1. Do you agree with the proposal for the incorporation of TrustMark into ECO3 and, in particular, for installers to have to be TrustMark registered businesses to deliver eligible ECO3 measures, with the exception of Demonstration Actions and certain District Heating Systems (DHS) measures? In particular, do you agree that the increased financial protection requirements under the TrustMark Framework should apply in respect of ECO energy efficiency measures (except demonstration actions and certain DHS measures)?
We do not agree with this proposal.
We welcome the interest and determination in improving the quality of installations as well as in customer protection in ECO. However, we do not believe that approach suggested here to achieve these objectives would have any significant impact. We appreciate that the incorporation of TrustMark will increase data sharing between accreditation bodies, Ofgem, obligated suppliers and other relevant government and private bodies. But this could have been tried to achieve through other means as well. For example, Ofgem could have been given those legal powers for data sharing or UKAS could have been mandated to act in that capacity.
We do not think that incorporation of TrustMark will improve quality of installation or provide higher customer protection because of the following reasons:
- Incorporation of TrustMark will be shifting the cost of running ECO scheme to obligated suppliers, and thus to millions of energy users.
- TrustMark must be implemented on a trial basis first to ensure its effectiveness in ECO, participation to which should be strictly on voluntary basis. The scheme has a significant cost implication for every household in the country and therefore should be first trialled and tested before making it mandatory.
- Current ECO3 rules have already reduced the level of activities under the scheme. Implementing TrustMark will only make installation of measures unaffordable for most fuel poor and vulnerable customers.
- BEIS’s impact assessment has not covered several cost heads to be incurred by participants to implement TrustMark. The financial effect of this implementation is going to be far bigger on the industry than what has been guessed in the impact assessments. Note that majority of the participants in this industry are small and medium size businesses. These companies are further going to be hit hard. The previous and current ECO rates assumed in the impact assessment are also incorrect, and therefore underestimate the cost implications.
- The impact assessment has neither listed nor quantified likely benefits of incorporation of TrustMark or of other changes proposed in the consultation. BEIS has also not explained on what grounds it is positive about the effectiveness of TrustMark or of the impacts of other amendments.
- Requirements of TrustMark and PAS 2035 cannot be fulfilled without increasing the customer journey and number of visits to be paid by various ‘experts’. As a minimum, a property will be visited at least by a Retrofit Coordinator (who, we assume will also act as a Retrofit Advisor and a Retrofit Assessor) and an Installer to complete pre-install survey. The installation team will then visit the property to complete installation. The property is then likely to be visited by a technical monitoring (TM) agent, scheme provider (for on-site assessments), and potentially by a Retrofit Evaluator.
- It seems to us that the need for incorporating additional standards was realised because PAS2030 failed to control the quality of installs. The existing consumer protection mechanisms have also not worked. Yet both BEIS and TrustMark have proposed to continue with PAS 2030 and the same consumer protection mechanisms.
- PAS2035, a fundamental requirement of Trustmark has completely side-lined heating measures. No matter how much emphasis is given to fabric first policy (para 5.4 of PAS 2035), the reality is that no household prioritises investment in fabric improvement over heating and hot water. The red tape, increased cost and time of installation may leave vulnerable families without receiving a heating measure for a prolonged time.
- PAS 2035 insists that overall scope for improvement by 2050 should be identified, even if only limited improvements can be undertaken in the short term (para 5.2.1 of PAS 2035). It suggests achieving this by issuing a medium-term improvement plan for every dwelling for implementation over a period of 20 or 30 years. This is a total waste of money, resources and customers time. Even EPCs expire in 10 years. Para 5.2.2 states that these plans should be updated to respond to changes in standards or availability of new technologies, and to record any improvements as they are made. It doesn’t specify who would bear the cost of such regular updates and how would they be monitored.
- If calculations of moisture, ventilation and occupancy assessments are so important why not make them mandatory under RdSAP or come up with a similar methodology that would offer a systematic approach to these assessments? PAS2035 only provides overarching guidelines on what should be covered in each assessment/report. This is open to interpretation and would lead to inaccurate and less useful reports similar to what has often been observed with the pre-design surveys under PAS 2030.
- The consultation and the draft TrustMark Framework Operating Requirements do not provide sufficient details on the technical monitoring processes under TrustMark, data sharing principles and procedures, annual audits or the complete use of Data Warehouse.
- We do not think TrustMark is adding any value to the entire process of quality assurance or consumer protection. The businesses will still be governed by PAS 2030 rules and they will be audited as per PAS 2031 rules. Scheme Providers will be ultimately accredited by UKAS under BS EN ISO/IEC 17065. What exactly would TrustMark do in addition to what is already being evaluated by UKAS?
- Certification bodies will continue to be governed by UKAS as per PAS2031 rules, and TrustMark does not seem to have any legal powers to administer them above and beyond what is required under PAS 2031.
- TrustMark’s actual role seems to be limited to managing data warehouse, data sharing and taking over the administrative burden of technical monitoring and warranty review from Ofgem.
- There is no strategy to address certain monopolistic practices prevailing in ECO where a PAS certification body mandates its members to use only certain products, use only their cavity wall surveillance service and opt only for their warranty. These requirements are insisted on the ground that this will help the certification body to ensure higher quality control. Allowing such practices to continue can only imply that such monopolistic behaviour is officially recognised and promoted by BEIS and that other certification bodies and warranty providers do not have effective controls to ensure quality.
We also do not believe that the increased financial protection requirements under TrustMark would make any positive impacts.
- TrustMark would not mandate insurance backed guarantees, lack of which has left thousands of customers without any benefit from their warranty cover when their insulation failed. There is no provision in the Framework Operating Requirements to prevent such practices.
- The requirement of minimum six years’ financial protection for all measures other than cavity wall, solid wall, park home, underfloor and room in roof insulation (para 10.2.4 of Trustmark framework) is unrealistic and difficult to achieve. The protection requires to cover both product warranty as well as workmanship guarantee as minimum ((para 10.2.2 of Trustmark framework). Several energy efficiency products are offered only one-year manufacturer warranty (for e.g., electric storage heaters or several boiler parts used for repair) whereas customers pay more for extended warranties on certain products (for e.g., boilers). How would an installer meet TrustMark requirements when a manufacturer warranty is not extended to six years or when a customer opts for the minimum warranty offered on a product?
- It seems odd to expect six years financial protection for measures that have been assigned less than six years of lifetime; for e.g., boiler and ESH replacement and repair measures. This will increase the delivery cost for such measures and achieve no additional protection for customer.
- Lifetime of underfloor insulation has been increased from 20 to 42 years. There is no scientific justification given behind this decision, and therefore we assume the decision has been taken purely to introduce 25 years warranty on these measures. What would happen if the insulation does not last beyond 20 years? Would the warranty cover the replacement cost in such cases?
- BEIS expects that the market would provide suitable guarantees where they are not already available (para 21 of the consultation document). Unfortunately, the experience in current and previous schemes prove to be otherwise. Warranties for wall insulation measures have been mandatory under all phases of ECO and some of its predecessor schemes. Yet, there are only four warranty providers functioning in the market at the moment.
- TrustMark’s financial protection panel’s role and remit are not fully explained in the Framework operating requirements. The panel does not seem to have any role to play in case a warranty provider refuses to fulfil its commitment towards a failed insulation. However, in any case the panel or TrustMark do not seem to have the same legal backup as an FCA or insurance backed guarantee.
2. Do you agree that incorporation of TrustMark into ECO3 is sufficient to demonstrate certification and compliance with the appropriate PAS standards?
We do not agree with this proposal.
- If incorporation of TrustMark into ECO3 is sufficient to demonstrate certification and compliance with the appropriate PAS standards then it would be more appropriate if TrustMark also implements PAS standards and supervises the certification bodies.
- PAS standards are implemented by PAS certification bodies and their performance and overall impact is overseen by UKAS. We do not see what additional value TrustMark would add to this process.
- It is also not clear how TrustMark would resolve any non-performance issues or disputes with installers or PAS certification bodies. Who would have a final say in case of a non-performance or dispute with a certification body- TrustMark or UKAS? Who would resolve a difference of opinion between TrustMark and UKAS regarding a certification body?
3. Do you agree that incorporation of TrustMark into ECO3 is sufficient to allow all solid wall, cavity wall and park home insulation measures delivered under the scheme to receive the relevant standard applicable lifetime?
We do not agree with this proposal.
- It is not clear whether this proposal is to free Ofgem from the administrative responsibility of ensuring that each wall insulation measure is covered by a warranty or whether it is to imply that incorporation of TrustMark itself means that TrustMark would take the responsibility if any wall insulation measure fails.
- The type of financial protection offered under ECO till date has proven to be highly ineffective. We have witnessed thousands of cases of failed insulation where customers have been left without any support from the warranty providers. Those warranties did nothing to protect customers, simply because they were not insurance backed guarantees.
- TrustMark has adopted the existing standards for warranties, which will not protect the customers in destress. If cost is a reason to stay away from insurance backed guarantees, note that two of the four appropriate warranties currently available for wall insulation measures are insurance backed.
4. Do you agree that underfloor and room-in-roof insulation measures should be accompanied by a 25 year or more guarantee under the scheme which not only meets the TrustMark financial protection requirements that apply to all ECO energy efficiency measures but also as a minimum meets the TrustMark “appropriate guarantee” criteria?
We do not agree with this proposal.
- None of the consultation documents explain how the proposed lifetime of 42 years is derived for underfloor insulation. Unlike most insulations, underfloor insulation is often more exposed to weather elements and rodents (in EWI the insulation material is covered by plaster and paint). Would the warranty provide protection against damage caused by such elements?
5. Are there any other complex ECO measures that you think should be accompanied by a 25 year or more guarantee which as a minimum meets the TrustMark “appropriate guarantee” criteria?
- No, we do not think any measures other than wall insulation measures and room in roof insulation require a 25 year or more guarantee.
- Besides, we do see limitations in TrustMark’s criteria defining “appropriate guarantee”. The draft Trustmark Framework Operating Requirements clause 10.1.3 states “Acknowledge well-established financial protection mechanisms, for example: those supported by insurance backed guarantees and THOSE SUPPORTED BY SCHEME PROVIDER PRACTICES.” How can those guarantees supported by scheme provider practices be treated the same as insurance backed guarantees? What legal backing would they provide to customers in distress when an installation fails? Such guarantees have failed massively in the past and has brought a lot of criticism to the entire sector and embarrassment to the government as well. How could such poor practices be continued on the assumption that such things would never happen again and that any assurances offered by these guarantee providers are sufficient to protect customers?
- Some guarantee providers are also acting as self-certification scheme operators as well as PAS certification body. In case of a failed installation how would TrustMark and BEIS ensure that these companies would be neutral and act in favour of customers rather than saving their own reputation and financial interests? Does TrustMark’s independent Financial Protection Panel hold more legal backing to take action against failed warranties than an insurance backed guarantee?
6. Do you agree that, to the extent they would apply to demonstration actions and certain DHS measures exempt from the TrustMark requirements, the current ECO3 requirements should be updated to move to the new PAS standards (PAS 2035:2019 and PAS 2030:2019) subject to similar transitional arrangements to those set out in paragraph 15 above?
We do not agree with this proposal.
- The existing as well as previous versions of PAS 2030 haven’t achieved the expected outcomes in terms of quality control and consumer protection. The issue here was not with its intensions, but was with its implementation. Certification bodies often followed their own interpretation of what is required of them and also made their own rules. To give you a few examples, some certification bodies were offering installer accreditation for room in roof insulation at a time when PAS didn’t even have a separate table specifying installation requirements. Another certification body has made it mandatory for installers to use their cavity surveillance system as well as wall insurance warranty to ensure quality when these conditions are not mentioned in PAS2031 nor are they endorsed by UKAS.
- There is no provision in the revised PAS 2030:2019 to restrict such practices.
- PAS 2035 is not trialled and tested for its effectiveness. Mandating it in ECO3 without any trial would disrupt the already bottom low delivery and would cost millions of pounds to the industry for initial preparations.
- The transitional period of 19 months explained in the consultation document does not mention that installers will have to register with TrustMark even before their PAS accreditation is renewed under PAS 2030:2019. This does not give installers any time to understand and adjust to TrustMark.
- TrustMark procedures are not fully set yet. There are many aspects of their procedures, including timelines and rules for notifying measures to their Data Warehouse, are under development. This will create a chaos and increase the risk of installers being penalised by suppliers and Ofgem for situation beyond their control.
- Each measure installed under ECO would require a warranty ranging from 6 to 25 years as soon as TrustMark is incorporated in the ECO Order. BEIS has left it up to the market to come up with warranties. The consultation document has not mentioned about how BEIS, Ofgem and TrustMark would deal with a situation if a market cannot be ready with appropriate warranties on time.
7. Do you agree with our proposed amendment to remove the 400% uplift for replacement boilers delivered outside of the broken heating system cap?
We do not agree with this proposal.
- We do not see the current 400% uplift going against the policy intent of ECO3. The policy intent in ECO3 is to promote ‘fabric first’ policy and to promote installation of dual measures with a combination of one insulation measure installed along with a boiler replacement. This policy intent is fully achieved under current rules.
- If the intent behind this proposal is to discourage boiler installs except FTCH then it can be achieved only by removing boiler replacement and upgrade as qualifying actions.
- BEIS had to introduce 400% uplift on boilers to support their decision of reducing boiler lifetime to 12 years, and not to acknowledge a particular policy intent. Removal of this uplift makes a stronger case now to re-introduce the 12 years lifetime to boilers.
8. Do you agree with our proposal to change the measure lifetime assumption for first time central heating measures to 20 years?
We do not agree with this proposal.
- The proposal of increasing the lifetime to 20 years is not supported with any scientific reasoning. Previous energy efficiency schemes had established lifetime through extensive technical studies which were representing the actual life expectancy of energy efficiency measures. Based on the outcomes of those studies and industry knowhow boilers are expected to last for up to 12 years and heat pumps for about 15 years.
- In a situation where a boiler is out of order, what purpose would the remaining parts of a heating system serve? The lifetime of a heating system therefore, should be based on the boiler and not on the life expectancy of the pipework or radiators.
9. Do you agree that first time central heating (FTCH) should be eligible in PRS EPC Band F&G rated properties?
We agree with this proposal.
- However, we do not believe that allowing FTCH in PRS EPC band F & G properties will have any significant impact on its uptake. We have not come across many properties qualifying for FTCH during our works in the current and previous phases of ECO.
- Additionally, FTCH are an expensive measure. The installation cost would now further increase due to introduction of TrustMark and extended warranties. This would make the measure unaffordable for most households and/or landlords.
- BEIS should have presented their analysis behind this decision to give some insights on the likely uptake expected from this policy change.
10. Do you agree that first time central heating (FTCH) should be included in the LA-Flex in-fill?
We agree with this proposal.
- We believe that BEIS should have published their analysis for the stakeholders to understand the likely impact of this policy change.
11. Do you agree with our transitional arrangements for all proposed changes?
We do not agree with this proposal.
- As we have mentioned in our response to question 6 above, the transitional arrangements have only taken in to account the transition from PAS 2030:2017 to PAS 2030:2019. The arrangements are proposed keeping in mind the time PAS certification bodies would need to get certified under PAS 2031:2019 and then transfer their members to PAS 2030:2019.
- The proposed arrangements do not take in to account the time installers, warranty providers and other stakeholders would require to prepare and implement the new requirements.
- There is no consideration given to the fact that besides recertifying themselves under PAS 2030:2019, installers will also have to brace themselves to implement PAS2035 and TrustMark.
- The consultation document does not cover transition of installers to TrustMark and its new reporting requirements.
- It also does not mention about how the installers would be assisted in case the market fails to provide newly introduced warranty requirements for various measures in due course.
- The proposed transitional arrangements do not provide any scope for running a trial period for PAS 2035 or TrustMark.
12. The Government invites views on the general requirements set out in this consultation and the illustrative draft of the amending ECO3 Order, once available.
- With several changes not included in the consultation questions and such narrowly conducted impact assessments, ECO consultations are becoming more of a formality rather than an opportunity for BEIS and ECO supply chain to engage in a meaningful exchange of ideas and viewpoints.
- Lifetime of measures should always be based on their expected lifespan rather than assumed policy intent or to introduce extended warranties.
- We are highly disappointed with the upfront cost analysis presented by BEIS in its impact assessment. The study has assumed that changes proposed in this consultation would impose an upfront cost to businesses of about £3.1 million. Our analysis suggests that the upfront costs to the industry (for 2300 installation companies) would be at least £11 million (see Annex 1 below). Note that this cost is in addition to the cost of extended warranties.
- It is even more frustrating that the impact assessment expects the benefits from these changes to outweigh the costs of its implementation, yet it has not produced any benefit analysis!
- We believe that BEIS missed an opportunity in the form of this consultation to help improve market delivery. Low rates are not the only reason behind slow delivery. Other factors like reduction in deemed scores (some even without a consultation), difficulty in finding eligible customers, reduced focus of solid wall insulation and over emphasis on insulation measures have significantly affected the delivery. Many respondents to BEIS’s ECO3 consultation in 2018 had highlighted these risks. BEIS’s reluctance to amend the scheme rules and commitment to incorporating TrustMark and additional warranties will only make the scheme more difficult to deliver and prone to fraud and mal practices. We appreciate the need for policy longevity and stability, but they are of no use if they are achieved through inactivity and denial.
- BEIS’s hesitation to amend the rules to support higher activity on the basis of 9 months’ worth data is in contrast with its insistence to incorporate two new standards that haven’t gone through any trials.
- The change in boiler lifetime from 12 to 3 years in ECO3 has given an excuse to many rouge installers to replace four-five years old boilers. Lack of duplicate checks from Ofgem against the existing and previous ECO phases has only exacerbated the situation. Reversing these two practices will be more effective and cost-efficient than introducing new quality standards.
Annex 1: Analysis of preparation costs for implementing TrustMark and PAS 2035 for businesses
- Based on our observation of various sources we have prepared a table of costs of implementing PAS 2030 and Trustmark for businesses. The costs in red in the table below are our assumptions, the rest are taken from actual sources. The table does not take into account the costs of training, registration and renewal costs of licenses/certification under building regulations, business insurances, equipment and materials, salaries, administration costs, travel, technical monitoring, lead generation or payment of fees to third party expert services (such as Retrofit Designers). These costs are essential for businesses working as installation companies and would not be directly affected by the introduction of PAS 2035.
- we have taken into account three types of costs: Type 1 is initial registrations with PAS and Trustmark, and accreditations. Type 2 is lodgement fees per measure (please note this doesn’t take into account the cost of preparing lodgement documents/reports, TM or PAS monitoring & evaluation documents). Type 3 is annual costs for renewing PAS, Trustmark, and accreditations required for implementing PAS 2035 (this doesn’t include accreditations of operatives or renewal of other installer licenses).
(data sources: BEIS Impact Assessment document for this consultation, Elmhurst website for retrofit trainings, registration and lodgement fees, and NEICE and Stroma websites for PAS 2030 registration and renewal costs.)
- BEIS has estimated that there are around 2,300 businesses engaged directly in the delivery of ECO measures. If all of them have at least one Retrofit Coordinator and a Retrofit Assessor they will together spend over £11.06 million on initial registration and lodging their first measures (£4,810.30 multiplied by 2,300 businesses). If we add in the annual renewal costs, those 2,300 businesses will together spend over £15.83 million in a year. This is far higher cost than the £3.14 million estimated in BEIS impact assessment.
- BEIS has also indicated that only a small number of professionals will train themselves to become Retrofit Coordinators, and that these Coordinators would work with several organisations. This assumption is contrary to what has been witnessed in similar accreditation schemes like SAP, RdSAP and GreenDeal Assessments. The number of trained assessors under these schemes is much higher than the demand for their services.