Energy and Climate Change CommitteeWritten evidence submitted by the National Landlords Association
Executive Summary
1. It would be our suggestion that the using the Energy Performance Certificate (EPC) Register to track the number of Green Deals successfully taken out and the level of energy savings being delivered is the most efficient and cost-effective method of monitoring Green Deal uptake.
2. The NLA believes value for money and effective Green Deal delivery will be demonstrated by uptake, particularly in the private rented sector. It is therefore vitally important there is effective monitoring and analysis of the whole Green Deal process.
3. Undertaking consumer feedback and customer satisfaction surveys at the end of the Green Deal journey should be a routine quality assurance process required of all Green Deal Providers. Anything more stringent could increase costs for Green Deal Providers and act as a disincentive for consumers.
4. The NLA does not believe annual targets are a necessary part of the Green Deal framework as this is a market-based rather than regulatory approach to tackling energy efficiency and could result in hard-selling and a loss of consumer confidence in the Green Deal.
Introduction
5. The National Landlords Association (NLA) exists to protect and promote the interests of private residential landlords.
6. With a membership of more than 20,000 individual landlords from around the United Kingdom and over 120 Local Authority Associates, we provide a comprehensive range of benefits and services and strive to raise standards in the private rented sector.
7. The NLA seeks a fair legislative and regulatory environment for the private rented sector while aiming to ensure that landlords are aware of their statutory rights and responsibilities.
General Comments—Landlords Perspective of the Green Deal
8. The NLA conducted a survey of a sample of its members (July 2011) on their attitudes to energy efficiency and the Green Deal. In the previous 12 months, 54% of respondents stated they had made energy efficiency improvements to their properties. On average, they had each improved 1.7 properties and 10% of those surveyed stated they have made energy efficiency improvements to five or more properties in the preceding 12 months.
9. Amongst those who had made improvements, the most common measure was the installation of new boilers with 67% responding they had replaced boilers in the last twelve months. 57% responded saying they had installed loft insulation and 46% have upgraded to double-glazing.
10. When looking at how landlords financed replacement boilers, 15% reported they had taken advantage of the Boiler Scrappage Scheme. 55% of landlords stated they installed cavity wall insulation through some form of loan or grant scheme and 10% reported using the Landlords Energy Savings Allowance (LESA) for cavity wall insulation. 13% reported they had taken out bank loans for the improvements and a further 13% said they had used credit cards.
11. We would argue two conclusions can be drawn from these results. Firstly, landlords do engage with energy efficiency schemes and financial incentives. Secondly, landlords are willing to take out credit in order to make energy efficiency improvements.
12. The survey also asked about landlords’ attitudes toward the Green Deal:
“The Green Deal will allow landlords to make energy efficiency improvements to their properties with no upfront costs and loans repaid by whoever pays the utility bills. Would you take advantage of such a scheme”:
62% of landlords responded that they would consider taking out the Green Deal.
24% said they will definitely take it up.
21% were unsure.
Of those who responded saying they are not interested in the Green Deal, 19% said this was because they had already made energy efficiency improvements to their properties.
A further 19% said they would need more information before they would consider it.
13. Of those who responded saying they would consider taking out the Green Deal:
66% reported this was because it would reduce energy bills/energy usage.
30% stated it was a cost-effective way of improving the energy efficiency of their property.
26% said they would do so because it was eco-friendly.
23% considered that it would improve the value of their property.
Respondents were able to select more than one category.
14. We would argue this is compelling evidence to demonstrate that once rolled out, landlords will take advantage of the Green Deal.
Call for Evidence Questions
Question 1—What is the best way of assessing the level of uptake of the Green Deal?
15. It would be our suggestion that using the EPC Register to track the number of Green Deals successfully taken out is the most efficient and cost-effective method of monitoring Green Deal uptake. Whilst it may require certain modifications to the Register and current software, the cost incurred would be significantly lower than creating a separate standalone database.
16. We would caution against the creation of a separate, standalone Green Deal database. Such a database would need to be managed and administered, incurring potentially significant administrative and cost burdens to the Green Deal Providers who would use it. These costs would inevitably be passed on to consumers in their Green Deal Plans (potentially through higher interest rates on the Green Deal Charge) thereby reducing potential savings for consumer which in turn would reduce interest in the Green Deal.
Question 2—What is the best way of assessing the level of energy savings being delivered by the Green Deal?
17. As with the response to the previous question, we would recommend using the estimated savings calculated through the Green Deal Assessment process which are stated on the EPC. Again, as this system is already in existence and Green Deal Providers will be required to upload the new EPCs to the Register once the Green Deal improvements have been installed, this will minimise the administrative burden for Green Deal Providers, reduce costs for consumers and only require minor modifications to the current software. We hope this should prove an effective and low-cost method of monitoring energy savings delivered through Green Deal.
18. The NLA would caution against including monitoring requirements as conditions to a Green Deal package. Such a requirement is highly likely to act as a disincentive to uptake. This is particularly relevant in the rented sectors (both social and private rented) where the owner of the property and the person responsible for repaying the Green Deal Charge are different people. A landlord cannot guarantee when taking out a Green Deal that every tenant throughout the life of the Green Deal repayment term will comply with monitoring conditions and therefore, if monitoring where a condition of a Green Deal Plan, many landlords would be extremely reluctant to undertaken Green Deal works.
Question 3—What is the best way of assessing the carbon savings being delivered by the Green Deal?
19. Using a national average price for carbon, it may be possible to use the estimated savings from the improvements contained within the EPC to calculate an estimated carbon saving per Green Deal Plan.
Question 4—What is the best way of assessing whether the Green Deal is delivering value for money to consumers?
20. It will undoubtedly be extremely challenging to accurately assess value for money in this context. The NLA believes that, to a certain extent, value for money in the private rented sector will be demonstrated through Green Deal uptake, in that volume will only be achieved if the product is perceived to represent good value for money. With this in mind, we would argue that in order to assess whether the Green Deal is delivering value for money, it is vitally important there is effective monitoring and analysis of the whole Green Deal process, from initial enquiry through to installation, attachment of the Green Deal Charge and during the repayment term, and that statistical analysis is broken down by tenure. Such analysis will also show whether there are any pinch-points in the Green Deal process (ie particular points in the Green Deal journey where large number of potential consumers drop out).
21. Further, value for money should be ensured in the first instance by strict adherence to the Golden Rule. Doing so will by definition demonstrate that cost savings are being generated in a tangible manner. However, it will remain difficult to assess this without the collection of data over the long-term of energy usage. It is likely that analysis based on average consumption, post Green Deal energy saving projections and energy prices will prove the most cost-effective and realistic method of assessment.
Question 5—What is the best way of assessing whether the Green Deal is being delivered effectively?
22. As with the response to the previous question, effective delivery of the Green Deal will be demonstrated through Green Deal uptake and a lack of complaints. It will therefore be important for Government and Parliament to monitor not only Green Deal uptake through the EPC Register but also complaints from consumers about their Green Deal Plans.
23. We would also suggest that at this early stage no one is in a position to anticipate what the problems may be. Whilst aspects of the Energy Company Obligation (ECO) derive from previous schemes, the Green Deal is an entirely new mechanism that has never been tried before (we would argue that it is not possible to use information from the Pay as You Save Pilots under the previous Government as evidence of Green Deal problems as there are fundamental differences in the schemes). Therefore, any attempts at this stage to anticipate likely problems can only be based on conjecture, anecdote and supposition. We do not feel this is appropriate for robust policy analysis or development and strongly believe it is necessary to await firm statistical analysis.
Question 6—What is the best way of assessing customer satisfaction with the Green Deal?
24. The NLA would contend that undertaking consumer feedback and customer satisfaction surveys once the Green Deal measures have been installed and the Green Deal Charge applied should be a routine quality assurance process required of all Green Deal Providers. These surveys can then be collated and periodically sent to the Green Deal Oversight and Regulatory Body who can undertake further quality assurance checks. Such a course of action is routine business practice for many companies (and public bodies). Consumers understand and are aware that quality assurance is carried out and therefore customer satisfactions surveys should not have any discernible impact on Green Deal uptake. Anything more stringent could increase costs for Green Deal Providers and act as a disincentive for consumers.
Question 7—What is the best way of assessing whether everyone who wants to is able to access the Green Deal?
25. The NLA was involved in the recent Hard-to-Reach Households Panel, chaired by Laura Sandys MP, which looked into ways vulnerable households could access both the Green Deal and Energy Company Obligation. This question was raised several times. It was the NLA’s position that there is no simple answer to this question, and this position appeared to be supported by the rest of the panel. We argued that many different sources of information and avenues to market for the Green Deal and ECO were needed. In order to make the Green Deal work Government bodies, local authorities, charities, not-for-profit organisations, other third sector bodies and companies all need to communicate the benefits of Green Deal in their own way to their own audience/customer base. Therefore, to look at what would be the best way of assessing whether everyone who wants the Green Deal is able to access it, we need to look at the organisations that are interacting on the issue. This way, Government will gain an insight into any sectors of society that are being missed.
26. Looking at the question from an empirical standpoint, it is also necessary to monitor how many contacts with the Energy Saving Advice Service (ESAS) resulted in people going forward with the Green Deal; potentially with follow-up calls to determine why people choose not to go forward with the Green Deal. This will build a further evidence base on pinch-points in the process as mentioned in paragraph 20 above.
Question 8—What sources of data are available for measuring your suggested indicators?
27. As previously stated, the NLA believes the most effective and cost efficient data source is through the existing national EPC Register. Complaints and other data can be obtained through the ESAS helpline, Green Deal Oversight and Regulatory Body and the Green Deal Ombudsman.
Question 9—Should there be annual take-up targets for Green Deal and if so, what should they be?
28. The NLA does not believe annual targets are a necessary part of the Green Deal framework. As essentially a market-based approach to tackling the issue of energy efficiency, it will take time for the market to react. The NLA believes that the roll-out of smart meters, coupled with the changes to EPCs that will be brought into force on 9 January 2013 and the private rented sector regulations contained within the Energy Act 2011 will have a substantial impact on raising the importance of energy efficiency for both landlords and tenants and we hope to see significant uptake of Green Deal in the private rented sector. We believe this approach has already been understood by both the Government and Parliament and is demonstrated by not bringing in immediate minimum energy standards in the private rented sector but allowing the market several years to adjust to the Green Deal before imposing minimum energy efficiency standards from April 2018.
29. Further, we would caution against annual targets as this is likely to result in “hard-selling” to consumers by the Green Deal Providers which could have significant consequences in terms of both the number of complaints received and a poor reputation of the Green Deal.
January 2013