Mr.
Ainsworth: I am grateful to the Minister and apologise for
interrupting her again. I vividly recall visiting the hydro project in
New Mills, Derbyshire recently. There was a plan to install an
Archimedes screw into the river there, which was going to power the
local primary school. The plan ran into all sorts of problems with the
Environment Agency, which insisted that an abstraction licence was
required, even though the water was simply going to be deviated a few
yards, turn through a screw, and be put back
in. I
accept that it might be rather a white-knuckle ride for local
fish—if they had knuckles—to go through the Archimedes
screw, but I cannot believe that any serious environmental damage was
going to be done. That is the sort of problem that people encounter,
and I hope that the Government will take these issues seriously and get
some reform in place.
Joan
Ruddock: Let me assure the hon. Gentleman that we have
taken this seriously and that we believe, as he does, that the system
could be very much improved. I am pleased to tell Committee members, on
behalf of DEFRA, that we can commit to a complete review of the
environmental consent process for micro-hydro power. Hon. Members will
be delighted to hear that the aim of the review will be to develop
recommendations for a streamlined system that is quick and easy for
developers, but which maintains a high level of environmental
protection. The
review will be undertaken by the Environment Agency—working in
co-operation with DEFRA—within a year of the Bill coming into
force. It will take account of any ongoing, or future, work. While the
Government cannot support amendment (a), I hope that hon. Members will
accept the Government’s commitment to this important sector. I
hope that the hon. Gentleman will feel able to withdraw the
amendment.
Charles
Hendry: That is a welcome proposal and we are keen to
support micro-hydro power. However, can the Minister clarify for the
Committee what, exactly, will be delivered within a year? Is it the
policy that will be put in place, a document for consultation, or a
review? Exactly what will have happened within 12
months?
Joan
Ruddock: I cannot do more than repeat what I said to the
hon. Gentleman, which is that the review will be undertaken by the
Environment Agency, working in co-operation with DEFRA, within a year
of the Bill coming into force. The review will take account of any
ongoing and future work. This is a review which is directed at getting
a new system, so that developers have a streamlined system that is
quick and easy for them. It will provide the recommendations for that
to happen. That is as much as I am able to tell him at this stage; it
is a DEFRA lead, and, having worked in the area of environmental
permitting, I know that there is no doubt this is a very complex
matter. My words are on the record as to what we seek to achieve, and
that is to get improvements into this area so that these technologies
can be put in place much more easily and quickly—clearly having
to use planning permission, but dealing with some of the barriers and
frustrations that hon. Members have raised here
today.
Mr.
Ainsworth: I am most grateful to the Minister for her
response to what has been a worthwhile debate. I wholly agree with her
analysis that this new clause is potentially a very major driver,
putting real weight behind air source heat pump technology and micro
wind, and that offers very exciting opportunities for job creation,
carbon reduction, and cost reduction as well. So I warmly support the
new clause, and I thank the Minister also for her response to the
Liberal Democrats’ amendment, which I think has some nuggets of
hope contained within it.
Question
put and
negatived. Clause
5 accordingly disagreed
to.
Clause
6Council
tax and non-domestic
rates Question
proposed, That the clause stand part of the
Bill.
Mr.
Ainsworth: No nuggets of hope here, I am afraid. The
purpose of clause 6, as originally drafted, was to end the anomalous
position whereby people or businesses who improve their properties
through the installation of micro power technologies may suffer on
revaluation an increase in their tax. It strikes me as logically the
case that this acts as a disincentive to people and businesses who want
to do the right thing. It therefore struck me that this Bill was the
right vehicle in which to raise this matter, to test the
Government’s thinking on it. I confess I had no great hope of a
positive outcome. An unseen hand drafted me a speaking note on this
issue, and the fact is that I have conceded that clause 6 will probably
not form part of the Bill.
The unseen
hand drafted the
following: “This
deletion is clearly the idea of counter-revolutionary forces in the
civil service. However, who am I to oppose the forces of
reaction?”
The Minister, I am
afraid, finds herself in the position of the forces of reaction this
afternoon.
I do accept
that where households are concerned—because revaluations are,
thankfully, pretty rare—a relatively small number of people
might be affected by this. But there may be consequences for small
businesses, particularly where revaluations are rather more common. So
I do remain concerned about the principle at stake here: we should not
be penalising people who are doing the right thing. For the sake of the
rest of the Bill, however, I am reluctantly prepared to ditch clause 6,
but not until I have heard the Minister produce a halfway decent,
plausible excuse for the Government’s approach to this important
matter.
Colin
Challen: It is a slight matter of regret that that little
speech had to be made, but I will go along with the proposer of the
Bill in his conclusion on that. I do hope that we will get a very
positive reply from the Minister, because we are considering—at
the same time as we are looking at this Bill—other possibilities
for changing council tax to recognise energy efficiency measures, and
some local authorities and British Gas and others have participated in
pilots where people have been rewarded for energy efficiency in their
homes with reductions in council tax. This proposal is exactly of that
order. If people are going to go out spend money on good things, they
should be rewarded for it. I hope that the Minister will be able to
tell us how the Government are going to approach this in the absence of
this clause.
Martin
Horwood: I have always wanted to stand against the forces
of reaction and I am happy to join the hon. Member for East Surrey on
the barricades in favour of many revolutionary measures, but this one
in particular, any day. It seems like an eminently sensible measure to
introduce. I have heard the Government’s excuses and none seems
very convincing. One such excuse is that energy efficiency and
mircrogeneration is unlikely to sufficiently increase the value of a
property to push it beyond a particular council band boundary. I cannot
see how the Government could possibly know that, because if it had only
been marginally below it to start with, the prospect of buying a
property with much lower energy bills than its neighbour seems to be
eminently likely to push it over a small marginal increase that would
take it into a higher band.
Another
excuse has been that the council tax system already disregards
improvements until a property is sold. This is a long-term piece of
legislation and one that not only applies when a property is first
sold, but in subsequent sales as well. As the hon. Member for Morley
and Rothwell quite rightly said, we ought to reward and incentivise
such improvements and not, potentially, punish
them.
Joan
Ruddock: There is no challenge there then, is there? I
just say to the hon. Member for East Surrey that, as well as the unseen
hand, this will not be the first time that he has accused me of being
the forces of reaction, but I remain named as such because of what I
have to say.
Mr.
Ainsworth: I do not know who the hon. Lady is referring
to. I was very careful to read out a redacted version of what the
unseen hand had written.
Joan
Ruddock: Let me just say that my colleague, the former
Minister of State for Energy and Climate Change, my right hon. and
learned Friend the Member for North Warwickshire (Mr.
O'Brien), made it clear on Second Reading that the Government could not
support the inclusion of this clause in the Bill. I guess that the hon.
Member for Cheltenham may be, in listing the so-called excuses, quoting
from my right hon. and learned Friend. I will, I am afraid, have to
make the same arguments today that were made by right hon. and learned
Friend on Second Reading, because of course these matters have not
changed. Therefore, we have to oppose, as the hon. Member for East
Surrey anticipates, that clause 6 should stand part of the
Bill.
Clause 6
requires that an increase
“in the value
of a property arising from the installation of an energy efficiency
measure or a microgeneration system after the day on which this Act is
passed shall be disregarded for the purpose of assessing council tax or
non-domestic rates payable on that
property.” Council
tax, as we all know, is a property tax based primarily on the value of
a person’s home. There are no plans to link the level of council
tax that a person has to pay to how energy-efficient their home and
property is. At present, making changes or improvements to a property
that increases its value cannot result in a higher council tax band
until the property is sold, as the hon. Member for Cheltenham said. An
increase in the band will take place only if the alterations add
sufficient value to the property to move it into a higher band. He
disputes that that is likely; the advice that we have from the
Department for Communities and Local Government is that that is the
case.
The value of
a dwelling depends on a number of factors, including its size, lay-out,
character and locality. Generally, any improvements made to a property
will not be taken into account for banding purposes unless, as I said,
the property is sold. Even then, the alterations will not necessarily
mean an increase in the council tax band. That will happen only if the
alterations have added sufficient value—reflecting 1991
values—to push the property into the higher
band.
Colin
Challen: If somebody were to consider purchasing a house
that may fall into a higher property band, then that would act as a
disincentive—a perverse disincentive, in fact—because
they might choose another property which may not fall into that
category. This needs careful
re-examination. 4.15
pm
Joan
Ruddock: The argument is that people choose properties for
a huge variety of reasons. Location is normally a prime issue and, as
the hon. Gentleman rightly suggests, people will be influenced by have
a whole list of subsidiary factors. If they have the prospect of buying
an energy-efficient home, they might well way weigh in the balance the
comparison between the cost of their energy and the cost of their
council tax. They might still favour the more energy-efficient home,
even though there might be a slight difference in the council tax band.
It is a relatively small factor. I do not think we can anticipate its
being such a major one as to determine council tax banding, as opposed
to energy-efficiency being a significant factor in people’s
choice of home. Clearly, we are not going to agree.
I will say to
all hon. Members, that, having worked on a variety of issues across
Government to try to apply positive measures to homes, there is always
the call to use the council tax system as a means of rewarding people.
I understand that people who have to deal with financial matters are
reluctant to pile more and more factors into how council tax banding
should be set. It is extraordinarily complex and there can be rewards
that are quite different and separate.
However,
that said, if local authorities want to incentivise the use of
microgeneration in homes, they can use their own existing powers. Those
are the council tax discounts powers, under section 13A of the Local
Government Finance Act 1992, for properties with higher standards of
energy performance. The council would set a level of council tax
reflecting that, which would then be revenue neutral to the authority.
Taxpayers not qualifying for the discount would, effectively, subsidise
those that do, providing a further incentive for people to
act.
Mr.
Ainsworth: I hope that the Minister will come to the issue
of non-domestic rates, where what she has said will not
apply.
Joan
Ruddock: I will conclude on the matter of local
authorities and the scope they have. We are aware that, already, some
local authorities, with assistance from British Gas, have provided a
one-off rebate on council tax bills to council taxpayers who have taken
certain measures to improve energy efficiency in their homes. So there
is some scope—there is a means of councils incentivising, and,
consequently, encouraging other home owners to do the same as those
being rewarded.
On
non-domestic rates, microgeneration equipment is already ignored in the
assessment of rateable value until the next revaluation. The exemption
was introduced on 1 October 2008. It will also apply to any 2010 rating
list, so that equipment fitted between 1 April 2010 and 31 March 2015
will not be assessed for rates until
2015. I
am told it is unlikely that fitting microgeneration equipment at
business premises would lead to a reassessment of their rateable value.
Nevertheless, the exemption was introduced to remove uncertainty, and
provide clarity and reassurance to businesses working to reduce their
carbon
footprint. I
know that what I have said will not meet with favour in the Committee,
but that is the position of the Government, it will not change. We are
opposed to clause 6 standing part of the
Bill.
Charles
Hendry: I am very uneasy about what the Minister has said.
I should have thought that one of the reasons people install
microgeneration, and the sort of technology under discussion, is that
it will increase the value of their homes—and not just because
they want to do the right thing. What the Minister proposes could be an
absolute block on the sale of such houses. Even if it were a small
minority of houses, it might become known that they have moved into a
higher council tax band. That extra payment in council tax might negate
the feed-in tariff benefits that the householder derives. Therefore,
many people choosing between two houses—one that has been
equipped with these technologies and one that has not—will say,
“I will go for the one that has
not, because there is no risk that I will then be put into a different
council tax band.” We could put a black mark on houses which
have done the right thing. That seems a peculiar situation to be
in.
The other
thing—and this is a practical point—is that the Minister
talks about the council tax being based on the 1991 valuation of those
properties. It is therefore expected that a valuation from 1991 will be
required, based on technology which was not invented until 10 years
later. What is the 1991 value of an air source heat pump? There cannot
be one because it was not invented. How, in practice, is this going to
work?
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