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Memorandum submitted by Consumer Focus ACC02 o Consumer Focus welcomes the Committee's inquiry into adapting to climate change, and asks that it considers the impacts of these changes on consumers' needs. o This response sets out: o the impact of projected climate changes on consumers, which are set to affect their homes and access to products and services; o consumers' increased understanding of the threats; o concerns about the lack of reference in Government policy to the needs of individuals; and o some ideas on how to quantify and measure consumer resilience to the changing climate. Consumer ContextThese concerns are based on the findings
of UKCP09. We have not stated definitive
impacts within
1. Risk to consumers. Consumers are making investments today that may be affected by changes in the climate. There will also be pressure on shorter-term demands. a. Homes may be affected by: · Reduced summer rainfall: · Risk of subsidence due to lower soil moisture levels. This can severely damage the fabric of houses, and can lead to higher insurance costs and/or requirements for consumers to pay significant amounts towards remedying subsidence before the insurance policy pays out. · Competition for water resources, may mean higher bills, lower water pressure or restrictions on use · Sea level rise, increased storm surge heights, coastal, river and surface water flooding: · Causes psychological distress, decrease in property value, reduction in the desirability of an area and a major impact on personal finance · Risk of flooding means higher insurance premiums, which may deter homeowners and tenants from getting insurance
b. Health may be affected by: · Average temperature rise and increased risk of heat waves · Higher temperatures pose considerable health risks for more vulnerable
population groups, such as the elderly, the very young or those with
pre-existing medical conditions. In the worst case, increased temperatures and
heat waves lasting for several days may prove fatal, as occurred during 2003,
which caused more than 2000 deaths in southern · Problems may be compounded, for example, by the urban heat island effect which exacerbates thermal discomfort in cities, or by water restrictions limiting the use of water for consumers' domestic and recreational use. These increase stress on the healthcare system, which may delay access to appropriate care. · Flooding · Causes psychological distress and has the potential to carry diseases
c. Financial Services · Climate change presents either direct or indirect risks on investments: · Direct risks through deterioration of the physical environment resulting from climate change impacts. · Indirect risks through changes in policy directed at reducing greenhouse gas emissions or for adaptation. · A recent survey of the 30 largest UK fund managers reveals that climate change is considered by a minority of pension schemes: only five schemes state that they will assess a fund manager's ability to manage climate change related risks and opportunities, and seven schemes require that their fund managers actively consider climate change related risks and opportunities as part of their ongoing investment mandate.[1]
· Insurers have made it clear to the Government that providing insurance cover to home owners is conditional upon Government increasing expenditure on flood protection[2]. Without insurance cover, securing a mortgage and selling a home becomes more difficult.
d. Energy · Climate change has the potential to affect continuity of energy supply, for example: 1. Flood risk to energy facilities 2. Sustained high temperatures on equipment ratings and reliability 3. Disruption to the transport of fuel to power stations or to homes e. Food · Climate change will significantly affect the availability of food for import · Changes in the British climate may affect: 1. Crop yields 2. Availability of agricultural land, particularly in the East of England 3. Food prices f. Water · Changes in the climate are expected to affect: 1. Water availability due to changes in rainfall, and higher demand as a result of warmer temperatures 2. Water quality due to changes in temperature and rainfall patterns, treatment will need to change as a result 3. Infrastructure such as water mains or sewers, as a result of changing soil moisture content or high volumes of waste water resulting from frequent intense precipitation 4. The ability of sewerage systems to cope with surface water drainage resulting from intense rainfall
g. Other infrastructure: communication, transport · The Pitt Review of the 2007 floods showed that communication is key during climate events. For example, the emergency response needs to include support consumers through both the media (to signpost consumers to the latest information) and the mobile phone networks. · Increased temperatures and surface water can disrupt road and rail transport, which has a direct impact on consumers' own ability to travel and also on the supply of products and services.
2. Changes in consumer awareness. Consumer Focus surveyed British consumers in July 2009. The survey indicates that, compared to 2007 (when a similar survey was conducted by the Association of British Insurers) there is an increased feeling of risk among consumers: 43 per cent now feel they are at risk from heat waves, up from 27 per cent in 2007; and 31 per cent of consumers feel that they are risk from flooding, up from 16 per cent. This shows an increase in awareness and concern among consumers about these issues.
3. Consumers have an opinion. It is also noticeable that, in the 2009 survey, despite this widespread rise in awareness and concern, there is also a rise in people who think they won't be affected by any of these (13 per cent in 2007 up to 25 per cent in 2009). This could be explained by the fact that the number of consumers having no opinion on climate change impacts has dropped significantly from 28 per cent in 2007 to 8 per cent in 2009. Far more people now have an opinion about the impacts of climate change
4. Climate change is not a middle class issue. Our survey showed little difference between social grades. There was a great deal of similarity in the responses, with around 5% difference between ABC1 respondents (where the head of the household has a managerial or supervisory role) and C2DE respondents (skilled and unskilled workers). However, the Pitt Review of the summer floods in 2007 found that low-income households are the least able to recover[3]. A third of residents of social housing have no insurance and half do not have home contents insurance, as opposed to one in five of households on average incomes[4].
5. Greater awareness of mitigation than adaptation measures. A lot of attention has been given to improving energy efficiency and reducing greenhouse gas emissions (to mitigate climate change) in the past decade, but consumers are as yet unaware of some of the main ways in which their lifestyles will be impacted by climate change and how they will have to adapt. Our survey asked consumers which methods they had heard of in terms of preventing (mitigating) and protecting themselves (adapting) from the effects of climate change. The responses showed that consumers had a much higher awareness of mitigation-related measures than adaptation measures.
Government Policy
6. Recognition of consumer needs. Consumer Focus welcomes the review of government policy on adapting to climate change, as it shows that work is underway across Government to prepare for changes. However, it also shows that plans lack relevance to individuals as they are focussed on large-scale systems with some reference to existing interfaces with consumers, with no consideration of the needs of the individual. For example, management of the housing stock is limited to adapting planning policies and building regulations (NAO, p59), which will not affect the majority of homes. The following two sections consider the gaps and how they can be filled through adaptation of existing policy approaches.
Adaptation Reporting Power
7. Homes are a strategic issue. We are concerned that the consultation on the Adaptation Reporting Power did not reflect the importance of individuals' homes to wider society. Defra recognised that the impact of climate events can be devastating for individual householders, but states in the consultation (4.73) that 'they are unlikely to have nationally significant repercussions'. Consumer Focus disagrees. We have seen in the past year the effect of activity in the property market on the nation's economy and consumer confidence. A failure to reflect the needs of the individual may also, in time, undermine the public's perception of the Government's wider approach to climate change adaptation. 8. 70% of the existing
housing stock will still be standing in 2050 but current plans only affect new
homes. Defra should use the Reporting Power to
manage the risks facing the existing housing stock. The current plans, as documented by the NAO,
do not reflect the risks listed above. The
intention to update the Code for Sustainable Homes only affects new homes, and
a minimum standard is not set for private developers in 9. Financial services are essential providers of products and of information. Her Majesty's Treasury (HMT) is reported by the NAO to be waiting for the UK Climate Change Risk Assessment and Economic Analysis in order to inform further consideration of climate change risks and policy development, but in the meantime considers that the impact could either be positive or negative dependent on the scale of the change and cost of adaptation measures (p87). It is therefore vital that financial services are included under the reporting power, potentially through the Financial Services Authority, and therefore in the risk assessment. · The insurance sector has a key role in reporting the financial costs of more extreme weather on a macro scale, and is an essential service for consumers who are vulnerable to or have suffered from extreme climate events. · Mortgage providers should consider the risks posed by climate change to the value of homes, not only to flag up those risks to buyers but also to manage the risks to their business and therefore the economy. 10. Think Small First, but include the consumer in that thinking. Consumer Focus considers Defra's approach to reporting from the energy sector, focussing on generators and distributors, to be proportionate. However, these companies are not necessarily visible to the consumer, who can feel very vulnerable and isolated in the case of disruption to energy supplies. We would like these reports to include specific references to communication plans in the case of emergencies, plans which are likely to involve the energy supplier.
11. A voluntary invitation to report (as proposed in Defra's consultation) does not reflect the necessity of food supplies and the level of risk they face from both gradual climatic changes and severe climate events. Consumer Focus wants the upcoming Food Strategy for the Future to provide a more coherent reporting mechanism for that sector. Whether a report is co-ordinated by industry, by the Food Standards Agency or the Government Office for Science (which is exploring the policy framework for the food system and climate change) the resultant information needs to be open to public scrutiny as with reports under the adaptation reporting power.
12. Communication services are vital in times of extreme climate events. Defra's consultation considered the need to report on the adaptability of standard functions, but Consumer Focus would like the Reporting Power to drive improvements to communications during events such as the floods of 2007. For example, it appears there is a need for: – better sign-posting from the media (print, television, radio) and a local helpline – development of an emergency response by the phone sector in order to: - provide mobile charging units, battery swap facilities and internet access in periods of large-scale power cuts - share mobile networks to allow greater access to those in need Opportunities to embed adaptation in Government policy
13. Better information on past flooding, and future flood risks, should be provided through a compulsory flood report in Home Information Packs; complete with reference to projected changes in climate. Consumers, particularly at the point of purchasing a home, should have access to plans for existing and proposed flood defences in areas that face an increased risk of flooding.
14. As ambient air temperature increases, more energy is required to cool a building. Cooling measures must be included in domestic energy assessments to ensure cooling is referenced in each property's Energy Performance Certificate. This measure should be complemented by advice on low carbon cooling measures.
15. Information on a home's climate resilience should not only be provided when property changes hands; the proposed smart meter and heat and energy saving programmes provide an opportunity to undertake audits to assess the energy efficiency and climate resilience of the housing stock; complemented by a social marketing campaign to help consumers reduce their energy bills, and related carbon emissions, and adapt to a changing climate.
16. Projected climate impacts must be taken into account in the delivery of housing and regeneration, and in the development of sustainable communities. Property should be included in preparations for climate changes, initially through the inclusion of homes and insurance cover alongside other elements of the national infrastructure in the application of the Adaptation Reporting Power in the Climate Change Act 2008.
17. Prepare consumers by including climate resilience in the development and delivery of the community and domestic aspects of the Heat and Energy Saving Strategy, to complement the infrastructural measures undertaken by the Environment Agency, the water industry and others.
18. In terms of reporting authorities responding to the Adaptation
Reporting Power, we would like the Financial Services Authority (reporting on
insurers and mortgage providers) and the housing sector (potentially reported
on in
Quantifying consumer resilience
19. Measuring the impact of climate changes on consumers could inform efforts to engage individuals in, as carbon reduction measures, as well as helping them to adapt. However, consideration must be given to how those impacts are communicated, as people will react differently to warning messages.
20. Consumer Focus considers the following could be useful high-level indicators of consumer resilience to climate changes. Reports should reflect different climate scenarios over time, with reference made to both the likelihood and impact of the related risks which together will drive the proportionate response.
a. Homes · Number of homes at risk from: o subsidence o flooding o significant overheating · Number of homes protected by flood defences; and number and proportion of homes at significant risk of flooding that will be protected by planned defences (by year).
b. Health · Coverage of plans to assist consumers in the event of flooding and heat waves, in support of their physical and psychological health.
c. Financial Services · Number and proportion of pension and investment funds considering the risks of climate change · Number of homes at risk of flooding without insurance cover. · Cost of flood insurance in areas at significant risk of flooding. · Number and proportion of flood insurance products that provide resilience measures in the event of flooding.
d. Energy · Proportion of supply at risk from rising temperatures, sea levels, or climate events
e. Food · Proportion of imported food at risk from changes to the climate. · Proportion of British grown food at risk from changes to the climate. · Proportion of British agricultural land at risk from flooding. About Consumer FocusConsumer
Focus is the independent champion for consumers across
2 October 2009 [1] FairPensions, 2009 http://www.fairpensions.org.uk/fairpensions_pdf/ResponsiblePensions_2009.pdf [2]'ABI Flood Manifesto, http://www.climatewise.org.uk/storage/628/floodmanifesto.pdf [3] Pitt Review, http://archive.cabinetoffice.gov.uk/pittreview/_/media/assets/www.cabinetoffice.gov.uk/flooding_review/pitt_review_full%20pdf.pdf [4] ibid |