RT HON HILARY BENN MP, MS SUSANNA MAY AND MR PAUL CHAMBERS

20 FEBRUARY 2008

  Q20  Chairman: Secretary of State, Peter Soulsby may rejoin us in a second but I just want to ask you one question about the Green Homes Initiative. Over the three year period up to 2011 what is your projected target for CO₂ emission savings as a result of the programme? What do you think it will do?

  Hilary Benn: As far as I am aware I do not know whether there is a figure currently because it is going to depend on the speed of the roll-out and also the extent to which people take the advice. That is the bit of the equation that you cannot predict.

  Q21  Chairman: Given that a lot of your spending, if you like, produces pounds per tonne of CO₂ saved, when you were teasing from the Treasury the extra sum of money you must have told them it was good value and there must have been a basis for doing it. Perhaps Mr Chambers might be able to help us.

  Mr Chambers: One of the difficulties in assessing organisations like the Energy Saving Trust is that a lot of what they promote is already counted under things like the existing Energy Efficiency Commitment, so for the purposes of something like the climate change programme review where we evaluated existing EST programmes, obviously not the Green Homes Service, that entire cost was seen as a support programme for EEC and, assessed in those terms, it is extremely good value for money.

  Q22  Chairman: Mr Chambers, I do not disagree with the point you are making about EEC, particularly as EEC is paid for by energy users, and we are going to come on and talk about that, but let us come back to the question that I asked. The Secretary of State made it clear to us that new public funding was being given to the Energy Saving Trust to run this particular scheme, and I do accept that it might be difficult to be exact on a number, but somebody must have said, "If we are going to spend £33 million of the public's money on this we must have some idea roughly of what we are going to get out of this expenditure". You are not a Department, given your oft straitened circumstances, to throw £33 million on the off-chance that a few people will take it up. You must have some idea as to what you are hoping for. Let me put the question another way: what do you hope for from this expenditure?

  Mr Chambers: The Green Homes Service builds on the experience the Energy Saving Trust has already built up turning their existing advice centre network into what they call their sustainable energy network, and they have rolled that out in a couple of places in the UK in the last few years. I do not have the detailed figures to hand but they found that to be extremely cost-effective in terms of the numbers of people reached and the numbers of enquiries that were turned into actual measures taken up by the people who contacted those sustainable energy networks, and that is the evidence base that fed into the development of the Green Homes Service.

  Q23  Chairman: If there is an evidence base, and I am grateful to you for that, there must be some indicative number that you can derive from the evidence base. When the Secretary of State gets his submission from you saying, "The Secretary of State might like to sign off £33 million", being a careful man he does not sign it off saying, "I think this is a jolly good idea. I have no idea what the outputs are going to be but let's just blow £33 million on something that looks like a good idea really, it's a nice thing to do. What is there next I can do?" You do not spend your Department's money like that, do you, Secretary of State?

  Hilary Benn: No, I do not. As Mr Chambers has pointed out, the evidence base is the success of the money that has been spent in the past by these means. I will happily undertake to go away and see whether in the bowels of the bits of paper some assumptions have been made. I suppose I come back to the point I made at the beginning that the confidence at this stage, since it depends on the uptake, of exactly what will be achieved will by definition be difficult but there is a very clear evidence base in terms of the success of these approaches in the past and this is about enabling more of it to happen.

  Q24  Chairman: Let us put it this way: your Department sets targets, and you have set one for CERT of 4.2 million tonnes of CO₂ to be saved by 2011, so you are in the business of making some kind of forecast. I do not want to delay proceedings now but if you could give us an indication, it does not have to be a spot-on exact number, we are not in the science business on this one, I would be grateful.

  Hilary Benn: I will gladly go and have a look.

  Chairman: Thank you. Peter, you were asking a question.

  Q25  Sir Peter Soulsby: The question I was asking was drawing on the example of differential rates of duty in the promotion of lead-free petrol. I realise that you cannot answer for the Chancellor or, indeed, for your colleagues in local government, but I just wonder whether, at least in theory, you think there is scope for the use of differential rates of VAT or reduced rates of VAT or reduced Council Tax as ways of adding to the incentives to people to promote the sorts of issues that will be part of the Green Homes Initiative or, indeed, beyond that.

  Hilary Benn: I do indeed, and not just in theory but in practice. Already there is a reduced rate of VAT if you get professionally installed micro-generation or energy saving measures in your home. As you will be aware, I am sure, we are pressing in Europe for a European-wide agreement on a reduced rate of VAT for energy efficiency and climate change supporting expenditure. If you are a micro-generator currently you do not pay any income tax on any revenue that you might generate. Some councils have teamed up with EEC to offer a financial incentive that takes the form of a rebate on the Council Tax, so the work gets done but the energy supplier passes the money to the council and the council gives some of it back. I understand about 60 councils are doing that already. That is an example of something that is already in place. I would take the point, were you to make it, about the need to publicise those things better but, when you look at that, that demonstrates we have thought about ways in which we can provide incentive although undoubtedly there will be a need to do more.

  Q26  Lynne Jones: Before I ask my questions I am allotted, could I just take you back a few minutes to when you were talking about retrofit. A lot of the instruments you were referring to were appropriate for owner-occupiers, incentives for loans and, of course, the Warm Front cannot be used for council houses. Have you any thoughts on rented housing? You said that you would learn, for example, from the German retrofit programme, which is refurbishing all pre-1978 homes. Have you any thoughts on what more could be done because, after all, the total programmes of Warm Front and CERT are not a patch on what is being spent in Germany?

  Hilary Benn: I need to check the particular figures but I am not entirely sure there is that disparity. That is the first point. The second point is obviously—

  Q27  Lynne Jones: €1.4 billion a year purely on energy efficiency in central government grants, let alone what is going through other mechanisms with these energy companies.

  Hilary Benn: €1.4 billion a year. The 2.3 billion that I referred to earlier over three years is less but it is not quite by the margin that—

  Q28  Lynne Jones: Most of that is through the energy efficiency companies.

  Hilary Benn: Most of it is because £800 million will be through the Warm Homes and the rest will be through what will be CERT. The second thing is Decent Homes. We must not forget the—

  Q29  Lynne Jones: The standards there are very low compared to current standards. The Germans are bringing all their pre-1978 stock up to current best practice. Decent Homes is not anywhere near that.

  Hilary Benn: But it is an improvement on where it was before. I take your point.

  Q30  Lynne Jones: We have got huge targets on reducing our CO₂ emissions so we have got to do much better than the Decent Homes standards.

  Hilary Benn: I accept the point, we are going to have to do better. The most difficult sector will be the privately rented because although Energy Performance Certificates are going to come in in October for privately rented properties, the question is how do you create an incentive structure for people who are renting their properties to make that kind of necessary investment unless market forces result in tenants saying, "We don't fancy your property, thank you very much, because it has not had any investment in it and we are going to go somewhere else".

  Q31  Lynne Jones: Tenants do not have much choice in many cases.

  Hilary Benn: In many areas they do not. Genuinely, I think that is the most difficult area, frankly.

  Q32  Lynne Jones: You did say in your response that you would look at the German programme, so perhaps in a little time you will let us know what your thoughts are. Anyway, moving on to feed-in tariffs, why was your response so negative about feed-in tariffs? Why did it say that it was a more expensive or more costly way of encouraging renewable energy generation?

  Hilary Benn: I think that is because that is what the figures show, however things have moved on since then.

  Q33  Chairman: Wait a minute, what figures? Where do you get your information from about what it costs?

  Hilary Benn: Well, I am sure the information was provided by BERR and, therefore, I would need to check.

  Q34  Lynne Jones: You would if they were provided by BERR.

  Hilary Benn: That is perhaps a bit unfair. That is what we referred to in the response. However, you will have seen what Malcolm Wicks said yesterday in—

  Chairman: I am sorry, I am cutting across Lynne here. I am intrigued to know where you got the number from that justified that statement. We went to Germany and we asked them how much it costs, we talked to the people on the ground so we have got a figure, but we are interested to know what yours is.

  Q35  Lynne Jones: The unit cost per amount of kilowatt reduction is much lower and even the Stern Report makes reference to the feed-in tariff being a more effective system, so we were quite surprised that you would roll out this old chestnut about it being more expensive.

  Hilary Benn: In truth, I would have to go and check precisely what the source of it was, but I suspect the answer is that it would come from a calculation that BERR had done.

  Q36  Chairman: But you put it down in your reply.

  Hilary Benn: Yes.

  Chairman: The information we have over a year in Germany is that it costs approximately £18 per year per cost per customer. I am just intrigued to know what number you had. It did not seem wildly expensive.

  Q37  Lynne Jones: The ROCs are less per customer but, of course, they produce very little renewable energy. The German system actually produces massively more renewable energy. 12 per cent of their energy is renewable energy using the feed-in tariff system and they have already met their 2010 target whereas we are not even meeting our target which is much lower.

  Hilary Benn: That is absolutely correct. The evidence from Germany and, indeed, the other countries that have moved to adopt or already have feed-in tariffs is exactly as you describe. Malcolm Wicks said yesterday, because as a Government we do listen to the arguments, including to what the Select Committee says, as part of the Renewable Energy Strategy we will look at feed-in tariffs for micro-generation. Can I say that I unreservedly welcome that.

  Q38  Lynne Jones: In fact, only a few days after your response the Prime Minister said they would investigate feed-in tariffs, so could you tell us what are the timescales and the terms of reference for the investigation of feed-in tariffs? Presumably BERR is taking the lead on this.

  Hilary Benn: BERR is indeed taking the lead. As I understand it, the Renewable Energy Strategy consultation will begin in the summer.

  Q39  Lynne Jones: So how many people are working on investigating the feed-in tariff?

  Hilary Benn: I could not answer that. I would have to find out from BERR and come back to you.