Net zero u-turn leaves tenants paying the bills

Posted: September 26, 2023 | Author: julesbirch | Filed under: Energy efficiency, Private renting |Leave a comment

Originally written as a column for Inside Housing.

The clue is in Rishi Sunak’s language. This is about more than just his claim to be putting ‘the long-term interests of our country before the short-term political needs of the moment’ when he is doing the opposite.

Nor even his pledge to scrap a range of ‘worrying proposals’ on bins, flights and car-sharing that have never actually been proposed.

No, the obfuscation in his speech last week on net zero really becomes clear when you look at the details with the biggest implications for housing.

‘Under current plans, some property owners would’ve been forced to make expensive upgrades in just two years’ time,’ he said.

Some property owners? Who could he mean? The prime minister cannot bring himself to say private landlords because they simply do not fit in with his narrative of Westminster imposing ‘significant costs on working people especially those who are already struggling to make ends meet’.

Because his announcement actually does the complete opposite. The plan to tighten Minimum Energy Efficiency Standards (MEES) for private rented homes would have saved millions of tenants £220 a year on average according to the government’s own impact assessment.

That was before the energy price crisis: the scrapping of the plan to increase the energy efficiency of rentals to Energy Performance Certificate (EPC) band C by 2025 for new tenancies and 2028 for existing ones will now cost those tenants an extra £400- £500 a year at current prices for gas and electricity.

There are currently 2.4 million private rented homes that are below EPC C so the extra costs being imposed on working people could easily total £1 billion a year or more.

The prime minister did not mention either that these ‘mandatory home upgrades for property owners in just two years’ time’ are not new. His government has already mandated private landlords to bring all their rentals up to EPC E in 2018. EPC C was the next step in a logical path to decarbonisation.

And the obfuscation does not stop there: many of the tenants who will lose out are precisely those who are most struggling to make ends meet and living in the coldest homes with the highest heating bills.

There are currently more than three million households in fuel poverty and a disproportionate number of them are private renters.

But the prime minister did not mention two other government targets: interim ones to get fuel poor homes up to EPC E by 2020 and D by 2025 and a statutory one for as many fuel poor homes as is reasonably practicable to be EPC C by 2030.

The first of these has already been missed by a wide margin and National Energy Action estimates that the third will take 300 years on current rates of improvement.

That’s just one more example of the powerful logic behind the tightening of MEES and even some beneficiaries of the u-turn are annoyed. A leading landlord website accuses Sunak of a ‘betrayal’ that has ‘stabbed landlords in the back’ because some had already started to invest in their properties ahead of the deadline.

The decision also presumably puts paid to the government’s pledge to extend the Decent Homes Standard to the private rented sector – and it will only worsen problems with damp and mould.

It’s a similar story with home heating: the plan was never to ‘force anyone to rip out their existing boiler and replace it with a heat pump’, as the prime minister claimed last week. It was always a ban on the sale of new gas boilers from 2030, which will now be delayed until 2035.

Even the apparently most sensible move, scrapping a ban on oil boilers in homes that are off the gas grid from 2026, was always likely to be subject to exemptions.

On net zero itself, the prime minister claims he remains committed to the 2050 legal target while setting out fairer means to achieve it.

But the means he has just scrapped or delayed were themselves delayed until the point where the timescales became impossibly tight.

The consultation on improving the energy efficiency of privately rented homes was published three years ago and the consultation ended in January 2021.

The whole thing be easier to take seriously if the government had not just scrapped (sorry, ‘streamlined’) a home energy efficiency taskforce that it only set up in March.

However, nothing in what the prime minister said last week changes the imperative to decarbonise our ageing, leaky housing stock. And you suspect that he knows it despite his short-term attempt to politicise the issue.

Delay might make sense if the extra time was used wisely, for example by reviewing an EPC system that is the most widely understood way of measuring energy efficiency but is also deeply flawed.   

The 50 per cent increase in the Boiler Upgrade Scheme grant will help but heat pump installations remain way below the levels needed to decarbonise domestic heating.

Even in social housing, the most energy efficient sector as things stand, further progress on decarbonisation is slow and funding and policy incentives inadequate. Landlords are only too aware of the trade-offs requited to meet the target of EPC C by 2030.

The final piece of obfuscation from the prime minister is that decarbonisation will still have to happen in other tenures, not just the private rented sector but the much bigger and more politically sensitive owner-occupied sector too.

Unless Sunak is planning more u-turns, government policy remains the same as it was in the Clean Growth Strategy published in 2017 and the Heat and Buildings Strategy in 2021.   

This is for ‘as many homes as possible to achieve EPC Band C by 2035 where cost-effective, practical and affordable’ and to ensure that ‘as many fuel poor homes in England, as reasonably practicable, achieve a minimum energy efficiency rating of Band C by the end of 2030’.

Even those deadlines are only staging posts on the journey to decarbonisation and critics argue they should be brought forward.

Both will involve decisions that last week’s speech has not just delayed but made even tougher for whoever wins the next election. Some actual long-term thinking would be welcome.

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