Exploratory Research into Building Regulations in relation to the Green Deal. Prepared for the Energy Saving Trust by IFF Research

Transcription

1 Exploratory Research into Building Regulations in relation to the Green Deal Prepared for the Energy Saving Trust by IFF Research

2 Contact details Mark Speed and Jane Barlow IFF Research Ltd Chart House 16 Chart Street London N1 6DD Tel +44(0) Fax +44(0)

3 Green Deal Research Contents 1 Executive Summary 4 2 Background and objectives 6 3 Methodology 7 Qualitative research with homeowners 7 Quantitative research with homeowners 7 Qualitative research with SMEs 9 Quantitative research with SMEs 9 4 Homeowners: qualitative research 12 Attitudes towards energy efficiency 12 Awareness of and attitudes towards existing regulations 12 Extending building regulations 13 Scenarios 19 Structuring the initiative 21 Summary 22 5 Homeowners: quantitative research 23 Attitudes towards energy efficiency 23 Awareness of existing regulations 24 Extending building regulations 25 Summary 27 6 SMEs: qualitative research 28 Attitudes towards energy efficiency 28 Awareness of and attitudes towards existing regulations 28 Extending building regulations 29 Scenarios 30 Structuring the initiative 32 Summary 32 7 SMEs: quantitative research 33 Attitudes towards energy efficiency 33 Awareness of existing regulations 34 Extending building regulations 35 Summary 37 8 Appendix A: Structure of focus groups 38 9 Appendix B: Homeowners screener, guide and questionnaire Appendix C: SMEs screener, guide and questionnaire Appendix D: Stimulus materials 64 Proposal IFF Prepared for Energy Saving TrustOwner: MS Security: CONFIDENTIAL

4 Green Deal Research 1 Executive Summary 1.1 This research consisting of 12 focus groups among homeowners and 6 among SMEs as well as short quantitative questionnaires for both audiences explored proposals to extend Part L of the Building Regulations in England and Wales so that when homeowners were already doing substantial work to their property, they would be obliged not only to ensure that this work meets energy efficiency standards but also to have work done, where necessary, to improve the overall energy efficiency of their entire property. 1.2 The Green Deal would allow consumers and businesses to make these energy efficiency improvements to their properties at no upfront cost, with payment being made in instalments as part of their energy bills. A golden rule will ensure that the charge would be the same as, or less than, the amount the property owner would save on their bill through using less energy, so they would not be paying any extra for having the improvements done. 1.3 There is evidence that the Green Deal tends to make the idea of extending building regulations more palatable, but many would still feel aggrieved about being forced to do extra energy efficiency work. The proposals were not seen as merely an extension of what is already there, and most would prefer a voluntary scheme supported by incentives rather than regulation. 1.4 There was a great deal of consistency between the views of Small and Medium-sized Enterprises (SMEs) and homeowners. If anything, homeowners in the groups were more emotional in their response than (particularly the larger) SMEs, with the latter taking a more objective view given that the proposals related to their business rather than their home. Among SMEs, property owners were less positive than renters about the proposals, and smaller businesses less positive than larger SMEs. 1.5 The quantitative research for both homeowners and SMEs shows that the basic concept of extending regulations and offering the Green Deal is a concept that could have wide appeal, with a majority feeling the initiative was reasonable. However, a significant minority felt the proposals were not reasonable and some claimed they would be put off doing improvement work to their property as a result. 1.6 Giving as much choice, control and power to property owners as possible is important to balance the control removed by the extension of regulations. The qualitative research demonstrates that the initiative is a hard concept to communicate, with both homeowners and SMEs raising a myriad of questions as to how the scheme would work. The challenge is to communicate the detail on the Green Deal in such a way that initially positive reactions are not eroded by doubt, questions or confusion. 1.7 Part of letting homeowners and SMEs feel in control is giving them more knowledge as, in the absence of information, scepticism fills the knowledge gap. It will be necessary to lead with the most salient messages to stop people becoming resistant before they have fully understood the scheme: Convincing people that the golden rule will work, clear and simple explanations of how repayments are calculated, and explaining the effect of energy price increases on future bills are all needed. To overturn the public scepticism aimed at government, clear explanations of the rationale behind the scheme including why homeowners and SMEs already doing work are targeted, and what consumer protection will involve are necessary. For smaller businesses, communications will be vital in order to overcome an innate cynicism of government initiatives. Proposal IFF Prepared for Energy Saving TrustOwner: MS Security: CONFIDENTIAL 4

5 Overturning the scepticism of energy companies is more difficult but reassuring homeowners that they will still be able to switch is important. 1.8 Choice can be given by structuring the initiative to allow homeowners and SMEs to choose the measures which make most sense to them, whether that is to minimise disruption, to maximise perceived benefit or to spend the least money. Ensuring that the scheme is available to small, local builders and communicating this to homeowners will ensure choice of provider without increased costs. Allowing DIY where appropriate will further increase choice. 1.9 In terms of how the scheme works, our recommendation is that any extension of regulations for homeowners should not be too ambitious, with a maximum additional spend capped to around 10%, and limited to one or two measures to minimise disruption Homeowners and SMEs would like to see a tangible cost saving as part of the scheme, however there is a delicate balance to be struck to ensure that potential Green Deal providers as well as homeowners and SMEs all find the scheme financially appealing The largest change in attitudes would be prompted by showing convincingly that cost savings could be made. Arguably, if this could be proved beyond doubt, the other messages to communicate become less important. However, if a financial incentive is not likely to be sufficiently attractive, communications would have to work much harder to win both SMEs and homeowners over. Research report Owner: MS Security: CONFIDENTIAL 5

6 2 Background and objectives 2.1 From autumn 2012, the Green Deal (announced within the December 2010 Energy Bill) aims to stimulate take-up of energy saving by both consumers and businesses as part of the government s commitment to substantially reduce UK carbon dioxide emissions. 2.2 One way in which this energy saving may be stimulated is by extending Part L of the Building Regulations in England and Wales which sets energy efficiency standards for renovations, conversions and extensions to existing buildings. The extended regulations would mean that when homeowners were already doing substantial work to their property, they would be obliged not only to ensure that this work meets energy efficiency standards but also to have work done, where necessary, to improve the overall energy efficiency of their entire property. The regulations would only apply when the property owner was already planning that work should be done in order to minimise any negative impact on owners. 2.3 In addition, the Green Deal will allow consumers and businesses to make energy efficiency improvements to their properties at no upfront cost, with payment being made in instalments as part of their energy bills. A golden rule will ensure that the charge would be the same as, or less than, the amount the property owner would save on their bill through using less energy, so they would not be paying any extra for having the improvements done. 2.4 The Department of Energy and Climate Change (DECC), the Energy Saving Trust (EST) and the Department for Communities and Local Government (DCLG) wanted to better understand consumer and SME perceptions and attitudes towards the potential use of regulatory options to help stimulate take-up of the Green Deal. 2.5 The research objectives therefore were to: Identify what type of requirements for energy saving improvements would be considered sensible and fair; Explore in detail the perceived advantages and disadvantages of various forms the Building Regulations could take; Explore the impact such regulations could have on behaviour for example whether they may discourage property owners from undertaking improvement work (or indeed encourage them). 2.6 In addition, the research set out to explore the challenges in communicating the changes in Building Regulations to consumers and businesses and to provide some insight into how best to communicate such issues to the target audiences of the Green Deal. Research report Owner: MS Security: CONFIDENTIAL 6

7 3 Methodology 3.1 The research, which took place from the 8 th 23 rd March 2011, consisted primarily of a large-scale qualitative survey involving 12 ninety-minute focus groups with homeowners and 6 with SME property owners. As the proposals to extend building regulations are still at an early stage of development and the research was therefore exploratory in nature, a qualitative approach was invaluable in seeking to better understand in depth motivations and concerns. 3.2 The qualitative research was supplemented with short quantitative questionnaires to get an idea of the strength of different views using a larger sample size. However, the limited amount of explanation possible during a quantitative interview means that reactions to the proposals should be considered initial, top-of-mind attitudes only. The survey with homeowners was conducted face-to-face using a general public omnibus, whilst telephone interviews were conducted with SMEs using IFF s SME monthly omnibus. 3.3 Copies of the topic guides, recruitment screeners, questionnaires and stimulus materials used can be found in the appendices. 3.4 Where differences by sub-group are highlighted in the quantitative research, they are statistically significant to a 95% confidence level. Where percentages do not sum to 100%, this is due to rounding effects. Qualitative research with homeowners 3.5 Twelve focus groups were conducted with homeowners across England and Wales. All participants owned their own home or were buying it with a mortgage and were instrumental in decisions about major repairs or renovations to their home. All had either done significant work to their home in the last two years or were planning to do so in the next two years. 3.6 Groups were primarily structured by social grade (AB, C1C2, DE), life stage (families with dependent children living at home, under 40s and over 40s), age of property (pre-1930, , ) and region (London, Leeds, Cardiff, Exeter, Birmingham). A full breakdown of the structure of the groups is provided in Appendix x). 3.7 Within each group IFF endeavoured to ensure a mix of housing type, attitudes towards energy efficiency, education level, gender and expected length of stay at their current property. Owners of newer properties (post-2000) were excluded and the number of flat dwellers was limited, as both these groups were considered less likely to be affected by the proposals under discussion. 3.8 Nine participants were recruited to each group and received an incentive payment of 45 outside London or 50 in London. Quantitative research with homeowners 3.9 A general public omnibus survey was used as the research vehicle for the quantitative survey of homeowners. A total of 1,028 face-to-face interviews were conducted with those who own their own home or were buying it with a mortgage; 56% of the total general public survey sample of 1,810 respondents in England and Wales. Research report Owner: MS Security: CONFIDENTIAL 7

8 Whether own or rent property % Own property outright 30 Have a mortgage 26 Renting 35 Living rent free (for example, with parents) 7 Don t know 2 Base: All in England and Wales Of homeowners, two in five (41%) lived in a semi-detached house, with the remainder split equally between detached homes (28%) and terraces (28%), and just 3% in a flat or maisonette. Type of home % Semi-detached house 41 Detached house 28 Terraced house 28 Flat / maisonette / duplex 3 Base: All owning or buying on a mortgage Half of the homeowners interviewed (51%) lived in a house built between 1930 and 1980, while over a quarter (27%) had a home which was older than this. Fifteen per cent lived in properties that were built between 1980 and 1999, while 5% had homes built in 2000 or more recently. Age of home % Before and later 5 Don t know / refused 2 Base: All owning or buying on a mortgage Two-thirds (67%) of homeowners had recently done or were planning repairs or renovations to their property. Almost three in five (57%) homeowners had undertaken such work in the past three years, and a quarter (24%) were planning work in the next three years. One in ten were planning work in the next three years but had yet to do any. A breakdown of the types of planned work are shown in the chart below. Research report Owner: MS Security: CONFIDENTIAL 8

9 Repairs or renovations planned or made to property Done within last 3 years Planning in next three years (but not yet done) 67% 41% 35% 24% 18% 12% 9% Base: All owning or buying on a mortgage (1028) 3.13 Those in social grade AB were more likely than others to have done or planned repairs or renovations (73% v. 65% C1C2, 62% DE). Flat dwellers and those in properties built since 2000 were less likely to have done or be planning such work (45% and 24% respectively v. 67% total). Qualitative research with SMEs 3.14 Six focus groups were conducted in England and Wales with SMEs. All participants owned their own business premises or were buying with a mortgage, and had a major say in decisions about major repairs or renovations. All had either done significant work to their premises in the last three years or were planning to do so in the next three years. All had premises smaller than 1000m 2 this was important as building regulations apply differently to those with larger premises. Seven participants were recruited to each group and each received an incentive payment of Groups were structured by size. One group was held with medium size businesses ( employees), three with small businesses (10-49 employees) and two with micro businesses (under 10 employees, including sole traders). They were held in locations across England and Wales. A full breakdown is provided in Appendix A. Quantitative research with SMEs telephone interviews were conducted with owners, Managing Directors and Financial Directors of SMEs with business premises of under 1000m 2 in England and Wales using the IFF SME telephone omnibus survey. Research report Owner: MS Security: CONFIDENTIAL 9

10 3.17 These interviews included both those who owned their business premises (59%), either outright or buying it with a mortgage, and those who rented (32%). Age of home % Owned outright 42 Rented from a private landlord 21 Have a mortgage on it 17 Rented from local authority or some other government body 4 Rented / leased from company directors 3 Rented from a cooperative 3 Rented from a charity / trust 1 Other 9 Base: All owning or buying on a mortgage Of the 97 businesses who rented, a third (33%) did not need to seek the consent of the landlord before undertaking alterations or refurbishment work, while 62% said they did need to The sample also included businesses which had not had any major repairs or renovations done to their premises in the past three years and were not planning any in the next three years. However, over half (54%) had recently done or were planning repairs or renovations to their property. Over two in five (44%) had undertaken such work in the past three years, and a further one in five (20%) were planning work in the next three years. One in ten were planning work in the next three years but had yet to do any. Details of the type of renovation are shown in the chart below. Repairs or renovations planned or made to property Done within last 3 years Planning in next three years (but not yet done) 54% 27% 23% 21% 17% 9% 5% Base: All SMEs (194) Research report Owner: MS Security: CONFIDENTIAL 10

11 3.20 Weights have been applied to the data so that it is representative of the national distribution by size of business, so sole traders predominate, making up three-quarters (76%) of the sample. Similarly, threequarters (76%) of SMEs had a turnover of up to 250,000 in the last financial year. Size of organisation % Sole Trader 76 Micro (1-9) 21 Small (10-49) 3 Medium (50-250) <1 Base: All SMEs 194 Turnover of business in last financial year % Up to 250, ,001-1,000, ,000,001-5,000, ,000,001 and over 4 Base: All SMEs giving a turnover figure A breakdown by business sector is shown in the table below. Business sector % Business services 36 Transport / distribution 21 Primary / manufacturing 16 Construction 14 Other services 13 Base: All SMEs 194 Research report Owner: MS Security: CONFIDENTIAL 11

12 4 Homeowners: qualitative research 4.1 This chapter provides the context of homeowners attitudes towards energy efficiency and current building regulations, before exploring in depth their attitudes towards the proposals of extending building regulations and the Green Deal. Attitudes towards energy efficiency 4.2 Homeowners in the focus groups were likely to be more aware of energy efficiency improvements than the general public since all had either undertaken repairs or improvements in the last two years or planned for them to take place over the next two years. 4.3 Most homeowners had a reasonable knowledge about the types of energy efficiency improvements that could be carried out and many claimed to have already made at least one improvement. The primary reason for making such improvements was to save money or to stay warm: You start to look for cheaper ways of staying warm. Over 40s, C1C2, Exeter 4.4 Secondary drivers, for a few homeowners, included noise reduction. 4.5 Helping the environment was not a driver in itself for most but was rather felt to be an added bonus, and energy efficiency improvements were not seen as key to improving property values or achieving a house sale. 4.6 A major barrier to carrying out further energy efficiency work was the upfront cost and a long payback period before homeowners would see a return on their investment. It was felt that there were other, quicker and easier, ways of saving money on fuel bills, such as switching energy suppliers. The hassle factor of having to organize builders was also felt to be off-putting. 4.7 It should be noted that the Green Deal seeks to remove the barriers of upfront cost and the hassle factor so the fact that these issues were identified as putting homeowners off carrying out (further) energy efficiency work argues in favour of the Green Deal being necessary. Awareness of and attitudes towards existing regulations 4.8 Group participants were asked, unprompted, what they currently knew about building regulations. This showed that spontaneous awareness was very low, and often confused with rules around planning permission. 4.9 When presented with a brief explanation of current building regulations 1, including Part L, group participants were often surprised as to what the regulations covered. They were more likely to be aware that there were structural regulations but were generally unaware of regulations around putting in new windows and doors, even when they had had this work done. It was simply something that their contractors had not mentioned and they had not thought about. When considering this after the fact, in the groups, homeowners tended to post-rationalise their thoughts and reported that they had assumed that it would be taken care of for them: 1 See the stimulus materials in Appendix D. Research report Owner: MS Security: CONFIDENTIAL 12

13 I expect the builder to know, not me We assume that it s being done Families, DE, Birmingham Over 40s, AB, Cardiff 4.10 Few homeowners associated current regulations with energy efficiency, with health and safety being top-of-mind for most when thinking about current regulations. There were some mentions of areas of building regulation that participants considered unnecessary or inappropriate for their home, and were therefore irritated at being forced to comply with: There is something slightly irritating, when you are in your own home, having to accommodate for not bending down to use plug sockets, or having a balustrade because you might fall off the step but it all makes sense Families, C1C2, London 4.11 However, most could see the rationale for building regulations, including the energy efficiency provisions of Part L, and considered that the current level of regulation was acceptable. Extending building regulations 4.12 Groups were presented with the suggestion of extending building regulations, initially without the Green Deal, so that if you were to undertake building work on your property you would have to undertake additional work elsewhere in the property at the same time to improve its energy efficiency. This provoked strong negative reactions from all groups, with words and phrases such as outrage, a cheek and ridiculous being used in all groups The low awareness of existing building regulations related to energy efficiency means that the proposal to extend these regulations is not seen as just adding a little more than what is already there, but instead a much larger, top down imposition from government There were two key barriers to the change when presented without the Green Deal: cost and compulsion Costs are a key barrier upfront costs especially, but also having to pay in general - particularly when married with other work which may already be stretching family budgets and eroding savings. The costs of further enforced work on top would be enough to put homeowners off doing the work at that time, or even look at methods of avoiding the additional work, such as cowboy builders. The long pay back periods were also mentioned as a barrier, along with scepticism of government involvement The element of compulsion elicits strong emotional reactions because it is seen as an invasion of privacy and the home. The phrase an Englishman s home is his castle was used on several occasions to describe this feeling. Secondary to this were feelings that it was unfair that the person who was trying to improve their home was being penalised whilst the neighbour who was letting their house fall into disrepair was not. There was also mention of the additional upheaval and hassle of getting extra work done in other areas of the home at the same time as the planned work. Research report Owner: MS Security: CONFIDENTIAL 13

14 4.17 The Green Deal was introduced as a possible new initiative with a brief explanation of how it would work 2 : Companies, including trusted high street brands, would be able to offer these additional energy efficiency improvements at no upfront cost to the property owner. These companies would have to be accredited through a government scheme which would ensure consumer protection. The property owner would pay for the improvements over time as part of their energy bill. The amount you save on your monthly bill through having your heating on less often should be more than, or the same as, the amount you pay for the improvement each month. The charge on your energy bill is not a personal debt. The cost stays with the property until the end of the payment period. If you move property the cost will pass to whoever next pays the energy bill Initial reactions to the scheme varied, but in general there was a reduction in the strong negative emotional response to the scheme without the Green Deal. Whilst many of the barriers remained (all those mentioned above, except upfront cost) and new ones appeared, the removal of the upfront cost element made the scheme a little closer to being emotionally neutral New barriers included a dislike of debt and having it attached to the property, a scepticism of energy company involvement, and uncertainty about the detail of the workings of the scheme. It should further be noted that although it was made clear when explaining the Green Deal that no upfront costs would be required for any additional work, homeowners did not accept that there would be no additional cost for them and their lack of understanding and trust in the scheme means that the majority still felt they would be out of pocket Each of the barriers mentioned above in bold are explored in more detail below to give a fuller understanding of homeowners concerns and confusion. The emotional barriers of compulsion, unfairness, the hassle factor and the dislike of debt are explored first, while the barriers linked to a lack of trust scepticism of the role of energy companies and government and a lack of understanding in how the scheme will work follow. Compulsion 4.21 The compulsion element makes homeowners begrudge doing the additional works, even those who may have been positive otherwise. It feels like you are being bullied in your own home Forcing you, it makes you want to do the opposite Under 40s, C1C2, Cardiff Families, DE, Birmingham It s changing what a home is for future buyers, future generations it s changing the rules of the game Under 40s, AB, London 2 As well as the points below, bar charts sought to help explain the golden rule visually see Appendix D. Research report Owner: MS Security: CONFIDENTIAL 14

15 Nobody is going to tell me to wash my car because it s a bit dirty and it s exactly the same, if you own something, it s nobody s right to tell you what to do with it Under 40s, C1C2, Leeds 4.22 Homeowners pointed out that additional work might be necessary and already an unwanted additional expense, not just a nice-to-have; for example, the boiler might break, windows might leak, or an extension or loft conversion might be the only financially viable answer to an overcrowded house for a growing family who can t afford to move. It was felt to be unfair to add a regulatory burden to households in these circumstances There was a widespread feeling that a voluntary scheme supported by incentives would be much more palatable. The expectation that there should be subsidies and grants available for energy efficiency work added to the negative reaction to extending regulation and compelling people to spend money on such work. They can t give the incentives, so they make you do it Under 40s, C1C2, Leeds 4.24 Even without the upfront cost, some still felt that the element of compulsion was enough for them to delay or cancel work, or to use cowboy builders in order to avoid the additional regulation. Some in the groups did not understand how enforcement could be made to work economically or practically, particularly since homeowners had no experience of existing regulations being enforced. Thus instead of the Green Deal boosting the construction industry and improving the quality of the nation s housing stock, the opposite might happen, with less and/or lower quality work resulting in a deterioration in the housing stock and a negative effect on the industry. Unfair to target those already carrying out work 4.25 There was a feeling that homeowners should be encouraged to improve their homes, but these proposals were felt to do the opposite. Many complained that their neighbours may have to do nothing, which seemed unfair, since neighbours who were not doing any improvement work to their houses were thought to be more likely to have less energy efficient homes in the first place. Homeowners could not accept the rationale for targeting those already doing work reducing the hassle factor of the additional work as they did not believe that this would be the case Homeowners asked whether additional work be required every time substantial work was undertaken as this did not appeal - it was felt that this would lead to homeowners delaying some work and grouping it, by doing more than one type of job at a time, in order to try and escape further energy efficiency improvements There was also a desire for existing energy efficient features to be taken into account, whereby homeowners would gain a type of green credit against being required to do more if energy efficiency work had already been undertaken voluntarily on their property by themselves or a predecessor. Hassle factor 4.28 Homeowners did not feel that the Green Deal would lessen the hassle factor to any great extent as different workmen would often be needed for different jobs, and other parts of the house may be affected other than those where work was already planned. Research report Owner: MS Security: CONFIDENTIAL 15

16 If my boiler breaks down and I have no heating or hot water, and I have an emergency plumber in to sort it out, does that mean I ve got to get Joe Bloggs in to change my windows? - Laughter Families, DE, Birmingham When I have work done I like to minimise the mess and disruption if now you re saying you re going to be chopping away at other parts of my house as well nah, forget it, it s like a total war Under 40s, AB, London 4.29 Some in the groups also wondered whether additional work would have to be done immediately as they would prefer to be able to plan for it to minimise disruption. Dislike of debt 4.30 Debt has particularly negative connotations for many in the current economic climate, with overborrowing perceived to have contributed to the financial crisis. Within this climate, homeowners were wary of any kind of borrowing. The idea that the charge is not a personal debt was not accepted by most, with some drawing an analogy to student loans. Participants felt that this was simply the wrong time for the government to be introducing such a scheme. It is still another loan you have to fork out for another bill round your neck Over 40s, AB, London Dislike of having debt attached to property 4.31 The majority did not like having the debt attached to their home. Many worried it would make their home less appealing to potential buyers if there was still a debt attached to it when they came to move, although a few felt it would simply be used to negotiate on price. Some would prefer to pay up front, or settle the debt before moving or on completion of the sale from equity. You wouldn t want to move into a house which had a loan on it Over 40s, AB, London 4.32 A few assumed that their house would be at risk if they could not keep up repayments on the Green Deal charge, as this is what a debt linked to a house is for many (like a secured loan). This would need to be countered by clear communications. It s a new kind of liability you re taking on Over 40s, AB, London 4.33 A few homeowners could see the merit in the idea, however, with the Green Deal allowing them to confidently undertake work that they might otherwise not see the financial savings from during their time in the property. It would equally ensure that they would not be paying for an improvement after they had stopped enjoying the benefits of it. That s interesting that the debt s passing on. That s definitely an incentive because if you re going to move in 5 years time you won t be out of pocket Under 40s, AB, London Research report Owner: MS Security: CONFIDENTIAL 16

17 Scepticism of energy company involvement 4.34 There is scepticism of energy company involvement in the Green Deal. Homeowners felt that there must be a financial gain for the energy company in administering the scheme by collecting the payments, even if they are not the company directly running it. Some feel that any costs incurred by the energy company would be passed on to the consumer, thus driving energy costs up. It was generally felt that the price of fuel increasing was inevitable, with consumers feeling powerless in this situation. Somewhere or other the gas companies will make money out of it. Families, DE, Birmingham You wouldn t want them profiting off you. You can never win with them; your bills never come down. Over 40s, AB, London Over 40s, AB, London 4.35 In addition they did not trust energy companies abilities to administer the scheme, because of previous poor experience of energy companies, usually in terms of billing: The hassle I ve had with energy companies in the past, I d be worried about that if they can t even manage normal utilities. Under 40s, C1C2, Leeds Scepticism of government involvement 4.36 Trust in the government in general seems shaken at this time. Within this context, there is a lack of trust in government fully supporting homeowners long term in undertaking energy efficiency improvements. Most group participants had little sense of personal responsibility for energy efficiency, wondering what real difference they, as homeowners (or even the UK as a small country), can make on a global scale. They would like to see the government incentivising action, since homeowners see their efforts as helping the government with government targets, rather than something that directly helps them. This feels like something that first came up three years ago when everyone had loads of money... It s bad timing. Under 40s, C1C2, Cardiff They want to help you to help the environment, which helps government, so all the energy isn t going out into the atmosphere, which is ending in government problems. Families, DE, Birmingham Hard to monitor Green Deal We re putting money in. What is the government doing? Families, C1C2, London 4.37 Homeowners were full of questions around how the Green Deal would work in practice, but in particular struggled with how it would work in the context of inflation, real energy price rises, and perceived profit-making price rises by energy companies. Homeowners struggled with the idea that Research report Owner: MS Security: CONFIDENTIAL 17

18 in using less energy, they would save more money (compared with not making changes) rather than less, since the Green Deal charge would remain stable. They felt it would be impossible to work out whether they were breaking even or saving money compared to if they had not made the improvement (also exacerbated by variable weather conditions in recent years leading to fluctuations in bills) and this led to fears that they would end up paying extra for the additional energy efficiency work they would have to undertake, even with the Green Deal. I m struggling already to think how it would work if the price increases Families, DE, Birmingham Energy prices are going up all the time so you ve no idea how much you are saving Under 40s, C1C2, Leeds Gas prices go up so the savings disappear Under 40s, C1C2, Leeds Hard to understand Green Deal 4.38 The Green Deal is an unfamiliar and complicated concept, and although homeowners were very keen to be given more details so they could try and understand the scheme, many found it hard to take in, exacerbated by some of the details not yet being fully transparent. I m baffled if I m honest. If someone came up to me and said all that I would be bombarded...they are going to have to sit me down and explain every single bit to me Families, DE, Birmingham 4.39 Areas which homeowners wanted to know more about included: The rationale behind the scheme, including who is making a profit and how; Who the accredited companies will be homeowners want reassurance that there will be adequate competition so that accredited companies will not be able to charge a premium. They also want local, trusted, builders to offer the scheme again, sometimes, as they were felt to offer a cheaper service; The interest rates (as homeowners wanted to be reassured that the Green Deal would be better value than taking out a normal loan and to know the total they would have to pay back); How variations in individual s energy use are accounted for (including how the Green Deal will affect new property owners, when their household circumstances may be very different to those of the Green Deal initiators) As with the Green Deal being hard to monitor, the unknown details of the scheme result in homeowners fearing that they will end up paying extra for their improvements even with the Green Deal. Clear communications, particularly around the final cost of finance will be needed to allay these fears. The Green Deal as an incentive 4.41 The Green Deal is designed to remove barriers to energy efficiency building work. It appears effective at removing one key barrier of upfront cost and therefore makes the idea of extended building regulations more palatable to some. The length of time for measures to pay back is still an issue but less so with no upfront costs to pay. However, the hassle factor remains. Research report Owner: MS Security: CONFIDENTIAL 18

19 4.42 As well as removing barriers, an incentive is needed. Suggestions of suitable incentives included cheaper council tax for energy efficient homes, removing VAT from energy efficiency improvement measures, tax relief if you pay for the additional energy efficiency work directly from your salary, free Energy Performance Certificates, or 50% off energy efficiency work if it was undertaken within six months of the home improvement work which triggered the extended building regulations Additional or alternative incentives, such as these, being requested by the groups suggests that the Green Deal alone is not enough of a draw in the context of extended regulations being mandatory; in this context, an incentive would have to have near universal appeal to outweigh homeowners dislike of the mandatory element. Hence, a tangible cost saving was felt to be needed as an incentive for the proposals to seem reasonable to many. The level of saving would need to be more than 50 per year, since this level of saving could be achieved by the simpler measure of switching energy suppliers. Positive reactions to Green Deal 4.44 Some group participants did buy into the idea of the Green Deal: If it does work in practice, you d be silly not to really. Yeah, if they re giving you stuff for free, where s the downside? Under 40s, AB, London You re paying the same as you are now for a more energy efficient house Over 40s, AB, London You wouldn t miss the money. Families, DE, Birmingham 4.45 However, fewer did so in the context of extending building regulations to make the energy saving improvements mandatory. Opinion tended to be swayed towards the negative by cynics with strong opinions in the groups. For the minority who were keenest (who tended to have stronger green ideals than most), the details of the scenarios which were presented did not matter, but most of the participants had more reservations, with great if it works a common reaction. Scenarios 4.46 Participants in each focus group were presented with three scenarios, both costed and uncosted, to explore the level at which additional requirements might be acceptable. The scenarios were used to stimulate discussion, as well as to aid understanding, so it was important that they were different from one another (in terms of measures, costs and payback periods) as well as being as simple as possible, whilst still including enough detail. Full details of the scenarios are given in Appendix D but a summary is shown below. There were three levels of cost, which were not identified as high, medium and low in the groups. They were always presented in the order high first, then low, then medium When costs were introduced, each was shown as a break-even scenario, so costs would be paid from savings on energy bills, but no additional savings would be seen by the homeowner until the costs were paid off. This was so that reactions to cost savings could be explored separately. Research report Owner: MS Security: CONFIDENTIAL 19

20 Scenarios High Trigger: Extension 25,000 Additional reqts: Loft insulation Cavity wall insulation New boiler 3,500 ( 350 over 10 years) Medium Trigger: Double glazing 4000 Additional reqts: Loft insulation Cavity wall insulation Draught proofing 800 ( 100 over 8 years) Low Trigger: New boiler 2500 Additional reqts: Loft insulation 480 ( 80 over 6 years) Draught proofing 4.48 The high cost scenario was acceptable for some, who tended to be better off, and thought it was nice to have a new boiler with a new extension, and it might be a necessity to heat the increased number of radiators. For most, however, the payback period was too long at ten years and the costs too high. They did not think they would see the benefit once the payback period had ended Loft and cavity wall insulation was seen as acceptable by some, but a new boiler was thought of differently. This was a high cost item, and homeowners resented the suggestion that they would have to replace a boiler which might be working perfectly satisfactorily in their eyes When presented with the medium cost scenario, participants again thought the payback period (of eight years) was too long. They also felt that there were too many additional requirements for one home improvement. A key question was how many windows would need to be double glazed for the additional requirements to come into effect. Most homeowners did not double glaze their entire house in one go, preferring to do one window at a time when needed, or perhaps the front or back of the house at one time. Half of the house was considered by some to be a reasonable level to require additional work The low cost scenario was considered much more reasonable, with around half feeling that these requirements were at an acceptable level. Participants felt positive because of the relatively small cost of the additional requirements and the logical link between the trigger and the requirement; it was sensible to draught proof and insulate the loft to maximise the benefit from the new boiler. As one put it, like getting new shoes and being sold the polish at the same time. It s proportional, almost common sense Under 40s, C1C2, Cardiff Research report Owner: MS Security: CONFIDENTIAL 20

21 4.52 The short payback period was a plus because of the negative attitudes to debt, and because it increased the likelihood of seeing savings while they were in the property. Homeowners also thought it might be possible to complete the additional work as a DIY project, making it less financially onerous and easier to plan Negative reactions to this scenario mostly related to the often unplanned nature of boiler replacement, when the original boiler breaks and can t be economically repaired. Requiring additional work in these circumstances was felt to be unfair. Others felt that as the original work of replacing the boiler is in itself an energy efficiency measure, they shouldn t be asked to do further energy efficiency work at the same time. Structuring the initiative 4.54 It has not yet been determined exactly how the initiative of extending building regulations would be structured and so, to test initial reactions of homeowners to various concepts, three options were explored with each group. It was made clear to participants that the Green Deal would be available for each of the options and that the choice of measures in each case may be limited by the type of property owned The three options presented to each group were as follows: Specified measures depending on the property and the work planned; Energy Performance Certificate (EPC) method where the home would be assessed to determine its energy rating and a report prepared suggesting measures to improve energy efficiency. The homeowner could select which measures to undertake; Percentage spend method where requirements would be linked to the cost of the initial project. The homeowner could choose which measures to undertake but they would be to the value of 10% of the initial project cost The specified measures option was the least favoured because of the lack of choice and control for the homeowner, although it should be remembered that this would be acceptable for some in certain scenarios (for example the low cost scenario mentioned above) The EPC option was preferred because the EPC is familiar and some liked being able to see from the certificate that their energy efficiency had improved. Some also felt that this might increase how attractive their house appeared to potential buyers, although this was the subject of some discussion with others disagreeing. Again, it was hard for homeowners to give a fully informed opinion on this concept as a method of structuring the initiative without knowing how it might affect them. There was an element of the unknown as homeowners did not know which measures might move them up a level, or indeed what the levels corresponded to so they had no firm idea of the level of cost which might be involved The percentage spend cap was popular because of the fixed cost element and the flexibility and choice for the homeowner. It was easy to understand and they could work it into their long term plan for home improvements, and so make it work for them rather than against them (for example, putting off double glazing until the extension is done). They did highlight the potential for fraud however, if builders were encouraged to bill less for a job that would trigger the 10% improvement requirement, and more for a job that did not. Some also highlighted that this method would penalise those with more expensive work planned whilst others were unsure how it would work, given that the cost of possible measures may not correspond to 10% of the initial spend. Research report Owner: MS Security: CONFIDENTIAL 21

22 4.59 On balance, groups were split as to which method they preferred but being allowed some choice in the measures that could be implemented was welcomed. Summary 4.60 The Green Deal does make extending building regulations more palatable for some, but this does not outweigh the grievance of being forced to do something in the first place. There is scope for the proposals to work but deciding exactly how, and the communication of the scheme, will be a challenge The removal of upfront costs appeals, but is not well understood. Cost savings are key to public perception but there is a delicate balance to be struck between appealing to Green Deal providers and ensuring homeowners see an attractive funding option Any extension of regulations should not be too ambitious, with a maximum additional spend of 10%, and a limit to one or two measures to minimise disruption Giving as much choice, control and power to people as possible is important to balance the control removed by the extension of regulations Part of letting homeowners feel in control is giving them more knowledge. Convincing people that the golden rule will work, clear and simple explanations of how repayments are calculated, and explaining the effect of fuel price increases on future bills are all needed To overturn the scepticism of government, clear explanations of the rationale behind the scheme including why homeowners already doing work are targeted, and what consumer protection will involve are necessary. Overturning the scepticism of energy companies is more difficult but reassuring homeowners that they will still be able to switch is important Choice can be given by structuring the initiative to allow homeowners to choose the measures which make most sense to them, whether that is to minimise disruption, to maximise perceived benefit or to spend the least money. Ensuring that the scheme is available to small, local builders and communicating this to homeowners will provide choice of provider without increased costs. Allowing DIY where appropriate will further increase choice. Research report Owner: MS Security: CONFIDENTIAL 22

23 5 Homeowners: quantitative research 5.1 This chapter provides the context of homeowners attitudes towards energy efficiency and their awareness of current building regulations, before exploring their attitudes towards current regulations and extended regulations, without, and then with, the Green Deal. Attitudes towards energy efficiency 5.2 Homeowners were asked to choose the statement closest to the way they felt about saving energy in their home. Almost half (47%) said that while it was important, they could do more to save energy and a further 9% said that while fairly important, they had other priorities preventing them from doing more. However, 40% claimed they took energy saving very seriously and did everything possible to save energy. Only 2% claimed saving energy was not important to them. Attitudes to energy efficiency I take saving energy in my home very seriously and do everything possible to save energy I feel saving energy is important and try to save energy when I can but there is more I could do I feel saving energy is fairly important but I have other priorities preventing me from doing as much as I probably should Saving energy is not important to me Don t know Base: All owning or buying on a mortgage (1028) 5.3 Those educated to no higher than GCSE or equivalent were more likely than others to say they were doing all they could (47% versus 37% of those with a degree or equivalent). Those who had carried out or were planning work were also more likely to express this attitude (43% versus 34% of those neither doing nor planning work). 5.4 Seven in ten (71%) homeowners agreed that energy efficient homes have a major impact on Britain s overall carbon emissions, with 29% agreeing strongly to this statement. The proportion in agreement fell to 61% of those who think energy saving is only fairly or not important (v. 73% who felt it was important) and to 64% of those who have not done or planned works (versus 75% of those who had/were planning works). Those who were most likely to admit not knowing about this Research report Owner: MS Security: CONFIDENTIAL 23