Creating energy efficient homes in the UK – The East 7 Community Green Dividend

1^st May 2015

The UK’s housing stock is some of the least energy efficient in Europe, with energy waste accounting for 15% of the UK’s carbon dioxide emissions in September 2014. While energy inefficiency has clear environmental implications, it is also hurting UK consumers with the current average dual-fuel bill set to rise above £1,264 per year.

Importance of energy efficiency

It is clear from this General Election campaign that energy efficiency is on the agenda of policymakers with the Conservatives pledging to insulate a million more homes over the next five years, the Liberal Democrats announcing a Green Buildings Act and Labour pledging to make 200,000 homes warm every year for those on low incomes. However, the ability of the Government and sector leaders to take action on energy inefficiency is constrained by funding.

The issue is particularly acute for social housing tenants who tend to pay above average for their utilities. This is caused by a number of factors including limited access to flexible bank accounts and poor credit history, which means tenants are unable to secure direct debit accounts and instead use card meters that have more expensive tariffs.

The East 7 Community Green Dividend

Energy inefficiency can be improved through the East 7 Community Green Dividend, which would see housing associations and tenants share the costs and benefits of investing in energy efficiency solutions. Under the scheme, housing associations would estimate how much money a given measure would save tenants who would then be offered the opportunity to have the technology installed. For tenants who participate, a monthly levy would be payable to the housing association to raise 25% of the estimated saving. This would continue over an agreed timescale, staying with the property in perpetuity rather than over the tenancy. To acknowledge ageing capital yields decreasing efficiency savings, charges would cease if tenants’ contributions surpass the original cost of investment.

The key variable for the success of the Dividend will be defining the duration of repayment, which should be determined by the cost and complexity of the measure installed. Low cost technologies such as loft insulation may take only two to three years to pay back whereas high cost technologies such as solid wall insulation could take over ten years to repay.

Benefits

It is clear that a scheme like the East 7 Community Green Dividend – based upon benefit received rather than subsidy – offers significant benefits. It would cut utility bills for social housing tenants whilst boosting the quality and efficiency of housing stock across the UK. In addition to saving tenants money, the Dividend could also generate monies for the Exchequer with the increase in energy saving measures contributing to National Insurance revenue and Corporation Tax. The scheme would also align with national energy efficiency programmes, helping achieve national targets.

With the General Election less than a week away, now is a critical time to ensure the next Government implements measures to tackle energy inefficiency. With housing associations accounting for two and a half million homes for more than five million people across England, the East 7 Community Green Dividend could provide the impetus needed to begin tackling this issue.

East 7 is an informal alliance of eight of the largest developing housing associations across the East of England’s six counties. Its members include bpha Ltd, Circle, Cross Keys Homes, Estuary Housing Association, Flagship Housing, Grand Union, Hightown Praetorian & Churches Housing Association and North Hertfordshire Homes. East 7 is campaigning for a number of measures to help housing associations make the best use of their assets which are outlined in the Group’s manifesto which can be found here.