Hello, and welcome to your weekly pulse of public policy. The prompt for this week’s article was this eye-catching tweet from Torsten Bell.
It reminded me that I had never really looked at the state of play around insulation policy, and also suggests rather starkly that something went wrong in the early 2010s. Of course, Insulate Britain have succeeded in drawing some attention to the issue (although perhaps not as much as they wanted to, and perhaps not as positively as they intended). At first glance it seems remarkable that so many people were moved to civil disobedience by something as mundane as insulation. But they were right to identify both the magnitude and the importance of the challenge, and the disparity between them and our paltry current policy response. With new pressures on global energy supply, and a new energy strategy apparently due from the Government this week, now seems like a good time to get into the issue.
Firstly: what are the problems, and why do they need addressing? The problem is, in short, that the UK has the oldest and coldest housing stock in Europe: the poor energy efficiency is the real problem, but much of it flows from the age and nature of our housing. Housing built with uninsulated solid brick walls – often meaning the brick housing with which our towns and cities expanded during the nineteenth and early twentieth centuries – are a particular problem, and make up 28% of our housing stock, although there are plenty of thermally inefficient homes of other types. Given that we are neither building nor demolishing homes especially quickly, around 80-85% of the homes that will be inhabited in 2050 are already standing.
There are multiple good reasons for doing something about this. One is the desirability of reducing the cost of heating a home: even without the current startling rises in energy costs, fuel poverty has been an increasingly well recognised problem, and presents households with stark choices including between heating and eating. And of course there is the need to move away from fossil fuels, which is in some ways a double whammy: making the transition will obviously be easier and quicker if we can reduce the amount of energy we need to find through new sources; but also, the technical solutions for doing this will only work effectively in well insulated buildings. With domestic energy consumption accounting for about 20% of the UK’s greenhouse gas emissions, and over three quarters of that energy being used for heating and hot water, it’s not an area that can be overlooked if we are to achieve Net Zero.
The nature of the likely energy solutions and the need for insulation go hand-in-hand. Our heating and hot water needs will in future be met by electricity, and the dominant heating technology appears likely to be heat pumps (although there are other options, such as infrared heating). Heat pumps are only really effective in well insulated buildings: while they are efficient and effective, they can’t readily provide a quick boost to a room’s temperature in the way that gas central heating can, so the ability to retain heat and manage rooms at steady temperatures is important. They also have different requirements for distributing heat around the home: under-floor heating is the best solution, and if radiators are used they really need to be somewhat larger than radiators for gas central heating.
In fact, so significant are the changes that will be needed to most homes that the engineering sector is using the phrase ‘deep retrofit’: this includes upgrades to walls, windows and roof insulation, as well as the fitting of new heating systems and potentially solar panels too, plus work to ensure ventilation is adequate and moisture doesn’t get trapped behind newly installed insulation panels and go on to cause a massive problem with mould. The Institution of Engineering and Technology estimates the cost at £10,000 to £19,000 for a single home. Achieving this at the necessary scale will require work being done at a rate of more than 1.5 homes per minute between now and 2050, and even that assumes each home is retrofitted in a single go, rather than with several modifications over time.
The scale of the challenge is therefore breathtaking. That said, we have achieved a major conversion in our heating before, with the widespread conversion of homes to gas central heating in the 1960s and 70s. This entailed the conversion of 13 million properties, and involved 12 regional gas boards, the mobilisation of substantial industrial capacity to manufacture new appliances, the training and deployment of contractors, and a large scale communications campaign. The work was co-ordinated by central government, with the publicly owned Gas Council having overall responsibility. It was one of the largest peacetime infrastructure programmes in modern British history.
A full scale deep retrofit programme, however, would have to be substantially bigger even than that. Rather than 13 million homes, it would need to cover 28 to 29 million. The cost of adapting each home to gas central heating was only around £1,700 in 2019 prices, maybe only a tenth of what work might cost this time round. And yet today we haven’t initiated a programme even on the scale of the 1960s exercise, never mind what’s actually required.
Not only is a programme not in place, but the Government hasn’t even started having a serious conversation with the public about the issue. If it ever does, all sorts of further issues will come up. One is that deep retrofit will change our experience of some urban environments. Even buildings with cavity walls will show external signs of some of their fabric being refreshed, but the big implications will be for older brick buildings: with no cavity wall, they will need insulation fitting either internally or externally. The former is highly intrusive: the insulation can be around 10cm thick, so it reduces floor space, requires redecorating and re-fitting plug sockets and so on. But adding external cladding to our Edwardian, Victorian and Georgian buildings comes with all sorts of aesthetic and heritage considerations, and possibly a need to look at how planning laws will work for it as well.
This is a good example of a policy issue where the private sector and civil society has done a great deal of the necessary thinking, but government has not stepped in to pick it up: as well as the IET’s work (which was clearly a big influence on the founding thinking of Insulate Britain), the Construction Leadership Council has developed a National Refit Strategy, which has modelled how the work would need to be rolled out, including phases of training and full deployment.
So, while we have an idea of what needs to be done, what’s actually happening? And what’s behind that drop in insulation rates in the early 2010s? As that stark chart suggests, there was a big change in policy around that time, and it has been chopped and changed further since then. At the start of the 2010s, a drive to reduce carbon emissions was underway under the banner of the Carbon Emissions Reduction Target (CERT), and aligned with this was work to reduce fuel poverty as well: the CERT and Warm Front programmes offered discounted or free insulation, the latter targeted at lower income households, funded through a levy on energy bills.
The Warm Front scheme dated back to 2000, and assisted 2.3 million homes in England. However, its funding was reduced at the October 2010 spending review, from £345 million in 2010/11 to £110 million in 2011/12 and £100 million in 2012/13. The number of households assisted dropped off accordingly, and the programme was replaced by the Green Deal.
The Green Deal took a different approach to Warm Front, with works funded by loans at commercial rates (at the Treasury’s insistence, apparently), paid back via energy bills. It ended in 2015, and the short duration of the scheme hampered the development of the home insulation market, with a reported 30,000 job losses after it ended.
However, there was a second plank to policy after the CERT / Warm Front programme ended: the Energy Company Obligation (ECO), which is still going. This is an obligation on companies to fund improvements for low income or vulnerable households, so is generally accessible only to households receiving certain welfare benefits.
Following the Green Deal, the next policy initiative was the Green Homes Grant: launched in 2020 and closed in 2021, it is already a notorious policy fiasco. It made grants of up to £5,000 available to homeowners, to cover up to two thirds of the cost of a specified range of works, including insulation and the fitting of heat pumps (or £10,000 to cover up to 100% of costs for low income households). The Chancellor set an aim of improving 600,000 homes, but the scheme closed having reached only 10% of that: the short funding window made it hard for the market to respond and invest in capacity to carry out works; and reports soon abounded of vouchers not being distributed, tradespeople being left out of pocket, and a rush of poor quality installations towards the end of the funding window.
At the time of writing, there appear to be schemes for renewable heating systems but not insulation (apart from the ECO). The Domestic Renewable Heat Initiative enables households who have installed a renewable heating source to receive quarterly payments over seven years (though it doesn’t appear to involve any up-front cash to get the work done). This April, it will be replaced by the Boiler Upgrade Scheme, which provides grants for replacing boilers with heat pumps, to the tune of £5,000 (air source) or £6,000 (ground source). However, with only £450 million available, at most it will help 90,000 households. Also, there is no help to fund insulation: your home must have a sufficiently good Energy Performance Certificate already to be eligible for the grant. Any home with outstanding recommendations for loft or cavity wall insulation will have to get that remedied first, plus the grant won’t cover the extra costs of deep retrofit (upgrading or replacing the heating distribution system in the home, and any necessary work on ventilation).
So, what’s the outlook? In short, it’s bleak. As the Climate Change Committee makes clear, under current policy there is essentially no prospect of upgrading our housing stock, either in terms of heating systems or in terms of insulation, to meet the targets we have set. There is no sign of the substantial, long-term programme that would be needed to stimulate the markets in supply and installation, and help households with the cost of making the changes.
This carries a curious implication for politics. As Robert Saunders and no doubt others have astutely warned, the campaigning forces that proved so influential in taking the United Kingdom out of the European Union appear to be mounting an attack on the idea of Net Zero. Whether their efforts will prove quite so effective up against such a complex issue is another question: it’s no surprise they want to re-cast it as a binary contest such as a referendum that they might have a chance of winning. But it is significant enough that they are mobilising, considering the profound influence their political successes had on policy decisions within the Conservative Party in particular (I’m thinking especially of Cameron feeling the need to offer an EU referendum).
But if these forces are gearing up for an assault on the current government’s Net Zero ambitions, what is the implication of the stark fact that the policies it is pursuing do not amount to a Net Zero policy programme? Is its political aim to do just enough to mollify and retain voters who are concerned about climate change? What if it decides its better political option is to bin the Net Zero ambition? It can hardly turn around and say, “forget it, we weren’t serious about it anyway,” can it…? Probably not: but it might decide that the path of least resistance is to find a way to reverse out of its notional commitments, rather than have a huge political fight to defend a policy agenda that it is not actually pursuing.
Thanks for reading
I’m acutely aware that the above is quite a superficial run through a complex issue (I didn’t have time to get into the important role local government could play as a broker between households and an emerging retrofit sector, to get works underway, for instance). If you think I’ve got something wrong, or would like to suggest further reading on the subject, please hit reply or tweet me @JMKPolicy.