Government to invest £1.5bn in UK home efficiency upgrades from this winter

Government to invest £1.5bn in UK home efficiency upgrades
from this winter
Government to invest £1.5bn in UK home efficiency upgrades from this winter

Around 130,000 low-income households could see bills slashed as homes receive energy efficiency upgrades through the government's Help to Heat funding programme

The government has confirmed it is to spend up to £1.5bn to help around 130,000 social housing and low-income properties in the UK upgrade their properties with a range of energy efficiency measures ahead of this winter, in a bid to slash annual bills by up to £700.

The £1.5bn of funding comes from the government's Heat and Buildings Strategy, which was first announced last year. It includes £800m that was committed to the Social Housing Decarbonisation Fund (SHDF) and £950m for the Home Upgrade Grant (HUG).

The Department for Business, Energy and Industrial Strategy (BEIS) this morning announced the funding is being allocated to allow social housing providers and local authorities to submit bids for funding to undertake improvements for low-income and social households across the country.

BEIS estimated that the funding could help 130,000 households see their bills reduced by between £400 and £700 a year.

Local authorities and social housing providers will be able to submit bids for funding and BEIS said successful applicants could receive upgrades from early next year until March 2025. According to BEIS, more than 30,000 homes have already been upgraded under the SHDF and HUG schemes.

BEIS said the funding forms part of "unprecedented government support" which aims to help protect households, businesses, and public sector organisations from rising energy costs sparked by Putin's illegal war in Ukraine.

Other measures include the Energy Price Guarantee, which over the next two years will aim to keep the average household energy bill at £2,500, which reflects a saving of around £1,000 a year.

However, Prime Minister Liz Truss was this morning taken to task by factcheckers for claiming that no household would pay more than £2,500 a year on their energy bills as a result of the policy, given the Price Guarantee only looks to cap average bills at that level, not all bills.

The government also previously announced it plans to give all households £400 off bills this winter and move green levies off energy bills. BEIS said this "direct and decisive action" means households will receive "significant" protection from an 80 per cent rise in the Energy Price Cap that would otherwise have resulted in average household bills rising to over £3,500 a year.

In addition, a new Energy Bill Relief Scheme will ensure businesses, public, and third sector organisations energy bills are similarly capped at current levels for at least six months.

"Putin's illegal war in Ukraine, would have had dire consequences on the energy bills of both households and businesses this winter, without the government's decisive action," said Business Secretary Jacob Rees-Mogg. "Today I am cutting costs even further for the most vulnerable households for years to come.

"By making homes warmer and cheaper to live in, we are not only transforming the lives of households across England, we are creating huge growth in the economy, backing the green energy sector and supporting thousands of high-skilled jobs."

As part of the government's Growth Plan, which was announced by the Chancellor this week, BEIS said the schemes could together support up to 19,000 green energy sector jobs.

Social housing with an Energy Performance Certificate (EPC) rating of D or lower will be eligible to receive SHDF upgrades, while the HUG funding will help people who are most vulnerable to fuel poverty, living in privately-owned - both rented and owner-occupied - off gas-grid homes and on low incomes.

BEIS said the cash forms part of £12bn of combined funding under the government's 'Help to Heat' schemes, which also include the Local Authority Delivery and Energy Company Obligation schemes, which are offering support to lower income and more vulnerable households.

The HUG funding will see up to £700m made available for local authorities to install energy efficiency measures in around 30,000 properties. Meanwhile, up to £800m from the SHDF wave 2 grant funding will see around 100,000 social homes receive energy efficiency upgrades, with BEIS estimating average energy bill reductions of around £400 a year at current prices. BEIS said that the grant funding provided by the government will have to be matched by those applying, doubling the investment being made under the SHDF scheme to around £1.6bn.

The wave 2 funding builds on the £179m funding announced through SHDF wave 1 in February 2022, which BEIS said it is using to upgrade up to 20,000 social housing properties.

"The cheapest form of energy is the energy we do not use. Our Help to Heat schemes are already bringing real benefits to tens of thousands of low-income households across the country by improving the energy performance of their homes and saving them hundreds of pounds on their bills," said Minister for Business and Energy Lord Callanan.

"Together with the unprecedented support government is putting in place to help households and businesses with rising energy costs, this latest funding will extend that assistance even further, targeting help to those who need it most by making their homes warmer and cheaper to run."

BEIS said the government has already made "huge" progress to increase the energy efficiency of UK homes. According to BEIS, in 2010, just 14 per cent of homes had an Energy Performance of C or above, however this is now at 46 per cent and rising, with the social housing sector up from 18 per cent in 2008 to around 66 per cent. BEIS added that energy efficiency improvements are one of "the most effective ways" to save money on energy bills at a time of rising global gas prices.

"We know that England's homes produce more carbon each year than the average annual use of the country's cars, so decarbonising social homes has a pivotal role to play to meeting the country's net zero target," said Kate Henderson, chief executive of the National Housing Federation. "The National Housing Federation and our members look forward to continuing to work with BEIS to demonstrate the benefits that decarbonising homes has on residents' lives."

Tracy Harrison, chief executive, Northern Housing Consortium welcomed the news of the funding, which she said would give northern regions the opportunity to scale-up social housing retrofit programmes as well as creating green jobs and helping to tackle fuel poverty.

"The North is ambitious for this Wave - some significant collaborations are under way and councils and housing associations are looking forward to working with BEIS to build on the momentum we've already established together," she added.

BEIS added that the next wave of the Public Sector Decarbonisation Scheme will also soon open for new applications, with up to £635m in funding to further support bill savings in the public sector.

The moves are likely to be welcomed by green business groups, but campaigners have also repeatedly warned that the UK's housing stock remains much less efficient than many of its northern European neighbours, leading to increased energy costs and emissions. A wide-ranging coalition of business and environmental groups has called on the government to urgently increase energy efficiency funding by up to £5bn, arguing a drastically expanded programme would deliver multiple economic and energy security benefits.

However, last week's mini-budget only assigned an additional £1bn of funding to energy efficiency programmes over the next three years, sparking accusations that the government had squandered an opportunity to reduce energy imports and bring down the cost to the Treasury of its Energy Price Guarantee.

* This article was originally published here