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Energy policy, says ROGER HUMBER, must change before manufacturing shuts down. But will

housebuilders still be left in a dark place?

We have heard a lot in the last couple of months about government policy having to be re-thought – the NHS and crime, for example. But the biggest U-turn is currently less evident than a bat-squeak and yet will eventually be driven by a tidal wave of opposition from individuals and industry. Energy policy is what I am talking about and, particularly, the disastrous renewables-based strategy that is just starting to hit householders and industry. Last month, householders got prior warning of

how much they would have to pay to meet the carbon reduction targets set by both our own government and the EU. £200 per year on household energy bills is merely the first down payment and, by this winter, the poor and the elderly will be facing the choice of keeping warm, or eating. Maybe politicians will think recurrent stories of Little Match Girl poignancy – as old people die of hypothermia – will merely serve to show the strength of their commitment to Gaia. But when industry starts to shut down and manufacturing in this country is totally priced out of international competitiveness, reducing our GDP growth even further, even they will have to reconsider where energy policy is taking us. Already, Tata has closed down its steel works at Scunthorpe and Anglesey Aluminium has closed its smelter, starting what the CBI and the European Metal Association both predict will become a wholesale transfer of manufacturing out of Europe, beyond the reach of EU anti- carbon policies. This resonates for housebuilders who are in the forefront and have borne many of the burdens of what is rapidly emerging as the most significant

economic mistake made by any country since Mao’s “Great Leap Forward” in 1957. Decarbonising the economy will require housebuilders to generate significant amounts of the energy used in and near new homes and also to pay increasing amounts to mitigate carbon in the wider community, by 2016. Although greater fabric efficiency will ensure

that owners of new homes will be better shielded from the effect of energy price increases than other home-owners, this does not mean the capital cost falling on housebuilders is any less of a scandal than the costs now facing industry or pensioners, through their fuel bills. They are all one and the same problem and, as policy inevitably starts to collapse, the housebuilding industry must ensure that the burdens placed on it are also unwound, not just left in place as sui generis measures. The problem with energy policy is that it is riven

by competing and often conflicting objectives. First, whatever green interests claim, we need ever-increasing, relatively cheap and secure supplies of energy to power our perfectly justifiable lifestyles and aspirations and to enable those who do not yet share in them to do so. Second, the fiction of man-made global warming

has prioritised the use of less energy and an increasing proportion of low carbon energy – as long as it is not nuclear powered. The incompatibility of these two aims has produced ostrich-policy, until virtually too late. The last Labour Government left a terrible economic and social legacy – benefit dependency particularly – but its failure to tackle energy will come to be seen as its greatest failure. 1997 was the point at which decisions about replacing existing coal fired and nuclear

power stations should have been addressed. But the politics of facing up to commissioning another, much larger, generation of nuclear powered stations, clearly needed by 2015, were put in the “too difficult” tray by Tony Blair and decisions deferred until too late. At the same time, the soft options of renewables were over-hyped, while the hysterics and lack of any critical appraisal of the Stern Report’s exaggerations of eco-doom, ensured that wishful thinking about and refusal to count the cost of renewables carried the day. But the day of reckoning has now arrived and,

with it, the cost.We are on the brink of shutting down half our power stations, while furiously building on and off shore wind farms that are supplying only a fraction of their theoretical energy output, at prices that are just starting to hurt. The public is, for now, being fobbed off with Green Deals and Feed-In Tariffs, to try to mitigate some of the cost, but industry and employment will inevitably suffer. Housebuilders have been offered an opportunity

to come up with a Green Deal for new homes. However the current Green Deal for existing homeowners is an arrangement for green-oriented individuals to enter voluntarily into expensive loans for energy upgrades, in the misguided hope that savings in their energy bills will pay for the loan. The housebuilders’ problem is that they are unable to charge the purchaser for the extra cost of fabric efficiency and the photovoltaics on the roof, while the homeowner would not take out an extra loan to pay for what the housebuilders are required to install, anyway. In effect, this dilemma perfectly encapsulates the impact of our foolish energy policy on housebuilders and the Green Deal could be a blessing in disguise. Effectively, examining the Green Deal focuses attention very clearly on the fact that zero carbon homes, as part of a wider policy fiasco, are simply unaffordable and unwanted. The industry must ensure that when all the rest of energy policy is put into reverse, it is not left with its residue, through oversight. Roger Humber is Strategic Policy Adviser to the House Builders Association, a division of the National Federation of Builders

sh showhouse July 2011 | 19

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