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Thu April 22 2021

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£342bn needed to bring UK homes up to EPC C

22 Mar MPs are warning the government that is has vastly underestimated the task involved in getting the UK’s existing housing stock to be adequately energy efficient.

The environmental audit committee report's front cover
The environmental audit committee report's front cover

The aspiration of net zero Britain is impossible, MPs says, without a solution to decarbonising the UK’s housing stock, which accounts for 20% of greenhouse gas emissions.

The latest report from the House of Commons environmental audit committee (EAC), Energy Efficiency of Existing Homes, highlights the scale of the problem.

Government has estimated the cost to decarbonise UK homes by 2050 at between £35bn and £65bn. The EAC thinks this is way out, as it does not include properties such as those with solid walls, or those in conservation areas which could make energy efficiency installations harder. Some 19 million UK properties need energy efficiency upgrades to meet EPC band C, and the EAC heard in evidence that it can cost on average £18,000 (before a heat pump installation). That works out at £342bn, several times greater than the government’s estimate.

The EAC is concerned that the government has announced just over £4bn of the £9.2bn committed to in the 2019 manifesto for energy efficiency measures. To stimulate activity, schemes such as the Home Upgrade Grants, Social Housing Decarbonisation Fund and phase two of the Green Homes Grant Local Authority Delivery Scheme should be "front-loaded and rolled out without delay", is says.

The committee recommends that the EPC methodology should be overhauled to support energy efficiency and low carbon heating measures by indicating in its headline rating its energy and carbon metrics. It says the government should support the rollout of Building Renovation Passports, developed with an approved, standardised methodology, with a view to the eventual replacement of energy performance certificates (EPCs).

It also calls for the rate of VAT on the labour element of refurbishment and renovations to be reduced to 5%, and the reinstatement of the reduced rate of VAT payable on energy saving materials at 5% while expanding its scope to cover energy storage, heat pumps and electric vehicle charging. Up until 2019, certain clean technologies were eligible for a reduced rate of VAT of 5%.

The EAC says that lack of government investment and signals to the energy efficiency sector is doing little to incentivise businesses to train installers. Poorly designed schemes which have been rolled-out are failing to make a big impact. The Green Homes Grant, although a welcome initiative, has been laden with lengthy bureaucracy, which perversely has led to reports of businesses laying off staff to cover loss of income rather than creating green jobs as it was supposed to.

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Chairman of the environmental audit committee is Philip Dunne, Tory MP for Ludlow. He said: “Making 19 million homes ready for net zero Britain by 2050 is an enormous challenge that the government appears to have not yet grasped. In the next 29 years, the government must improve energy efficiency upgrades and roll out low carbon heating measures: a material start must be made now.

 “Government investment to improve energy efficiency has been woefully inadequate. The £9bn that the government pledged at the election was welcome, but 16 months on, there appears to be no plan nor meaningful delivery. Funding allocated for the Green Homes Grant has not been spent, with only £125m worth of vouchers – of the £1.5bn budget – issued.

 “Further schemes that endure must be rolled out, boosting the government’s credibility with householders and their contractors that it is determined to decarbonise the nation’s homes. This will give confidence to businesses that they can invest in upskilling and green jobs. Consumer advice must also make clear the necessity and benefits of retrofits: although installations may be disruptive for a short period, in the long run consumers can enjoy warmer homes with lower energy bills. This must be properly reflected in the system that assesses energy efficiency: EPCs are outdated and should be replaced with Building Renovation Passports, which set a clear pathway to decarbonise homes.

 “Realism needs to be injected into the government. A much better understanding of cost, pace, scale and feasibility of skills development is desperately needed for net zero Britain.”

The MPs’ recommendations were enthusiastically endorsed by the Federation of Master Builders, whose chief executive, Brian Berry, said: “A long-term national retrofit strategy, underpinned by a skills plan and fiscal incentives that build supply and demand for home retrofits, must be a government priority ahead of COP26. If we are to lead the world in tackling climate change, then the government must act now to mobilise a market that has historically failed and will continue to do so if we rely on flash-in-the-pan schemes. The FMB welcomes the environmental audit committee’s report on energy efficiency published today, and we urge the government to adopt its recommendations in full.”

He added: “Local builders must be at the heart of plans to green our homes, and a national retrofit strategy would provide them with the confidence they need to invest in the necessary skills and training requirements. Cutting VAT on home improvement projects, in combination with financial solutions like green mortgages, would help make green home upgrades a reality for more households.”

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