Gaps in new Strategy leave UK homes leaking heat

The Government's Heat & Buildings Strategy lacks a comprehensive plan to tackle homes' woeful energy (in)efficiency.

Profile picture of Dr Simon Cran-McGreehin

By Dr Simon Cran-McGreehin

@SimonCMcG

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.

Energy efficiency funding gap

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?

Costs and benefits of energy efficiency improvements

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

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.

Existing homes

The main challenge is reducing the heat demand of existing homes. For its Sixth Carbon Budget, the Committee modelled the impacts of improving the average home energy rating (as measured by Energy Performance Certificates, EPCs) from band D to band C.

They found that this policy would reduce UK homes’ aggregate heating demand by up to 22% – at a cost of no more than £1,000 each for almost two thirds of homes. Individual homes could see energy savings of 30% to nearly 60%, if their original performance was particularly poor and/or if deeper improvements were made.

The CCC forecasts the total investment for these 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.

Manifesto targets unlikely to be met

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.

Filling the insulation gap

The Heat and Buildings Strategy does acknowledge that it isn’t complete, and looks to possible future policies to drive improvements to our building stock. But fundamentally it seems to miss the importance of insulation, offering only an aspiration of “upgrading as many homes as possible to achieve EPC band C by 2035 where cost-effective, practical and affordable” – and by 2030 for those in fuel poverty.

It presents clear plans for requiring private landlords and commercial companies to make changes. But there’s nothing as yet for owner-occupied homes – just “gathering further evidence to inform our approach”, and a hope that private green finance will be enough to help homeowners.

This long-awaited strategy has a big gap that needs filling – urgently – if the intention of cutting bills, cutting carbon and creating the jobs is to be fulfilled. With international gas markets frantically yo-yoing in response to Putin’s geopolitical manipulations, and with the UK public suffering the consequences in rising heating bills, the need to improve our buildings has never been clearer.