Written evidence submitted by the Cavity Insulation Guarantee Agency (HEE0107)
The Cavity Insulation Guarantee Agency (CIGA) welcomes the opportunity to submit to the Energy and Climate Change Select Committee’s inquiry into home energy efficiency.
Our submission summarises our view of the shortcomings of the current energy efficiency schemes relating to cavity wall insulation in the UK – and in particular of maintaining standards and protecting consumers. The submission gives our view regarding improvements applicable to future schemes.
We have drawn on our experience and knowledge of the sector as the largest and longest-established UK provider of cavity wall insulation guarantees.
We provide a set of recommendations which we believe have the potential to significantly strengthen the quality standards and consumer protection framework in cavity wall insulation in the UK. We would welcome the opportunity to discuss and refine these proposals.
CIGA acts as a guarantor for 25 years for cavity wall insulation fitted by registered installers in the UK and the Channel Islands. Where a guarantee holder experiences problems with their cavity wall insulation that are due to workmanship or materials, CIGA will work with the installer, or step in ourselves where that isn’t possible, to put the problem right.
CIGA also operates and administers the Cavity Wall Insulation Certification scheme in partnership with the British Board of Agrément (BBA), which provides certification to registered contractors.
CIGA was established by the industry in 1995 as part of a wider push from Government to encourage the uptake of cavity wall insulation in the UK. We are funded through a one-off £15.00 charge levied on all CIGA-certified installations.
CIGA is by far the UK’s largest and most popular cavity wall insulation guarantee agency. It is trusted by more members of the public, installers and systems providers to deliver guarantees than any other organisation.
CIGA believes that while a robust quality standards and consumer protection framework already exists for cavity wall insulation in the UK, there are a small number of shortcomings that – if not addressed in future energy efficiency schemes – could impact consumer confidence and contribute to concerns that standards could fall.
Those shortcomings relate to the provision of guarantees and the quality of technical standards monitoring.
Together, these shortcomings represent, in CIGA’s view, the greatest potential future cause of problems for consumers with their cavity wall insulation if not rectified in any future scheme.
By putting in place measures that address these issues, CIGA believes the quality standards framework and consumer protection regime could be strengthened and the incidence of problems with cavity wall insulation, while already low, could be materially reduced.
The introduction of competition in the certification and guarantee markets has led to installers being certified to install cavity wall insulation by a range of competing Certification Bodies (CB).
With regards to installer certification, this has introduced confusion in the market and the risk of CB ‘hopping’. Many certification and guarantee providers have limited experience of cavity wall insulation, and whilst there is a requirement that certification bodies notify the oversight body of any installers that are de-registered, this does not preclude re-certification by another CB.
Currently there are 450 certified installers, only 208 of which are approved by the BBA, as required to comply with the system technical approvals. Whilst this represents the main route to demonstration of compliance with the Building Regulations, if an alternatively certified installer completes an installation there is a concern that consumers could believe that the work was being completed by an appropriately certified installer, when in fact the work would not comply with the building regulations.
With regards to guarantees, although CIGA is by far the largest and most established provider of cavity wall insulation guarantees in the UK, a range of new entrant guarantee providers are now recognised by Ofgem for ECO and formerly under Green Deal.
It is worth noting that the depth of the insurance market for long tail risk (i.e. policies covering 25 years) is very limited, with only a very small number of companies underwriting these policies.
Traditionally, much of the installer accreditation, registration, surveillance and training in the current quality standards framework relied on installers being CIGA registered and BBA approved. The CIGA technical guidance was cited in the Ofgem guidance, and completion of work to these standards was necessary for suppliers to be awarded lifetime savings.
Whilst recognising the desire to introduce competition, this should not act to the detriment of consumers.
There is now a risk that to gain market share, alternative providers of certification activities or guarantees could offer a less stringent regime of quality checks on installers, to provide installers a short-term incentive to register with them.
The result is that through competition in the certification and guarantee markets, there is less consumer protection and the quality standards framework risks being undermined. CIGA is less able to fulfil its traditional role of enforcing standards and protecting consumers across the board, and, what’s more, where an installer has breached CIGA’s strict quality requirements and has been expelled from the organisation, it has the option (which CIGA is currently unable to deny as a result of competition) of simply registering with another less stringent guarantee provider and thereby continue trading with no improvement.
Combined, these factors represent a significant loophole in the quality standards framework and one that could threaten to undermine the system if not properly addressed in a future scheme.
CIGA therefore recommends that any future scheme should require that where an installer has been de-registered by CIGA then other providers should also be precluded from registering that company or providing guarantees for work.
This will prevent installers operating to a less stringent set of quality requirements and allow CIGA to introduce further improvements to the quality framework without the risks of installers moving to alternative guarantee providers imposing less robust criteria. Additionally, reversion to the system whereby all cavity wall insulation work was completed according to the CIGA technical guidance would ensure that the advances already made are not squandered.
In the case of certification bodies, it is recommended that a very clear declaration is provided in any future scheme to funders and consumers on how compliance with the Building Regulation and quality requirements are to be satisfied where work is not carried out by installers under BBA assessment and surveillance and CIGA guidance.
Currently the main driver for uptake of cavity wall insulation is the Energy Company Obligation (ECO). The accompanying Ofgem technical monitoring scheme is intended to provide confidence that installations under ECO have taken place in accordance with technical requirements and that claimed savings over the assumed lifetime of a measure will be delivered.
It is the single largest opportunity to check work but under the current scheme does not look at indicators which could point to future problems with a measure.
Instead, under ECO1 the focus of technical monitoring was limited to a number of very limited checks. Slightly amended requirements apply under ECO2 as of June 2015, including non-mandatory best practice monitoring questions.
In CIGA’s view, despite wide consultation, these amendments represent a missed opportunity to uphold better quality standards and protect consumers.
If carefully constructed, technical monitoring could play a more valuable and informative role in the quality standards and consumer protection framework. Specifically, it could be enhanced in three ways:
CIGA therefore recommends that the Ofgem technical monitoring scheme should be expanded under any new scheme to include simple checks for the following, which CIGA’s data shows can lead to problems with cavity wall insulation being reported:
CIGA therefore recommends that any future scheme includes a more inclusive technical monitoring information feedback loop that allows information to be fully and routinely shared with CIGA and other interested organisations who establish the technical requirements and guidance.
CIGA therefore recommends that, as part of their technical monitoring obligations, suppliers should be required under any future scheme to investigate a proportion of older installations promoted in the earlier periods of the relevant obligation phase.
This will provide an opportunity to collate information to inform development of future Best Practice guidance and technical monitoring questions. CIGA would also suggest that opportunities to incorporate inspection of work completed in prior obligation phases (i.e., CERT/CESP) be investigated.
In addition, whilst ECO is currently the dominant source of funding for installations, technical monitoring does not apply to work completed outside of this scheme. Therefore, additional mechanisms to provide consumer confidence in cavity wall insulation systems, the assessment of buildings and installation are required.
CIGA believes that guarantee providers have a role in establishing robust technical requirements for cavity wall insulation installations, but that to be effective in driving quality any enhanced post installation monitoring or consumer surveys must be adopted across all providers.
Following changes introduced after ECO1, the current ECO2 technical monitoring requirement is that 5% of installations are inspected. The sample inspected must be representative of the installers who delivered the measures, regardless of factors such as the historical incidence of problems for each installer.
Where the failure rate is above 10% for a particular installer or measure in a quarter then a range of sanctions are available. Where the failure rate is above 10% for two quarters then the monitoring rate may be increased by 10% until results fall to less than 10%. Where the failure rate is above 10% for three quarters then additional sanctions exist.
However, the brokerage model through which energy suppliers tender out their installation obligations to individual installers has removed the traditional close oversight suppliers have over the standard of installations.
Suppliers will often not be aware who will actually be delivering the work until after the event, weakening the incentive to deliver quality work.
This reduces transparency and means that it is often not possible for the consumer to identify who is funding or completing the work. Similarly, an installer may be unaware of the supplier who will ultimately be claiming the associated savings. Additionally we are aware of cases where measures are still accepted even where payment for the measures has not been made to the installer involved whose work generated the savings.
Whilst we welcome any developments that help incentivise quality, we have some concerns with the operation and extent of the proposed approach under ECO2.
CIGA therefore recommends that a graduated scale is introduced under any future scheme for installer inspections under technical monitoring, whereby those installers with an observed lower incidence of problems have the percentage of their installations requiring inspection reduced, and the installers at the other end of the scale have their percentage increased.
Additionally, where the failure rate exceeds 10% then consideration should be given to reducing the carbon scores attributed to notified measures by that installer pro rata, and additionally that proof of payment, and ownership of the Carbon/ECO points, is provided.
This will provide a strong incentive for installers to enforce high quality standards in their installations. This in turn will maintain and improve the incidence of problems with cavity wall insulation being reported and experienced by consumers.
Issue | Impact | Improvement |
GUARANTEE PROVIDERS | ||
The existence of other guarantee providers undermines CIGA’s ability to work towards higher standards across the whole industry.
| Installers who are expelled or face disciplinary action from CIGA can simply move to a different guarantee provider without improving their standards. Other guarantee providers do not impose additional quality requirements but rely on PAS2030 so offer less protection to consumers. This makes it more difficult for CIGA to maintain and push through improvements to its own quality framework without risking some installers choosing to move to another guarantee provider.
| CIGA recommends that installers should not be able to ‘Guarantee hop’ and that CIGA guidance should be followed for all work. This will enable CIGA to maintain and strengthen its own quality standards measures and ensure universal good standards and practice across the entirety of the UK cavity wall insulation market. |
TECHNICAL MONITORING | ||
Ofgem’s technical monitoring scheme does not include checks for early indicators of problems with cavity wall insulation.
| Many early indicators of problems go undetected and problems are allowed to surface, causing distress and inconvenience for consumers. In addition, valuable information that could inform other elements of the quality framework is not proactively gathered. | Ofgem’s technical monitoring scheme should be extended and improved to include checks for early indicators of problems with cavity wall insulation. This will mean that problems are caught before they become problems, reducing the incidence of problems experienced by consumers and helping to inform other parts of the quality standards framework.
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There is no information sharing of the results of the technical monitoring.
| CIGA and other organisations, notably the BBA, do not have access to information which would help them to shape their guidance, training and surveillance. | The information gathered during the course of Ofgem’s technical monitoring should be routinely and fully shared with CIGA and other organisations which will allow CIGA to better influence installers towards better standards and reduce problems for consumers in the long run.
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The technical monitoring scheme does not incentivise installers to ensure a high quality of workmanship in their installations.
| Installers who routinely or severely underperform according to the parameters of Ofgem’s technical monitoring have insufficient incentive to improve, meaning that TM does not drive quality improvements. | The percentage of properties subject to technical monitoring and savings from work should be varied according to the installers’ historical performance. This will incentivise installers to install cavity wall insulation to a consistently higher standard, leading to a reduction in the incidence of problems.
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The range of models employed means that it is not always clear when the technical assessment takes place
| There is a risk of consumer confusion and unsuitable properties being treated. | Final arrangements for assessment, surveillance and carding of individual Assessors should be incorporated into the ECO requirements. |
October 2015