Retrofitting for net-zero creates warmer homes, lower bills, and a stronger economy
6 min read
The energy transition offers numerous critical benefits on the path to net-zero, including lower energy bills for households and reduced costs across the entire economy. Bill Esterson MP, Chair of the Energy Security and Net Zero Committee, underlines retrofitting homes as a key opportunity, delivering warmer, healthier living conditions for people across the UK
Britain has a housing crisis. Yes, there’s a shortage of secure, affordable homes. But there’s also a crisis in home energy efficiency. Two thirds of our households are living in draughty, damp or overheated homes. Well over a third of UK households have to spend more than 10 per cent of their income after housing costs on domestic energy – up from one fifth of households in 2021, before the gas price shock sent the cost of living spiralling upwards.
Support to make our homes warmer, healthier and cheaper to heat should be a no-brainer.
But since David Cameron vowed to “cut the green crap” in 2012, rowing back government funding for green policies like home retrofit has undermined consumer confidence and business certainty and blown the UK off its previous warm homes pathway.
Today, there are 98 per cent fewer home energy efficiency measures being installed than if we’d stayed on the trajectory we’d been on in 2010. The rollout of clean heating systems is desperately off track. Fewer than 3 per cent of our homes are connected to a heat network, and fewer than 1 per cent have a heat pump installed.
By upgrading all homes to Energy Performance Certificate (EPC) Band C, we could deliver £40bn in benefits to the UK economy by 2030 and up to £100bn in further benefits by 2040 – including £24bn in consumer bill savings, more than £9bn in societal savings and around £4bn in reduced energy system costs.
There’s potential here, too, for £2bn in savings to the NHS by 2030, and a further £600m every year to 2040, by significantly reducing levels of cold-related illnesses and mental health conditions caused by fuel poverty.
But stop-start policies and reversals in phasing out fossil fuels for home heating have robbed households and the supply chain of the certainty they needed to invest in the transition. The absence of a clear regulatory signal has meant a slower rollout of low-carbon heating systems and “higher costs in the long run” for everyone.
Too many over complicated and short-term government home heating schemes are failing to support either the vulnerable or those who could pay. By increasing awareness of schemes, simplifying their eligibility criteria and providing far longer-term certainty, there is still the potential to deliver warm, energy efficient homes for many people, and to do so quickly. But the EPC itself is fundamentally flawed and does not help households to retrofit their homes or guide them towards systems that will save them money over the longer term. Replacing a gas boiler with a heat pump can in fact downgrade a home’s energy performance score. This, in turn, can negatively impact the property’s value and also distort eligibility for support schemes.
“By upgrading all homes to Energy Performance Certificate (EPC) Band C, we could deliver £40bn in benefits to the UK economy by 2030 and up to £100bn in further benefits by 2040”
That’s why the Energy Security and Net Zero Committee, which I chair, has called for a new national warm homes advice service, a “one-stop shop” to provide consumers with impartial information and advice that meets the needs of their home. Crucially, it would signpost householders to trusted tradespeople and financial support and help them find redress when things go wrong. We need to eliminate the postcode lottery that people face when making decisions about significant works in their homes.
However, even the best information and advice alone cannot give households the confidence they need about the upgrades that could be done to improve their home. We heard distressing evidence from individuals who had mould and damp covering their walls following botched solid wall insulation works, facilitated and funded by previous government retrofit schemes. Some homes were rendered unliveable and, while numbers are still very uncertain, early indications are that 250,000 homes could have been left unmortgageable from the poor installation of spray foam insulation.
The new government has suspended businesses responsible for poor-quality work and will force them to fix the work, at no cost to households. Until they do, they will remain banned from solid wall insulation work under any government scheme. But this has further exposed national skills shortages and shown the existing quality assurance system is not fit for purpose. It needs investment and a complete overhaul.
My committee has also uncovered a problematic “Catch 22” in the national Warm Homes project. Ofgem estimates there are currently 2.3 million households who owe over £1,200 on average, and total energy debt is over £3bn. Apart from adding to everyone’s bills, that debt is stopping those households switching to a cleaner, cheaper heating system until they’ve paid it. Even without debt, disconnecting an existing gas meter with its ongoing standing charges can incur charges of thousands of pounds. This raises the spectre of a very significant proportion of UK households that may be effectively “too poor to afford cheaper heating”. The Warm Homes Plan must set out how this will be tackled.
The transition away from our reliance on fossil fuels will bring us security of energy supply and lower energy costs in the long term. But, as my committee is recommending to the government, UK consumers can benefit now if we reduce the cost of electricity relative to gas. The evidence we heard was that the government could do this by rebalancing the proportion of policy costs levied on electricity bills.
There are huge benefits for the UK in reaching net-zero by 2050 and in delivering clean power by 2030. Putting home retrofit on track is needed for both. But the rollout of a successful national retrofit strategy will deliver massive benefits of its own through the prize of a nation of warm, energy-secure homes with affordable energy bills: home energy bills that are not exposed to the actions of violent dictators and the casino economics of volatile international fossil fuel markets.
The Warm Homes Plan is expected in the autumn, and the recent Spending Review confirmed the full funding commitment to it. My committee has made recommendations that can help make the plan work. As a country let’s seize this opportunity to move towards warmer, healthier and more comfortable homes across Britain.
