Mini-Budget: recovery begins at home

It’s reassuring to see that the chancellor has put home energy efficiency front-and-centre of his green jobs plan in today’s mini-Budget. But while the £3bn announced by the government for their green jobs package will kickstart the rollout of home upgrades, we’re going to need a lot more investment to make the benefits of retrofitting widespread. £3bn is just one third of what the government committed to in their 2019 manifesto. Investing in thousands of jobs will not touch the sides of unemployment rate forecasts, which could be 900,000 above 2019 levels by December 2021 if action is not taken.

A ​‘V‑shaped’ recovery, where the economy recovers quickly and strongly following a sharp decline, is looking highly unlikely for Britain. Our analysis of over 30 independent forecasts for the UK economy shows that unemployment could still be above 2 million by Christmas next year without government action. Nominal gross domestic product (GDP) is set to be £136bn (6%) lower by Christmas 2021 compared with pre-Covid forecasts. Frontline services are already seeing a rise in homelessness, and that’s before the temporary evictions ban has even been lifted.

As we leave the peak of the virus behind us, the government must turn its attention to bringing the economy off ice. In the past, governments have moved to restart economies through carbon-intensive stimulus spending, like road building. But in 2020 we cannot afford to recover from the recession in a way that doesn’t set us on a path towards ambitious climate goals, reduce inequality, and create a more inclusive and resilient society than we had before. The choices we make about navigating this recession will have impacts on the shape of our economy for years to come, and calls to ​‘build back better’ are gathering momentum.

The government needs to stimulate the economy in a way that will create jobs, cut carbon emissions, and improve the lot of the lowest-income households — and a key contender is retrofitting UK housing. Retrofitting means doing up existing buildings with the aim of reducing energy use. It’s been rumoured that the PM’s strategist Dominic Cummings has dismissed retrofitting as ​‘boring’. But far from it — a new report by NEF, Leeds University and Parity Projects argues that a massive four-year government-backed retrofitting programme could create over 500,000 jobs all over the UK, reduce household emissions by over 20% a year, and save households over £400 in annual energy bills.

The case for retrofitting housing was already clear before coronavirus. UK homes are responsible for one fifth of our emissions and 35% of our energy use. One in 10 UK households are in fuel poverty because of low incomes, poor quality housing, and rising energy prices. But the current crisis has only strengthened the argument. Construction has been one of the hardest hit sectors in this pandemic, with 41% of workers furloughed in April 2020, second only to the hospitality industry. Our proposal would see a 22% increase in total construction employment over four years. There are leaky and damp homes that need retrofitting in every town in the UK, creating local work in a time when travelling remains uncertain. What’s more, there are health benefits to living in warmer, less draughty homes.

But how would it work? The government should create a National Retrofit Taskforce that would be paid for by the government, stimulating investment from the private sector. As well as producing hundreds of thousands of jobs and retrofitting 8.7 million homes, the scheme could also boost annual economic activity by £27.96 billion (1.28%) by 2021 and £36.34 billion (1.58%) by 2023/​24 (nominal GDP, compared to previous forecasts). Right now, borrowing costs for the government are at an all-time low, so this investment plan is not just economically feasible but essential.

Over the last week, the government has been trailing investment plans billed as a Roosevelt-style ​‘New Deal’, but the £3bn pledged today for ​‘thousands of green jobs’ doesn’t even touch the sides of our looming unemployment crisis. According to the TUC, the government would need to spend £450bn over the next five years to genuinely match the original New Deal. In what the Bank of England is warning could be the worst recession in 300 years, this piecemeal approach to stimulating the economy will not float. We need investment at a scale and speed necessary to create not thousands, but hundreds of thousands of climate jobs all over the UK if we’re to move through this recession, cut carbon, and improve people’s standard of living.

Image: EE Image Database (CC BY-NC-ND 2.0)