Homes retrofit ‘could cut household emissions by a fifth’

A plan to retrofit 8.7m homes by 2023/24 could create over 500,000 new jobs, reduce household carbon emissions by 21 per cent by 2023/24 and cut household bills by an average of £418, according to new research published by the New Economics Foundation (NEF).

A plan of this scale would constitute the largest infrastructure project the UK has seen - preventing thousands of premature deaths from cold homes and responding to the unemployment emergency from Covid-19.

NEF analysis of over 30 independent forecasts for the UK economy shows that GDP is set to be £136bn (2019 prices, 6 per cent) lower by the end of 2021 compared with pre-Covid forecasts, unless government takes action now. However, a four-year programme to retrofit millions of UK homes could boost annual economic activity by £28bn by 2021 compared to previous forecasts, and by £36bn by 2023/24.

The proposals represent a genuine stimulus on the scale of a‘New Deal’, spearheaded by a National Retrofitting Taskforce (NFT) responsible for ensuring every single UK home meets excellent energy efficient standards (Energy Performance Certificate rating“C”) by 2030. The research includes detailed economic modelling models the impact of the taskforce, finding that it would: 

• create jobs: 206,000 new full-time equivalent jobs in retrofitting industries would be created across all regions by the end of 2021. Taken together the direct and indirect employment impacts are therefore estimated to sustain an average of 515,000 new jobs between 2020 – 2024. New direct jobs created are worth 22 per cent of all employment in construction between 2020 – 2024;

• boost national income: The programme could boost annual economic activity by £27.96bn (1.28 per cent) by 2021 compared to previous forecasts, and by £36.34bn (1.58) by 2023/24 (2019 prices);

• cut household bills: There would be an average annual energy bill savings of around £418 for each home retrofitted by 2023/?24;

• cut emissions: Approximately 19.23MtCO/year of emissions would be saved by 2023/24, or 21 per cent of 2019 emissions from UK’s homes. This is a cumulative 40.9MtCOby 2023/24.

To meet net-zero ambitions and tackle UK fuel poverty the report recommends the four-year programme has the following features, alongside the new National Retrofitting Taskforce:

• public and private investment: Public capital investment of an average of £8.66bn per year for four years, much of it supporting low-income households through grants. The cumulative government investment of £34.7bn between 2020/21 and 2023/24 would unlock around £72bn of private capital investment over the same period.

• fiscal incentives: Tax changes in the form of a fiscally neutral, variable Stamp Duty Land Tax for more efficient homes, and equalising the VAT treatment for all retrofitting works at 5 per cent, provided the whole property is brought above certain EPC thresholds (paid for elsewhere through higher taxes on the richest households). In addition, the package includes green mortgages, public-backed zero-interest loans and a boiler scrappage scheme, as incentives for ?‘able to pay’ homeowners and landlords.

• strengthened Building Regulations: This would include new mandatory energy efficiency works for‘consequential improvements’, and support new business models, standards, supply chains and skills necessary to provide‘whole-house retrofits’ for 8.7m UK homes.

• local engagement and delivery: A long-term Area-Based-Delivery approach, with local authorities playing a core role in informing and engaging communities through awareness raising initiatives, tackling fuel poverty, creating demand and growing local supply chains.

Hanna Wheatley, senior researcher at the New Economics Foundation, said: “The green stimulus for housing that we have proposed would not only contribute to crisis recovery but would contribute to how the UK tackles climate change, poverty and the government’s levelling up agenda, creating a housing stock and economy fit for the century to come. In 2020, we cannot afford to recover from the recession in a way that doesn’t set us on a path towards ambitious climate goals, reduce inequality, and create a more inclusive and resilient society than we had before.”

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