Gaps in new Strategy leave UK homes leaking heat

The Government’s Heat and Buildings Strategy drew headlines for its scheme to support the installation of heat pumps. At £5,000 per home, the £450million pot will cover an average of 30,000 projects a year over three years, with the UK already installing an anticipated 67,000 heat pumps in 2021. This initial investment could help to grow the industry and drive innovation to cut costs and increase skill levels – priming the sector into longer term action to meet the Government’s target of 600,000 installations a year by 2028.

However, the bigger story of the Strategy was what it didn’t include – a comprehensive plan to tackle the woeful energy (in)efficiency of our homes. Yes, there was some new funding for 2022/23 to 2024/25:

• £950million for vulnerable households and low-income families
• £800million for social housing
• £1.4billion for public sector buildings
• £338 million for heat networks.

Adding these schemes and the heat pump support gets us to the Strategy’s £3.9billion headline figure. Then adding the £1.3billion for buildings already announced for 2021/22 we get a total of around £5.2billion over four years – an average of £1.3billion per year.

But, how does this compare to the scale of the task – and to the Government’s previous commitments?

The Climate Change Committee (CCC) is currently assessing the Government’s Net Zero Strategy, including the policies for heat and buildings and whether the overall package will meet upcoming carbon budgets and achieve net zero by 2050.

The CCC’s analysis has always placed a strong emphasis on improving buildings’ energy efficiency – using insulation and draught-proofing to reduce energy demand being the best first step in cutting emissions, managing energy bills, and limiting the need for wider upgrades to energy networks.

New-build homes should be an easy win – giving tiny heating bills and adding nothing to the UK’s carbon emissions. They can be built with very high levels of insulation and draught-proofing, accompanied by ventilation for air quality and cooling, such that they have very low heat demand.

But improvements in building regulations have been painfully slow, with stop-start policy directions deterring industry investment in improved practices – most notoriously the last-minute scrapping of the Zero Carbon Homes regulations in 2015. Tragically, the UK has been constructing homes in recent years that may ultimately need to be retrofitted.

The current expectation is that the Future Homes Standard will come into force in England in 2025 – requiring very high levels of energy efficiency and future-proofing to be ready for low-carbon heating. There are currently no plans for bringing this date forward, which continues to be a Government blind spot.

The largest issue is the need to reduce the heat demand of existing homes. The Climate Change Committee found that UK homes' aggregate heating demand could be cut by 11% at a cost of no more than £1,000 each for almost two thirds of homes, in its central 'Balanced Pathway' scenario. And it found that demand could be cut by up to 22% in the more ambitious 'Tailwinds' scenario - equivalent to shifting the average Energy Performance Certificate rating from band D to band C, in line with Government ambition. In either scenario, individual homes could see energy savings of between 30% and nearly 60%, if their original performance was particularly poor and/or if deep improvements were made.

The CCC forecasts the total investment in improvements in existing homes’ energy efficiency as £45billion up to 2035 (and a further £10billion out to 2050) – this frontloading allowing us to benefit as early as possible from lower bills and healthier homes.

This cost estimate by the CCC averages out at around £3billion a year from now to 2035, for home insulation alone. This is double what is being offered by the Government to cover insulation as well as heating systems – across residential, commercial and public buildings.

What’s more, the announced funding lasts only to 2024/25, ten years short of 2035; even if all of the funds were put into home insulation, they would achieve only around 10% of what the CCC recommends we should aim for by 2035.

The Conservative’s 2019 election manifesto promised to spend £6.3billion on energy improvements to help 2.2million disadvantaged households reduce their bills by improving the performance of homes with poor energy efficiency – part of £9.2billion for improving homes, schools and hospitals. Initial proposals were dialled down, and the £5.2billion for current schemes noted above is being stretched between homes and the public and private sector, so meeting the manifesto target with these proposals alone seems unlikely.