Cynulliad Cenedlaethol Cymru

As we can't see each other, it's very difficult to know whether it's working or not. Good morning, Lord Deben. 

Good morning. You sound all right to me. Do I sound all right to you?

You sound all right to us. It's strange looking at a screen with lines through it when you think you're talking to somebody. But thank you very much for speaking to us on building a low-carbon economy, and over to you.

Well, thank you very much. I just tried to do it in a different way, but the truth is, as you know, that we have made our recommendations to the Welsh Government from the climate change committee and we are awaiting their response. We don't think that there will be much that they can do in the budget up to 2020, but the reality is that the next budget will really have to move the dial particularly strongly because the 80 per cent reduction by 2050, as you know, is very hard for Wales because of the special problems of Welsh industry. So, the 80 per cent reduction in our emissions is, of course, the national target, but 80 per cent for Wales is tougher than it is for either England or Scotland. To get the net per capita emissions down to what we think is necessary around the world if we are going to meet the target of keeping heat increases under 2 degrees is a very tough one for Wales. So, we really do want to help in every way that we can. Of course, we haven't yet had discussions as to what the longer term targets may be as a result of the United Kingdom's adherence to the Paris accord. You will have read that the United Kingdom Government is going to ask the climate change committee to set out the parameters and the plans that would be needed to move below 2 degrees and towards 1.5 degrees, which are the very ambitious targets that the countries of the world have now accepted. 

So, I think, for me, we've got to get on with the things that we can deal with. There are some encouragements that we know would be very helpful. I think the possibility of using geothermal heat from disused coal mines is increasingly one to be considered. The need to have carbon capture utilisation and storage is going to be central for the longer term, even though Wales suffers from the difficulty of not having a ready place to do the storage bit. But it still will probably be necessary to take the carbon and store it elsewhere in the United Kingdom.

I'd start with those things, not because they are the things that are of immediate importance, but simply because, unless we get those under way, the longer term targets will be upon us and Wales will not have found a suitable route, and indeed that's what, between us, we've really got to do to find a scenario that enables Wales to make the contribution she wants to make to the worldwide effort.

Now, we've been looking very carefully at the powers that the Welsh Government has in order to try first of all to suggest things that you can do under your present devolved powers. And the biggest of these is to deal with building standards. This is an entirely devolved power, and I have to say that, personally, I feel very strongly that it's an area where Wales could lead the way, because it could challenge the rest of the United Kingdom, and particularly the central Government, on what is a real failure of central Government, which is to ensure that the houses we are now building meet modern requirements.

We are in fact building very poorly, and there is no reason why we shouldn't build much better. The trouble with building very poorly is that the people who buy those houses are then saddled with long-term costs for energy that are quite unnecessary and which, of course, mean that we are not helping towards reducing our emissions. But the personal cost is a disgrace, and it is outrageous that we allow these large building companies to go on building crap houses. Now, they always argue that the houses are better than they were, but that is no argument at all. That's like saying that the Volkswagen diesel cars that were using trickery were at least better than the first Ford motor cars. Of course they're better, but they're not good enough. 

There are two things that the Welsh Government could do immediately. One is to say that no houses will be built in Wales unless they reach what used to be called level 5—something just below Passivhaus levels. If you look at what that would cost, it is surprisingly small, and, of course, people buying the houses, even if they paid a bit more on their mortgages, would find that that would be made up by the significant reduction in their heating bills. And, if it's a question of rental, that would also be seen in that light, and local authorities and housing associations building houses to that level would find that their rents would be much more likely to be paid by people whose heating bills were so significantly lower.

There is in fact no reason why the costs should be greater. Comparable costs elsewhere in the world aren't greater. If using highly insulated materials became much more common, the price would fall. And, in any case, the price of housing is largely dictated by the price of land, and the price of land is fixed by the house builders, increasingly, because they have a corner in this, and they could certainly take less for the price of land. It would mean that farmers, and such like, selling land, would just get rather less of a bonanza than they do now. So, there is no reason why we shouldn't do this—no reason why Wales shouldn't lead the way.

The second part of it is that the excellent relationship between Welsh Government and its local government, which has led to the exemplary position of Wales on waste, could be used to get local government to be much tougher on measuring the energy efficiency of new housing. It seems to be true that our whole system needs a great deal more accuracy, because what happens is that a house builder presents a standard house, and that standard house, let's say it's called the Caernarfon—. There may be a house called the Caernarfon, so I apologise if there is. I'm not referring to a real house at all, but let's imagine there is a house called the Caernarfon. The standard Caernarfon is then given a rating, and it is built throughout Wales, and indeed very often throughout the United Kingdom. Very rarely is the house that is actually built tested again. Well, obviously, the house builder builds its first Caernarfon extremely carefully. I'm not so sure that other Caernarfons later on, on housing estates up and down the principality, are, in fact, built as carefully. But if they always knew that there would be a real chance of random testing by the local authority, they would build these houses much better.

So, it's not just a question of raising the standard. It's a question of enforcement, and enforcement means random testing and it means real punishment. My own view is that the house builder would know that he'd have to demolish houses that he hadn't built to the right standard, and rebuild to a standard that is appropriate. I think if we did that, we would, at one stroke, change the situation in Wales, and that means that more and more people would actually be able to buy a house and know they could afford it. That's why I've always believed that the houses should not be advertised at a particular rate of mortgage. You see outside one of these estates flags that fly, saying, 'Buy this house at £499 a month'. It should always be a mixture—an addition—between the mortgage cost and the heating cost, because people have to pay the heating cost. We would then see that, by building a better house, the mortgage might go up slightly, although I don't believe it need do that. The mortgage could go up slightly, but the heating cost would fall dramatically.

So, that is the centre of what I think Wales can do immediately. The second thing they can do is not within their power, but is certainly within their persuasion. The Barnett formula has, by all parties, been accepted as being particularly damaging to Wales. Wales gets less money from the central funds than it ought, and that ought to give the Welsh Government real power to demand that Wales gets a higher proportion of the money coming for energy efficiency and for low-carbon heat in the plans that the Government is about to unveil. In those plans, it seems to me that the Welsh Government should say, 'We want a disproportionate amount because we have been penalised elsewhere'. I've seen for myself the enormous difference that a proper energy improvement programme can have in a community. I went to a housing estate where the Welsh Government, with help from the European Union, had very significantly improved the energy efficiency of a large council estate. The difference in the whole condition of the people was enormous, and I was very moved by talking to a teacher who explained to me that, at long last, in his school, the children didn't come to school with wet clothes. Just think of the health implications of this. It's a win-win policy, and I think the Welsh Government must be very tough with the central authorities in demanding more than their fair share.

The last thing that I'd like to refer to is the fact that Wales has a unique opportunity and a necessary opportunity to play a big part in carbon sequestration. If we're going to meet these tougher rules that we have signed up to in Paris, then we really have to accept that agriculture and forestry are going to play a big part in it, and the Welsh Government has a forestry target that it has signally failed to meet. And all the evidence is that the biggest reason that the high ambition has been thwarted is because of the red tape involved. 

Now, Governments control the red tape. It is the Welsh Government that has the power to get this working, and I do think that a first priority of Ministers and of elected representatives, but also of the civil service, is to say, 'We really mustn't allow our ambitions, which are fine, to be undermined by our mechanisms, which are clearly not fit for purpose'. And sometimes we have to take a risk. Sometimes, we have to say, 'Well, we will make it as easy as possible', even though that may mean that some people get away with things they oughtn't to get away with. If we try to close off every possible tiny loophole, then it may mean that we don't actually get any of the trees that we need, and forestry and the improvement of the Welsh countryside seem to me to be so important that the Government really does have to take radical measures to make sure that the ambitious plans it has already outlined can be increased and can be met.

So, from building standards to forestry, where the Government in Wales has powers, it should use them and use them very, very toughly, not least because I want Wales to be the exemplar to the rest of the country. If you do these things well, it will be very much easier for the climate change committee to be able to insist that England does it better, by being shown up by what Wales can do in its more difficult circumstances to achieve so much more.

Thank you very much. I'm glad to see somebody else apart from me talking about the importance of geothermal. As you will be well aware, we've had great difficulty, and are still having great difficulty, getting the tidal lagoon agreed by the Westminster Government.

On forestry, you're pushing at an open door with this committee. We are very keen on seeing more forests and, more precisely, more trees, especially urban trees, planted. We produced a forestry report earlier this year—sorry, at the end of last year.

I would also say that building regulations really are the key, and we seem to be timid on building regulations. Would you say that was a fair comment?

Well, I think that's true, and I have to say that I think that this is partly the mental attitude that we have engendered in the civil service, because, if anything goes wrong, if a single person manages to take advantage, unfair advantage, of the rules, then all the organisational structure of the civil service comes down solidly and demands this check and that extra power and that new form, whereas I think much more we should be saying to ourselves, 'How do we make this so successful and so easy a thing to do that we achieve our end?' instead of constantly being worried lest anything go wrong and anybody be blamed for there being a lacuna in the regulations.

David Melding.

Prynhawn da, Lord Deben. Very interesting. I note your emphasis on housing and, as the Welsh Conservative Party's housing spokesperson, I was pleased to hear that. In looking at new building, first of all, we are at record low levels of building in Wales, as we are in the rest of the UK. So, we are not quite building 7,000 new units a year; that's well below the historical trend. Whilst I think setting the higher standards there is appropriate, obviously the biggest gains we're going to make are with the existing housing stock. I was interested to hear about your visit to an area-based scheme. I suspect it was a rather traditional post-war council estate. Of course, we have those in Wales, and I think looking at area schemes there is very important. But in Wales, we have the highest proportion of pre-first world war housing stock in Britain, and I think one of the lowest in the whole of Europe. There seems to be much less progress in the development of appropriate materials to retrofit and to improve insulation in these properties. I just wonder whether you've seen anything out there, and is this an area where the Welsh Government perhaps could be trying to lead the market? Because one thing, if we do improve these materials and the expertise and skills involved in installing them, is that then there may be wider advantages to the Welsh economy. There's a bit of a debate as to whether we really know what to do with that part of the housing stock.

Well, you're right to emphasise that difference. All the arguments over leasehold enfranchisement, if you remember, were based around the fact that such a large amount of the stock had been built over 100 years ago, and that's why changes in the law were so urgently needed. So, I'm very conscious of that. There have been some good schemes in some towns with similar problems in the rest of the United Kingdom. I've got some examples, but I'm loath to give them because I think it depends on exactly the problems in the particular place. I'm thinking about the Welsh Valleys in particular. There are two aspects to it, of course. One is whether you can get a communal agreement to redo a whole street of houses, because that's the way I think Derby has managed to do work and really made a difference. That's one issue. Because if you do them terraced house by terraced house, it's a very expensive operation. You really do need to get communal agreement. The second thing is, as far as the research is concerned—I'll certainly look into it and come back to you with some examples of what is being done—it is certainly an area where the Welsh Government would be able to make a big difference, I think, because the priority of this for Wales is such that it is much more important, and therefore might well be the place where Wales would demand that national research should take place. It may be that we can persuade the UK Government to direct some of its research programme not only into this but into the appropriate institutes, particularly in Welsh universities.

Thank you. That's interesting.

Simon Thomas.

Thank you. Prynhawn da. Simon Thomas here, Plaid Cymru member of the committee. I would just like to follow up on two things with you, if I may. Firstly, with the housing side of things, to say that we've also been undertaking an inquiry into zero-carbon housing in Wales. One of the issues that emerged that actually did surprise me is something that you've touched on this morning, which is the lack of rigour in quality standards around building standards. I think many of us had assumed that we had certain building standards, and at least we were meeting those, but it seems increasingly likely that we're not, and that houses are not performing even to the inadequate standard that we have done. But to pick up on the point  that we've just been discussing, we've looked at your report, and also a report of our own expert reference group. One of the things that concerns me is that it's been flagged up that increasing work by the Department for Environment, Food and Rural Affairs and the Building Research Establishment on solid-wall properties, which are the properties that David Melding was often referring to—that the insulation measures there are not as effective as we thought they would be. Our own reference group has alerted us to the fact that Wales will not achieve the anticipated emissions from insulating solid-wall properties. So, I just wondered whether you on the Committee on Climate Change had a view on that. I'd also like to ask about energy as well. But perhaps just to leave that question first, because that's a specific one.

Well, there is no doubt that there has been a mis-assessment of the effect of present solid-wall insulations. I think one has to recognise, before we get too depressed about it, that there are also many new techniques that we need to evaluate, and I think it may be that we will find a way through this by using new techniques, which is why I thought the reference to research was really very important. And, of course you're right to emphasise the fact that the biggest problem is old housing, and I fully accept that.

I just want to return, though, for a moment, to new housing. It seems to me that it doesn't help to say, 'Well, because the biggest problem is old housing, we don't mind building 7,000 new units a year', which makes things worse. And the argument of the house builders, which is entirely false, is that if you improve the standards, then there will be fewer houses built, or they will be more expensive. The truth is that the housing market is driven by what the house builders can get for the house; it isn't a question of the price of land, plus the price of building, plus the profit. It is, 'What can I sell a house for?' And that is how they fix their prices. House builders make a very good return on capital. One of the reasons for the historically low rate of house building is because the house builders recognise that building at a particular level ensures that prices remain at that level, or rise, and they themselves make the sort of return they want.

I was interested to listen to a debate in the House of Lords in which people of all political parties—I can't remember whether Dafydd Wigley intervened, so it may be that Plaid was not represented—but as far as the rest of the parties, from the extreme right to the extreme left, there is no doubt about the commonality of view that one of the problems, and a very serious problem, is that the house builders have become not house builders but land securers and land developers. So, they think about the price of land, they pay for this land in advance, and they want to keep the price of houses at the level that repays their four or five-year land banks. That is not a proper way to run a housing system, and I am really demanding a radical change. I think the Welsh Government could do that, but they all have to support it—from the Conservatives right the way through to every other political party. We're going to have to say, 'It isn't good enough to make the situation worse, and you, the house builders, particularly the large national house builders, have really got to recognise that you have got to start building better houses.'

That's why I come back to agreeing with you about the fact that they are not building to the present standards, let alone to the standards they ought to be building. Why is it that we in Britain are accepting this when continental countries don't? We are very bad in Britain at learning the lessons from each other—England from Wales and Wales from Scotland. But we're even worse at learning from the rest of Europe, which is one of the reasons why we have been so stupid as to want to leave the European Union. The fact is that we ought to be learning from others, as well as trying to teach them. And I want to learn from the Scandinavian countries, from Germany, from the Netherlands, where they manage to get higher quality houses, they manage to get more of them and they manage to have less homelessness. We've really got this wrong, and because I'm interested in the emissions, of course, I'm emphasising that side of it, but there really is an opportunity for an all-party view on raising the standards of our housing. As far as the research and suchlike is concerned, I'm very happy to take that up. I think it's a very interesting area, and I think perhaps we can encourage the United Kingdom Government to look much more toughly at the specialist problems of solid walls and terraced houses. 

Thank you for that. Just on that point, I think that's something that this committee is likely to publish something on very shortly, and will follow up on. You can't see us, but the current composition of this committee is completely with you on the European Union. I don't speak for the staff of course, I just speak for the Members. 

But I want to come back on energy, just to say, on the issues you've talked about with buildings, that many of us were very despondent when the Welsh Government did actually yield to house builders' pressures about five years ago on building standards that didn't take us to the next level. So, we do need to come back to that. 

But just to flag up as well that the Welsh Government has proposed a vacant land tax in Wales as one of the innovative taxes allowed under the new Wales Act 2017, and it will be interesting to see whether that vacant land tax first of all gets the support of the Conservative Government in Westminster, which is important, and secondly then is used in Wales to free up some of the land so that we can see the buildings and house builders take advantage of that, and this manipulation of the market come to an end. 

If I can move on to energy, if you're still okay with energy. 

Well, can I just say, of course, that it's not for the climate change committee to tell the Government of Wales, or indeed of the United Kingdom, what to do? What it is there to do is to say, 'Here is a target you have to reach, and as far as we can see, you won't do it unless you can do something about certain issues.' And for us, building standards is one of those. How you do it is really for the Government.

My own view is that whatever you do needs to deal with the fundamental issue, which is a financial issue. We have got ourselves into a position in which it is not in the interests of house builders to build the number of houses we need. You've therefore got to find a way of getting out of that conundrum. For most things, it's in the interests of the provider to provide as much as possible if there is a market for it. For the reasons we've all discussed, that is not true about house building, and it's a mixture of the inevitable results of the planning system—a system I entirely support; I believe very much that we have to have a proper planning system—it's partly a result of that, but it's much more a result of the way in which the house building industry has now developed, and we frankly need to change that.

I think you have a receptive audience in all parties in this committee, anyway, on that.

If I can just ask you about energy, because one of the issues that we've been discussing as a committee has been the EU emissions trading system, and the consequences, which we still don't understand fully, of how we leave the European Union, and the relationship with that trading system. Your report makes it clear that Welsh energy is even more involved in that system than the UK as a whole. Fifty-five per cent of our Welsh emissions are covered by that system. And you also draw our attention to a particular power station in Wales, Aberthaw, which of course has broken EU regulations on several occasions as regards air pollution, and has been the subject of court cases.

So, just two questions on that. Firstly, from your perspective, how important is the closure, which has been forecast, of Aberthaw power station to the Welsh Government meeting its emissions targets? And secondly, are you in a position to help this committee understand better, certainly better than we do at the moment, how leaving the European Union and the EU emissions trading system can be in some way replaced by either a UK trading system or a UK framework or some better understanding of how the work under that emissions trading system can continue as we leave the European Union?

Well, if we take the forecast first, obviously, what we've done is to show the Welsh Government what is the import of closing Aberthaw. It is something for the Government itself to take seriously. This is, in a proper sense, a political decision. But it's for us to try to show what the various parameters are, and we have done that. And, of course, Aberthaw is a very significant element in Welsh emissions. And, of course, this is part of a fundamental problem. Very rightly, with a devolved Government, Wales wants to have its own policies and seek to make its own contribution, and I'm entirely on side for that. But we have to see that in the context that it makes certain things in Wales more difficult, and without lessening the pressure to do well—because that would be a mistake for all of us—I do think we do have to recognise the very fact that you have a country that is relatively small, with a very concentrated industrial centre, with particular difficulties. We have to take that into account. And it will always mean that individual matters, individual plants, individual generators make a much bigger impact in Wales than they do even in Scotland, and certainly than they do to the United Kingdom as a whole. So, I don't want to lessen the pressure, but I do want to show that one takes seriously the difficulty. 

Now, on leaving the European Union, first of all, I don't believe that it is either—. Whatever our position relating to the rest of Europe, the idea that we have a different trading system seems to me to be pretty barmy. After all, the Chinese are busy working a trading system that they are hoping to make in a way that will harmonise with the European Union trading system. Trading systems are not meant to be nationally driven and competitive. We're all trying to do this as a global answer to a global problem. So, whatever Mr Rees-Mogg may think, the fact of the matter is we cannot properly do what we need to do without having a system that is integrated in this way. And I can't really believe that it would be sensible to do other than remain as part of the European trading system, even if it meant inventing some fancy way to suggest that somehow or other it was different, and I'm perfectly happy to help to do that. 

The one problem about the trading system is that it does, of course, mean that it doesn't quite fit in with the timing arrangements that we have under a climate change Act, because we are, of course, setting targets way ahead. So, we have the fifth carbon budget, which takes us to 2032, and we are now starting on the sixth carbon budget, which will take us towards the end of the 2030s. Now, that means that we don't know the allocation that we are given by the trading system at the time we lay down the targets. And we just have to accept that there is then an iteration that has to take place when we do know. But it's a minor difficulty and one we've got over perfectly well so far, and it's certainly much less important than the basic importance of us all having part of the same trading system. I don't know how you would do it on a kind of national basis. And the Government has not made a decision on it. It has not made a statement on it. I think it is truthful when it says that that's because it's part of the negotiating structure and that there are other areas that they need to get an agreement on, and you can't just pull this one out. I think I'm prepared to go along with that as a reasonable argument. I say that as somebody who has consistently voted in favour of things like the customs union and the like, so people know where I stand on it. But I think the Government is perfectly right in saying it can't say where this should be, even though that's very inconvenient for us all. But if I were betting, I'd bet that it will come out in a way in which we will find ourselves in much the same position as we are now. But anything might happen in this world. A world which has managed to give us Mr Trump is, of course, a world that is entirely impossible to prognosticate upon.

Thank you. Any other questions? We've come to the time we're meant to finish, so can I thank you very much for sharing your thoughts with us? I think you were quite forthright in some of the statements you made, which we very much appreciate, so thank you very much.

And you'd be very dissapointed if I weren't.

Thank you very much.

Thank you.