Pumps and plans: are the Heat and Buildings and Net Zero strategies missed opportunities?
The publication of these two vital strategies is welcome, but we need long-term funding to deliver real results.
Government has at long last published two of their most demanding projects – the Heat and Buildings and Net Zero Strategies within a cat’s whisker of the Spending Review, Budget and COP 26, with the former setting out its plans to make a large dent in decarbonising our homes over the next three years.
It is encouraging to see funding being made available to households to help them switch to low carbon heating systems, as well as continued support for energy efficiency improvements for those in fuel poverty and on low incomes. We are seeing the beginnings of a long-term plan to address some enormous challenges, but policies and funding to support the retrofitting of homes to 2035 are strikingly absent.
Energy efficiency first:
Energy efficiency improvements are key to reducing heating demand, regardless of the type of heating system in place, and should be core to any retrofit strategy. We could see 90,000 heat pumps installed over the next three years, putting the emphasis on this technology but without the means to upgrade the insulation if needed. This could lead to larger, more costly heat pumps needing to be installed or a risk of colder homes for some. Energy efficiency and clean heat policies must be fully joined-up to ensure our building fabric is performing well in reality – a fabric first approach.
Manifesto commitments fall short:
The Strategy also shies away from the commitments in the Conservative manifesto. £3.8bn was committed for the decarbonisation of social housing by 2030, yet less than a quarter of that has been brought forward between existing policy and the new strategy. Funding for the Homes Upgrade Grant is also £1.4bn less than pledged, meaning some of most vulnerable in society could miss out on the chance to improve their homes. On top of this, to get on track for Net Zero this Parliament and meet Manifesto commitments, we estimate a further £3.6bn is needed between now and 2025 for an energy efficiency scheme open to all types of households.
Support for homeowners:
In COP Minister, Alok Sharma’s own words we need to “incentivise people to make the right decisions” and to help and support people make those decisions. Government can do that through much-needed fiscal incentives and financial support for a broad range of homeowners – who account for around 64% of our 28 million households - to improve the energy efficiency of their homes and reduce heating costs now is a missed opportunity. With only one in six (16%) people planning to improve the energy efficiency of their home over the next five years. The only way forward is for strong demand drivers to be introduced and suite of financial products made available to encourage and enable homeowners to make the necessary improvements. For instance, a revenue-neutral Green Stamp Duty incentive linked to the energy performance of properties would “nudge” both vendors and buyers to upgrade their homes, reduce their carbon footprints and create healthier living environments, and be rewarded for doing so. This would then allow the targeting of direct subsidies and grants to struggling families and households without the means to pay or access to finance, as well as providing much-needed certainty to the retrofit market.
Is this a missed opportunity?
Whilst the Government’s ambition is welcome, a complete investment plan covering all tenures, out to 2035 and beyond, is needed. Only then will we see the supply chain rising to the challenge, making major investments in skills and training, and de-risking the market for the many firms we rely on to deliver Net Zero.
Most recently, the Prime Minister made a promise to make the move to greener homes an affordable, fair and common sense proposal. However, the Spending Review and Budget has massively underfunded this ambition, and risks putting the UK on the backfoot for net zero. Making our homes healthier faces an investment shortfall of £9.75bn this Parliament – investment which could vitally cut household fuel bills and support green jobs and businesses across the country.
This is a missed opportunity to address the long-standing underfunding of domestic energy efficiency improvements, the unsung hero of green infrastructure priorities. Moving forward, the Government must channel funds with speed from the £16bn green gilt and offer attractive financial deals through the UK Infrastructure Bank, in order to get us back on track.
However it is not all bad news and we have existing potential mechanisms - such as the Green Stamp Duty - to incentivise homeowners to make the right decisions and make real progress in 18 million households. This provides the opportunity for the Government to change direction, avoid another boom-bust cycle, and create a lasting legacy: a capable and a sustainable building energy efficiency market. Using the PM’s own words, only this will make the transition to green homes “affordable, attractive and fair".
Sarah is the Executive Director of MIMA, the Mineral Wool Insulation Manufacturers Association (UK’s industry trade body for non-combustible, breathable glass and stone wool insulation), and Chairman of the EEIG, the Energy Efficiency Infrastructure Group (a broad-based coalition of over 25 industry groups, NGOs, charities and businesses proposing a long-term Better Buildings Investment Plan).
Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.