Warm, healthy, sustainable housing: policies for the next parliament

Dr Joanne Wade is the director of the Association for the Conservation of Energy (ACE). ACE represents major companies in the energy efficiency supply chain, and uses parliamentary work and policy research to promote the development of an optimal, demand-led energy policy.

Housing that delivers healthy, comfortable, sustainable living space underpins people’s ability to contribute fully to society and the economy. Given this, we need to see high quality housing as part of our infrastructure. And high quality includes high thermal performance.

We are at the moment a long way from having a housing infrastructure that is fit for purpose in this respect, and there is an urgent need for an ambitious, robust and strategic policy framework to support the required transformation. The construction and energy efficiency supply chains can deliver the solutions needed, but only if there are policies in place that underpin investor confidence in market growth. This means policies that are long-term, embedded, consistent and not subject to change. So, where are we now?

For new build, we had established a clear trajectory to zero carbon but the last Part L revision slowed progress, tightening the emissions requirements by only 33 per cent compared to 2006 standards rather than the expected 44 per cent. This not only generates uncertainty (will the new trajectory stick?), it also misses an opportunity for the housebuilding and energy efficiency industries in the UK to be the first to develop solutions that will be required Europe-wide in all new-build from 2020, as all EU Member States respond to the requirements of the ‘recast’ Energy Performance of Buildings Directive.

For refurbishment we have the Green Deal that has not yet delivered anything like the level of investment hoped for; an Energy Company Obligation that has been meddled with, resulting in expected activity levels for this winter that are going to be a quarter of what was anticipated this time last year; and subsidies that temporarily inflate apparent demand but run out almost as fast as Black Friday sales offers. We need to stop encouraging householders to be subsidy junkies and start putting in place long-term incentives and regulation that will enable the industry to build a real market for energy efficient housing refurbishment.

If demand for energy efficiency measures is to grow, then energy efficient homes need to be valued by owners and tenants. This can in part be achieved by changing the conversation about energy efficiency: it is not just about lower energy bills, it is also about a warm and comfortable home, and a high quality, well maintained home. Both government and industry have a role to play in demonstrating this value to householders.

This will take us some, but not all, of the way. To raise energy efficiency to the top of the list of home improvement priorities, people need to believe that it will also improve the financial value of the property they own. And this is where government action is central.

Systemic incentives that translate the social value of energy efficiency into private value for the householder will send a clear signal that energy efficient homes are desirable. ‘Systemic’ could and should mean differential stamp duty and council tax rates, linked to the energy rating of a property. If these incentives were combined with an improved Green Deal that included free, impartial advice and zero or low-interest finance, then people would be encouraged and enabled to act. Given this, the government could then introduce long-term plans to extend minimum energy efficiency standards to cover all housing. A clear timetable for the introduction and tightening of these regulations would send a strong signal to the market to value properties meeting upcoming regulations more highly than those requiring refurbishment work.

A policy framework that resulted in householders valuing energy efficiency could stimulate innovation from housebuilders to exceed the required minimum standards, since higher energy efficiency would be in demand; and landlords need not be concerned about rent increases to cover the costs of energy efficiency works, since tenants would want a warm, comfortable home and would understand that the overall cost of living in the property is what is important.

Which brings us to the final part of the jigsaw: affordable homes. There are far too many households who already understand well the value of a warm home; because they don’t have one. The framework described above will not work for many of these households, since the increase in warmth they need will compromise their ability to repay any loans used to cover the cost of energy efficiency work. Hence, an infrastructure investment programme is needed. The majority of the funding should come from the government and/or energy company obligations. Social landlords may also be able to play a significant role, but only if they are allowed to reflect the increased value of energy efficient homes in their rents. Including running costs such as energy bills in the definition of affordability would be a good start. And this applies to new homes too: a cheap home with poor energy efficiency is not ‘affordable’.

If the next government introduces this sort of policy programme, then the construction and energy efficiency sectors will have the confidence to invest. By agreeing on a long-term framework and sticking to it, government and industry action should deliver the much needed transformation of the UK housing stock.