HL Deb 20 October 2004 vol 665 cc894-902

(1) For the purposes of—

  1. (a) improving the energy efficiency of residential accommodation;
  2. (b) increasing the comfort level of occupants of residential accommodation; and
  3. (c) alleviating fuel poverty;
the Secretary of State shall take reasonable steps to ensure an increase in residential energy efficiency of at least 20% by 2010 based upon 2000 levels.

(2) In this section— fuel poverty" has the same meaning as in the Warm Homes and Energy Conservation Act 2000 (c. 31); residential energy efficiency" means the energy efficiency of residential accommodation.

The noble Baroness said: My Lords, we are still more or less on the theme of fuel poverty. This new clause calls for a 20 per cent improvement in domestic energy efficiency by 2010. The target of a 20 per cent improvement was first set by the Conservative government in 1996 under the Home Energy Conservation Act 1995. I am sure that the Minister will not argue with me about that. The target was then increased to 30 per cent by 2010, but 30 per cent from 1996 is almost the same as 20 per cent based on 2000 levels. That target was for years accepted by the current Government. The 20 per cent improvement is just another way of saying that the target is the saving of five megatonnes of carbon from domestic energy efficiency by 2010.

We discussed the issue at some length in Committee. The noble Lord, Lord Rooker, made the point that the Government were, in effect, already doing this. I am afraid that we do not agree with that. In March 2003, Mr Michael Meacher told the House of Commons that a 20 per cent improvement was broadly equivalent to a saving of 5 million tonnes of carbon. Now, while some latitude might be reasonable, the 16 per cent difference cannot be said to be "broadly equivalent". So that is nonsense.

Let us apply the 16 per cent rule to another issue—the the ending of fuel poverty, about which we have been talking. There is a legal duty on the Government under the Warm Homes and Energy Conservation Act 2000. When that Act was passed, which was prior to this Government, there were 4.5 million households in fuel poverty. Applying the "16 per cent less is broadly equivalent" rule that the Minister sought to apply to the current amendment, if the Government ended fuel poverty for 3.75 million households leaving 16 per cent still in fuel poverty, would that be broadly equivalent to discharging a statutory duty and ending fuel poverty?

CO2 savings of 4.2 million tonnes from household energy efficiency is not broadly equivalent to a 20 per cent improvement in energy efficiency. In short, the Government should keep their promises to save 5 million tonnes of carbon dioxide from the domestic sector and support this amendment. I beg to move.

Baroness Maddock

My Lords, I strongly support almost everything that the noble Baroness said on this issue. Indeed, as I have pointed out before, many of these issues have been contained in Private Member's Bills. In fact, the Home Energy Conservation Act 1995 was my own Private Member's Bill. Indeed, the previous Conservative government allowed it through, just as a Labour government allowed through the Warm Homes and Energy Conservation Act 2000. Although we push like mad on Private Member's Bills, in the end it is the government of the day who have to approve them.

However, as I said, we are always pushing the Government on these issues. They rarely come forward as a result of the Government's own initiative. That is very sad. The Home Energy Conservation Act was passed in 1995 and at that time we were calling for a 20 per cent improvement in domestic energy efficiency. It is particularly sad that over the years lobby groups and those of us who care about these issues pushed that matter time and time again. We have been given promise after promise after promise. However, as the noble Baroness said, suddenly last April the situation changed. Once again we are having to push the Government to tackle a matter that is very important at this time of discussion about climate change. Indeed, some people think that climate change is one of the most important issues facing us at the moment. Here we are trying in a Housing Bill to get the Government to reinstate commitments that they have given before. We should not have to do that if this is such an important issue. I hope that the Minister will discuss the matter with colleagues in other departments. This is a very serious matter and I hope that the Government will take it seriously.

Lord Bassam of Brighton

My Lords, this is a matter that we take seriously. We have had this debate before. We take the view that the Sustainable Energy Act 2003, and not this Bill, is the right vehicle for prescribing and reviewing energy efficiency targets of the kind that are proposed in this amendment. It also requires the Government—

Baroness Maddock

My Lords, I am not sure that the Minister heard what I said. The measure started off in the Home Energy Conservation Act and has been in every other relevant Bill since then. It was not until last April that the Government went back on it.

Lord Bassam of Brighton

My Lords, I understand that point but the Sustainable Energy Act 2003 requires the Government to publish an annual progress report. I venture to suggest to noble Lords that, far from retreating on the issue, the Government are determined to make steady progress. Obviously I cannot speak for how colleagues have dealt with this matter in the past, but energy conservation is clearly a very important issue. I understand exactly the points about global warming and the commitments that we have made to conserve energy in relation to that issue.

The noble Baroness, Lady Hanham, has suggested that the UK target for carbon in the plan of action in some way marks a retreat from the aspirations in the energy White Paper. That figure is in fact the minimum that we expect to be achieved. We hope that we will be able to achieve more. Indeed, taking into account the increased commitment to energy efficiency from business, we expect total carbon savings from both sectors to be greater than the numbers set out in the White Paper. Far from lowering our expectations, we want to see an increase in activity and achievement across the board. The review mechanism in the Sustainable Energy Act 2003 will allow us to reflect those changes. This includes possible changes as a result of the forthcoming review of the UK Climate Change Programme, and any changes arising from the review of the Energy Efficiency Commitment, under which gas and electricity suppliers are required to promote energy-saving measures.

It is perhaps worth reminding ourselves that the Bill in itself makes a significant contribution to carbon savings from the domestic sector. We have already discussed in part the thermal comfort element of the decent home standard, and I will not go over that again. However, we should also recall that the housing health and safety rating system in Part 1 will enable local authorities to tackle cold, damp and mould hazards from poor heating and insulation, particularly in the private sector. Home information packs will include an energy efficiency assessment—the noble Baroness, Lady Maddock, congratulated us on that—which will set out how energy-efficient the property is and provide information on measures to improve energy efficiency.

In view of all that and the Government's overall commitment, I take it rather badly that we have been berated for not doing enough to stimulate domestic energy efficiency. I hope that the noble Baronesses will be able to focus a little before Third Reading on some of the inconsistencies in their position in that respect. There is a golden thread of commitment between us, and point scoring does not necessarily help us to take the policy forward in the most constructive way.

Baroness Hanham

My Lords, I thank the Minister for that reply; I hear what he says. However, a considerable proportion of the energy efficiency is meant to come about as a result of the use of renewable energy. The Bill is not the place to deal with wind farms and all the rest of it, but the Government would be lucky to achieve that goal. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 208 [Additional power to give grants for social housing]:

Lord Best moved Amendment No. 211:

Page 163, line 16, at end insert ", to include measures to ensure—

  1. (a) that tenants of homes built under subsection (2)(d) are afforded the same protection as tenants of registered social landlords in respect of—
    1. (i) legal rights;
    2. (ii) terms and conditions of occupancy;
    3. (iii) rent levels;
    4. (iv) bankruptcy of landlord or managing agent;
    5. (v) recourse to the Independent Housing Ombudsman;
  2. (b) that all recipients of grant under subsection (2) are subject to the same regulation in respect of—
    1. (i) disposal of land or property which has been the subject of grant;
    2. (ii) accountability for the use of grant;
    3. (iii)requirements to repay or recycle grant."

The noble Lord said: My Lords, the clause gives grants for social housing to unregulated and unregistered bodies. I spoke at some length on the subject in Committee and shall not repeat anything that I said before. I am sorry to say that the Government's two amendments in relation to the clause do not dissuade me from continuing to press for the changes contained in my amendment.

In a nutshell, Clause 208 seeks to bring in a radically different approach to social housing. After 30 years of creating and refining the arrangements for housing associations—registered social landlords—to use public funds for providing low-cost accommodation, the intention is that grants will be given to profit-making house builders and developers who are not subject to the same registration and regulation. I know that the Treasury is keen to see more homes built to meet the acute shortages of housing; no one is more sympathetic to that requirement than I am, but it is most unwise to try to achieve that by jettisoning all the painstaking work in devising arrangements for giving funds only to bodies that are subject to regular monitoring and inspection.

The only competitive advantage that house builders are likely to have over housing associations lies in avoiding the extra duties and social responsibilities that come from being a registered social landlord. For example, house builders, unlike housing associations, will fall outside the EU procurement directives. When bidding for grants, they will not need to build into their costings all the social welfare services that housing associations are rightly expected to provide. Also, the requirement that housing associations must accept to upgrade their property in future to meet new and higher standards does not apply to them.

No one has argued that house builders are achieving high levels of satisfaction from their customers. The regular publication of the satisfaction surveys by the National House-Building Council makes astonishing reading, particularly for some of the largest house-building companies, with only 45 per cent of buyers expressing satisfaction with their new home. A very depressing publication came out only days ago from the Commission for Architecture and the Built Environment and the Civic Trust. It considered 100 developments by the major house builders in the south-east, concluding that only 17 per cent of the new homes were either good or very good, and that 83 per cent were poor or average.

Indeed, the chief executive of one of the major house-building companies—one of the most respected—recently told the annual conference of the National Housing Federation that he felt the proposals for paying social housing grant to developers and house builders were seriously flawed. He said that very few of these companies were equipped to take on the lifetime commitment of a contract to supply social rented housing and it was not sensible to suggest that a simple contract at the time of the development could avoid all the hazards implicit in this approach.

I have not heard the Minister claim that a contract with a developer or a house builder could possibly provide the same safeguards for the public funds, or for the occupiers of the affordable housing, stretching into the future, as those where the Housing Corporation is able to keep a constant eye on the performance of the registered social landlord, with powers even to replace the members of the board if need be. What on earth is the point of inspectors from the Audit Commission visiting housing associations to look at their standards of maintenance and repairs, consider their attention to tenant participation and involvement in management, check their ongoing adherence to good practice in relation to equality and diversity and the rest, if all those considerations are swept away when house builders or developers seek the same grants?

My housing association has been happy to see Housing Corporation officers visiting its premises and joining meetings of our board. There is no intention, once this part of the Bill is enacted, for such measures to apply when the grants are switched to profit-making bodies. Yet house-building companies are far more likely to go bust, merge, amalgamate, change their business and generally have more need to be trapped by close inspection than housing associations. Amendment No. 211 places an obligation on the Government to make sure that before any grants start going to unregulated, unregistered developers and house builders, arrangements should be put in hand to ensure that the tenants receive the same deal and taxpayers' money receives the same protection as when grants are paid to regulated registered social landlords.

I am not underestimating the difficulties of devising arrangements which produce this parity and maintain it over the 50, 60 or 100 years of the life of the property in question. Yet it is because these safeguards are in place for housing associations that institutional lenders—banks and building societies—have had the confidence to lend more than £45 billion for social housing on very good terms.

Unless the safeguards of this amendment are in place, it seems extremely unwise to ditch the years of work back to the Housing Act 1974, in which all the checks and balances, rights and responsibilities for the parties concerned have been carefully put in place, just for the short-term gains of some cheaper homes today. I beg to move.

10.15 p.m.

Baroness Hanham

My Lords, Amendment No. 212A is in this group. The noble Lord, Lord Best, put forward the problems which we foresee as being associated with this quite unusual intervention in the social market by private builders, encouraged by this government amendment.

The noble Lord, Lord Best, clearly laid out the views which many of us hold, but I want to ask the Minister a couple of questions. I do not believe that they are addressed by the Minister's amendment. If the Government are going to give public money to companies, what protection is there for the taxpayer should the company in question go bust? We know that back gardens are being classified as brownfield sites already, so what is stopping this scheme from becoming a subsidised mechanism for the infill of suburban areas? Indeed, what would stop private developers from cherry picking the best sites in housing hot spots so that they could receive a greater return on their investments by having access to the social housing grant?

Once these properties have been built and they enter the social housing market, who will manage and run them? I think that we touched on this matter at the last stage, but it needs to be made clear whether the properties will be handed back to a local housing trust—if that is the case, what will happen to the grant?—or to another registered social landlord. On the other hand, will private companies—I think that the noble Lord, Lord Best, mentioned this—be set up with their own management bodies? If the latter is the case, all kinds of questions need to be asked about who should be on those bodies.

As it stands, this clause, and any explanation attached to it, is woefully inadequate in its detail. As I said, I do not think that the government amendments deal with the problems which we have all identified.

Baroness Maddock

My Lords, I strongly support everything that the noble Lord, Lord Best, said in moving Amendment No. 211 and much of what the noble Baroness, Lady Hanham, has just said. This provision will bring about a huge change in the way that we are to fund social housing, and I think that we deserve a little more detail from the Government.

We discussed this matter earlier. It is now very late at night, but this is a massive change. Various rumours are going around about what might happen. If the Government expect us to accept this measure, they owe it to us to explain a little about what is going on. For example, I have heard that if the scheme proves to be successful and good value for money, the Government's intention is that the whole of the Housing Corporation programme will be opened up to private developers. If that is so, I think that the least the Government can do is to say how they are going to assess it.

The last time that we spoke about this matter, I was concerned because I did not know what it was based on or what evidence the Government had that it would work. I believe that they should tell us how they are going to assess it and, as other noble Lords have said, how they will ensure that taxpayers' money and public money is put to best use.

There is another area on which I hope the Minister can enlighten us and, again, it is a matter that we have been reading about in the housing press. Many builders are looking to set up housing associations because they will then be able to save on VAT payments. Ultimately, the builders are there to make profits, and I understand that. But, in providing social housing for years to come, we must ensure that the money is used properly and that the homes we build will last and be fit for purpose.

I remember local authorities, in bad times, buying off-the-peg housing, and I remember the problems that they had. This is a very serious issue. We do not really have enough time to discuss it at this hour of the night, but I hope that the Minister can enlighten us on the two problems that I have mentioned.

Lord Bassam of Brighton

My Lords, I certainly agree with the noble Baroness that this is the wrong time of day to discuss an issue which is clearly of great import to all those who have contributed to the debate. I shall deal with Amendment No. 211 at a little more length than I shall the government amendments because I recognise the seriousness of the issue.

In Committee, we made it clear that we wish to ensure equality of opportunity for tenants, prospective tenants and residents of registered social landlords and non-RSLs, to use the jargon. But we believe that this amendment would restrict the Housing Corporation's flexibility to shape competition to deal with these matters. And it does not properly take into account inevitable differences in approach that will be needed to achieve the same outcomes for one system controlled by regulation and another controlled through grant conditions.

We do not believe that the withdrawal of the amendment will mean poorer outcomes for tenants and local communities. The conditions of grant drawn up by the Housing Corporation will be expected to replicate for non-RSLs the design, construction and management standards that currently apply to RSLs receiving grant. I heard what the noble Lord, Lord Best, said about that and I certainly recognise the importance of the issue, but, in our view, this approach does not undermine the desire that we have, as a Government, to see improvements in the design, construction and quality of properties.

As a long-stop, the clause already contains a provision that should allay the noble Lord's concerns about the conditions of grant and how they will be applied. The Secretary of State will have an order-making power to ensure that any key risks, including financial risks, are addressed. We are very aware that the use of public funds is a crucial value-for-money issue. We shall ensure that the Housing Corporation puts conditions and, where required, charges in place so that funds will not be unfairly lost for reinvestment in future social housing. The Housing Corporation is considering ways of recovering a proper share of equity growth, certainly in the event of disposal. In effect, the Government's order-making powers will provide an essential, important and effective safety net to ensure that these matters can be dealt with satisfactorily.

Amendment No. 211 deals with two scenarios concerning what might happen to property built by a non-RSL using a Section 27A grant. The first is where a non-RSL transfers the grant-funded property to an RSL. The second is where a non-RSL transfers the grant-funded property to another RSL. I can see that the purpose of the amendment is to ensure that tenants and residents continue to be protected. The effect will be that where a non-RSL transfers a grant-funded property to an RSL, the grant will be treated as if it were a traditional grant given under Section 18 of the Housing Act 1996 thereby attracting the grant conditions which would usually be imposed if it had been given under Section 18. At any time a property is transferred to another non-RSL the grant will be treated as if it were payable to the non-RSL and all rights and obligations will be transferred to that non-RSL.

Amendments Nos. 213, 238 and 242 have the purpose of extending to the tenants of non-RSL grant-funded property a right to acquire the equivalent of that right currently enjoyed by tenants of newly-built RSL grant-funded properties. The effect will be to ensure that non-RSL tenants have an equality of opportunity with RSL tenants.

Amendment No. 238 is essentially technical, but it does ensure that determinations made under the new Section 27B are treated in the same way as determinations under Sections 18 and Section 27 of the Housing Act 1996. I hope that that clearly explains the effects of our amendments.

The noble Lord, Lord Best, asked questions with regard to inspections. I can advise the noble Lord that the Audit Commission will in any case be concentrating inspection on organisations with more than 1,000 units. Non-RSL managers are likely to be smaller than that. The Housing Corporation plans to develop some form of external validation of standards just as it will require an independent audit of compliance with development funding conditions.

I know that my response to the issues has not been entirely adequate. I am conscious of the lateness of the hour. Certainly, I understand the force of the noble Lord's argument. I think that the issues of concern can properly be covered in the way in which the Housing Corporation will operate and the way in which we can provide orders which guarantee a system of regulation which is fair and effective. I beg to move.

Baroness Maddock

My Lords, before the noble Lord sits down, I wonder whether he can answer my question or at least undertake to write to us on how the Government intend to assess how well that is going and how they will progress it later on, which is of concern to us.

Lord Bassam of Brighton

My Lords, of course we shall be concerned with that issue. I am happy to give the commitment that we shall conduct correspondence on this and describe how that assessment will be carried out.

Baroness Hanham

My Lords, briefly, I thank the Minister for not replying to any of the questions that I raised in my remarks on this amendment. I shall be grateful to receive a response in writing, as I appreciate the lateness of the hour. The only remark which I heard with dismay was that there are order-making powers which will deal with all of this satisfactorily. I think that we have all said today that we do not believe in that. We like to know what is going on and why. If it is not laid out at this stage it will be very difficult to track back what is meant. It is unusually unspecific of the Minister, but perhaps he will be kind enough to deal with that in correspondence also.

10.30 p.m.

Lord Best

My Lords, even this afternoon we have been able to see that there are all kinds of things that you can impose retrospectively on registered social landlords. We have talked today about choice-based letting systems, about registers for accessible housing for people with disabilities and upgrading energy efficiency—all kinds of measures which, if you have a bunch of social landlords, you can require them to get on with.

When you have signed a contract many years before with the private sector, you cannot go back and expect it to do the things that we would expect and hope for from social landlords. We are talking in completely different terms once we dissolve the structures we have built up since the 1974 Act in order to have a whole sector of regulated social landlords and say that that is no longer the way we work and, in our quest for more and cheaper homes today, we are prepared to sacrifice those arrangements. I think that measures of this kind will be deeply regretted later. Although of course I would not dream of dividing the House at this late hour, I would wish to return to this at Third Reading. At this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Bassam of Brighton moved Amendment No. 212:

Page 164, line 16, at end insert—