Energy Efficiency and Conservation

HC Deb 19 December 1988 vol 144 cc152-66

1 am

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

I hope that the House agrees that it is important to raise the question of energy efficiency and conservation now. It may not be an appropriate time of day to raise the matter, but it is an appropriate time in the political debate to raise it.

I hope that this debate will be spared deep ideological divisions, although there are of course important questions and legitimate differences about public expenditure and what resources should be devoted to such matters. But the timing of this short debate is important. There is widespread public concern about the global environment—issues such as the greenhouse effect and the general increase in pollution levels. People are also worried about adverse climatic effects, the potential increase in sea levels, deforestation and desertification of various parts of the globe. Increased energy efficiency and conservation have an important part to play in those debates.

The Prime Minister, if not the Secretary of State for the Environment, has said she has an interest in the subject. That is right and proper. However, the Prime Minister's speech to the Royal Society raised the suspicion among the cynics that she is more interested in arguing a positive case for nuclear power than in protecting the environment. She is more interested in promoting the interests of the nuclear industry and in trying to stymie future developments in coal-fired stations.

I am not a cynic and I take all the statements of the Prime Minister and the Secretary of State for the Environment at face value. Both the Prime Minister and the Secretary of State have at least increased public interest and concern about conservation and the environment.

It is also important that we should consider energy efficiency and conservation now—and this will not be lost on the Minister—because there is the small matter of the Electricity Bill before the House. Hon. Members will be able to voice their concerns in the debates on that Bill. The Bill provides an opportunity for people to argue an alternative to the nuclear route. Clearly we will have the opportunity in the debates on the Electricity Bill to consider an alternative that will provide greater value for money for the industry, the public sector and for private domestic users. That alternative can be achieved if we increase the amount of resources that we devote to energy conservation and efficiency.

It is common knowledge that many academic and professional bodies are now interested in conservation and the environment and have published reports and general information about it. The Rocky Mountain Institute, whose expertise is well known, took the view in a recently published report that The key to ameliorating future climatic warming caused by the combustion of fossil fuels is to improve the efficiency of energy usage. That sums up the view of many academics, who have concluded that investment in energy efficiency is, pound for pound, seven times more effective in abating global warming than is nuclear power. There is nothing new about that—many academic, professional and pressure groups take the same view. Although the Select Committee on the Environment's recent report is essentially concerned with air pollution, it nevertheless reaches an interesting conclusion in respect of energy conservation: However, if the world wants light, heat and energy in constant and increasing supply, the choice might resolve itself between a source which is deliberately and constantly poisoning the atmosphere and one whose misadventure would have catastrophic global results … but an alternative would be energy conservation and reduction in demand. That is an important and significant finding.

What will reduced demand mean? The House will know that the European Community has recently produced its own estimates. It came to the conclusion that if a saving of 1 per cent. per annum in energy usage can be achieved, it will reduce sulphur dioxide emissions by the staggering figure of 125,000 tonnes annually, and those of nitric oxide by 200,000 tonnes, in addition to achieving significant reductions in carbon dioxide levels.

The Minister will know that the European Community has set a target reduction of 20 per cent. over the period 1983–95. That is a minimum, but it is clearly also achievable, and it provides the context for our debate and sets down what is achievable by all member states over that period.

There are worries in the minds of many people about recent trends in Government policy on efficiency and conservation. As evidence of the Government's awareness of the situation, I quote the former Secretary of State for Energy: When I came into office in 1983, I judged that Britain was down at the bottom of the international energy efficiency league. By the end of the decade I want the world to judge that we are at the top. Some of the actions following upon that statement served to confirm that the Government were taking the matter fairly seriously. In 1983, the then Secretary of State began with an inherited budget of about £11.8 million. By 1986–87, the budget had increased to £25 million. There was also the monergy scheme, and at one stage about 2,000 events were sponsored by the Energy Efficiency Office. There were even, at the last count, 43 breakfasts! In all seriousness, they made the point to business men; those to whom I spoke felt that they had provided a useful exchange of information and had a real purpose. So a certain amount of energy was expended by the former Secretary of State himself.

The budget for the Energy Efficiency Office has now been cut to £15 million, and it has been suggested that it will be cut further. The number of staff has also been cut since the heyday of nearly 100 people, and the Civil Service grades of those involved seem to be getting lower. There used to be at least five grade IV civil servants.

Home insulation grants are arguably the most practical way in which people can contribute to energy efficiency. Increased insulation schemes lead not only to financial savings but to warmer homes, which is particularly important for elderly people at this time of year. The home improvement grant scheme was introduced in 1978 and expanded in 1984: the budget was increased to £35 million and there was a 90 per cent. allowance for supplementary benefit claimants. By 1987 all but the supplementary benefit scheme had been abolished. I know that most homes now have some insulation, but what percentage have the Government's recommended 6 in of insulation in their lofts? What I have read suggests that the figure could be as low as 15 per cent.

The industrial energy survey schemes set in train by the Government recently had benefits transcending the protection of the environment. They increased the competitiveness of businesses that engaged in them, providing for 50-50 cost sharing for industry, commerce and public sector buildings when energy-saving schemes were being considered. Up to £10,000 of grant was also available for the more extensive schemes, and the Department of Energy claimed that when they were in full swing some £35 could be saved for every £1 invested. If that was so, why did the Department decide to abolish the scheme this year?

There are also worries about the planned cutbacks in the advertising budget. The budget for getting the energy message across was formerly £7 million; what is it to be in the years to come? Some people fear that it will be cut fairly drastically. Then there is the home energy advice scheme. A draft European Community directive entitled "Energy Information in Buildings" makes a major contribution to information about the energy costs of new homes, and tells domestic consumers how to improve their energy efficiency. Some pressure groups think that the United Kingdom blocked the scheme, or at least was not enthusiastic about it, and I would be interested to hear whether that contributed to the delaying of the directive.

The Minister of State, Department of Energy (Mr. Peter Morrison)

Is the hon. Gentleman talking about a compulsory energy audit?

Mr. Kirkwood

I am talking about what I understand to be an EEC draft directive called "Energy Information in Buildings", but I understand that it is basically concerned with domestic energy audits.

There are other measures that the Government formerly promoted and in which they now seem less interested—for instance, the monitoring and targeting of specific industries, and assistance to energy managers, which seems less readily available than it was. The Department also seems to be promoting fewer building demonstration schemes. The Department of Energy is apparently becoming increasingly uninterested in this important matter.

In 1985 the Audit Commission for Local Authorities in England and Wales set minimum standards. It said that one staff member should be employed for every £1 million spent on fuel and that 10 per cent. of revenue should be reinvested in capital improvements. How many councils and Government Departments have achieved that target, or are making any effort to do so? The target figure for savings was formerly £7 billion per annum. What is that target now? Does the Minister have any information about the EEC target by 1995? All these important questions need to be answered.

The Government are missing opportunities in both public and private sector housing. Building controls and standards should be tightened. The Department insists on a U-value—a measure of energy efficiency, and the lower the figure the better the value—of 0.45. I am told that many of the materials that are being used in the construction industry do not meet that standard. Do the Government believe that there is adequate policing of the regulations? There is an argument for raising the standard of the U-value to at least 0.35, a standard that has been adopted by other EEC countries whose circumstances are similar to ours. What pressure do the Government intend to bring to bear to make sure that tougher steps are taken to ensure that tighter control and higher standards are achieved?

Much could be achieved. That has been demonstrated by the Milton Keynes energy unit. It has promoted eight schemes that have saved £125,000 a week. Other Milton Keynes projects include solar power cells, chemical systems and a 300-acre energy park. When the Minister visited Milton Keynes he referred to the need to spread to Wigan, Wick and Walthamstow the lessons that had been learnt at Milton Keynes. I agree with him, but what has he done since he made that important and useful speech to ensure that the message has been spread? The recent draft EEC directive "Energy Information in Buildings" will be useful in that connection.

The March consultative group that produced a report for the EEC said that up to 15 to 20 per cent. could be saved in the north-west by using tried and tested techniques—nothing new, or too fancy or technological—that are already available in the market. The measures that they outlined included monitoring, targeting, better housekeeping, better design and better equipment. The March consultative group came to the conclusion that an 8 per cent. reduction in energy use could be achieved by ordinary householders becoming more energy efficient by installing hot water tank insulation, loft insulation and cavity wall insulation, draft proofing, double glazing, condensing boilers and heating controls. The Government, local authorities and housing associations should be trumpeting these messages from the rooftops.

There have been recent press reports, including one in The Guardian, about the Treasury making it more difficult for the National Health Service to make full use of energy-efficient systems, thereby saving taxpayers' money. In the context of the United Kingdom as a whole, the energy bill could be reduced by £4 billion to £5 billion a year if £8 billion to £9 billion were spent on energy conservation measures. I acknowledge that that is a very large figure, and I do not expect the Minister to say that he can immediately produce such a huge sum of money, but there are positive directions in which he could move. The £3 billion provided in the Electricity Bill to featherbed the nuclear industry could be put to better use, but no doubt we shall have the opportunity to debate that in the coming weeks as the Electricity Bill completes its passage through the House.

When the Prime Minister spoke at the Milton Keynes energy week, I was disturbed that she spoke about savings and reductions of only £7 billion out of £35 billion total energy expenditure. That was the original saving hoped for in energy efficiency. That aim has been improved by the Secretary of State, who said that we can now save only £8 billion out of a total expenditure of £39 billion. That is a very complacent target. The Government are not doing enough to achieve better savings.

The Government should set rigorous targets which they should prosecute with a great deal more vigour. They have to deploy resources and produce finance to achieve them. The standards set by statute for buildings, appliances, plant and methods of transport could be improved and "least cost" planning for all Government Departments should be established. Contract energy management, which is a system of third party financing, and energy service companies to provide financing should be encouraged. Information needs to be more widely available at domestic level about running costs through the labelling of appliances. Resources for domestic and industrial efficiency and conservation procedures should be made available throughout the United Kingdom. And, against that background, we still have to remember the importance of the global perspective.

The Secretary of State has said that energy conservation cannot be imposed on an unwilling public; but there is no evidence that the public is unwilling to have conservation and efficiency forced upon it. There may be a lack of individual and collective finance, a degree of ignorance or lack of awareness, but people are certainly not unwilling. The Government have a duty to protect the environment. If they did that by promoting energy conservation and efficiency more vigorously, that would benefit industry, consumers and the public sector and would even make room for further tax cuts if the savings proved to be as extensive as I hoped they might be.

The Electricity Bill provides an opportunity to make efficiency and conservation of energy a primary aim in industry. If the Prime Minister wants to be taken seriously as being glad to be green or being concerned about prudent housekeeping, she will need to invest to achieve better long-term results in this important sector of public expenditure.

1.22 am

Mr. Tony Speller (Devon, North)

We owe the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) a debt of gratitude for raising the subject for debate. I was sad to hear his comments about the Prime Minister. I believe that when a convert is found one should be nice to them, and it does no good at all to snub them. That applies as much to a marginal voter as it does to a marginal Prime Minister. Having said that, everything else the hon. Gentleman said made sound sense.

The way to achieve energy efficiency and conservation is not to waste things. It is that simple. Many years ago during the war, there were campaigns to save one thing or another because there were no resources to spare. Now energy resources are abundant. They are even overabundant allowing for the way that we use them. Energy is over-used because it is cheap, and therefore it is wasted. If we do not waste it and we use less of it we shall benefit. Let us start at the bottom, in the home. We should insulate, double-glaze and draught-proof the home. We should lag the hot water tank and check the appliances that we buy to find out how much electricity they use. Those tremendously easy and simple methods cost very little and pay back in terms of power bills within six months to two years.

We follow the United States in many things, including fast food. It has energy audits as a matter of course. All its major utilities are required by its Energy Act to offer an audit to each house to see what can be done cheaply to make it draught-proof, warmer and, therefore, cheaper to run for the householder. It makes sense and I suspect that sooner or later we shall introduce such a system. If a utility could save the cost of a new power station, it would be worth making the saving and selling a little less energy.

One of our problems is that the newspapers are full of advertisements from the excellent salesmen of gas or electricity trying to sell more and more. That may mean producing one more power station at a gigantic cost to supply a marginal unit of electricity. The United States has realised that resources are finite and is working on that basis. Surely we should do that and we would be none the worse for it. We have already pointed the way.

When my right hon. Friend the Member for Worcester (Mr. Walker) was the Secretary of State for Energy we started the monergy campaign. It was designed to save a fair proportion of the energy used. Ultimately, we did not save a great deal. In percentage terms we saved 1 per cent. That might not seem to be much but it is equivalent to the output of three Sizewells. It was achieved at a cost to the taxpayer of less than the cost of the public inquiry into the last Sizewell station. Lagging jackets on the 10 million uninsulated water tanks in Britain would save the cost of a Hinkley Point C, which is not too far from my constituency or yours, Mr. Deputy Speaker.

If one can save the cost of a new utility, irrespective of the arguments as to whether it should be coal, nuclear or hydro, the saving must make sense. The United States Energy Act 1978 forces electricity and gas utilities to provide free energy audits to their consumers, provide loans and give advice on how to save energy. Within two years, insulation in Britain could save 5 per cent. of our energy. Although the percentage seems small, it is actually a vast figure.

Another system which is much talked of but which no one really understands—rather like proportional representation—is combined heat and power. In that system one does not waste, as we do at present, more power in cooling off the generating stations than is produced for the grid. One of the oddities of life is that we are so profligate with power that we waste more than we produce. That is illogical. I am sorry to have to quote figures but about 40 per cent. of our final energy demand is used as petrol or diesel for vehicles. Much of the pollution in our ever-more congested streets is ejected at what I call "pushchair level". It does vast damage to youngsters and brings no pleasure to the rest of us. It is time we started to give priority to other forms of transport. The most illogical thing in London is to see a queue of cars entering town between 8.30 am and 9.30 am each containing one person and taking up a vast amount of space. Probably all the drivers in a length of road could be fitted into one omnibus. That may not be convenient, but it would be a saving of a finite resource, which is what we should be looking towards.

I do not seek to detain the House at this hour. However, many of us, irrespective of our views on the type of generation, would agree that anything that saves energy saves money. If one can save some cash, one would be a welcome and popular friend, not least to one's electorate.

Windmills work and pollute nothing. They are excellent producers of clean energy in a quantity that is easy to assimilate and distribute locally. Water wheels have worked for centuries. We abandoned them because of the idleness of our civilisation but they have a sensible and logical use. Tidal power works and is clean and infinitely renewable. In my constituency, the tide rises and falls 36 ft twice a day, but we have no way of harnessing that power. When we consider harnessing it in barrages, there is a veritable barrage of protest from environmental interests, which say that terrible things will happen to wading birds. I feel sorry for wading birds, but I suspect that they will find another place to wade. Surely it is sensible to begin to consider this clean form of energy and try to use it, not to the exclusion of other sources but as well as them. Further alternative sources are sunlight and geothermal hot water.

If we tried a little tenderness with the environment instead of using the most expensive and pollutant forms of energy and, in our own small way, tried to save a little here and there, we would save much money and much of our environment for future generations.

1.30 am

Mr. Rhodri Morgan (Cardiff, West)

I am not sure that I want to follow the hon. Members for Roxburgh and Berwickshire (Mr. Kirkwood) and for Devon, North (Mr. Speller) down all the avenues that they travelled. It would make the debate unnecessarily wide if I spoke about the greenhouse effect and renewable sources of energy, which are worth a debate on their own.

I shall confine my remarks to a fairly narrow definition of energy efficiency and conservation and the problems, that were partly dealt with by the hon. Member for Roxburgh and Berwickshire, concerning the Government's attitude to them. The debate has spread to topics mentioned by the Prime Minister in her Royal Society speech, which was a broad commitment to conservation and looking after the global environment. It did not necessarily imply a commitment to policies that might bring that about in the lifetime of her Government.

I have taken the point made by the hon. Member for Roxburgh and Berwickshire about the budget of the Energy Efficiency Office, but I am not sure that I am working from the same figures as the hon. Gentleman. My figures come from a written answer given to my hon. Friend the Member for Sedgefield (Mr. Blair) on 9 December and show a cut in the budget of the Energy Efficiency Office from £26 million in 1986–87 to £24.5 million in the year ending last April and to £20.8 million for the current financial year. The hon. Member for Roxburgh and Berwickshire may have been referring to a prospective cut in the next financial year, but perhaps the Minister will say a little more about that and justify a cut of almost 80 per cent. in the budget, if the figure of £15 million being projected for the 1989–90 budget is correct. My figures certainly show a major cut from £26 million to £20 million over the past two years, which is extremely serious, against which the Government's commitment to conservation and efficiency must be judged.

One of the reasons why it gives me a certain amount of pleasure, even at this late hour, to be debating this topic is that being the hon. Member for Cardiff, West it is possible for me to say that much useful work has been done by Cardiff over the three years since it became the first energy action city in the United Kingdom by a combination of local authority and Government initiative. It has been an extremely good and well-run programme, which has been reasonably well funded by a mixture of Government and local authority funding, combined with much enthusiasm. There are 110,000 dwellings in Cardiff, and almost 20,000 have been fitted with home insulation and draught-proofing under the neighbourhood energy action programme. That sounds like a lot, but much remains to be done, although Cardiff is probably in the lead of most middle-sized United Kingdom cities in breaking the back of the problem.

The hon. Member for Devon, North mentioned the vast number of domestic hot water tanks that remain to be insulated and the many roofs that need to be brought up to modern insulation standards. As the hon. Member for Roxburgh and Berwickshire said, probably three quarters of British homes now have roof insulation, but only a small number have the 6 in roof insulation that is recommended by the Government and which will become mandatory for house building from April next year. The Minister may say something about that. The hon. Gentleman's figure of 15 per cent. would coincide with my estimate of the proportion of the total United Kingdom housing stock that currently has 6 in insulation.

I should like the Minister to say when he can reasonably expect 50 per cent. of houses in the United Kingdom to be insulated to the 6 in standard. When does he expect 25 per cent. or 75 per cent. of United Kingdom houses to be insulated to the 6 in standard? Does he expect that to be achieved within 10 years, 25 years, or is that a totally unrealistic target, given his budget for energy efficiency work?

Cardiff is not the only energy action city. There are many. There are five in Wales alone. I do not know the figure for the United Kingdom. Neighbourhood insulation schemes are run by a non-profit-making company in Newcastle, Neighbourhood Energy Action, and a good outfit it is. The problem is that a major catastrophe has engulfed neighbourhood energy action programmes up and down the land. I do not think that I am exaggerating—that is as I understand it from people working in the sector.

By and large, programmes will grind to a halt. They cannot cope with the change from community programme funding to employment training funding. Apart from Hull, most cities are not able to find volunteers under the current rules for benefit payment. Obviously, the major impulse for neighbourhood energy action insulation programmes has not come just from householders wanting insulation, and wanting insulation done on the cheap. It has been a by-product of the benefit system and of high unemployment. It is certainly now running into the sand. By and large, people are not willing to operate just for benefits-plus.

The previous scheme under community programme rules, whereby people got £20 a day for three days' work was not wildly popular, but it was not too bad. Most schemes are running into heavy weather. The phrase "grinding to a halt" is not an exaggeration, although I am told that Hull is an exception. I hope that the Minister will say something about that.

If the benefits-plus system is not working for the people who operate energy insulation schemes, we must think of something else, otherwise the momentum and the skills that have been built up among supervisory and estimating staff and in the production of insulation material will reach a serious crisis.

We need to consider what we must do about the elderly. The elderly are major beneficiaries of neighbourhood energy action schemes. They are the most vulnerable group. In general, they spend about twice as much of their weekly income on heating in the winter as the population in general spend. On average, pensioners spend about 15 per cent. of their weekly income on heating. The figure is much higher for those who do not have gas central heating. They would spend about 20 per cent., maybe even more. It is not unknown for pensioners to spend 25 per cent. of their weekly income on heating. They hit a severe crisis if there is a really cold winter. In January and February, pensioners go through an extremely difficult time. The phenomenon is almost uniquely British.

The hon. Member for Roxburgh and Berwickshire mentioned building standards, which are extremely important, and discussed what we should do with buildings erected before the first world war to completely different insulation standards and to buildings built since then but with very poor cavity wall insulation or none at all. Such buildings are frequently inhabited by pensioners, who find it extremely expensive to keep warm in them. Hypothermia among the elderly is a largely British phenomenon. It is not found in Scandinavia, where building standards are much higher and where pensions are higher in relation to the cost of fuel. In Britain, the death rate shoots up in winter. Objective sources estimate that an additional 15,000 to 20,000 winter deaths occur in Britain. They do not occur in Germany, Scandinavia or Holland because they are caused by a combination of poor building standards, inadequate pensions and high fuel prices. Cot deaths, too, may be related, but I shall confine my remarks to hypothermia, which is an almost uniquely British disease.

The Government do not yet seem to have adopted with any enthusiasm the EEC proposals under which it is hoped to introduce trials for an energy labelling scheme for houses in Cardiff just before Christmas. The scheme is to be conducted on a voluntary basis and in Cardiff alone. We need to know whether the Government are willing to consider introducing such arrangements. In Denmark an energy surveyor has to affix ratings to houses so that people know whether they are getting an energy-efficient house.

Such a scheme would probably be desirable in this country. We have a history of voluntary arrangements in this country, but when a crisis hits we opt for intervention, and perhaps the time has come for the Government to introduce a scheme for labelling houses—a kind of MOT test of their ability to retain heat or to be heated to a reasonable, civilised standard without costing the earth. A large number of small houses are still built without a central heating system being installed. Heating is supposed to be added by the occupier. Nothing in the building regulations for England and Wales—Scotland is different—says that an adequate heating system must be installed when a house is built, which is a major omission. I hope that the Minister will touch on at least some of the topics that I have raised.

1.42 am

The Minister of State, Department of Energy (Mr. Peter Morrison)

Even at this rather late hour, I am grateful to the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) for raising this important subject. I am also grateful to the hon. Member for Cardiff, West (Mr. Morgan) and to my hon. Friend the Member for Devon, North (Mr. Speller) for participating in the debate, which gives me an opportunity to reaffirm in strong terms—very strong terms—the Government's commitment to energy efficiency. It is a firm commitment, which has been demonstrated in a range of effective programmes; it has produced results and we intend to build on it in the future. I hope that the hon. Member for Roxburgh and Berwickshire will accept that the commitment of my right hon. Friend the Prime Minister to energy efficiency is genuine. The hon. Gentleman and my right hon. Friend may not agree about everything, but I am sure that he would accept that she always speaks with commitment and conviction.

I hope that I do not need to spend too much time on the reasons for being committed to energy efficiency, many of which have already been mentioned. The primary reason is straightforward and economic. It resides in the extent of the opportunities for energy efficiency improvement. The size of the national energy bill, some £38 billion a year, and of the estimated savings, nearly £8 billion a year, is staggering. In industry and commerce alone, the total expenditure on energy last year was nearly £10 billion, which suggest that a savings potential of nearly £2 billion is achievable. Much of that can be achieved simply through low-cost, good housekeeping measures, and the rest by investment and good pay-back periods.

The narrow economic argument is not the only reason for being interested in energy efficiency, as all hon. Members who have taken part in the debate have said. Another particularly important and topical issue is the environmental consequences, and clearly energy efficiency measures which help to minimise these consequences must be part of an overall package of measures to deal with these problems.

There are wider benefits relating to energy efficiency and perhaps I may enumerate some. Energy efficiency provides a valuable insurance policy against possible upsets on the supply side. It helps make the best possible use of our indigenous resources, leads to better growth and competitiveness, helps to create jobs, and brings social benefits in improving living conditions, especially for older and low income groups. However we consider this, there are no shortage of good reasons for taking energy efficiency seriously, and the Government do precisely that.

In the domestic sector the Energy Efficiency Office has done much to build up an awareness of the importance of energy efficiency in the home through its publicity programmes. The hon. Member for Roxburgh and Berwickshire was generous enough to refer to my right hon. Friend the Member for Worcester (Mr. Walker) when he was Secretary of State for Energy. We have provided consumers with practical information on how to save money by saving energy and we have worked with others—recently, I took an initiative with building societies—to reinforce this message.

We have been giving special attention to the problems of pensioners and low-income households. We have supported the development of over 450 community insulation projects which install draught proofing and loft insulation for people who would find it difficult to take these measures themselves. Over 500,000 homes have been treated under this scheme.

The hon. Member for Cardiff, West raised his concern about the translation of the community programme to the adult training programme. The Training Commission and my right hon. and hon. Friends in the Department of Employment are directing themselves to this matter.

Under the homes insulation scheme operated by the Department of the Environment and the territorial departments, the Government have helped around 3.5 million people to install loft insulation, which over 90 per cent. of homes now have. This scheme has recently targeted on low-income householders to ensure that help goes to those who need it most.

The hon. Gentleman asked some detailed questions, and I am assured that these matters are for my right hon. and hon. Friends in the Department of the Environment; I shall ensure that they receive copies of his points, to which I am sure they will reply.

Mr. Morgan

The Minister's point about the number of homes that already have loft insulation is valid. The problem is that complacency has frequently set in among householders who have their 1 in or 2 in of insulation, which was all that was recommended 10 or 15 years ago. Now that the Government have decided to go for 6 in of insulation as a recommended standard, it seems time to stir the pot again and tell all those householders who think, "Loft insulation, we've got it," that it is time to have another look to see if they should increase it.

Mr. Morrison

If I gave the impression that I was complacent, that was not my intention. There is scope for improvement in every aspect, principally by the consumer.

We operate a range of programmes aimed at industry and commerce. The monitoring and targeting programme aims to develop energy management systems for 40 sectors of industry and commerce. Twenty-five such systems have been developed already, and have been installed on some 600 sites. They are producing savings averaging around 10 per cent. in the companies that install them, and total savings from this scheme amount to nearly £100 million.

The demonstrations programme aims to help new energy efficiency technologies get into the market place. More than 350 projects have been supported and savings amount to nearly £200 million.

Our research and development programme aims to help innovation by developing new energy efficiency technologies. One hundred and twenty-nine projects have been supported of many different types, including industrial plant and process and building services and design. However, our main objective is to get relevant advice direct to the consumer, which means activity in the regions through our network of regional energy efficiency officers. They help market our schemes, set up seminars and workshops, visit major energy users and point them towards sources of advice and practical help. In short, they bring the energy efficiency message home to those who can most benefit from it. We shall be providing our regional offices with more resources and better support in the future.

The programmes of the Energy Efficiency Office can be judged by their direct result. As I have already said, more than 500,000 low-income households have been treated under community insulation projects. Savings of nearly £100 million per year are being made through the monitoring and targeting programme, and savings of nearly £200 million per year are being achieved through the efficiency demonstration scheme. Furthermore, savings of more than £200 million per year have been identified through the former energy efficiency survey scheme.

Overall, therefore, the savings attributable to the activities of the Energy Efficiency Office amount to more than £500 million a year, arid more than 4 million consumers have been directly helped by our programme. Far from being insignificant, the resources devoted to energy efficiency by the Government have been considerable, and they have risen substantially since 1983. Taking account of direct expenditure by the Energy Efficiency Office, the homes insulation scheme and community insulation projects, some £42 million in total was spent in 1983–84, while in 1987–88 expenditure on those programmes had doubled. The total spent in that year was some £84 million. To be honest, that compares with very much less when the Labour Government left office in 1979.

On a wider economic basis, the results are also very impressive. Despite the considerable fall in energy prices since 1983, there was a 7 per cent. improvement—worth more than £2 billion—in the efficiency with which energy was used across the economy between 1983 and 1987. The hon. Member for Roxburgh and Berwickshire was concerned about the rate of improvement, and I can tell him that, in the United Kindom, which was previously well below the European average, it is now twice that average.

The hon. Member for Roxburgh and Berwickshire and my hon. Friend the Member for Devon, North referred to the energy audit. We are opposed to what the Commission was proposing as a draft directive; I was at that Council. We were opposed to it because there are no sanctions, so it would be ineffective, and it would require the householder to pay an average bill of about £200. I do not believe that that would be either acceptable or desirable in the way that it is presently proposed.

The Energy Efficiency Office has succeeded in establishing energy efficiency as a key issue, and raising awareness of its importance among consumers. Against that background, we have been considering where we can continue to be most effective. I hope that all hon. Members will agree that there is simply no point in spending taxpayers' money unnecessarily to subsidise people to do what they already know is in their interest.

Mr. Speller

I am grateful to my right hon. Friend for making a valid point about how much the Government have tried to do over the past years to encourage people to use energy efficiently in their homes. However, I have yet to see any sign of the gas or the electricity authorities showing an interest in reducing the demand for their products. I understand the economic illogic of that, but I have yet to see them saying that they would like to promote energy efficiency to the individual housewife.

Mr. Morrison

I think that my hon. Friend is perhaps less than fair to the gas and electricity industries—I shall deal specifically with the electricity industry in a moment. In my travels over the past 18 months, I have seen both industries running competitions to promote precisely what he and I would like to see—energy efficiency. I do not believe that my hon. Friend has given a totally fair critique of the industries, but no doubt they will read this debate carefully and pay attention to what my hon. Friend has said.

I hope that all hon. Members would agree that there is no point spending taxpayers' money unnecessarily to subsidise people to do what they already know is in their own interests. Therefore, we must consider carefully what the Government do to ensure that everything is properly directed. That is the background to the review, the results of which were announced in June.

The review concluded, among other things, that, since awareness of the need for energy efficiency was now fairly high, there is now less need than in the past for high-profile advertising programmes, expensive razzmatazz and the breakfasts to which the hon. Member for Roxburgh and Berwickshire referred.

Mr. Kirkwood

I was never invited to one.

Mr. Morrison

Nor was I.

Hence, the case for large amounts of expenditure in this area now seems less compelling.

It is that firm base of achievement that allows us to move forward to a new phase in our activities. In that new phase, the emphasis will be on targeting key areas of energy use, and offering specific advice and technical support. We shall be developing new schemes with that objective.

One aspect of targeting means local delivery in response to local needs. In the new phase, much more attention will therefore be given to the work of the regional energy efficiency officers. We will be strengthening the financial and advisory support available to them, allowing them to offer a better service to industry and commerce in their regions.

One example of the more targeted approach to which we are moving, is the recent "Heat is on" campaign aimed specifically at three major energy-using sectors—chemicals, ceramics and metal. Those three sectors alone account for around half of industrial energy use, and we have tried to bring together the advice and support the EEO can offer from its various programmes to help consumers in those sectors. Meanwhile, other important work continues.

My hon. Friend the Member for Devon, North referred to combined heat and power and I heartily agree with him about its potential importance. My hon. Friend will be aware that the Government have provided strong support and encouragement for the development and application of economic CHP technology.

The Energy Efficiency Office has supported 25 research, development and demonstration projects featuring CHP plant in industry, buildings and communal heating schemes. We have also provided substantial funding towards studies to evaluate the feasibility of citywide combined heat and power district heating.

I believe that privatisation of the electricity industry will provide growing opportunities for private generation, including CHP. Our aim is to ensure that all economic sources of electricity supply will have fair access to the market. For the first time independent generators will be able to compete on an equal footing with the two major generating companies being created from the CEGB. After privatisation the Director General of Electricity Supply will be able to investigate anti-competitive practices, and the privatised companies will also be subject to general competition law.

The Government will therefore be fulfilling their proper role—of providing fair market conditions. The CHP producers will be able to compete freely with other forms of power generation. The future of CHP will then depend not on further public funding but on whether it can compete successfully. I have every confidence that it will be able to do so. In view of its high thermal efficiency and versatility to which my hon. Friend the Member for Devon, North referred, CHP will be well placed to take every advantage of the new opportunities.

The hon. Member for Cardiff, West was concerned about electricity privatisation. In our proposals for the privatisation of the electricity supply industry, we have taken full account of the need for energy efficiency while balancing it against the primary objective of introducing competition and private sector disciplines.

I do not believe that it would be right to require the industry to subsidise energy efficiency on the part of its consumers. That would be an unwelcome return to over-regulation, and it would force the industry to act uncommercially, so undermining the key objectives of privatisation.

What we have done in the Bill, however, as the hon. Member for Roxburgh and Berwickshire knows, is to require the Director General of Electricity Supply to promote the efficient use of electricity, and we intend, in the licence, to insist that the industry tells the consumer how best to pursue this objective. I think that that answers the point made my my hon. Friend the Member for Devon, North.

Turning to the greenhouse effect, the need to maintain sustainable economic development while protecting our natural environment is one of the most important challenges facing the world today, and the hon. Member for Roxburgh and Berwickshire is right to refer to the relevance of the greenhouse effect to our debate. However, we have to see this issue in a wider perspective. Fossil fuel burn is one important producer of carbon dioxide emissions and so contributes to the greenhouse effect, but other gases in the atmosphere also contribute.

At the same time, it has to be said that the United Kingdom accounts for only around 3 per cent. of world carbon dioxide emissions, and the problems are as yet imperfectly understood.

The time scales of the exact effect on world climate patterns and the possible rise in sea levels are uncertain. The United Kingdom will continue to play its full part in reducing these uncertainties as quickly as possible through co-ordinated international research. The Government will take whatever action is shown to be necessary as our understanding develops, but I also accept that we need to take action now where it is sensible to do so. It is clear that there is no single, simple solution, whether in energy efficiency or in nuclear power, but it is also clear that both these things have their part to play.

The Government certainly recognise the links between energy efficiency and the environment. All means of producing energy have some environmental consequences. and energy efficiency helps keep them to a minimum. That is one good reason among many for promoting energy efficiency.

We have had a useful debate, and I am grateful to the hon. Member for raising this subject. I hope I have also been able to demonstrate the Government's full-hearted commitment to energy efficiency. The fact is that we have provided much more support for energy efficiency than any previous Government. And we have not simply thrown money indiscriminately at the problem. Our programmes have been built up carefully to ensure the maximum effectiveness and impact. We have an excellent record of achievement, and we are building on that firm basis to target our activities even more effectively.

Our programmes have directly benefited industry and commerce, low-income consumers and old-age pensioners, as well as bringing wider social and environmental advantages. This is a record of which the Government can be justly proud, and I commend it to the House.