House of Commons - Communities and Local Government Committee

Select Committee on Communities and Local Government Committee Seventh Report

6 Breaching the barriers to change

71. In the clamour surrounding an urgent response to climate change, it is tempting to concentrate, as the Government has to some extent done, on how the homes of the future can be made as carbon-free as possible, or to focus on Eco-Towns and microgeneration, on Combined Heat and Power systems and personal wind farms. It is equally easy to forget that far more apparently mundane means of achieving rapid reductions in the UK's carbon emissions are much more easily available to improve quickly and simply the housing stock already standing. As one witness to our inquiry said, cavity wall insulation is not a 'sexy' subject.[105] It is, however, part of the range of long-existing, familiar, comparatively cheap and comparatively easy-to-install technologies already freely available to the average householder. As the Government notes, with the exception of some emerging technologies

the products and materials required to improve the energy efficiency of existing homes are well known and have well established markets.[106]

72. Some 9 million homes in Britain contain unfilled cavity walls. The Sustainable Development Commission estimates that filling those cavities could save around 2.62 million tonnes of carbon. A further 7 million homes, usually those built before 1919, have solid walls, and, although questions arise about the aesthetics and appropriateness of either externally cladding or internally insulating them (see Chapter 8), a potential 4 million tonnes of carbon could be saved there.[107] The Glass and Glazing Federation estimates that a fifth of the heat lost from a single-glazed house goes out through the windows, and that savings of around 5 million tonnes of carbon could be made from replacing even older double-glazing with more recent energy efficient windows.[108]

73. The Energy Saving Trust estimates that a carbon emissions reduction of 20 per cent—one third of the total the Government is committed to by 2050—could be swiftly achieved through the insulation of cavity walls, lofts and hot water tanks, improvements to heating, such as better controls, thermostatic radiator valves and high-efficiency condensing boilers, and more efficient lighting.[109] It believes that

given the right policy framework, almost all of the potential for the cost-effective technologies currently in existence could be fulfilled by 2020 … This would leave thirty years, 2020-2050, to achieve the remaining 38% reduction through other technologies.[110]

This will not, however, happen at current rates of uptake: the EST also estimates that some cavity walls will remain unfilled by 2050, for example.[111] The difficulty lies in finding a means of ensuring that householders themselves have enough incentive to make the rate of adoption of existing measures rise.

74. The Energy Saving Trust estimates that installing the basic, cost-effective measures outlined above could save the average household in the UK £250 to £300 a year (in turn recouping the cost of average investment within three years). Since it is likely that energy costs will rise in the near and foreseeable future, the savings could in fact be greater than that. It would appear, therefore, that there is a significant market failure here. Market theory rests on the assumption that consumers will act in an economically rational manner on the information available. In this case, it seems safe to assume that the information available is the root of the problem.

Barriers

75. A number of reasons are routinely advanced to explain why householders do not choose to commission or undertake comparatively straightforward home improvement works with fairly quick payback periods.

Barriers to Home Improvement
Hassle factor—the difficulty of commissioning work and the inconvenience and disruption caused during installation

Trust—lack of confidence in identifying reliable installers or contractors, and suspicion of energy suppliers who come bearing energy saving deals.

Up-front costs—even with short payback periods, the up-front cost may be a significant disincentive to many works. In addition, the perception of what measures may cost has an influence

Information/knowledge—what can be done, what grants are available, where advice may be had, and how much things really cost

Technological immaturity—the limited availability of many zero or low-carbon technologies makes them not just hard to find, but expensive

Risk—Households may expect to move before a measure pays back its cost; additionally, there may be uncertainty about new or unfamiliar products

Other priorities—householders often have higher, more visible or cosmetic home improvement priorities, such as extensions or kitchen or bathroom overhauls.

Table adapted from EHCC 64, Government memorandum

76. Government has a role to play in helping householders overcome all those barriers, but the direct provision of finance through grants and schemes and the widespread provision of accurate information on which householders can act with confidence are the two most obvious routes to driving up the uptake of basic energy efficiency measures, unless it chooses to force movement by setting regulatory standards. Some steps are being taken to increase both incentives and information. On the incentive side, the Government estimates that the Carbon Emissions Reduction Target will speed up the installation of cavity wall insulation as suppliers seek to identify a further 3 million homes by 2011. The additional information provided to householders by the introduction and increased spread of the Energy Performance Certificate and the establishment of the Green Homes Service are expected to result in increased individual action, too.

Green Homes Service

77. Later in 2008, the Energy Saving Trust will, on behalf of the Government, launch a new Green Homes Service, with an annual budget of £26 million, aimed specifically at surmounting the information barrier.[112] Householders will be able to seek a personalised home energy check that provides advice on energy saving, water saving, waste reduction and recycling. Information will also be given on what grants, discounts or other financial support might be available from energy companies or the Government, and DEFRA, the principal sponsoring Government department for the scheme, believes this will reduce confusion about what support is available.[113] The Energy Saving Trust is expected to begin operating pilot schemes from 1 April and to have a service available across the country by December. The Trust currently offers advice to those who seek it; additional funding under the new scheme is expected to make it more proactive: householders whose EPCs contain ratings or F or G will be specifically targeted with improvement information.[114] We welcome the creation of the new Green Homes Service from April 2008 and urge the Government to support its rapid introduction nationwide. The provision of a 'one-stop' source of information for householders is a significant step towards overcoming the 'information barrier' to quick, simple and cost-effective action in many homes. We urge the service to provide information on competent suppliers and installers, and to monitor and report on the effectiveness of the works carried out. We expect in the future to examine further how the introduction of the service both widens information and leads to real improvement in individual homes.

Smart meters

78. The widespread roll out of real-time or smart meters for fuel may, however, offer even greater potential to influence millions of individual householders by providing them with the kind of instant cost and usage information that can lead to quick behaviour change. The 2007 White Paper on Energy set out an expectation that smart meters will be installed in all the UK's 26 million or so homes over the next decade. Beama plc estimates that the installation of a smart meter leads householders to cut energy consumption by between 5 and 10 per cent. Since the simplest means of all of reducing carbon emissions is to reduce the use of carbon-producing fuels, considerable benefits lie in the information gain such meters may provide. Ofgem, the energy regulator, is currently managing trials of smart meters in more than 15,000 households.

79. Several other European Union countries are already ahead on the provision of smart meters; Italy, for example, already has 33 million in operation.[115] The impetus behind their introduction is also the EU: the Energy Services Directive, to be implemented in May 2008, requires the provision of individual meters that provide householders with details of actual consumption, and bills that do the same. Real-time units meet those objectives; smart meters fulfil them to a greater degree.

80. The impact of either type of meter on consumption by individual families is unquestioned. Nicholas Doyle, project manger for Places for People, which has installed display meters in several of its projects, says there is an immediate and dramatic effect:

You should see the difference in terms of the way the family operates. The children run around the house turning items off (turning items on to begin with) but it makes that connection that we lost a number of years ago between turning a switch on and what the cost impact or carbon impact of that is.[116]

We welcome the forthcoming introduction of smart meters along with fuel bills that more comprehensibly tell householders just how much gas and electricity they use. We believe that suppliers should roll the meters out nationally as swiftly as can be achieved. The meters have a particularly important role to play in overcoming the information barrier that prevents simple, cost-free action in millions of households across the whole UK.

81. The Government has also announced that households should, from early 2008, be able to get a free display unit from their energy supplier, and that all new and replacement electricity meters from May 2008 should include a real-time electricity display.[117] Real-time displays offer less information than full-scale smart meters—the latter give the householder not just real-time information on energy usage and the likely cost, but a two-way connection with their supplier, the possibility of flexible pricing and much more detailed information on patterns of use, which may lead householders to tailor their use accordingly. Real-time units are, however, considerably cheaper (about a fifth of the cost) and could be rolled out across Great Britain within about two to three years rather than the estimated 10 years it will take to install smart meters everywhere.

82. Given the commitment to installation of full-scale smart meters within 10 years, energy suppliers have objected that moving first to real-time displays represents a waste of money and effort, and may even delay smart meters themselves. Centrica, the parent company of British Gas, notes:

We accept [real-time displays] are an interesting stop-gap for interested consumers until smart meters can be installed … we don't see merit in mandating [them] as meter replacement which will be expensive and will dilute industry focus in delivering universal smart meters.[118]

EDF, a major electricity supplier, similarly notes that real-time displays will provide consumers with less information than a full roll-out of smart meters.[119] Ofgem has also warned that installation of real-time displays could be "a costly distraction from from the bigger prize of introducing truly smart meters."[120] In supporting the Government's policy, however, the Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs, Joan Ruddock MP, cited the need for an urgent response to climate change as a reason for taking temporary action immediately:

It is important to get this in and not just to wait until we can manage smart metering for everybody.[121]

We recommend strongly that the provision of real-time display units must not become a proxy for smart meters and must not be allowed to delay the full roll-out of smart meters to every home in the country within a decade.

105 Q43 Back

106 Ev 281 Back

107 Sustainable Development Commission, Stock Take delivering improvements in existing housing, July 2006, p. 31 Back

108 Ev 82 Back

109 Ev 260 Back

110 Ev 260 Back

111 Ev 260 Back

112 HM Treasury, Budget 2008: Stability and Opportunity: building a strong, sustainable future, 12 March 2008, para 6.68 Back

113 DEFRA, new release, 19 November 2007. Back

114 Energy Saving Trust, parliamentary briefing note, January 2008 Back

115 Ev 158 Back

116 Q 211 Back