This relationship isn't working

In his latest blog exposing the reality of buying a new build home in the UK, David Frise looks at the tangled mess organisations he has to deal with to try and get things done

Living in a new purpose built 56-apartment block can be very confusing. There are so many people in this relationship but none of them want to commit. There’s the freeholder (there have been two in 18 months), leaseholders, tenants, a housing association, a managing agent for the leaseholders, a managing agent for the freeholder, and the developer.

Where do they all fit in? The developer was the first freeholder. his is very convenient for them because they can claim all defects in the communal areas are their own problem and therefore don’t need to be rectified. However, they then sold the freehold to a very large insurance provider, without bothering to inform the leaseholders. This is not supposed to happen given the first right of refusal under the Landlord and Tenant Act.

Now the new freeholder has insured the building, at leaseholders’ expense, with a well known national insurance company that just happens to share the same name as the freeholder. How convenient, I’m sure. But not very good for the poor leaseholders, as the premium would appear to be, shall we say, uncompetitive.

Now this is probably all above board but when I asked for an explanation of how the managing agent tested the market and how much commission was paid, I was told “any commercial arrangement we may or may not have with our brokers to receive a share of their income to contribute towards our own administration costs and expenses is confidential”. I bet it is.

There is no question of the housebuilder sorting out the defect and arguing with the water company afterwards: they don’t do customer care.

This just looks wrong, if there is nothing to hide you would be open about it wouldn’t you? It is, however, perfectly legal. There is no one we can turn to for help – I tried the Financial Conduct Authority (FCA), Association of British Insurers (ABI) for a code of practice, the Information Commissioner (ICO) and the Leaseholder Advisory Service (LAS). None of whom could help, as from the FCA perspective, I wasn’t the holder of the insurance policy (just paying for it), the ABI referred me to the insurer, the ICO said the information was not about people, and the LAS agreed I did not have a right to this information. I can ask to see a copy of the invoice but that is unlikely to show the commission paid.

So the leaseholders are expected to stump up the premium on a building that the owner insures through itself, and have no right to know how the premium is calculated.

It is no wonder then that getting government policy implemented such as energy efficiency measures and community heating schemes, is so difficult. The default position is no change.

The insurance arm of the freeholder to our property, was recently quoted saying it was concerned at increasing losses from fire damage, which are now running at the highest level ever experienced.

However, at the same time their managing agent is telling us – their leaseholders – that the insurer/freeholder cannot get involved in fire safety issues within the building. The agent said: “Unfortunately matters pertaining to the actual fabric of the building is something that [the developer] will have to resolve with you, we cannot fix the problems directly”. Actually we weren’t asking them fix to the problems themselves, but simply how we could work with them to make the building they now own, safe to live in. That would, incidentally, also reduce the insurance risk.

There are other fractious relationships. The developer appointed the managing agent and signed a contract requiring six months notice be given to end the contract. Residents and tenants frequently wonder who the managing agent is actually representing. They have many contracts throughout the country with the same developer (a large national housebuilder) so appear keen not to rock the boat and seem unable to get the builder to fix anything.

For example the water meters have leaked and the residents are stuck in an argument between the water company and the developer about who is responsible. There is no question of the housebuilder sorting out the defect and arguing with the water company afterwards; they don’t do customer care. The managing agent doesn’t want to get involved as the water meters are demised to the individual properties. This means that each time a water meter fails the leaseholder has to report the fault themselves, despite damage being caused to communal areas.

That is inconvenient but far worse is that the communal heating system has not been properly commissioned. Getting that resolved is proving very difficult, because so many parties are involved and because while the heating system works, there is no compulsion on anyone to see that it works efficiently and according to design.

The complexity of property law and holdings and the opaque nature of who is entitled to what means that as a country we stick huge hurdles in the way of progress. How do you make landlords carry out energy efficiency improvements, or agree to community energy projects?

In London we are about to embark on large-scale residential tower developments along the River Thames, with centralised heating systems. Who will ensure that these highly efficient systems actually deliver on those low energy promises?

The shocking truth about my housebuilder and health and safety

In fourth of his diaries of a new home purchase, David Frise details how his builder consciously flouted health and safety laws

I mentioned in my blog introducing this series that the builder of my new house – a major listed housebuilder – has shown a total disregard for health and safety. My subsequent blogs detailed the firm’s construction failing and inability to provide me – the customer – with basic information about its performance and functionality.

But it’s time to come back to this disregard of health and safety. This came as a genuine shock. I have worked in construction for over 20 years and, genuinely, had not experienced this hugely disappointing lack of care.

Examples? Well, let’s start with the windows.

The flats have tilt and turn full height windows. So, to stop people falling out glazed guards are fitted, which are half the height of the window and very heavy.

One has already fallen off – fortunately from a ground floor flat. A second was found to be loose. There are four floors in the block, so you can imagine the result if someone leans against a guard on the upper floors and it gives way. Danger from above and below.

You would think this would trigger an immediate safety check of the 100 or so other guards. Well you would be wrong. There is apparently no need to check as these two particular window guards were installed by a ‘rogue contractor’. That makes me feel so much better.

I’ve seen the ‘Building Log Book’ and it tells me they have inadequate records of the build, so how can they be so sure about this particular aspect? As I told one of the directors: “You surely don’t earn enough money to take this level of personal risk?”

It seems incredibly cavalier that the directors remain oblivious of their responsibilities - or simply choose to ignore them. Actually, as I have pointed out the former to them, it has to be the latter.

We have mice on the first floor. They must have come in through holes in the structure where the services penetrate. Begs the question how did the housebuilder pressure test the building?

What else? The window installation company changed a window on the fourth floor using a cherry picker. The problem was that they waited until it was dark. It was also sited in a public car park and crossed a school footpath, which remained open so school children could walk under the platform.

The residents on the floors below were not warned, so they could also walk under the platform as the window was hoisted into position.

I reported this incident to the housebuilder with photographs. The result: Nothing. In fact they didn’t even acknowledge my complaint, even after numerous chasing letters.

Ironically, when I asked to go onto the flat roof to see the solar thermal installation I was advised I would need to complete a £600 “safety course” first.

Anything else? Yes, actually. They took a year to produce a Legionella risk assessment and even then it was just the bare minimum as it only covered the public areas. Residents have received no advice about the risks or any precautions they should take.

We had a number of soil and vent pipe leaks into the undercroft basement car park. I cycled through a bad one (not recommended - contact with human faeces can damage your health). The plumber tried to blag my wife that the water was only shower waste. He claimed the toilets used a different system.

My wife’s response: “Don’t p*** on me and tell me it’s raining”. She is a plumber’s wife after all. The builders have so little regard for the residents that they even refused to pay for water sampling to prove their claim that some of the leaks were rainwater not toilet water.

We have mice on the first floor. Intelligent creatures mice, but they didn’t take the lift and didn’t open the fire doors and climb the stairs to appear magically behind kitchen units. They must have come in through holes in the structure where the services penetrate. Begs the question how did the housebuilder pressure test the building?

The builder thinks the residents are “over-reacting” and said “if you can locate the holes we will fill them”. My concern is that where the mice can go smoke can follow. Is our fire safety compromised? The fire at Lakanal House, where six people lost their lives in 2009, resulted from smoke passing between floors. We currently have two fire doors that do not shut fully. This was reported four weeks ago as a defect, but still has not been repaired despite numerous follow up reports from residents.

Do these companies never learn anything?

Over a third of the water meters have leaked causing water damage down the stairwells, which led to two fire alarm panels having to be changed. We thought this might prompt a product recall and replacement meters. Of course, we were wrong… again.

So despite bland published statements like “in managing health and safety we take a pro-active approach” and “the safety of you and your family is extremely important to us” the evidence would suggest that this approach either ends at handover or there is a cultural issue at this very large national housebuilder. How else could one explain such a blatant disregard of the safety of those to whom they owe a duty of care?

Official secrets: Why are housebuilders keeping us in the dark?

David Frise battles to find out if his new home from a listed builder is performing as it should

I started my career in the Royal Navy, in fact in nuclear submarines. I have signed the Official Secrets Act and clearly see the need to keep secret the design of a nuclear power plant on a submarine. I fail to see, however, why the schematic of a centralised gas-fired boiler system in a 52 apartment block in North London should be a big secret. But apparently it is.

The latest installment in my diary of my new home purchase concerns openness and consumer information.

Regarding the boiler schematic, the builder has flatly refused to give me a copy. “We have declined to provide a schematic because it is a communal system”. Why not? What harm could be done by providing a resident with information about the installed systems?

I have also been frustrated in my attempts to get a copy of the schematic of the solar thermal installation. I needed this because the building would qualify for the Renewable Heat Incentive (RHI)at a rate of 8.5p KWhr (at the time it was relevant) and I thought this would be sensible to pursue. Again I was refused, only to find out that the installer had entered an Energy Efficiency awards competition – and I was one of the judges (unlucky for them)! They were claiming quite remarkable performance from the system they installed in my block. It was particularly remarkable because I happened to know it wasn’t working because of a leak on the system.

In fact there is, incredibly, a heat meter already installed, but you won’t be surprised to hear it is in the wrong place and not wired

The installer did, however, offer to send over a schematic to allow the installation of the required heat meters for the RHI. Weeks passed and when chased the promised schematic had mysteriously disappeared and, in fact, they said they only did the maintenance. Really? Not what their competition entry said. They are apparently still able to install the heat meters though. How they will do that, without knowing what size they need to be and where to site them is a mystery. In fact there is, incredibly, a heat meter already installed, but you won’t be surprised to hear it is in the wrong place and not wired.

Other items that have the security status of “For Builders’ Eyes Only” include the basis on which a Code for Sustainable Homes Level 3 was attained. The developer seems to have the equivalent of a rubber stamp: “Permission Denied”. However, as I am in the know I contacted BRE who administer the Code. BRE have no record of inspections and so pointed me towards DCLG. They again have no records. There is no central registry and, as I did not pay for the inspection, I am not entitled to see how the code level was attained.

Now, as I have two shower valves with a combined flow rate of 43.4 litres per minute, a dishwasher, washing machine and two toilets, I am not really sure how we sneak under the 105 litres per person per day requirement of the code. But as I’m rapidly learning, it’s all on a “need to know” basis, and in order to bill me Thames Water have installed a meter that I am now able to read (I had to buy a key to the cupboard) so I know my water consumption is 180 litres per person per day.

No wonder they want to keep it all a secret.

They don’t know what they’ve built

David Frise with the second in his series of articles charting his experience of buying a new build flat marketed as reaching Code for Sustainable Homes level three

I should have realised “early doors” that the builder of my brand new Code for Sustainable Homes level three flat was not really too concerned about what they had built. They couldn’t tell me if the solar array was solar PV or thermal when asked.

Having taken possession, and checked what we could before the sky darkened over our new home on that first night, we immediately noticed a fault in the design. No light switch for the living room! It was quickly found however … in the hallway.

This quirkiness of design rapidly became a trend; we noticed we couldn’t operate the kitchen extractor fan from within the kitchen. This switch took a bit more finding, as it was located in the airing cupboard, (where else?). An unmarked two speed light switch operates the fan. The manual advises you to leave the fan operating in low speed at all times to ventilate the bathrooms, but if you’re cooking the fan needs to be on a high speed (so you have to walk out the kitchen and make the switch, not very high tech. Invariably we forget to switch it back to low speed after cooking, so wasting energy. I made a note to get that changed; Building Regulations require local switching of fans.

After one night we also abandoned the fan running constantly on low speed, it’s far too noisy to sleep with it on.

We noticed we couldn’t operate the kitchen extractor fan from within the kitchen. This switch took a bit more finding, as it was located in the airing cupboard, (where else?)

I checked the instruction manual for the fan and became more puzzled as the manual was for a MVHR (mechanical ventilation heat recovery) model, which are very efficient and save lots of energy by recovering around 90% of the heat extracted. I could see the extract side but no supply air ducts; the system should balance supply and extract air. I queried this with customer support; “I’ll get back to you on that”. Two weeks later, the reply was, “we’ve issued you the wrong manual in error”. The correct manual was dispatched but took months to arrive.

This got me thinking and having checked the energy performance certificate (EPC) in the flat manual I thought I’d like to see the SAP calculation. If the MVHR was used in that calculation it would produce a much better result than straightforward extract. This is after all a code level three flat so dumb extract seemed wrong.

I waited a long time for the SAP calc, and had to ask for it on numerous occasions. Eventually I got one but it was marked “draft”, so I asked for the correct one. Months passed again but the second one produced was a “checklist”. I’m now getting really suspicious, because one thing I noted on the “checklist” is, that the ventilation system is described as ”balanced” indicating MVHR (straightforward extract being “unbalanced”). I therefore asked again for the correct SAP calc. That was six months ago and to date I’ve received nothing. So I know what I think the answer is.

The builder uses this tactic frequently – giving any request they don’t like the look of “a good stiff ignoring”. The other 51 residents in this block wouldn’t know a MVHR if it hit them over the head. So you will get away with this on 51 of 52 occasions. I thought if you had made a genuine mistake and supplied the wrong manual you would quickly provide the evidence within a correct SAP calculation wouldn’t you? If however you had “value engineered” out the MHVR somewhere between planning approval and build, you have made 52 savings on fans, ductwork, louvres and labour. It all adds up.

I said in the first article that the housebuilder sold me a Volkswagen and delivered a Skoda. The building designed for planning did not translate into the finished article and the builder does not have accurate enough records of the changes. Or perhaps they do, but to produce them would prove what I can only currently surmise. I’m more inclined to believe they don’t know what they’ve built, and worse, don’t much care.

Why housebuilders are trying to sell you a Skoda

David Frise starts a series where he will chart his experience of how one major housebuilder failed to build the home it promised, and then staunchly refused to do anything about it

Housebuilders are a lucky bunch. They have prospered during the recession that has decimated the construction industry. How have they done this? By sitting on their landbanks and squeezing the supply chain.

Having done little to help during the crisis, they have now been rewarded by being given a £3.5bn cash boost from the chancellor, desperate to stimulate economic growth, through the Help to Buy scheme.

The missed opportunity to attach a price for this prize is staggering. We are not even going to insist that they build things properly. The fact that in recent weeks the government has suggested houses should have reasonable space to live in and somewhere to put our bins, suggests an industry not really focused on their customers.

Having done little to help during the crisis, housebuilders have now been rewarded by being given a £3.5bn cash boost

But why should housebuilders care? They have unsurpassed political clout, customers queuing up to buy their products, no new entrants into the market because of big barriers to entry and, it seems to me, nobody checking the quality of build.

The result is numerous complaints about cramped accommodation, poor workmanship and long running defects. I’ve been considering this of late: why is there such a divergence between what they sell and what they actually deliver?

How do I know about this problem? Well, I’ve recently bought a new flat in a brand new, purpose-built apartment block. Not any old flat but a Code for Sustainable Homes level 3 flat, from one of the largest housebuilders in the country, one that is expanding on the back of the chancellor’s largesse and recording record profits.

I have concluded there are two reasons for the performance gap, apart from “because they can”.

Firstly, they sell you a Volkswagen Golf, give you a Skoda and tell you it’s the same. But why don’t we rail against this inequity? Well, basically we don’t know we have been sold a Skoda. How would we know without an in-depth knowledge of Building Regulations? In my case I have tried to get the information but have been subject to a good stiff dose of ignoring, dissembling and misinformation.

One year after moving in I still do not have basic information like a SAP calculation, a schematic of the centralised communal heating system so I can work out how the system works and no information on the solar thermal heating, that in theory should qualify the development for the Renewable Heat Incentive.

So you have to be an expert to spot the scam.

A house is the biggest purchase of our lives so we don’t want to make it look like we’ve been sold a pup

Secondly, house purchases are about location, location, location. This is the biggest purchase of our lives so we don’t want to make it look like we’ve been sold a pup. As long as the building doesn’t fall down, the housebuilder has nothing to fear. We stay pretty quiet.

It isn’t just that the build that doesn’t match the expectation. My housebuilder has in its brochure a section on customer care – Because we care. A photograph of a bank of three operators ready to take your call is displayed. In reality they have a part time, non-specialist in place who has the ability to dump information at the end of each call. The person can’t open an Excel spreadsheet detailing defects, in fact wondered “what that file was” in an email. To be fair almost everything that was forwarded on to the construction manager by the customer care “team” was roundly ignored, particularly if it was requests for information. It truly is customer “care” with no customer support from senior management.

Most disturbing and most surprising to me has been a cavalier approach to health and safety. In the area of commercial construction I’ve been involved in, H&S is taken very seriously, yet regional directors at housebuilders appear to be unaware of the concept of criminal negligence or duty of care.

In the coming weeks, I will be expanding on my battle with the developer, over problems ranging from windows which no-one knows how to clean, to leaking pipes and poorly thought through design to real health and safety issues. And how I’ve had to become a director of the residents’ management company to get information about the property I live in. Overwhelmingly it is a story about the builder’s complete lack of interest in whether or not the building operates to the design.

A right royal mess

 

February 24, 2014

It might be cold comfort to the three million or so people in this country classified as ‘fuel poor’, but the Queen is now officially one of them.

Last week’s report into the royal finances revealed that almost £10m is spent annually on ‘utilities and IT’ at Her Majesty’s official residences – including Buckingham Palace, Windsor, Sandringham and Balmoral. She receives £31m from public coffers for the upkeep of the buildings, meaning she is spending comfortably more than the 10% of her income on keeping warm that qualifies her as fuel poor – even allowing for her IT and lighting costs.
It also emerged that the 60-year-old central heating system at Buckingham Palace will cost over £1m to replace. I wonder if she would qualify for ECO assistance. Clearly, biomass is an option, which means she could claim the Renewable Heat Incentive (RHI) payments from April when the residential scheme kicks off. She does own quite a lot of trees after all.
However, Her Majesty does take a keen interest in the finances and is notoriously thrifty – her old fashioned electric fire being a case in point. So, she would surely sympathise with the B&ES mantra of sorting out the leaky fabric of historic buildings to improve their energy efficiency before even thinking about renewables.
Troubled scheme
Her financial instincts might initially attract her to a Green Deal package. However, she may already have seen the research carried out by DECC and recently highlighted in The Guardian, which effectively torpedoed the government’s claims for how much people can save through this troubled scheme.
Part of a long-term study into gas and electricity consumption, DECC’s research revealed that people would actually lose money by taking out a Green Deal loan because the measures deliver less than half the savings that continue to be claimed for it. Note: This is DECC’s own research.
Homeowners, who installed cavity and loft insulation and a new boiler in 2010 cut energy use by 19%, adding up to a saving of around £140 a year at current gas prices. Chris Goodall from the Carbon Commentary website did some further analysis of DECC’s figures and this was the basis of the Guardian article.
He found that a new boiler would produce annual savings of less than £70; cavity wall insulation about £54; and loft insulation £15. The Energy Saving Trust (EST) continues to publish an estimate of between £105 and £310 for the new boiler; up to £140 for the cavity wall insulation; and up to £180 for loft insulation
Interest
If someone installed all three measures in the same year, their typical saving was 3,600 kWh – or £139.46 at last year’s energy prices. The EST said they would save £270. The EST estimates that it would cost of £3,050 to fit all three measures and the Green Deal charges an interest rate of 8% on repayments.
But that’s not all. There are a large number of homes whose gas consumption actually rose after having the energy saving measures fitted due to poor workmanship or changes in occupant behaviour.
The decision to charge interest on Green Deal repayments now looks even more bonkers than before. Homeowners will be saddled with a charge added to their electricity bill for 20 years that more than wipes out any possible savings and gives energy efficiency, in general, a bad name. In fact, the Carbon Commentary team worked out families could be £200 a year worse off by taking out a Green Deal loan.
Goodall rightly asks: ‘If the research arm of DECC knows the true figure for the likely cost savings from energy efficiency measures, why are other parts of government continuing to promulgate much larger figures in order to get householders to take out Green Deals?’ Quite.
Incentives
Perhaps the Queen could mention to the Prime Minister, at one of their regular meetings, that if the government is truly committed to improving the energy efficiency of this country, it must underpin it with incentives that actually incentivise.
There is the kernel of a good idea in the Green Deal, but it has to be made appealing to consumers – not just to finance providers. That means scrapping the interest charge and, instead, offering those who carry out energy saving measures a reduction in their council tax and applying lower stamp duty rates to energy efficient homes. Both things are fiscally cost neutral.
Have a word, Ma’am.

At last - some good news!

 

December 4, 2013
After weeks of unedifying politicking over energy prices and green subsidies, the government has shown that it can – once in a while – make a sensible decision about energy by reinforcing its support for the Renewable Heat Incentive (RHI).
The tinkering with ECO and the shambles that is the Green Deal prompted many of us to fear the worst when a review of the RHI was announced. Thankfully the government is expanding the non-domestic scheme to take in some more technologies and the domestic version will kick off in the Spring.
Currently just 2% of the UK’s heat is generated by renewables and uptake of the non-domestic RHI has been disappointing, since its introduction in 2011, something the government admitted in its response to the consultation.
‘We have seen strong uptake in certain renewable heat technologies and a 7% rise in renewable heat in 2012. However we have not, so far, seen the levels of uptake that were anticipated when the scheme was launched.
Expectations
‘Whilst applications of biomass installations smaller than 1MWth have exceeded our expectations, uptake for the other technologies offered support has been lower than was originally anticipated. Based on current applications we estimate the total heat generated in 2013/14 will be about 1.2 TWh. This is just over a third of what was originally expected.’
The improvements announced should drive up renewables share of the heat market to around 12% by 2020, according to the Department for Energy and Climate Change (DECC).
Including air-to-water heat pumps is a really welcome move and the 2.5p/kWh tariff should give that market the lift it has been looking for since all the bad publicity received earlier this year. This incentive is dependent on an installation achieving a minimum seasonal performance factor of at least 2.5, which is clearly doable and will provide a worthwhile energy saving.
Heat pumps clearly have a part to play and so does CHP, which is also getting increased support with an increased tariff for biomass and biogas systems.
In the domestic scheme, the government has confirmed the tariff for solar thermal at 19.2p/kWh, which should help to revitalise a good technology that fell back dramatically in the face of rapid PV expansion taking up much of the available roof tops.
However, the RHI remains far from perfect. One disappointment is that the industry’s call for a method of rewarding good system design has been ducked.
Underpinning
In our response to the consultation, B&ES called for minimum energy efficiency standards to be adopted as an underpinning requirement for RHI funding. That way only the most efficient systems would be supported. The current scheme, rather perversely, pays out less to the most efficient systems because they generate less heat.
In its response, DECC said: ‘Energy efficiency is at the heart of the Government’s approach…and Government plans over time to unlock this potential through existing policies, such as the RHI. However, we will not be introducing explicit energy efficiency criteria for non-domestic RHI applicants at this time.
‘The mixed views from consultation respondents made it clear that more work needs to be done to establish a range of effective, but not unduly burdensome energy efficiency measures that could be introduced.’
That means the industry has a bit more work to do on presenting the case for energy efficiency as the underpinning driver for all such schemes.
It is troubling that politicians and government officials continue to struggle with the concept of energy efficiency. They are far more comfortable with the idea of increasing generation of energy than using what we already have more efficiently. Hence their obvious confusion over how to support energy efficiency schemes like ECO and the Green Deal.
However, let’s not be churlish. We can return to that theme another day. Today is a day for welcoming a positive step in the right direction and the government showing it can think long-term, when it wants to.

The price is too high for Cameron's £50 roll back

 

December 3, 2013

David Cameron has rolled over, rolled back and let the energy companies tickle his tummy. It is not a pleasant picture.

Within hours of the government’s announcement that it was cutting the ‘social charges’ added to domestic energy bills, several of the suppliers announced a reduction or freeze in their charges to customers. Job done. The government gives itself lots of brownie points for helping ‘hard working families’ and we all move on to the next short-term political crusade.
It all goes to show that the ‘greenest government ever’ does not do energy policy. The measures announced this week will shave about £50 from the average fuel bill of £1,340. The rebate element of that saving is just £12. Small beer, big problem.
This government just makes up policy as it goes along – it hasn’t the slightest idea of investing in the long-term. If you cut, or scale back, measures designed to reduce energy consumption, the long-term effect is increasing energy use and, therefore, costs.
It is that obvious, yet our politicians don’t get it – or rather, choose to ignore it in favour of short-term political point scoring.
Labour is no better. Ed Miliband was once this country’s Energy Minister, but has announced a ‘policy’ to freeze energy prices if he wins the next election. The cost of that? Prices rose within weeks and potential investors in new energy infrastructure started to get cold feet.
Security
Our energy efficiency strategy is in tatters; we have no long-term energy security …and, as a result, consumers will be paying much, much higher bills in the future.
Look, nobody said going green would be easy. It is a huge shift in technology and user behaviour – and possibly the most significant change of direction since the industrial revolution. However, it simply has to be done – there is no alternative; even if you don’t believe in climate change. To control energy prices in the long-term we have to find alternatives to finite supplies of fossil fuels or make sure we use as a little as possible.
Yet, every time there is a tough decision to make our government bottles it. No-one is going to invest in renewables and energy efficiency in this country if the government just raises the white flag every time the going gets tough.
The irony is that ECO was actually working, unlike numerous other government initiatives I could mention. It was starting to make a difference to the energy performance of harder to treat homes and putting a small dent in fuel poverty. Now it will be watered down to save consumers just £30-£35 a year.
Of course, the energy companies moved swiftly to embrace this by announcing new pricing. They love it because they pay less in ECO and get to sell more energy. Drinks all round.
The risk in watering down ECO is breathtaking. The long-term impact on fuel poor homes could be devastating. This is short-termism at its very worst. People who have trouble heating their homes will be the ones who pay the highest price for this miniscule rebate because their properties will be wasting energy far into the future.
Fuel poverty
Also, tinkering with the definition of fuel poverty is fooling no-one. The government has managed to take 800,000 families out of fuel poverty simply by changing the method for calculating it – that does nothing at all to address the underlying problem.
Instead a series of ‘roll backs’ are quickly unravelling our energy security. The Green Deal has been hung out to dry and the Code for Sustainable Homes is being abolished as part of the Housing Standards Review. Shaving tiny amounts from consumers’ bills to win a few votes is a total abrogation of responsibility for the future energy security of this country.
None of these schemes are perfect, in fact, they are an administrative nightmare for both consumers and installers, but that is what you get when over complicate schemes in an attempt to remove all the risk and at least we have some schemes capable of delivering energy savings. They should be improved rather than just swept away on a political whim.
Grants
The £540m worth of grants announced alongside the ‘roll back’ also don’t add up. Grants of £1,000 will be available for home buyers to spend on energy saving measures over the next three years – expected to support work in around 60,000 homes a year i.e. 180,000 homes in total. There are 26 million houses in the UK.
A scheme for private landlords is expected to reach 15,000 of the least energy efficient properties and £90m will be spent on improving schools, hospitals and other public sector buildings.
This pales into insignificance beside the £16bn cost of the UK’s first nuclear power plant in 20 years at Hinkley Point. Although that is being paid for by private investment, EDF has negotiated a tariff double the current price of electricity to guarantee its return. So, the government won’t spend a few pounds on insulation and other energy saving measures, but is perfectly happy to mortgage consumers’ future energy prices against expensive nuclear power.
We will keep banging the drum for energy efficiency – as the most valuable fuel we have is the fuel we don’t use – but I fear the government isn’t listening and we are all going to pay a very high price.

Cameron rolls back, rolls over – what will be his next trick?

 

October 25, 2013
David Cameron’s call for a “roll back” of green energy surcharges shows that the Government is now making up energy policy as it goes along.
He was quick to lambast Ed Miliband for announcing an energy price cap if Labour wins the next election – rightly pointing out that this would have a catastrophic impact on confidence in plans for energy infrastructure investment. Yet, almost without pausing for breath, he turns round and announces a review of the system for raising funds to pay for…energy infrastructure investment.
This is not only breathtaking hypocrisy and politicking of the worst kind; it shows a complete failure to understand our energy market and our country’s needs. Even his coalition partners the Lib Dems say he is panicking. His language at the despatch box betrayed his lack of poise on this issue. He might believe that Ed Miliband is a ‘con man’, but he was ill advised to voice that out loud.
He also conveniently forgets that the Climate Change Act of 2008 went through with support from both sides of the House – and green surcharges are a direct result of that Act.
Mortgaging the future
The Hinkley Point nuclear deal in the same week should give him further pause for thought. To get the nuclear deal over the line, he had to guarantee investors double the current price of electricity – in other words, he has mortgaged future domestic energy bills.
Green surcharges are not the whole reason our energy bills are rising – and it is hard to believe that Cameron doesn’t know that. The real reason is that we cannot control the wholesale market. Pension funds, who for so long saw utilities as core investments, no longer consider them the stable deliverers of returns and have disinvested. You would have expected the Tories to understand these pretty basic economic facts.
The big energy companies and investors didn’t like the look of the risk profile surrounding UK nuclear infrastructure so would only invest if the Government agreed to pay a high price.
According to the Climate Change Committee, the independent body advising the Government on how to meet our carbon reduction targets, household energy bills rose by an average of £520 between 2004 and 2012. Of that increase, £35 went towards supporting renewable power and £45 was invested in energy efficiency measures. Mr Cameron told the Commons that green charges had added £112 to the average annual energy bill.
Collapse
Even if his sums are right (and his own advisers are wrong); the addition of less than £10 a month to bills is hardly life changing – the collapse of our future energy infrastructure definitely would be.
Our industry has continually reminded the Government that you will only solve the problem of dwindling energy supplies with long-term policy decisions – yet both the Labour administration and the current coalition have flip flopped over this issue more than any other.
They managed to stick to their guns on petrol, though. Taxes account for more than 80% of what we pay at the pump and there were huge, violent protests in 2000 when we were paying around 80p per litre. Now, as we move towards £2.50 the protestors have melted away and there is much greater focus on the efficiency and reliability of vehicles to ensure they consume less fuel.
How about applying the same principle to buildings? Investment now in sustainable energy supplies will keep prices down in the future; but the most valuable energy is the energy we don’t use – so the big investment should be in energy efficiency. The Government has a perfectly good scheme in place for retrofitting every home in the country, but it is going nowhere.
Forgotten flagship
The Green Deal is rapidly becoming the forgotten ‘flagship’ policy because the “greenest government ever” has failed to invest in it. Not only has it not publicised it properly, it has allowed the loan repayments to be saddled with a 7% interest charge that is putting households off.
If the Government is prepared to mortgage future energy bills against nuclear energy and act as lender of last resort through Help to Buy, why can’t it make much more modest investments in energy saving? Underwriting the Green Deal so that it is cost neutral to homeowners, would turn the 80,000+ assessments that have been carried out into projects – currently only around 500 families have registered to convert their Green Deal assessment into an actual project.
Cameron should go further and incentivise the scheme by introducing lower council tax rates and stamp duty for energy efficient homes. This would lead to the nationwide rollout of energy efficient measures that would ensure households use less energy and, therefore, pay less now and in the future. The results would be visible long before Hinkley Point comes on stream.
It is pretty basic economics, but it does mean you have to stop making things up as you go along and playing party politics with our future.
Oh, and you have to believe there is a future beyond the next election.

Stop tinkering, Mr Cameron

 

October 22, 2013

Before the ‘Special One’ came along, Chelsea Football Club was managed by a certain Claudio Ranieri. He became famous as the ‘Tinkerman’ because he couldn’t resist the temptation to tweak his team selections despite having a superb squad of players paid for by the Russian billionaire Roman Abramovic.

His constant fiddling with the line-up unsettled the notoriously fickle international megastars in the dressing room – and led to inconsistent performances. In the end, the owner got fed up with all this tinkering and unceremoniously tweaked Ranieri out of his club and so began Chelsea’s love affair with the ‘special’ Jose Mourinho.
Our government is falling into all the same traps when it comes to building related policy. It seems incapable of having an idea and then allowing it to grow and flourish. They can’t resist the temptation to tinker.
The latest victim of this crass approach is Mark Prisk. After less than a year in the job of Housing Minister he has been dumped in David Cameron’s mini-reshuffle. And the really sad thing is that Prisk was one of those rarest of beasts – a minister who seemed to be on top of his brief.
Bonfire
A surveyor by profession – not a career politician – he had taken to the role with gusto and introduced a number of initiatives. His ‘bonfire of the housing standards’ looks likely to simplify and, therefore, reduce the cost of house building while driving forward minimum energy performance standards through a commitment to Part L of the Building Regulations.
As a result of his sacking, business leaders have accused the Government of being “all talk and no trousers” over housing policy and the reason for his removal seems weak. Clearly disappointed, he revealed his sacking on Twitter, explaining he had “been asked to step aside from housing for a younger generation… Disappointing, but it’s been a great eleven years as a frontbencher.”
The younger generation - his replacement is actually just a year younger - is actually a euphemism for a cabinet decision to demote the role of Housing Minister from a frontbench to a junior minister role. And what message does that send? And this after giving the housing sector a £3.5bn boost through Help to Buy. It would appear government do not want to close an informed scrutiny of what we get in return from the housebuilders.
Hot on the heels is a report from an All Party Parliamentary Group that attacks the Government for “sending mixed messages about its commitment to the green agenda”. It cites delays to the revised Part L; slow progress on establishing how zero carbon targets for homes can be met; and “unexpected changes to the feed-in-tariffs”.
In its report, ‘Re-energising the green agenda’, the Commission of Inquiry of the All Party Parliamentary Group for Excellence in the Built Environment says the Green Deal is failing because it is not “financially attractive” and calls for an urgent review of how such green initiatives are funded and incentivised.
In other words: “Stop tinkering and start showing some leadership!”
The decision to saddle the Green Deal with a 7% interest rate on top of the loan repayments has derailed a generally good idea. It was far from perfect, but the Treasury’s insistence on pandering to the financial lobby means it is stuck on the starting grid.
Prisk was guilty of the cardinal sin of actually understanding issues like this and trying to make progress. Could it be that he was forcing his bosses to face up to some uncomfortable truths about built environment policy – and suddenly his face didn’t fit anymore?

Labour energy ‘policy’ is populist drivel

 

October 7, 2013

The leader of the opposition has very little power or influence, but he can do one thing – he can create damaging uncertainty. Ed Miliband did just that last week with his unexpected announcement that a future Labour government would cap energy prices.

As a former Energy Minister he must have known what effect this would have on energy markets; possible future investment in our power infrastructure; and long-term energy costs in the UK.
This is unforgiveable and puts the interests of his party ahead of those of the country.
The shadow energy secretary Caroline Flint has compounded this folly by saying a Labour government would also cancel the Green Deal and replace it with a new ‘energy save scheme’ – with no further explanation of what that might be. The Green Deal has had a terrible start with only 12 projects carried out at the last count – against the Government’s target for 10,000 by Christmas.
Ms Flint is right to pinpoint problems with the scheme including the ridiculously high interest rates (around 7%) attached to the loans and the reluctance of homeowners to take out another 25-year loan with early repayment penalties that will have to be sold on to any future buyer.
Populist
However, capping energy prices at some arbitrary point in the future and scrapping the one coherent initiative aimed at improving the energy efficiency of existing homes could hardly be construed as ‘policy’. This is just populist drivel. The Green Deal is the best we have and it needs fixing not axing.
Labour doesn’t have an energy policy and it didn’t have one when it was in government. To be fair, neither does the Coalition, who are thrashing around looking for a way out of the energy black hole we are falling into. They disastrously undermined the revised Part L and the Green Deal is foundering through lack of government support.
There was £135m of taxpayers’ money spent on promoting the switch to digital TV and radio, but just £3.5m on marketing the Green Deal. That just shows where the votes are and why just 12 Green Deal projects have been completed to date.
If you are going to ask people to put a value on something they don’t really understand; you have to push the message hard. Nobody wakes up in the morning and asks: ‘I wonder how much energy I can save today?’ They can see why a new kitchen or conservatory would add value to their property, but they are struggling to put a value on a possible energy saving sometime in the future. Why, then, would they pay for it over 25 years with 7% interest on top?
As I have said before, your future self does not exist. It does not come naturally to pay for something now that will only benefit someone who may or may not be in the same house sometime in the future.
Reduced council tax and a cut in stamp duty for energy efficient homes are incentives that might make a homeowner take the plunge now. You also need to make the scheme as easy and accessible as possible, which it isn’t.
There is clearly lots of work to do to save the Green Deal and it might not be salvageable. But it is irresponsible politics of the worst sort to say you will scrap it and think up something else in its place simply to score cheap political points.
The Armitt Review (ironically commissioned by Ed Balls) called for politicians to stop playing politics with our infrastructure and it is high time they stopped trying to score points over energy too. Labour’s latest populist outbursts are only undermining already fragile confidence in the value of energy efficiency – and our future selves will all be paying a heavy price if this politicking goes on for much longer.