Tory “green housing” plans lack ambition

The Tory plans, unveiled today, do not go far enough to tackle the housing problems in our country.

Grant Shapps’s keynote speech on creating a green housing policy at the Building Research Establishment today recognises the route we have to take but lacks the ambition required to actually get there.

The proposals outlined in the speech demonstrate a mismatch between the policy objectives and the means necessary to achieve them and add little to Greg Clark’s speech and Oliver Letwin’s comments at the Conservative party conference last month.

Tory policy on homes and community retrofit requires further detail and clarification.

To say that greening of existing homes has largely been ignored is simply inaccurate. Mr Shapps overlooks the Carbon Emissions Reduction Target, the Government consultation on the Heat and Energy Saving Strategy (HES), and the UK Low Carbon Transition Plan.

These policies and documents are inadequate both in scope and ambition, but they do demonstrate a focus on existing buildings on the part of the current government.

Since the end of the HES consultation, civil servants at the Department for Energy and Climate Change (DECC) have devoted considerable time and energy to this issue and are in the process of preparing what could turn out to be an ambitious, deliverable plan for the retrofit of existing homes.

But how well will the Conservatives’ Green Deal address what actually must be done to existing homes and communities in order to meet carbon reduction targets, achieve energy security and renewables goals and assist in eradicating fuel poverty?

In the first place, we need greater direction and motivation if home owners and tenants are actually to have their homes improved. We also need to be realistic about the scale of the problems and the extent to which a loan of £6,500 can resolve them.

The Pay-As-You-Save (PAYS) mechanism does partially tackle one of the main barriers – access to finance – but that on its own will not be enough to motivate households to participate. Simplicity and ease of access through a trusted and objective source is a necessary precondition.

Expert, independent advice is needed in relation to energy efficiency improvement measures needed in the home and in the wider community; can property owners really be expected to implement expensive heating and insulation improvements in their home as a result of an approach at the checkout in M&S or Tesco? We need a proactive and locally delivered programme, where those advising householders utilise local knowledge and understanding of the needs of the home and its occupants.

New boilers, cavity wall insulation and compact fluorescent lightbulbs (of which almost 170 million have been distributed under CERT in the last 15 months) cannot deliver the necessary 80 per cent emissions reductions referred to in the speech. They represent easy wins which should have been dealt with by 2015 at the latest.

A quick glance at the Committee on Climate Change’s first annual report is enough to realise how much more must be done.

The harder, more costly measures such as solid wall insulation and local heat and electricity generation need to be included in any neighbourhood and home retrofit programme. This would require a higher cost to households that could be repaid under the PAYS scheme proposed.

The UK Green Buildings Council suggests up to £10,000 is possible under PAYS. In reality some (not all) households would need to spend between £15,000 and £30,000. Our housing stock is not all detached, post-1945 homes in the suburbs.

There are more difficult properties – the Victorian terraces and flats (among others) – that contribute disproportionately towards carbon emissions due to low energy efficiency standards. Inadequate funding levels could well leave the householder with high energy bills and not enough assistance to fully retrofit their property.

The speech makes no reference to the impact on fuel poverty of inefficient housing. The Conservative plan, as articulated today, appears to make no provision for the most vulnerable and disadvantaged households. The PAYS mechanism is not appropriate for fuel-poor households – this is conceded by the UKGBC which has done most work on the proposed model.

These households require government assistance but we heard no firm commitment today to helping those in the worst properties, who are vulnerable or on very low incomes.

There are ten key principles to retrofit which should underlie any programme:

1. Deliver street-by-street

2. Set a minimum energy efficiency standard for homes

3. Prioritise the fuel poor

4. Develop a single scheme that is easy to understand

5. Make it affordable and accessible

6. Ensure the highest standards of work

7. Involve local government as the lead agency

8. Enforce action by private and social landlords

9. Implement as a matter of urgency

10. Introduce across the four nations of the UK

Regrettably, what we have heard today does not fully address the key fundamentals required for a domestic energy retrofit programme.

The warm homes campaigners National Energy Action (NEA), however, have worked to develop an appropriate model for the delivery mechanism and have also looked at other finance and incentive options required to achieve both social and environmental objectives through a home energy retrofit programme.

3 Responses to “Tory “green housing” plans lack ambition”

  1. Roger

    I’ve now attended several of Shapp’s speeches and every time I am reminded of the Seinfeld line about how just when I think I’ve finally worked out how shallow he is, he goes and drains the lake a little bit more..

    Good article – but we need a proper comparison between PAYS and the Green Deal.

    They are both conceptually similar in that they attempt to incentivise retrofit work by offering a loan which attaches itself to the property itself through some sort of charge.

    The Tory Green Deal however at least in Shapps’s presentation seems based on the fantasy that all this can be achieved with little or no state involvement, with the likes of Tesco and M&S offering the loans and the energy companies kindly administering the payback through adding a charge to your bill.

    Problem is that if you work through their examples the 25-year loans bear an implied interest rate of only 4% p.a. and given how small most will be it is difficult to see why any private sector company would trouble itself to offer them (Tesco currently make an IRR of 6% by selling baked beans and I doubt they’d make 1% profit on these loans after operation and marketing costs are deducted).

    As for the energy companies I can’t see what their incentive to co-operate is at all.

    In fact the Tory loan scheme only makes any sort of financial sense if you bear in mind that they also want to reward us for recycling with M&S and Tesco vouchers (the more you recycle the more you can buy!) – but this trade-off between loans and vouchers seems a very shaky foundation for a policy that needs to be in place for decades rather than years.

    In contrast the PAYS scheme is being properly piloted, should offer a more realistic maximum level of loan and relies on council charges rather than the goodwill of energy companies and High St retailers to administer payback.

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