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Energy giants accused of cashing in on boiler scrappage scheme

April 6th, 2010 · No Comments

Consumers complain of wild variations in quotes for similar work

Some energy companies are ripping off householders using the Government’s boiler scrappage scheme by quoting inflated prices for a new boiler, according to industry experts.

The warning comes as a leading heating engineer says that paying £2,000 to replace a working boiler is “financial madness” and that the scrappage scheme has serious flaws.

The boiler scrappage scheme, launched last month, gives households £400 to replace old boilers with a new, energy-efficient model. British Gas, E.On, nPower and Scottish and Southern have matched the Government scheme by offering an additional £400 discount. But some householders hoping to claim £800 off the cost of a new boiler have complained that British Gas is quoting far higher figures than independent engineers.

Peter Thom, of Green Heat, the heating engineer, says: “The energy suppliers are top-loading the price and then offering an £800 discount. A customer I saw in Cambridge received a quote from British Gas of £5,012 for a boiler replacement, which reduced to £4,212 with the £800 discount. Our quotation for exactly the same work and identical boiler was £2,894.”

The boiler scrappage scheme is one of the few government grants that is not means tested, and more than 40 per cent of the vouchers (55,000) have already been taken. That leaves about 70,000 vouchers worth a total of £28 million up for grabs. However, there is still confusion over how the scheme works and whether it is worth paying for a replacement boiler.

Charlie Mullins, of Pimlico Plumbers, another heating engineer, says: “What is the point of replacing a boiler in perfectly good working order? It is financial madness. New energy-efficient boilers are not built to last like the old models — if you get ten years out of them, you’ve done well. We often have to replace boilers that are about six years old.”

Times Money reader Pearl Lawrence, from Wimbled, southwest London, obtained three quotes to install the same Valliant boiler this week. British Gas quoted £3,474, nPower quoted £2,400 — both of these include the £800 discount — and Pimlico Plumbers quoted £1,979, including the Government’s £400 discount. The 62-year-old says: “My boiler is 16 years old so I’ve been meaning to get it replaced before it breaks down. But I was shocked at how much British Gas wanted to charge.”

Many householders, anxious to avoid cowboy plumbers, are likely to choose a trusted brand such as British Gas or another energy supplier. However, it is worth obtaining at least three quotes, including from independent engineers, before agreeing to any work. Research from Which? last year found that British Gas charged up to twice as much as the cheapest independent engineer for the same job.

A spokeswoman for British Gas says: “We have not increased our prices and they are actually lower now than they were 12 months ago, as we’ve been working with manufacturers to ensure a good deal for customers. The cost of a boiler will vary based on the customer’s home and lifestyle.”

The Energy Saving Trust (EST), which is running the scheme for the Government, receives 5,000 inquiries a day about scrapping boilers. It says that replacing an old G-rated boiler with an A-rated condensing boiler could save up to £235 a year in heating costs, if the boiler lasts 12 years. Old boilers convert 60 per cent of fuel into heat, compared with at least 90 per cent for condensing boilers.

However, Mark Todd, of energyhelpline, the comparison website, says: “Consumers should be aware that the savings come in the long term. The cost of a new boiler is £2,000-£3,000, so a £400 discount means that customers will still need to pay £1,600 to £2,600. With a saving of £200 a year on energy bills, it will take those signing up 8-13 years to break even, when it will probably be time for a new boiler.”

Critics say that the Government is pushing the boiler scheme to meet carbon-reduction targets, boost employment and raise revenue. Manufacturing and installing the new boilers could earn more than £300 million for the heating industry, which has been hit hard by the collapse in housebuilding. And with the average VAT on a new boiler at £437, the Government stands to make £65 million in tax from the scheme, meaning a net revenue gain of about £5 million.

A spokeswoman for the Department of Energy and Climate Change says: “VAT would be applicable whether a householder changed their old boiler now or whether they leave it to break down and then replace it.

“The scheme encourages people to replace old, inefficient boilers sooner, meaning that household energy bills will be permanently reduced and emissions will be cut.”

To qualify for the boiler scrappage scheme, households need to have a working G-rated boiler, which means it is likely to be more than 15 years old and gas-fired, with a permanent pilot light. Applicants arrange a quote for a new boiler. The householder pays the installer, then claims £400 back from the EST, which should be paid within 25 days. Crucially, householders aged under 60 can apply only if the existing boiler works, while boilers belonging to the over-60s do not have to work.

Conversely, the scheme has also been criticised for not going far enough, particularly as many of the poorest households will still not be able to afford a new boiler.

Dave Timms, of Friends of the Earth, says: “The scheme is pathetically small — it will reach only 125,000 households when the UK has more than four million inefficient G-rated boilers.”

Grants of up to £3,500 for a new boiler are available for those on some benefits in England under the Government’s Warm Front scheme. It is worth checking if you are eligible before applying for the scrappage scheme. Warm Front, however, does not allow householders to shop around for the best quote. As a result, if Eaga, the Warm Front contractor, charges more than £3,500 for the work the customer must pay the difference.

Householders have complained that Warm Front engineers also appear to charge too much, knowing that they can always get up to £3,500 of government money from the job. Again, it is worth arranging an independent quote yourself to compare costs.

If you are considering buying a new boiler, check that your installer is registered with the Institute of Domestic Heating and Environmental Engineers at idhee.org.uk or the Heating & Hotwater Industry Council at centralheating.co.uk. Both sites allow you to find a qualified engineer in your local area. By law, all engineers must be on the Gas Safe Register — you can check at gassaferegister.co.uk.

You may also want to research boilers before you buy. Last year Which? found that Vaillant and Worcester boilers are the most reliable, with Keston boilers receiving the lowest customer satisfaction.

Which? also found that 92 per cent of members who used an independent installer were satisfied with the process, compared with 84 per cent who used British Gas. For more information go to which.co.uk/boilers.

More information on the boiler scrappage scheme is available from the EST at est.org.uk or by calling 0800 512012. To find out if you qualify for Warm Front, go to warmfront.co.uk or call 0800 3162805.

Case study: ‘Green Heat was still better value’

John and Susan Edwards from Cambridge replaced their 26-year-old boiler last month. Mr Edwards, 62, said: “British Gas quoted £5,477, but we went with Green Heat who quoted £5,033. This included a new kitchen heater worth £400 and a replacement bathroom radiator, which was not included in the British Gas quote.”

The Edwards’s got their quotes in November, before the scrappage scheme was announced. The cost of the work will, therefore, be £4,633 after they have received their £400 voucher, which they are still waiting for 26 days after they sent off the paperwork to the Energy Saving Trust.

The cost was high because they replaced their G-rated boiler in the kitchen with a new Worcester boiler in the loft.

Although the British Gas quote did not include any discounts under the boiler scrappage scheme, it did include various other discounts worth £1,050, including £300 for a boiler older than 15 years, a “point of sale” discount of £100, a Warm Front rebate of £300, and a winter sale discount of £350. “Green Heat was still better value,” Mr Edwards said.

Questions to ask your boiler installer

Why has an installer recommended a particular boiler? Will they receive a commission or manufacturer reward from the sale of a particular boiler?

How often should the boiler be serviced?

Is there a warranty and what will it cover?

Is the quote the final cost or is there a chance that extra costs could be added?

How long will the installation take?

Will they need to change any pipe work?

Will the system need to be power flushed?

Tags: Boilers

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