Local Government and Communities Committee

Meeting date: Wednesday, September 28, 2016

Official Report 595KB pdf

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“Low Carbon Scotland: Meeting our Emissions Reduction Targets 2013-2027. The Second Report on Proposals and Policies”

Good morning, everyone. Agenda item 2 is consideration of the second climate change report on proposals and policies—RPP2. The committee will take evidence on the progress that has been made with RPP2. Today’s session is a precursor to the committee’s scrutiny of the draft third climate change report on proposals and policies—RPP3—which is due to be laid in January 2017. The session will take place in a round-table format to allow for a more free-flowing discussion of the issues. It does not always work out this way, but a successful round-table event is usually one in which MSPs talk less and the witnesses talk more. We will see how it goes.

Rather than introduce the witnesses, I invite everyone to introduce themselves, after which we will move to the first question. I am the convener of the committee. Thank you for coming along this morning.

I am vice-chair of the sustainable Scotland network. My day job is to look after energy and sustainability for Dumfries and Galloway Council.

I am a member of the Scottish Parliament for Mid Scotland and Fife and a councillor on Perth and Kinross Council.

Hi. I am the head of the Energy Saving Trust’s team in Scotland. The trust delivers significant programmes for the Scottish Government that help with the delivery of the policies under the RPP, not least the home energy Scotland network.

I am an MSP for Lothian.

I am climate and energy policy officer at WWF Scotland, and I am representing Stop Climate Chaos Scotland, which is a group of organisations that campaigns to tackle climate change.

Good morning, everyone. I am the MSP for Cunninghame South. I listen as well as I talk, so this will be a good session for me.

Good morning. I am director of the Royal Town Planning Institute covering Scotland and the Republic of Ireland. We are the professional body for town planners.

I am an MSP for Central Scotland.

I am the MSP for Cunninghame North.

I am an MSP for Central Scotland.

I am a councillor on North Lanarkshire Council and COSLA’s community wellbeing and safety representative.

I am from COSLA, on the housing portfolio.

Thank you, everyone. You are most welcome.

Before we move to the first question, I intimate to the committee that Councillor Harry McGuigan and Silke Isbrand need to leave at about 12 o’clock. I ask them to slip off quietly when they need to and, because I will not get a chance to thank them at the end of the evidence session, I thank them in advance for their contribution this morning.

I have a general question about moving from RPP1 to RPP2. What we have learned from that as we move to RPP3? Will RPP3 just be a continuation of a similar scale of increase and effort, or do we need to make a much more dramatic step change in efforts to tackle climate change?

We have laid solid foundations with the previous RPPs, but there is now a need, as you intimate, for a step change to maintain track. The lessons that have been learned can drive that step change, which probably needs to be in areas such as renewable heat and district heating. The strategic infrastructure priority on energy efficiency bodes well. I suppose that we would say that there is a need to crack on, if I can put it colloquially.

I endorse that. From the perspective of working with a local authority, we have good foundations. We are starting to record what we are doing much more effectively; the information is now available. We know that there are big gaps, particularly in areas such as demand reduction and renewables, in trying to get more on the ground and to increase the scale of what we are doing to meet our targets.

It is helpful to look at the overall picture of emissions reduction in Scotland when looking back at the previous RPP and looking ahead to the next one. In the past couple of years since the RPP2 was passed, we have had good emissions reduction, which shows that policies can work. That is reflected in this year’s first hit annual target.

When we look at how the emissions targets have been met, we see good progress in sectors such as electricity and waste. For example, we have seen the benefits of the deployment of renewable electricity in the electricity sector. However, some areas of the economy have not quite seen the same emissions reduction. Buildings, especially housing, and transport are areas in which we have not seen significant progress. For example, if we adjust for recent winters and weather, housing emissions have fallen by only about 4 per cent since the Climate Change (Scotland) Act 2009, compared with a 30 per cent fall in electricity emissions and a 50 per cent fall in waste emissions.

The challenge with RPP3 will be extending the good work that has been done in those two sectors to the other areas. A priority for this committee would be to look at housing emissions and, to reflect what Chris Wood-Gee and Mike Thornton said, the energy efficiency of our buildings. There is a lot of work to be done in specific policy areas such as those, but the RPP is a great opportunity to step up our game.

We, too, endorse the need for a step change in order to ensure that we tackle the issues in a purposeful and effective way. However, we need also to be in early, so that we can work between the national and the local aspirations in order to show a synergy from that that will enable us to ensure that we are tackling matters in a complementary rather than a confusing way, which can sometimes happen.

We should never move away from the reality that it will be very difficult to effect that step change without the necessary resources and ensuring that we are able to engage fully locally and use the skills and the knowledge that are out there.

11:30  

Like others, I think that good progress is being made, and we should certainly build on that. I would like to see something that would allow the change that we are trying to achieve to be much more transformational, and I would like us to plan for that much more. RPP2 has 322 pages but only four paragraphs on planning. The planning system can help us to achieve what we are trying to achieve, but it is probably underutilised and is not held up and recognised enough. If we have something that allows us to take forward a planned approach that is coherent but focused, that will help us to achieve the targets.

I have a supplementary question, but I would rather give Andy Wightman the opportunity to develop his line of questioning.

Thank you very much.

This is an opening dialogue, as we move towards seeing RPP3. I am interested in Craig McLaren’s point about planning. We are to have new planning and forestry acts. Is there potential to set the necessity to tackle climate change as a core purpose of systems such as forestry and planning in the basic statutory frameworks for those things? Would that help?

Changes that have already been made have helped. The national planning framework and Scottish planning policy, which were published in June 2014, now work towards four outcomes, one of which is a low-carbon economy, so that is central to what we should be trying to achieve. My issue with the national planning framework and Scottish planning policy is that they are very much seen as planning documents, whereas they should be much more influential than that. They should co-ordinate our approach to the development of different places and of infrastructure to try to ensure that we achieve a low-carbon economy. That is not really the case just now. Perhaps, as a planner, I would say this, but we are missing a trick by having a national plan that does not have the ability to influence decisions and policies or where we put resources.

Of course, there will be a new national planning framework and a planning bill will come before the Parliament. We will scrutinise that anyway but, as we go through that scrutiny, what should we look out for? Can you give us tips on what we should look out for as we mainstream RPP3, if you like, in the committee’s work? Does Mr McLaren or anyone else want to answer that?

There are lots of things that we should be doing. To be honest, the planning review that is under way is focusing more on the processes and procedures of planning, but we are doing some work on the big-picture issues, such as what we are trying to achieve, what type of Scotland we want and what type of planning system we need to achieve that. We will publish some stuff on that in the next few weeks. Key to that is a low-carbon economy, and planning can help to provide a route map to get to elements of that.

Dealing with issues to do with how planning is perceived and used might help us to do that. In the planning review, we have talked about the fact that the system has to be much more corporate and collaborative. As I said, it has to have much more influence in local government and in the Scottish Government. We talk about the need to front load things much more. We need to have discussions and debates about what we want to achieve at the start of the process so that we can all then work out what we can contribute, rather than at the end of the process, when we are immediately in some form of conflict.

We have also talked about the idea of planning being much more focused on delivering things. That is about linking resource to the vision, which does not always happen just now. Such things would help us to meet the targets and achieve the objectives for a low-carbon Scotland.

I will bring in Elaine Smith in a second, but I should point out to the witnesses that I can be a bit dim sometimes and if you do not blatantly catch my eye, I will not know that you want to speak. So, before I go to Elaine, this is your opportunity to feed in something on planning. Does anyone want to comment on that?

I have a more general comment about what the committee can do with RPP3, once it is published, to continue the scrutiny and, as you say, convener, mainstream it. It is not a document that should sit in isolation. One of the problems with RPP2 is that there has not been any process of monitoring or verifying whether policies are actually implemented and whether the emissions reductions have been delivered. It is key for the committee and for the Parliament to continue the work of the RPP. It will contain lots of policies and proposals, but the key is to look out for the implementation of those through bills. The RPP should instigate and set in motion new policies, which could end up in all sorts of consultations and bills, so it is key that the pressure is kept up.

With past RPPs, policies and proposals have been in the document but have not been implemented. For example, as far back as RPP1 there was a proposal to regulate minimum energy efficiency standards for the housing stock. The proposal was also in RPP2, but it has been endlessly delayed and has still not been consulted on. One of the ways to mainstream RPP3 will be to look out for those key measures and see whether they are popping up elsewhere.

That is helpful. Does Mike Thornton want to come in?

Conflating that with the point about planning, through the first two RPPs we have had a sort of national plan with a small p and some policies at a useful scale to deliver the first steps in that plan. There is a need, both in planning and in regulation of the energy efficiency of the domestic stock, to have a national framework to support the policy delivery. Those decisions are large scale, have winners and losers and are more difficult. However, we have reached the stage at which such decisions need to be made and implemented both in planning and in other legislation.

Craig McLaren talked about getting it right at the start of the process. What do committee members and others think about conflicting aims? An example would be a planning proposal for an incinerator in a local community, which could be argued for as meeting some of the aims of the RPP but the local community may not want it. Where does that leave local government? Do the arguments around the RPP override the community empowerment arguments? I am asking the question not of Mr McLaren specifically, although he may want to comment, but for general consideration.

That is a valid point and an issue at a local level. In trying to implement climate change and low-carbon policies, planners always come up against other priorities and initiatives. A key priority at present is the delivery of more housing. The planning profession is under the cosh to ensure that it delivers as many houses as it can. Does that always mean that houses will be located in sustainable places? There is a balance and a lot of work to be done to ensure that we can make that happen.

The planner’s job is often to navigate through the different interests to come up with something that suits people. Some people’s requirements might not be met and they might not be happy with the decision, although it may be in the public or the greater interest.

The RPPs have been a very useful tool in the delivery of carbon emission reductions and so on. We must try to make sure that the resources that are needed to effect what is highlighted in the RPPs are well understood. We should not pay lip service to something because we like the aspiration if the resources will not be there to make it happen. We have to get into that territory very early for RPP3, which we welcome.

Local authorities have to deliver 50,000 homes and we want to do that; it is desirable. However, resources are scant. Last year in my area we set a horrendous budget—in all my years as a politician, I never thought that I would see one like it. We need the assurances from the RPP that resources can and will be found. I am hammering the point, but it is crucial. We are kidding ourselves if we do not raise the profile of resources.

You mentioned the target of 50,000 affordable homes. There is a significant investment of taxpayers’ money in funding that ambitious commitment. Are you confident that the new homes that will emerge from that programme will have suitable energy efficiency measures as standard? It is assumed that new social housing tends to be the most energy efficient in the business. I think that at least 35,000 of the 50,000 affordable homes are earmarked as social housing, and some of the remaining balance might be social housing and some might not be. I apologise for my ignorance, but will the balance of up to 15,000 homes be built to the same energy efficiency standards as the new social housing?

It would be an absolute disgrace if that were not the case. If a two-tier system were applied, we would fight to ensure that we tackled it.

I am not saying that there is a two-tier system; I just do not know.

No, but you make a good point.

The building regulations will apply, whatever the tenure. Therefore, because the houses are new, they will be 45 per cent more carbon efficient than if they had been built in 2007, which is obviously a significant gain. However, most of the houses that we will live in by the time the climate change targets have to be achieved are already built—people are living in them already. Energy efficient new housing stops things getting worse but only retrofitting existing housing can make them better. New housing is a necessary but not sufficient condition of achieving the targets.

As you said, convener, social housing is the most carbon efficient sector by tenure and, therefore, the people who live in it have more efficient energy bills. That is because the Government has regulated for energy efficiency in the sector. I imagine that that is why there is a strong consensus among the witnesses that the regulatory approach should be extended beyond the social sector. Basically, it works.

We might come on to explore greater regulation of the private rented sector, the owner-occupied sector or the buy-to-let sector. For the moment, we will stick to how we can maximise the benefit from the 50,000 affordable homes.

As we have heard, there are fairly stringent building standards for new housing, which means that there should be a high standard of energy efficiency in the 50,000 affordable homes. However, we do not often take account of the location of those new houses. We need to think about how that can be made to work in a way that minimises the carbon impact. We need to ensure that they are linked to public transport or are extensions of existing settlements and build on the existing infrastructure, which minimises the need for new infrastructure; otherwise, we will need to open up sustainable sites through investing in infrastructure.

There is a need to think about the housing unit, and the RPP does that. However, it does not consider where we put those units or the importance of the contribution of location to sustainable development.

Have we come full circle? We mentioned the planning review, which the committee has had an initial look at. Do we have to consider the reform of section 75 agreements, planning gain and the introduction of a levy—I apologise if I use the terminology wrongly—so that the money goes towards infrastructure and other types of sustainable development? Whether we are talking about the affordable housing target or just what happens when a large housing developer picks a field somewhere and seeks planning permission to build 400 units, do the witnesses have any comments about how we could use procurement or the levies that we could introduce in relation to building and sustainability? Is there more that we can do?

We have been saying for some time that the section 75 model is in a bit of a crisis because developers are crying foul and saying that it is too expensive for them to deliver the other facilities as well as housing, and it is left to the state to try to pick up the pieces. There is a bigger role for the Scottish Government and local government in addressing the matter. We should use the continental model, which involves providing the infrastructure. We should pick the sites that we think are developable, red carpet the infrastructure into them to derisk them and leave house builders to develop them. They would be serviced sites, in essence. That would be a change in culture and would mean that we would have to do much more up front than we do at the moment. It would also mean more up-front finance at a time when we are not in the best financial position.

11:45  

Do you mean that in a positive way, to direct the market, and that you would red carpet the sites that you believe will lead to sustainable housing developments, with all the benefits that that would bring for RPP3?

Absolutely.

That is exactly my sentiment. It is well expressed—I cannot add to that.

I think that that is coming. Sites that were pre-started happened with industrial development in the past. It would help particularly with things such as the additional infrastructure costs of putting in heat pipe networks for new housing developments. By the time the planning is in, it is almost too late to get such infrastructure in place. It is a really positive idea.

Building regulations have been mentioned. Are they still fit for purpose for all of this? What is the role of building control officers, and do we have enough of them? Are the companies now more self-regulating with regard to building control standards? I am interested in that area and how it fits in.

That was mentioned in our written evidence. The building regulations pathway that the Scottish Government adopted has been good. We argue that that trajectory should continue.

Another aspect worthy of the attention of committee members is that, when a house is built to a certain standard, people assume that the standard is met. Although that is a perfectly reasonable policy, it is not necessarily backed up by sufficient testing and monitoring so that we can be sure that the carbon savings that the Scottish Government books against its targets are actually being achieved. That area needs some attention.

If there are no further questions on that area, I will mop up something mentioned by Chris Wood-Gee about heat and power initiatives. Committee members visited the Wyndford estate in my constituency to look at the community heating system. Wyndford is a 50 or 60-year-old development that was retrofitted using grants and moneys from power companies and the like. There are 50,000 new affordable homes planned. Is it anticipated that, as 600 units are built in a community, a heat and power system or a new community heating system will just happen from scratch? Has the Scottish Government indicated that when housing associations, for example, go forward for housing association grants, such things are expected to be part of the mix? Perhaps that would require funds from another source, or a cocktail of funding, rather than conventional housing association grant funding. Do you have any comments or information on that?

Mike Thornton was on a group that the Scottish Government convened to consider the role of regulation to support district heat networks, so this is without prejudice to his comments. The group considered what needs to be done to improve the roll-out of district heat and whether local authorities have the necessary powers, and made several recommendations.

To answer your question, there is a lot more that could be done to give local authorities planning and other powers to require district heat networks in new developments and to obligate people who might have waste heat to contribute to those district heat networks. There is a proposal for a warm homes bill in this Parliamentary session, which will be a great opportunity to take forward the group’s recommendations to increase local authorities’ powers.

With regard to the example that you have just given, although new developments are more likely to have district heat networks, my guess is that the new builds that we are talking about probably will not have district heat networks because they take a lot of planning and up-front investment.

That would be disappointing, obviously.

I should declare an interest: I chaired the Scottish Government special working group on district heating regulation that Fabrice Leveque mentioned.

I return to my earlier comment and to other comments that have been made about the planning system. The answer to your question about the 50,000 new houses is that some of them may be on district heating—that may or may not be planned into those developments. There is no decisive policy structure that will make that happen at the moment, despite the Government’s commitment to renewable and low-carbon heat and the fact that district heating is a key route to that.

The working group on regulation had stakeholders from all sides—the private sector, the public sector and so on. The consensus was very much that something more forceful should be done through the planning system and the regulatory system. We accepted that those were harder choices that would require more political capital to implement, but unless those choices are made and a fairly directed regulatory background is put in, we will not see the progress that the Scottish Government wants, which is a step change in district heating.

Some very specific things can be done, and in our view they should be done.

I will bring in Silke Isbrand in a second.

The 50,000 is now a Government target with a timescale. You mentioned that to have district heating systems in those developments might cause delays to the process. Governments like to meet targets; they do not like to not meet targets. Every month or every quarter there is a dance about housing new starts and completions and what number suits one political party over another. If we take all that out of it, is there a way around this? Is it more important to maximise the number of homes among the 50,000 that have such things as district heating systems than it is to hit the 50,000 target bang on in the timescale?

I would slightly sidestep that question. We have covered the fact that new houses are built to higher regulatory standards, so they use less energy in the first place. The economics of district heating are much more compelling for existing homes. I am not saying that it would not be a good thing if new houses were used as a stimulus to put in district heating networks, but the real challenge is to get existing properties on to district heating networks. For that, we need the sort of regulatory instruments that say, for example, that if you are upgrading a large building’s heating system, you must actively consider district heating as an option, and if it is of equivalent cost benefit to other systems you should go down the district heating route. There should perhaps be a requirement that local authority buildings should form the centrepiece of new district heating systems and that local authorities should put them in as part of their normal development cycle.

We need to do that, because if we want district heating systems that can be built on to and which householders in existing homes can connect to, we must have a way to start them off. Sometimes a new build can be that opportunity, but that will not be the universal panacea. We need to consider what can be done for the vast majority of existing homes.

That is very helpful. It places the issue in a realistic context.

Silke, I apologise.

Thank you. I wanted to comment not on the new-build affordable housing—local government is obviously pulling out all the stops to deliver towards the 35,000 social housing figure, but Mike Thornton made all those points—but on district heating.

District heating is a key feature of the new Scottish energy efficiency programme—the infrastructure priorities for the next 15 to 20 years, from 2018 onwards. Local government is quite strongly involved in that programme—as Councillor McGuigan said, councils need to be in there early to shape programme design.

At the moment, 11 local authorities throughout Scotland are involved in the SEEP pilots, which have district heating as a key component. In terms of supporting the overall development of the programme from 2018 onwards, we have a local government reference group that brings together all the different departments that would typically be involved: planning, housing, sustainability, finance and so on. That is quite a high-level group that is coming together to feed very strongly into programme design. Again, district heating is a key component of that in terms of its contribution to overall energy efficiency.

This follows Mike Thornton’s point about powers for local authorities. A lot of innovation is going on in cities across Europe on the move towards a low-carbon society. Do the local authority representatives believe that local government has all the powers that it needs to be innovative, to experiment, to implement schemes and to reduce carbon emissions? Much of the written evidence from the participants here today talks about lack of monitoring and evaluation of RPP1 and RPP2. What would a good system of monitoring and evaluation look like?

Councillor McGuigan, what is your view on more powers for local authorities?

I am a bit repetitive on this subject. One of the big difficulties is not so much about powers but about the resources that would allow us to use sensibly powers that would enable us to hit the targets that we believe are necessary for particular localities that we are dealing with. Having listened to the discussion, I think that we have to be a bit guarded about thinking that we can come up with a template that we could hold up as one that we could apply right across Scotland. We cannot do that, because there has to be flexibility among local authorities and in the whole localism agenda.

Perhaps Silke Isbrand will come in on powers. We have been in negotiation about some powers, but the main tool will come from national Government, local government and others recognising that if we work together and pull together, and utilise resources collaboratively, we can overcome problems. However, we have to ensure that the resources exist that will enable us to do that.

Silke Isbrand was name-checked. Do you want to add to what Councillor McGuigan has said?

I fully back what Councillor McGuigan said. It is essential that we can respond to local circumstances within a wider framework of ambitious national targets and that we have a constructive approach and partnership. When individual authorities chase challenge funds and use a lot of resources on doing that, the result is often a very fragmented approach, which is not the most effective use of resources. Given the financial pressures that exist for local government and every other area, the effectiveness of the approach is part of what makes for success.

It is helpful that you put that on the record.

Monitoring and evaluation need to be done regularly—perhaps each year. We have annual climate change targets and a statement is made to Parliament on whether the country has met them, but there is no real deep dive into how a target has been met and, more specifically, into how all the policies in each sector are doing. We get a headline figure: that has meant, for example, that this year transport has again been highlighted as an area in which not much is being done to meet the target. However, there is no process within Parliament or Government to feed that back in and to ask whether we need to look again at what RPP2 is delivering and at what policies are in place. I therefore think that there should be yearly evaluation and that it should be embedded in Government. The process of parliamentary scrutiny should consider not only the production of the RPP but the annual target.

12:00  

Finally, in the context of how evaluation can be embedded in the Government’s policy development, the Westminster Government produces a forecast each year of where it thinks emissions are going and how policies are performing. In Scotland we do not have such a forecast, so we have no way of looking ahead, anticipating where emissions are going and considering whether we are on track. Perhaps the Scottish Government can produce its own tracker, so that we can see how we are doing.

This point will not answer the whole question. Mandatory reporting in the public sector will start in November. It is built on what we have done with climate change declaration reporting over several years in local authorities, in particular, which is starting to give us a baseline and more robust information. I have been directly involved in trying to pull the figures together, and I can say that there are challenges—including in transport—but things like changing finance codes are helping us to report more effectively and get to the right place.

We are certainly starting to get information on carbon emissions for buildings, waste and so on. A colleague in SSN, from the University of Glasgow, has said that the data set is one of the better ones that have been developed. It is not perfect by any means, but it is a step in the right direction. The challenge will be to pick up on the bigger gap on what is happening in the country more widely. The public sector is starting to get there and is a good example on which to build.

I want to give Andy Wightman a chance to come back in, but Graham Simpson may have a supplementary on the issue that we are talking about.

I want to move the conversation on to the private sector.

That has already come up, so I will bring you in, to be followed by Alexander Stewart.

It seems to me that there is a huge issue to do with existing buildings. I am interested in hearing views on how we can improve energy efficiency in homes in the private rented and privately owned sectors.

I had a chat with Fabrice Leveque yesterday, and he told me that in England there is a system in the private rented sector, for which regulations appear to be stricter than they are here. However, the system does not apply in the privately owned sector. The challenge is about how we get into privately owned homes and improve their energy efficiency. As I said to Fabrice yesterday, if someone knocked on my door and told me that I had to spend £100 on something, I would chase them.

I will make sure that I do not knock on your door, Mr Simpson.

Don’t do it.

I will talk about how we can tackle the existing building stock. I am glad that Graham Simpson recognises that that is probably the biggest challenge that we have in terms of emissions from housing.

We are already tackling energy efficiency, but we need to do more. We have a grants system for people who are fuel poor, whereby the Government subsidises measures for low-income households. For everyone else, we are proposing regulation that says that after a certain date it will not be possible to sell or rent out a property that does not meet the energy performance standard. We propose that the regulation be backed up by loans and incentives in order to encourage householders to make the improvements.

Graham Simpson is right to say that there is a cost associated with upgrades, but let us remember that upgrading reduces energy bills, so people would invest to make themselves better off in the long run. Upgrading makes homes warmer and can add value to properties.

Energy performance certificates are the cornerstone of such a programme. Someone who is renting a home or has bought or sold a home in the past four years will already have an EPC, which tells them what improvements they can make.

We have made a good start in Scotland through the home energy efficiency programmes. As someone said, the Scottish Government is developing the new Scotland’s energy efficiency programme, which will start in 2018. If we are to deliver the kind of climate savings that we need, the programme will need to be backed up with regulation and a proper programme of loans, information and incentives for all householders. If that does not happen, emissions from housing stock will continue to flatline.

It is all very well to step in when people put their houses up for sale or rent, but what about people who have lived in a house for a long time and will continue to live there? How can we get to those people?

There are different ways around that. There have been proposals to have a backstop, whereby all homes have to be brought up to the required level. After the initial regulatory requirement, at a later date any homes that have not been back on the market and improved would need to be improved. That would probably be enforced by local authorities. You have identified one of the programme’s smaller problems—there are solutions.

The RPP horizon is quite long, as is the climate change targets policy horizon, so the programme would not be about what happens to a home in the next two years. Once the intention to regulate has been announced, the regulatory shadow can influence people: they know that there will eventually be regulation when they sell their home, which gives them a significant number of years to take action at a time that suits them. The point has been made that that action will, ultimately, lead to them and their successors in that house being better off financially. Although there is psychological resistance, the programme is still a good thing for the individual and for the whole of Scottish society.

There is another stark fact. The Existing Homes Alliance Scotland’s ambition for the strategic infrastructure priority for energy efficiency is that by 2025 all homes have an energy performance certificate rating of at least C, and various cost estimates are floating about. I would not like to quote those estimates to the nearest £1 billion, but they are in the range of £10 billion, which is a lot of money. The question is how that money will be found, because if we do not reach that ambition, the climate change targets will be missed. It is that stark.

There is a choice: to regulate, which produces investment from home owners and building owners to their own benefit; or to have some form of public sector subsidy, which would be large and difficult to produce in times of financial stringency.

I suspect, given the time constraints, that we cannot tease out what regulation would look like. I have written down “compulsion” and “enforcement” as two significant aspects of deciding to regulate, but I will leave that point hanging.

The home energy efficiency programmes were mentioned. I sat on this committee’s predecessor committee back in 2007 and we looked at HEEPs. There was a political stushie about the central heating programme for older people. At the time, the debate was about whether pensioners should get free central heating systems or the programme should be targeted at the most fuel-poor people or at the most energy inefficient homes. Through a few reincarnations, that programme became more and more targeted.

Is that where we are with the home energy efficiency programmes now, or was the programme that I mentioned something different? Where is that predecessor and how focused is it? I think that it was called the energy assistance package. Do we need a bit more support for the private sector in tenement properties and hard-to-heat homes, for example?

At the moment, there are twins tracks. There is a national programme of highly targeted grants for fuel-poor households, which will get them insulation and efficient heating systems. There are also what jargon people like me refer to as HEEPs ABS—the area-based schemes under the HEEPs that are focused on specific geographical areas. The local authority people are not here now—the schemes are managed and delivered by local authorities and they are really good programmes. I said at the beginning that some really good things have been done in the previous two RPP periods, and those schemes are part of that. Again, however, it is a question of a step up in scale. In policy terms, that is the dilemma that needs to be wrestled with—how to go from some very good programmes at medium scale to the truly large-scale programmes that are needed to get the housing stock up to C rating by 2025.

There is a resource question about whether the money will come from the public purse via subsidy or from the private market via compulsion. Let us put that question slightly to one side. Are the available public funds being suitably targeted and focused?

In my opinion—it is just an opinion—the answer is yes. Broadly, the policy is that the Government programme gives grants to those who cannot afford to make the change but need to do so in order to take them out of fuel poverty. That is right: the funds should be concentrated on the truly vulnerable, truly needy sector, and that is being done.

However, if we take that view and we know that the climate change targets mean that the able-to-pay sector has to improve as well, we need another policy instrument to get progress in that sector.

I have a question on access to finance. The crux of the matter seems to be the need to ensure that we have enough money and that people can access it. In order to ensure that that happens, maybe we should be tapping into the private sector to complement what the public sector is doing. I would like to hear some views on how we can do that. If we manage to achieve that, the measures will be implemented—along with many more—and that will give us a real chance.

Graham Simpson alluded to that when he mentioned up-front costs for households. Does anyone want to comment on financing and how we make this affordable for households? You have all presented the problems; finding solutions is more challenging. Do you have any ideas? I will give Mr Thornton a slight break and take Fabrice Leveque first.

It is a crucial time because the Government is redeveloping the HEEPS programme, and the RPP comes at a great time to feed into that process.

The Existing Homes Alliance Scotland—I think that Stop Climate Chaos Scotland supports this—believes that we have to provide a financial offering if we are to compel people to improve their homes. There are various ways that we can do that: for example, we can use low-interest Government borrowing and provide low-interest or zero-interest loans. Germany has done that with great success using its development bank, which provides low-interest loans to cover costs. Ways of doing that also include equity release. I can elaborate on that if the committee wishes; there are a variety of solutions on the table. It will be good if Parliament scrutinises delivery on the proposals when more detail emerges from the programme.

I do not mean to be talking so much, but I, too, say that there has to be a finance offering. The current financial climate is a brilliant time for the strategic infrastructure priority. That sounds a bit perverse, but because capital costs are so low, investment in energy efficiency is relatively cheap and relatively good. There are certainly options for Government-incentivised loans and so on. I think that we all recognise that there are not going to be grants, and perhaps there should not be grants for the able-to-pay sector.

However, there is a difficulty. I am beginning to sound like a broken record, but if we think about our own experience, we know that one can go and borrow at low rates right now. If people want to put, say, solid wall insulation in their home, they can probably go out and do that. There are no solid-wall-insulation loans, but there are plenty of loans for general purposes, which they can probably get at a fixed interest rate of 2 or 3 per cent, which will be cost effective for them. In general, however, people do not do that.

A financial offering is important, but if we do not have a lever for making people take it up—which I argue is regulatory shadow or regulation itself—it will not take the sector forward.

12:15  

I will talk about the infrastructure side. As I mentioned, we think that there is a role for national Government and local government in funding things earlier, and there are examples of places where that has happened. In Dundee, prudential borrowing has been used very cleverly to redevelop the city centre, which is becoming a fantastic place—it is a work in progress, but it is getting there. The council is being creative in using prudential borrowing to invest in the area, and it will get a return on that investment because it owns the land. It is talking to developers and investors about how they will use that land so that it gets a return on it. There is some thinking going into that.

There are also existing resources that we could perhaps use better. We have an infrastructure investment plan, but I worry that it concentrates on trying to get things and people from A to B instead of thinking about how we can use infrastructure creatively to open up development opportunities or to ensure that we meet broader objectives. There is the possibility of linking that into—dare I say it?—the national planning framework to get a longer-term view and some transformational change rather than a short-term view.

A lot of the resource for the development of our infrastructure just now is the city region deals, and I have a slight concern that they tend to be a list of projects that have been around for some time. They have not quite been picked off a shelf, but they have been identified as something for which the additional funding can be used. I would have liked to see the city deals make much more transformational change and more thought to have been given to how those resources are used to initiate and develop that transformational change. There might be a second round of city deals or there might be the opportunity to use the existing city deals to do that.

My last point on resourcing is that we need to remember that, if we use the money cleverly, it can be preventative spend, which is really important in terms of carbon emissions and energy efficiency. If we invest early and make the right decisions early, we will not have to pick up the pieces later on, which can make a major difference.

That is helpful. You got my interest when you mentioned city deals and I am tempted to address my personal hobbyhorse. When I was a regional MSP covering Glasgow, the Cathkin bypass was part of the Glasgow city deal although the communities that I represented at that time would rather have had better park-and-ride facilities and public transport infrastructure than more costly tarmac. I leave that issue sitting there, but there is a wider question: is anyone checking the city deals to ensure that they are consistent with our climate change ambitions and targets?

I do not know the answer to that.

I suspect that they are not.

I am interested in the point about preventative spend. When we are talking about trying to change behaviour and get people to invest, from a local authority or housing association perspective, having energy efficient buildings and homes will keep the stock in better condition and do a bit to prevent fuel poverty. If we are able to transfer that message to private housing—if there could be a bit of carrot as well as stick—that might help to change behaviours around energy efficiency and investment in private properties.

That is helpful.

To my knowledge, there is no process to measure the carbon emissions for the projects that result from the city deals and the infrastructure investment plan. In the past, there has been a focus on road building and high-carbon infrastructure, and there has been no scrutiny of whether the projects have been aligned with what the Climate Change (Scotland) Act 2009 requires. I definitely highlight the need for improvement in that area.

I should say that I no longer represent that part of Glasgow—I am now the member for Maryhill and Springburn. However, that project got my interest at the time.

You must remember the way in which city deals are structured. Local authorities put forward proposals that are analysed for what gross value added they will bring to the economy, and they will get the money from the Government only once that GVA has been realised.

There are two points there, first about whether that will be realised and secondly, the fact that the measure is GVA and how that ties in with what we are talking about around reducing carbon emissions and climate change.

That is helpful. Graham Simpson, you sparked off that line of questioning—do you have any reflections on that?

Convener, sorry, could I ask a question first?

Oh, sorry, Elaine—yes.

I was listening to the conversation about investment and what happens in other countries. Fabrice Leveque mentioned loans, including interest-free loans. How does the Green Investment Bank fit into this? Does anyone know? Does it fit in?

No one is desperate to make eye contact with me but Mike Thornton has, so he is going to tell you everything you want to know about it, Elaine.

Banking is not exactly my specialist area but in theory the Green Investment Bank could access capital on the capital markets that could then be loaned out on a retail basis to individual householders. That is in essence what happens in Germany.

The KfW Development Bank is owned by the German national Government and the German states. It borrows with what is, in effect, Government backing, so it can borrow incredibly cheaply on the capital markets and then it lends that money on at a very cheap rate to consumer-orientated banks. Those banks then take a small percentage for their administrative costs and lend on at what is still a very cheap rate to individual householders.

It is a programme on a big scale—it aims to do 2 per cent of the German housing stock every year, which is a big number. It lends only for specific increases in energy efficiency. You cannot say, “I fancy having this but I don’t fancy having that”. You have to buy one of a number of packages, get it costed and so on, and then you get a loan.

The difficulty of reproducing that model in the United Kingdom, never mind in Scotland, is that although there might be some semi state-owned banks, there are no state-directed banks.

I do not want to speak for the GIB but, in theory, it could play a similar role. That would be a policy matter for the GIB and the UK Government, perhaps.

Could the bank be doing things such as district heating schemes, which were talked about earlier?

Yes. Again, I do not want to speak for the GIB but I know that it invests in a number of capital scale projects. I imagine that, amongst those, it has an interest in district heating. It provides investment for things such as biomass plants, aerobic digestion plants, and all sorts of low-carbon capital intensive projects. The bank lends a lot of money so we can all see that there is a potential connection, I just do not know how close that is to being realised.

Perhaps the committee could try to find out a bit more about that.

That would be a good thing for us to do.

I have a quick comment. Within the non-domestic energy efficiency programme that is being supported through the Scottish Government and the Scottish Futures Trust, the Green Investment Bank is certainly one of the suggested mechanisms to fund the works to deliver energy efficiency across public sector buildings. We have not, however, explored that within Dumfries and Galloway Council. We would probably start with prudential borrowing as a means of funding that sort of work in the first instance.

I said earlier that Graham Simpson might want to come back in. Graham, do you have any reflections on what you have heard? You kicked off a line of questioning and we have moved on. Is there anything that you want to add? We are almost at the close of the session.

We have got to a point, thanks to Elaine Smith’s questioning, where we have ended up with the positive idea of going to an organisation that is there now—the Green Investment Bank. We could speak to the bank in relation to housing, which is within this committee’s remit, to see whether we can expand on those ideas. I think that that is a great way to end that line of questioning.

We are about to end our entire line of questioning in a second. I will give an opportunity for the witnesses to put any reflections or comments on the record before we draw to a close because, despite our attempts not to speak, the MSPs took up a lot of air time so perhaps you did not always get to say precisely what was on your mind or the lines of questioning went off on a tangent from what you were hoping to say.

We will take it in the opposite order to the introductions and we will start with Mr McLaren. Is there anything that you want to add before we close?

There is nothing in particular that I would like to add, except perhaps to reinforce and reiterate that there is a role for planning and the planning system in this area that is currently understated. If we thought about how planning could fit in a more corporate, influential and collaborative way with different disciplines, sectors and agencies, we could take a medium-term to longer-term view, and that could have a real impact.

The session has been really good, and I am glad to see that the committee is getting involved early with the RPP.

The RPP is a huge cross-Government piece of work that affects—as we have heard today—investment opportunities, the economy and health as well as climate and issues such as fuel poverty. Looking back at the old RPP, the scrutiny process happened entirely in committees, so my final thought is to offer a reminder that your committees play a crucial role in ensuring that the RPP delivers what we need it to deliver. You should keep up the good work, and when the RPP is published, I hope to see it as a big part of the committee’s work plan.

I have made the points that I wanted to make; I thank you for the opportunity to do so.

You are welcome.

I have a couple of points. First, it is great that we are going to have a climate change plan. If people are involved in the RPP they understand what it is all about, but a climate change plan will be much more accessible in general, so that is really good. It is important to ensure that there are clear targets in the plan when it comes out. As the public sector, we know what our bit of that job is. We should try to go for smarter targets, as some of that is a bit woolly at the moment. That would be useful.

Secondly—and we have touched on this a lot today—I emphasise the need to ensure that climate change is on the wider policy agendas across the board, because it is quite easy to ignore it. At present, we can perhaps get away with ignoring it, but it is important that we deal with that area effectively. It can help us to tackle issues such as fuel savings and look at all sorts of interesting ideas, and it can improve quality of life if we get it right. That is critical.

I thank all the witnesses for coming along. I draw attention to the fact that one way of ensuring that RPP3 and climate change do not just get channelled into a one-off evidence session once a year is to provide written evidence regularly on the legislation that goes through this committee. That will give us the opportunity to have different aspects before us and to question ministers and other stakeholders as we look at various pieces of legislation. You should bear that in mind and follow the committee’s work—please contact us if you want to add anything else following today’s evidence session.

The committee will now move into private session.

12:27 Meeting continued in private until 13:12.