AgilityEco's input to the 2020 Comprehensive Spending Review

30/09/2020

Established in 2013, AgilityEco is a recognised sector leader in low carbon, energy efficiency and fuel poverty services. We fund, design, manage and operate fuel poverty and energy efficiency community schemes, including the award-winning Local Energy Advice Partnership (LEAP). With our sister company, Bierce Surveying, we have bases in both Sutton and Aylesbury but operate nationwide.

This is our submission into the Comprehensive Spending Review (CSR), making our case for substantial investment in home energy efficiency. We believe such investment will deliver on a number of priorities set by the Chancellor for the 2020 CSR including: strengthening the UK’s economic recovery from Covid-19 by prioritising jobs and skills; levelling up economic opportunity across all nations and regions of the country; improving outcomes in public services, including supporting the NHS; and, enabling the Government to meet its commitments including the  ambition to reach net zero carbon emissions by 2050.

Investment in energy efficiency will have the following 4 main benefits:

   1. Helping the economy recover and creating jobs

The energy efficiency sector is well placed to support an economic recovery following the pandemic. This is due to:

  • its ability to pump prime local economies, given the sector includes a large number of SMEs that have a healthy GB-wide geographic distribution as evidenced by data on the distribution of work under the Energy Company Obligation (ECO);
  • a long-established and robust delivery mechanism – ECO has delivered important improvements to 2.7 million homes since 2013; and,
  • the proven ability of the sector to adapt to change and bring new forms of support to market quickly, with firms able to expand in line with increased Government support and new businesses entering the market. The industry has demonstrated on multiple occasions that the time lag between Government announcing support and on-the-ground economic activity is very short by comparison to other infrastructure areas.

As a sector, energy efficiency provides important job multipliers from investment made. The UN Net Zero Asset Owner Alliance has reported that:

“Evidence from recovery spending following 2008/2009 [financial crisis] suggests that green stimulus has a higher jobs multiplier than conventional government spending …… one model found every $1m in spending generates 7.49 full-time jobs in renewables infrastructure, 7.72 in energy efficiency, but only 2.65 in fossil fuels”.[1]

    2. Protecting the NHS and the vulnerable

There has to be a real risk that the virus has a resurgence or that a new virus emerges. Either may lead to a further period of lockdown and quite possibly over the cold winter months. In these circumstances it will be essential that as many people as possible have warm and healthy homes in which to be locked down, with affordable energy bills. This is particularly the case for the old and vulnerable as well as those on low incomes. Warmer and more efficient homes help improve the well-being of the occupants and reduce pressure on the health service. Energy efficiency services are already being delivered with the input of health and care providers in terms of identifying the most vulnerable, but there is scope to do much more to improve the lives of those with medical conditions who are struggling in cold homes.

Recent independent analysis suggests that, if a second lockdown was imposed during winter months, families in cold, leaky homes would face heating bills elevated on average to £124 per month, compared with £76 per month for those in well-insulated homes – a difference of £49 per month.[2]

The links between cold homes and ill health on the one hand, and the associated costs to the NHS on the other, are well documented. The Building Research Establishment has estimated that this costs the NHS between £1.4 and £2.0 billion every year and that is a pre-Covid-19 calculation.[3]

    3. Tackling fuel poverty and catching up on stalled progress on energy efficiency

Government is very significantly behind the trajectory needed to meet the statutory target for all fuel poor homes to be energy efficiency Band C by 2030. The latest annual statistics show only 12.4% of fuel poor homes at that level. Progress on the 2020 milestone of all fuel poor homes being at Band E or above has stalled, only increasing by 0.4% in the most recent twelve months for which data is available. This is part of an overall picture highlighted by the BEIS Select Committee last year – the rate of insulation in homes under Government schemes is 95% lower than in 2012. The CSR provides the opportunity to reverse these trends while there is still a chance for the 2030 target to be met.

   4. Reducing Climate Change

Improving the energy efficiency of the housing stock whether through insulation, renewable heating systems or replacing a broken-down boiler with a more efficient version, is an important vehicle for reducing carbon emissions. National Grid has recently published its Future Energy Scenarios report where they look at the different ways in which the UK can meet its net zero carbon objectives by 2050 or earlier. They comment that under any scenario

“Improving energy efficiency across all sectors is a no regret action. It enables low carbon technologies - and supports meeting peak and annual demands.”[4]

Our proposals

The recent announcement of the Green Homes Grant is an excellent start to ramping up the energy efficiency of our homes. But it’s clear that it is intended as a short-term stimulus. Energy efficiency needs long-term, sustainable investment if the sector is to thrive and households across the country are to benefit. The Committees for Fuel Poverty and Climate Change have estimated that almost £20bn of investment is needed to meet the statutory 2030 fuel poverty target. Government investment focused on the fuel poor, low income and vulnerable will help build a solid supply base which will then be better able to work with those households more able to pay for improvements.

The main actions we believe are required are as follows:

  • swift introduction of the Home Upgrade Grant and Social Housing Decarbonisation Fund promised in the Government’s election manifesto with the full £6.3bn of spending committed. Far from this investment being a ‘luxury’ in terms of the impacts of Covid-19 on the UK, it is now even more essential that everyone, especially the old and vulnerable, live in a home fit for purpose.
  • early agreement on the extension and expansion of the Energy Company Obligation from March 2022 when the current Regulations expire.
  • priority to be given to a one-year extension of the Warm Home Discount (WHD) scheme so it doesn’t grind to a halt after this winter. WHD provides essential energy bill rebates to over 2 million of the poorest households. This isn’t as effective as making sure they all live in warm and efficient homes, but WHD is vital all the time that continues not to be the case. WHD has been providing this lifeline for 10 years and is needed even more given the difficult economic circumstances now faced by many as a result of the Covid-19 pandemic.
  • in addition to a one-year extension of the WHD there should follow, as swiftly as possible, a consultation on a longer-term extension of the WHD out to 2030. This should include a retention and extension of the ‘industry initiatives’ mechanism to enable longer-term support to be provided to households in or at risk of fuel poverty.

Footnotes:

[1] UN-convened Net Zero Asset Owner Alliance Position paper on the coronavirus recovery

[2] Lockdown in Leaky Homes, The Energy and Climate Intelligence Unit, 22 May 2020 

[3] BRE - The cost of poor housing to the NHS 

[4] National Grid’s Future Energy Scenarios report, July 2020