Memorandum from the Sustainable Energy
Partnership
1. This Partnership represents a very wide
group of organizations, namely the Association for the Conservation
of Energy, Association for Environment Conscious Building, Association
of Coal Mine Methane Operators, British Biogen, British Hydro,
British Energy Efficiency Federation, Combined Heat and Power
Association, Cornwall Sustainable Energy Partnership, Energy Conservation
and Solar Centre, Friends of the Earth, GLOBE UK All-Party Parliamentary
Group, Green Liberal Democrats, Green Party, Greenpeace, Help
the Aged, London Energy Managers Group, National Energy Action,
National Federation of Residential Landlords, National Federation
of Women's Institutes, National Home Improvement Council, National
Housing Federation, National Right to Fuel Campaign, PV-UK, PRASEG,
RSPB, Renewable Power Association, SERA, SHELTER, Solar Century,
Tenants & Residents Organisations of England (TAROE), Tory
Green Initiative, TRANSCO, UK HECA Forum, UNISON, Unit-[E], and
WWF-UK.
THE LONG
HISTORY
2. All of these organisations agreed to
support a series of measures entitled "The Clean Dozen"
in response to the first Treasury consultation on this issue commending
on 16 July 2002. The Clean Dozen was also supported by a very
wide range of other organisations, as the submission to the Committee
from the Association for the Conservation of Energy points out.
3. Subsequent to that consultation three
measures from the Clean Dozen were "short-listed" by
the Treasury in a second consultation. They were:
— a reduced rate of VAT to 5% for the
supply and installation of energy efficient products or materials
in non-grant schemes when householders employ contractors;
— capital allowances and 100% first
year enhanced capital allowances for companies, eg Energy Service
Providers, who invest in energy-saving equipment to lease to social
landlords and households; and
— a "domestic business tax allowance",
allowing private landlords to claim investment in energy-saving
materials against profits.
4. This Partnership considered this to be
an inadequate response and so called upon the Government to give
serious further consideration to the following additional measures,
namely:
— a stamp duty rebate for house purchasers
who make energy efficiency improvements to their home within,
say, six months to a year (this has been strongly backed by the
Energy Saving Trust); and
— a tax allowance for companies training
installers of energy-saving equipment.
5. In this second consultation, which ended
on 24 October 2003 the Government asked for expert opinion. The
submission by this Partnership, which related both to the government's
three short listed measure and the additional two measures listed
above made the following points:
— First that there was a mass of expert
opinion and evidence to support these measures namely 108 individual
local authorities, 47 out of 51 Energy Efficiency Advice Centres,
17 miscellaneous energy advice/delivery bodies and 18 out of 21
HECA/Fuel Poverty Forums. In addition, subsequent to 24 October,
the Local Government Association, which represents all local authorities
has, after extensive consultation with all its members, decided
to support these five measures. We pointed out that "it
is the united view of all the people whom we have consulted that
the above five measures not only will work—but that they
are essential".
— Secondly, we argued "that Whitehall
has to decide, when advising Ministers, whether to accept the
advice that has been sought in these two Treasury consultations—or
whether to reject it." We submitted "that those on whose
behalf we make this submission are the experts and the most experienced.
If those in Whitehall consider that they `know best' and so wish
to gainsay the united voices of all [of these people and organisations],
then the question arises—why consult in the first place?"
6. On a number of occasions the Treasury
committed itself to responding in the pre Budget statement. To
quote one example (from many), at the seminar run by the Energy
Efficiency Partnership for Homes on 25 February a response in
the pre Budget statements was promised.
THE EFFECTS
OF THE
"DEAFENING SILENCE"
IN THE
PRE-BUDGET
STATEMENT
7. As the Committee is aware, these promises
were not kept. This has the following serious effects:
— Those businesses that are being exhorted
by the government to invest long term in energy efficiency have
had their confidence to do so undermined. Boards and banks do
not invest on the basis of warm words: they invest on the basis
of commitment and the view that the government it taking these
matters seriously. Coupled with the government's continual and
continuing vacillation on the issue of targets and commitments
to energy efficiency, investors are increasingly getting the "whiff"
that the government is committed only to warm words. This will
not produce the investment that the government needs to achieve
long-term energy policy objectives.
— It also means that if the government
waits for the Budget to announce any results from these consultations,
that it will not be able to keep its promise to publish its
Energy Efficiency Implementation Plan within one year of the White
paper (ie 24 February) because part of that plan will be the fiscal
measures needed—and the Budget will not be published dentil
March/April. This delay will yet again leave the distinct
impression that the government cannot be trusted—with the
further downward effect on investment.
— In the case of investors in new technology
in particular (eg domestic heat pumps, micro CHP etc) they have
consistently seen no help from the government: this is a serious
disincentive to those, and future investors in the new technology
needed to achieve a low-carbon economy.[3]
COMMENT ON
THE "REASONS"
GIVEN FOR
THIS DEAFENING
SILENCE
8. No reason at all has been given
for the delay in the decision on the landlords tax allowance point.
This raises doubts among many people consulted as to whether the
government was serious in the first place.
9. No reason at all has been given
for the failure to re-consider the two extra points (stamp duty;
training). This raises doubts among many people consulted as to
whether the government is listening to the mass of evidence presented.
10. The reason for delaying the decision
on enhanced capital allowances relates to the whole consideration
of corporate taxation. This does have substance but we are disappointed
that no "steer" was given as to whether this measures
is high or low on the list of measures under consideration.
11. Re the 5% VAT rate the reason
given is at best confused and at worst disingenuous. Its seems
to suggest that it is blocked by the 6th VAT Directive not allowing
5% on D-I-Y purchases. But our submission concerned "contractor
installed" purchases not D-I-Y. And the Treasury's own consultation
document conceded that this was permitted under the Directive.
So why the delay? Once again this does not generate confidence!
REQUESTED ACTION
12. In the light of the above may we ask
the Committee to ask the Minister the following points:
Question 1: In view of the commitment
to publish the energy efficiency implementation plan on or before
24 February will he give an indication before then of the fiscal
measures to assist with household energy efficiency that he proposed
to introduce?
Question 2: Does he agree with the Treasury
consultation document which stated clearly that the 6th VAT Directive
does not prevent the application of the 5% rate to measures installed
by contractors?
Question 3: Is he aware of the submission
by the National Federation of Residential Landlords which indicated
that a package of measures including the VAT reduction and the
landlords tax allowance would persuade their members to invest
in energy efficiency, and that this would help the Government
deal with some of the most inefficient properties in the country?
January 2004
3 The writer of this submission (Ron Bailey) draws
attention to his interest regarding micro CHP declared in the
Register. Back
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