Growing back better

Property and Business Policy Adviser Hermione Warmington delves into detail on a newly-published report that urges Government to be greener, healthier and more resilient as it rebuilds from Covid-19

The Environmental Audit Committee (EAC) published a major report entitled: Growing Back Better: Putting Nature and Net-Zero at the Heart of the Economic Recovery this week.

This report urges the government to recognise Covid-19 as a ‘symptom of a growing ecological emergency’ and to focus its recovery on growing ‘back better, creating a greener, healthier and more resilient economy’. They warn that if this is not done, ‘then the climate change and biodiversity collapse may deliver an even greater crisis.’

The full report, which can be found here, covers everything from our ecological crisis to shifting tax to make the polluter pay, but in today’s blog, I will be looking at the energy efficiency of buildings and the green homes grant.

Most notably, the EAC has recommended that the government reduces VAT on low-carbon and energy efficiency measures. This is a welcome recommendation, and one that the CLA made in our submission to Treasury ahead of the Budget last year. For context, VAT is currently charged at 20% on repair and maintenance and at 5% on qualifying conversion/adaptation work to buildings. In contrast, VAT is charged at zero rate on the construction and first sale or lease of new buildings. This incentivises demolishing existing buildings and building new ones over regenerative development but also does not incentivise the retro-fit of energy efficiency measures and low carbon technology in existing homes.

Energy Efficiency

Buildings contribute around 17% of the UK’s greenhouse gas emissions, and up to 85% of housing that will exist in 2050 has already been built. Decarbonising our existing housing stock is therefore incredibly important.

The government’s Clean Growth Strategy, the Energy White Paper and the proposals within the recent consultation: Improving the Energy Performance of Privately Rented Homes in England and Wales all set out targets to upgrade as many houses to Energy Performance Certificate (EPC) Band C in the next decade ‘where practical, cost-effective and affordable’.

The EAC report highlights the benefits of energy efficiency retrofit, ‘delivering economic as well as environmental and social benefits’. The Energy Institute identified ‘a jobs-rich, energy-efficient retrofit of UK housing’ as the ‘number one route to both economic recovery and net zero, extending over a sufficiently long-time frame to build supply chains and skills, and ensure job security.

CLA comment: Improving the energy-efficiency of homes is labour intensive and it is important that rural areas have access to the right funding and skills in order to create employment opportunities. For more information on the CLA’s view of Energy Performance Certificates, please click here.

The Green Homes Grant

In July 2020, the Chancellor of the Exchequer announced £2 billion of support through the Green Homes Grant. The government claimed that the measures would help make over 600,000 homes more energy efficient and would support over 100,000 green jobs.

The EAC conducted a survey and found that 86% of respondents had a poor experience with the process and 75% of respondents had difficulty finding a TrustMark installer. Most concerningly, in November 2020, out of 7,400 Federation of Master Builders members, only 180 registered companies had expressed an interest in securing accreditation and only three had been accredited.

The EAC "recommend that the Green Homes Grant scheme be urgently overhauled and extended to provide greater long-term stimulus to the domestic energy efficiency sector. The Government must be mindful not to repeat the mistakes of the failed Green Deal energy efficiency incentive scheme."

CLA comment: The CLA is aware of the severe issues with the Green Homes Grant and has taken this up with the government. As of 22 January, only £71.3 million of the £2 billion had been issued, a clear indication of its failing. For more information on the Green Homes Grant, please find our latest guidance note here.

The EAC report comes at an incredibly important time and only time will tell whether government is prepared to take a broader ‘green recovery’ approach, going beyond low-carbon electricity and transport to provide policy supports for nature restoration and the circular economy.

Key contact:

Hermione Warmington
Hermione Warmington Policy Advisor, Property and Business