy efficiency—leading to delivery on the ground through the green deal and other policies—while still complying with the amendment. There is no additional driver for action. As such, new clause 7 provides little further clarity on what the Government expect to see delivered through their energy saving policies. That will fail to provide the certainty that businesses desperately want.

New clause 6, on the contribution to carbon budgeting, requires the Secretary of State to report to Parliament on the contribution of green deal policy and the energy company obligation to carbon reduction targets. We have repeatedly called for an annual report, so we are pleased with this movement from the Government. However, I am keen to learn from the Minister what level of reporting will be required by new clause 6. Will that reporting include information on emission reductions and not just on the number of homes? In new clause 6, there is no plan for delivery, which is what we are calling for in the warm homes amendment. There is also nothing in new clause 6 to ensure an implementation plan for the policy.

Our amendment—the warm homes amendment—seeks to provide more clarity and certainty for business by establishing a purpose for the Government’s policies, and by stating that the Government should deliver energy savings from the building stock that make a commensurate contribution to our carbon budgets and reduce fuel poverty. A more qualified level of ambition is set out in our amendment, one that directly supports the wider energy policy agenda.

Steve Brine (Conservative, Winchester)

I feel bad for interrupting the hon. Lady, as she is flowing so nicely while she quotes a number of organisations. However, this Bill—this primary legislation—is about creating a 20-year market, which is a long-term project by any definition; it is certainly not within the terms of any single Parliament. Secondly, the green deal, although absolutely critical to this Government’s carbon reduction ambitions, is not the sole mechanism for achieving the carbon reductions that this, the greenest Government ever, will achieve during their time in office. Does she acknowledge those two points?

Luciana Berger (Labour, Liverpool, Wavertree)

The hon. Gentleman says that this Bill is about a 20-year project, yet the Government’s new clauses 6 and 7 relate to 2050. If there is a 20-year project, at the very least we would like to see some ambitions set within that time frame. He says that the green deal is not the Government’s only mechanism for achieving carbon reductions, but it is the only mechanism that they say they will achieve their targets through. As I have said, 43% of our emissions come from domestic and commercial properties—that is just under 50% of our total emissions—so those emissions really need to be linked to our carbon emissions targets. That is something I feel very strongly about. We cannot leave it all to the other 57% of properties that are creating emissions.

Steve Brine (Conservative, Winchester)

I imagine that a sunny Saturday afternoon in Winchester would produce an equal number of people to talk about this issue. However, the green deal is not the sole mechanism for reducing carbon emissions. Also, the Minister’s having to come to Parliament annually to make a statement is one hell of a check on the Government’s ambitions in this area. That constitutes significant movement from the Minister on this issue, which, as he knows, I very much welcome.

Luciana Berger (Labour, Liverpool, Wavertree)

I thank the hon. Gentleman for his contribution. All I will say in response is that the green deal is the policy by which the Government are proving their green credentials. They have professed themselves to be “the greenest Government ever”, and we want to see that reflected in primary legislation. I do not believe that it is enough to say that there will be an annual report that does not relate to our carbon emissions targets. Those are not separate entities or separate issues; they are interrelated and one cannot look at one without the other.

The warm homes amendment is important, because it links directly to carbon budgets, so it is possible to set out what action is necessary for each five-year period, which fits better with business investment cycles. I reiterate that point. Those in business say that we need that ambition enshrined in law to know what we should be doing to prepare, what opportunities lie ahead and what investment we should be making at this stage and every five years.

Finally, the level of effort undertaken on energy savings should be informed by advice from the Committee on Climate Change, so that it is sufficient and relevant to the wider challenge. Overall, and taken together with the second part of the proposals, which introduce a plan and a duty to take action on energy efficiency, the proposals would firmly ground the Government’s energy saving policies within the pre-existing targets on climate change and fuel poverty and would provide business with greater certainty on the action required.

We have heard the soundbite about the green deal, saying that millions of homes will be improved, that hundreds of thousands of jobs will be created and that this is an once-in-a-lifetime refit of the nation’s housing stock and the most ambitious energy-saving plan since the second world war. However, talk is cheap. In the five parts, 89 pages and 186 clauses of the Bill, there is no clear plan for how those ambitions will be realised. To even come close to achieving the hopes that the Government have for the green deal, Ministers need to set a clear level of ambition along with the plan for achieving it. The warm homes amendment will provide that, and I hope that Ministers will support it today.

Caroline Lucas (Green, Brighton, Pavilion)

I apologise for being late—I had a long meeting at the Treasury. I want to discuss new clause 7 and particularly amendments (a) and (b), which I have tabled. My concern about the new clause is that it is vague. It follows the Minister’s speech on Second Reading, in which he said that his Department will

“publish a formal aim—that is, on the face of the Bill—to take reasonable steps to improve the energy efficiency of the English residential sector by 2020”—[Official Report, 10 May 2011; Vol. 527, c. 1131.].

However, that formal aim is specified not as a number or as a percentage, but simply as a requirement to take such action as the Secretary of State

“considers appropriate to improve the energy efficiency of residential accommodation”.

That is incredibly vague language, and it differs from section 2 of the Sustainable Energy Act 2003, which requires the setting of an aim for energy improvements in the residential sector—the aim required a 16% improvement by 2010. Section 2(4) of the 2003 Act required the Secretary of State to take reasonable steps to achieve that particular numerical aim, but that section will be repealed by new clause 7.

The new clause is also weaker than the further statutory aim under section 217 of the Housing Act 2004, which set a 20% improvement aim by 2010. As with the 2003 Act, section 217(1) of the 2004 Act requires the Secretary of State to take reasonable steps to achieve the 20% target, and time has superseded that. In new clause 7, we have something that is weaker than the two previous Acts of Parliament, both of which were supported by the Conservative, Liberal Democrat and Labour parties. In that respect, new clause 7 is step backwards, not forwards.

The new clause is also so vague as to be virtually unenforceable. “Reasonable steps” is such as a nebulous term that it is difficult to know how one would judge whether that has been achieved. Again, that compares unfavourably with the 2003 and 2004 Acts, which specified that reasonable steps had to be taken to achieve a specific percentage of improvements, rather than the unmeasurable and unstated amount in new clause 7. That is why it is unsatisfactory in terms of dealing with climate change and fuel poverty.

Amendment (a) would delete the final two lines of proposed new subsection (1) in new clause 7 and insert:

“achieve 29 per cent. decrease in emissions of carbon dioxide from residential accommodation by 2022”.

The significance of 29% is that it is a Government percentage that was flagged up in the summary of the Government’s proposals contained in the document “A Green Deal” in 2010.

Claire Perry (Conservative, Devizes)

May I say that I rather like the hon. Lady’s explanatory statements and would like to see more of them, as they are helpful? More importantly though, given that the Government have presented a legally binding target for the overall reduction in emissions, the term “reasonable steps” has legal ramifications. Given that we have set the overarching legal requirement, which I support, a fairly heavy burden, with which I am comfortable, will be placed on the Minister.

Caroline Lucas (Green, Brighton, Pavilion)

I have some sympathy with what the hon. Lady has said. To ensure, however, that timely and effective progress is made towards an overarching target, incremental steps need to be measured, or we will suddenly realise that the gap between where we are and the target that we need to achieve is too large.

Claire Perry (Conservative, Devizes)

Is not the purpose of the annual report to demonstrate both the progress made in a short time frame and the steps taken over the year?

Caroline Lucas (Green, Brighton, Pavilion)

The annual report is certainly a help, but having a target of 29%—the figure in the Government’s own 2010 document—would concentrate minds and help us to be clearer about the objective we are trying to achieve.

Huw Irranca-Davies (Labour, Ogmore)

I thank the hon. Lady for her well-intentioned amendments. I, too, support the Government’s annual report—it is a good way forward—but I share her concern, which has been expressed by many people who want to see success in this area, that the absence of concrete targets, which would give robustness to the annual reporting, might allow slippage.

Caroline Lucas (Green, Brighton, Pavilion)

I thank the hon. Gentleman for his support. In a sense, my amendments precisely try to achieve that kind of robustness behind a specific target, so that we can see that progress is being made. It is nice to hear warm words from Government Members, but we need to see real targets and timetables, which is what my amendments seek to achieve.

David Anderson (Labour, Blaydon)

It is a great pleasure to serve under your chairmanship today, Mr Crausby. My hon. Friend the Member for Liverpool, Wavertree has said that some 70 organisations have come together around the warm homes amendment, and I will mention just a few of them—they are not the sort of people I normally support, given my background.

We could debate how we do this. The Minister has said that the process will be market driven, and although I think that it might be better driven through a public sector body, that is not where we are, and we have to take cognisance of what is being said by the markets. The people who have signed up to the World Wildlife Fund amendment are clearly people who are in the market. They want to make money—there is nothing wrong with that—but they also want to provide a service for the people.

I want to read some quotes from some of the people who have written to us on the issue. Matthew Sexton, director of corporate social responsibility at B&Q, has said that while B&Q

“strongly supports the Government’s Green Deal and is committed to helping our customers reduce their environmental footprint…To help ensure we meet these important targets we would like to see the Government back WWF’s Warm Homes amendment.”

Richard Gillies, director of plan A and sustainable business at Marks and Spencer, has said:

“A strong Green Deal is essential to make it easier and more attractive for everyone to take action and cut emissions in their homes…We’re backing WWF’s Warm Homes amendment to help ensure that the Green Deal supports the target to cut emissions by 80% by 2050.”

John Walker, the chairman of the Federation of Small Businesses, has said:

“The FSB is demanding a better Energy Bill because it currently lacks the ambition needed to meet our climate change goals and drive investment in the low carbon economy. The Green Deal has the potential to help realise these goals and create green jobs across the UK, but only if the Bill is given a clear purpose and direction. That is why the FSB is urging MPs from all parties to support the Warm Homes Amendment.”

I will be really interested to hear from our Liberal Democrat colleague today whether her party supports the amendments. Clearly, in the past they would have been the people at the front on this issue.

Zac Goldsmith (Conservative, Richmond Park)

I understand that the support from these organisations, which have been listed a few times, preceded the Government’s two late amendments, which we are now discussing. I suspect that those same organisations would support the amendments, because in all my discussions with them in many meetings in recent weeks they have said that they support the warm homes amendment, principally because they want a mechanism by which we, and people generally, can judge the Government’s success or failure in the green deal. Requiring the Secretary of State to report annually to Parliament will put such a mechanism in place.

The issue is not about enforceability. If the Government miss their targets, the targets will still be unenforceable under the proposals made by the Opposition and by the amendments tabled by the hon. Member for Brighton, Pavilion. The report will merely be a mechanism by which the Government can be shamed or embarrassed at the failure of their policies, which is exactly what the two Government amendments will do. I therefore do not see any difference.

David Anderson (Labour, Blaydon)

Opposition Members are happy with the Government amendments. They go so far, but not far enough. If a target is set down, people will know that that is what the Government have to achieve. An annual report might tell us nothing, but if we have a target we can hold the Government to account, which is surely what we are all about in this place.

Graham Jones (Labour, Hyndburn)

It is a pleasure to serve under your chairmanship, Mr Crausby.

On the point raised by the hon. Member for Richmond Park, does my hon. Friend the Member for Blaydon share my disappointment that since Government new clause 7 was tabled not one of the 70 organisations has contacted me by e-mail or in any other way to say that it endorses new clause 7 and rescinds its support for the previous proposals. Why might that be the case?

David Anderson (Labour, Blaydon)

I do not necessarily share my hon. Friend’s disappointment, because I am not sure why those organisations have not responded—perhaps they are happy rather than unhappy. However, they are very clear in the statements that we have all been sent copies of. We know where they want to be—unless the Minister has any pearls of wisdom, having had word from the 70 organisations. They are saying, “Thank you very much. We don’t want to push the proposals. If that is the case, we can take it forward in the next few weeks.” I hope that, after our sittings today are reported, we will receive feedback from them.

Huw Irranca-Davies (Labour, Ogmore)

May I suggest to my hon. Friend that one reason why there is such strong support for the proposals, and indeed for amendments (a) and (b), is the suspicion that whereas the previous Government were willing to be both praised and shamed, because they were held to account by targets and by organisations such as the Sustainable Development Commission, in this case we will have an annual report but we will not to be able to apply the targets rigidly, in the way that was proposed? That is why we are rightly being asked to hold the Government to account much more rigorously.

David Anderson (Labour, Blaydon)

I agree entirely with my hon. Friend, because those organisations are acting for the right reasons—they want the new system to work. I will add two more comments, Mr Crausby, because it is vital that we listen to what such people are saying.

David Crausby (Labour, Bolton North East)

Order. We have 108 clauses in the Bill as it stands. Your quotations may be relevant, but may I ask you to keep down the number of them? I know that we are at an early stage in our proceedings, but we need some discipline.

David Anderson (Labour, Blaydon)

I agree totally, Mr Crausby. I have been too generous in taking interventions.

I want to mention two last quotations. Richard Diment, the director general of the Federation of Master Builders, has said that

“the Government must be much clearer about what the Green Deal should achieve if it is to succeed…and…businesses of all sizes should be given the confidence to invest in the developing the capacity and skills required. Without a clear delivery plan the Government risks having no Green Deal in 2012.”

As we heard earlier, if we had started earlier, nearly 5,000 homes a day could be being improved. If the work does not start within the next year, it will be even harder to reach the targets that we already have.

Harry Rich, the chief executive of the Royal Institute of British Architects, has said:

“The Energy Bill as it stands…is neither tough nor precise enough.”

It will not provide the necessary

“certainty and confidence…if households, businesses and investors are to embrace the Green Deal.”

On one side are the people who will do the work, who are not comfortable with the proposed system, but on the other side are the people—the householders—who need to buy into it.

To relate a local comparison, early in this century, the homes which were built early in the 20th century were nearing the end of their life. The local authority introduced a plan, saying to the people in those houses that it would pay for half the refurbishment of their home if they paid for the other half. When we went into details, people asked questions such as, “What happens if I want to move out of the house? What happens about interest rates, and who will set them? What will I be liable for?” The local authority could not give them the answers that they wanted. Ultimately, the people did not buy into the scheme and the houses were pulled down at huge cost to the local authority, which had to rehouse the people living in those areas. My worry is that if we do not have the confidence of the people doing the work, and if we do not have the confidence of the people whom we need to get on board—the householders—the measure will fail, and none of us wants that to happen.

Gregory Barker (Conservative, Bexhill and Battle)

Good afternoon, Mr Crausby. May I say how much I welcome your chairmanship and look forward to serving under you?

During the debate on Second Reading, hon. Members on both sides of the House gave a clear message that the ambition we have for our energy efficiency policies should be firmly anchored in legislation. Hon. Members also argued that such ambition would carry particular weight if delivered in a way that was transparent and open to parliamentary scrutiny. That can be ensured only if appropriate reporting arrangements are in place. I listened to the debate and was persuaded by the arguments that were made. As a result, I announced my intention to put a formal aim, together with specific reporting requirements, for our energy efficiency policies in the Bill. While I take on board the comments from Opposition Members, I am very pleased to be able to fulfil that promise with amendments.

New clauses 7 and 6 were brilliantly articulated by my hon. Friend the Member for Richmond Park. New clause 7 sets out a formal aim, which serves the same purpose as new clause 8, at least in terms of linking the purpose of green deal delivery to the delivery of our carbon budgets, which of course are the overarching framework to which my hon. Friend the Member for Winchester so rightly and accurately referred. I understand the wish for Government to set out a formal plan for the green deal and the ECO through new clause 9. As part of the forthcoming consultation, we will publish in detail how the programmes will be constructed, and that will give some of the market participants to which the hon. Member for Blaydon referred much of the clarity that they need.

I think there is still a fundamental pressure pulling members of the Committee in different directions. Labour Members, in their heart of hearts, yearn for a plan—a centrally organised Government plan like Warm Front. They yearn for, perhaps not an old style five-year plan, but a Government-driven and Government-owned programme of works. That is not the green deal; that is not how it will work. Nor are targets the way it will work, because we have been down that road before and it ended in failure. The previous Government legislated away fuel poverty.

Earlier, at the beginning of this century, the previous Government, with years ahead of them, legislated that fuel poverty would be abolished by 2016—by 22 November 2016, my hon. Friend the Member for Wealden reminds me. Yet the hon. Member for Ogmore has already reminded us that when the previous Administration left office, fuel poverty had risen year on year since 2004 to 4 million. The hon. Member for Liverpool, Wavertree said that 5.5 million are living in fuel poverty. We all know that we are nowhere near—certainly, if we had maintained the previous policy direction—abolishing fuel poverty, and we have failed those who live in such poverty. Putting something in the Bill will not wave a wand or compel a Government to create some great wish that we would all share to either abolish fuel poverty or meet our carbon emissions targets. It is much harder than that and we need a game changer. We need a new solution and a framework. We need to be able to marshal resources that are commensurate with the scale of the problem. We will only do that with a new market-based framework, where we can take private resources and all the ingenuity and innovation of the private sector and drive it towards these social aims. It will not be reached by a programme of any kind. That is why we have the green deal framework. That is still the tension I feel within the Committee.

Graham Jones (Labour, Hyndburn)

I take on board what the Minister says about targets, although I do not agree with that point of view. In the NHS, we have seen that without targets, waiting times have gone up. I want to draw on the reality of why targets on fuel poverty are important. In my constituency, Hyndburn, there are 5,400 households in fuel poverty. That is not just a number. If hon. Members were to walk the streets, they would have the perception that there are many poor people living in fuel poverty, partly because of the condition of the property stock. We need to do something about it. This is 5,400 households with families, children and grandparents—real people, with real lives. I do not accept that there cannot be targets because energy prices are rising. Fuel poverty has risen because of rising energy prices, but that does not mean that we can neglect a target that involves the old Victorian stock, which is, by and large, the problem in my constituency. The Minister needs to take targets more seriously.

Gregory Barker (Conservative, Bexhill and Battle)

I take the point on board, because the hon. Gentleman is right: this is ultimately about people. It is about families and the houses they live in. On linking the green deal to the delivery for those families of our fuel poverty targets, I want to remind members of the Committee that the impending review of the fuel poverty target and definition will take all that into account. It would therefore be inappropriate to include a reference to the existing target and definition when we have already announced that we will be taking forward the review by Professor John Hills.

Huw Irranca-Davies (Labour, Ogmore)

I am now totally confused. The Minister is saying that the targets are useless, but he is revising other targets into which this will fall. In his peroration he passionately spoke against target-driven cultures, so why is his Front Bench colleague accepting the renewables targets we have for 2020 and 2030, as well as our carbon reduction targets, if they are so useless?

Gregory Barker (Conservative, Bexhill and Battle)

Unfortunately, the hon. Gentleman has totally misquoted me. I did not say that all targets were useless, and the record will show that. I said that we should not overinvest in targets per se. A plethora of targets will not incrementally increase the efficiency and efficacy of a policy. A few simple targets are invariably much more effective than a whole plethora of targets, as we found under the previous Government.

Claire Perry (Conservative, Devizes)

In his opening speech, the Minister alluded to the point that the targets have failed, despite all the efforts and all the money, because, fundamentally, we have a housing structure that means people move before they can extract the economic value of doing this and because the installers are not trusted. The beauty of this measure is that it overcomes the two fundamental bottom-up obstacles to change. Frankly, we should focus on that and stop shilly-shallying around with trying to target the reduction in fuel poverty. We all want to reduce it, but we have to understand why it has not happened and work with human nature to make it happen.

Gregory Barker (Conservative, Bexhill and Battle)

My hon. Friend makes an excellent point, which I entirely concur with. I want to reiterate, however, that we are not against all targets per se. We are against the overuse of targets and the simplistic belief that targets alone can deliver change. Targets are the easiest thing to set and the hardest thing to meet. That is why this Government are putting less focus on targets and a great deal more emphasis on road maps for delivery. It is the delivery and achievement of the aims, rather than setting ever more targets, that we are focused on.

I apologise for my increased level of passion, but I feel strongly about that matter and I hope that, having reflected on it, Opposition Members will consider withdrawing new clauses 8 and 9.

Amendments (a) and (b) seek to amend new clause 7 to create a far more specific sub-target for our energy efficiency policies. Energy efficiency is certainly one of the most cost-effective means of reducing emissions at present. As hon. Members have said, however, this is a decades-long programme, and we cannot predict the future and say for sure that that will always be so. Committing ourselves, therefore, to a long-term carbon budget sub-target for energy efficiency might put us at risk of not following the most cost-effective pathway in future. Furthermore, targets are not the most important factor in ensuring transparency or accountability, which can be realised fully only through clear, robust reporting on deliveries. The reporting is ultimately the guarantee.

Caroline Lucas (Green, Brighton, Pavilion)

Of course reporting is important, but it must report against something, which must surely be the target. I appreciate that targets are not the be-all and end-all, but even as recently as 2010, page 7 of the Government’s own document, “The Green Deal: A Summary of the Government’s Proposals” states:

“To help meet the carbon budgets we need to cut emissions in our homes and communities by 29% and by 13% in our workplaces by 2022”.

Only last year the Minister was happy enough to sign up to that target against which to report; without it, I am not sure what the reporting will tell us.

Gregory Barker (Conservative, Bexhill and Battle)

We will certainly be creating the framework and the trajectory that will clearly indicate the progress. Ultimately, we all know what we are trying to achieve. As the hon. Member for Liverpool, Wavertree has said, 14 million homes by 2020 and 26 million homes by 2030 is the trajectory. New clause 6 will achieve as much by putting a specific requirement in the Bill to report annually on what has been achieved by our energy efficiency schemes, including the green deal and, separately, the energy company obligation. New clause 6 achieves the same effect as what is intended in proposed new clause 10, which, I think, is what my hon. Friend the Member for Richmond Park drew out.

I assure the Committee that we will seek to report the carbon saved as well as the number of homes that receive measures. We will break down the types of measures that have been installed and report on our overall progress in reducing fuel poverty. All those things, about which the Committee is rightly concerned, will be part of the reporting procedure. As the green deal gathers pace over the course of the next decade, I dare say there may be other features that become a regular part of reporting as the programme gains traction and we understand, based on experience rather than conjecture, how it will be delivered.

David Anderson (Labour, Blaydon)

May I ask about a specific point that was made by the hon. Member for Richmond Park? Have any of the 70 organisations that have signed up for the warm homes amendment been in touch with the Minister to say, “Thank you for new clauses 6 and 7; we no longer feel it necessary to pursue the warm homes amendment”?

Gregory Barker (Conservative, Bexhill and Battle)

No, I cannot give him that assurance, but it has been a relatively short period of time since the amendments were tabled. In politics, thank you letters are fairly few and far between. [ Interruption. ] In my experience—perhaps that says more about me than it does about politics. We will continue to have a strong dialogue with all the stakeholders and market participants that have been mentioned in the debate on clause 1, the vast majority of which are committed to the roll-out of the green deal.

I conclude by saying that we have announced an energy efficiency aim that will be directly linked to our carbon budgets. We made that promise on Second Reading. We do not believe that sub-targets would be the most efficient way to make savings; we do believe that we must offer transparent reporting, but we must wait for the findings of the fuel poverty review before making any further commitments about adding to fuel poverty targets. On that basis, I urge hon. Members to support the clause.

David Crausby (Labour, Bolton North East)

As this is such an important part of the Bill, I will allow all Members who wish to contribute to this part of the debate to do so, and the Minister to respond, should he wish.

Alan Whitehead (Labour, Southampton, Test)

When I serve on a Public Bill Committee, I always try to ask myself why we are here. What is the purpose of what we are doing? Why are we passing this Bill and not another? What is our aim? It is germane to ask such questions in relation to this Bill. Are we trying to bring about a green deal because we are not very happy with fuel poverty and would like people to have warmer homes? Do we think it a bit embarrassing when we see snug, warm homes in the cold climate of Scandinavia doing much better than ours? Perhaps we should do a bit better as far as our homes are concerned, so maybe that is what we will do. Is it about providing a jobs programme for people to get involved in energy efficiency, because we know we ought to be doing a bit more on it?

There are various possibilities and they all have some validity. However, as I understand it, the overall purpose of what we are doing is that the green deal, if it is to be the success it is claimed it should be, will not just radically transform the energy efficiency of our homes up and down the country, but do so to the extent that it will make a substantial contribution—indeed, the major contribution—to bringing about a far more efficient domestic energy environment, with huge gains in relation to our climate change targets. Not only is that a nice aim, but it is vital inasmuch as we know that one of the key things that we have to do to meet our climate change targets is vastly and radically to improve the energy efficiency of our buildings up and down the country.

As things stand, this is about the only measure that will really get going on that particular target. I say “target” because the target of energy efficiency in relation to climate change is an integral part of the overall targets that we have all agreed to in the Climate Change Act 2008. Moreover, the other day the Government agreed, wisely, to the fourth carbon budget and its radical targets, a key building block of which are enormous increases in energy efficiency in buildings. Indeed, if that building block were knocked away, those targets could not be met, and neither could what we have signed up for in the Climate Change Act or what the Government have just signed up for in the fourth carbon budget. There is, therefore, a serious purpose to the Bill, but that purpose is integrally bound up with targets.

Huw Irranca-Davies (Labour, Ogmore)

Part of the success of the Government’s laudable signing off of the fourth carbon budget is the absolute certainty that it gives to investors that the Government are wholly committed. They can charge headlong and go for what we need to do on carbon reduction. A similar thing applies here. If we are serious about the green deal and about having an army of people on the ground creating green jobs and doing work on the green deal, we should not be worried about putting our money where our mouth is and pinning it down to identifiable targets.

Alan Whitehead (Labour, Southampton, Test)

Indeed. My hon. Friend makes an important point in relation, again, to targets. The question in my mind, therefore, is not whether we have targets or not. It may be the case that we have simplified and fewer targets and we can choose which targets we have. We have effectively already had a number of targets chosen for us by the Climate Change Act and what we have done since then. Those are not negotiable targets or targets that we can wish away. We cannot have an inquiry into whether they should be maintained or not. As far as I am concerned, we are signed up to those and we must stick with them.

Therefore, although a portfolio of contributions to that target can be made, the choice that the Government of any particular era have is to change how the palette of different elements that make up that target will look. Nevertheless, there has to be a palette of those ingredients to make up that target. Not only must there be a palette, but we have to know what that palette will look like. If parts of the palette prove to be less successful than others, that palette has to be made back up again by improving the success of other elements of it. Energy efficiency in buildings is an absolutely key part of the palette of measures that go towards those climate change ambitions.

How that palette is made up may vary between Governments. Indeed, the Minister made the point a moment ago that the previous Government thought they could wish away various things by creating targets and believing targets had somehow been achieved by wishing them into existence in the first place. I think that was the purport of what he said. He is not right, but he believed that to be the case. He has said that a different way of achieving that goal is to go about this by using market mechanisms. The green deal is essentially a market mechanism for getting to those targets. That is why we are here. We are talking about different mechanisms but the same targets.

This is my thank you note to the Minister. In the other place, there was no talk of targets or of new clauses 6 and 7. Indeed, I am afraid there may have been apocryphal exchanges such as, “Well, it’s a market mechanism, so we don’t need to actually measure whether it works or not. The market’s going to deal with it. You wouldn’t go and tell Marks and Spencer how to sell its goods, so why should you tell people how to deal with this?” Even if it is a market mechanism, Marks and Spencer plans and looks carefully at how many jumpers it is selling. It has daily returns of what jumpers are selling in what stores. If the jumpers do not sell, it decides to sell different jumpers in different colours with different arrangements. It does so very quickly because it is concerned that its targets should be sorted out so that its market is working well.

First, we need to find out why we have introduced the Bill. I think we understand that. Secondly, having decided why we are doing it, we want to know whether it is actually working. Thirdly, if it is not working, we need to know what other things we should do to make it work, so that we can carry on reaching the targets that we decided we were going to reach in the first place. As I mentioned, my sort of thank you note to the Minister is to express my gratitude for putting in place some clauses that were not there before, as he said on Second Reading that he would. However, those clauses essentially talk about recording as opposed to relating what we are trying to do with recording and then looking at how we might do better if we are not doing as well as we might.

The previous Government’s fuel poverty targets might not have been reached due to fluctuations in energy prices on the world market over time, because fuel poverty is related to energy affordability. However, interestingly, from 1997 to 2010 the standard assessment procedure rating of UK houses rose by no less than 13 points. Over the last five years of that period, the SAP rating, averaged across all UK housing stock, increased 1.5 times as fast per year as in the first five years. One could say that an underlying target had been reached, inasmuch as a lot of progress was made on increasing the energy efficiency of UK homes.

If we do not keep to such targets and such a pace and give ourselves targets to reach on that key element by a particular date, we might as well have a SAP rating target to stand by: an average of 70 by 2020, or similar. If we do not have targets to adhere to and simply say, “It is a market mechanism and we will not bother to keep our noses to the wheel as far as getting where we want to go is concerned, other than reporting what’s happening,” we are setting ourselves up to fail. I do not want the green deal to fail, because it is all there is at the moment to get us to one of the most important targets of all in terms of reducing the amount of energy that we use in our homes in daily life and demand from the utilities, with all the carbon emissions issues that that involves.

New clauses 6 and 7 are good, but no cigar. New clauses 8, 9 and 10 get us towards the cigar. Whether we will get the cigar in the end we do not yet know, but we need to understand that knowing, by whatever measure, that we have increased the efficiency of homes radically by a certain period and on a certain trajectory, using methods that we can analyse and revise if they do not work, is essential to making the process a success. That is why I think that the new clauses are an essential part of the Bill. The Government can take their choice of which one they want, but the new clauses are supported by many organisations, as my hon. Friends have said, and point in the right direction in terms of the framework on which the Bill should be built. Putting new clauses 8 and 9 into the Bill is therefore important.

If my limited oratory fails to persuade the Committee that that should be the case, new clauses 6 and 7 are far better than where we were, but I do not think that the Bill is all the way there, and we want to get all the way there.

Caroline Lucas (Green, Brighton, Pavilion)

While we are on the subject, I feel compelled to say a few words about targets, because we should bear in mind the wider context of the urgency of climate change and what the science demands. It suggests that the cuts necessary are far greater than anything that we are discussing. I feel compelled to put that on record. We should remember that the latest science makes it clear that the concentration of CO2 in the atmosphere, which has risen from 270 parts per million in the 19th century to about 435 parts per million today, must stabilise at 450 parts per million at most. To be safer, and to run much less of a risk, scientists are increasingly considering a limit of 350 parts per million.

The Government’s carbon budget targets, which culminate in an 80% reduction by 2050, are based on the aim of stabilising the concentration of greenhouse gases in the atmosphere at about 550 parts per million of CO2 equivalent. Worryingly, the former Government’s Stern report says that, at that level, there is still a 75% to 99% chance that the global temperature rise will exceed 2° C. If that happens, there is, as we know, a high chance of runaway and disastrous climate change. I strongly believe that it is imprudent and immoral knowingly to accept that level of risk. To achieve a much safer level of CO2 in theatmosphere, global emissions need to drop by as much as 60% as soon as 2030. Industrialised countries with high emissions, such as the UK, can afford to, and need to, reduce their emissions much faster. A 90% reduction by 2030 means an annual reduction of about 10% per year from now until 2030.

I do not expect the Minister suddenly to get up and tell me that he is convinced by that, but it is important to put that wider context on the record, because according to the science, the targets we are talking about are still inadequate and we are still running high levels of risk. The only way we can avoid that risk is by making Bills such as this as ambitious as we can, which is why I conclude by supporting the adoption of, at the very least, the provisions tabled by the Opposition.

Zac Goldsmith (Conservative, Richmond Park)

I want to echo the call to arms from the hon. Member for Brighton, Pavilion. It seems that there is a cross-party consensus on the issue. There are concerns across the board about how rapidly the scheme will be taken up, but the reality is that no one can possibly know, because this is a new scheme and a world first. Hopefully, it will become something of a template for other countries to follow, but it is hard to make predictions about it.

It would be mad to imagine that the existence of targets will make the difference between success or failure; that is not the bit that will make any difference. However, I ask the Minister to acknowledge a point that I made on Second Reading. I urge all the Ministers at the Department of Energy and Climate Change to do everything they can to persuade the Treasury to allow them to introduce greater incentives into the Bill. There are things that could be done. For example, we could reduce VAT on a wider range of energy efficiency materials or provide stamp duty rebates for people who pass their homes on in the best possible environmental condition. I could also include some of the wider points that the hon. Member for Brighton, Pavilion made much earlier today, but those two incentives alone could make the difference between a runaway success and something that is less than a runaway success.

That is where we should put our emphasis. I know that the Bill does not allow an opportunity to make amendments to that effect, but I hope that the ministerial team will take the opportunity to hammer that message home to the Treasury, and I hope others will echo the point.

Luciana Berger (Labour, Liverpool, Wavertree)

As Opposition Members have reiterated, we face a mammoth task. To reiterate, 43% of our domestic emissions come from households and commercial properties, so the green deal should be linked to the Climate Change Act and the target of an 80% reduction by 2050. Sadly, I am not reassured by the Minister’s response and I am very disappointed that he will not accept our proposals—I had hoped that he would reconsider.

We will not drop our proposals. We have not heard from the Liberal Democrats, but in the light of the many comments from Opposition Members, I would ask the Minister to consider taking his provisions away and coming back with something stronger. I ask him to reflect on that in his response. If not, we will be forced to have a vote, because all Opposition Members feel incredibly strongly about the issue.

David Crausby (Labour, Bolton North East)

Does anyone want to speak on clause stand part?

Huw Irranca-Davies (Labour, Ogmore)

I want to make a brief contribution on an earlier part of the debate. I want to thank the Minister for the fact that he and his team have listened and responded to earlier queries and worries that were raised. Some good amendments have been tabled to take us forward, but we are asking him to go a little further. We are not being ungrateful and churlish; we just want him to be ultra-progressive in what I know is his ambition for the Bill to be a success.

At this morning’s sitting, the Minister led the debate on how those who will benefit most from the green deal and who will be least penalised by the green deal element of their bills will be those who will, for whatever vagary, end up paying more. He reassured us that the green deal will come into its own in a winter spell. As the bills increase, the green deal will come into its own. If there is a different characteristic in the make-up of the household than originally stated, that will assist. I was fortunate to discuss with organisations and colleagues during the break the fact that matters seem to have the Bargain Booze mentality although other off-licences are available, when people bulk buy to save more, but have spent a tremendous amount to get those savings.

The Minister will know that Consumer Focus suggested a coherent and compelling 10-point request for making the green deal a fair deal. Under point 1, it states:

“The key to the Green Deal is that it will protect consumers from rising energy prices, while making their homes more comfortable.”

It goes on to say:

“But current modelling does not adequately reflect how consumers use their homes. Green Deal advice must be based on consumer behaviour, but also ensure that those who under-heat their homes get help and limit costs for subsequent residents. It must also recognise the different heating needs in different parts of Great Britain”.

That is exactly so, given that the temperature in places like Sennybridge, not far from my constituency, is typically at minus 4° or minus 5° when we are basking in 0° or even in plus 1° or plus 2°. Point 1 continues that

“advice based on average use does not meet the needs of consumers in colder parts of the country.”

Will the Minister expand on the vagaries around the argument advanced this morning that the more people spend, the better the green deal, and give us some examples from his model about what that means in terms of an actual bill for someone? How will the system work in practice? I want members of the Committee to understand fully what he means by saying that people will not end up paying more when the cold snap hits and snow is outside the door or when a characteristic in the house changes from when the original green deal was set up. I look forward to hearing his comments because we are struggling to understand such matters.

Luciana Berger (Labour, Liverpool, Wavertree)

On clause stand part, I wish to revisit briefly my earlier request. I hope that the Minister can reply to my request for submissions to the green deal call for evidence. Several members of the Committee are keen to know the response. We welcome the Government’s earlier commitments to discuss further the green deal payment on bills, although we need more clarity. Much debate has taken place about the variable interest rate, and we should appreciate the opportunity to discuss that further, too. We welcome the commitment to explore water efficiency with DEFRA colleagues, and we recognise the fact that the hon. Gentleman understands the serious worries of Opposition Members about the energy company obligation going to the able-to-pay sector. We want to flesh that out when we reach later clauses on the ECO, but it is raising much worry outside of the room.

Steve Brine (Conservative, Winchester)

I should have said earlier that it is a pleasure to serve under your chairmanship this afternoon, Mr Crausby.

Given that we are in the thank you card business this afternoon, I also want to thank the Minister. We are really pumping him up, but he listened to several contributions that we made to the debate on Second Reading and took them away. He was lobbied by several hon. Members and he has tabled amendments. New clauses 6 and 7 clearly anchor the scale of our ambition for the green deal in the Bill. Whether they are cigar or no cigar, as the hon. Member for Southampton, Test said, I do not know, but they go a lot further than they did several weeks ago, and certainly when we talked about the Bill on Second Reading.

I agree wholeheartedly with the hon. Member for Brighton, Pavilion and my hon. Friend the Member for Richmond Park: we must always aim higher. There is a climate crisis and we must always look beyond what we are doing, within the reasonable bounds of Government, and then go even further. Let us get this legislation on the statute book. Let us get the green deal up and running. Let us create this new market and motor on with dealing with one of the biggest causes of our carbon emissions, which is our existing housing stock. Let us also recognise, however, that the green deal is not the be-all and end-all of the Government’s ambitions for meeting their carbon budget. It is one element of that, and one element of that only.

Gregory Barker (Conservative, Bexhill and Battle)

I will endeavour to pull the wide-ranging and informed debate together and briefly argue the points. Ultimately, there will not be a total meeting of minds on the issue of targets, but I think we are much closer in terms of purpose and intent than this rather abstract debate around targets might suggest. We clearly know what we have to achieve. I listened very carefully to the hon. Member for Southampton, Test, who always has something worthwhile to say. I am grateful for the thank you card, which seemed to come with something from Marks and Spencer as well. I am afraid that I cannot quite offer him in return the cigar that was proffered, but I hope he will see that our clauses maybe represent a slim panatella, if not a great big Cuban proposition.

We are making progress and we are setting the framework for the Bill. I am sure that there will be further iterations and improvements to it down the years in the next two decades. For the very real and urgent reasons that the hon. Member for Brighton, Pavilion reminded us of, in a timely and articulate way, the science of dangerous climate change is becoming more urgent and more pressing. We need to grip that, but one should not in any way interpret the lack of targets or sub-targets in the secondary legislation as being in any way an underestimation of the important points that she made on the need for action. We recognise that, if we are going to meet our carbon budget, which the coalition Government have signed up to meet, and meet our statutory obligations under the Climate Change Act 2008, to which everyone in the Committee subscribed, then obviously, as 43% of that budget is made up of housing, we clearly must have the policies in place to drive that forward.

Graham Jones (Labour, Hyndburn)

Will the Minister give way?

Gregory Barker (Conservative, Bexhill and Battle)

Not at the moment, if I may. We will need to drive that forward. It is not just targets or sub-targets that will be key. As my hon. Friend the Member for Richmond Park said, the biggest lever of all will be the incentives, particularly in the earlier years of the scheme. They will be key. I thank him for his point and I draw his attention, and that of the Committee, to the words of the Chancellor of the Exchequer in the Budget. He said:

“The Government is committed to the success of the Green Deal and will act to encourage and incentivise take-up so that the Green Deal will appeal to households, businesses and prospective providers alike, before it is introduced in 2012”.

It is way above my pay grade to speculate on what the Chancellor has in store for the Budget, but the Department is engaged in a constructive dialogue with the Treasury about its options. The coming Budget will certainly not be the last opportunity for us to come forward with further means of incentivising take-up once we have the benefit of real-life experience to analyse.

Regarding the points that have been raised in the clause stand part debate, I can only repeat what I said this morning. I do not understand why the hon. Member for Ogmore, who is normally as sharp as a pin on these issues, cannot quite grasp what we are saying. We are saying that those who spend most on energy in the “leakiest” homes will benefit most from the green deal. I can assure him that there will absolutely not be a one-size-fits-all approach. The application of the golden rule will be cautious, as I said this morning, to ensure that it does not over-anticipate the savings that might come from any particular technological intervention or measure. Each house will be individually assessed for its location, the type of building that it is and the energy usage of its occupiers. A collection of those factors will not only trigger the green deal but the ECO. Where the occupants of a building are in fuel poverty, the green deal’s weighting of the ECO will be increased and the very poorest people will benefit most from the ECO. That stands to reason.

I am not in a position to spell out the exact split or ratio, even if I wanted to. But in all honesty, we are in sympathy with both sides of the Committee in what we are trying to achieve. I fully understand what the hon. Gentleman is saying about the need to ensure that we embrace fuel poverty within the ECO, but I do not think that this choice is a binary choice, or at least in many cases it is not a binary choice, as we said this morning. Many of those in fuel poverty live in these houses that are hard to treat. We will certainly not be prioritising Blenheim palace or Castle Howard as recipients of hard-wall insulation. [Interruption.] To the other place: sorry about that. We all have a shared appreciation of where this money needs to be spent. Ultimately there will be a finite resource in any given year, and we must ensure that it is used effectively and that there is both a carbon element and a social element to it.

I want to make a statement and respond to the request from the hon. Member for Liverpool, Wavertree, but it might make more sense, Mr Crausby, to do that as a point of order before we go on to the next part of our proceedings. If that is in order, it would be helpful to answer the point that was made.

In summary, I am grateful for the acknowledgment across the Committee that we have listened on Second Reading and that we have moved substantially forward. We have put the aim in the Bill and we have backed that up with the commitment to the transparency of the annual reporting to Parliament. That must be seen in the context of the overall carbon budgets, to which the coalition Government are absolutely committed. On that basis, I urge Opposition Members to withdraw their amendment.

Huw Irranca-Davies (Labour, Ogmore)

On a point of order, Mr Crausby. I am just seeking some clarification. At what point will we vote on the individual amendments?

David Crausby (Labour, Bolton North East)

That will happen when the new clauses are considered. The amendments in question are not to clause 1.

David Anderson (Labour, Blaydon)

On a point of order, Mr Crausby. Does that mean that we will not vote on the amendments that we have discussed since returning at 4 o’clock?

David Crausby (Labour, Bolton North East)

You will get the opportunity to vote on the amendments, but they will come in the correct marshalled order, not at this point. They have been debated—and we have dealt with clause 1 stand part—but we will deal with them later.

Gregory Barker (Conservative, Bexhill and Battle)

On a point of order, Mr Crausby. With your permission, I would like to make a brief statement about the request of the hon. Member for Liverpool, Wavertree for the disclosure of the responses to the Department’s call for evidence. The submissions that we received contain market-sensitive information about the costs of production, product performance and market share, which was provided to DECC as “commercial in confidence”. We as a Department would be happy to share that information with the Committee, but it is not within our gift to do so without the consent of the companies that gave it to us, as it would be a breach of confidence. However, what we can do—I undertake to do this for the hon. Lady—is to check with the companies whether they are content to have their evidence submitted to the Committee, and, having spoken to the companies, report back to her.

Clause 2 - Green deal plans: supplementary

Huw Irranca-Davies (Labour, Ogmore)

I wish to make some brief comments on clause 2. I would like to direct Members’ attention to subsection (5). We have not tabled amendments because I am confident that the Minister will clarify my queries—not concerns—on the matter. In the past few months there has been a great deal of debate on microgeneration, the green deal and particularly the potential of feed-in tariffs and the renewable heat incentive; indeed, they have potential. There has been debate particularly on how they would fit either within the green deal or alongside it. There is a significant difference between having feed-in tariffs, RHI or other microgeneration initiatives in the future as part and parcel of the green deal and their being run, in the words used by the Minister this morning, as a green deal max or green deal plus—a bonus on top of it. There is a substantial difference, and I would like to test the Minister’s thinking on that in Committee, because there was not a great deal of debate on the matter and little clarity in the other place. This is a good opportunity for the Minister to lay out his thoughts constructively.

It is probably fair to say that this is an area in which the Minister and his team have been taking soundings, not only in the past few months, but throughout the past year. The situation has been fluid, and there has been a lot of speculation, so now is the time to see whether we can have some clarity, albeit that there is more work to do.

Clause 2(5) deals with microgeneration, including two pretty comprehensive definitions in paragraphs (a)(i) and (a)(ii). Paragraph (a)(i) mentions

“measures for increasing the amount of electricity generated, or heat produced, by microgeneration”.

The Climate Change and Sustainable Energy Act 2006 is specifically referred to. It is a great Act, and has been referred to earlier in the proceedings. Paragraph (a)(ii) refers to

“any other measures for increasing the amount of electricity generated, or heat produced, using low-emissions sources or technologies”.

That is tremendous and is to be welcomed, because the two combined, taken with the definitions referred to in the 2006 Act, are up to date and quite wide ranging. Once again, the Minister is to be applauded for listening and for working hell for leather over the past few months to try to incorporate this in the Bill. This is the first opportunity we have had to discuss it.

However, the list of possible microgeneration technologies in section 26(2) of the Climate Change and Sustainable Energy Act 2006 differs from that in the Minister’s document of May 2011, entitled, “What measures does the Green Deal cover?” The Act refers to biomass, biofuels, fuel cells, photovoltaics, water, including waves and tides, wind, solar power, geothermal sources—of both types, I assume—and combined heat and power. The Minister may be able to tell me that, even though his document does not replicate that list, it actually covers the same things. I would like clarity. Perhaps I have misread, but can he confirm that the full range of microgeneration technologies in the original Act is replicated in the proposals? If they are not—they may well not be for a very good reason, because the Minister has done some impact assessments and has seen that some of them will not work in the green deal—which technologies are excluded and why is that the case?

It is laudable that the Minister and his team are thinking widely about how the various strands of DECC policy can be brought together in relation to energy efficiency and energy generation in individual properties. It is undoubtedly the case that that type of thinking has the potential to revolutionise energy by decentralising it. Perhaps it will also appear as a stronger thread—I look to the Minister’s colleague, the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden—in the evolution of the next energy Bill, which is much awaited, in relation to how we deal with decentralised energy, as well as large, distant, remote, large-scale industrial energy. I would certainly welcome that.

Will the Minister explain the Government’s thinking in relation to a phased approach—we have heard some speculation about this—to the introduction of some of the technologies to the green deal? Does the Minister want to see genuine trial, piloting and experiments, and learn from experience so that we have a graduated roll-out—that would make sense—or is this another Treasury-restrained area impacting on DECC policy? I would prefer the former, not the latter. If there is to be a phased roll-out under the clause, which of the technologies is likely to be first in line to move forward, according to the Minister’s current thinking? I know that he will not be able to give a precise answer right here, right now, but he must have some idea of the top two or three that will proceed—the Bill has been a year in fruition—and which ones will go later and which ones will not go at all. They may be the ones that I referred to earlier which do not seem to be replicated from the original list in the 2006 Act.

The microgeneration measures have been broadly welcomed by stakeholders, including Friends of the Earth, the UK Green Building Council and everybody in between. However, they have also called, as we do, for urgent clarity on how the green deal will integrate with feed-in tariffs and the renewable heat incentives in particular. I ask the Minister directly: in this green deal max, as he has described it previously, can the microgeneration technologies be included as part of the green deal package, or are they a bolt-on as part of the overall energy package? Are they integral to it, or are they separate but a lovely thing to add on? If they are to be considered as part of the green deal itself, do the household and assessor have to work through a hierarchy of energy efficiency measures, which is where the big wins are, to make sure that the home is at a suitable standard before they can even consider some energy generation? In simple terms, what would be the point of putting solar photovoltaic panels on a roof or of ground source thermal if the energy is simply leaking through the roofs, walls and doors?

Dave Powell of Friends of the Earth highlighted the separate danger that the £10,000 limit for the green deal is probably insufficient to do both microgeneration and energy efficiency. He said:

“There is a danger that you end up with one or the other, when you should be doing both.”

I agree with that, because there is a big win for Members if we get the green deal right, not only in energy efficiency but in being able to say to householders and our communities, “You can metaphorically insulate yourself from rising prices by generating your own electricity and heat.”

The Minister is very familiar with the income that is derived from feed-in tariffs, which currently accrues to community schemes or individual householders. Will that income—or other income derived from measures that he might announce next year on domestic RHIs—contribute towards the financing of a wider green deal package, including energy efficient measures for a property, to make it stack up? If so, the plus side might be a boost in the attractiveness of the green deal for some people. However, the measure is market driven and it might also bring a significant downside. The pot of money for FITs is now restricted. We are waiting to hear about the matter any day, so I am not asking the Minister to pre-empt the fast-track solar review—but is it happening this afternoon, while we are in Committee?

Gregory Barker (Conservative, Bexhill and Battle)

It’s happened!

Huw Irranca-Davies (Labour, Ogmore)

It has happened already. The downside of a capped, feed-in tariff pot of money as part and parcel of the green deal is that it increases the attractiveness for everyone. People who are in more modern homes that they have already insulated will grab at the scheme and say, “Hey, yeah—we’ll put in a little bit more of the thicker insulation and we’ll also have the solar panels on the top.” There will be a rush to the scheme, which might exhaust that pot of money much sooner than the Minister is expecting, and I know he has concerns about that.

In addition, the money may not get to those people who would benefit from it even more. It may not get to those communities in which we could not only upgrade insulation to a higher level, but we could say to people in those stone-built, terraced houses, “You’ve done all that—well done. You can also do this before the pot of money is used up.” If that is the case, will the Minister have to ration the FITs and RHIs under the green deal, or will he go back to the Chancellor to argue for more money in the next Budget or the one after that?

Many questions about the use of microgeneration in the green deal remain unanswered or unclear, and I have raised the issue to be genuinely helpful to the Minister so that he can put his initial thoughts on the map for us. We may have to return at a later stage in the Bill with some amendments to clarify the Government’s intentions, but I am hopeful that the Minister can answer those questions today and satisfy the Committee that he is clear about how we will integrate microgeneration into the green deal.

I remind the Minister that he launched enthusiastically a microgeneration strategy earlier this year. At that launch, the chief executive of the Micropower Council, Dave Sowden, said,

“The UK’s microgeneration sector is at the heart of a citizen’s energy revolution. In tough economic times, this rapidly growing industry is helping consumers to go green, has created thousands of jobs, aiding economic recovery, and attracting manufacturing investment here in the UK.”

He specifically paid tribute to the solar feed-in tariff that was introduced by the Labour Government a year ago with fairly strong cross-party support. The Minister’s response to that was poetic, if a little less restrained. He said,

“I am planting the seeds for growth so we can see small scale energy generation flourish in homes, businesses and communities.”

In the light of the clause, I therefore ask the Minister whether microgeneration in the green deal is just the seed corn for reaping in future years, or whether we will get the harvest plentiful, and earlier. I look forward to his response.

Gregory Barker (Conservative, Bexhill and Battle)

I do not know whether I can match the poetic rhetoric of the hon. Member for Ogmore, but I shall do my best. Dylan Thomas, eat your heart out. I shall try to answer some of his questions, even if I do so in plain prose.

The clause is at the heart of the Bill, because it sets out what energy efficiency improvement means. It allows for a broad range of measures to be covered by the new framework, including measures relating to reducing energy consumption as well as energy generation measures. The clause is deliberately inclusive, allowing the greatest number of consumers and businesses to benefit from the new framework. It enables the Secretary of State to specify which types of measure will be eligible for green deal finance. The eligibility criteria will be set out in framework regulations.

The eligibility measures are being informed by consultation with experts and stakeholders and will be based on the latest science and evidence about the performance and quality of products. Indeed, the Energy Efficiency Partnership for Homes has just conducted a call for evidence on behalf of DECC on the performance and cost of the measures.

To give the hon. Gentleman some clue about our thinking, he is absolutely right. When we first conceived of the green deal, it was as an energy efficiency programme, but what became clear as we developed the policy in more detail was that, as the hon. Member for Brighton, Pavilion said earlier, householders will want a total, holistic, green prescription for their home. For many, that will mean taking advantage of microgeneration technologies. I share the hon. Gentleman’s passion for microgeneration, if not his eloquence. While in opposition in 2006, I wrote a pamphlet for my right hon. Friend the Member for Witney (Mr Cameron) on driving forward a decentralised energy economy.

One of the first things we will do to reform the feed-in tariff system we inherited from the last Government is make a direct link between energy efficiency in the home and the applicability of feed-in tariffs. We will use the early comprehensive review to do exactly that. The hon. Gentleman is absolutely right that there was no link. The scheme as we inherited it allowed people to bung solar panels on the roof without any regard to whether or not the home was energy-efficient. In terms of the hierarchy of measures taken, it must be right to look first at energy efficiency improvements, and then and only then to consider further microgeneration possibilities.

The green deal, at its core, is an economic model based on a payment mechanism through the Energy Bill. The mechanism is based on energy savings. Although microgeneration, at current costs, is complementary to the greening of a home in all the ways that we can easily imagine, in most cases it does not lead to energy savings, certainly if one does not include the benefit of the feed-in tariffs.

At the moment, it is difficult to envisage how to drive down the cost of somebody’s bills simply by including microgeneration technology. I have no doubt that that will change in due course as the industry scales up and microgeneration takes off in response to feed-in tariffs, innovation and consumer demands. There are early signs about both renewable heat and renewable electricity technologies—we must not forget renewable heat, as it is probably more important in carbon terms, ultimately, than generating electricity in the home—but they are still some way from being energy-saving in finance terms. There is some indication that heat pumps might be getting close to breakthrough point, but it is still early days.

That is why we have endeavoured as best we can, having listened to comments from colleagues on Second Reading and from stakeholders before drafting, to future-proof the Bill to ensure that when microgeneration technologies become more cost-effective, they can be met within the golden rule. However, at the moment, given the costs of such technologies and the feed-in tariff, I would expect a green deal provider or assessor to advise on the energy saving measures that could be undertaken in a home. I would expect those measures to be captured and paid for through the green deal mechanism in the Bill, with no up-front payment. It would be paid for through savings, subject to the golden rule, with potential support from the ECO. He or she will also point out the potential of these microgeneration technologies. There will also be, I hope and very much expect, competitive financing propositions, which will mean that there is another no-cost, up-front alternative so far as the customer is concerned, depending on the technology. Others may choose to pay something towards it and capture more of the feed-in tariff benefits for themselves, depending on their ability to pay. At the outset, we see them working in tandem. As the price of these technologies comes down, we hope that in due course there will be the potential to incorporate them within the green deal.

Huw Irranca-Davies (Labour, Ogmore)

I thank the Minister for his lucid explanation. It is helpful for the Committee that, at least in the initial phase of the green deal, microgeneration technologies will stand as a useful extra and should be part of the assessment of people going into it. Those will not be part of the green deal financing mechanism, at least initially, until they come down in cost. That is a welcome clarification, which I thank him for. Perhaps we can further explore his thinking in some detail in separate meetings, before we get to the later stages of the Committee.

Gregory Barker (Conservative, Bexhill and Battle)

I thank the hon. Gentleman. Green deal installers will also be required, under clause 7, to adhere to any requirements in the installers code of practice on the standards of products installed; or, alternatively, to ensure that the products installed are listed in a document issued by the Secretary of State or an authorised person, identifying the products that are to be taken as meeting the required standard.

Finally, subsection (10) provides that regulations may make provision regarding the circumstances in which a person who is not a bill payer, as defined in the clause, may be considered a bill payer.

Clause 3 - Framework regulations

Luciana Berger (Labour, Liverpool, Wavertree)

I beg to move amendment 83, in clause 3, page 3, line 46, at end insert—

‘(c) to ensure through the use of regulation, the implementation of the code of practice, and audit, that co-operatives, mutuals, social enterprises, charities and businesses of all sizes have equal access to the market for supply and installation of energy efficiency measures under the Green Deal.’.

David Crausby (Labour, Bolton North East)

With this it will be convenient to discuss amendment 38, in clause 3, page 5, line 21, at end add—

‘(12) regulations for fees payable under this section may establish a reduced fee for charities, social enterprises, co-operatives and mutuals applying for initial or continued authorisation as Green Deal participants.’.

Luciana Berger (Labour, Liverpool, Wavertree)

Amendment 83 seeks confirmation from Ministers that the green deal market will not be confined to the big energy companies and big business. I am grateful that we have the opportunity to debate amendment 38 alongside it. Baroness Smith tabled an amendment similar to amendment 38 in Committee in the other place. Lord Marland agreed to take it away and discuss reduced fees with ministerial colleagues, with a view to bringing proposals forward at a later date.

The willingness of smaller and non-traditional players to enter the green deal marketplace will depend on how well they are able to compete and how easily they can access the new energy company obligation, and any administrative costs. We know that the ECO will make up a substantial proportion of the green deal market, and that companies of all sizes need to know that they can carry out an assessment of any house and be confident that, regardless of the household’s income, they can install energy efficiency measures. The draft document on the ECO recognises the need for an open market to ensure the maximum possible scale and range of energy efficiency delivery overall. It states that

“it may be difficult and expensive for smaller Green Deal providers to engage and negotiate with energy companies even when they can deliver energy efficiency improvements very cost effectively. Also, for equally natural business reasons, an energy company might also be a Green Deal provider and might have a preference for funding their own internal Green Deal activity. The company might prefer to provide ECO subsidy to its own Green Deal transactions, as this would allow it to grow the Green Deal side of its business and gain market share (at the expense of other Green Deal providers which had no such access to funding).”

It is important to highlight that there is a real danger that the green deal will become a closed marketplace, uncompetitive and dominated by the big energy companies, which is not unlike the retail energy market as it currently operates.

Concern has been expressed by several organisations, including the Builders Merchants Federation, that the green deal as it stands relies too heavily on big corporate names and favours vertically integrated businesses that will dominate the marketplace from the outset with a one-stop-shop approach. Retailers and the energy companies dominating the marketplace could jeopardise the green deal’s likelihood of success for two reasons: first, it would drive down competition and increase prices for customers; secondly, the suppliers that are least trusted by consumers would be the main drivers of the scheme.

According to the consumer advice group, Which?, only one in five of the public find their energy supplier trustworthy. Research by YouGov for the Great British Refurb campaign found that 46% of the public trusted their local authority to deliver a green deal scheme, compared with just 28% trusting their energy supplier and only 9% trusting DIY firms or supermarkets.

There are strong economic reasons for ensuring that small and medium-sized enterprises have equal access to the green deal market. The construction sector is dominated by small firms that have been particularly hard hit by the recession. Even despite some growth in the economy in the first quarter of 2011, construction activity fell by 4.7%—the sharpest decline since the first quarter of 2010.

As a Labour and Co-operative Member of Parliament, I am proud to be part of a movement not motivated purely by the pursuit of profit but by values of openness, social responsibility and solidarity. As well as being founded on strong principles, in practice co-ops and mutuals can be more efficient and are a positive force in our local communities. I am very pleased that the Government have also recognised the value of employee-led models. In a speech on 17 November, the Minister for the Cabinet Office and Paymaster General, the right hon. Member for Horsham (Mr Maude) Francis Maude, said:

“The evidence increasingly shows that they reduce absenteeism, improve performance management, encourage innovation, and increase productivity.”

The co-operative model also makes sense economically. Last year the co-operative economy across the UK stood at 12.9 million members, who were part of just under 5,000 co-operative businesses with a turnover of £33.5 billion, contributing 237,800 jobs to the economy. And there is clear evidence that the model is already thriving in the energy market. Baywind is a wind co-operative in Cumbria that has successfully carried out two share offers since it was founded in 1996, and currently has more than 1,300 members. It is clear that the green deal would benefit from having co-operatives and mutuals as part of a wide variety of green deal providers in the marketplace. That is why, in addition to ensuring access to the marketplace, we would like to see a reduction in the fee paid to participate in the green deal.

The framework regulations in clause 3 mention

“the payment of a fee in connection with either initial or continued participation in the scheme”.

Ministers and officials indicated in my discussions with them that this fee is likely to relate to the administration costs arising from registering as an approved green deal participant. I want to make it clear that we believe it vital to have strong regulations in place to ensure that only reputable organisations are allowed to become green deal participants. However, that should not be done in a way that prevents organisations that are not purely driven by profit from entering the market, owing to excessive administrative costs.

I hope there is broad agreement among all members of the Committee that we do not want to exclude from the green deal the charities, co-operatives, mutuals and social enterprises that want to benefit our communities and focus resources on vulnerable people or households in fuel poverty. A reduced fee would not only lessen the financial start-up costs for those organisations but indicate to them that they have an important part to play in the green deal.

The green deal could be a catalyst for growth. The Minister has said that he would like to see 14 million homes transformed under the green deal by 2020—a task that would require work to be completed at the rate of almost 30,000 homes per week. Small contractors working locally are the obvious choice for homeowners and landlords looking to make energy efficiency improvements to their properties. Local firms provide a personalised service, procure goods and services from other local businesses, create local jobs and provide training opportunities for young people through apprenticeship places.

However, the Federation of Small Businesses has highlighted that, under current proposals, small contractors are at risk of being excluded from delivering this work because there is no finance mechanism to allow businesses that are not tied to major green deal providers to offer an alternative service. Energy companies, major retailers and banks will therefore dominate the market, and the choice of providers available to consumers will be reduced.

A more desirable market would be one in which local businesses, co-ops, charities and social enterprises, particularly those with a focus on tackling fuel poverty, are guaranteed access to the ECO. The amendment does not seek narrowly to prescribe how that process should be carried out, as the matter obviously needs to be examined in some detail. It is easy to imagine a scenario in which the Government mandate that half the work done under the ECO should be carried out by small and medium-sized enterprises, co-ops, mutuals, charities and so on, either directly tendered by the energy companies or through a third party. I would be grateful if the Minister addressed that issue in some detail.

To what extent does the Minister think the Government will intervene in the marketplace through the regulation of ECO spending? We touched on that previously, but I am keen for more detail. Does he agree with the principle of co-ops, SMEs and charities being equally involved and having equal access to the green deal market? Will he acknowledge that if the green deal is dominated by the big energy companies and big businesses, it will not meet the ambitions he holds for it?

I mentioned at the start that in the other place, Lord Marland said he would bring in proposals for reduced fees. I am surprised that those proposals have not been introduced at this stage. Will the Minister say why that is the case and what consideration has been given to them?

Caroline Lucas (Green, Brighton, Pavilion)

I should like to associate myself strongly with the hon. Lady’s words. These two amendments go to the heart of what kind of scheme the green deal will be and whether it will be something that benefits local economies, communities and businesses or whether it will be perceived as a top-down process that is done to people.

As the Minister knows and has said many times, there is enormous potential for job creation. Tens of thousands of jobs could be created in local economies around the green deal. In my constituency, there is huge excitement among local groups such as the local 10:10 group, the new Brighton Energy Cooperative, many local businesses and the local authority. All those groups are chomping at the bit to get on with doing this; they are very excited about it. It is important to signal at this early stage that we absolutely envisage that such groups will be strongly involved.

When an assessor goes to someone’s home, looks around and makes recommendations for the work that needs to be done, if people find out that the person doing the work is from a big company based hundreds of miles away rather than from a local business or builders around the corner, they will be shocked and disappointed. I simply want to underline that the amendments go to the heart of what kind of green deal we envisage. The amendments would bring us closer to the kind of street-by-street area-based comprehensive approach that many of us would like the green deal to become. I hope very much that the Minister will give the green light to the amendment.

Claire Perry (Conservative, Devizes)

I would like to support the spirit of the amendment, but I do not feel that I can do so wholeheartedly. We are all describing a situation that exists to some extent currently. A number of small operators—often building companies—are in the business and offer solar installations. Part of the problem is that people do not trust small operators or feel that they have the financial backing to do this. They are not sure that they will be there if there is a problem. There is the whole issue of customer care, which we will talk about later in the debate.

Having said that, I would very much like to hear the Minister’s comments on how we could include the not-for-profit sector or, indeed, small businesses as part of the overall contracting mechanism, as we have done in other areas—for example, in relation to the welfare-to-work reforms. It is absolutely right to say that a number of very good organisations could and should be involved, whether they are co-operatives, voluntary organisations or, indeed, small businesses. Perhaps the Minister could clarify whether there are some ways to include them and to ensure that there is trust and customer care behind the process.

Gregory Barker (Conservative, Bexhill and Battle)

I thank hon. Members for their points on amendments 38 and 83. Amendment 38 would ensure that where an authorisation fee was payable by green deal participants, it would be reduced for charities, social enterprises, co-operatives and mutuals. We fully endorse the enthusiasm of the hon. Member for Liverpool, Wavertree for co-operatives and we certainly want them to play an important part in the roll-out of community-level green deal programmes. We recognise that co-ops and other social enterprises will play an important role in delivering the green deal and therefore we need to ensure that we take appropriate steps to support their involvement, exactly as she says. We are also considering ways in which we can encourage other important social benefits to come out of the green deal—for example, encouraging local firms to take on more apprentices to help to bridge the skills gap that is evident in the sector. However, we need to carry out further work in consultation with those firms and organisations and with interested parties before specifying the details of how authorisation fees will be levied.

The hon. Lady asked why we have not followed through on Lord Marland’s statement in the other place. I can assure her that that stream of work is ongoing, but we need to do further work on how fees should be levied on the various green deal participants before making commitments to specific fee levels for different bodies. We want to be as open and flexible as possible about the way in which fees can be used to deliver wider policy objectives.

Luciana Berger (Labour, Liverpool, Wavertree)

To reinforce my point, I was not specifying what the levels should be; I was just saying that there should be a reduced rate for organisations that do not generate a profit.

Gregory Barker (Conservative, Bexhill and Battle)

That is certainly what we hope to achieve and is very much in the spirit of the stream of work going on at the moment. This is not just about social enterprises or co-ops. We also want a fully engaged SME sector. We want to ensure that local green deals really do add value to the local economy. As much as we welcome the enthusiasm and support of the well known, national brands, we want to ensure that there is strong local participation. I was very pleased to be able to attend an event at Brighton university, in the constituency of the hon. Member for Brighton, Pavilion. We had a very constructive round table and were able to thrash out some of the issues that we would need to get over to ensure that there was local take-up. That work stream is ongoing in the Department. It would therefore be inappropriate to limit our flexibility at this point by being specific and placing details regarding the levying of fees in the Bill.

Amendment 83 would require the Secretary of State to ensure through regulation, audit and the code of practice that all types and sizes of organisation had equal access to the market for supply and installation of energy efficiency measures under the green deal. The green deal will stimulate the market in the UK, driving growth across the supply chain. We very much hope that there will be opportunities for all types and sizes of company in supplying and installing a broad range of measures under the green deal. We have been working closely with business representatives covering a wide variety of company types and sizes to ensure that our framework can work for as many as possible. I would be very happy to share that stream of work with my hon. Friend the Member for Devizes. If there are any contributions that she wishes to make or ideas that she wishes to share, I would welcome her input. We will continue to work with the sector as we set out our code in secondary legislation. However, we do not intend to regulate in this area.

Equally, the hon. Member for Liverpool, Wavertree is right to highlight the ECO as critical to a competitive green deal market. Additionally, we fully recognise that we need to include in our consultation how best to design the ECO to ensure that we promote an open and competitive market that will make the ECO’s opportunities available, including to smaller local participants.

Luciana Berger (Labour, Liverpool, Wavertree)

I sense that the Minister is coming to the conclusion of his remarks, but I want to press him on one of the questions that I asked at the end of my contribution. Will he acknowledge that if the green deal is dominated by the big energy companies and big business, it will not meet the ambitions that he holds for it?

Gregory Barker (Conservative, Bexhill and Battle)

I perhaps would not frame it in those words, but for me a benchmark for the success of the green deal would be that it spurs a strong local response in communities throughout the country. We do not want to see only high street UK; we want to see many community-based initiatives alongside the excellent retailer offers that will come from the likes of Marks and Spencer, B&Q, John Lewis and Tesco that also specialise in a good consumer experience. Absolutely at the heart of the green deal is choice—choice, choice, choice—and competition. We recognise, however, that it is sometimes easier for the national players to benefit from such programmes than it is for smaller, local SMEs, co-ops or social enterprises. We will ensure that their special needs are taken into account in secondary legislation.

In summary, the Bill already contains all the necessary provisions to achieve what is intended by the amendment. I fully understand her motivation, which we share, and the sentiments behind them, but I hope that the hon. Member for Liverpool, Wavertree will withdraw her amendment.

Luciana Berger (Labour, Liverpool, Wavertree)

I thank the Minister for his response, but I return to the Committee sitting in the House of Lords at which the point was initially raised. The amendment was raised in the spirit that we share, but in practice it should be made to the Bill to acknowledge the contribution made by SMEs, co-ops and mutuals in our economy and to ensure that they have a fair opportunity to participate in the green deal. On that basis, I will press it to a vote.

Luciana Berger (Labour, Liverpool, Wavertree)

I beg to move amendment 33, in clause 3, page 4, line 12, at end insert—

‘(da) for the use of a comprehensive assessment tool by green deal assessors that will reliably estimate the likely energy bill savings.’.

David Crausby (Labour, Bolton North East)

With this it will be convenient to discuss the following: amendment 31, in clause 36, page 24, line 6, at end add—

‘(12) Before making regulations or an order under this Chapter, the Secretary of State must, after consultation with industry, trade unions and key stakeholders, provide a plan for the recruitment and training of green deal assessors.’.

Amendment 37, in clause 36, page 24, line 6, at end add—

‘(12) Before making regulations or an order under this Chapter, the Secretary of State must report to Parliament with proposals on a specific Green Deal apprenticeships programme.’.

Huw Irranca-Davies (Labour, Ogmore)

On a point of order, Mr Crausby. I should have done so earlier, but I now refer members of the Committee to my declaration of interest, which states that I am a member of the Co-operative party as well as of other organisations. I do not want to start a spate of declarations of interest, but I thought that it might be worth putting that on the record.

Graham Jones (Labour, Hyndburn)

On a further point of order, Mr Crausby. I am also a member of the Co-operative party.

Luciana Berger (Labour, Liverpool, Wavertree)

The three amendments that I will speak to deal with green apprenticeships, which we addressed briefly in our discussion of the previous clauses; the recruitment and training of green deal assessors; and the use of the comprehensive assessment tool by green deal assessors, which will reliably estimate the likely energy bill savings.

I will start with amendment 33, which deals with that comprehensive assessment tool. The aim of the amendment is to ensure that the green deal assessment method reliably estimates fuel bill savings. I expect the Minister will say that the assessment method will be part of the framework regulations. The amendment seeks to make the assessment explicit and to ensure that it will also be part of the green deal code of practice.

I am keen to press the Minister on a number of points. It is believed that the green deal will succeed or fail subject to whether the initial property assessment is conducted correctly. That is the basis on which the energy savings will be guaranteed or not and it is the basis on which people will know what options are available to them when someone comes to their home. We talked earlier about that episode—someone coming to people’s homes—being very important. It might not happen again until the person moves home, if at all.

There will be not only the golden rule calculation but the estimates of likely energy bill savings and the likely period during which the improvements will generate those savings. That requires assessment criteria to be based on a common standard that is approved and widely available to all participants.

I talked about the Builders Merchants Federation before. The BMF has also been very helpful with amendment 33, suggesting that there will be a software package based on the Building Research Establishment’s standard assessment procedure software or reduced data standard assessment procedure software. The assessment will need to encompass many factors, including the construction of the property, its condition, the function of the property and the occupancy, as well as the interaction of different energy efficiency measures. There are other factors that might need to be considered, such as variations in location and region. My hon. Friend the Member for Ogmore spoke earlier about towns that might not be very far from each other but that still experience different climates during the winter. There are different companies and different prices, but a standardised assessment scheme will provide a fair platform for comparison of the benefits of the green deal for each consumer.

However, given the lack of transparency in the energy market and fluctuating energy prices—only today we heard about a 19% price increase by one of the energy companies—with an upward trend in those prices, how does the Minister intend to ensure that each green deal fulfils the golden rule without an accurate and reliable estimate of the likely energy bill savings?

Without our amendment how will the Government protect consumers, when research shows that fuel bill savings calculated by standard assessment procedure can be, on average, 50% less than predicted? I want to reinforce that point. Fuel bill savings have been calculated in the past and they can be hugely inaccurate—they can be up to 50% less than predicted. A recent report by Which? revealed that in a trial comparing insulation assessments, on average consumers were given over-inflated estimates of energy savings. How will people assess energy efficiency improvements for low-income households, which currently under-heat their homes? Also, will each assessor work under a standardised assessment scheme?

Whether the green deal makes financial sense for a consumer will also depend on the price of energy; that point has already been made during today’s two sittings of the Committee. If energy prices are high, energy efficiency savings paid for by the green deal will be more cost-effective. If energy prices fall, the green deal may not make the savings on energy bills as quickly.

Estimating how much money households can save under the green deal is difficult, because it depends so much on energy prices, inflation, the type of retrofit undertaken and the state of the house involved. The main estimates for the domestic sector use central projections of energy and carbon prices. Changing those assumptions has a substantial impact on the overall cost-benefit balance. If low energy and carbon prices and high capital costs are assumed, the overall costs outweigh benefits by between £6 billion and £8 billion. With high energy and carbon prices and low capital costs, the net benefits increase substantially, to between £16 billion and £25 billion. Central estimates of the net benefits are between £6 billion and £11 billion. Those estimates were provided in the Library briefing on the Bill.

Domestic energy prices could rise by as much as 25% over the coming decade, as the big six gas and electricity suppliers warned the Energy and Climate Change Committee on 7 December. I alluded earlier to the Bank of England estimate of a 10% to 15% rise in energy bills by 2012. Those figures were echoed by Phil Bentley, the managing director of British Gas, who said:

“If you look forward to 2020, we are all expecting to see higher wholesale prices and higher transmission and distribution charges across the industry, as we are having to make larger investments”.

Likewise, the chief executive of E.ON, Paul Golby, said:

“Unfortunately, the inevitable direction of wholesale energy prices is upwards, so in terms of tariffs I think we will see continuing rises through the next decade”.

We all know that that is the case. I reiterate that the point of the amendment is to ensure that we have a comprehensive assessment tool that considers all measures, particularly energy prices, so that green deal assessors can reliably estimate the likely energy bill savings that householders and tenants will enjoy.

The Minister spoke in debate on previous amendments about green deal apprenticeship programmes. People across industry have said that their immediate concern in the short term is to upskill the existing work force. They also want the number of trained individuals to match demand. Youth unemployment is an issue that the Bill could address, creating a long-term pipeline of individuals capable of doing the work required for sustained implementation of the green deal. The basis of the amendment is that currently, the Bill does not ensure that a well-defined apprenticeship programme will be prepared as a component of green deal implementation.

On 8 March, the Government assured us that at least 1,000 green deal apprentices could receive Government funding towards their training. The Deputy Prime Minister stated:

“The green deal is about the future, and it is important we ensure that future generations have the skills they need to take advantage of the opportunities of the green economy. These apprenticeships are a perfect example of how Government and business can work together towards a low-carbon future.”

Those 1,000 apprenticeships appear against the backdrop of the 350,000 apprenticeships already assured by the Government. They are a drop in the ocean, in terms of the Government’s wider apprenticeship ambition. The amendment seeks to ensure that a portion of those apprenticeships are designated for the green deal.

The subject was raised in the House of Lords by my noble Friend, Baroness Smith, in debate on amendment 20. She cited the Aldersgate Group report, “Mind the Gap: skills for the transition to a low carbon economy”, which makes some points that should be reiterated. One is that whatever the speed of our transition to a low-carbon economy, we must fix the skills shortage in those areas. I say “skills shortage” having spoken to the Union of Construction, Allied Trades and Technicians, which stated its concerns about the skills gap. The skill set is not completely new, so we do not need to build up new skills from scratch, but we certainly need training courses and further work to enhance the current skill set.

The biggest problem identified in the Aldersgate Group report is that because the debate on work force skills has moved on so quickly, people at various levels in engineering and manufacturing in the UK, including at the highest management levels, have not really understood the implications for the degree of change necessary. If we are to meet the significant challenges that we want the green deal to overcome, we must ensure that the skills are available. Companies want to understand the nature of the change and explain the required skills to the work force.

I mentioned UCATT; in 2008, together with Cardiff university, it prepared a report that highlighted that construction apprenticeship training is in crisis. Construction employers do not want to train anyone, and that leads to a lack of long-term thinking or planning. Half the industry is composed of a work force that is officially self-employed, and if companies do not want to employ anyone, they certainly do not want to train anyone. That worry has been echoed by many organisations and businesses. As the sector is made up of so many self-employed people, it is difficult to ensure that people are trained effectively to meet the scale of the demand that the Government are anticipating for the green deal.

The skills gaps and shortages in the industry are likely to be exacerbated by the fact that the construction work force is ageing. In its 2008 report, ConstructionSkills predicted that by 2010, the sector would need 500,000 new entrants and a major expansion in the four main trades: bricklayers; wood trades and interior fit-out; painters and decorators; and plasterers and dry liners. We are all expecting such people to be upskilled to meet the green deal.

I referred earlier to youth unemployment, and I repeat that the green deal will provide a fantastic opportunity to help our young unemployed people. According to the figures released in February by the Office for National Statistics, youth unemployment in the United Kingdom rose to almost 2.5 million and hit a record high. While UK unemployment reached a rate of 7.9%, youth unemployment was marked at 20.5%. Those figures mean that one 16 to 25-year-old in five is out of work—an increase of 66,000. The amendment would provide apprenticeships that would help those young unemployed people.

Huw Irranca-Davies (Labour, Ogmore)

In light of the amendments, will my hon. Friend join me in encouraging the Minister—I am sure that he is minded to do this—to make certain that apprenticeships and skills enhancement measures are delivered not only by the very good academies in the big six, including British Gas Centrica, but by those linked to higher and further education colleges, such as Pencoed skills academy and those in Aberavon and elsewhere in the country? Training would then not be dominated by utility players, and a wider range of players could deliver the apprenticeships.

Luciana Berger (Labour, Liverpool, Wavertree)

I thank my hon. Friend for his contribution. I know from speaking to one of the big energy companies that it has a skills base. It is training 1,300 people this year, although that will not meet the scale of the challenge that the Government are expecting. Having recently visited Liverpool community college in my constituency, I know the desire of its young people to be trained. There is no lack of young people who want apprenticeships; the challenge is to make such opportunities available.

Graham Jones (Labour, Hyndburn)

I wish to add to that list. We must involve the private sector. This debate gives me the chance to mention the training organisations in the north. We have talked about FE colleges, but let us not forget the training providers in my area, such as Training 2000 and North Lancs Training Group, which are as big as colleges. Does my hon. Friend agree that the private sector and private sector training organisations are keen to deliver what is a mammoth scheme?

Luciana Berger (Labour, Liverpool, Wavertree)

I thank my hon. Friend for his contribution. The point of the amendment is to ensure that as many businesses as possible—be they in the private or public sector—offer such opportunities, and to ensure that the apprenticeships go beyond the 1,000 green apprenticeships that have already been announced. We would like more of the 350,000 apprenticeships that the Government have spoken of attributed not only to the green sector, but specifically to the green deal.

Under amendment 31, consultation would take place with industry, trade unions and key stakeholders to provide a plan for the recruitment and training of green deal assessors. Its aim is to ensure that the number of trained assessors meets demand, that those assessors are trained adequately, and that the best recruitment and training plans are implemented through the consultation of relevant groups, including trade unions. At present, the green deal does not guarantee that proper steps will be taken to ensure adequate recruitment to produce the necessary number of assessors to match anticipated demands. Likewise, the green deal does not include a solidified training plan for assessors, generated through consultation with expert groups, including unions and key stakeholders.

My earlier amendment on the assessment tool referred to the fact that the assessment requires skilled assessors. The green deal will require higher levels of assessment, and so more training for advisers and industry-recognised standards such as the energy performance certificate. The Government have talked about the army of assessors that will be needed if we are to meet the ambition of the scheme. Where will those assessors come from, if the planning has not taken place to ensure their recruitment and training? The Secretary of State has said that the green deal is likely to support 100,000 jobs by 2015, and up to 250,000 when it reaches its peak. Is there a plan to ensure that those people are appropriately trained?

I raise that point in the context of what happened in Australia. I am sure that hon. Members on both sides of the room will have heard of the Australian experience. We have heard many comments about it from the Secretary of State and the Minister. Australia’s green loan scheme was halted specifically by a lack of proper plans for training and implementation. The Auditor-General’s audit report No. 9 of 2010-11 stated:

“The primary cause for the administration problems encountered by the program was, to a very large extent, an absence of effective governance by the Department of Sustainability, Environment, Water, Population, and Communities during the program’s design and early implementation…and did not sufficiently identify and manage other key risks to effective program implementation in a timely manner. These risks included: the quality of assessor training posed by the absence of an accredited training course; the lack of policy or administrative measures to control assessment demand; and staff in the Green Loans team collectively not possessing sufficient skills and experience in key areas of program management”.

Underestimation of demand and lack of assessor recruitment led, in part, to the collapse of Australia’s programme. That collapse meant that trained assessors had wasted their money on a programme that left them without other job prospects.

In subsequent amendments, I will go into more detail on where the Australian programme went wrong, and what lessons we can take from it to strengthen the green deal. Some 100 people lodged claims for compensation after they were put out of work. I would not want the Government to undergo a similar experience. Those applying to be an assessor typically spent $3,000 on training, insurance and membership. With the scheme set to shut down early, their future was uncertain. The amendments seek to ensure that the Government consult effectively with industry, trade unions and key stakeholders to provide an effective plan for the recruitment and training of green deal investors.

Gregory Barker (Conservative, Bexhill and Battle)

I congratulate the hon. Lady on raising this issue. If nothing else, it serves to remind the Committee just how important the issues of training, standards and assessment are. I can say at the outset that we have absolutely no intention of allowing the green deal to go down the Australian route. I have been very mindful, since its inception, of the need for robust consumer safeguards, a strong regime around installation, and—this was the hon. Lady’s key point—a properly trained cadre of installers and assessors; I think that we are at one with her on that. The green deal will succeed or fail on the success and calibre of the people who are trained to recommend and then install the measures.

I would like to take amendments 31 and 33 together, because they relate to the need to ensure that the green deal is supported by comprehensive assessments carried out by appropriately trained assessors—that is one of the Government’s priorities. On amendment 31, I assure the hon. Lady that in clause 3, provision is already made for secondary legislation that sets out the qualification and training requirements for assessors.

The code of practice and the overall authorisation scheme will set out, in considerably more detail, the training requirements of assessors, and will involve full consultation with a broad range of stakeholders in their development. I must also clarify that, because the green deal is a market-led initiative, Government will not provide a plan for the recruitment of assessors, but will be laying down measures to ensure their quality.

On amendment 33, we certainly support the principle that the assessment must be of robust and high quality and able to deliver a reliable indication of suitable measures, including those likely to be eligible for green deal finance, to help enable householders and businesses to make informed decisions. It is also essential to deliver estimated savings that can be used by the green deal provider to provide their quotes and the final green deal plan. However, clauses 1 and 4 already require a qualifying assessment to be carried out, and secondary legislation will detail specifications for the standardised methodology and scope of those assessments. Members can be reassured of the intent that the specifications will address the need for a reliable and standardised approach.

Amendment 37 seeks to ensure that, before making regulations or an order, the Secretary of State must report to Parliament with proposals on a specific green deal apprenticeships programme. I confirm to the hon. Member for Liverpool, Wavertree that we have already announced funding for up to 1,000 green deal apprentices, and we will review that commitment as the green deal develops to ensure that we have enough skilled people entering the work force. We fully recognise the value of modern apprenticeships, and the coalition has made two significant announcements to boost the supply of apprentices across the whole UK economy.

I assure the Committee that we will continue to work closely with the sector skills council, other training providers and industry stakeholders to ensure that the supply chain is ready by the time the green deal launches at the end of 2012 and that industry can capitalise on the market opportunities that the green deal will present.

Huw Irranca-Davies (Labour, Ogmore)

Has the Minister done an assessment of the anticipated number of required apprenticeships or other skilled people in year 1, year 2 and year 3? As I continue to speak, the Minister might receive rapid inspiration that will enable him to tell us. The figure of 1,000 is good and a step forward, but I wonder whether that reflects a slow implementation in the first couple of years of the scheme.

Gregory Barker (Conservative, Bexhill and Battle)

We have created a skills forum to bring together key industry players, who are in the process of building a model along those lines. Ultimately, it is much better that our assumption should be informed by the industry itself and by practitioners, not by—I mean no disrespect to my officials— Department of Energy and Climate Change civil servants. We are drawing on the private sector’s knowledge for that and it is working with us. I cannot give the hon. Gentleman a reliable figure at this moment, but the issue will feature in secondary legislation and I anticipate that further announcements will be made.

David Anderson (Labour, Blaydon)

I am very pleased with the Minister’s response. He should also talk to local authorities, which, over the past five years, have gone through the decent homes work. Some of that is not just about being a craftsman, but about relating to the public in a way that people may not have in the past. There are the unforeseen circumstances such as going into a home to re-lay pipes and ending up disturbing asbestos. We can learn things from the experience of what has been a big programme of work over the past five years.

Gregory Barker (Conservative, Bexhill and Battle)

That is absolutely right—the hon. Gentleman makes a good point. If we go into those older homes and if we are going to be more ambitious, there will certainly be things such as disturbing asbestos. This is not just about simple installations. It is not like popping some solar panels on the roof. It is an intrusive process, into the fabric of the building. The hon. Gentleman makes another interesting point. It is not just about having the skills to do the job; it is also about having the interpersonal skills to reassure the householder of the merits of the scheme and to assure them as the work is going on. It can be intrusive or even distressing for people to see their home being knocked around. It is important that we have a range of skills and to not just think that this is about fixing certain products into the home. That is why we are working with the industry. The forum that we have created is mindful of those issues.

I understand that it is frustrating for members of the Committee that we do not have all the detail at this stage of the green deal process, but it is the very nature of how we are doing it, by bringing forward the broad framework in this legislation and the detail in secondary legislation. There will obviously be a whole process leading up to that, involving full stakeholder consultation. That is not just a glib nod towards standard consultation; we want to have a collaborative approach in building these regulations, in creating this framework and creating these robust standards. That means working closely with those who understand best practice in the industry and understanding how we can further drive that forward. I hope that the hon. Member for Liverpool, Wavertree will feel reassured by those points. On that basis, I urge her to withdraw her amendment.

Luciana Berger (Labour, Liverpool, Wavertree)

I thank the Minister for his comments, but I will come back to amendments 33 and 37, on the green deal apprenticeship programme and the comprehensive assessment tool. Those two elements are so important that they should be enshrined in the Bill. The comprehensive assessment tool should be enshrined because the assessor coming into someone’s home is a once-in-a-lifetime opportunity, and if they do not give a reliable estimate of the energy that the person will save, the whole of their green deal is rendered useless. We want to see green deal apprenticeships work. I appreciate that the Minister has said that the Government will provide the plan for the recruitment and training of the green deal assessors, we want to see a bigger ambition. Although we welcome the 1,000 green deal apprentices, that is a tiny fraction of the 350,000 national apprentices. We want the Government to do everything that they can to challenge and address youth unemployment. This is a fantastic opportunity, and we want to see it enshrined in primary legislation.

Luciana Berger (Labour, Liverpool, Wavertree)

I beg to move amendment 39, in clause 3, page 4, line 26, leave out ‘may’ and insert ‘must’.

David Crausby (Labour, Bolton North East)

With this it will be convenient to discuss amendment 40, in clause 3, page 4, line 41, leave out ‘may’ and insert ‘must’.

The rest of the debate is in Hansard.