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Retrofit revolution: how do we decarbonise the UK’s homes?

The UK has the worst insulated and leakiest housing in Europe – experts discuss how we can fix it.

By Spotlight

According to the UK Green Building Council, there are 29 million homes in the UK that will need to be retrofitted before 2050, and at least 15 million need to be retrofitted before the end of this decade. Achieving this will require a large-scale, long-term project from government backed by adequate funding, and supported by landlords, homeowners and housing associations. New Statesman Spotlight asked three housing and energy experts to share their views on how the UK can accelerate the retrofit revolution.

Juliet Phillips, UK energy team programme lead, E3G: “The UK needs a new heat and buildings strategy”

Ask any installer, manufacturer, energy company or financier what they’re looking for to accelerate progress on home retrofits, and the number one response you’ll receive is long-term certainty. This will not come as a surprise when the sector has been exposed to perhaps the highest rate of policy chopping and changing of any industry.

In the decade between 2012 and 2022, Westminster and the devolved governments introduced at least 30 retrofit schemes. The proliferation of short-term and sometimes conflicting public schemes has damaged supply chains and ultimately reduced the number of homes upgraded. The priority of the next government should be to develop coherent, consistent, and long-term support for home upgrades.

In 2021, the government set out its landmark Heat and Buildings Strategy: providing the direction of travel for energy efficiency and heat decarbonisation policies. This now lies in tatters, subject to delays and derailment. Regulatory timelines to upgrade leaky private-rented homes have been scrapped. Legislation for the clean heat market mechanism has been kicked into the long grass. There is no sign of the measures needed to lower the running costs of heat pumps, removing the levies which are disproportionately loaded onto electricity bills – and not gas.

Post general election, the UK needs a Heat and Buildings Strategy 2.0. There are several low-hanging fruits which could boost the consumer appeal of home retrofits. This includes removing the levies from electric heat running costs, and reintroducing and reconfirming the regulations the Conservatives have faltered on. Targeted support to local authorities should be combined with a national energy efficiency skills plan.

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The UK hasn’t always been such a laggard on energy efficiency: in 2005, industry delivered one million loft insulations. With the right long-term plan and funding in place, Britain can once again gear up towards the scale it has achieved previously.

Kate Henderson, chief executive, National Housing Federation: “Social housing providers want clarity”

Homes in England produce more carbon each year than all the country’s cars, making retrofit an essential part of meeting net zero by 2050. Decarbonising social housing is central to achieving this, and the sector is already leading the way in retrofitting existing properties and building new energy-efficient homes. However, a number of challenges are preventing housing associations from retrofitting all their homes at the scale and pace that’s needed.

Firstly, retrofitting is expensive. Housing associations plan to invest £70bn by 2050 in upgrading the fabric, heating systems and components of their existing homes. However, analysis by Savills estimates that at least an additional £36bn is needed. Recent “top ups” to the government’s Social Housing Decarbonisation Fund are welcome, but funding commitments to date
only take us to 2028. Long term funding is crucial to providing the certainty needed to plan large-scale retrofit projects.

In addition to funding, we need clarity. The current roadmap to net zero is unclear due to an absence of necessary policy interventions. This is making it hard for housing associations to plan effectively and with confidence. The sector is currently working towards ensuring all homes reach a minimum energy efficiency standard of energy performance certificate (EPC) rating C by 2030; delays in government policy are making it challenging to meet this target.

There is also a lack of capacity and skills shortages in supply chains, and no national policy or strategy to address it. To join all this together we need a national retrofit strategy, which sets out clear standards, and aims to boost green skills and green supply chains.

Helping the country reach its net-zero target by 2050 is a complex task, but one we are committed to. However, a strategic plan and long-term funding are essential. Decarbonising our homes is a win-win, saving residents money, boosting our economy, and helping protect the environment

Annabel Rice, political adviser, Green Alliance: “We should support consumers to transition”

Insulating homes doesn’t need to be hard, but since the early 2010s the UK has struggled to maintain momentum, and rates of installation have plummeted. We used to think that to improve leaky homes, structural upgrades were most cost-effective. Improvements like loft and cavity wall insulation were often the priority for traditional retrofit, but these techniques have stayed stubbornly expensive.

At the same time, innovation in heat pump technology means they are now at least three times more efficient than gas boilers. But support is still needed to ensure investment in high-quality production and installation, not least through the recently delayed Clean Heat Market Mechanism.

The energy crisis is not over, however, and while heat pumps themselves are increasingly affordable, current electricity prices (which are linked to gas) drive up average running costs. To combat this, the government needs to provide targeted support for households using electric heating to reduce energy costs.

In the short term this could be through a clean heat discount or the use of smart tariffs. The government also needs to provide long-term clarity, as a lack of consistency in policy has left installers and consumers unclear on their options. This includes boosting delivery under existing schemes such as the Great British Insulation Scheme, an initiative launched by the government last year to enhance insulation in residential properties across England.

Meanwhile, private landlords have little incentive to upgrade leaky housing thanks to a lack of regulation, including a failure to revise minimum energy efficiency standards. But there are no downsides to scaling up the adoption of heat pumps alongside small-scale home improvements, and focusing on this will benefit households across the UK.

[See also: The Research Brief: UK housing cannot cope with hotter summers]

This article first appeared in a Spotlight print report on Sustainability, published on 10 May 2024. Read it in full here.

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