Pre-Budget Report reveals boiler scrappage scheme
The announcement of a boiler scrappage scheme was a highlight in the Pre-Budget Report.
The UK Government’s Pre-Budget Report (PBR) released yesterday revealed a number of decisions that will affect the construction industry, many of which were not welcomed.
In his final PBR before the general election, Chancellor Alistair Darling announced cuts in regeneration spending of £340 million, in order to pay for health and education commitments.
However, the launch of a household boiler scrappage scheme has been met with a positive response. The Chancellor announced a commitment to help replace 125,000 inefficient household boilers with a scheme based on the car scrappage scheme for the automobile industry.
Will Marples, energy expert at uSwitch.com, says: “Installing a modern efficient boiler can save up to £235 a year on heating bills. However for many families and households the cost of buying one and having it installed is prohibitive. Hopefully this new scrappage scheme will put it within reach of more people.”
A new infrastructure unit will also be set up to coordinate and help fund all infrastructure projects in the UK. In response to this news, Ken Dytor, Chairman of the British Property Foundation’s (BPF) regeneration committee, said:
“Infrastructure UK is potentially a major step forward but will only be effective if it cuts through the silos that exist between government departments in order to unlock real value for money.
“With public sector finances in such a poor state and with the requirement for investment into affordable housing and health/education led regeneration becoming greater, the need to attract investment into UK plc requires a greater drive abroad to sell infrastructure investment to international investors from markets such as China. To improve our investment offer we need to streamline the process of procurement to reduce delay and cut costs, issues that are currently deterring investors.”
Other initiatives affecting the construction industry include a commitment to introduce four pilot carbon capture coal-fired power stations; a £500m capital growth fund to support small businesses; a commitment to fund Crossrail and continue with the rail electrification programme; tax rebates for electric cars and wind turbines and more help for young unemployed.
The Chancellor also announced no change to VAT for residential refurbishment, and the end of stamp duty relief on homes costing less than £175,000, even though the housing market has clearly not returned to optimum health.
Finally, the news that the Government is looking at the taxation laws of self-employment is causing uproar as the housebuilding industry maintains there is no need for further legislation for such a flexible workforce. HM Revenue plans to collect tax and national insurance contributions from an estimated 300,000 workers who claim that they are self-employed, but they will receive none of the benefits that come with employment.
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I run a small business selling both Boilers and spare parts. As always with these announcements the devil is in the detail.
My understanding is that the boiler has to be at least 15 years old to qualify and it has to be in working condition. I can tell you right now that even with the scrappage scheme very few people with working boilers will want to spend any money on a new boiler–they will simply wait until the old boiler packs up.
The only way to get around this is to impose a time limit, say 12 months.
The only boilers that qualify for the scheme are boilers with an efficiency rate less than 70% (band G) and this actually accounts for approx 10% of working boilers. I cannot ascertain whether you need to purchase a boiler in band A to qualify, if you do then the potential cost saving is swallowed up by having to purchase a much more expensive boiler-the difference between a band A and band B boiler is about £400. In theory the difference in efficiency could be as little as 1%.
One final point to note is the fact that the scheme will not be in operation until April 2010 so it’s very possible that someone with a boiler that breaks down and will potentially qualify for the scheme will sit throughout the winter with no central heating. How many pensioners will die from hyperthermia because of this lack of foresight from the government penpushers.
December 10th, 2009 at 10:37 pm