Warm homes without false economies
What’s needed now to make sure the Each Home Counts review delivers for consumers
Over 2 million million families live in fuel poverty. For these families turning up the heating during the recent January cold snap was not an easy decision. One in 5 households find it difficult to meet their heat and other fuel costs, often as a result of energy inefficient housing. For families living in energy inefficient, cold homes, the winter months can lead to problems with physical and mental health.
However people can cut their bills and keep their homes warmer through better insulation, solar panels, and other energy saving measures. Not many of us are experts in these kind of products, so it’s important that there are checks and balances to protect consumers when they are thinking about having them installed. From calls to our consumer helpline we’ve seen the serious problems people face as a result of poor quality work on expensive measures like cavity wall insulation.
A couple of years ago, we looked into the consumer protection for energy efficiency and renewables schemes. We found that protections are at times overly complex and don’t always guarantee high quality work. If something does go wrong there are patchy processes for consumers. We were pleased when the government launched the Each Home Counts review to tackle these problems.
Just before Christmas, Dr Peter Bonfield published the long-awaited findings of the review. It calls on the industry to create a single quality mark, like the Gas Safe badge, covering all energy efficiency and renewable work taking place in homes. To earn this mark, firms will be required to meet minimum standards of workmanship and professional conduct in everything they do, from the first point of contact by marketing staff. It will require more effective quality checks and penalties to make sure firms get work right first time. If something does go wrong, there will be a standard, simple process for consumers to get help.
As we start 2017, it’s a good time time to look at what the review has achieved and ask what industry and the government need to do now to make the review a success.
Implementing stronger consumer protections in 2017
These recommendations have the the backing of industry and the government. But they will only be successful if industry put them into practice, and the government supports them and makes sure they are effective. Otherwise, consumers will continue to be let down.
A number of policy developments happening in parallel to the review will need to reflect the recommendations. This year, BEIS will launch its consultation on the future of its main energy efficiency scheme, the Energy Company Obligation (ECO), beyond 2018. While this will focus funding on less well-off households, at some point we expect the government to set out a plan to encourage better-off consumers to make their homes more efficient too. Some finance companies are also starting to look again at how they can provide loans to households for energy efficiency measures and for new renewable heating systems.
A quality mark that consumers can trust
To protect all consumers and drive up standards in the industry, the quality mark needs to cover all domestic installations of energy efficiency and renewables. This means government schemes like ECO, the Renewable Heat Incentive and Feed in Tariffs must make having the mark an entry requirement for firms. So too will social housing renewal schemes and new energy efficiency financing offers for consumers.
In turn, this will rely on an industry-led monitoring and sanctions regime that is strong enough to drive out bad practice. It will need to make sure that firms cannot leave people out of pocket or with damage to their homes. It needs to be strong enough that Ofgem will not need to carry out further expensive checks on works done for ECO, and so that private financiers are not faced with potential expensive liabilities due to shoddy work.
Through a combination of risk-based and random audits, strong sanctions, and a clearer approach, there is no reason why a new monitoring regime can’t deliver better consumer protection outcomes without raising costs for consumers.
Advice that consumers can rely on
BEIS is also looking at what will replace the Energy Saving Advice Service (ESAS), the government energy efficiency phone line. Influenced by the review, it is rethinking how best to provide consumers with information, advice and guidance on energy efficiency and renewable energy.
Consumers need a single, trusted, and authoritative source for information on energy efficiency and renewables products, including how much they can expect to spend and save. They need advice not just on the benefits of these technologies, but on what to look out for when getting work done and how to get help if it is not up to scratch (something that should be rarer as the new audit regime is introduced). And consumers do not see energy efficiency in isolation, so advice needs to be integrated with advice on other subjects and provided through the right channels to meet consumers needs.
Schemes that meet consumer needs
BEIS can also help the review through its approach to energy efficiency policy more widely. When it plans schemes, it should consider how they will affect consumer protection and consumer engagement. Recent schemes — ECO, the Green Deal, and the Green Deal Home Improvement Fund — were confusing for consumers and opened the door for unscrupulous firms to take advantage. Our research with consumers suggests that when motivating people to engage with energy efficiency, the design of schemes count as much as protections in fostering trust. BEIS should design their successor schemes to make it easier for consumers to understand what’s on offer and to identify trustworthy tradespeople. Consumer protection impacts need to be addressed in the policy process.
Helping consumers who have already been let down
The review focused on putting the sector on a sound footing for the future, rather than addressing existing problems with work done in previous schemes. However, it does make one positive suggestion here, recommending that Ofgem direct the fine money that they collect from energy companies who break the rules to consumers who otherwise haven’t been able to access compensation. These consumers may be paying more to heat their homes than before they had energy efficiency measures installed.
Ofgem should take up this recommendation and take action to help these consumers now. The problems they face can be pervasive and costly. For example, incorrectly installed insulation can cause long-term damage to a property’s brickwork or interior. Dealing with outstanding problems will be key to building consumer confidence for future schemes. Taking remedial action could also deliver energy bill savings in homes affected. As Ofgem administers energy efficiency schemes, there is a natural link here.
Ofgem is reviewing how it allocates these funds, and we will be working with them to make sure those who have lost out can get redress. Even if Ofgem can direct funds to victims of poor practice, it will not guarantee that any individual consumer gets support. More work is needed to understand the extent of the redress needed and how support available can match up. Other organisations need to do their bit in making sure the Each Home Counts recommendations help these consumers. There have been steps to improve consumer contacts by some organisations, but starting from a very low base.
Making Each Home Count
The Each Home Counts review reflects many things Citizens Advice has worked towards and sets a positive direction for the future. However, much hard work is still to be done in implementing it. Now the report is published, industry, government and other stakeholders can focus what needs to be done to support its recommendations. We’ll be looking to benchmark and monitor progress on quality of work and access to redress over the coming years. We we’ll continue to work with the review as it enters the implementation phase to make sure the review does deliver for consumers.
