Does Labour’s Green Paper go far enough to end cold homes?

21^st November 2014

There is cross-party consensus that we need to improve the thermal efficiency of the UK’s homes. Not only will it help to bring down energy bills for hard pressed consumers, but will also reduce carbon emissions, and the number of deaths caused by cold amongst vulnerable people each winter. Nobel laureate and former United States Energy Secretary Dr Steven Chu has gone so far as to say that ‘Energy efficiency is not just low-hanging fruit, it is fruit that is lying on the ground’.

The current government’s flagship energy efficiency policy offer, the Green Deal, is widely recognised as a missed opportunity. As of October 2014, just over 7,000 people have plans in progress under the Green Deal; when compared to the Government’s initial estimates that 130,000 households would take out Green Deal finance in 2013 alone, it is not difficult to see that there has been a mismatch between expectation and delivery. Meanwhile, the Energy Company Obligation (ECO), an initiative to encourage the installation of energy efficiency measures in harder-to-treat properties and low-income households, while more successful than the Green Deal, has been accompanied by a fall in the number of such installations.

With these challenges in mind, on Monday 10th November, the Labour Party launched its much-anticipated energy efficiency Green Paper ‘An end to cold homes: One Nation Labour’s plans for energy efficiency’. While there is much to support in the Green Paper (for example, designating energy efficiency as an infrastructure priority; moving ECO from a single-measure approach to whole house retrofits; a greater role for local authorities and intermediary institutions as delivery partners; and the removal of the split incentive from ECO), a number of important challenges remain.

The offer of up to one million interest-free loans during the next Parliament will help to create a fiscal, but not a behavioural, incentive for householders to install energy efficiency measures: an improved interest rate on loans will do little to encourage consumers who have not already considered such measures. A more sustainable and fiscally responsible approach would be to allow the private sector to offer loans with a competitive interest rate (certainly lower than those currently offered under the Green Deal) while spending Government money on how to ensure consumers are behaviourally incentivised to improve their properties in the first place.

The retrofit of the UK’s domestic properties doesn’t only present an opportunity to create warm homes, but also to create jobs and boost local economies. This is why there is a need for an integrated approach which benefits local supply chains. With greater devolution to our cities high on the political agenda (in no small part due to ResPublica’s Devo Max- Devo Manc report) now is an opportune moment for budgets for infrastructure to be devolved to the local level, which would not only ensure a more efficient allocation of public spending towards the fuel poor, but would also help local authorities in different circumstances spend the money in a way which is sensitive to their needs.

In the private rented sector, Labour’s proposal to create a more ambitious minimum standard target for Energy Performance Certificates (EPCs), EPC C, by 2027 is to be welcomed, but there are concerns surrounding the scrapping the current target of EPC E by 2018. With no interim target, there is little stopping landlords from waiting until 2026, when efficiency improvements are likely to be cheaper, and installing them all simultaneously.

This leads us to one of the biggest concerns for the energy efficiency industry, and the energy industry more broadly: a lack of policy certainty. For too long politicians have moved from one piece of energy legislation to another with piecemeal intervention after piecemeal intervention. Rather than this short-term approach, we need a bold, comprehensive policy offer which gives business the confidence to make long term investments while also providing them with a clear roadmap to help bring down the cost of more expensive measures such as solid wall insulation, with the aim of assisting business to gradually move beyond the need for Government subsidy.

In the run up to the General Election and beyond we need to continue to push for an energy efficiency strategy which promotes human and economic flourishing and consumer engagement. Perhaps only once this has been achieved will we see an end to cold homes.

For opportunities to partner with ResPublica in creating an innovative consumer and industry-led energy efficiency policy offer, please see the following: Out of the Cold: Creating a Consumer-led Energy Efficiency Policy Offer.