Mixed industry response to Autumn Statement

Published:  26 November, 2015

There has been a mixed response to yesterday's Autumn Statement by the heating and renewable industry.

The cut in funding for the domestic Renewable Heat Incentive (RHI) has been the main focus, with many keen to know more detail about exactly how the scheme will be reformed.

Chris Stammers, marketing director for Dimplex, said: "“The 22% cut in DECC’'s budget is a concern, but it'’s the incentive schemes that we need to promote if people are to invest in new technologies. We need clarification on the RHI reforms, particularly how the government expects to save £700 million without compromising the benefits to homeowners. Also of note was the intention to replace the current Energy Company Obligation (ECO) scheme with a new, cheaper domestic energy supplier obligation, which will support energy efficiency upgrades in 200,000 homes per year until 2022.

"“If these reformed schemes - and I stress the word ‘if’ - can continue to provide genuine incentives for consumers to invest in lower carbon heating, then they must be welcomed. One thing remains clear; the government’'s commitment towards lower carbon electricity production means technologies such as heat pumps and solar systems remain key to help meet targets and drive bills down for homeowners.”"

Dave Sowden, chief executive of the Sustainable Energy Association, said the Statement represented a considerable watering down of energy policy.

"While the government has properly paid attention to limiting the impact on fuel bills, it has missed an opportunity to declare energy efficiency as a National Infrastructure Priority, scale up ambition in this area and consider routes for funding other than on energy bills. This is a missed opportunity for millions of families to be permanently better off.

"On heating, we broadly welcome the package of measures announced today. In particular the uncertainty surrounding the RHI's continuation has been removed (albeit with significantly reduced ambition), and the measures announced for heat networks are to be welcomed."

The Oil-Fired Technical Association (OFTEC) welcomed the planned reforms to the domestic RHI, which it said were badly needed. OFTEC director general Jeremy Hawksley said: "Unless radical changes are made to the domestic RHI, the scheme will continue to only benefit the wealthy few. We are concerned to see DECC ploughing a further £1.1 billion of taxpayers money over the next five years into this floundering initiative.

"Only 43,000 accreditations to the scheme have been made since it started in April 2014, compared to the 180,000 that DECC had anticipated. An incentive to replace the 600,000 standard efficiency oil boilers in GB with modern condensing versions would appeal more to homeowners and could deliver significant greenhouse gas savings.

"Government needs to urgently re-think its low carbon heat strategy and focus on incentivising solutions that are simple, affordable to install, impose limited disruption on the home owner and offer competitive running costs. This is even more apparent given figures which show the number of excess winter deaths last year reached a 15-year high."

Phil Hurley, managing director of heat pump manufacturer NIBE, said the Spending Review had provided clarity on two main points: "Firstly, that the RHI will continue for the remainder of this parliament, and secondly, that the budget for it will be a significant £1.15 billion. While there's no denying that a £700 million reduction in support for the scheme is a substantial cutback, all is certainly not lost for renewable heat in the UK.

"Although we don't know at this stage exactly what the reforms will look like, or how they will affect RHI tariffs for heat pumps, we're optimistic that this injection of confidence will have a positive impact on market growth. For installers, it provides the necessary ammunition to continue communicating the benefits of the technologies - and the financial incentives that back them - to their customers."

Mr Hurley also called for the Microgeneration Certification Scheme to be simplified and made more cost effective, in order to make renewables more attractive and accessible for installers.

Ideal Boilers, meanwhile, is keen to learn more about the Apprenticeship Levy that is being applied to large firms.

Carrie Young, head of marketing at Ideal Boilers, said: "As a large employer, we have run an Engineering apprenticeship scheme for over 30 years and we are committed to continuing to develop young people in this highly successful way to meet future business needs. We will continue to monitor the impact of the housing proposals, including the planning reforms, land release and doubling of the housing budget, on the long-term plans of housing associations and local authorities for new house-building."

Dr Diana Montgomery, chief executive of the Construction Products Association, said there were few surprises in the Autumn Statement, but that the industry was pleased to have clarification of the Apprenticeship Levy.

"Today we learned that the Levy will be paid on payrolls in excess of £3 million," she said. "The Chancellor suggests that this means less than 2% of UK employers will pay it; however, we estimate the Levy may affect manufacturers with as few as 100 employees. We appreciate the establishment of a new employer-led body to set apprenticeship standards and ensure quality, not quantity. This body needs to include manufacturers and distribution representatives of the construction supply chain. The critical focus must be on a 'light-touch' approach that delivers the right skills."

She also acknowledged that the increased support for the building of new Starter Homes and shared ownership schemes would help first time buyers, but warned that the housing crisis "has less to do with supporting demand and more to do with increasing the supply. Today's plans – paired with a raft of measures addressing planning reforms, the release of appropriate land for housing and help for SME housebuilders – may go some way towards achieving that."

The UK Green Building Council also welcomed the additional support for newbuild homes, but warned that more needed to be done to address the energy efficiency of the UK's existing housing stock. Chief executive Julie Hirigoyen said: "The cuts to ECO and RHI will see more jobs lost in the industry and vulnerable households will continue to be trapped by unaffordable energy bills. Upgrading the UK's draughty homes is a key infrastructure challenge, which can reduce pressures on our energy system, bring down consumer bills and ease the burden of cold homes on NHS budgets. The Chancellor repeatedly talks about productivity, but here he is just discouraging investment and destroying a market."

Celia Francis, CEO of Rated People, praised the extension of the small business rate-relief scheme for an additional year. "Tradespeople are the lifeblood of the British economy and we're pleaed to see that 600,000 small businesses will gain for one more year - these entrepreneurs deserve incentievs and support on the road to recovery," she said.

Ms Francis also welcomed the doubling of the housing budget and the promise of 400,000 affordable new homes which, she said, was "not only good news for potential homeowners, but for tradespeople all over the UK".

 

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