12 March 1998

Mr. John Burnett MP (L. Dem. Torridge and West Devon)

The Minister, The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions, Angela Eagle, posed the question: "Is there a viable voluntary approach which would ensure that all mortgage lenders provided tailored, reliable, energy-efficiency advice, along with a rating and estimates of energy cost savings and the likely cost of improvement measures; or, having worked on this for several years to no significant effect, is legislation now the only option?"

Energy efficiency is one of those matters that few, if any, oppose. Measures that enable us to enjoy the same levels of comfort, warmth, light and convenience, but which use less of the world's resources, are obviously beneficial. Although burning fossil fuels has led to huge improvements in the level of comfort we all enjoy at home, it has its drawbacks. Climate change is one of the biggest environmental threats facing the world today and this year the Kyoto conference and the strongest ever El Nino effect have raised awareness of the problems we may face still higher.

The burning of fossil fuels has been the main contributor to the level of so-called greenhouse gases, among which carbon dioxide is the major culprit. The most effective way to reduce carbon dioxide emissions is to use less energy. Energy-efficiency measures allow us to do that.

Energy efficiency in the home can also have serious health effects. The poor quality of the United Kingdom's housing stock leaves approximately 8 million homes in the UK shivering through the winter. That leads to cold-related illnesses and premature deaths, especially among our elderly and poor. Our winter death rate rises by almost one third compared with the summer rate; by contrast, in countries such as Sweden and Norway, the increase is closer to 10 per cent.

The aim of the Energy Efficiency Bill is to improve the energy efficiency of Britain's housing stock. It will achieve that aim by providing clear and digestible information to people who are buying a house. House buyers will receive a rating, indicating the energy efficiency of their home, and a list of suggestions for cost-effective energy-efficiency improvements. An indication will be provided of the period in which such improvements will pay for themselves by reducing fuel consumption and, therefore, fuel bills.

The idea can be compared to many other existing schemes. While the quoted miles-per-gallon figure is not the only factor that the public consider when buying a new car, it is certainly one to which they pay attention and is regularly reported in car reviews in newspapers and magazines. It is a legal requirement for cars to be tested for the number of miles per gallon that they can do, and that information is displayed at the point of purchase. That requirement was first introduced in 1983; if such information is required for cars, why not for houses?

Another analogous example is that few people would buy a house without discovering into which council tax band it fell. But, despite the fact that fuel bills can often be greater than council tax bills, we currently receive no information on the likely level of fuel bills.

The signs are that people want to receive such information. A Which? survey in 1991 found that 60 per cent. of people wanted information on heating costs when they bought their homes. More recently, a South Bank university study that considered the wishes of new home buyers suggested an even higher figure. It found that 87 per cent. of people wanted to know the energy rating of their home. That answers the criticism that some have made that people may not want the information.

The information is useful: it is the basis for comparisons between properties and will act as a catalyst towards the installation of energy-efficiency measures. Combined with tailored advice, ratings are an extremely useful tool to persuade people of the benefits of energy efficiency. People do not have to take the advice, but it will highlight the benefits of taking those measures.

I believe that people do want to act on such advice. In 1996, the effect of the work of local energy advice centres was studied by an independent company for the Energy Saving Trust. That research showed that, on average, a visitor to a local energy advice centre went on to save 390 kg of annual carbon dioxide emissions. That figure did not count savings made through changes in behaviour resulting from advice from the local advice centres, so is likely to be an underestimate.

If we assume, therefore, that the 60 per cent. of people who told Which? that they would like such information are as receptive to the advice as those who visit local energy advice centres and go on to take similar steps to improve their homes, we can estimate the environmental benefits that will accrue if the Bill becomes law.

Every year, about 425,000 mortgages are given to people to buy houses that are not newly built. If 60 per cent. of those--225,000 households--were to save an average of 390 kg of carbon dioxide emissions every year, the annual savings would be 0.1 million tonnes of carbon dioxide emissions--a not insignificant figure.

Of course, all this has financial benefits. Recent work by the Energy Saving Trust shows that the average household could save 250 a year on its fuel bills. It is true that not all of that saving would come from changes to the property itself; some would come from purchasing more efficient appliances and light bulbs, but I understand from the trust that the building measures that can be taken could save an average 175 per household per year.

The only possible objections would be that the measure places too onerous a work load on mortgage lenders or imposes an excessive cost on house buyers, but the simple fact is that it does not. By requiring energy surveys to be carried out only when a property is already being surveyed by the mortgage lender to assess the value and condition of the building, it adds minimally to the work of the surveyor.

Clause 1 places a duty on mortgage lenders to provide the borrower with information on the energy efficiency of the property that they are buying, together with suggestions on how that can be improved. Any information provided under clause 1 must be subject to guidance issued by the Secretary of State. Clause 3 defines the terms used in the Bill, and it is worth noting that the definitions mean that the Bill will apply only to residential properties.

Fourteen years of inaction have shown that there is no viable voluntary approach to deliver the rating and advice that the Minister has called for. Legislation is the only option.

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