Ed Davey speech to the LGA Annual Conference
- Department of Energy & Climate Change and The Rt Hon Edward Davey
- Part of:
- Energy industry and infrastructure licensing and regulation
- 27 June 2012
- Delivered on:
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
Thanks Gerald – and thanks to the LGA for inviting me to talk. In my first few months in DECC, I've been confronted with issues and decisions that might seem a million miles from the responsibilities...
Thanks Gerald - and thanks to the LGA for inviting me to talk.
In my first few months in DECC, I’ve been confronted with issues and decisions that might seem a million miles from the responsibilities of a local authority - from international climate change talks to reform of the electricity market. From the EU ETS to the National Grid.
Yet the more I do the job, it’s clearer that national government can’t deliver on its energy and climate change policy without local government.
Indeed, my message today is, that the role of councils in energy and climate change policy is much, much greater than even the LGA may currently think.
So whether you’re motivated by saving the planet. Or saving money. Or tackling fuel poverty.
Or you just want to help people make their homes more cosy.
I think councils and communities have a unique leadership role.
Some might say, that’s hardly news. Councils have been in the energy arena for years. You’ve been helping people insulate their homes for years. In planning, councils have promoted renewable energy. And so on.
But I’m talking about a step change - and a much wider role.
So today, I want to set out three strategic roles for local authorities in energy and climate change.
First, in buying energy. Second, in saving energy. Third, in generating energy.
And let me start with buying. For you may have noticed that energy bills have been going up in recent years. In tough economic times, more and more people are finding the cost of living their main problem - and electricity and gas bills, their top problem.
I’m clear that we’ve got to do as much as we can to help consumers and business grapple with high energy bills.
So Ofgem has almost completed some critical work on simplifying tariffs and getting clearer pricing from the market. I am determined we get more competition into energy markets, especially new players. In my first few months, I negotiated a deal with the Big Six energy companies, announced in April by the Deputy Prime Minister, which will help people get the best deals their suppliers offer.
Yet the policy initiative I’m most excited about - which I believe has the most potential - comes from work I started at the Department for Business, as Consumer Affairs Ministers. It’s based on an old idea. It comes from the co-operative movement. It’s collective purchase. Group buying.
In energy markets, we call it collective switching.
Now switching energy suppliers itself is not new. You can do it now. In fact, you could probably be switching energy suppliers while listening to my speech - the technology exists. And there are big savings to be made.
But here’s a thing. As energy bills have risen, switching rates have fallen. Mainly because energy companies have largely stopped the door-to-door selling that drove individuals to switch, due to mis-selling scandals.
And the much smaller numbers switching today tend to be the internet savvy - often the better-heeled internet savvy - whose deals may be being paid for by the less savvy, less well-heeled.
So while I enthusiastically encourage switching, we have a long way to go, before switching is helping more people, and really driving the competition in energy markets we all want to see.
Which brings me back to collective switching. And councils.
If you want to help your local residents, why not help them switch? Better still, why not help them get a really good deal when they switch? By organising people in your villages and towns and cities - perhaps in partnership with other villages, towns and cities, to switch together?
I can already here you shuffling in your seats at this crazy idea.
Well, it’s been done - in the UK and abroad.
In the Netherlands, Belgium and Germany a number of areas have done this, partnering with companies and not-for-profits, who’ve done all the backroom work - the IT, the web and phone support.
In the UK, we’ve seen Which? run the Big Switch - which at the last count, saw 36,000 people switch suppliers, saving - on average - over £220. Yes. £220 pounds.
Energyhelpline ran the Huge Switch - and saved nearly 9,000 people a combined total of £1.5 million, with an average of £176.
And range of groups are entering or considering this new space - social housing providers, social enterprises and local authorities. So we have PeoplesPower. We have the Eden Project in Cornwall, working with the local authority NHS and others. We have South Lakeland District Council.
For collective switching brings three real opportunities. First, it can help more people consider switching - bringing huge savings that already exist to many more people, faster. And potentially, to those who aren’t internet savvy or well-heeled. Second, by using group purchasing power, it can also help drive better bargains too. Third, to drive competition, and get more players in the market, it can reduce barriers to entry, by helping smaller players access more customer opportunities, more quickly. When Co-op Energy won the Big Switch auction this year, they doubled their customer base.
So I really want to encourage this. My Department has issued factsheets, and Ofgem have issued guidance - all aimed at enabling and encouraging this new competitive force in the marketplace.
Adding to the force of switching sites for individuals, I think collective switching could become really big. We are beginning to understand the challenges better. Lots of lessons have already been learnt. But it’s clear that one critical success factor, is they group organising the switching has to be trusted. Trusted to do their research properly. Trusted to run an auction. Trusted to help people switch.
So my first message today is that these schemes can really work for your councils, your communities and your citizens - and I wholeheartedly encourage you to get involved.
The way we buy energy is changing, and that brings real opportunities for local authorities. The second thing that’s changing is the way we save energy.
Later this year, the Green Deal begins. It’s a new way of financing energy saving improvements to our building stock, and it will support a whole new market in energy efficiency.
People will get warmer homes for less. Businesses will get the chance to be part of new installation and supply chains stretching right across the country. Local authorities can play a hugely important role in bringing them together.
A successful, vibrant, effective Green Deal will save money, save carbon - and make a real contribution to economic growth, supporting new jobs and businesses.
It’s a programme that’s going to run for decades, not years. And consumer confidence is critical.
Local authorities and communities, who have the trust and faith of local people, will be essential partners in delivering the Green Deal. And I’ve been deeply impressed by their response so far.
Local authorities are leading work on financing models and joining together to create community interest companies. Six are involved in the Green Deal Finance Company.
Some are taking huge leaps forward - like Birmingham, which is pushing ahead with a £1.5 billion Energy Savers scheme, or Newcastle, which is leading a Green Deal partnership scheme which spans the North East.
The GLA is bringing together the London boroughs. And many county councils are working on energy saving in partnership with their districts and boroughs: from West Sussex to Worcestershire, from Cornwall to Kent.
They’re exploring what the Green Deal can offer local residents, community groups and businesses. Not just energy savings - and bill savings - but actions to much wider strategic priorities, like economic development and public health.
I want all local authorities - and all local communities - to have the chance to realise that potential.
So we’re revitalising the Home Energy Conservation Act, which requires all English local authorities with housing responsibilities to report on the energy conservation measures they think will significantly improve the efficiency of their residents’ homes - including owner-occupied, social and privately rented properties.
Because the reality is that you know your local housing stock. You know your residents, businesses and areas. And you know how to build the strong local partnerships that will work in your area.
So my second ask is that if you aren’t already, get involved in the Green Deal. Because local authorities can drive energy saving schemes at scale; not just by connecting businesses and people, but also by investing in their own building stock.
The last point I want to touch on is generation. Because in the kind of world we’re anticipating, communities will generate more of their energy renewably and locally. And that will change for the way you work.
We’ve got a whole range of policies to support clean energy - from feed-in tariffs for small scale renewables to the Microgeneration strategy.
And we’re putting communities at the heart of these policies:
- We’ve set up Community Energy Online, our website for local authorities and community groups to access information on everything from finance to legal resources.
- We’ve got a community energy contact group, so people can tell us what’s working - and what’s not.
- And we’re going to produce a community energy strategy document, to put our ambitions down on paper.
And of course, we’ve got the £10 million LEAF or Local Energy Assessment Fund, which supports communities right across England and Wales in preparing for the Green Deal - and preparing feasibility studies for community renewable energy projects.
But actually, it’s not windfarms and feed-in tariffs that I want to talk to you about. It’s something much bigger, and arguably more important: heat.
Almost half of the UK’s energy demand is driven by the need for heat. Getting more of it from local renewable sources - and wasting less - is hugely important. Not just for our carbon emissions targets, but also for our work on fuel poverty. For those who are struggling to pay the bills, heating is when our policies really hit home.
Local authorities and social housing providers know how important warm homes are. How cold can harm the health and the wellbeing of people who rely on their services. How an inability to keep your home warm enough weighs down some of the most vulnerable in our society.
At the moment, most heat is delivered by burning fossil fuels. And as we’ve seen in the last year - when the cost of gas soared, pushing up energy bills - that leaves our consumers exposed to volatile global markets.
We need to get smart about the way we use heat. We’ve got a whole range of policies to support clean heat, including the Renewable Heat Incentive, but I wanted to mention one particular example: the Renewable Heat Premium Payment.
The scheme included a competition which invited social landlords to bid for funds to install renewable heating systems in their tenants’ homes. It was so successful that we’re doing it again - but this time it’s bigger. More competitions, more money, and more time to apply. So my third and final ask of you is this: if you haven’t got your bids in yet, get a wriggle on.
Now I know that something called the ‘Renewable Heat Premium Payment’ doesn’t immediately grab your attention. But this is the kind of smart policy that can make a real difference to people’s lives. Some residents have seen their bills cut in half thanks to renewable heat pumps.
Just listen to what one wheelchair user in a social housing property said; and I quote:
‘I used to go to bed around 6pm when the weather turned cold… this system has given me more hours in the day, it’s extended my life’.
That’s what a well designed policy, delivered in partnership with a switched-on local authority, can do. It’s the kind of thing that most of us got into public service to achieve.
I want stories like that to be replicated across the country. That’s why we’re publishing Energy Performance Certificate data, to help local authorities and communities better understand the state of their local housing stock.
And it’s why we’ve created the National Heat Map, to help us understand the potential of clean heat networks to pipe heat directly into homes. The challenge now is for you and your peers to realise its potential; building on this foundation and bringing more district heating schemes online.
I hope I’ve given you a sense of our commitment to working with you to move from our high-carbon past to our low-carbon future.
Because I passionately believe that the connection between local and national government is an essential part of that story.
And I’m not alone. Many local authorities are already cutting carbon, already saving money, already empowering communities. Many recognise that the link between our carbon targets and our communities depends on the strength and the vision of our local government.
Because actually, it’s all about trust.
Local government and local community groups are more trusted than central government.
Ok - you might say that’s a pretty low base to start from. That being the most trusted type of government is like being the healthiest patient in intensive care.
But as we begin delivering huge programmes like the Green Deal, having genuinely trusted intermediaries who can connect local people with local providers is critical.
And as we look to a world where heat and energy are increasingly clean and local, these connections can help make big abstract ideas about decarbonisation real - and can bring real benefits.
That’s massively important; not just to make sure people ‘buy in’ to the green agenda. But also to deliver the policies that will secure the low-carbon transition.
Across energy and climate policy, a trusting and genuinely two-way relationship between local and central government is vital.
And in many ways, you’re ahead of us. Across the country, councils are coming together to figure out how they can turn these individual actions into something bigger.
Take the LGA’s Climate Local initiative, a new programme - led by local government - to support council action on climate change. Bringing different resources together, sharing learning and successes alike.
There’s a chance for some real wins here, which is why the Government supports the initiative.
It’s why we’re going to talk to the LGA about how we can use local authority emissions data better.
And it’s why we asked the Committee on Climate Change to provide guidance for local authorities on reducing carbon emissions, which was published last month.
The work we are doing to save energy will bring lower bills for businesses and households. It will empower communities, and put local authorities at the heart of the low-carbon transition.
Delivering these ambitions will require commitment, focus and dedication to public service.
Something that local authorities - and the local government association - know all about. I look forward to working with you to make it happen.
Published: 27 June 2012