EEH0118

Written evidence from Stonewater

Stonewater is a leading social housing provider, with a mission to deliver good quality, affordable homes to people who need them most.

We manage around 32,500 homes in England for over 70,000 customers, including affordable properties for general rent, shared ownership and sale, alongside specialist accommodation such as retirement and supported living schemes for older and vulnerable people, domestic abuse refuges, a dedicated LGBTQ+ Safe Space, and young people’s foyers.

Stonewater is ambitious in our plans to respond to the global climate emergency and achieve zero-carbon by 2050, and want to work closely with the Government to look at how the social housing sector can lead the way on this issue.

Key points

Setting the scene

• Making the UK’s housing stock energy and fuel efficient needs to be at the heart of our efforts to reduce our carbon emissions, and ensure we hit our net zero by 2050 target.

• There are approximately 4 million socially rented homes in the UK and it is estimated that only 56% of these homes (approx. 2.25 million) currently meet EPC band C.
• 
  Recent analysis by Savills suggests that there is an average cost of £25,000 per dwelling for the upgrades required to retrofit social homes. This equates to approximately £4.3bn of investment per annum over 25 years, on top of existing planned maintenance.

• Currently, the Government intends to provide £3.8bn in total through the Social Housing Decarbonisation Fund.

• 71% of the social housing sector sees capital grant funding as the only viable solution to ensuring that retrofit is possible, alongside an established plan and roadmap to doing so.

• Only 56% of social housing stock currently meets EPC band C standard, the Government’s minimum ambition by 2035. Without further support and accelerated intervention, the UK’s current rate of installation means that we are on track to miss the 2035 deadline by some 60 years.

How Stonewater is leading the sector

• Stonewater wants to work with the Government and housing sector to meet the retrofit challenge, and has made doing so a priority.

• As a first step in this commitment, we wanted to identify a viable solution to the issue. That is why, in January 2020, we commissioned think tank IPPR to develop a pathway to retrofitting social housing, as well as establishing ways to fund this.

• The report, All hands to the pump: A home improvement plan for England, makes the case for an ambitious investment programme to deliver household improvements across the country to be put at the heart of the economic recovery from Covid-19. The report included 21 recommendations to Government to support the delivery of a framework for retrofit, as well as a method for funding it.

• Stonewater is already committed to running costs for residents by improving the energy efficiency of our homes to a minimum of band E by the end of 2020, a minimum of Band D by 2025 and a minimum of band C by 2030 – five years ahead of target.

• However, we know that this is not enough. We are therefore looking at modelling what would be required to get all of our homes to EPC Band B. This would require a whole house solution, not just retrofitting boilers, and significant investment. Our current modelling suggests that we would need to upgrade 25,552 homes with new heating systems and other measures.

• We estimate that this would cost, on average, £10,000 to do this above existing costs – though this will of course vary depending on the homes. There is, for example, a small number of our properties which will require investment of approximately £20,000. This is all against a backdrop of reduced incomed – to deliver all of these priorities without government support will be a significant challenge.

• In Oxford we are already partnering with Kensa to retrofit night storage heaters with ground source heat pumps with smart controls on 60 of our homes – which will save our customers money and provide a low carbon heating solution.

• The project in Oxford is part of the Energy Superhub Oxford project, one of only four UK demonstrator projects for smart local energy systems. We will be utilising smart thermostats with time of use tariffs to aid grid balancing and further reduce costs for customers.

• We are undertaking a feasibility study for the use of local energy systems in new and existing homes. Combining renewable technologies, battery storage and artificial intelligence we believe this could provide a viable solution to decarbonise our stock whilst reducing costs for customers. This could be applied to a high electrification pathway or new or existing heat networks.

What we need

• Because there is no clear pathway or plan, as well as significantly less funding than required available, the housing sector is not prioritising decarbonisation. A longer-term roadmap and funding plan for retrofit would give the sector confidence, and would also allow the supply chain to prepare for a significant increase in orders over the coming years.

• The Government must provide more, longer-term funding for decarbonisation of existing housing – above and beyond what has already been announced. This will allow the sector to plan ahead and for the supply chain to scale up. With only a one-year Spending Review in 2021/22, we are concerned that any funding will be short-term.

• The Government should identify a clear technological pathway that is achievable in the short term. We are of the view that it is unlikely that hydrogen solutions will be available at the level required for several years, causing significant delays to an already pressing issue.

• We also believe that there should be a focus on existing, achievable technologies. Too often we look to revolutionary technology, when actually we can get started now with what is currently available and achieve the same results quicker.

• Existing funding mechanisms should be made more accessible. For example, when applying for the voucher element of Green Homes Grant, local authorities are required to be the lead bidders but many LAs do not have their own stock or have the resource to lead bids. This means that there is difficulty in finding local authorities capable of processing the applications, or who have a particular desire to as it does not directly benefit them

• Housing associations are able to apply for the Social Housing Decarbonisation Fund demonstrator programme but it requires local authorities to lead the bid, which presents a challenge for organisations like Stonewater. This is because housing associations are better placed to drive improvements across the country. However, we are more than happy to collaborate at a local level to drive improvement across tenures. We believe local energy systems/solutions to be a viable solution and a way to provide a good blend of technological approaches nationally.

November 2020