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ECO+ – will it join a list of insulation failures?

ECO+ House
By Roy Turner
27 January 2023
Green & Good (ESG and Impact)

At the end of November, Grant Shapps, the latest incumbent heading the Department of Business, Energy and Industrial Strategy, announced ECO+, a £1bn package of grants for households to upgrade their leaky homes. Will it substantially make Britain’s homes greener, warmer and cheaper to heat or will it be forgotten, topping the pile of past half-baked measures to improve the UK’s woeful domestic energy efficiency?

Britain has a huge problem with draughty, cold homes. Our housing stock is the oldest in Europe. Newer homes are more energy efficient, with almost all homes built since 2012 having an EPC rating level of C (which is regarded as energy efficient), compared to a mere twelve per cent of homes built before 1900 reaching this target. Currently, only 42 per cent of the total housing stock has an EPC rating of C or higher.

It is vital we address this. Not only for lowering carbon emissions with homes accounting for a fifth of the UK’s emissions, but also to improve the population’s health and wellbeing, particularly for poorer households. And there is the issue of lowering fossil fuel consumption to boost energy security, an issue almost ignored prior to the war in the Ukraine.

The solution is a massive retrofit programme to improve our homes’ standard of insulation. But although the government has shown some recognition of this need, so far, policies to improve the UK’s housing stock have been slow, unambitious and on many counts, have failed.

Under David Cameron’s government the Green Deal was introduced, which ran from 2013 to 2015 and only resulted in 1,850 homes being improved. The National Audit Office (NAO) declared the £240mn scheme a complete waste of money. Reasons for its failures were many. There was practically no publicity, so take up was very low; and worse, the cost of the loan to upgrade the property was at an interest rate too high – even higher than available commercially.

As a comparison, Germany’s ‘EnV’ scheme to upgrade energy inefficient housing stock, which ran from 2002 to 2010, improved 200,000 homes per year. Key to its success was the availably of cheap loans, grants, effective publicity and a high-level of investment, averaging €1.4bn per annum. It also included landlords and not just owner-occupiers.

The next attempt to boost our housing energy efficiency was the Green Homes Grant. Unveiled in September 2020 as a £1.5bn scheme to upgrade 600,000 homes in England, only to be halted in March 2021 with a mere 47,500 homes benefitting and £73mn spent. The voucher-based scheme with up to £5,000 available for insulation improvements and low-carbon energy heating systems was plagued by costly and complex administration, according to the NAO, and poor publicity.

ECO+ is launching in April 2023 and aims to upgrade 410,000 homes over three years, saving households £310 per year on average on their energy bills. An initial £1bn has been allocated with the Chancellor budgeting a further £6bn in 2025. The scheme is limited to properties with an EPC rating of D, E and F and in the lower Council Tax bands. This means 11.7mn households should be eligible for the scheme, but as it stands, the scheme is £23bn short and would only help 3% of them, according to real estate consultancy, Hamptons.

However, the scheme is insufficient in scale even to get the UK’s 28mn most underperforming homes to an acceptable EPC ‘C’ energy efficiency standard, let alone meet Net Zero standards by 2050. To reach this, the UK’s 28mn homes would need to be renovated at a rate of 700,000 a year. It is also only accessible to landlords if their tenants are on benefits or a low-income.

Then there is the issue of not enough insulation installers. The private sector would love to invest. But many of the insulation sector’s businesses have been bitten by past lacklustre schemes, needing firm long-term commitment to invest in expanding and training people.

Furthermore, the focus has been on homeowners rather than the private rental sector (PRS), a major omission with 60 per cent of buy-to-let stock failing to reach an EPC ‘C’ rating or above and an increasing number of households in PRS accommodation. Currently, there are no tax incentives for environmental upgrades.

Looking at ECO+ and other past schemes, upgrading the UK’s homes seem to be low on Government’s list of priorities. Past failures not only lacked ambition but also suffered from being rushed and poorly thought out. What is needed is an ambitious, strategic, long-term national retrofit scheme.  To get it right will require intense consultation with insulation and green energy installers, devolved national governments, local authorities, the finance sector and tenant/owner groups. But above all commitment to drive the agenda through.

But with recent government instability, high ministerial churn and an election in 2024, it is unlikely this nettle will be grasped firmly anytime soon.