EEH0012

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1. About the Local Government Association (LGA)

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. Summary

2.1.               Increasing the quality and carbon neutrality of both existing housing stock and new build homes will be integral to the transition across all sectors to achieve the Government’s net zero carbon by 2050 target. The unprecedented challenge of economic and social recovery following the current crisis will require these plans to be accelerated and expanded.

2.2.               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.[i] 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.[ii]

2.3.               As we move to a restart and recovery phase, national government can be instrumental in delivering to councils the tools, powers and flexibilities that they need to improve quality standards and decarbonise existing homes and deliver the types of new homes and infrastructure their communities need.

2.4.               The LGA supports local authorities in their ambition to tackle climate change and reduce carbon emissions while improving housing in the shift towards achieving net zero carbon. Local government plays a vital role in leading the way. This is demonstrated by the LGA’s climate emergency declaration together with around 230 councils.[iii]

2.5.               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.

2.6.               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 different factors such as location or building type.[iv] This is supported by the Business, Energy and Industrial Strategy (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”.[v]

2.7.               Councils are best placed to understand the priorities and opportunities in their local area and deliver local solutions for the decarbonisation of housing. Those with housing responsibilities are particularly well placed to pinpoint vulnerable households, drawing together partnerships to lever in funding and align comprehensive activity at a local level.

2.8.                                                                                                                       Councils need 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, both existing and new. This will also help grow and develop the skills base in the newly emerging green economy.

2.9.               The LGA supports the principle of a ‘whole house’ approach to low-carbon retrofitting.[vi] 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.[vii] This approach is underpinned by holistic 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.

2.10.          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.[viii]

2.11.          Any new policies should drive retrofit energy efficiency measures and support and tackle fuel poverty. As of 2019 the National Health Service was spending at least £2.5 billion a year treating people with illnesses directly linked to living in cold, damp and dangerous conditions.[ix] Improving the quality of the existing housing stock will also result in financial savings for our public health care system through savings from lower incidences of health issues.[x]

2.12.          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 to ensure that any decarbonisation process is fair.[xi]

2.13.          Councils should also 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.[xii]

2.14.          The LGA recommends that the Government explores and considers alternative measures to Energy Performance Certificate (EPC) that will account for the decarbonisation of electricity and modern energy efficiency technologies as we shift towards decarbonisation.

2.15.          As part of this the Government should urgently bring forward its commitment for a £3.8 billion capital Social Housing Decarbonisation Fund.[xiii]

2.16.          This inquiry coincides with other proposals for ambitious capital programmes, including the Building Safety Programme and a potential revised Decent Homes Standard. Further consultation of the Future Homes Standard will occur in the coming months to address existing domestic buildings, as well as new and existing non-domestic buildings.[xiv]

2.17.          Any proposals regarding existing housing must acknowledge and recognise cost implications and will require greater government investment to ensure delivery on all these programmes. Even before COVID-19 there was a significant funding shortfall across local government. Extra COVID-19 costs and losses mean that councils could need as much as £6 billion more than the Government has already provided to cover the costs of coping with the coronavirus pandemic during this financial year.[xv]

2.18.          We are calling on the Government to ensure that legislation and regulation of housing energy efficiency measures are led by the same government department or have a clear and complementary process.

3. Are the Government’s targets on residential energy efficiency still appropriate to achieve its ambition to reach net zero emissions by 2050?

3.1.               Increasing the quality and carbon neutrality of both existing housing stock and new build homes will be integral to the transition across all sectors to achieve the Government’s net zero carbon ambition by 2050.

3.2.               In the Clean Growth Strategy, the Government proposes to ‘improve the energy performance standards of privately rented homes, with the aim of upgrading as many as possible to EPC Band C by 2030 where practical, cost-effective and affordable’.[xvi] This will reduce carbon emissions by reducing demand. The Committee on Climate Change recommends that policies be put in place to deliver the Government’s ambition to improve all homes to as least EPC band C because “it remains unclear how the Government will deliver its target” (p 58).[xvii]

3.3.               Building standards are also not sufficiently enforced across the private rented sector. Currently, according to the English Housing Survey, 25 per cent of the 4.6 million homes in the private rented sector (PRS) did not meet the Decent Homes Standard in 2018 – the highest proportion of non-decent homes of all tenures.[xviii]

3.4.               Privately rented homes have the highest proportion of older dwellings built before 1919 with 33 per cent, compared with 20 per cent of owner-occupied homes, 4 per cent of local authority homes and 9 per cent of housing associations homes.[xix] They are also more likely to have indicators of poor housing quality, such as damp and condensation.[xx]

4. How effective is the EPC rating at measuring energy efficiency? Are there any alternative methodologies that could be used? What are the challenges for rural areas?

4.1.               Research conducted by the LGA on improving the standards in the PRS highlighted some of the challenges councils face with EPC rating, including a lack of knowledge by landlords. 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. However, in some cases landlords are genuinely unable to afford the necessary works to eliminate F and G EPC ratings.

4.2.               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.[xxi]

4.3.               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 (as explained in 2.9) that considers the house as a complete energy system that uses holistic targets, when considering what is ‘practical, affordable and cost-effective’.

4.4.               In Leeds, for example there are 75,000 solid wall properties and a further 30,000 to 40,000 system built and timber framed properties that require solid wall insulation. This would cost more than the £3,500 cap for landlords for energy efficiency improvements and so could be defined as not affordable through the ‘high cost’ exemption.

4.5.               The LGA supports exploring other 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 (e.g. heat pumps, hybrid systems, hydrogen)”.[xxii]

5. How can the Government frame a Covid-19 stimulus strategy around improved energy efficiency of homes?

5.1.               As we recover from the COVID-19 pandemic, there is both a greater need, and a further opportunity, to decarbonise our existing housing stock while alleviating fuel poverty and stimulating the economy.[xxiii] The BEIS Committee pointed to the wider net benefits from energy efficiency, including household savings of around £290 per year between 2008 and 2017[xxiv], 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.[xxv]

5.2.               As we plan our way towards COVID-19 recovery, 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.[xxvi] [xxvii] This requires ensuring we have the right skills at the right time to retrofit existing housing.

5.3.               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.

5.4.               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.[xxviii]

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, but for too long it 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 channelled 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, LGA’s positive proposal for change, provides a platform for supporting the shift needed for the green and sustainability sectors.[xxix] 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.

6. What policy and/or regulation could supplement it?

6.1.               Research commissioned by the LGA shows that consumer regulation is a key challenge to local authority enforcement action in the private rented sector. 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.

6.2.               The Committee on Climate Change found in their 2019 Progress Report to Parliament that “regulations for the private rented prioritise costs for landlord over running costs for tenants”.[xxx] Strengthening regulations and policy interventions that ensure councils have the appropriate resource to support consumer regulation as well as enforcement activities can help to empower tenants.

6.3.               Councils are proactive in addressing the challenge of consumer regulation by incentivising landlords to improve energy efficiency and support fuel poor households. Stoke-on-Trent Council, for example, has higher than average fuel poverty figures and the percentage has risen in recent years.[xxxi] 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.

6.4.               A number of councils have also set up Social Lettings Agencies (SLA) which help to secure better private rented sector housing for marginalised groups.[xxxii] 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. What additional policy interventions are needed for social housing, leaseholders, landlords and tenants?

7.1.               The LGA would, in principle, welcome more ambitious legislation for energy efficiency in the PRS, such as tighter EPC ratings. It is vital that any new legislation being bought forward is properly resourced. This should include local authority funding to ensure environmental health officers have appropriate training, and existing and future staff get upskilled on new energy technologies and retrofitting. Additional policy interventions that allow greater flexibility for a local authority to be able to take forward whole area or area specific licensing schemes is also crucial to help councils improve standards, including energy efficiency in the PRS.

7.2.               Councils need the tools to become exemplars for using new smart technologies and sustainable construction methods. This should be supported by appropriate investment. To do this, we urge the Government to make provision for councils’ commitments beyond new housebuilding, especially investment in their existing stock, which for some, post-Grenfell, is a major challenge. The long-term viability of each council’s Housing Revenue Account (HRA) depends on being able to make this reinvestment as well as on factors such as rental income.

7.3.               This could be supported by developing strategies to help property owners and managers meet the 2050 zero-carbon target, with the provision of seed capital where necessary.

7.4.               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.[xxxiii] 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. Learning from GMCA and other councils participating in HAP will be shared across the local government sector to build capacity. 

7.5.               Post COVID-19 greater funding will be required to improve the existing housing stock and meet carbon targets. Government should urgently bring forward its commitment for a £3.8 billion capital Social Housing Decarbonisation Fund.[xxxiv] There is also an opportunity, in a COVID-19 fiscal stimulus package, to accelerate housing decarbonisation through incentives for home owners and landlords to retrofit.

7.6.               Improved energy efficiency and increased use of renewable energy could become part of any revised Decent Homes Standard (DHS). This would support the retrofit of all homes by investing in critical social housing. Alignment between a new DHS and the Clean Growth Strategy could help bring all social homes up to an EPC Band C by 2030.

7.7.               There is a significant gap in policy and provision for homeowners and ‘able to pay’ households. We have been calling for government to bring forward a replacement for the Green Deal scheme. Previous schemes have suffered from being overly complex and this has been a barrier to council participation. Councils should be involved in the design of any new schemes from the start.

8. How should the proposed Home Upgrade Grant Scheme be delivered to help the fuel poor? Should the new grant scheme supplement ECO in its current form, or should ECO be redesigned?

8.1.               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. 

8.2.               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 following the COVID-19 pandemic as households experience additional and unexpected financial stress such as loss of employment.

8.3.               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 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’.[xxxv] 

8.4.               A just transition will be required to ensure that any decarbonisation process is fair, particularly for those who are vulnerable or already in fuel poverty.[xxxvi] The Scottish Government 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.[xxxvii]

8.5.               Nottingham City Council is an example of a council addressing fuel poverty at a local level. Their overall strategy examines the interrelated solutions of fuel poverty: to reduce energy bills, improve energy efficiency and maximise household income. To do this Nottingham will target households in need and pilot methods of improving energy efficiency in a cost-effective way by rolling out over 100 homes of the EnergieSprong whole house retrofitting methodology to reduce the energy, resource and carbon footprint of hard to-treat-homes.[xxxviii] [xxxix]

9. Are there examples of where energy efficiency policy has fallen between Government Departments? How could cross-departmental coordination be improved?

9.1.               EPCs are currently legislated and led by the Ministry of Housing, Communities and Local Government and MEES by BEIS. This can create coordination challenges which can affect the implementation of MEES in the PRS. The LGA therefore urges the Government to ensure that the legislation and regulation regarding compliance with minimum energy efficiency standards has a clear and complementary process.

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[xxxvii]Scottish Government, Leading the way to a low-carbon future, 13 September 2018.