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Viscount Mersey: My Lords, I gave notice that I should like to say a few words in the gap.

I must declare an interest as the immediate past president of the Combined Heat and Power Association.

I welcome the Bill introduced by the noble Baroness, Lady Hamwee. I interject to reinforce what she said. Although this is a short Bill, it is very important. Energy conservation is the perfect answer to global warming. It is a much better answer than windmills, solar heating, wave power or a barrage across the Severn. The best way to reduce carbon dioxide emissions is not to emit it. It is as simple as that. That is what we achieve when we conserve energy.

When I was president of the Combined Heat and Power Association I toured Scandinavia. I was encouraged by the extent of energy conservation there. For example, in Finland loft insulation, double glazing, triple glazing and quintuple glazing (which was the most I came across) reduced energy consumption to a high degree. So economic is heating in Finland that it costs the same to heat air up to room temperature there as it does in southern Italy. However, in this country it costs a lot more. In the United Kingdom we waste energy more than in any other west European country. Therefore any measure which achieves a saving is a measure of excellence. Quite simply, that is why I support the Bill.

6.20 p.m.

Lord Skelmersdale: My Lords, I had not meant to pre-empt my noble friend by jumping into the gap in the list of speakers, which, in this instance, seems to come at a rather strange place with regard to the normal modus operandi of your Lordships' House when discussing matters on Second Reading.

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First, I congratulate the noble Baroness, Lady Hamwee, on picking up her honourable friend's Bill, which went through another place with some speed. There is no doubt that perhaps the major gap in energy conservation matters in this country is that no one has overseen it on a local scale. Over the years, under all governments, local authorities have sometimes done valuable work especially regarding council houses, and especially in the houses of those people on what is now called income support. Nonetheless, there has been no overall consideration on a local basis.

Two points occurred to me when considering the Bill. First, the provisions of the Bill will be a cost to local authorities. I hope that the Minister or the noble Baroness when she winds up will be able to say from where the funds to meet those costs to local authorities will come and whether that cost will be an amount to be included in the standard spending assessments of local authorities in the normal grant format.

Secondly, at the time that the gas and electricity industries were privatised, the Government set up the Energy Savings Trust. It was due to be funded out of some of the profits from the privatised energy utilities. In recent months—it is just over a year—I understand that somewhat of a blight has been put on the funding of that organisation, which is chaired by my noble friend Lord Moore, because the Director-General of Ofgas has been making somewhat deprecatory noises. Indeed, I understand that gas funding has not been going into the trust in the way anticipated. I hope that my noble friend will be able to say something about that when he responds to this very worthy Bill.

6.22 p.m.

Lord Ezra: My Lords, I have no hesitation in warmly supporting the Bill in this debate so ably introduced by my noble friend. As the noble Lord, Lord Skelmersdale, said, it was moved with speed by my honourable friend in another place.

It must be admitted that much has been done in recent years to stimulate energy efficiency. However, the Bill fills an important gap. It can be capable of bringing together many existing initiatives, introducing new initiatives and expanding and combining them in a way which could lead to better results.

The Bill applies only to domestic heating. However, that is an essential part of the total energy usage of the country. It represents the most diverse and complex area because of the multiplicity of domestic dwellings. As my noble friend pointed out, at least a quarter of CO 2 emissions come from domestic dwellings. Half of final energy is used in buildings of various types in this country. The bulk of those are domestic dwellings. Therefore there is no doubt about the importance of the Bill.

I referred to the various initiatives which have already been taken. Perhaps I may mention in particular a body in which the noble Baroness, Lady Hilton, and I are much involved, Neighbourhood Energy Action. That organisation has existed for over 10 years. Its prime purpose is to insulate the homes of people on low

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incomes, in particular the elderly. I am glad to say that well over a million homes have already been insulated in that way and the lifestyle of those people fundamentally altered for the better. Through the funding of the Home Energy Efficiency Scheme (HEES), the Government have much increased the available resources for this purpose. I understand that in 1995-96 the rate of improvement in insulation for homes in that category could rise to something like 600,000. As my noble friend pointed out, there are 8 million homes in this country which need such treatment, so there is a long way to go.

There are, of course, all the other homes whose owners could probably afford to introduce effective insulation and other energy efficiency measures but who may not have the incentive or the knowledge to do so. That is where the surveys can be particularly useful. Like my noble friend, I regret that no target is mentioned in the Bill. A target of a 30 per cent. improvement was originally included but after much debate in another place it was eliminated. I am a little surprised, because the Government have introduced targets for many purposes—CO 2 reductions, energy efficiency savings in government buildings, recycling of domestic waste, reduction of road accidents and many others. People understand targets; they motivate and stimulate. I would have seen no harm in including a target.

My noble friend pointed out that those local authorities which mainly object to the use of targets are not those which have achieved most. If one talks about a target of 30 per cent., those which had gone some way to achieve it would be able to take that factor into account. However, as I understand it—no doubt the noble Viscount will confirm this—in the guidance which will be given to local authorities a target of that order will be mentioned. That is how I read the sense of the debates in another place.

I hope that the various reports will stimulate home energy rating. The rating of individual homes is what really counts. The Government have standardised the assessment procedure (SAP) for home energy ratings. There were two or three different systems; they are now standardised so that they can be more effectively applied. I am very pleased to learn that the Government intend to include an obligation in new building regulations that all new homes should include a standard energy rating. That will mean that those homes will be built to a much higher energy saving standard than previously.

For the SAP grades, 100 is the maximum. The figure of 70 would represent a very good achievement. I would expect new homes to be of the order of 60 per cent. to 70 per cent. From sample surveys taken in various parts of the country, the average efficiency in existing houses on the SAP basis may be between 25 per cent. and 30 per cent. I have had experience of this type of assessment in my own home. I rather pride myself on my knowledge of energy efficiency. I had thought that I had done almost everything. However, as a result of the survey I found that I achieved a further 10 per cent. saving through relatively little expenditure.

While it is very satisfactory that the assessments will be included with regard to new building, new building represents only about 5 per cent. of the total amount of

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buildings in this country. What is important is that the assessments should be extended to existing buildings. That can best be done as part of the mortgage lending process. Building societies have to make a survey of buildings before they advance a mortgage. I am glad that two building societies—the Nationwide and the Halifax—already include energy rating in their surveys. Since it can involve little extra expense, I hope that as many as possible of the other building societies and financial institutions which lend money for mortgage purposes will be persuaded to move in that direction. Perhaps the noble Viscount can indicate what the Government are doing to persuade them to move towards that.

The labelling of appliances which use energy in the home is important. More and more fridges, cooking and heating appliances and so on are being used. I am glad that the Government have already adopted EC regulations on the energy labelling of fridges and freezers. There is also the labelling of domestic boilers. The whole range of domestic appliances should be labelled. On the Government's own figures, the savings which could arise from that amount to something like 40 per cent. if the right appliances are chosen.

In my opinion, the Bill gives a further major boost to promoting energy efficiency in the home. For five reasons, it is vital that it should get through the House as quickly as it did in another place, if not even more quickly. First, it could help to save lives. My noble friend referred to the problem of fuel poverty. The fact is that in this country the difference in the mortality rate in summer and winter is larger than in any other Western European country. We have a difference in the mortality rate of the order of about 20 per cent., which represents 50,000 people. We are talking of many more people dying in winter than in summer. The average for the Continent is in single figures; in France, for example, it is 6 per cent. In some Scandinavian countries—notably Denmark, where traditionally people attach great importance to home insulation and improvements in heating—there is no difference between the death rate in summer and that in winter. Thus I have no hesitation in saying that the Bill will help to save lives.

Secondly, it will help to save money. Up to one-third of fuel bills could be cut by carrying out the surveys indicated in the Bill and applying the recommendations that the surveys will contain. Thirdly, it will increase comfort in the home. There is no doubt that much of the energy we use goes to waste through gaps in windows and doors, through badly insulated roof spaces and so on. Fourthly, it will reduce CO 2 emissions. We have heard about the substantial amount of CO 2 emitted from domestic dwellings. Finally, it will stimulate employment in the sector which provides insulation and other improvements in the home. For all those reasons, I hope that the Bill will achieve a speedy and unanimous passage through the House.

6.33 p.m.

Baroness Hilton of Eggardon: My Lords, we too welcome this straightforward and sensible Bill. Other speakers have already mentioned the many advantages

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of having a national strategy on energy saving. It would not only bring benefits through savings to individuals and the nation in terms of lower costs in fuel bills; it would also assist to reduce the problem of global warming. It would improve the health of old people and also of children. There is substantial evidence that, particularly in Scotland, allergic reactions to mould in houses cause bronchitis and colds which profoundly affect children in their ability to go to school and become educated and, therefore, ultimately to become useful working members of our society. The Bill also indirectly assists with employment in that one hopes that more houses will be insulated, which will provide jobs.

As the noble Baroness, Lady Hamwee, said, the Bill is widely supported by local authorities and all the other organisations which are worried about the right to warmth, the right to energy and the right to fuel. The noble Viscount, Lord Mersey, mentioned Scandinavia which has a much better record than we do on this front. The extent to which their houses are double or triple glazed provides a shining example of what can be achieved on the energy saving front.

We regret that to some extent the Bill was watered down by a series of compromises elsewhere: "duties" became "powers", "shall" became "may". It was not felt possible to have a specific target, though obviously individual local authorities could set targets for themselves. We hope that guidance from the Minister will encourage local authorities to do so because that often encourages action; plans are much more effective if people set targets for themselves.

We believe that many local authorities are achieving good results on the energy conservation front and encouraging the insulation of homes. As the noble Lord, Lord Ezra, said, organisations like the Neighbourhood Energy Action group, with which we are both involved, have done a good deal to insulate homes in our country. Nevertheless, there is a patchiness about the provisions. The Bill should serve to provide a comprehensive national strategy, with much better co-ordination, and the opportunity for individual local authorities to learn best practice from each other. It will therefore help to drag those local authorities which lag behind up to the standards of the best local authorities. In that way, many more households will be able to conserve energy and afford adequate heat to keep themselves warm. As the noble Lord, Lord Ezra, said, fewer old people will die in our winters. We shall have a healthier, better warmed nation which contributes less to global warming and which conserves energy, therefore achieving savings in the budgets both of individuals and of the nation as a whole. We welcome the Bill.

6.36 p.m.

The Minister of State, Department of the Environment (Viscount Ullswater): My Lords, I should like to start by congratulating the noble Baroness, Lady Hamwee, on introducing the Bill and on setting out its provisions so clearly. I welcome the opportunity the debate offers to restate the Government's commitment to energy efficiency and to outline the Government's views on the Bill, which I hope will have a smooth passage to the statute book.

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The environmental importance of energy efficiency has been highlighted recently by the First Conference of Parties to the UN Climate Change Convention in Berlin. The Government are confident of meeting, and indeed exceeding, the UK's existing commitments up to the year 2000 under the convention. The UK Climate Change Programme was the first national programme to be submitted under the convention. The Berlin conference adopted a mandate for negotiation by 1997 of further commitments for the period beyond the year 2000 to combat the threat of global warming. The UK is calling for all developed countries to agree to aim to reduce total greenhouse gas emissions to a figure between 5 per cent. and 10 per cent. below 1990 levels by the year 2010. Achieving reductions in total greenhouse gas emissions represents a challenge when set against projections of likely economic growth. However, the prompt and successful implementation of the UK's existing commitments and the continuing effects of measures already taken put the UK in a strong position to start to work towards achieving such an objective.

What I have said concurs with everything that noble Lords have already said, in that the UK is well placed and is seized of the effectiveness of energy efficiency. Talk of climate change may seem to be on a rather different level from the Bill before your Lordships, which is concerned with the energy efficiency of homes. However, as the noble Baroness, Lady Hamwee, advised the House, over 25 per cent. of carbon dioxide emissions are attributable to energy used in the home. Therefore, it is a sector which cannot be ignored in considering the environmental impact of energy use. It is also one where the individual can make a direct contribution. Every one of your Lordships is in a position to influence the amount of energy used in his or her home, as the noble Lord, Lord Ezra, indicated in his speech. But of course the benefits of reduced consumption are not only environmental. It also brings about lower fuel bills or increased comfort levels, with fuel providing useful heat rather than being wasted because of inadequate insulation or draught-proofing.

The Bill's definition of energy efficiency measures is rightly a broad one, covering information, advice, education and promotion, as well as making grants and loans and carrying out works. In fact the main challenge in seeking to improve energy efficiency in the home is in changing behaviour and, where appropriate, purchasing habits. It is important to improve awareness among individual householders of how they can reduce their fuel bills and be more energy efficient.

There is a role for central government in increasing awareness of the opportunities for increasing energy efficiency in the home. The current Wasting Energy Costs the Earth initiative is part of that awareness programme. Some of your Lordships may have seen the television and press advertisements featuring a family of dinosaurs or the associated promotions of energy-saving materials in shops. The campaign is intended to educate householders about the link between cost-effective energy use and the threat of climate change. It is also intended to bring about changes in behaviour, drawing

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attention to simple no-cost or low-cost measures such as draught-proofing, loft insulation, low-energy light bulbs and others. With such measures, an average household can save about £100 on fuel bills.

Of course there are some, particularly the elderly, who may need financial or practical help or both with energy efficiency measures. The Home Energy Efficiency Scheme provides grants for basic energy efficiency measures for householders over 60 and those receiving certain benefits. The HEES budget received a 45 per cent. increase, to more than £100 million, this financial year.

There are many other schemes and projects being run and managed by the Department of the Environment's Energy Efficiency Office designed to improve energy efficiency in homes. For example, it is working closely with mortgage lenders to encourage them to incorporate energy ratings into their survey reports and to offer green loans or other financial services to help home owners take measures to improve energy efficiency. The noble Lord, Lord Ezra, indicated that from his knowledge the Nationwide and the Halifax building societies had already undertaken this. My honourable friend has had a meeting with mortgage lenders to pursue this very appropriate avenue of approach.

Progress is also being made with introducing energy labelling for domestic appliances so that consumers can make an informed choice between available models. Again that was mentioned by the noble Lord, Lord Ezra. I may tell the House that the first energy labelling directive came into force in the United Kingdom on the 1st January. This requires large energy information labels to be fixed to all domestic freezers and refrigerators displayed for sale. Directives covering similar labels for washing machines and tumble-dryers are to come into force in the United Kingdom by 1st March 1996. More products are to follow. The European Commission has recently proposed a directive on minimum energy efficiency levels for refrigerators and freezers with a view to removing the most inefficient products from the market. I believe that we are taking the right steps in the right direction.

The Bill, however, concentrates on the important role which local authorities can play in encouraging energy efficiency in homes. They are ideally placed to identify what needs to be done in their own communities and to know what local networks are available for getting messages and advice across to people. There will be scope for involving schools, businesses, libraries, local newspapers and no doubt many other organisations. Housing authorities are of course also directly responsible for their own housing stock, and the Government will continue to look specifically at energy efficiency measures in the context of housing investment programmes. The noble Baroness, Lady Hilton, called that a national strategy and I would not disagree with the words that she used.

As the noble Baroness, Lady Hamwee, has already said, the Bill will focus local authorities' attention on measures which would produce significant improvements in energy efficiency for housing in their areas and require them to draw up reports on those measures and send them to the Secretary of State. The

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Government believe that this will lead to the production of cost-effective assessments of where energy may be being used inefficiently and help to bring about real savings and affordable warmth for all households. The Secretary of State will be able to provide appropriate guidance to local authorities and to set timetables for them to report on progress. He himself will also be required to report to Parliament on what local authorities have done and on certain steps he has taken.

There was considerable discussion in another place about whether the Bill should include specific targets for local authorities. Of course there is no point in a measure which will not achieve anything at the end of the day, and setting targets is an excellent way of concentrating effort: I would not for one moment dispute that. The Government are certainly anxious that local authorities' plans should, in the words of the Bill, identify measures which will lead to significant savings.

However, the Government's view, which was accepted in another place, was that it was best to leave specific targets to the guidance to be produced under Clause 4 of the Bill. I repeat to your Lordships, and specifically to the noble Lord, Lord Ezra, and to the noble Baroness, Lady Hilton, the assurance from the Government that was given in another place: we shall be looking for savings of the order of 30 per cent. overall, and the guidance will make this clear. A target on the face of the Bill would be inflexible and make no distinction between those authorities which have already taken an active approach to energy efficiency and those which have not. The noble Baroness, Lady Hamwee, questioned that, but I believe that that is indeed one of the problems. The department will be talking to local authority associations and others about guidance over the coming weeks and months.

The noble Lord, Lord Ezra, talked about the energy rating of homes. As he indicated, the standard assessment procedure for the energy rating of homes is now a fairly scientific process which has been developed recently. This, as he indicated, can measure the energy efficiency of a dwelling on the scale of one to 100. The SAP, as it is called, has already been incorporated into the building regulations, as the noble Lord indicated, and from this summer all new dwellings will be required to have a SAP. The SAP also provides a ready-made method of measuring the improvement in the energy efficiency of dwellings and it is very likely that some of the targets we shall set local authorities under this Bill will be based on SAPs.

My noble friend Lord Mersey, agreeing with the Government on the requirement for energy efficiency and what could be done with combined heat and power, will understand that the Government fully recognise the energy efficiency and the environmental benefits of combined heat and power. I am sure that, as a past president of the Combined Heat and Power Association, he will understand that, through the Department of the Environment's Energy Efficiency Office, we shall continue to promote and encourage its use in all cost-effective areas. CHP has become an integral part of the department's strategy for the 1990s and beyond. As part of the Climate Change Programme, my right honourable friend the Secretary of State for the

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Environment has set a CHP target of 5,000 megawatts installed capacity by the year 2000. I am glad to report that very good progress is being made on the take-up of CHP: over 1,100 megawatts of new capacity has been contracted for since electricity privatisation.

Your Lordships would not expect the Government to be indifferent to the financial and other burdens which the Bill may create for local authorities and, indeed, for the Secretary of State. The noble Baroness, Lady Hamwee, as a local councillor, will no doubt have that particularly in mind. My noble friend Lord Skelmersdale also indicated that it would not come without cost.

I am glad that consideration of the Bill in another place resulted in something which in the Government's view will be more workable and less bureaucratic than the version originally introduced. It complements and rests on authorities' existing powers. It is certainly not the intention that there should be intrusive and costly powers or duties requiring authorities to carry out extensive surveys or to force householders to carry out work. However, the Government have made clear that the new burdens procedure will apply and that there will be a suitable transfer of resources to local authorities.

My noble friend Lord Skelmersdale also asked about the progress of the Energy Saving Trust. Two recent developments have affected the trust. It has become clear that the steep increase in funds from the gas and electricity customers will not materialise. The Government have announced that they are confident in meeting their commitment under the climate change convention and that they now expect to exceed it. The trust is revising its plans in the light of those changes and attempting to develop its role as an effective catalyst for change. It intends to develop new and innovative ideas which will promote the efficient use of energy at a time of increasing competition in the gas and electricity industries. The Government have taken powers under the Environmental Protection Act which will enable them to contribute to the trust's running costs.

The Bill before us has widespread support, not only from noble Lords who have spoken today but also from individual householders throughout the country, energy efficiency organisations, pressure groups for the elderly and others for whom affordable warmth is of particular concern and, most importantly, the local authority associations and many individual authorities. The Government's approach in another place was widely acknowledged to be constructive, and that will remain the case as the Bill proceeds through your Lordships' House, against the background that any new duties placed on local authorities should be the minimum necessary to achieve the Bill's aims and ensure that it provides a tool to help central and local government in directing effort and resources where they are most effective. The Government welcome this Bill, and I wish it well.

6.52 p.m.

Baroness Hamwee: My Lords, I thank all noble Lords who have taken part in this debate. The congratulations offered are not due to me but to my honourable friend. I merely have the privilege and

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indeed the pleasure of taking up the Bill on its passage through this House. I thank the Minister particularly because the fair wind offered by the Government is most important.

I shall not take up the time of the House in answering in detail the points made. I shall merely say that the point made by the noble Baroness, Lady Hilton, in regard to the sharing of best practice is an important one. It is part of a continuing exercise. I welcome the Government's assurance in relation to the targets—or whatever term one uses—to be contained in the guidance. If one reads Clause 4 carefully, one sees that it is very much a code for there being targets, but there may be different targets rather than one unyielding target to be applied inflexibly across all authorities.

I was interested in the point made by my noble friend Lord Ezra regarding building society assessments. What is important is that the assessment of energy efficiency becomes a matter of routine and in that way efficiency savings will be made. The noble Viscount said that climate change may be an odd topic to refer to in this context. That is not at all the case. It is precisely the right topic and this Bill, above all, is a good example of thinking globally, acting locally and acting individually. I ask this House to give the Bill a Second Reading.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

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