Written evidence submitted by the Local Government Association (DHH0019) |
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1.1. The Local Government Association (LGA) is the national voice of local government. We are a politically-led, cross-party membership organisation, representing councils from England and Wales.
1.2. Our role is to support, promote and improve local government, and raise national awareness of the work of councils. Our ultimate ambition is to support councils to deliver local solutions to national problems.
2.1. Decarbonising our homes and heat supply, while increasing the quality and carbon neutrality of both existing housing stock and new build homes, will be integral to achieving net zero carbon by 2050. If these measures are accelerated and expanded, it can help to overcome the unprecedented challenge of economic and social recovery following the COVID-19 crisis.
2.2. Local government plays a vital role in accelerating the shift towards achieving net carbon zero. The LGA supports local authorities in their ambition to tackle climate change and reduce carbon emissions, while improving housing. With nearly two thirds of councils in England aiming to be carbon neutral 20 years before the national target, councils are well placed to support Government to meet its net zero carbon ambitions by 2050. This is further demonstrated by the LGA’s climate emergency declaration together with around 230 councils.
2.3. There is a clear link between decarbonisation and energy efficiency. The decarbonisation of buildings is contingent on energy efficiency, and the heat supply of buildings must also be decarbonised. Investing in energy efficiency can address fuel poverty, reduce carbon emissions by reducing demand, and reduce energy demand and fuel bills for the afford-to-pay sector.
2.4. Most recently COVID-19 has revealed and exacerbated societal inequalities across all sectors including, and especially, housing. According to the Committee for Climate Change (CCC) now is the time to ensure that climate policies are fair for all. This requires ensuring that low-carbon heating is rolled out across our existing housing stock while alleviating fuel poverty and stimulating the economy.
2.5. The Business, Energy and Industrial Strategy (BEIS) Committee pointed to the CCC’s findings in 2019 of the wider net benefits from energy efficiency, including household savings of around £290 per year between 2008 and 2017, and economic growth benefits of £92.7 billion. The house building and construction industry has an opportunity to develop the necessary supply chains, skills and construction practices to deliver low-carbon heat and highly energy efficient new homes and reap the long-term benefits of the low carbon transition.
2.6. National government can be instrumental in delivering to councils the tools, powers and flexibilities that they need to improve quality standards and decarbonise heat in existing and new build homes, and deliver the types of new homes and infrastructure their communities need. Councils with housing responsibilities are particularly well placed to pinpoint vulnerable households, drawing together partnerships to leverage funding and align comprehensive activity at a local level.
2.7. In order for councils to deliver on this agenda, they will need greater resources. The current projected funding shortfall across local government will limit councils’ ability to upskill staff and carry out additional work in this space. As part of this, the Government should urgently bring forward its commitment to a £3.8 billion capital Social Housing Decarbonisation Fund.
2.8. The Government should also ensure councils have the flexibility to set energy efficiency standards above the current building regulation standards to ensure they can meet their own ambitions to achieve net zero carbon and support better quality housing. These standards should cover both existing and new homes. This will also help grow and develop the skills base in the newly emerging green economy.
2.9. In our submission on the Future Homes Standard, we supported proposals to increase the quality and carbon neutrality of both new build and existing housing stock as part of the wider transition necessary to achieve net zero carbon across all sectors.
2.10. Any proposals regarding existing housing must acknowledge and recognise cost implications and will require greater government investment to ensure delivery on all these programmes.
2.11. The LGA supports the principle of a ‘whole house’ approach to low-carbon retrofitting, which considers the house as an energy system with interdependent parts, and takes into consideration local characteristics such as climate and site, underpinned by holistic targets around energy efficiency, decarbonised heat and renewable energy generation.
3.1. The Comprehensive Spending Review 2020 offers an opportunity for additional capital investment for the delivery of environmentally friendly homes and commercial buildings. As a significant majority of the homes that will be in place by 2050 have already been built, this should include retrofitting existing homes as well as new builds. In our CSR submission we have called for the Government to work with councils to urgently bring forward its commitment to a £3.8 billion capital Social Housing Decarbonisation Fund. This would provide a national stimulus to kick start the comprehensive energy retrofit of all homes by investing in an energy revolution in social housing.
3.2. Analysis undertaken by Savills for the LGA (available on request) estimates that the additional investment costs to achieve net zero carbon in existing housing stock held within councils’ Housing Revenue Accounts (HRA) is almost £1 billion per year over a 30-year period of investment.
3.3. One of the most effective areas of focus when it comes to addressing carbon emissions is the built environment, with more energy-efficient homes reducing their reliance on fossil fuels. Local government needs the appropriate resources to meet the Government’s targets. A balance between appropriate targets and resource required to meet them is needed, especially when compliance with legislation in the private rented sector (PRS) requires local authority enforcement. The decarbonisation of heat in homes should take a whole house approach that considers the house as a complete energy system that uses holistic targets, when considering what is practical, affordable and cost-effective.
3.4. The Future Homes Standard proposals will restrict local authorities from setting higher energy efficiency standards than those set by Government. This may discourage some councils from setting the ambitious targets required to meet the Government’s 2050 targets (and their own locally-set targets) and disadvantage them as they miss out on opportunities to take up innovative technologies and boost economic growth. In response to the Future Homes Standard consultation, the LGA in principle supported measures that will lead to increased housing performance and higher standards of housing quality across all typologies. Specifically, we supported the intention of the proposals to future-proof new build homes with low carbon heating and world-leading levels of energy efficiency.
3.5. The LGA leads the Net Zero Innovation programme which supports councils that have declared a climate emergency to achieve net zero by matching universities and their local councils. The cohort is supported and facilitated by University College London and the LGA. In 2020, twelve partnerships were successful with grant funding of up to £18,000 for those councils. Their learnings will be available mid-2021.
3.6. Other methods of accelerating and promoting councils’ decarbonisation ambitions could be delivered through capacity building programmes like the LGA Housing Advisers Programme (HAP). HAP supports local authorities to deliver projects to meet the housing needs of their local area. Greater Manchester Combined Authority (GMCA) received HAP funding to develop a method to model the need and opportunity to retrofit existing homes, supporting their ambition to become carbon neutral by 2038. Learnings from GMCA and other councils participating in HAP will be shared across the local government sector to build capacity. The 2020-21 HAP programme will begin accepting applications shortly.
4.1. The LGA supports exploring alternative methods of measuring energy efficiency in the shift towards decarbonisation for all housing tenures. In its Analysis of Alternative UK Heat, Imperial College London found that decarbonisation of buildings is contingent on energy efficiency, and that the heat supply of buildings must also be decarbonised. The study also noted that challenges are interlinked: low-carbon heat cannot be deployed cost-effectively unless buildings are properly insulated—regardless of the technology pursued (for example heat pumps, hybrid systems and hydrogen).
4.2. Councils should have the tools required to become exemplars for using new smart technologies supported by appropriate investment. This requires greater resources and use of local and urban planning to make progress on climate change mitigation or adaptation.
4.3. The LGA recommends that one area the Government could explore is alternative measures to the Energy Performance Certificate (EPC) that will account for the decarbonisation of electricity and modern energy efficiency technologies as we shift towards decarbonisation.
5.1. The CCC highlights that the greatest challenge on low carbon heating has barely been addressed. The challenge is three-fold and includes low-carbon heating in existing homes, energy efficiency in existing homes, and low carbon heating in new homes. However, the CCC notes that there has been recent progress, with significant new commitments to reduce emissions to net zero by local authorities and private companies.
5.2. The LGA supports the scaling up of low carbon technologies to decarbonise our existing housing stock. Analysis for the LGA found that to achieve net zero by 2050, close to 28 million homes will need to change how they use energy through methods such as heating systems that produce next to no greenhouse emissions.
5.3. There is an opportunity to reap the long-term economic benefits of the low carbon transition and lead on clean growth, as demonstrated through the progress on reducing UK emissions. This requires ensuring we have the right skills at the right time to shift to low-carbon heating and retrofit existing housing.
5.4. The LGA supports the Government’s work to scale up innovative training models for construction skills across the country, including the Construction Skills Fund and Construction Industry Training Board (CITB) to more ably respond to the emerging skills needs of the construction sector. This includes skills for sustainable construction and for improving energy efficiency. However, local authorities and the wider construction industry have repeatedly emphasised that there are some fundamental challenges with the skills system and failure to invest will harm the economy. Prior to COVID-19, there were significant existing skills challenges including shortages of higher-skilled technical and vocational workers, and geographical differences contributing to reduced local growth.
5.5. LGA commissioned research has shown that nearly 700,000 direct jobs could be created in England’s low-carbon and renewable energy economy by 2030, rising to more than 1.18 million by 2050. Nearly half (46 per cent) of an estimated 693,628 total low-carbon jobs by 2030 will be in clean electricity generation and providing low-carbon heat for homes and businesses. Around a fifth (21 per cent) of jobs will be involved in installing energy efficiency products, such as insulation, lighting and control systems.
5.6. As demand for green jobs increases it will require an appropriate range of skills and labour market support to make sure people can benefit from these local opportunities. That requires making good use of existing employment support and skills funding, which for too long has been centrally commissioned with little local government influence, meaning it often fails to meet, and respond to, local need. Increased and better-targeted skills investment channeled through councils and combined authorities, working in tandem with businesses and education providers, is needed to train and retrain young people and older workers so they can benefit from these new local opportunities.
5.7. Work Local, the LGA’s positive proposal for change, provides a platform for supporting the shift needed for the green and sustainability sectors. Led by combined authorities and groups of councils, in partnership with local and national stakeholders, local areas should have powers and funding to plan, commission and have oversight of a joined-up service bringing together advice and guidance, employment, skills, apprenticeship and business support for individuals and employers.
5.8. The LGA also supports increasing the quality and carbon neutrality of both new build and existing housing stock. This is part of the wider transition necessary to achieve net zero carbon across all sectors. Local authorities are well placed to understand the needs and opportunities in their local areas, and should have the flexibility to require standards above the building regulations to ensure they can meet their own ambitions to achieve net zero carbon, support better quality housing, and develop and grow a skills base in the newly emerging green economy.
5.9. Drawing on the CCC’s 2015 Sectoral Scenarios for the Fifth Carbon Budget, BEIS estimated that around 18 per cent of UK heat will need to come from heat networks by 2050 to meet its carbon targets cost effectively. Given the increasing role that heat networks will play in national and local ambitions to reduce carbon and cut heating bills for domestic and commercial customers, it will be vital that the Government continues to work with local authorities to address capability and capacity challenges in heat network deployment.
6.1. Any new policies should increase retrofit energy efficiency measures and support and tackle fuel poverty. As of 2019 the National Health Service (NHS) was spending at least £2.5 billion a year treating people with illnesses directly linked to living in cold, damp and dangerous conditions. Improving the quality of the existing housing stock will also result in financial savings for our public health care system through lower incidences of health issues.
6.2. More than 2.4 million, or 10 per cent, of UK households experienced fuel poverty in 2018. According to the Annual Fuel Poverty Statistics in England, from 2010 to 2018 the proportion of households in fuel poverty has remained between 10 to 12 per cent.
6.3. Although projections for 2020 will not be published due to the unprecedented nature of the ongoing COVID-19 pandemic, projections prior to the pandemic indicated an increase in fuel poverty. This could be exacerbated as a result of the pandemic as households experience additional and unexpected financial stress such as loss of employment.
6.4. The LGA advocates for a local approach to addressing fuel poverty. Current and previous home energy efficiency schemes have suffered from a delivery model that is remote from local people and based on targets rather than an understanding of local need. The BEIS Committee in 2019 found that ‘different areas have different fuel poverty challenges, and local authorities are best placed to tailor and target support to where it is most needed’.
6.5. Local authorities only control a limited proportion of the funding available to tackle fuel poverty. The vast majority of funding is delivered through the Energy Company Obligation (ECO) by energy companies with limited local knowledge or interest in meeting locally determined need.
6.6. A new, locally led model of delivery is needed for home energy efficiency. National Energy Action cautions that universal technologies should not be applied because of the significant difference in costs between households due to factors such as location or building type. This is supported by the BEIS Committee, which found that unlike ECO, locally delivered schemes allow those most in need to be prioritised, rather than those with the lowest-cost installations.
6.7. The cost of funding infrastructure required for the transition to decarbonised housing may, however, have implications for social equity and exacerbate fuel poverty. A just transition will be required, and according to the Climate Assembly UK, any decarbonisation process must be fair, especially for those who are vulnerable or already in fuel poverty. The Scottish Government, for example, has sought to ensure fairness by establishing the Just Transition Commission to maximise opportunities of decarbonisation, tackle inequalities, while delivering a sustainable and inclusive labour market.
7.1. Research commissioned by the LGA (available on request) shows that consumer regulation is a key challenge to local authority enforcement action in the private rented sector (PRS). This can risk increased rents for tenants if landlords transfer the cost of retrofitting, and for fuel poverty, which has wider impacts on the health and wellbeing of vulnerable tenants. The research found that there is general agreement amongst councils of the imbalance of power favouring landlords and lettings agents over tenants. Councils will also need sufficient resources and convening powers to scale up retrofitting housing programmes and cut emissions.
7.2. The Committee on Climate Change found in their 2019 Progress Report to Parliament that regulations in the PRS prioritise costs for landlords over running costs for tenants. Strengthening regulations, policy interventions and incentives that ensure councils have the appropriate resource to support consumer regulation, as well as enforcement activities, can help to empower tenants. This could include reviewing the cap on landlords’ expenditure with a view to increasing it to support delivery of the EPC ‘C’ target’ and establishing financial support and incentives for councils to encourage private retrofitting, including a revolving loan fund and/or low-cost finance for home energy retrofitting, bringing in public health finance where appropriate. This could also support the home ownership sector. Both of these are recommended by the Association of Directors of Environment, Economy, Planning & Transport (ADEPT) and a coalition of local government, research and environmental organisations in their Blueprint for accelerating climate action and a green recovery at the local level.
7.3. The CCC suggests that regulators also play an important role, for example the Office of Gas and Electricity Markets (Ofgem), whose decarbonisation action plan considers the impact of net zero on its activities, and public bodies such as the NHS who are developing plans to reach net-zero emissions as soon as possible.
7.4. Councils are already proactive in addressing the challenge of consumer regulation by incentivising landlords to improve energy efficiency to support fuel poor households. Stoke-on-Trent Council, for example, has higher than average fuel poverty figures. To address this, the Council offers ‘safe and warm home grants’ financed by better care funding for tenants and homeowners and provides assistance to fund resident contributions required for ECO funded work in order to maximise investment in the city.
7.5. A number of councils have also set up Social Lettings Agencies (SLA) which help to secure better PRS housing for marginalised groups. Hartlepool Borough Council, for example, operates an SLA which provides similar services to a commercial letting and managing agent and works with landlords and tenants to help establish and sustain tenancies.
7.6. Research conducted by the LGA on improving standards in the PRS highlighted some of the challenges councils face with EPC rating, including a lack of knowledge by landlords. To support councils more specifically with homes in the PRS, the LGA and Housing Quality Network produced Improving the private rented sector, a useful guide and toolkit that provides advice on good practice.
7.7. Boston Borough Council, for example, is working to educate landlords about Minimum Energy Efficiency Standards (MEES) obligations and have been using intelligence to match the EPC database with other records to target non-compliant housing.
7.8. MEES require an EPC rating of E for all private rented properties and a target of band C by 2030. However, not all Houses in Multiple Occupation (HMOs) are within EPC requirements, for example, where an HMO is let on separate tenancies. They would therefore not comply with MEES. There were an estimated 497,000 HMOs in England and Wales at the end of March 2018.
7.9. Local government needs the appropriate resources to meet the Government’s targets. A balance between appropriate targets and resource required to meet them is needed, especially when compliance with legislation in the PRS requires local authority enforcement. MEES should take a whole house approach that considers the house as complete energy system that uses holistic targets, when considering what is practical, affordable and cost-effective.
8.1. The LGA supports the principle of a ‘whole house’ approach to low-carbon retrofitting because this approach considers the house as an energy system with interdependent parts, each of which affects the performance of the entire system and takes into consideration local characteristics such as climate and site. This holistic approach is underpinned by targets around energy efficiency, decarbonised heat and renewable energy generation that can help realise economies of scale, minimise disruption and ensure homes are more resilient for the future.
9.1. Delivering low carbon heating will require cross-government action as part of a wider integrated post COVID-19 economic strategy. Local authorities have historically been instrumental in developing district heating in their areas and play a critical role in the provision of low carbon and energy efficiency programmes. Local authorities are best placed to provide leadership and coordinate local activity.
9.2. As outlined in this submission, local authorities will need the powers and flexibilities required to improve quality standards and decarbonise heat in existing and new build homes and deliver the types of new homes and infrastructure their communities need.