HANSARD
Boiler Upgrade Scheme (England and Wales) Regulations 2022
- Considered in Grand Committee
- 4:08 pm
- Moved by
- That the Grand Committee do consider the Boiler Upgrade Scheme (England and Wales) Regulations 2022.Relevant document: 32nd Report by the Secondary Legislation Scrutiny Committee. Special attention drawn to the instrument.
- My Lords, these draft regulations were laid before the House on 25 February 2022, and the SLSC considered the regulations in its 32nd report.The UK is the first major economy in the world to set a legally binding target to achieve net-zero greenhouse gas emissions by 2050. Between 1990 and 2019, our emissions decreased by 44%. We are continuing to advance sustainability through the Government’s Ten Point Plan for a Green Industrial Revolution, the Net Zero Strategy and, most relevant in this case, the Heat and Buildings Strategy.Currently, the heating of our homes, buildings and industry is responsible for 21% of the UK’s greenhouse gas emissions. Decarbonisation of heat is recognised as one of the biggest challenges in meeting our climate targets, requiring virtually all heat and buildings to be decarbonised. The Government’s ambition is to phase out the installation of new natural gas boilers beyond 2035. Heat pumps are a proven, scalable option for decarbonising heat and will play a substantial role in any net-zero scenario.A UK market with the capacity and capability to deploy at least 600,000 heat pumps per year by 2028 can keep us on track to get to net zero and set us up for further growth if required. However, the current UK market for low-carbon heat is relatively small; due to this, these technologies are largely unable to compete on a capital-cost basis with conventional heating options. Although the new-build market for low-carbon heat is expected to grow as a result of regulatory signals, such as the future homes standard, existing buildings face a specific set of challenges. Subsidy is required to mobilise this section of the market, bridge the cost gap between a fossil fuel system and low-carbon alternatives, and build the appropriate supply chains.
- 4:15 pm
- My Lords, so much detail, so much complexity. I thank the Minister for his introduction to these historic regulations. They presage building operations in pretty well every conventional house in Britain. Perhaps there will have been nothing like it since the immediate post-World War II years, when we addressed the consequences of Göring’s Luftwaffe and Adolf Hitler’s rocketry on our homes and factories.I served in three Administrations as a young man, and I recognise the nature of these regulations. They are the product of a dedicated department and a concerned Government, and they could have been presented by any concerned previous Government of yesteryear, but now is a unique challenge. The vocabulary and phrasing is reassuring in its familiarity, with the prosaic title and then the vocabulary which we know well: standards, eligibility, budgets, grant values, investigation, offsetting, a code, vouchers and regulation. It is the whole panoply of the reassuring, everyday Civil Service vocabulary that, in fact, describes a quite revolutionary proposition, and one so soon to impinge on the private, ordered, domestic life of pretty well everyone. It is startling that, almost in successive years, our fellow citizens have willingly signed up to lockdown—a kind of partial, self-imposed house arrest—and now to inviting plumbers, heating engineers and inspectors into virtually every one of their traditional houses.Like many others in your Lordships’ House, I am fully signed up to green, and one cannot argue with the statistics: they are very daunting. Understandably, the Government must do their duty here and take the nation with them, whatever the difficulties. The regulations will go forward. The nation—the planet—faces mighty consequences if the Government do not present regulations such as these. However, in the context of this debate, one can ask: are they appropriate as they stand? I found the regulations’ executive summary and Explanatory Memorandum helpful amid the plethora of challenging small print, but summations raise further questions. The Secondary Legislation Scrutiny Committee report, the 32nd of 2019-21, has drawn special attention to these regulations: namely, that they are politically and legally important. Are the Government confident that there will be customer protection adequate to prevent mis-selling? What plans and what detail have the Government prepared to protect the unsuspecting household consumer? Are the regulations overambitious in their targeting?
- My Lords, I thank the Minister for his clear explanation of how the scheme will work. However, like the noble Lord, Lord Jones, I await the Minister’s response to the Secondary Legislation Scrutiny Committee’s specific comments relating to how the scheme will work in making progress towards the Government’s ambitious target of 600,000 installations by 2028 and on how realistic the Government’s current projections and targets are, given the six-year timetable.I also want to know from the Minister why there is a seven-week delay in the introduction of the scheme. This causes severe problems for both manufacturers and installers who have geared up for the scheme’s introduction on 1 April. Will the RHI scheme be extended to cover this gap? Can the Minister also confirm that this scheme will run its full course, unlike the green homes grant, and tell us what will happen if the take-up goes beyond 30,000 installations per year? Is funding contemplated for that?I am also interested in the Minister’s response to the part that other measures and technologies can play in achieving the same ends. Can he provide confirmation that they will receive similar financial support and incentives? Although the financial support that the boiler upgrade scheme will provide is welcome and necessary, it is important to recognise that heat pumps and biomass boilers are just two of a range of technologies that will help us to reach net zero. We need to take into account the diverse nature of the United Kingdom’s stock of domestic and non-domestic properties. This requires us to be flexible in the choices we make regarding the low-carbon solutions that are employed.For instance, heat pumps are not appropriate or effective in a vast number of properties. Given this, the Government should adopt a technology-neutral approach to the decarbonisation of home heating, ensuring that the most appropriate and suitable solutions are used on a case-by-case basis. BEIS’s figures indicate that, in the off-grid space, roughly 1.7 million homes use fuel oil for heating, while another 220,000 use LPG. For many of these properties, which are often older, uninsulated and listed and where insulating is either unfeasible or extremely challenging, installing a retrofitted heat pump could cost £30,000 or more. Even with the maximum amount of government support, home owners in these instances would be left with a bill for £24,000 or more.
- My Lords, discussions on heat pumps are always interesting. Everyone seems to have a view, although few have any experience of actually running the things; I find that this is particularly the case with those who are the most enthusiastic about them. I would love to know how many noble Lords who have spoken today have installed a heat pump—indeed, whether the Minister or any other member of the Government has done so. For the record, I have; I have two heat pumps, in fact, so I do speak a little from experience.I welcome the scheme even if, from a personal point of view, I regret that it has come a bit late for me —although I do benefit from the RHI scheme, which over its life is slightly more generous. We need to bring down the costs of heat pumps if we are to encourage their uptake. This scheme is simple and up front, so I think it is likely to be more successful than the RHI scheme, which is complex and, frankly, rather tedious with having to measure everything and send in the forms every three months.I want to raise a couple of points of caution, based both on my own experience with heat pumps and on publicly available information, including an Answer from the Minister to a Written Question I submitted to him about a year ago. Heat pumps are often stated as being able to generate heat equivalent to three to four times the electrical energy that is put in; I have seen claims of up to five times. There has been quite a lot of press coverage over the weekend suggesting that, with these grants and based on that kind of efficiency claim, heat pumps could now be cheaper than gas. There is plenty of coverage saying it; it is not right, but it says it. Advertising in brochures for heat pumps often talks about those sorts of efficiency multiples. My own pumps claim they should achieve 3.2 times efficiency; they are less efficient high-temperature pumps, which is why it is a slightly lower number.
- 4:30 pm
- High expectations of these things are being set, but, sadly, the efficiency claims and performance are rarely, if ever, achieved—and only in absolutely ideal situations. When you read the small print in the brochures or whatever, you find that the claims tend to be made when the outside temperature is 15 degrees centigrade or higher and the output hot water set at 35 degrees, which is somewhat lower than normal domestic hot water temperatures of 50 to 60 degrees. Efficiency drops really quite dramatically as the outside temperature drops. Efficiency at zero degrees outside temperature can be less than half what it is at 15 degrees. The same happens as you push the output hot water temperature up.
- My own experience has been a peak coefficient of performance of about 2.5 times and an average close to 2.1 times. The Minister’s Answer to the Written Question I mentioned suggested a seasonal average of around 2.4 times. These are all substantially lower than the public claims we all read about in the press, on green websites and, in particular, in manufacturers’ advertising. With electricity prices being what they are, the reality is that heat pumps are very unlikely to save money against gas.
- This also does not take into account the little secret that no one tells you when you install an air source heat pump: the defrost cycle. As the outside temperature drops, the pump has to work harder. As well as becoming less efficient, it starts to collect ice around the coil, especially when the air is humid; a typical cold, damp UK winter day is about as bad as it gets. It then has to defrost, which it does by taking heat back out of your hot water tank, so just when you need heat the most, the heat pump is producing the least heat and at times actually taking heat out of the system.
- The difference between a coefficient of performance of a claimed 3.5 times and an actual 2.4 times makes an incredibly substantial impact on the running costs. In many houses, other than those with perfect insulation, you may well need a secondary heat source during cold snaps to make up for the lower output and defrost problems I have just described. In my case, an additional electric boiler and a wood-burning stove have made the system workable when the outside temperature drops below about 2 degrees centigrade.
- I am not trying to undermine the scheme. Heat pumps are an excellent solution in the right circumstances and will be an important part of our move to net zero, but I am really concerned that we may see a VW dieselgate-style mis-selling scandal if we are not careful and people buy heat pumps based on the unrealistic claims made to them and then find them very much more expensive to run than expected and producing less heat when it is really needed, compared with their existing boiler. If people feel misled, uptake will fall away quickly and the scheme will fail.
- Can the Minister confirm that manufacturers and installers will be required to state clearly in their advertising and installation literature the real-world expectations of efficiency and running costs and realistic heat output in a typical UK winter, rather than the unrealistic claims that are currently made? This real-life information should also be included in the MCS database, rather than just the perfect information in there at the moment. As I have said, heat pumps are an excellent solution in the right circumstances, but people need to know what they should realistically expect before they buy.
- I have a small second point. I was rather surprised to discover that installing a heat pump can actually have a negative impact on energy performance certificates. That means that, for a landlord looking to achieve the required EPC, there is a disincentive to install a heat pump. I have this problem as a landlord, albeit in Scotland—so it is devolved—but I think the same is true in England. That cannot make sense, so if the Minister could look at that I would be most grateful.
- My Lords, I too thank the Minister for his comprehensive explanation and for having spared the time last week, with his officials, to explain some of this stuff to me. It is welcome that we have a simpler scheme and that the Government are trying to understand that big schemes that cannot be met with the skills required, et cetera, do not bring any benefit. These are the key things that arise from the scheme.The noble Lord, Lord Jones, raised the issue of skills, which are fundamental to everything in this area, not just in terms of heat pumps. As we green our economy, we have to ensure that we build our skills base. I know that the Minister talked about a lot of money having been spent on training under the previous green homes grant scheme and the money being spent by manufacturers. But we need to ensure that the Government, working with local authorities, skills providers and industry, are really looking across the piece about greening the economy and how we ensure that the skills are there to do it.As I understand it, the grant scheme is to be installer led. That is obviously beneficial because the installers will, I hope, get used to that process, which will make it a bit less daunting for consumers. It is also encouraging that proper quality assurance is being required although, again, that clearly also constrains the ability to meet demand.It is very important that all those installers will be required clearly to advise home owners on the appropriateness or otherwise of installing a heat pump in their property. As we have heard from the noble Lords, Lord Carrington, Lord Jones, and Lord Vaux of Harrowden, properties vary immensely. The performance of these pumps also varies and public confidence in the scheme should not be lost—as the noble Lord, Lord Vaux, said, it could really disappear overnight. If people feel that it has been oversold and they have been provided with replacements for their heating systems which do not achieve the heat and hot water that they are used to, or have been promised, we will have a real problem. I hope that the Minister will be able to reply to those important points that the noble Lord raised.
- My Lords, in debates such as this, from listening to the excellent contributions from my noble friend Lord Jones, and the noble Lords, Lord Carrington, Lord Vaux of Harrowden and Lord Oates, more questions come up as we go along. I look forward to the Minister’s response on some of the technical details.I go along with the general response in welcoming the purpose behind the scheme. The ambition is clear. Obviously, the context is the imperative to decarbonise for our net-zero targets and energy security is absolutely at the forefront of everything we are discussing at the moment, but perhaps we have not dwelt enough on the link with the cost of living crisis and the real concerns we have about people being able to afford to heat their homes, as well as all the other challenges for people bringing up families, in particular, and older people, who are also making terrible decisions about heating or eating. There is a very complex background to this, as we have heard.The main question we have running through this is whether the amount of funding available—I thank the Minister for the detail on the background to the upgrade scheme—realistically has a chance of delivering the number of conversions laid out in the proposals.I go to personal experience. I have talked to people over the past few days who have been considering upgrading their boiler and heard clearly the reasons why, at this moment, they have decided not to go down that route. Of course, the fundamental one is cost, but efficiency is also a major concern. Noble Lords know my background in local government; I know that the Minister visited Leeds to look at a scheme for retrofitting housing. The biggest challenge we have is retrofitting and suitability for purpose.