Written evidence submitted by Ashden Climate Solutions (HEA0017)

About Ashden

Ashden Climate Solutions is a charity whose mission is to accelerate transformative climate solutions and build a more just world. We have been supporting UK local authorities on delivering retrofit plans for the last three years, by showcasing innovative solutions through our annual Ashden Awards, and by convening regional learning networks.

Q1 What policy changes are needed to deliver energy efficient homes across the UK?

We support the calls for a National Retrofit Strategy as set out by the Construction Industry Training Board (CITB) to be delivered over 10 years with £60bn public funding, providing the long-term certainty for businesses, training providers and private finance to invest in retrofit. Whilst most of this £60bn investment will be capital funding, £2bn should be allocated to build local capacity and set up local retrofit hubs. 

In the short term a programme of free basic energy saving measures, including loft and cavity wall insulation, draught-proofing, and smart heating controls, is needed for millions of low and middle income homes facing fuel poverty this winter and beyond.

We also call for:  

Finance and regulation 

•                   Introduce further incentives and finance for retrofit, including a fiscally neutral variable Stamp Duty Land Tax for more efficient homes. Government should also create a revolving loan fund and/or low-cost finance for home energy retrofitting 
•                   Replace the current disjointed and inflexible retrofit schemes, by devolving funds to local areas through allocation rather than competition, building on the trailblazer deals with Greater Manchester Combined Authority and West Midlands Combined Authority announced in the Spring 2023 budget. Allocations should be informed by fuel poverty levels to target energy efficiency spending in areas of most need.
•                   Reform of EPCs to include four primary metrics: energy (total use intensity), fabric (space heating demand), heating (system type) and cost (energy cost intensity), as recommended by the Committee on Climate Change. 
•                   Consideration of a minimum energy efficiency standard for homes in all tenures by 2033. 

Information and Advice 

•                   A national public information campaign on home energy saving which includes advice on retrofit and can be tailored for local authority use, and provide support for community-led promotion of retrofit. 

Private rented sector  

•                   Introduce the proposed regulations on the energy performance of private rented homes so that these homes are EPC ‘C’ by 2028, with a cost cap on landlords of £15,000 to drive greater carbon emissions reductions across a larger number of homes and deeper energy bill reductions for tenants than the currently proposed £10,000 cap.  
•                   Ensure councils have sufficient resources for ensuring compliance with the regulations on private rented homes.  

Planning regulations 

•                   Reform the planning system and building regulations to enable local authorities to require the installation of energy efficiency measures when owners are making changes to a property that requires permission from their council, and ensure there is adequate funding for building control officers to enforce this.  
•                   Revise the National Planning Policy Framework (NPPF) to encourage the installation of energy efficiency measures in non-listed buildings in conservation areas. Provide funding, professional advice and technical support to enable sympathetic retrofitting to listed buildings.  
•                   Reform the planning system so that external wall insulation with non-combustible materials is permitted development in all cases, except for conservation areas and listed buildings.  

Developing skills and good retrofit jobs 

Over 400,000 builders and skilled retrofit professionals are needed to retrofit the UK’s leaky homes, but just 200,000 people currently work on maintaining and upgrading existing homes. Across the construction sector the skills gap has grown by 200,000 since 2010. 75% of FE college learners taking construction-related courses do not enter the construction sector. 

Boosting retrofit demand and the supply chain must go hand-in-hand; some councils have handed back government funds for energy efficiency due to a lack of installers. Long term certainty of policy and funding is essential for the supply chain and education providers to have the confidence to scale up skills development.

Solving the retrofit skills challenge requires ministers working on energy and climate to work closely with DfE to make sure that skills development is aligned with demand and that trainees have jobs to go to. The way that publicly procured energy efficiency work such as ECO4 is delivered is not always conducive to good pay or to skills development. Managing agents/main contractors are not incentivised to ensure that sub-contractors are fairly paid and trained. 

To ensure the UK has the skilled practitioners needed to make use of government and private funding, we would urge the UK government to:  

•                   Create a retrofit skills mission, with a national retrofit skills plan to include: apprenticeship reform, funding and support for FE colleges, development of skills/career pathways, mentoring of newly qualified retrofitters and a national publicity campaign to attract trainees including women and those from diverse backgrounds. 
•                   Integrate skills development into government-funded retrofit schemes by setting minimum procurement criteria to encourage local authorities to stimulate skills development through the retrofit programmes that they commission and deliver, and setting training targets across all relevant retrofit skills for suppliers delivering ECO schemes. Ensure that government programmes offer long term funding so that skills targets can be achieved, and to minimise risk to SMEs.  
•                   Devolution of skills funding to local areas, so local government can work with colleges and employers to put retrofit at the heart of Local Skills Improvement Plans.  
•                   Increase the apprenticeship wage for construction apprentices, to reduce the high drop-off rate amongst construction trainees – currently 75% of FE college learners taking construction-related courses do not enter the construction sector.  
•                   Reform apprenticeships by revising apprenticeship standards to include a foundational buildings and energy module in all trades apprenticeships and making it easier for SMEs to take on apprentices by supporting shared apprenticeship schemes and supporting levy transfer to smaller firms. 
•                   Support and fund the FE college sector who train over 100,000 construction workers each year to hire experienced instructors and develop training rigs for retrofit, to establish regional centres of excellence and to set up a national partnership between employer organisations and the college sector to scale up retrofit training.   
•                   Primary and secondary school level education will play a key role in equipping students with the skills needed to take meaningful climate action. Therefore sustainability should be embedded as a statutory feature of career guidance in UK schools by 2025. 

Case studies: 

Below are some case studies of successful place-based action on energy efficiency and skills development 

NE Derbyshire Council (LAD scheme delivery), Sutton (Energiesprong), Liverpool City Council (MEES enforcement and landlord licensing), Cosy Homes Oxfordshire (able-to-pay) 

Case studies: B4Box and Stockport Homes – multi-trade apprenticeships. NE Derbyshire Council – LAD scheme delivering skills training, The Retrofit Academy – partnering with local authorities to deliver retrofit skills.  

Q2 What are the key factors contributing to the under-delivery of the UK’s government-backed retrofit schemes?

We are basing this response on our work with councils in the North East and South West regions of England where we have running regional retrofit learning hubs since January 2021.

One of the main barriers for councils is the existence of numerous, short-term competitive funding streams with ever-changing eligibility criteria for the types of homes and households that can benefit.  

Energy efficiency improvements for low-income homes are funded through three main streams: 

•                   ECO, delivered since 2013 by energy providers with many households referred by councils; the latest iterations of this funding are ECO4 and ECO+ , now re-branded as the ‘Great British Insulation Scheme’, 
•                   the Social Housing Decarbonisation Fund, delivered by councils and housing associations. 
•                   The Green Homes Grant scheme, delivered by councils, which has been rolled out in several phases, the latest of which is the Sustainable Warmth fund. 

Despite pressing need, far fewer homes have benefited from ECO funding since March 2022 – just 32,684 homes were upgraded in the period April 2022 – March 2023 compared to 143,946 between April 2021 and March 2022. This is due to delays in the announcement of new funding rounds, and eligibility criteria that focus on homes off the gas grid. The new Great British Insulation Scheme has broader eligibility criteria but is less generous -– campaign group National Energy Action estimates that it could take a further 300 years for the scheme to fully address the governments’ own fuel poverty targets. 

Funding for council-led retrofit schemes, introduced in 2020, has been welcomed across the country. But the short-term nature of funding streams for council-delivered retrofit programmes creates a constant process of bid-writing, with local authorities best placed to navigate the process attracting a high proportion of funding. Analysis by not-for-profit consultancy Regen shows that those English regions with the highest fuel poverty and coldest winter climates are not receiving the most funding through government schemes.  Ever-changing eligibility criteria and the barrier to blending financing streams that this creates mean that it is difficult to plan strategically, or deliver a street-by-street area-based approach to retrofit.  

Short term funding also creates uncertainty for the supply chain, and for education providers who are left reluctant to invest in training. Funding uncertainty has caused some local businesses to collapse, discouraging others from participating in future programmes. 

Q4 How might the Government support innovation in delivering local solutions?

Local authorities are well positioned to boost retrofit through raising public awareness, providing trusted advice, engaging with hard-to-reach residents, delivering grant-funded schemes, and building a local market for tradespeople. 

But there are major barriers including the existence of numerous, short-term competitive funding streams with ever-changing eligibility criteria for the types of homes and households that can benefit, which make strategic planning difficult and waste valuable council officer time in a continuous bidding cycle. Local one-stop-shops can provide trusted advice and retrofit delivery for residents but require set-up funding. Planning regulations can be too restrictive particularly in conservation areas.

We recommend that:

•                   Replace the current disjointed and inflexible retrofit schemes, by devolving funds to local areas through allocation rather than competition, building on the trailblazer deals with Greater Manchester Combined Authority and West Midlands Combined Authority announced in the Spring 2023 budget. Allocations should be informed by fuel poverty levels to target energy efficiency spending in areas of most need.
•                   Allocate £2bn to build local capacity and set up local retrofit hubs. 
•                   Revise the National Planning Policy Framework (NPPF) to encourage the installation of energy efficiency measures in non-listed buildings in conservation areas.

Many councils such as Leeds (area based delivery approach), Sutton (Energiesprong), Devon (Energy Saving Devon home energy plans delivered in partnership with local community groups), and NE Derbyshire Council (delivery of government schemes) are showing the way but need more support to scale up their work.

August 2023