HMRC in Meltdown

Posted on March 16, 2013 by Doug King

For once I’m not writing about the environment or the construction industry, but an issue that will affect virtually everyone. I had a long conversation with my accountant yesterday about the implications of Her Majesty’s Revenue and Customs’ (HMRC) new requirement for real time reporting of payroll taxation.

From April all businesses must report to HMRC the payroll deductions and payments made to all employees on the day that the payments are made! This is to be known as Real Time Information or RTI.

Back in 2010, HMRC told Channel 4 News that over 40 million UK employees pay tax through PAYE. That means that presently UK employers will submit 40 million annual returns during the 6 weeks following the end of the tax year. From April, UK employers will submit 40 million RTI returns on the last Friday of the month every month!

HMRC is of course introducing a new IT system to allow all the RTI to be submitted online. But remember back in 2008 when HMRC mandated online filing for personal tax returns? On the filing deadline day HMRC’s servers crashed with just 104,000 people accessing the system, leaving 10,000s unable to do so. Do we really believe that just 5 years on HMRC have developed a system which will be able to handle a 400 fold increase in submissions and do it every month reliably?

Also woe betide any employer who makes a mistake in either the calculation or the payment amount. Penalties will apply immediately for any inaccuracy in the RTI reporting. Businesses previously had the opportunity to correct any mistake at the next month provided that the end of year returns were correct. Back to the 2010 Chanel 4 News piece and HMRC also reported that the were 5.7 million mistakes in PAYE calculations and payments. This would be an average of 475,000 mistakes per month, clearly a nice little earner if penalties were applied to each one under the new system.

However, note also that last year HMRC left 1 million letters unanswered. If actions on payroll errors are going to be piling up at a rate of around 1 million every two months, I wonder how long it will take the RTI system to collapse under the backlog? Does anyone want to take a bet with me? I give it six months.

Low Carbon People

Posted on March 8, 2013 by Doug King

MP Don Foster announced at Ecobuild this week, funding for a programme by the Zero Carbon Hub to investigate why energy consumption in low carbon dwellings is higher than expected. The answer is apparent in evidence also available at Ecobuild pointing to the obvious, which the industry and policy makers continue to fail to recognise.

On Tuesday, Ed Davey defended the Green Deal in the face of poor take up and a recent YouGov survey which revealed that the majority of householders have little interest in energy conservation and believe instead that the energy companies should be forced to lower their charges.

In the Edge Debate on Politics of Carbon Measurement, on Wednesday, Lynne Sullivan showed that actual energy consumption in Passivhaus dwellings is 90% below the average and substantially below the best of the rest.

So the reason for the performance gap between prediction and actual outcomes in low carbon homes should be obvious to all:

Passivhaus homes are voluntary. They are built or commissioned by individuals who are already concerned about their carbon footprint and are therefore pre-disposed to a low energy lifestyle.

The Code for Sustainable Homes, Building Regulations Part L et al are well meaning in intent, but the people who will buy the homes are no more interested in energy conservation than the average Briton. They will happily leave the heating on and open all the windows.

Studies of low carbon refurbishments by social housing landlords have already shown the vast variation in energy consumption in identically refurbished flats that occurs simply as a result of lifestyle. In some cases this variation is so great that it actually masks the improvement in efficiency achieved in the refurbishment.

The message is clear. Personal preference and individual behaviour is what drives energy consumption or conservation, not fantastic building fabric energy efficiency standards, nor regulation or checklists and not energy bills (at least yet).

When are politicians going to finally wake up and admit that the climate change and energy crisis is down to the way in which we all behave, not the buildings we behave in. If we want to make any substantial progress on sustainability it is time to start apportioning blame where it really belongs: the workmen (and workwomen) not the tools. Then we need to get on with changing people’s attitudes towards energy.

Ecobuild Over-Enthusiasm

Posted on March 1, 2013 by Doug King

It’s Ecobuild time again so the ether is filling up with marketeers attempts to convince us that re-branding is as good as actually addressing the environmental impacts of a product. The sheer band-waggoning on display at Ecobuild is enough to make anyone question their eco-credentials. Last year I noted a wide range of products that differed from those on display at conventional trade shows only by the addition of the “Eco-” tag to their branding. Classics included electric pumps for removing water from leaking basements, “green” plumbers merchants and “certified zero carbon carpet”.

Speaking of carpet, in past years I have questioned the sustainability of an event that glues down acres of carpet to the floor of Excel for just one week. Now there are many questions over the environmental impacts of cheap carpet anyway, but note that the carpet is Ecobuild blue. So I suspect that at the end of the week it is all scraped up and sent to land-fill. This year I am going to make it my task to find out from the organisers how much carpet has been recycled from past Ecobuilds.

Where does all the Ecobuild blue carpet go after Ecobuild?

By the way, this year I will be speaking at a special Edge Debate on the Politics of Carbon Emissions Data along with Richard Lorch, Tadj Oreszczyn and Lynne Sullivan (Wednesday 6th 16:30-18:00).

Right to Low Carbon

Posted on February 21, 2013 by Doug King

This week all attention seems on rights to light. A proposal has been made that the historic right to occupy your home without needing to turn the lights on during the hours of daylight could be brushed away in order to permit more dense urban development.

Surely this is another example of legislators failing to consider the consequences of their actions. We are driving forward with national legislation to force all new buildings to become zero carbon in an attempt to meet our carbon budgets. Meanwhile, work by the Green Construction Board indicates that we will need to work just as hard, if not harder, to cut carbon emissions from the existing building stock. Now we have a proposal that will force an increase in energy consumption on the neighbours of new development that is deemed desirable. I have no doubt that the desirability of the new developments will be based on their energy efficiency credentials, so who actually stands to win from this situation?

However, in the sustainable urban future, we will find that other rights become just as important as rights to light. Our plan to decarbonise the UK presently relies on the pervasive use of PV in the urban environment to supposedly offset carbon emissions at other times of the year. As taxation falls more heavily on carbon emissions I believe that we will see more and more legal disputes over someone interfering with neighbours attempts to cut energy consumption. This will not be just over rights to daylight, but I predict disputes over rights to unpolluted fresh air for natural ventilation and access to renewable energy sources such as the wind and sunshine.

This PV installation was an exemplar when installed, until the neighbours built higher.

Since Government is presently considering changes to legislation on rights to light, now is the time to look to the future that we want to build for ourselves and implement broader and better informed legislation that protects building owners rights to comply with carbon emissions legislation in the manner that suits them best.

Innovation Ignorance

Posted on October 10, 2012 by Doug King

There has been a plethora of debate recently about stimulating innovation in the construction industry, but it seems to me that all discussions have missed the fundamental point:

“There is no incentive for construction industry players to innovate.”

Innovation is expensive so there needs to be adequate reward for investment in innovation. In manufacturing, innovation is rewarded by lower production costs or higher product sales, which when multiplied by thousands or millions of products adds up to a considerable incentive.

In construction, a team is assembled to deliver a single product. They may never have worked together before and may never work together again. Some of them may be competitors. The main beneficiary of any innovation is certainly not going to be any of the design team; it is most likely to be the end user who may not even be known at the time of design. How then is the team incentivised to innovate?

Innovation may be in the interests of the developer if this means that buildings are more attractive to customers, but our dysfunctional property market means that the premium for location outweighs that for building performance by such a margin that innovation becomes irrelevant. Further, the developer has the counter incentive to pay the lowest design and construction cost possible to maximise his return in the market.

The reality is that the construction industry won’t innovate unless there is a strong reason for doing so, but that can’t happen with the present property market. Government could lead the way by procuring public sector construction in a way that directly rewards innovators, rather than persisting in least first cost procurement, but that would require joined up thinking which has never been their strength. However that would be a much more productive approach than continuing to lambaste an industry for something beyond its control.