Labour’s ‘Warm Homes For All’ scheme is a load of hot air

    28 November 2019

    ‘Green crap’ was David Cameron’s memorable verdict on his own government’s efforts to reduce the carbon footprint of UK homes, much of it funded via levies on householders’ energy bills. But to anyone who thought that an apt description, the Cameron government’s energy-saving initiatives were a mere rabbit dropping compared with the gigantic turd which Labour is proposing to deposit on the nation’s doorsteps.

    The Warm Homes for All scheme aims to improve the energy efficiency of all the UK’s existing 27 million homes, which it claims would reduce Britain’s carbon emissions by 10 per cent. According to Labour business and energy spokesman Rebecca Long-Bailey, it will also create 450,000 jobs. For 9.6 million low-income households the work would be done for free, while the rest of us would be invited to take out loans. We would have to repay them, of course, but the cost would be covered by savings on our energy bills.

    Or so Labour hopes. Warm Homes for All is really just a superheated version of the Green Deal, which the Cameron government abandoned early in 2015 after 14,000 properties had received energy improvements. A National Audit Office report in 2016 was scathing. The scheme, which had cost taxpayers £240 million, had not provided value for money and ‘had not convinced householders that energy improvements were worth paying for’.

    The essential problem was that the low-hanging fruit of energy improvements has already been picked. There are some improvements — such as insulating lofts — which are cheap and worth doing. Indeed, that is why they have already been done. It is very hard to find a UK home now which does not have loft insulation. The Green Deal was left tackling the higher-hanging fruit — in particular insulating the walls of the 7.8 million UK homes (most built in the 1930s and earlier) which have solid walls. As the Green Deal found, the energy savings from providing this expensive form of insulation will not pay the interest repayments on a loan taken out to cover the work — the payback period is just too long.

    There is some logic to a mass programme of retrofitting homes with insulation. While newly built homes are more energy-efficient than older ones, we certainly aren’t going to be building our way to rapid decarbonisation — in the year to June housebuilders started work on 160,000 new homes. Even if they were doing nothing but replacing old homes, as opposed to providing additional properties, it would take nearly 150 years to replace every UK home with a more energy-efficient building.

    But if Labour did succeed in retrofitting all UK homes with energy improvements, would that achieve Labour’s target of cutting total carbon emissions by 10 per cent? The experience from previous retrofitting schemes is not encouraging. A government study in 2017, for example, assessed the energy performance of four semi-detached houses in Dartford which had been retrofitted with energy improvements at an average cost of £16,000 each. The target had been to reduce energy consumption between 25 and 40 per cent. But in the event, the houses showed respective savings of 32 per cent, 19 per cent, 13 per cent and 0 per cent. The last property demonstrated a phenomenon which has become well-documented from these schemes — that when houses are better-insulated their occupants often respond by turning up the thermostat, negating some of the savings from better insulation.

    If Labour succeeded in retrofitting every UK home and, as at Dartford, each property reduced energy consumption by an average of 16 per cent, what would that mean for UK carbon emissions? In 2017, carbon emissions from homes — in the form of heating and gas cooking — accounted for 17 per cent of all UK emissions   (that doesn’t include electricity consumed by UK homes, which is accounted for separately). Put those figures together and Labour’s scheme could be expected to reduce total emissions, not by 10 per cent, but by less than 3 per cent.

    There is another problem which doesn’t seem to have occurred to Labour: where do you find 450,000 contractors to carry out these improvements?  The experience of previous subsidy schemes is that they have tended to attract large numbers of cowboys. Research by thermal imaging company IRT two years ago revealed that cavity wall insulation fitted to an earlier subsidy scheme failed to work in a quarter of cases. Some homes had been left with damp and some had seen fuel bills rise.

    One quiet revolution is helping hugely to reduce electricity consumption and at very little cost — LED light bulbs have taken over from fluorescent energy-saving  bulbs. The result is it now takes a tenth as much electricity to light a typical home as it did a decade ago and with very little government input. It is a lesson in how the market often succeeds where grand government initiatives fail.