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.