Examination of Witnesses (Questions 620-629)|
TUESDAY 4 DECEMBER 2001
620. Staying on the theme really of how domestic
consumers will see the economics of energy efficiency in so far
as it affects them, energy-efficient appliances like that and
indeed a number of others are more expensive in the short term,
at the point of sale, than the alternative. Do you think that
the at-the-point-of-sale price is a disincentive? If it is, is
there anything we could do about that end of things?
(Dr Lees) Let me answer that in two parts. The first
part is, you are correct, on average the cost of buying an A-rated
fridge freezer, which is the most energy-efficient one, over a
C or an E-rated one, is more expensive. However, what our research
shows is that the spread across the A is far greater than that
average difference. In other words, if you shop around you will
find you can buy the most energy-efficient one that fits your
price and your budget, the facilities that you require for it
(and quite often, particularly, I am sad to say, the German A-rated
fridges are the most expensive because they have the most features).
So yes, there is an additional cost, but it is nothing compared
to the variation in prices. So I would maintain that you could
always find the A-rated fridge that is economic to use.
621. I am sure that is right, but do you think
people see that? It is chicken and egg, is it not? You are talking
about there being a step change in attitude, are you not?
(Dr Lees) Yes.
622. If that change in attitudes is not yet
there, the assumption that people will shop around is a problem,
is it not?
(Dr Lees) But we hope that we have made it easier
for them by two things: one, of course, is the energy label which
clearly differentiates them, but I think equally important, because
people see labels on some things and not on other things, we have
introduced this "energy efficiency recommended", so
when you go into Currys and Comet now you will see the little
triangle which says "This is an energy-efficient device,
amongst the most energy-efficient in its class. If you buy this
you're going to help the environment and you're going to save
a few bob yourself."
623. Can I ask you one other thing about minimum
energy efficiency standards. Again assuming we are not yet at
that step change of public attitudes, if setting those standards
leads to the prices of appliances rising, could that provide a
disincentive to consumers actually to buy new appliances and therefore
it could be a bit self-defeating?
(Dr Lees) Again I think the price rises are probably
going to be not lost in noise, but they are going to be small.
If your question is does that have a major impact on low-income
households, I am not sure it is such a major impact, because a
lot of very low-income households actually buy a lot of their
appliances in the second-hand market. What we have been trying
to do with the energy suppliers is to create a scheme which has
now delivered over 200,000 energy efficient fridges and fridge
freezers to low-income households; they buy that in for £25
in the case of a fridge, £50 in the case of a fridge freezer,
which is a real bargain, and for the first time in their life
they actually have fridges and freezers which work, which keep
their medicines at the right temperature, keep their food at the
right temperature and so on, and since the average fridge we took
away used over £30 a year, they get their money back inside
a year because the running costs are so low. So there are many
ways to tackle this. I am personally not too concerned. I think
there is such a spread in price that you can shop around and buy
the most energy efficient. It may have less features than a high
German A-rated one, but it will be energy rated A.
(Dr Eyre) We would see the role of minimum standards
as eliminating the worst products from the market. That has, of
course, already been done with fridges and freezers without us
seeing a major price rise in any of those, in order to promote
the best, significantly above minimum standards over other techniques
such as the promotions that Eoin has mentioned were needed. I
think we would also suggest that it might be helpful if the Government
could look at using reduced rate VAT in the way that it has already
done for insulation and heating controls in this area, not on
a very large number, just to promote the very best. The cost of
that to the Treasury I think would be of the order of £10
million a year. We think the benefits could be substantial.
Sir Robert Smith
624. People think they are paying less tax,
even if the product costs more. One concern that has come to light
is that the current energy efficiency schemes aimed at domestic
users concentrate on the cheapest and easiest improvements. If
you look at guidance leaflets it is always a nice square box with
a clear roof and plenty of ventilation in the loft, and they are
all neatly spaced joists where you just have to roll out the insulation
and you have achieved a great improvement, whereas a lot of people
in the fuel-poor houses will live in older houses with attic conversions,
and if they live in the part of Scotland I live in they will be
in houses which do not necessarily have eave ventilation as described
in the nice leaflet that comes with it. Would that be a fair point
(Dr Lees) Given that most of the fuel-poor houses
have their insulation done by professionals, I am not sure it
is a problem, because some of them done under the Warm Deal or
Warm Front Deal would be done by energy professionals, so there
is not a problem. I think there might be a problem particularly
in older houses which either do not have an accessible loft or
have solid walls. I agree those are a problem, and we need to
tackle them. I do not think we are tackling them to the extent
we think would be necessary to solve the fuel problem at the moment.
625. Those must need serious investment to get
round the problem?
(Dr Lees) Indeed.
626. On the question of zero emissions in new
buildings and things of that nature, putting in the necessary
incentives that have been identified in the Energy Efficiency
Strategy, have you made any calculations as to how much these
savings would cost the Treasury, or have you decided to let the
Treasury worry about that?
(Dr Lees) Sorry, the building regs would not cost
the Treasury anything.
627. You would have to forego in the form of
tax credits, reduced VAT and stamp duty rebates, the sorts of
things that have been suggested in the Energy Efficiency Strategy.
(Dr Lees) Sorry, I was at cross purposes. Yes, we
have made estimates of that in some considerable detail for exempting
boilers which are A rated. In fact we have done them all, but
we would think the A rated is the most sensible for that, and
we are planning to do further work on that. We are about to launch
a series of studies looking at fiscal incentives such as using
maybe tax allowances or it could be lower council tax, whatever.
Yes, we would like to do a study on that, but we did not realise
all these things might be possible a few years ago.
628. What sort of timescale are you talking
about? The reason why I am asking you is that we are now into
what might be called the pre-budget period, and it is a question
of if you do not get it out by the end of January, then you will
not get it into next year.
(Dr Lees) We have the boiler one under way.
629. One last point is that we have had several
pieces of home energy legislationfor example, the 1995
Actwhere there is a responsibility on local authorities.
Do you keep a weather eye (if that is the right way of putting
it) on the performance of local authorities? They are getting
ever more ambitious, but some of them are still lagging behind.
How do you think we can kick them into action, because it could
prejudice the successor schemes, could it not?
(Dr Lees) Absolutely. We have lots of individual examples
around the whole of the UK, which are excellent, of local authorities
taking leads and making a major difference. Equally, in terms
of local authorities, for instance, we have now supported some
304, some 76 per cent of local authorities with a housing responsibility,
actually to do practical energy efficiency activities on the ground.
That is much better than I ever thought we would get, but we have
done it for six years now, and I do not think we are ever going
to get that other 24 per cent, I think we have reached about equal
in those, so we are stuck there. It is a problem. How might we
go forward in the future? One of the things we are establishing
at the moment is a whole energy efficiency databasebecause
one of the problems with the Home Energy Conservation Act is the
reporting which is highly variable in its quality and accuracythrough
the government programmes, through the energy supplier programmes,
through our contacts with the cavity wall insulators, the boiler
installers, etcetera. What we want to do is crack progress, hopefully
by ward code, postal code, so we can try to identify those local
authorities which are actually making a difference, where things
are happening and where they are not, and then there are a variety
of things we can do after that.
Chairman: Naming and shaming. I think that has
covered all of our concerns this morning. As always, if we have
anything else that we would like to raise with you, we will be
in touch. If you think, on reflection, there is anything you would
like to amplify, then we would be more than happy to receive the
information from you. Thank you very much for coming in this morning.