Supplementary memorandum submitted by
the Energy Saving Trust
ADMINISTRATIVE ARRANGEMENTS AND TAKE UP FIGURES
FOR EXISTING COUNCIL TAX SCHEMES
NOVEMBER 2005
There are currently three council tax schemes
run in conjunction with British Gas. A fourth, is run by Fenland
District Council with funding provided by the Energy Saving Trust's
Innovation Programme. This latter scheme is rather more complicated
than those run in conjunction with British Gas. For this reason
we don't believe such a model would be appropriate for a national
scheme. This note therefore focuses on the simpler schemes that
are being run in conjunction with British Gas.
The premise for each scheme is the same, with
British Gas providing funds to each council to be off-set against
the council tax bills of residents who install Cavity Wall Insulation
(CWI). However, each council appears to have interpreted their
powers in relation to their ability to offer rebates in a slightly
different way and as a result each council is implementing their
programme differently.
There are currently three active schemes. A
further two are due to launch in February 2006 to coincide with
the new year's council tax bills. British Gas is in discussions
with at least 20 other local authorities about setting up such
schemes.
What follows is a brief summary of the administrative
arrangements, and take up figures for each of the existing council
tax schemes.
1. BRAINTREE
DISTRICT COUNCIL
(BDC)
Press release: http://www.britishgasnews.co.uk/index.asp?PageID=19&Year=2004&NewsID=632
To date over 300 homes have had CWI installed
under the scheme, and there is commitment to re-run the scheme
with 2006 council tax bills.
The scheme is considered by BDC to be a council
tax rebate scheme. The press release refers to a "council
tax rebate" and explicitly links the rebate to council tax.
Before the scheme began the council sought legal advice. This
did not identify any reasons why the scheme could not go ahead.
The timing of the schemes introduction meant
that unlike some of the other schemes (see below) Braintree could
not send out letters with its council tax bills. Enquires have
been generated off the back of national and local PR as opposed
to mainstream marketing.
Operation of scheme
The scheme operates as follows:
1. Customer hears about scheme and calls
BDC.
2. BDC book customer directly onto British
Gas scheme and a survey is arranged.
3. Occasionally the installer will generate
leads themselves, in which case they book customers onto the scheme
directly themselves.
4. Insulation works carried out by accredited
installer appointed by BG.
5. Insulation installer notifies the Sustainable
Energy Team at BDC when insulation works are complete.
6. The BDC Sustainable Energy Team notify
the BDC Council Tax Department of the addresses where the work
has been completed.
7. £100 from the Sustainable Energy
Team's budget is transferred to BDC's finance department.
8. BDC send list of all properties which
have had CWI installed to BG and invoice them for £50 per
property. The additional £50 is provided by BDC (for further
details see below).
9. BG send cheque to BDC and it is deposited
in the Sustainable Energy Team's budget.
10. BDC's finance department issue a new
payment schedule for each household's council tax for the current
year and this is sent to the householder. It is worthwhile clarifying
terminology here—a council tax notice is the notice sent
to every household and states what band the property is in and
what the charge for that band property is. This is a legal document
and cannot be altered unless there is overcharging or a reassessment
of the property bands. Accompanying the notice is a payment schedule.
This tells the householder if they have agreed to direct debits
or if they pay in instalments what those regular payments should
be. This is purely an administrative document and it is here that
any discounts/rebates can be.
11. It is likely that if work is undertaken
after December then the discounts will apply to the next year's
council tax bill.
Feedback received from BDC indicates that the
administration costs associated with running this scheme are marginal
and minimal.
Braintree's utilisation of EEC funds
BDC have been working with British Gas for around
two years to offer an "able-to-pay" insulation scheme
targeted at owner occupiers. British Gas paid BDC to manage the
scheme, with a set fee being offered (approx £11) for each
insulation measure installed. The money received by BDC for the
"able-to-pay" insulation scheme was ring-fenced and
it is these funds that are being used to provide the additional
£50. Since the start of the council tax scheme British Gas
have only provided £50 for the installation of CWI—the
£11 fee is no longer provided to BDC for CWI. However, this
fee is available for the installation of other insulation measures,
and these funds continue to be ring fenced for use in the council
tax scheme. BDC estimate that they have sufficient funds ring
fenced to enable the scheme to run for several more years.
2. SOUTH CAMBRIDGESHIRE
DISTRICT COUNCIL
Contact: Ian Green: 01954 713209
Press release: There is no link to the press
release on either the British Gas or South Cambridgeshire websites.
To date there have been over 200 enquires about
the scheme, and 90 homes have had CWI installed under it.
The scheme is not considered by the council
to be either a rebate or a discount. The scheme has been marketed
as the "British Gas Cavity Wall Insulation Scheme" and
the "British Gas Council Cashback Scheme".
In March 2005 the Council sent out a letter
with council tax bills which highlighted the existence of the
scheme. This referred to the "British Gas Cavity Wall Insulation
Scheme" and the provision of a "£50 cashback".
The press release refers to the "British Gas Council Cashback
Scheme", and suggests that householders may use the £50
"to offset against their council tax". The press release
also calls the cashback a "rebate" (but it doesn't state
that it is a rebate against council tax).
Before launching the scheme the council took
legal advice and also discussed their intentions with Braintree
council. The legal advice suggested that running a council tax
rebate scheme would be illegal for the following reasons:
— The council sets council tax at the
beginning of the year, and the legal advice suggested it is illegal
to offer rebates once the tax had been set unless the householder
has been charged too much. However, the Braintree experience suggests
that while it is illegal to alter the council tax notice it is
not illegal to alter the payment schedule. It therefore possible
that the South Cambridgeshire advice was based on the assumption
that the council tax notice would need to be changed in order
to provide a rebate.
— There was some concern about "penalising"
householders who wouldn't qualify for the rebate.
— If householders are in arrears with
their council tax the council felt it would seem perverse to provide
them with a rebate against a bill they had not paid. However,
this could possibly be overcome by providing the rebate against
the next years' council tax bill, and there would seem to be a
legitimate reason for excluding such households from taking part
in the scheme.
Operation of scheme
The scheme operates as follows:
1. Customer calls British Gas Call Centre
and a survey is arranged.
2. Insulation works carried out by accredited
installer appointed by BG.
3. Insulation installer notifies BG when
insulation works are complete.
4. BG send list of all properties which have
had the work done over the last 2 month period to council.
5. Council arranges for cheque to be sent
out to the householder—this is in no way linked to the householder's
council tax bills.
6. Council claims the money back from BG
(£50 per CWI installation).
3. SOUTH HAMS
DISTRICT COUNCIL
Press release: http://www.southhams.gov.uk/index/council—index/ksp-press-office-index/spec-press-releases.htm?newsid=11481
Marketing activity is currently underway. However,
no take up figures are available yet.
The council consider the scheme to be a rebate
scheme. The press release refers to the "Council Tax Cashback
from British Gas"—explicitly linking the cashback to
council tax. As with the South Cambridgeshire press release the
South Hams one suggests that householders may use the £50
"to offset against their council tax". The press release
also refers to the cashback as a "rebate".
Apart from the press release there has been
no other advertising/PR around the scheme. Scheme details will
appear on the council's website when the site is revised.
Operation of scheme
The scheme operates as follows:
1. Customer calls British Gas Call Centre
and a survey is arranged.
2. Insulation works carried out by accredited
installer appointed by BG.
3. Insulation installer notifies BG when
insulation works are complete.
4. BG notifies council when work complete
and send cheque to council for each household that has had CWI
work carried out under the scheme.
5. The council then offset £50 against
each household's council tax for the next year (on 1 April of
the next year household council tax bills will be minus the £50).
The demands for 05-06 had been sent prior to commencement of the
scheme. At this point some council tax payers would have already
paid in full, some in part etc and the Council considered that
adjusting current bills would have been too time consuming for
this to be an option.
6. This avoids the administrative burden
of sending out a new payment schedule part way through the financial
year. However, it does mean that some householders could end up
waiting for considerable amounts of time before receiving their
rebate. For example, a household installing CWI on 2 April in
one year they could not get the rebate until the council tax notification
for 1 April the following year.
SET TOP
BOXES AS
AN EXAMPLE
OF PROBLEMATIC
PRODUCT DESIGN
In order for existing TV's to be able to receive
digital TV signals they require an additional piece of equipment—a
set top box. Evidence to date suggests that the large majority
of UK consumers will choose to do this via the purchase of a low
cost terrestrial adapter (set top box). The number of adapters
in use has grown from around 1 million in 2000 to c 8 million
today and is projected to grow to over 50 million by the time
digital switchover is completed in 2012.
The key issue is that the first appliances on
the market in 2000 retailed for around £100 and included
the facility whereby they went into stand-by mode when they were
not in use. However commercial pressure has resulted in appliances
being sold today in the £30 to £40 bracket which no
longer go into stand by mode when not in use. Our evidence is
that the large majority of these appliances are never switched
off by consumers resulting in them being always on.
The Market Transformation Programme (MTP) estimates
that based on current set top box designs in 2012 they will be
responsible for around half a million tonnes of carbon emissions
in the UK. They also estimate that if designs were amended to
include a stand by function these emissions could be reduced by
30 to 50%.
The UK cannot introduce unilateral mandatory
minimum standards for products in the UK alone—we are restricted
from doing so as a member of the European single market. However
the Energy Using Products Directive will offer us a route for
setting such a standard across the EU but this is likely to take
at least three years. The MTP has been working with manufacturers
to establish a European voluntary code of practice which establishes
the level for a suitable minimum standard but at present there
are no manufactures of terrestrial appliances who are prepared
to sign up—unlike the satellite and cable service providers
who are virtually all signed up and have delivered significant
savings—SKY being particularly involved.
The MTP is also trying to influence the Department
for Trade and Industry (DTI) and the Department for Culture Media
and Sport (DCMS) to include energy efficiency as one of the criteria
for awarding the digital tick but as yet have been unsuccessful.
TUMBLE DRYERS
AS AN
EXAMPLE OF
PROBLEMATIC PRODUCT
DESIGN
1. European labelling framework directive
Electric tumble dryers are one of eight product
groups covered under the European Commission's labelling framework
directive (92/75/EEC) which specifies the mandatory labelling
of householder products. Legislation introducing the specific
labelling of electric tumble dryers (95/13/EC) came into force
in October 1996[42].
2. UK market
2004 UK Sales Data from GfK confirms that 80%
of the electric tumble dryer market is rated EU energy label C;
10% is rated D with the remainder less than or equal to E. There
are two known products available in the UK that are rated EU energy
label A. The first, the White Knight CL847, achieves its rating
by using an extended low temperature programme that takes over
nine hours to dry a full 5kg load (MTP tests). The other, the
AEG heat pump tumble dryer that claims to be the World's only
tumble dryer with an "A" rating for a standard cycle
time, has undergone a UK re-launch in 2005 (product first introduced
in 1999) due to the unsuccessful establishment of the product.
The AEG heat pump tumble dryer operates at a temperature comparable
to standard condensing or vented dryers, but the high level of
efficiency from the heat pump system achieves the better energy
performance[43].
If all the C/D rated tumble dryers sold in GB
in 04-05 were A rated, some 103GWh/yr of electricity (12,100tC/yr)
would be saved.
3. Technology
The market has not moved towards ratings better
than C as manufacturers struggle to achieve the higher energy
performance under existing technology of vented and condenser
dryers, except by the method of running an extended programme
at a low temperature. In late 2005, one manufacturer (Electrolux
which owns the AEG and Zanussi brands) has launched B rated models
by using standard technology but by optimising the sensor, control
system, air flow and maximising insulation.
4. Interpretation
With electric tumble dryer UK household market
penetration at around 40%, the consequences of stalled product
development on energy consumption is significant. The technology
necessary to achieve EU energy label A rated performance has been
established for at least six years but cost remains a barrier
to the consumer and prevents significant market penetration. A
concerted effort by manufacturers to implement this technology
has not been forth coming, and with the current combination of
early adopter technology and low market uptake, costs remain high.
14 November 2005
42 Guidance notes on the various energy information
regulations relating to the energy labelling of household products
http://www.defra.gov.uk/environment/consumerprod/mtp/guidance-notes.pdf Back
43
MTP BNW22 Energy Saving Recommended Tumble Dryer Endorsement
Review 2005 http://www.mtprog.com/ApprovedBriefingNotes/BriefingNoteTemplate.aspx?intBriefingNoteID=406 Back
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