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Behind the Green CurveBritain’s Missing Housing Revolution
The UK’s green housing initiatives lag way behind our European counterparts, explain Jon Bloomfield and Patrick Willcocks
Energy is the issue rising up the political agenda. Bills are increasing fast, with a big hike in the price cap set by the Government scheduled for this April.
Listen to voices in the right-wing press and coming out of the Conservative ‘Net Zero Scrutiny Group’ and the main culprits are green levies and subsidies to renewables. Read the cultural warriors like academic Matthew Goodwin and they have the climate change agenda set firmly in their sights.
This is a foretaste of battles to come.
The climate deniers have morphed into sceptics; they now profess to accept the science but claim it is too difficult and expensive to do anything about it. They may have changed tactics and tone, but they remain deniers at heart.
As Boris Johnson’s time as Prime Minister appears to be drawing to a close, climate change looks set to be the new ‘culture war’ battleground, as the hard-right looks to rally around a figurehead seeking to reverse Johnson’s tepid – but real – acceptance of the climate change agenda.
The Draughtiest Housing in Europe
The climate sceptics never mention that UK households are particularly exposed to spikes in electricity and gas prices because Britain has the worst housing quality in western Europe with the most energy inefficient homes.
As the map below shows, on a cold day UK households experience three times the heat loss of their German or Scandinavian counterparts. People cannot see the heat loss, but it shows in their bills.
Yet, the Government’s two efforts to address the coldest and leakiest housing in Europe have been disastrous failures.
David Cameron’s flagship scheme – the grossly misnamed ‘Green Deal’ – aspired to be “Europe’s most innovative and transformational energy efficiency programme”. However, its annual target of two million retrofitted homes struggled to reach just 6,000, less than 1% of its target.
The Government’s model of high interest, private loans through an independent finance company simply did not deliver. Its broader failure was highlighted recently in an article in Carbon Brief showing how Cameron’s anti-green measures have added £2.5 billion to UK energy bills since 2015.
The Conservatives’ second attempt at energy efficiency – the Green Homes Grant scheme – was launched in Boris Johnson’s 10-point ‘Green Industrial Revolution’ plan. It was contracted-out to the US global consulting firm ICF. Of the £1.5 billion promised in its first year, only £71 million – less than 5% – was spent. The scheme was then scrapped, having reached just 10% of the 600,000 homes that the Chancellor had promised would be improved.
The contracted-out, top-down, ‘householder as consumer’ model has failed – yet the Government is still pursuing a largely individual, householder-based approach, without setting an annual target for housing renovation.
Learning from Europe
This is not just a UK issue. The swift and effective transformation of housing stock is one of the central tests for Europe’s net-zero ambitions.
All the advantages of focusing on building refurbishment are clearly laid out in this European Commission document – not least ensuring substantial emission reductions before 2030 and creating thousands of jobs.
Is Europe up to the challenge?
The agreement hammered out between the German Social Democrats, Greens and Liberals represents the most serious attempt yet by a national government to develop an eco-social market economy. The combination of three parties drawn from distinctive political traditions, along with the backing of the Confederation of German Industry, indicates the breadth of the coalition mobilising around the climate change agenda.
On energy efficiency and renovation, this new German coalition can build on the impressive work undertaken by previous governments operating the country’s social market model, which gives a crucial role to state financial intervention and regulatory support. Thus, in 2020, the state reconstruction bank, KfW, in its energy efficiency programme awarded loans and grants worth €27 billion for the renovation of almost half a million residential units.
The contrast with Rishi Sunak’s Green Homes scheme is astounding. The German programme is now being strengthened: it covers both residential and non-residential buildings; wholesale retrofit as well as partial; includes grants for a whole range of technologies as well as systemic measures such as the installation of digital technologies to optimise consumption; plus grants to ensure that projects are professionally planned with building owners, able to consult energy-efficiency experts.
France, where buildings account for 28% of carbon emissions and overall emissions have been reduced by just 3% since 1990, is looking to follow the German example.
The High Council on Climate has called for a rapid increase in the number of high-performance energy renovations underpinned by a generous support scheme combining loans and grants.
From 1 January this year, all French renovation efforts have been streamlined into a single national energy renovation service, ‘France Renov’. Last year, the service accepted 670,000 applications – more than 10 times the number from 2016 and the Minister of Housing Emmanuelle Wargon has set the target of one million renovations for 2022.
This plan emphasises the need to support low-income households to ensure that this is an equitable transition. The old industrial areas of northern France around Lille are already showing how this can be done. In Spain, Italy and elsewhere, each of the national recovery plans that complement the European Green Deal has a significant energy efficiency and renovation component.
What we see here is coordinated public sector action at national, regional and local levels designed to encourage both individual and collective initiatives. There is an acceptance of government investment and strong regulation, in contrast to small-state advocates on the Conservative right.
Lobbying for Change
The scale of the task in the UK is significant.
The Institution of Engineering and Technology in its report, ‘Scaling Up Retrofit 2050‘, advises that nearly every home in the UK needs to be upgraded with energy efficiency measures at a rate of more than 1.5 homes every minute to 2050. That is just less than 800,000 a year.
Labour Leader Keir Starmer has pledged that a Labour Government would spend £6 billion a year for a decade to retrofit 19 million homes to a minimum standard of energy performance band C. This is significant, but less than a quarter of what Germany is already spending.
The Energy Efficiency Infrastructure Group (EEIG), a campaigning body composed of charities and business organisations including the Confederation of British Industry, is calling on the Prime Minister to prioritise cutting energy bill through better insulation.
EEIG chairwoman Sarah Kostense-Winterton says that “a permanent solution to lower bills is by reducing demand through energy efficiency measures”.
In the short-term, the EEIG wants the Government to provide additional support, such as expanding the ‘Warm Homes Discount’ for vulnerable households to prevent a fuel poverty emergency. The EEIG is also calling for a new £3.6 billion grant or subsidy scheme to help all households insulate their homes. The insulation call has been backed by MPs on the Conservative Environment Network. But the smaller climate-sceptic Net Zero Scrutiny group has the ear of the Conservative press and is dominating the media discussion.
One initiative that has real potential comes from the 11 major cities forming the Core Cities group. Along with the London boroughs, they have come together to seek large-scale, private sector funding for low carbon projects. The big cities know that capital resources need to be mobilised at scale for mass retrofitting and they cannot rely on a miserly Treasury, which under Sunak is looking to reassert the Thatcherite mindset.
At the COP26 climate change summit last November, Mark Carney, former Governor of the Bank of England, confirmed the role of the Glasgow Financial Alliance for Net Zero (GFANZ) and claimed that it has a total of $130 trillion assets under management ready to deploy for low carbon purposes across the globe. NatWest claims a £100 billion target for financing decarbonisation by 2025. The Core Cities initiative is designed to unlock these resources and enable cities to undertake innovative, whole-neighbourhood energy efficiency schemes.
With a Government in disarray and its policy options paralysed as the climate-sceptic right looks to reassert small-state thinking, it is likely that cities and other municipalities will have to negotiate with the banks – and learn to do it for themselves.
Jon Bloomfield is an honorary research fellow at the University of Birmingham and the author with Fred Steward of a blog series on ‘Making the Green New Deal Happen’. Patrick Willcocks is a freelance policy advisor focused on cities, sustainability and creativity, based in Birmingham