16,000 jobs at risk in home insulation, says industry


by Guest    
10:26 am - October 12th 2012

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contribution by Philip Pearson

The Insulation Industry Forum is the latest business group to warn the Government that it’s putting green jobs at risk. Home insulation is a key part of the Government’s Green Deal.

The Forum has warned the Energy Secretary Ed Davey that the lack of continuity of Goverment support between the end of the existing Government subsidy for cavity wall and loft insulation and the Government’s Green Deal has put 16,000 jobs in jeopardy from 1 January 2013.

Cuts damage the economy – exactly what the IMF warned the Government about two days ago. As Duncan Weldon blogged yesterday, spending cuts have a one-for-one impact on GDP, by directly reducing output and employment.

The Forum represents 70% of the UK’s £700m insulation industry. Spokesperson John Sinfield of Knauf Insulation said “The loft and cavity wall insulation industry will fall off a cliff in 2013.” His forum’s letter to Ed Davey uses DECC’s own forecasts:

  • 87.5% reduction in the loft insulation market
  • 57% reduction in the cavity wall insulation market
  • 16% drop in the solid wall insulation market

As a result of this gap, 16,000 (45%) of jobs in the insulation industry will be lost in 2013. The lack of any transition planning will also stifle and restrict investment, job creation and training in solid wall insulation, necessary to transform the market in order to meet Government carbon targets.

Installation contractors will go out of business, with jobs cut from 36,000 to 20,000 in 2013.

“The policy by the current Government risks destroying businesses, putting people out of work and undermining the Coalition’s green ambitions for the country,” the Forum said. It supports the Green Deal and ECO, which they want to succeed.

But the industry is calling on the Secretary of State to recognise the scale of the problem that is about to hit the industry, develop a set of measures to address the insulation gap, and implement a suitable solution.

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Reader comments


1. Man on Clapham Omnibus

No surprises here. One massive growth area and the Government shuts it down. Same with Science funding. Talk about shooting yourself in the thermal sock!

Why don’t we just go the magic money tree and subsidise all the jobs! Eh comrade, eh.

3. Northern Worker

Rent seekers

Insulation installation is not a career or a long term business. There are a finite number of old lofts that need a layer of puffed up fibre and a finite number of old walls that might benefit from cavity filling.

So, assume that we fund those rent seekers for a couple of years to insulate every house, allegedly protecting 16,000 jobs. At the end of it, 16.000 people will need a job. Job protection is not a permanent thing.

Insulation of old houses is a poor long term business. New houses are required to have more insulation so retro-fitting is a declining trade.

(I don’t have the energy to explain why theoretical insulation efficiency doesn’t work if the householder is a low energy user.)

How many thousands of wind farm jobs will be lost with the less generous subsidies for wind farms, as announced in July, and the prospect of 25 new gas-fired power stations being built to meet the forthcoming electricity generation gap?

@5. Bob B: “How many thousands of wind farm jobs will be lost with the less generous subsidies for wind farms, as announced in July, and the prospect of 25 new gas-fired power stations being built to meet the forthcoming electricity generation gap?”

We should worship the less generous subsidies for wind farms. If the technology works, it does not require subsidy.

We have to live with gas and oil power. The option is no power.

Charlieman

There is even worse news. According to an online news report, gas-fired power stations use less water than coal-fired power stations. With the prospect of 25 new gas-fired power stations that means fewer jobs in the water industry.

Heaven knows how many more jobs there would be if only they banned computers. Come to think about it, lots of jobs would be created if only we went back to using quill pens.

8. just visiting

Guest Author

you wrote:
87.5% reduction in the loft insulation market
57% reduction in the cavity wall insulation market
16% drop in the solid wall insulation market

I’d like more data.

What is the trend year on year recently for the quantity of each of these 3? What is their trend – up or down?

If people have not taken up the generous loft subsidies over the last 5 years – (they have been free for many people – like my retired mother) is it not inevitable that the market will shrink – subsidies or not – because there are fewer takers?

Will the polar bears notice the difference?

10. Man on Clapham Omnibus

@6

We should worship the less generous subsidies for wind farms. If the technology works, it does not require subsidy.

So no subsidies for the nuclear industry then. And who will pick up the tab for the externalities of gas power?

Insulation installation is not a career or a long term business. There are a finite number of old lofts that need a layer of puffed up fibre and a finite number of old walls that might benefit from cavity filling.

Kinda misses the point in my view. The question is whether there is a marginal benefit in insulating homes rather than not. If there is then it has to be worth doing because the houses wont practically be knocked down and rebuilt in an energy efficient way.Furthermore, is it good to create and maintain jobs or get rid of them.

11. Man on Clapham Omnibus

@2

Why don’t we just go the magic money tree and subsidise all the jobs! Eh comrade, eh.

I think you’ll find there is a wide recognition that the green industries are a growth area for the UK.Same with science investment which ,in some areas ,the UK is a world leader.
I would suggest that not investing in this industry will probably lead to less money on the magic tree. Of course
if your magic money tree is Chinese then I know where you are coming from.

Every penny saved abolishing the green economy is a pound wasted propping up the fossil fuel dinosaurs!

“Why don’t we just go the magic money tree and subsidise all the jobs! Eh comrade, eh.”

Seriously. In the 1970s and 1980s, that became a fashion.

Ministers would get regular letters from MPs enclosing pleas from constituents for subsidies for factories in their constituencies about to close since a subsidy would amount to less cost to the national exchequer than welfare benefits to those made redundant plus the lost income tax revenues from wages previously paid to employees and the lower VAT revenues from reduced spending in local shops. On that rationale, almost all employment could be subsidised.

@10. Man on Clapham Omnibus: “So no subsidies for the nuclear industry then. And who will pick up the tab for the externalities of gas power?”

As I understand it, the current government position is no subsidy for nuclear power. If you cast your mind back, there was a kerfuffle when government declined to finance a steel forger in Sheffield who sought to make nuclear power plant components.

“Kinda misses the point in my view. The question is whether there is a marginal benefit in insulating homes rather than not.”

There is no marginal benefit in insulating homes. Reduction of heat loss is evident and insulation pays for itself very quickly, so benefit is not marginal. Thus there is no reason to give it away. Perhaps there is room for an imaginative payback system so that low income households do not have to pay everything up front. There’s a good argument too that rented property might be required to meet an insulation standard.

New homes *should* be more efficient than older ones. If they are not, house builders are cheating or regulation loopholes need closing.

@12. Dissident: “Every penny saved abolishing the green economy is a pound wasted propping up the fossil fuel dinosaurs!”

Let’s interpret the expression “green economy”. To me, it means working out how to reuse things (recycling is a less efficient form of reuse) and how to generate energy efficiently in the next ten years, the next hundred and beyond.

The market is the only way that we currently understand that allows us to determine whether an industry is efficient. In a laissez faire economy, externalities are not considered. But we (UK, EU, developed world) do not have laissez faire economies. We use taxes to capture the cost of externalities, and that’s how government encourages sustainability: by imposing a cost on unsustainability.

It is true that fossil fuel extractors seek to distort markets and confuse arguments. It is also true that their opponents or competition try to do the same thing. We should reject them both.

16. Man on Clapham Omnibus

@14

As I understand it, the current government position is no subsidy for nuclear power.

Perhaps not a direct subsidy but potentially hidden ones by agreeing future prices on energy and through CFD’s.
I read somewhere that EDF were tendering a Nuke on a cost parity with wind generation although the costs of the latter were likely to drop in the next few years .

Maybe I’m wrong on this .Please say if you are an expert in this field.

17. Chaise Guevara

@ 14 Charlieman

“There is no marginal benefit in insulating homes. Reduction of heat loss is evident and insulation pays for itself very quickly, so benefit is not marginal.”

Two points. Firstly, a lot of people live in rented accommodation. If you’re only planning to be somewhere for a year or two, it seems unlikely that you’ll recoup your losses from insulating the building. The landlord could do it, but frankly I don’t think it’s that big a selling point. People don’t shop all that rationally, and I imagine that’s more true than ever when it comes to renting. As one specific example, people consistently fail to factor commuting into the decisions properly, so they take a place that’s slightly cheaper, then lose more than they gained in travel costs, AND have to spend more time getting to work and back.

Secondly, the other benefit of insulation is that it’s better for the environment, and the tragedy of the commons is in effect there: the downsides of the pollution you generate and the resources you squander are visited upon the world, not just you.

“Thus there is no reason to give it away. Perhaps there is room for an imaginative payback system so that low income households do not have to pay everything up front.”

Don’t we have that already? I’m sure we recently brought in a system where people could get interest-free loans for insulation, with an eye to meeting carbon reduction targets.

@16. Man on Clapham Omnibus: “Please say if you are an expert in this field.”

I am not an expert but I am a general engineer working in IT.

I avoid acronyms: CFD, EDF etc. I hate long explanations. Tell me me what you mean.

19. Chaise Guevara

@ Charlieman

EDF is just Electricite de France. I think acronyming it is pretty reasonable, unless you habitually write National Aeronautics and Space Administration and such.

I keep getting the phone calls, tell me that if I have solar panels fitter I can make money from selling the extra power, if I have my home insulated even when I had it done two years ago, we are told that old hat now you need new insulation. I was informed that solar panels have never been so cheap and they will make a pile of money for you with free electricity, how much is it, ah well we cannot discuss this over the phone may we send our expert to talk to you, what a sales man, no no he’s an expert, he spends three hours trying to get us to sign an HP agreement for £10,000 quid.

It’s green but it got the same problem power sales problems.

21. Man on Clapham Omnibus

@18 Charlieman

OK in essence, rather than the government saying here’s a couple of billion as a sweetner to a company planning on building a nuke, they can say we will agree the contract on the basis of, say, how much it costs to say generate wind energy in Pounds/Kilowatt Hours.
The thing is that the nuke will take a while to build and meanwhile economies of scale will start to reduce the price of wind. Fast forward to 2025 and EDF will be getting the historic price whilst wind maybe the quarter of the cost.

The second thing I mentioned was CFD which is Contract for difference, a financial derivative bought on margin. I don’t know much (anything!) about this but included it on the basis that if the Government is buying long in order to fund the building of Nukes then the Government is essentially underwriting the risk and possible financial loss.I interpret this as a subsidy since risk has value. There maybe a financial wizz kid laughing his socks off at the moment at my effort and if so perhaps they could put me straight on this.

I know you like short sentences but this is the best I could do.Sorry!

@21. Man on Clapham Omnibus: “I know you like short sentences but this is the best I could do.Sorry!”

Thanks, MoCO. I’m not obsessed about short sentences but there are some around here who can talk all month without presenting a clear argument.

As I understand it, the EDF proposal was discussed by a Commons committee a few months ago and was rejected. It was all about the money, and there will be another set of discussions. It is clear that EDF sought to benefit from tariff agreements that apply to renewable sources. The parties are nowhere close to agreement.

These are similar to the negotiations for the West Coast Main Line franchise. The companies involved in the rail franchise — of which there can only be one winner — require government commitment to make it work, and government requires that companies are committed to make it work. Everyone wishes to reduce risk and maximise financial benefit.

Given how complicated such negotiations become, perhaps they are not appropriate mechanisms in a market with multiple suppliers? I disagree with subsidies for any power generator, so cut power manufacturers free from pricing mechanisms based on how the power is created. Electrical power, at the consumer end, is the same no matter how it is created. The market value of power is determined by when it is delivered.

On Contract for Difference, I agree with your rejection of it. It is not a government role to act as an insurance guarantor.

23. Man on Clapham Omnibus

@22 Charlieman

I disagree with subsidies for any power generator

Even if the start up costs are prohibitive but there is an obvious and desirable benefit in the long term?(eg Low CO2 emmisions and no dangerous waste)

benefit of insulation is that it’s better for the environment, jobs are important too for a stabilized working economy to grow , a job against a lost job might be better alternative.

@23. Man on Clapham Omnibus: “Even if the start up costs are prohibitive but there is an obvious and desirable benefit in the long term?(eg Low CO2 emmisions and no dangerous waste)”

If that were the case, the generator would not be compensating society for externalities. Thus it would be a good gamble for long term investment. It might be appropriate for government support (scientific investment) but not for subsidy of “industrial production”.

26. Man on Clapham Omnibus

@25

say that again I cant quite understand

27. Robin Levett

@Charlieman:

The UK nuclear industry is subsidised in a number of ways.

Firstly, its insurance premiums are limited by a statutory cap on liability; so the government underwrites the excess risk.

Secondly, decommissioning costs are underwritten by the government.

Thirdly, waste disposal and storage costs are again underwritten by the Government.

That’s before you start looking at nuclear obligations or capacity payments.

@27. Robin Levett: “Firstly, its insurance premiums are limited by a statutory cap on liability; so the government underwrites the excess risk.”

Yep, many industries seek this haven. It is wrong to provide it to a commercial energy provider. Unless there is no other way to do it.

“Secondly, decommissioning costs are underwritten by the government.”

Cost of decommissioning must be an up front cost, part of the business plan.

“Thirdly, waste disposal and storage costs are again underwritten by the Government.”

See above.

“That’s before you start looking at nuclear obligations or capacity payments.”

Contracts have been signed with energy suppliers under Non-Fossil Fuel Obligation or Renewable Obligation agreements and similar. They are thoroughly disgraceful. We should pay for what we get.

Have a look at what power suppliers pay for today; a unit of “renewable” power costs three times as much as in 2006:
http://en.wikipedia.org/wiki/Renewables_Obligation

That does not mean that renewable power sources are pointless; it means that we are giving money (ie pissing it away) to particular people who can’t deliver the goods.

It appears that a worrying time is ahead for the insulation industry if these statistics do indeed hold water. If nothing else it highlights that the Government really needs to advertise the Green Deal more fervently so that people actually know what it is and how it works. At the moment there is so little knowledge about it, especially outside the industry, that the switchover is bound to be painful.


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