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UK needs more funding for energy efficiency upgrades, notes IPPR thinktank

Jordan O'Brien

Jordan O'Brien

Contributing Editor
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Homes need energy efficiency upgrades

The UK Government recently pledged more than £3 billion to make buildings in the UK more energy efficient, although that’s not nearly enough according to a new report by left-leaning thinktank, IPPR. 

Announced as part of its response to the Covid-19 pandemic, the UK Government confirmed that it will set aside £3 billion worth of funding for energy efficiency upgrades to UK homes and public buildings. The Green Homes Grant scheme will get the lion’s share of the funding, with £2 billion set aside to provide homeowners with up to £5,000 each to make vital upgrades to the energy efficiency of their homes. 

While IPPR has applauded Chancellor Rishi Sunak for providing the cash to make the energy efficiency upgrades, the thinktank warned that the UK could miss its climate targets if more funding isn’t made available. 

It believes that the Government’s current goals are nowhere near ambitious enough, which is why IPPR has introduced what it’s calling the Home Improvement Plan for England. 

Why does IPPR believe the UK Government’s approach doesn’t go far enough? 

The Green Homes Grant scheme is aimed squarely at homeowners, offering £2 billion towards energy efficiency upgrades such as LED lighting, triple glazing, heat pumps and insulation. The problem with the scheme, according to IPPR, is that there are over 26 million homes in England that are in need of retrofit – and £2 billion will not nearly cover all of them. 

The Climate Change Council estimates that £15 billion will be required each year to reduce all emissions from buildings by 2050. Using English Housing Survey data, IPPR estimates that retrofitting the majority of homes below an EPC band of C in England with heat pumps and high energy efficiency standards will require significant investment at approximately £10.6 billion per year through to 2030, reducing to £7 billion per year from 2030 to 2050. 

The report notes that at least 21 million separate energy efficiency measures and 19 million heat pumps will need to be installed in the next 30 years alone with the connection of five million homes to heat networks. 

What is the Home Improvement Plan? 

In order to meet the substantial challenge of making so many energy efficiency upgrades, IPPR has come up with the Home Improvement Plan. This involves increased funding, as well as more robust goals, with social housing playing a leading role in pushing energy efficiency standards beyond the Government’s current target of a C EPC rating and towards an A or B. 

Under IPPR’s Home Improvement Plan 495,716 homes (including 137,670 social homes) per year through to 2030 will receive highly energy efficient retrofits and heat pumps, while that number will reduce to 358,046 homes per year from 2030-2050. 

How will the Home Improvement Plan be funded? 

IPPR believes there are many options for funding its Home Improvement Plan, including through private funding and Government borrowing, although it argues the fairest and most equitable way of funding the scheme is through general taxation. It has provided two options for an increase in tax:

Option 1

Basic rate of tax remains the same, 1% increase to the higher rate and 1.5% increase to the additional rate. 

This would provide £2.6 billion extra towards funding the Home Improvement Plan. 

Option 2

Increase basic rate by 0.5%, high tax rate by 1.25% and additional tax rate by 2.75%. This provides £6.3 billion a year in extra cash, although IPPR notes that this would be funding just for heat pumps, which have seen the lowest take up. 

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