UK government yet to spend one-third of funding for housing retrofits

28th February 2023

The UK government has still not spent one-third of the funding pledged to make buildings energy efficient and decarbonise heat, new analysis has revealed.

The Conservatives’ 2019 manifesto promised a total of £9.2bn for upgrades such as heat pumps and insulation by 2030, of which £6.6bn is due by 2025.

However, research by the climate and energy think tank E3G shows that £2.2bn of the £6.6bn remains unallocated, including £1.5bn for the Home Upgrade Grant.

Furthermore, the research suggests that an additional £8.7bn of funding is needed for energy efficiency and heat decarbonisation if the UK is to meet its legally-binding carbon budgets.

The researchers also warn of a 'warm homes postcode lottery', with households living in areas struggling with the retrofit challenge falling further behind due to the competitive nature of funding allocated to local authorities.

Commenting on the findings, IEMA’s Deputy CEO, Martin Baxter, said: “Retrofitting our leaky buildings and homes will be essential if the UK is to meet its carbon budgets and achieve net zero by 2050.

“However, regional differences in the availability of support, skills and subsidies are making it difficult for businesses to invest.

"By providing long-term certainty through regulations and economic incentives, the government can ramp up delivery of energy efficiency and clean heat across the country in the Spring Budget 2023.

"IEMA will continue to support the government in delivering on its policies by offering the training and guidance required for the low-carbon transition."

The unspent funding is illustrated below:

Source: E3G

According to the researchers, years of “boom-bust policy-making” have left the retrofitting industry decimated, and a lack of long-term certainty is compounded by further “nuts and bolts” challenges associated with delivering current government-backed retrofit schemes.

The UK’s cornerstone fuel poverty energy efficiency programme, ECO, is currently delivering at around a quarter of its intended scope, and energy efficiency installers report problems associated with meeting the scheme’s criteria.

To build up the retrofit market rapidly and sustainably, E3G recommends:

1) Long-term regulations and economic incentives, including tightening energy efficiency standards for the private rented sector, confirming timelines for phasing out fossil heating systems, and signalling the introduction of an Energy Saving Stamp Duty

2) Support installers to build the skills, competencies and capacity to deliver programmes to a high standard across the country – providing long-term funding with sufficient timelines to deliver local training programmes

3) Build capacity and competence among local authorities to launch and deliver retrofit schemes in their areas, providing resources for hiring project staff

4) Boost household awareness and roll out trusted, tailored advice services across the country.

Juliet Phillips, Senior Policy Advisor at E3G, said: “Getting on track for UK climate and energy security targets will require a significant step-up from today’s level of investment in energy efficiency and heat pumps.

"The forthcoming Spring Budget provides a platform for the government to launch a decade-long programme to support warmer homes, green industries and good jobs across the whole of the UK.”

IEMA's Green Careers Hub can help people from any sector or background understand how they can play a role in the wider green economy.

Photo by Richard Bell on Unsplash

Graphic credit: E3G

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