Energy and Climate Change CommitteeWritten evidence submitted by Affinity Sutton
Affinity Sutton Group is one of the largest independent providers of affordable housing in England, with over 57, 000 homes in more than 120 local authority areas throughout the country.
We are supportive of the Government’s agenda to improve the energy efficiency of the housing stock and the “pay as you save” approach to funding. As a national Registered Provider, Affinity Sutton is committed to improving the energy efficiency of our homes to reduce their environmental impact and to assist in preventing fuel poverty amongst our residents.
We welcome the opportunity to respond to this call for written evidence, particularly in light of our FutureFit project, an extensive piece of research on retrofit and the Green Deal that we are very close to completing.
This £1.2 million internally funded project involved the retrofitting of 102 homes selected from 22 common property archetypes with each receiving either a high (£25,000), medium (£10,000) or low (£6,500) package of works based on budgets rather than carbon savings. Measures ranged from air tightness works, ventilation and new boilers to floor insulation and solar PV. We then worked with half of this group along with an additional 50 households, delivering lifestyle advice on reducing energy use in the home. The focus was not on technological solutions but on identifying the practical implications, real costs, potential funding mechanisms and actual savings achieved. All homes in the project have been monitored post-intervention and the majority also have pre-intervention data. A final report will soon be released showing any savings made and the impact of lifestyle advice, as well as the longer-term impacts of retrofitting which are felt in the two years following any works or advice.
Key FutureFit findings so far:
A lot of the basic work has already been done in social housing: since 1990 we have already achieved an estimated 24% carbon reduction across our General Needs stock via ongoing boiler replacement and cavity and loft insulation programmes.
Retrofit costs more than desktop studies specify, but economies of scale could bring costs down.
Projected energy savings only cover half of these costs resulting in a £130 million funding gap if Affinity Sutton were to apply a low package of works across all 40,000 of our General Needs stock.
Engaging people in this topic is challenging and dropout is significant: FutureFit had only a 4.8% initial response rate and 23% of people withdrew permission for works.
The measurement tool for energy savings (SAP) is not accurate.
There is a knowledge gap in the industry around retrofit: the whole supply chain, from surveyors and installers to resident-facing staff, require up-skilling to cope with the energy efficiency agenda.
We would be happy to share the results of the final report with the Commons Select Committee in advance of publication (under embargo), since the findings could offer extremely useful evidence and insight for the development of the Green Deal.
The outputs and experience gained from this award winning project, as well as other surveys and research we have carried out with our residents, have been used to inform and shape our response to this request for written evidence.
Please treat figures used in this response as confidential since not all of them have been released publicly.
What should be the key indicators for tracking the progress of the Green Deal?
1. Take-up figures and demographics
Evidence: FutureFit found that despite being offered energy improvement works free of charge by their landlord, out of 900 residents around the country only 4.8% responded. It will be key for the Green Deal to understand if take-up is going to be an issue and if so, what steps need to be taken to overcome this. In contrast to FutureFit, Gentoo Green has had different results with highly successful take-up rates for their project. Understanding who does take up the Green Deal could be very useful for future success of the scheme. Our recent survey to a representative sample of over 1,000 residents gathered behavioural information around energy saving and attitudes to credit as these indicators could help us to target those most likely to participate in something like the Green Deal. Since embarking on the FutureFit project we have undertaken a customer segmentation exercise and found that family groups were the least likely to take up our FutureFit offer. Older people and single person households were over-represented in the group that participated in the project. Gaining customer insight such as this in the early stages of the Green Deal will be essential for targeting the scheme and making the best progress possible.
2. Repayment statistics including numbers, frequency and timeframe of any arrears
Evidence: Our research shows that Welfare Reform is expected to have a serious impact on our residents’ ability to pay their rent with 65% of our residents in receipt of benefits. Even before the welfare cuts a quarter of our residents have concerns about paying their rent and 42% of our residents are worried about money issues. Although the Green Deal is largely targeted at the owner-occupier market it will still be vital to understand the success of this repayment system and whether, in a time when household budgets are increasingly stretched, there is an increase in Green Deal repayment arrears.
3. Whether the Golden Rule is being met (projected energy savings are achieved)
Evidence: The final FutureFit report will show whether this was the case in the 102 homes that had works specified by the full SAP methodology. We would be happy to share these results as soon as they are available. The first FutureFit report showed that SAP was specifying works for properties that were not viable (such as less than 1kwp of PV for a single house). The in-use factors applied to Green Deal measures do acknowledge this gap between actual and projected performance and we acknowledge that the SAP methodology has been improved since FutureFit. However, since the Green Deal relies on projected savings being achieved, monitoring this will be a crucial indicator of its efficacy in practice.
4. The impact of lifestyle: major changes in household (new family members, people moving out)
Evidence: Anecdotal evidence from FutureFit is already showing that significant lifestyle changes can result in projected energy savings not being achieved. For example, one household had a baby during the year and has reported using much more energy. If this is going to be the case it must be fully understood so that Green Deal customers can be made aware of this in advance.
5. Any unintended consequences: specifically around ventilation
Evidence: During the post-works period, where FutureFit households gave direct feedback, 17% reported issues of damp and condensation and 27% reported issues related to the ventilation systems, often with households reporting these in tandem. This was despite an energy hierarchy approach being taken with the works and appropriate ventilation being fitted to every property. Findings show that people were unwilling to interact with new ventilation systems or, before the air tightness works, were living in a way that created moisture which their draughty homes could cope with. After the works, issues arose to the extent that in one FutureFit property we had to return to remove all the works despite intensive engagement around lifestyle. It is stated in the Code of Practice that installers must minimise the risk of inadequate ventilation and build up of condensation. It is not clear how this will work in practice since the Green Deal is consumer and finance-led and rests on measures that meet the Golden Rule, not those which will ensure appropriate ventilation. It will be vital to monitor unintended consequences such as this after any Green Deal works have been installed so that further requirements and guidance can be added if necessary.
6. Tenancy turnover and success of re-let/resale of GD homes
Evidence: Out of the 150 FutureFit homes, 14 changed tenancy during the monitoring period. For all landlords (social and private) it will be important to track the extent of this issue and how straightforward the re-let process is. Re-sales will also be of interest and any impact of the Green Deal on these.
What is the best way of assessing the level of uptake of the Green Deal?
7. How many people express an interest (voluntarily, when offered soft sell, when offered hard sell)
Evidence: See indicator 1.
8. How many people have an assessment
Evidence: See indicator 1.
9. How many people take up a GD
Evidence: See indicator 1.
10. How many people progress to the works (do not drop out during cooling off period)
Evidence: From the start of engagement to the end of the FutureFit works, 23% of residents withdrew their permission to continue, citing time, health and disruption as issues. Even during the process residents required up to 20 visits to maintain engagement in the scheme. This needs to be monitored so that relevant measures can be taken to do this during the process in a cost-effective manner.
11. In what circumstances people take up the GD ie trigger points
Evidence: See indicator 1. Our impact assessment submitted in response to the Green Deal consultation shows that social housing providers are in an excellent position to drive down costs by as much as £1,660 per property by incorporating a Green Deal programme into their planned works. These are carried out annually on an estate-basis where contractors will be on-site meaning overheads and preliminaries can be lower.
12. How people hear about the GD
Evidence: See indicator 1.
13. Which industries have been the most popular providers (who the customer trusts)
Evidence: See indicator 1.
What is the best way of assessing the level of energy savings being delivered by the Green Deal?
14. Meter readings before works and a year after installation taken by installer/Green Deal provider or GD customer
15. Energy companies sharing bill data via the Data Transfer Service and historic energy bills
Evidence: Obtaining past energy bills for pre-works energy usage in the FutureFit properties was hugely time-consuming and in some cases was not made possible by the energy companies, despite us owning the properties and having written consent from all tenants. Although provisions have been made for Green Deal Providers to use the Data Transfer Service, it is not clear whether any historic usage figures will be available. Equally the Occupancy Assessment does include reference to gaining past energy data but this will be complementary rather than obligatory. Energy companies must be more open to sharing energy usage details (with consumer consent), beyond the DTS.
16. Householder perceptions of savings
Evidence: If energy bills rise, any Green Deal savings might be less apparent to the consumer if they compare their own before and after energy bills. A mild winter could have a similar effect. Energy savings may need to be emphasised to customers to avoid poor reception of the Green Deal programme. Indicators 14 and 15 must be compared to this Indicator in order to assess where people actually recognise a saving. The final FutureFit report will make this comparison. As a market-led mechanism the image of the Green Deal and the savings that can be achieved are arguably as important as the savings themselves.
What is the best way of assessing the carbon savings being delivered by the Green Deal?
17. Whole country use of energy converted into carbon (eg figures used for UK Carbon targets)
What is the best way of assessing whether the Green Deal is delivering value for money to consumers?
18. Comparison of actual energy use to Golden Rule predictions
Evidence: See Indicator 3.
19. Monthly repairs/defects figures
Evidence: FutureFit logged a number of repair issues in the year following the works. 16% of the properties that gave direct feedback reported problems related to installation. During the works themselves an issues log was kept and 49% of these were technical. These two figures illustrate the importance of monitoring knowledge gaps in the industry that need to be addressed. Also several repair call-outs from FutureFit residents were down to a lack of understanding of how to work ventilation or zoned heating systems. We acknowledge that there is a great deal of certification for Green Deal installers to try to ensure quality, but the contractors involved in FutureFit also worked to high industry standards. In its early stages in particular, any repairs must be monitored following Green Deal installations so that any extra costs or industry knowledge gaps can be accounted for and addressed. Under current regulations, the Green Deal Provider is responsible for the repair of Green Deal components. This results in a potentially complicated scenario for the householder who may have to go to different parties to repair different elements of their home. It is important to understand how well this process works.
20. Impact on private rent or sales value for Green Deal properties
21. Householder perception of whether it has been value for money: they have saved energy/money; improved their home; improved comfort; increased their home’s value
Evidence: During FutureFit, resident liaison officers reported that participants were more interested in the expected increase in comfort and warmth in their homes than the monetary savings. If this can be recorded it might show whether customers would be more willing to accept a break-even Golden Rule or even one which results in them paying an excess. It might also provide valuable insight for engagement strategies.
22. Monitoring any miss-selling
23. Monitoring of any upfront charges to consumers (eg at assessment stage): level and frequency of charge, uptake/customer response
What is the best way of assessing whether the Green Deal is being effectively delivered?
24. End-to-end householder experience (including warranty, repairs and understanding of financial mechanism)
Evidence: FutureFit participants reported satisfaction with the level of disruption during the works, suggesting that the actual delivery of the improvements was effective and well-received. However, there were lower scores for resident understanding of the systems being installed. Also, as evidence already stated suggests, the retrofit (and therefore Green Deal) experience goes beyond the works period. For this reason we feel it important to monitor the Green Deal customer’s experience from the start until at least one year after the works to ensure a positive legacy for the policy.
25. Landlord experience (social and private rented)
Evidence: Landlords are likely to be key stakeholders in this programme. Currently only a few Registered Providers (social landlords) have signed up to be Green Deal Providers. Others are yet to state their position. This would imply certain barriers. Monitoring why landlords do not engage, and how those who do engage have found it, could provide valuable information for the development of the Green Deal in this sector.
26. Tracking installation costs to show any reduction due to high uptake (as with solar panels)
27. Report from Oversight Body on delivery failures/GDPs not meeting requirements
28. Assessment of different delivery mechanisms (their effectiveness) eg Green Deal Finance Company vs Local Authority prudential borrowing; community based vs market-led
Evidence: At the time of submission it is still acknowledged that financing the Green Deal will be challenging and a number of routes forward are being investigated. Monitoring the progress of these different approaches will be useful to show how the Green Deal could work for different providers.
What is the best way of assessing customer satisfaction with the Green Deal?
29. See attached FutureFit survey
What is the best way of assessing whether everyone who wants to is able to access the Green Deal?
30. Assessing barriers to access: financial (credit checks), demographics, non-home owners
31. How many social housing providers have not given consent and why
Additional indicators:
32. Impact on local economy and jobs
33. Has it triggered a change in attitude or awareness towards energy efficiency in the home
34. Engagement/marketing costs
Evidence: During the works phase of FutureFit estimated engagement costs ranged from £450–£1,350 per property, depending on the level of interaction that was required to keep residents on board. This was when work was being delivered by a recognised, trusted source (the landlord) and via existing channels. As something that is not included in the Golden Rule these costs must be fully understood.
35. Monitoring energy bill increases and impact on Golden Rule
36. Link between ECO and Green Deal: how many Green Deals are attached to ECO
What sources of data are available for measuring your suggested indicators?
Energy company records.
Meter readings.
Projected savings in Green Deal assessment.
Upfront charges to customers made by Green Deal Assessors.
Costs recorded by Green Deal installers.
Monitoring of the Code of Practice by the Green Deal Oversight Body, Gemserve.
Green Deal Provider, Assessor and Certification body reports as specified by the Framework Regulations.
A requirement on GDPs to provide uptake information in first year.
Queries to Green Deal helpline/EST.
Consistent, anonymised template for GDPs to fill in any additional monitoring data.
Should there be annual take-up targets for the Green Deal and if so what should they be?
No: Setting targets for a consumer-led, market-driven scheme like the Green Deal could result in unscrupulous selling to meet those targets and Providers encouraging householders to take up Green Deals when either their Occupancy Assessment or debt threshold suggests it inappropriate, for example. One alternative could be to set up broader evaluation criteria to monitor what is deemed as success.
January 2013