Submission from Agility Eco Services Limited (HEA0123)

About Us

Agility Eco Services Limited (“AgilityEco”) is a private company and accredited BCorp that plans, manages and delivers energy efficiency and affordable warmth projects across Britain.

Our mission is to play a major role in eliminating fuel poverty, to deliver better outcomes for low income and vulnerable families and to prepare Britain’s homes for Net Zero.

We work closely with energy suppliers, local authorities, housing providers and charities to secure funding and reach those most in need. We then deliver a wide range of services through our carefully chosen national network of trusted and experienced survey and installation partners.

In 2022/23 we helped over 36,000 households achieve nearly £75 million in lifetime energy bill savings. You can find out more about our work at www.agilityeco.co.uk

Our reasons for responding to this consultation

We are delighted to be able to respond to this call for evidence. We are heavily involved in the practical delivery of insulation, heating and renewable generation measures into domestic homes. In 2022/23 the programmes that we fund and manage collectively installed over 94,000 energy efficiency measures into low income homes.

We also provided home energy advice and financial support to over 27,000 low income and vulnerable households through our Local Energy Advice Partnership (LEAP) scheme (www.applyforleap.org.uk).

So we have significant experience of what works and what doesn’t in this field, and are keen the government develops a sensible approach to heating homes that balances the ambition to decarbonise with the needs of fuel poor households.

Our responses to the Inquiry’s questions

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

We suggest the following principles need to be applied to government policy:

1. Consistency of existing grant schemes: The current ‘stop-start’ nature of energy efficiency schemes needs to end, and existing delivery programmes, such as ECO, LAD and HUG, need to be supported with funding allocated for the long-term. This will ensure that these schemes can achieve high levels of delivery and value for money. It will also help businesses and public bodies invest in the workforce and equipment necessary to ensure sufficient progress towards the 2030 fuel poverty and 2050 net zero targets.

2. Matching funding with the required outcome:  By all analysis the funding allocated, and resulting rate of progress falls far short of what is needed to deliver against the binding targets for both energy efficiency and fuel poverty.  A strategy which combines allocated (increased) government funding and unlocks private finance is required: the estimates for the cost of eliminating fuel poverty are in the tens of billions, and for achieving net zero in domestic homes in the hundreds of billions. Only a fraction of these costs can be covered by the taxpayer – the remainder must come from homeowners themselves, whether owner-occupiers or landlords. The majority of households do not have the up-front capital available to undertake the necessary measures. So policy changes are required to ensure appropriate financial instruments are in place to allow cash-poor property owners to confidently and successfully achieve the necessary upgrades.

3. Support for green skills development and job creation: Alongside finance must come the capacity of the industry to undertake the volume of work required. Efforts to recruit and train more workers have to date have been low key, and this must swiftly change, otherwise the ambitious retrofit targets being set by local and national government will be missed

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

We would like to highlight the following issues facing retrofit schemes in 2023:

1. Lack of consistency: the stop-start nature of programmes, the continual issuing of new guidance from regulators and the repeated need for councils to publish ECO Flex Statements of Intent and bid for funding have all hampered delivery and added unnecessarily to cost. Domestic retrofit is expensive and complicated and the creation of robust and trusted referral pathways and supply chains takes time. Every time a scheme is changed there is an inevitable dip in delivery and a loss of confidence from the organisations that deliver these schemes.

2. Inflation: the cost increases that all organisations have experienced in terms of labour and materials have impacted the viability of many schemes and the ability for companies to invest and grow to meet the decarbonisation challenge.

3. Lack of supply-chain capacity: the lack of trust that installation companies have in grant funded schemes means that they have not invested in staffing and equipment, or have exited scheme delivery altogether. This means that the current grant funded schemes are competing for delivery capacity with the ‘able-to-pay’ sector and non-domestic buildings.

4. Restricted eligibility: the design of the flagship ECO4, SHDF and HUG programmes, which combine multiple policy objectives, means that only a very small number of properties are eligible. The principles of whole house retrofit, a fabric-first approach, dealing with the ‘worst-first’ and the transition to low-carbon heating are all well-intentioned, but including them all in these schemes increases costs (due to the difficulty in generating leads) and holds back delivery.

3.    Which standards and assessment frameworks are needed to deliver a reliable, skilled workforce capable of transitioning UK homes to modern heating solutions?

The overarching Trustmark and MCS frameworks, and the use of PAS standards, are effective and sensible approaches to ensuring quality whole-house retrofit. The challenge now is to upskill existing sector staff, and train newcomers to the industry, in sufficient numbers to meet demand.

4.    How might the Government support innovation in delivering local solutions?

Local authorities and housing associations are leading the way, both individually and in partnership. For example, the Warmer Homes consortium (www.warmerhomes.org.uk) of 23 local authorities, led by Portsmouth City Council and supported by AgilityEco, has achieved significant success in installing heating and insulation measures into thousands of low income homes in the last 5 years. Providing additional funding to local authorities to enable all of them to properly engage with the retrofit agenda would help drive local solutions.

5.    What role should customer choice play in the future planning of energy networks for home heating?

It is important that households are positive about the changes being made to their heating systems. The low carbon transition offers the chance for households to lower their bills, and have a more healthy and comfortable home, as well as reducing their carbon footprint.

It is incumbent on the UK and devolved governments, councils, energy suppliers, energy networks, installers and other organisations working on this agenda to provide helpful and supportive information to households to enable them to make positive choices, rather than having changes forced upon them.

6.    Does the current state of consumer protections for low-carbon home technologies represent a barrier to uptake of these products?

No. The trust achieved through a strong compliance and quality assurance process will outweigh any short-term delay in delivery timescales. There is always room for improvement, and some tweaks around the requirements for e.g. single measure installation of easy-to-treat measures such as loft insulation. But overall the strengthening of consumer protection over the last few years has been the right thing to do.

7.    How will the public be able to afford the switch to decarbonised heating?

Firstly, this will require a reduction in costs coming from the economies of scale achieved with increased numbers of low carbon heating measure being installed.

It also needs trusted financial products that allow households to cover the cost of low carbon heating without needing pay up front. For example, green mortgages, low interest lending, charges on properties, etc.

8.    How will decarbonisation plans be drawn up in each area?

The Local Area Energy Planning process offers a holistic approach to ensuring that energy systems are decarbonised. The challenge will be to give these plans sufficient clout so that they are not blocked by the obligations and ambitions of individual agencies, nor national policy changes made by future governments.

9.    Do the current EPC frameworks help consumers make informed decisions on transition?

EPCs provide a basic review of a property’s energy efficiency but are not consumer-friendly reports and are not designed to provide the kind of comprehensive and tailored advice required when considering decarbonisation alongside energy costs. There are also issues with the scoring assumptions that determine a property’s EPC band, In particular, the outdated data on the carbon intensity of UK electricity production negatively affects the impact of a heat pump installation. The long expected switch to the latest version of SAP and RdSAP will help solve this.

10.     Do standards need to differ for different types of housing?

Standards should be comparable across social housing, owner-occupied homes and the private rented sector. Listed buildings, those in conversation areas and others with exceptional needs do deserve additional standards and safeguarding – as per the requirements in the PAS 2035 Path C approach for ‘high risk’ properties.

11.     What is the role of different levels of government in developing, funding and implementing schemes?

The lessons of the last decade in domestic retrofit in the UK have shown that the UK government has found it difficult to create and implement centralised schemes (for example, Green Homes Grant vouchers). It must therefore focus upon creating the right conditions for the range of required actors to be successful.  Principally this requires long-term certainty of funding, clear, objectives and targets and a consistent approach to delivery channels,  through enforcement obligations on energy suppliers and prioritisation of energy efficiency upgrades for local authorities.

Policy must involve the provision of sufficient taxpayer funding, and also the necessary policy and legislation to unlock much greater amounts of private funding. It will also be necessary for government to create sustainable, long-term legislative frameworks to avoid the stop-start nature of schemes to date.

Local authorities, working together on an appropriate geographical basis, have a huge opportunity to shape the success of energy efficiency schemes, and to ensure they are integrated on one hand with efforts to support households manage the cost-of-living crisis, and on the other hand to ensure homes, businesses and public organisations decarbonise in the most effective way possible.

August 2023