The Labour party has good ideas but the question of where the money is remains
Next year’s election is looking increasingly impossible to call. The polls are no longer just close, they’re now neck and neck between the Tories and Labour. So for those of us eager to know what’s going to happen to energy efficiency policy over the next five years things are far from clear.
At a packed parliamentary event we hosted last week, the Labour shadow energy team set out their vision in a highly anticipated green paper on energy efficiency policy. I say it was highly anticipated for two reasons - there had been some innovative proposals trailed at the Labour Conference a month ago which were well received by industry, and because we’d originally been told the paper would be published by Easter.
But now it’s finally with us the Labour team would like to know what the industry thinks, with a consultation on the paper open until 22 December.
We knew most of the main headlines from the conference announcements, and there are some very good ideas. Scrapping the Energy Company Obligation from 2017 and redirecting the £940m of funding to focus on whole house retrofits for low income households is a bold move in the right direction. There is, of course, devil in the detail and I fielded some tricky questions about how the new scheme would be administered - there’s a suggestion it will be local authorities leading - but if implemented properly it could make a huge difference to those most at risk of falling into fuel poverty.
Then there’s the ambitious commitment to increase the minimum standard for private rented homes to Energy Performance Certificate band C by 2027. With the private rented sector regulations for EPC band E by 2018 due to be confirmed (hopefully) imminently, the 2027 target would provide forward-thinking landlords with valuable certainty about the action they’ll need to take over the next 10 years, and thereby inform wise investment decisions sooner rather than later.
On the new build side, a clear commitment to implementing the Zero Carbon Hub’s on-site carbon compliance standard for new homes is also very welcome after the past few years when the industry hasn’t known whether it’s coming or going.
There is still a question about small sites with the paper ruling out “indefinite exemptions” and perhaps leaving the door open for time-limited loopholes. Caroline Flint, shadow secretary of state for energy and climate change, tried to dispel any talk of exemptions, indefinite or not, but I suspect that’s one to ask her colleagues in the shadow communities and local government team about.
I do have particular reservations about the plans for energy efficiency in the owner occupied sector. The flagship announcement here is for interest free Green Deal-style loans for 1 million able to pay households, which sounds great, but the problem is there’s only £300m earmarked to pay for it - based somewhat arbitrarily on the current government’s home improvement fund pot.
The overriding constraint here is that Labour has set out what it would do within the same spending plans as the coalition government
Even with a government guarantee for the loans, the back of my envelope calculation suggests that for 1 million loans at £2,000 per household (we’re not talking whole house retrofit here), £300m could only subsidise a 0 per cent interest rate for around three years. Now, either there’s more money on its way, or some householders are going to get a nasty shock further down the line!
And there is still the fundamental outstanding issue of a lack of demand. Zero interest loans will undoubtedly help to drive activity, but some householders are held back by more than just finance. And what happens beyond the lucky 1 million households when the money runs out and the interest rates rise? If we’re really going to transform our existing housing stock we need sustainable, long-term low interest rates, backed up by a suite of demand drivers like variable stamp duty or council tax, consequential improvements or even minimum standards for owner occupiers.
The overriding constraint here is that Labour has set out what it would do within the same spending plans as the coalition government. And that begs one very big question: if, as they assert, energy efficiency should be seen as a national infrastructure priority, and “one of the best investments a government can make” to quote Jonathan Reynolds on Monday, where is the capital spending commitment to leverage that opportunity?
The answer of course is out of bounds until the shadow treasury team are prepared to show their hand some months down the line. Let’s hope Ed Balls shares Jonathan’s enthusiasm.
Overall though, I have to say I’m very encouraged by Labour’s proposals which have certainly raised the bar and there are the makings of an effective policy framework here. We’re probably not going to know the colour(s) of the next government until 8 May 2015 – or days later if 2010 is anything to go by – but these are encouraging signs from the red corner.
We don’t yet have comparable details from the other main contenders but let’s hope they respond with equally ambitious proposals.
Paul King is chief executive of the UK Green Building Council