Of course, we’re a prominent HIP provider in Bristol — so we’re bound to be against it, right?

Not necessarily. The abolition of HIPs will be a blow but a move such as this could have much wider implications for the economic recovery, as you’ll see below.

Why do the Conservatives want to abolish HIPs?

They’ve always opposed the introduction of HIPs from the opposition benches, arguing that they add cost and bureaucracy to the housing market. So now they want the opportunity to kill them off.

However, it doesn’t look like they expect this promise to be much of a vote winner. It merits only one sentence in their manifesto:

We will also abolish Home Information Packs, which have made a significant contribution to problems in our housing market.

That’s all. It doesn’t define the ‘significant contribution’, or the ‘problems’ — nor does it say whether any alternative measures are planned.

HIPs are not mentioned in the other parties’ manifestos, so it’s clear this is not a raging political battleground. Still, if the Conservatives are voted in on May 6th, what are the likely consequences if Home Information Packs are consigned to history?

Will abolishing HIPs harm, not help the housing market?

If the Conservatives thought the introduction of HIPs has cost the housing market money, abolishing them could backfire in the same way.

To see why, look back to what happened when HIPs were introduced. Vendors rushed to market their homes before the HIP deadline arrived. The market was then eerily quiet for a while afterwards.

The side effect of pledging to do away with HIPs is that many sellers will wait a month or so to market their homes without one, in order to avoid the typical £368 cost.

In other words, scrapping HIPs could impose another lurch in the housing market at a far more sensitive time.

What people don’t realise about HIPs…

Aside from whether it will rock the boat in the housing market, abolishing HIPs won’t make as much of a difference to sellers as the Conservatives are claiming. Here’s why:

1. HIPs don’t cost as much as politicians think

Conservative opposition to Home Information Packs was based on the cost of obtaining a HIP being a significant deterrent to vendors.

However, the Home Condition Report—the structural survey that would have accounted for most of the mooted £700 cost—was later cancelled.

Had this component been included, it would also have added much more meaning to HIPs and made them much more important from a buyer’s point of view. True, HIPs would have been more expensive—but also in my view a lot more successful (more on this in a future post).

2. You’ll still need an EPC

The only part of a HIP that’s new to the home selling process was the requirement to include an Energy Performance Certificate in the information provided to buyers.

Even if  HIPs are cancelled tomorrow  you’ll still need to get an EPC—they’re part of different legislation at a European level.

The rest of the paperwork still needs to be obtained anyway; HIPs merely moved this requirement from the end of the homebuying process to the beginning to try to speed things up a little.

Why cancelling HIPs won’t change what we see on the Horizon

Home Information Packs are currently the product that has to be wrapped around our domestic EPCs. However, the requirement for both domestic and commercial EPCs will stay even if HIPs are cancelled and as we all are feeling with the recent rises in the price of petrol the burden that fuel places on our budgets is steadily increasing. We are leading providers of EPCs throughout Bristol and the surrounding area and people are beginning to be a little more mindful of the information they contain. The EPC has always been our primary focus and this is why we are market leaders.

From our point of view, once the EPC has been delivered, the rest of producing a HIP is office work: putting together pieces of paper, administration. That’s why this piece isn’t exactly a rant at the anti HIP lobby; after all it’s hard to be passionate about administration, however, energy is a very different matter!

What do you think?

Are HIPs just a Tory bugbear? Would you keep them—or improve them?

Or will the pledge to scrap HIPs be a vote winner?

Do you spot a few connections?

The similarity in name might be a coincidence, but we’re talking about Horizon House — the Environment Agency’s new corporate office in Bristol, which was recently awarded the highest ever BREEAM score for an office in the UK.

And the reason for mentioning it is that it perfectly illustrates a big win for the building’s occupiers that we’re happy to draw attention to: the huge upside in running costs to being in a sustainable office building.

The Building:

Horizon House is the Environment Agency’s new corporate office in Bristol. It occupies the city centre site opposite the Central Library (this map is still showing the previous building that was demolished).

It’s part of a mixed use development that also includes apartments and further office space, and is due to be occupied by the end of 2010. It’s bang in the middle of the city, and has been called a new milestone in sustainable design.

The Award:

The big deal about Horizon House is that it scored a superb 85% under BREEAM (the Building Research Establishment Environmental Assessment Method). BREEAM measures the sustainability of buildings, assessed across multiple categories: energy, materials, waste, water, ecology, pollution, transport, management, and health & wellbeing.

That’s the highest ever score for an office in the UK, with points spread across all the categories, including the harder-to-achieve ratings.

Euan Creswell, managing director of the building’s developer, Westmark, said: “We’re very proud of Horizon House – not only because of its highly sustainable features, but because it’s being delivered to a competitive budget in a city centre location.

“[The award] will help us spread the word that going green doesn’t have to cost the earth and can create city centre offices that are great places to work.”

The big win for the occupiers?

Aside from the fact these premises are an obvious fit for the Environment Agency, what will the current and future occupiers gain from moving in to Horizon House?

A lot more than a CSR halo or a badge of greenness. According to Graham Ledward, the EA’s Director of Resources: “By relocating to Horizon House, the Environment Agency will save around 10% every year on operational costs — an estimated £180,000 saving per year.”

How to make substantial cost cuts through environmental awareness

There aren’t many ways you can save 10% on your costs in business without resorting to P45s. Until there are more commercially viable buildings that also have the highest environmental standards, what can businesses do in the meantime?

Here are two suggestions:

1. Most of the savings at Horizon House will come about thanks to lower business utility bills, particularly from reduced use of electricity—and there are steps that any commercial building owner can take now to reduce their energy use.

Whenever we carry out a commercial EPC in Bristol, there are always great energy saving suggestions on offer. Of course, a weak point of EPCs is that the outgoing occupier rarely benefits from any incentive to make changes; any action on these recommendations is usually left up to the incoming occupier. However, as demand for sustainable spaces increases, a good EPC score may be higher up the wishlist.

2. There’s also the renewable electricity feed-in tariff, a way for small-to-medium-sized businesses to make money generating their own energy. Typically, but not always, this comes from solar electricity (an important feature of Horizon House).

To make a saving you first need to spend a bit on installation, but the feed-in tariff pays you back per unit and over 20 years this can offer a tempting return on investment.

Is this the future we see on the Horizon?

It’s easy to be impressed with Horizon House, an achievement that points the way for a new wave of commercial buildings that will save you money.

And we’re not cross at them for borrowing our name, really. Instead, perhaps we’re a little envious of all that low-cost sustainable energy…  perhaps we’ll simply move in there one day?

From April this year, a scheme will be launched that encourages British homes and small businesses to generate renewable electricity by paying you to produce it.

That means paying you for every unit you produce, up to 5 MWh a year — even what you use yourself.

It makes £0 energy bills a reality, and turns solar panels and wind turbines into an investment that can potentially generate you an 8% return.

“Clean Energy Cashback” is what Ed Milliband calls it. It’s not a new idea: elsewhere it’s called a Feed-In Tariff, and has boosted wind and solar electricity production in Germay, Spain, Denmark and elsewhere. Many said it wouldn’t happen in the UK: with 63 other schemes in place worldwide, we’re playing catch-up. But a look at the plans reveals that we’re getting a scheme with a few differences.

So let’s look at our new way of selling energy to ourselves. Is it good for homes, for businesses, and if not, why do we need it?

First, some basics.

What is a Feed-In Tariff?

Feed-In Tariffs (FITs) are a way to encourage low-carbon electricity to be generated by users.

They work by rewarding your upfront investment in renewable generation technology by paying you back for each unit you produce.

Yes, you get paid even when you use it all. When you make surplus electricity, you can sell it to the National Grid at a slightly higher rate. When you don’t produce enough, you can still use grid electricity produced elsewhere.

Why are feed-in tariffs necessary?

They’re necessary to make renewable energy growth happen.

Whereas fossil-fuel and nuclear power need large centralised plants to feed the grid, renewables are the opposite. The most obvious renewable resources, wind and solar energy, are spread out. You need a network of small producers to capture it all.

By incentivising those of us willing to invest in clean energy, and providing a way to interconnect our production capacity and store the surplus, it solves a national problem of how to produce more clean energy. On a technological level it works too, because renewable energy needs to be stored. Batteries aren’t feasible on that scale, so where better to store it than the National Grid?

You could compare it to the Internet and cloud computing: many small users forming an interconnected two-way network with huge power.

British feed-in tariff: particulars

Our “clean energy cashback” scheme will be introduced for qualifying renewable electricity generation from April 2010. Here’s a rundown of what we know so far:

• Install a qualifying system:
• solar PV, wind power, hydro power or anaerobic digestion biomass, with a capacity up to 5MW, or
• a domestic CHP (combined heat & power) plant up to 2kW capacity
• Earn a guaranteed rate of payment for all generated electricity
• Earn an optional guaranteed export price for surplus electricity sold to the National Grid.

There are differing bands of payments, depending upon the technology and installed capacity, of up to 36.5 pence per kWh. An additional 5 pence per kWh could be paid for any surplus exported to the grid.
» View the tariff details (downloads a .doc file)

Small businesses: how does a zero electricity bill sound?

Since the scheme allows capacities up to 5MW, this should appeal as much to businesses as to domestic customers.

The eye catching part is the opportunity not just to weigh the savings on electricity bills against the
The feed-in tariffs would be payable for 20 years (25 for solar), which in theory should give you a return on investment.

Questions:

There are lots of questions to tie up before the launch, though. Here are some of mine:

• Will the return on investment be high enough for businesses to consider the upfront cost?
• Will we need two meters? This means paying tax twice (VAT on power in, Income tax on power out) compared to using one (net metering)
• Will the cost of technology come down as the scheme gets going, benefiting those who wait — or will the incentives decrease over time, as they have done elsewhere in Europe, benefiting the early adopters?

Everyone who sets up a business believes they have something unique to offer. And if you’re good enough at it, finding and keeping customers shouldn’t be a problem… right?

In practice, often something else happens. As more and more competitors come along, many of them competing on price, it’s easy to feel that you have to cut your quotes too. Sooner or later, you’ve lost sight of what makes you good in the first place. Many businesses end up taking on more and more work just to pay the same bills.

What can you do when everybody around you is cutting throats and cutting prices to stay in business?

Not every business is like the EPC and HIP business, but if there’s one thing our industry has taught us, it’s how to provide value without getting sucked into a price war.

Let me share six suggestions on how to thrive when you’re being under-priced.  They’re drawn from our own industry, but we hope they’ll apply to yours as well.

1. Build partnerships.

Direct to the end user might not be the only, or even the best, way to market your products.  What if another business could be selling your service the ultimate point of sale for your product or service?

In many cases, buying your service as part of someone else’s package may be the customer’s favourite way to buy. Not everybody wants to shop around. Think luxury city breaks: the holidaymaker wants a quality getaway, short and sweet, without hours of price comparisons and planning.

Is there an agency that could be selling on your service as part of theirs? Many HIPs and domestic EPCs are provided through partnerships with estate agents. Householders can buy direct, but they’re often most willing to sort it out there and then when arranging the sale of their home. We make the most of our relationships with agents—which leads us on to the next point…

2. Extend your partners’ brand for them.

When you’re working in partnership, you’re helping another company provide added value to the end user. Everything you do is an extension of their service.

So if your partner has a strong brand that end users are willing to pay more for, it means you can pour your energies into an excellent service to enhance what they do.  This is better than stripping down your service levels to the bare minimum cost.

For example: what’s one of the vital things an estate agent wants from an EPC provider?  Somebody reliable and reputable. This applies particularly because we’re going into somebody’s property. The agent can reassure Mr & Mrs Homeseller that the person they are sending to the property is reputable, and we know that doing a good job reflects well on them.

It’s hard to say who’s giving who the piggyback in this situation—you benefit from your partners’ brand strengths, and they benefit from building theirs on your service.

3. Get recommended!

Recommendations are as good as gold because they give your customers confidence to buy on something other than price.  They don’t just mean more business—they mean better business.

From the end user’s point of view, choosing from a list of companies you’ve never heard of puts the focus solely on price, as there’s no reputation to go on.  A recommendation changes that: it’s a another voice to reassure them what they’re paying for.

If you position your marketing mainly on price, it puts the focus on “least worst outlay”.  By contrast, if the end user is happy to pay for a recommended supplier, that puts the focus on “best result”!  Which again leads us on nicely to the next point…

4. Be tireless in building a great service.

Pricing is a bit like a limbo dance: if the bar gets too low, something will topple.  In our business this translates to hurried or faked assessments and non-compliant EPCs.

It doesn’t have to be that way.  An excellent service gives you a pass out of the limbo dance.  When the support is there, and the customer service is there, your pricing is secure. Whenever it goes missing, you’re vulnerable to price competition.

5. Never market yourself as “bargain basement”!

A recent visit to a property provided a great example of how bargain basement marketing comes across.  A provider had obviously spotted the agent’s board outside, and on the doormat was an A4 printed flyer asking “Do you need an EPC?”

This provider decided to market directly to the individual on undercutting basis. Unfortunately, it really showed.  The paper was flimsy, the approach impersonal and the only proposition was price.  They will probably pick up some business, but the cheapness of the approach won’t win them much respect.

It can be a thankless task being stuck at the bottom of the market.  Unless you want to make bargain basement your long-term selling point, or fancy your chances of a brand revival on the scale of Škoda, avoid the temptation to resort to cheap marketing.

6. Don’t be frightened to tell people.

Brand what you do—everything you do—and be proud of what you do!

Putting your name, and your visual identity, on every business activity is the glue that holds together all your strong points in your partners’ and customers’ eyes.

And if you’re doing all the above and doing them well, what’s there to be shy about?

Conclusion?

It might seem inevitable in a pressured market to stoop to price competition, but there are plenty of ways to avoid it and still provide excellent value—in many cases, arguably far better value than your next lowest priced competitor.

What do you think?  It’d be interesting to hear your comments…