Home Energy Efficiency: North of England

Debate between Scott Benton and Peter Gibson

Wednesday 6th July 2022 Westminster Hall

[Peter Gibson]

It is as though the hon. Member has read a paragraph later in my speech. It would, indeed, be a win-win if we tackle this issue. Can we afford to not tackle the issue? Can we afford to not reap those health benefits, the energy cost savings, the wasted energy usage savings, and the preservation of our built environment?

I must acknowledge the work that the Government have done so far to tackle this issue. The heat and buildings strategy was published in October 2021, setting out the Government’s planned approach to reducing emissions from heating buildings. The social housing decarbonisation fund has awarded £179 million to 69 projects.

[Scott Benton (Blackpool South) (Con)]

My hon. Friend is articulating well the need for further measures to improve our housing stock. I am sure he will agree that now is an opportune moment to move ahead with this, given the pressure on household budgets. Blackpool received £1.4 million from the social housing decarbon-isation fund, and I am sure his constituency has benefited, too. Will he welcome those grants already given and support the need for further action to drive down those household bills?

[Peter Gibson]

Being familiar with my hon. Friend’s constituency, I well understand the situation and issues that his constituents face, as they are similar to those in my own. I was about to say that the Tees Valley Combined Authority has secured £2.6million from the social housing decarbonisation fund, from which homes in Darlington will benefit. I am grateful for that, and I welcome the contribution that my hon. Friend has secured for his constituency.

The local authority delivery scheme is also helping to improve energy efficiency: it is expected to save households across the country more than £2 million on energy bills every year. It is welcome that nearly 40% of the households that have been upgraded under the scheme are in the north. I also welcome the decision of the former Chancellor, my right hon. Friend the Member for Richmond (Yorks) (Rishi Sunak), to cut VAT on home upgrades in the spring statement, encouraging people to invest in wall and loft insulation. I know that the Minister will agree that we must continue this good work, and I ask what the Government can do to roll out the schemes more widely.

Although progress is under way on decarbonisation and retrofitting, we still have a long way to go, but I want to focus on the need to tackle the huge cost currently associated with making our homes more energy efficient. We cannot achieve decarbonisation while it remains financially unviable for homeowners, private landlords and housing associations to pay for the work. We also need to ensure that we bring communities with us as we embark on this challenge. Recent research by Onward found that people think that the invasion of Ukraine means we should be moving more quickly on net zero, but retrofitting a home is intrusive work, and many people do not see it as a priority for them. We need to be clear what the benefit of this work is to our communities, and the connection between home heating and reaching net zero must be emphasised. How can the Government make it clear to communities how they stand to benefit from more energy efficient homes? That is a challenge that I hope the Minister can respond to.

As part of my preparation for the debate, I have been in contact with Angela Lockwood and Emma Speight at North Star Housing to discuss the difficulties faced by housing associations when it comes to decarbonisation and retrofitting their properties. In short, they are fully supportive of moves to decarbonise homes, but the costs involved are prohibitive. To illustrate this, they made me aware of a pilot decarbonisation project that they are carrying out on a two-bedroom, late-Victorian terraced house in Middlesbrough that they are aiming to get to EPC level A, so that they can then monitor the performance of the building.

I have the figures in front of me. North Star Housing calculates that the cost of decarbonisation work will be £45,500, with £12,000 going on solid wall insulation alone. While the work is being carried out, the property must sit empty for around 20 weeks, resulting in a void period and a loss of rental income. Given that other houses on the same street are valued at around £70,000, North Star Housing is looking at spending well over half of the value of a property in order to decarbonise it. It is simply not viable for housing associations to be spending that much to decarbonise their stock without targeted support and assistance.

Equally, private owners of those properties will face similar costs. However, although the up-front costs may be high, investing in the region’s homes now is, as the hon. Member for Sheffield Central (Paul Blomfield) said, a win-win scenario for northern communities, because it will lead to warmer, healthier homes. Upgrading a home from EPC E to EPC C would reduce bills by an average of £595 a year, whereas upgrading from EPC F to EPC G would reduce bills by £1,339 a year. These are not short-term cuts to energy bills, but permanent reductions in household energy consumption, meaning that more of people’s money will be spent in our local economy.

The Government have seen that their retrofitting schemes can and do work. Data from the Department for Business, Energy and Industrial Strategy shows that the total estimated annual bill saving for the 12,143 households upgraded in phase 1 of the local authority delivery scheme is £1.2 million. I therefore ask my right hon. Friend the Minister to outline what more the Government can do to ensure that we continue to deliver these schemes.

Retrofitting homes in the north will also play a huge part in delivering on our levelling-up agenda, with the north having the best chance to reap the economic benefits of our transition to a low-carbon economy compared with other regions of the UK. The large-scale retrofitting of homes in the north has the potential to deliver new skilled jobs in the green industries of the future—again, as the hon. Member for Sheffield Central said, a win-win.

The Northern Housing Consortium’s “Northern Powerhomes” report showed that a large-scale programme of social housing retrofitting could lead to the creation of 77,000 jobs in the north by 2035, 15,000 of which could be in the north-east. However, we have only around 1,200 qualified heat pump installers across the UK, so we clearly have a skills gap. I urge the Minister to do all he can to plug that skills gap and attract new entrants to the good green jobs that a focus on northern housing can deliver.

I also ask the Minister when the new energy company obligation scheme will begin. In the north, a high proportion of homes are fitted with insulation measures through ECO, and the support the scheme gives to low-income households is highly valuable. I understood that ECO4 was expected to begin in April. I would welcome any clarity the Minister can provide on the potential expansion of the scheme and when we might expect it.

We are now free of the bounds of Europe, and we can be bold, imaginative, creative and entrepreneurial. If we can lead the way in the north-east with carbon capture technology or hydrogen production, with vision our region can lead the way in innovating the retrofitting our old homes.

The north-east already has some innovative solutions. The Coal Authority in Gateshead is using mine water to generate heat for local homes and businesses. Will the Minister look closely at that project to see how it can be exploited at scale? Many gas boilers can already be made hydrogen-ready. As we transition away from fossil fuels, will the Minister look at what steps he can take to make every new boiler installed hydrogen-ready as soon as possible, rather than waiting for some date way off in the future?

Millions of homes across the country are just like those in the north, so the Government need both the carrot and the stick to drive this forward. We have no time to lose. I am proud of our built environment and want it to be preserved and protected for future generations, but I want my constituents’ homes to be warm and efficient too. There should not be a binary choice between two ambitions. There is a range of imaginative policy solutions and ideas to accelerate this process, including changes to stamp duty, incentives for home buyers to carry out these works at the beginning of their ownership, and creative financing through green mortgages, whereby the lender provides an initial sum on the original drawdown to fund the works, with the necessary conditions in place to ensure that the funds are not diverted elsewhere. We can even use the taxation system, through salary sacrifice. If it is good enough to fund car hire, the purchase of a bike or childcare, it should be good enough to provide improvements to our homes.

It is clear that improving the energy efficiency of homes in the north is a huge challenge. However, it can bring huge benefits to communities such as mine in Darlington. We can permanently bring down heating costs for millions of households, improve health outcomes for some of the most vulnerable in our society and level up communities that have been left behind by getting behind new, innovative green industries and delivering highly skilled jobs for our constituencies. I hope the Minister will give serious thought to all the points I have raised, and I look forward to hearing the rest of the contributions from across the Chamber.