BRITAIN’S STREETS of Georgian row houses and Victorian terraces may be easy on the eye but they are not easy on the wallet. The country has some of the oldest, worst-built and draughtiest housing stock in Europe. One-in-four pounds spent on heating homes is lost through poor insulation. After energy prices quadrupled three years ago as a result of Russia’s invasion of Ukraine there was a renewed imperative to fix them up. What has happened since?
Not much. The Conservative government was distracted. Now Labour is working on a “Warm Homes Plan”, led by Miatta Fahnbulleh, junior minister for “energy consumers” in the Department for Energy. Her “lodestar”, she says, is lowering household bills because the “crazy oscillation in prices has been hugely upsetting for families”. Bills will rise by 6% on April 1st.
As well as lowering bills, insulating homes is a necessary part of the commitment to achieve net-zero greenhouse-gas emissions by 2050. Housing accounts for one-quarter of Britain’s energy consumption and one-seventh of emissions. For net zero, the carbon footprint of housing needs to fall by 40% over the next decade. That mostly entails replacing gas boilers with heat pumps powered by electricity. Fewer than 2% of homes in Britain are warmed by a heat pump, compared with 21% in France. According to the Climate Change Committee, which advises the government on emissions targets, by 2035 the figure needs to rise to 25%.
Policymakers want owners to insulate their buildings, too. First, because it will help them save money. Second, because heat pumps will increase the demand for electricity. As the most thermally efficient homes use 40% less energy than poorly insulated ones, unless homes are insulated first, the electricity grid may fail to supply enough power at peak times.
Britain assesses the thermal efficiency of housing using an “energy performance certificate” (EPC). Registered assessors briefly inspect a home, noting its age, construction material and the presence of retrofitting such as loft insulation and double-glazing. Every home must have an EPC—which is valid for ten years—before it is marketed for sale or rent. The headline figure is a measure of a home’s total cost of energy per square metre of floor space and bucketed into ratings from A (the least costly homes) to G (the most expensive).
Yet this system, introduced 18 years ago, is not fit for purpose. Because its headline metric is based on cost not carbon, it penalises the introduction of heat pumps, which can be more costly to run than gas boilers. And an EPC makes too many assumptions about energy prices, behaviour and weather to be a meaningful tool for households. As a result, there is a 20% gap between the theoretical use implied by an EPC and real-world bills.
In response, the government has proposed that the single EPC figure be replaced at the end of 2026 with half a dozen new metrics. It also wants to introduce a more thorough energy-assessment process (the “home energy model”) and mandate that it be done every three to five years. This risks overwhelming households. “If my gran doesn’t understand it,” says Ms Fahnbulleh, “we’ve got it wrong.”
Retrofitting Britain’s draughty homes is easier said than done. The Labour government wants 6m rented homes to meet a minimum energy-efficiency standard of EPC C (or its equivalent) by 2030. And all new tenancies will have to meet this standard by 2028. An estimated 3.7m homes—2.5m of them in the private-rented sector—will not make the grade. Landlords will need to demonstrate that they have spent at least £15,000 ($19,300) on improving their property before they are given an exemption for a non-compliant building.
That has set the cat among the pigeons for baby-boomers with draughty buy-to-let portfolios. Landlords (median age, 59) already feeling the heat because of changes to tenancy law and the investment benefits of property may simply decide to sell up.
Meanwhile, the government’s plans for 1.5m homes to be built during this five-year parliament—a 30% rise on the last one—will also go some way to derailing its net-zero goals. That is because the “Future Homes Standard”, which mandates a de-facto ban on gas boilers in new properties, has taken far too long to implement. Until its full implementation in 2027, about 700,000 new homes will have been built that will (eventually) need to be retrofitted with a heat pump. It is, Ms Fahnbulleh admits, the “definition of madness”.
She does not want to “force it [retrofit] down people’s throats”, but instead seeks to devise a set of incentives and support schemes that will make retrofitting a “no brainer”. The government already offers £7,500 grants for households to install heat pumps and has pledged £13.2bn for retrofitting over the five years of this parliament. Yet such funding will be dwarfed by the £60bn that the previous government spent on capping household bills after gas prices spiked in 2022. Ms Fahnbulleh is in a hurry to make progress before disaster strikes again, she says, “because we know another crisis will come.” ■
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