The IPPR (Institute for Public Policy Research) published this 24 page report by Joshua Emden and Luke Murphy in January 2023. It is a damning critique of Government failure: “for the last decade the government has failed to grasp the opportunity for retrofitting through a combination of cuts and multiple false-starts with initiatives like the green deal and green homes grant.” The report follows it up with some useful proposals for what the Government should now do.
This combination of evidence-based critical analysis and positive alternative proposals is exactly what our local political leaders should be offering, but they aren’t. It’s no surprise that Mayor Street isn’t, but why aren’t our Labour leaders building a public campaign for a change in Government policies now, not just waiting for the General Election till they tackle fuel poverty?
Below are some key extracts from the IPPR report (with added emphasis of key points). You can read the full report at https://www.ippr.org/research/publications/greengo-clean-heat-revolution
3.1 FALLING BEHIND OUR TARGETS
Compared to net zero targets, the rate of deployment of both heat pumps and energy efficiency retrofitting is severely behind schedule. IPPR analysis … shows how the UK is currently installing only 11 per cent of the heat pumps, 12 per cent of the cavity wall insulations, 3 per cent of the loft insulations and 3 per cent of the solid wall insulations needed by 2028 to keep pace with net zero …. In the face of the dire energy price crisis the pace of deployment required is only increasing.
3.2. INVESTMENT IS FALLING SHORT
Despite the government announcing additional funding for after 2025, the evidence shows that more investment is needed now and that slow progress is also a matter of insufficient and often short-term, piecemeal funding, which has stunted the growth of the retrofitting industry as a whole. Most prominently, the £2 billion green homes grant voucher scheme was designed and then discontinued after three months which was described as having a ‘chilling effect’ on industry confidence.
Learning from these mistakes, recent spending plans have committed to a gradual scale up in funding over longer time periods. For example, funding for the local authority delivery (LADs) scheme and off-grid rural properties (home upgrade grants or ‘HUGs’) has continued and increased gradually over time. Despite delays to ECO4, the chancellor recently confirmed plans to uplift ECO spending targets to £1 billion per year through to 2026.
Taking all these funding streams together suggests that government policies supporting investment into energy efficiency measures are now close to matching the Climate Change Committee’s (CCC) estimates of funding requirements between 2020-2025. If the funding for a £1 billion ECO Plus scheme proves to be genuinely additional …, then funding for energy efficiency would broadly match investment required by the CCC’s balanced pathway scenario.
However, many severe funding gaps remain. First, a large portion of the investment mentioned above comes from industry spending as part of the Energy Company Obligation. Looking purely at public investment, as the Environmental Audit Committee has recently highlighted, there is still a £2.6 billion gap in the government’s manifesto commitment of £9.2 billion in public investment into energy efficiency for the course of this parliament ….
Second, … there is still a substantial £4.2 billion funding gap for support for heat pumps between 2020-2025.
… despite the autumn statement committing £6 billion of additional funding between 2025 and 2028 … the overall funding picture falls off a cliff-edge during this period, as these years mark the exact time when funding should be rapidly scaling up. While there is still time to commit to more investment between 2026-2030, this funding commitment would be less than the amount spent on retrofitting during the current parliament.
Third, retrofitting’s crucial role in cutting soaring energy bills means there is a strong case for accelerating the rollout of energy efficiency measures and lowcarbon heating above and beyond the CCC’s balanced pathway timeline.
As a response, the Energy Efficiency Infrastructure Group (EEIG) have previously set out what a more ambitious public investment programme should look like between 2020-2025, the ambition of which closely matches the CCC’s tailwinds scenarios. This pathway would see 7 million homes upgraded with insulation to reach an EPC of C and 750,000 homes upgraded with heat pumps by 2025. This ambition would require £12.7 billion of public investment (matched by £15.6 billion in private investment) into scaling up fabric efficiency installations and £5.1 billion of public investment (matched by £2.2 billion in private investment) into delivering heat pump upgrades ….
… public funding is currently falling short of this pathway, particularly on heat pumps. In total we estimate there is consequently a £5.8 billion gap in public investment between now and 2025, £2.4–£3.4 billion for fabric efficiency,7 and £3.4 billion for heat pumps.
3.3 CHALLENGES IN DELIVERY
While some schemes have seen funding gradually increase over time, many still face several delivery challenges. Most prominently, the only consistent funding for energy efficiency measures for low-income households, the energy company obligation, has seen its most recent wave of funding (ECO4), which was due in April, delayed by seven months. Research suggests just under 19,000 homes missed out on bill saving energy efficiency measures as a result …. Even with funding in place, this scheme has also had longstanding challenges identifying and targeting where low-income earners actually live….
4.2 GREENGO FUNDING
To respond with the kind of policy support commensurate to the energy crisis we recommend introducing a ‘one stop shop’ for financial support known as ‘GreenGO’. This scheme would see an increase in public funding of £5.8 billion between now and 2025, over and above funding which has already been committed, of which £2.4 billion would go towards energy efficiency upgrades and £3.5 billion would go towards support for installing low-carbon heating. We therefore call on the chancellor to bring forward the £6 billion committed in the autumn statement for 2025-2028 to increase funding for this GreenGo programme from now until 2025.
Key features of the scheme would include:
- The continued scale up in funding for LADs, HUGs and the SHDF. For both LADs and the SHDF, the funding must be made more flexible to allow for situations where efficient delivery would mean upgrading housing or areas with multiple tenures.
- No reallocation of funding from HUGs or SHDF to others scheme such as ECO Plus.
- Full grants for fuel poor homes that would fund energy efficiency upgrades, additional measures such as water tanks and new radiators and low-carbon heating. We estimate the average cost of these grants would be approximately £12,000 per household, potentially falling to £9,500 by 2030. Substantial grants are already available to some extent for off-grid properties through the HUGs programme but other funding sources for these grants could include uplifting public funding for LADs and SHDF and increasing funding targets for ECO4.
- Grants for non-fuel poor homes of up to £7,500 per home until 2025. We estimate that any remaining costs would be comparable to the price of a high-end gas boiler. This funding could initially come from the government’s plans for a £1 billion ECO Plus able-to-pay scheme but would need to be uplifted with additional public investment.