For the same cost as renovating parliament, government could retrofit 4.4m homes, saving families at least £345 a year on energy bills

Embargo 00.01 Wednesday 9 March 2022

For the same cost as the refurbishment of parliament, the government could lift 4.4m UK homes to decent levels of energy efficiency through a mass retrofitting programme, according to analysis from the New Economics Foundation (NEF) out today. The analysis finds that these home upgrades could save families on average at least £345 a year on their energy bills.

Last month chancellor Rishi Sunak announced measures to cushion the blow of soaring energy bills. But today’s analysis from NEF has found that when the energy price cap and national insurance rise in April, despite the council tax rebate, and higher minimum wages, the poorest 10% of families will be £420 worse off in annual terms, losing 2.5% of their disposable income. The analysis finds that all families will be become poorer in the UK on average, with the lowest income households being hit proportionately harder than middle-income families, even after government support measures.

But longer term, NEF argues that the UK must improve energy security to lower energy bills, including through a Great Homes Upgrade which would retrofit millions of UK homes to make them warm and energy efficient. The analysis finds that upgrading the UK’s draughty housing can lock in savings in energy bills for years to come. NEF is calling on the government to commit to bring every home in the UK up to a good energy efficiency standard by 2030 as part of a Great Homes Upgrade.

The campaign is calling for the chancellor to announce the following package of measures in his upcoming budget:

• An additional public investment of £11.7bn for home insulation measures and low-carbon heating solutions over the rest of this parliament.
• Steer cheap bank credit towards home retrofits by working with the Bank of England to create a green term funding scheme incentivising lenders to offer cheap loans and green mortgages to support home.
• A fairer tax system where stamp duty is reduced according to how efficient a home is, and VAT is equalised for all retrofitting works at 5%, provided the whole property is brought above certain EPC thresholds.

NEF argues that these measures, if implemented, will initiate the largest home retrofitting programme in UK’s history and considerably cut UK reliance on imported natural gas. NEF estimates suggest that basic insulation measures alone can completely eliminate Russian imports and further reduce dependence on other nations.

As part of the Great Homes Upgrade campaign, 25 organisations including Fuel Poverty Action, Greenpeace and the Centre for Ageing Better, have signed a joint letter to the chancellor, organised by NEF, Architects Climate Action Network (ACAN), E3G, Friends of the Earth, Green Jobs Alliance and Citizens UK, calling on him to include a national home retrofitting programme in his upcoming spring budget. Today, the same day that the government’s climate advisers will respond to the Heat and Buildings Strategy, 50 people from these organisations will be gathering outside the Treasury today to hand in the letter and promote the benefits of upgrading the UK’s homes.

Chaitanya Kumar, head of environment and the just transition at the New Economics Foundation, said:

“We all want to be able to come home to a place which is warm, safe and comfortable. But in the UK, this most basic of needs hasn’t been looked after, and this spring many people will be struggling to pay their energy bills – with the poorest families hit hardest. This government hasn’t taken responsibility for improving our housing, which is draughty, wastes energy, and relies on fossil fuels that pollute our communities and our atmosphere. Upgrading Britain’s housing would mean that everyone can make sure their home is well-insulated and heated by clean, green energy.”

Ed Miliband, shadow secretary of state for climate change and net zero, said:

“I fully support NEF’s Great Homes Upgrade Plan. Delivering warmer homes, lower household bills, and good jobs across the country is a no-brainer, and that is why a Labour government would fund a house by house, street by street 10-year home insulation and retrofit plan.”

Sara Edmonds, coordinator at Architects Climate Action Network, said:

“Our homes are responsible for around 20% of total UK emissions. The UK has one of the oldest and leakiest housing stocks in the world. We believe that it is imperative that a national retrofit strategy based on improving the fabric of our buildings is essential. Without this more people will be plunged into fuel poverty and the UK will not meet its legally binding targets to reduce emissions.”

Juliet Phillips, senior policy adviser at E3G, said:

“Energy security starts at home – this means a nationwide retrofit scheme to reduce our energy bills and reliance on fossil gas. The chancellor can seize the opportunity at the spring statement to supercharge warmer, healthier and greener homes. As other European countries take ambitious steps to get off gas, the UK must show leadership through an ambitious new energy approach which puts families, workers and communities at the heart.”

Sana Yusuf, climate campaigner at Friends of the Earth, said:

“In order to meet our national climate targets we need to reduce our dependence on dirty, damaging fossil fuels, and this can be significantly helped by improving the energy efficiency of the UK’s old and poorly insulated housing stock.

An immensely volatile global gas market means that people are paying through the nose to heat their homes right now, and millions are facing a future of financial hardship. Retrofitting homes so that they retain more heat, and for longer, will not only help to bring down bills and cut harmful emissions, but will keep the most vulnerable people safer and healthier, too.”

Notes

The New Economics Foundation is a charitable think tank who are wholly independent of political parties and committed to being transparent about how it is funded.

The full analysis will be available at https://​newe​co​nom​ics​.org/​2​0​2​2​/​0​3​/​c​o​l​d​-​h​o​m​e​s​-​t​h​i​s​-​april from 00.01 Wednesday 9 March 2022.

The Great Homes Upgrade is a campaign to get the government to upgrade the millions of cold and leaky homes in the UK.

ACAN is a network of individuals within architecture and related built environment professions taking action to address the twin crises of climate and ecological breakdown.

E3G is an independent climate change think tank accelerating the transition to a climate safe world.

Friends of the Earth is an international community dedicated to the protection of the natural world and the wellbeing of everyone in it.

The full text of the letter will be available at https://​greath​ome​sup​grade​.org/​p​a​g​e​s​/​r​i​s​h​i​-​s​u​n​a​k​-​w​i​l​l​-​y​o​u​-​s​u​p​p​o​r​t​-​t​h​e​-​g​r​e​a​t​-​h​o​m​e​s​-​u​p​grade from 00.01 Wednesday 9 March 2022.

The government in its spending review has already committed to an additional £2bn in spending through the rest of this parliament which brings the total requirement down to £9.8bn. This includes an investment of £4.2bn on supporting heat pump rollout, £3.6bn for a successor to the green homes grant for insulation measures and £2bn for bolstering existing schemes such as the home upgrade grant, social housing decarbonisation fund and the public sector decarbonisation scheme.

Latest data from the Department for Business, Energy and Industrial Strategy show that Russian imports of natural gas amounted to 34 TWh of energy in 2021. Insulation measures alone, as part of our Great Homes Upgrade package, can cut natural gas use by 44 TWh by 2030. Coupled with measures to electrify heat using heat pumps, the Climate Change Committee’s ​‘balanced pathway’ scenario to net zero suggests that we can achieve this goal in under five years.

The forecasts for average energy bill increases are based on our analysis the latest ONS data on energy expenditure by income decile and family type taken from their analysis of the Living Costs and Food Survey and Effects of Taxes and Benefits datasets. These figures have been uprated according to Ofgem announcement of average energy bill increases and our estimates for income increases using the IPPR tax and benefit model. Family types are not mutually exclusive: Families​‘with children’ include single and coupled adults with one or more children; families​‘without children’ include single and coupled adults with no children;​‘pensioners’ include single and coupled adults with at least one adult claiming a pension;​‘single parents’ include single adults with 1 or more children;​‘unemployed’ includes families with at least one unemployed person; and​‘disabled’ includes families with at least one disabled person.

The UK energy research centre or UKERC, in 2015, identified the potential for 4.32mn cavity wall insulation measures, 5.4mn loft insulation measures and 2.4mn solid wall insulation measures that can be undertaken cost effectively by 2035. As of today, government policy has only managed to achieve, in seven years, less than 10% of the cost effective potential target of insulations measures. We therefore assume a significant potential in scaling up basic insulation measures across millions more households.

Household energy statistics from BEIS shows that since 2013, 2.3mn households received some form of efficiency measure at a total delivery cost of £5.3bn. Considering the ECO scheme has been the only major flagship energy efficiency programme in the UK, we use the average cost of retrofitting per household based on that scheme as the basis of our analysis. We can estimate that at least 4.4m homes can be retrofitted with a budget of £12bn in today’s money. This does not factor in the effects of economies of scale and innovation that can bring down the costs further.

The National Energy Efficiency Data framework indicates that the average gain in energy savings per beneficiary household of the ECO scheme was 17.5%. Assuming this saving extends through the lifetime of a £12bn retrofit programme, an average household today could see energy bills fall by £345 a year under the new price cap taking effect from April this year. This is a conservative estimate as bill savings can be higher on the basis of further measures that can be undertaken by households, particularly the able-to-pay market and in highly energy inefficient homes, in addition to the government funded efforts. In such a scenario, energy savings can rise to as much as £740.