VAT move puts heat on households: Paul Gosling shows how bills can come down with temperature

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ENERGY conservation is suddenly much more cost-effective, following the Chancellor's decision to charge VAT on domestic gas and electricity from April next year. Most households can easily save 40 per cent on their energy bills, which will be on average pounds 235 a year after the full VAT rate is imposed in 1995.

Many energy-saving measures cost nothing. Wearing warmer clothing and long underwear in the winter should enable most people to be comfortable at about 19C, or 21C for a living-room occupied by an elderly or infirm person. A centrally heated home is likely to be heated to 22C, and cutting this to 19C would save between 20 and 25 per cent of household energy costs.

Switching off lights and appliances when not needed will also save money. George Henderson of the Building Research Establishment said: 'My hobby-horse is to switch off the things that are left on all the time. A typical house has a dozen things consuming energy the whole time - video and timer, television on stand-by, microwave with timer, oven with timer, a cordless phone, satellite television decoder, alarm clocks, hi-fis with timers - taken together they use up a lot of power. I spend about pounds 30 a year just to keep these damn things on stand-by, which is about the same as I will pay on VAT on energy.'

Mr Henderson recommends that consumers also consider carefully which models of electrical appliances they purchase. 'There is a considerable variation in performance of, for example, fridges or freezers, and there are energy labels which enable buyers to compare them.'

Which? reports also compare energy use. Dishwashers and washing-machines that tumble- dry are heavy energy consumers, but machines plumbed into the hot-water supply are the least demanding.

The structure of the house itself offers opportunities for saving the most energy. The National Energy Foundation says that householders should consider energy audits, which can be purchased from it for between pounds 40 and pounds 50. The period in which a remedy will pay for itself is calculated. Proposals may include: insulating cavity walls, the loft and the hot-water tank; reducing the household temperature; and buying low- energy light-bulbs. Under the NEF's energy-rating scheme, homes are assessed on a scale from 0 to 10 for energy efficiency - older homes commonly scoring 4 and newer ones 6, but, it says, most homes can be upgraded to score 8 or better.

The Centre for Alternative Technology at Machynlleth in Wales has buildings and exhibitions demonstrating energy conservation measures. The centre strongly recommends households that use electricity for space heating to switch to gas.

Brian Horne, its information officer, said: 'It saves carbon dioxide emissions by a factor of 6 and gas is cheaper than electricity, even on the Economy 7 tariff. A modern condensing gas boiler, on mains gas supply, costs 1.7p per useful kilowatt hour, compared with Economy 7 at 3.5p, and 8p for peak-rate electricity.'

Even CAT concedes that some of its systems are impractical. Mr Horne admitted: 'We use solar water-heating, but I would be hard-pushed to argue for it on economic grounds, though it can make financial sense if you do it yourself.'

In the future, building design is more likely to concentrate on insulation standards than energy self-sufficiency. The Building Research Establishment is testing the performance of two houses built to tougher proposed UK building regulations, and two in accordance with existing Swedish standards, which are designed to be warm in temperatures of -10C.

Architects are also increasingly aware that homes should have maximum glazing on their southern elevations, where the living-rooms should be sited. Storage space should face north.

Home improvements offer the opportunity to alter design features of older buildings. Radiators should be put at right angles to windows, to minimise air-flow. The inner face of external walls can be dry-lined with plasterboard, and it may be possible to insulate floors. Conservatories trap heat effectively, but be warned: over-effective energy conservation can cause problems and windows should be adequate for cooling the home on a hot day.

British homes are generally far worse at saving energy than those in other Western European countries, partly because we have previously avoided VAT on energy consumption.

The irony of the Chancellor's move on VAT, as Friends of the Earth pointed out, is that if households respond by taking simple energy conservation measures they could end up better off than before the Budget. This, Friends of the Earth said, would be 'the ultimate green tax-dodge'.

----------------------------------------------------------------- PAYBACK PERIOD FOR ENERGY SAVING ----------------------------------------------------------------- Action taken Typical Saving Payback cost per yr* period Use lights and appliances only when needed. Turn thermostat down 1 degree centigrade Nil pounds 32 Immediate Lag hot water tank pounds 7 pounds 15 6 months Use low-energy light-bulb in room used 5 1/2 hours per day pounds 8 pounds 14 7 months Install thermostat on heating system pounds 10 pounds 18 7 months Lag hot water pipes pounds 8 pounds 10 10 months Draught-proof doors, windows pounds 45 pounds 32 18 months Install timer/programmer to heating system pounds 40 pounds 27 18 months Loft insulation at 6-inch thickness (DIY) pounds 135 pounds 76 21 months Replace gas-fired central heating boiler with energy-efficient gas condensing boiler pounds 350 pounds 176 24 months Fit thermostats to each radiator pounds 45 pounds 18 30 months Install cavity wall insulation pounds 375 pounds 82 54 months Install double glazing pounds 200 pounds 29 7 years ----------------------------------------------------------------- *Including VAT when full rate of 17.5% imposed ----------------------------------------------------------------- Based on figures supplied by the Department of the Environment -----------------------------------------------------------------