Timmy Elsewhere

The Thunderer in The Times this morning:

“People of the same trade,” Adam Smith pointed out, “seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

But Smith has been dead these 217 years so what relevance now have the observations of the Sage of Kirkcaldy? Surely our modern world has most certainly surpassed the insights of the man who observed the beginnings of liberal capitalism. Why, we even have the “third way” now.

Well, yes, so allow me to introduce you to Mike Ockenden, the director-general of the Association of Home Information Pack Providers (AHIPP). The mere creation of a new line of work is of course not enough: further and greater opportunities must be found for those whose interests he is paid to advance.

Thus Mr Ockenden has been lobbying for rental properties to be required, as soon as possible, to have energy performance certificates, a key part of the home information pack. At an average cost of £200, with a possible requirement to renew it every three years and with 850,000 buy-to-let properties alone, these energy certificates would raise a very handy £57 million a year for home inspectors and domestic energy assessors. Or, for each of the 3,500 paper-shufflers £16,000 a year or so in a transfer from the pocketbooks of landlords to their own.

Not that it will have much effect on the energy used in a rental property of course, for why would a landlord care? Modern-day Rachmanns don’t pay heating bills.

But no blame should be attached to AHIPP; it is doing exactly what it is there for. Like any other trade association (and also unions and most professional organisations), it is contriving to benefit its members at the cost of the general public. There’s no conspiracy; this is open.

If blame there is to be, it should fall upon those who will enshrine this contrivance into law. Expensive, meddlesome, of no great benefit – why would any government insist upon such interference in a private contract? Perhaps it is simply that having dithered for the ten years since Hips first appeared in the 1997 election manifesto, the Government now thinks that having encouraged a posse of clipboard-wielders into existence, it ought really find something for them to do.

Listen again to Adam Smith, who stares out from the new £20 note: “The proposal of any new law or regulation of commerce . . . ought always to be listened to with great precaution . . . It comes from an order of men . . . who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”

Who would have thought it? A Dead White European Male has something illuminating to say about life in the 21st century.

7 responses

  1. “Bloggers of the same ilk,” Adam Smith pointed out, “seldom read each other, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise the price of reading the opinions by one of them by flogging them off to a newspaper .”
    I’m just jealous! Congratulations, good points well made.

  2. Bob B Avatar
    Bob B

    Tim – I trust that you recognise with appropriate contrition that this looks suspiciously like a reversion to the recently discarded “econocentric” focus.
    Well done – not least for demonstrating so early on why an “econocentric” focus will continue to be crucial in government for identifying and assessing market efficiency and regulatory failures.

  3. Yes, if only the government would let private landlords get back to what they do best – providing tenants with all the information they need to make informed decisions. Oh wait …
    Are you labouring under some sort of delusion that tenants are well-informed about the energy efficiency of homes they live in or are thinking of living in? Do you think that tenants shouldn’t get the same information that potential owner-occupiers? And, most interestingly for me, why didn’t you find space to mention in your Times article that you’re one of these poor landlords who is going to be so badly affected by the regulation in question? Seems to me that would have been useful for readers to know. Oh well, I guess that’s just another useful information asymmetry, eh?
    Tim adds: “Are you labouring under some sort of delusion that tenants are well-informed about the energy efficiency of homes they live in or are thinking of living in?”
    Err, yes. I would expect adults to weigh up all the factors about a place they might rent. Location, size, furnishings (if any) energy usage, presence of a bath or shower etc etc. It’s called weighing up the options before making a decision, something we do rather expect adults to do.
    The same information as owner-occupiers? Sure, as I argue that owner-occupiers should not be forced to have energy certificates either.
    As to my position as a landlord of one flat, do me a small favour. Disclosure is about significant numbers is it not? That this might cost me £66 a year is not significant enough to require disclosure. If that sum were significant enough to require such then each and every newspaper article would be festooned with such disclosures.

  4. Alastair Avatar
    Alastair

    Jim,
    Having spent most of my adult life in rented accomodation, I can honestly say that the energy efficiency never affected my decision. I don’t think that they will be very useful for home buyers either but relative to the other costs involved in purchasing a house they are relatively insignificant.

  5. Kay Tie Avatar
    Kay Tie

    As a prospective tenant for the first time, I am concerned not with the heating costs of the house, but with the idea that the landlord will stick me with the costs of the energy certificate of more than a year’s energy bills.

  6. KT: if you think your energy bills for the year are going to be less than £66, then you very much haven’t done your homework…
    (for comparison, the energy bills on the rented house I’m currently sharing with three other people run at c£1.5k per year, based on the cheapest suppliers of electricity and gas, a new-ish boiler and not being /unusually/ wasteful about lights, heating, etc).

  7. “Tim adds: “Are you labouring under some sort of delusion that tenants are well-informed about the energy efficiency of homes they live in or are thinking of living in?”
    Err, yes.”
    Well, Kay Tie hasn’t a clue for one. But it’s not all her fault – I was the same in the first two rented houses I lived in, and it’s a similar story for tenants everywhere. It’s because landlords have no interest in telling tenants about energy efficiency measures in their homes – after all, the tenants might ask them to spend some money on improvements, and we can’t have that can we? So they don’t offer the information, and prospective tenants realise they don’t want to give the impression of a massive bill waiting to happen if they actually want to get the place so they’d better not ask. Home energy reports would solve this very nicely and greatly increase the amount of reliable information, thus improving market efficiency.
    Finally, if you don’t think this is the source of the market failure, what do you think is? Because privately rented homes are way, way less likely to have energy efficiency features than either owner occupied or social rented, so something’s going wrong.

Leave a Reply

Discover more from Tim Worstall

Subscribe now to keep reading and get access to the full archive.

Continue reading