Contribution
I thank noble Lords for their constructive contributions to this afternoon’s debate; I hope to respond to their points in a similarly crisp and succinct fashion.
First, the noble Baroness, Lady Bloomfield, asked how much taxpayers will pay for the extension of the ECO. The answer is: nothing. The ECO will continue exactly as it has previously, except it will be extended by nine months. There will be no new obligations, only the continuation of obligations that are already in place. Of course, there will be an opportunity to make sure that the remediation that will be necessary for a number of treatments is carried out in good time, and will be sorted out and finished by the time the ECO comes to an end.
Of course, the ending of ECO4 will in itself save bill payers a considerable amount of money. Indeed, as the noble Baroness knows, ECO4 is, in effect, an obligation on energy companies, which they passed on to customers in the form of bills. Alongside the cost of some other legacy obligations, such as the renewable obligation, the removal of that obligation and the end of ECO4 will remove, as I said, around £117 of costs on average from household energy bills across Great Britain.
It is true that the new warm homes plan is underwritten from general taxation, but it is a substantial transfer from direct customer bills to general taxation, with the resulting saving that I have outlined. The warm home scheme is a far more far-reaching programme over a longer period, with a substantial investment of up to £15 billion in it. In the long term, that will be judged by the difference between what has been put in it and what has resulted from the energy savings coming about as a result of the warm homes plan— this will, obviously, be further savings to customers’ bills—as well as by the efficiency with which the warm homes plan is put into place.
The noble Earl, Lord Russell, asked about the arrangements for remediation in properties that the Government consider should be undertaken during the period of the extension of the ECO4 programme for nine months. As I am sure he will know, the NAO report considered that almost all of the external wall insulation measures had major issues requiring remediation; to put that into context, that is about 40,000 treatments, as compared with the 1 million-plus treatments that there were in ECO4 overall, but external wall insulation was a particular problem for the scheme. To a lesser extent, that applies also to internal wall insulation: 29% had major issues requiring remediation, and the NAO considered that a smaller number of treatments had possibly falsified claims attached to them.
Part of the task of this extension is to ensure that those remediations, which are down to the installers to put right, can be done during the period of the ECO extension. The noble Earl raised the possible issue of what the position is if we have got to the end of the period of extension and some of the remediations have not been done. I emphasise that these remediations are being done by obligated installers, first, but also under a strengthened trust mark arrangement for oversight, with increasing audits, site inspections and various other things as regards non-compliance detection and enforcement. So, the people who have to do that remediation will be known about, clearly, and Ofgem has taken the action of writing to all of the people who are possibly in a position where they can have remediation undertaken in order to offer them the opportunity to go on a register for remediation.
This is driven to some extent by installers and to some extent by customer demand for that remediation, and it is backed up by a strong code that makes sure that it gets done. Even if that strays beyond the end of the extension of ECO, it is not the end of the story as far as that remediation is concerned. It will be done. If it is in danger of life and limb it has to be done immediately, but if it is less serious, as it were, it has to be done during the course of that extension.
We think the Government have a good belt-and-braces position as far as those remediations are concerned, and that ECO can come to an end in an orderly fashion. That is quite important in terms of the issues that both the noble Earl and the noble Baroness mentioned about whether there is a cliff edge between what is happening with the end of ECO4 and the beginning of the warm homes plan. Among other things, this extension will mean that there is less of a cliff edge. Indeed, in conjunction with industry, the Government are active in holding round tables to enhance the ability of industry that has invested in ECO4 to transition to activity under the warm homes plan. I hope that it will not be such a cliff edge as the noble Earl mentioned and will run reasonably smoothly—if not necessarily entirely smoothly—into the warm homes plan itself, and therefore a lot of the investment that various companies have put into ECO4 can be realised through the warm homes plan.