Where Britain’s journey to insulation went wrong

Credit card buy

Christmas 2015 was a miserable one for the 1,000 employees of Leicester-based Mark Group who had lost their jobs with the energy efficiency company just weeks before.

The business, named Britain’s fastest-growing in a prestigious list published just two years earlier, had become a casualty of then prime minister David Cameron’s environmental flip-flopping, which saw him oscillate from hugging a husky to issuing a pledge to “cut the green crap”.

A wave of state-funded schemes helping homeowners to patch up draughty homes had been replaced in 2013 with the deeply flawed green deal, which was eventually killed off in summer 2015.

Companies in the sector shrank or folded in the face of a sudden dearth of customers able to afford improvements. The annual number of installations of cavity wall and loft insulations has fallen from more than 2m to barely a tenth of that today.

“Helping people [laid-off employees] carry personal belongings to their cars brings it home to you,” says Mark Group’s chief commercial officer Bill Rumble. “You’re not sure what to say when they close the boot.”

“It’s not rocket science,” says David Adams, of the UK Green Building Council, who witnessed the insulation industry’s rapid decay.

“If the market reduces by three-quarters, you have to take three-quarters of your capacity out. Some will close and to a significant extent they have not rehired because activity has remained low since.”

Installed insulation line chart

Boris Johnson has fared little better than Cameron. His Green Homes Grant for England was introduced in summer 2020 only to be axed six months later. It was branded a “slam dunk fail”.

Meanwhile, upgrades made under the Energy Companies Obligation system have risen and fallen as short-term schemes ended, never fuelling a return to the pre-2013 glory days.

  Tell us: are you due a £150 council tax rebate that you haven’t yet been paid?

The UK’s piecemeal attitude to patching up its energy inefficient homes – among the leakiest in Europe – is back in the spotlight after the government’s energy security strategy, published earlier this month, was criticised for failing to include any new measures on insulation.

Britain’s leaky homes make the energy crisis worse. Why have governments not fixed them? | Max WakefieldRead more

The government has said it wants as many homes as possible to be upgraded from energy efficiency band D to C by 2035 but Adams does not see where that shift will come from. “There are no policies for delivering it,” he says. “It’s simply words.”

Meanwhile, the Italian government is effectively paying its citizens to upgrade their homes, offering 110% on the cost of installing insulation systems, heat pumps and solar panels or replacing an old boiler. It has cost about £17.5bn so far.

Italy’s superbonus 110% scheme prompts surge of green home renovationsRead more

Labour has criticised the lack of action on the issue as “shameful” and has offered its own pledge, costed at £60bn over 10 years, to fund the upgrade of 2m homes in the first year.

That is double the rate that even the insulation-friendly Energy and Climate Intelligence Unit (ECIU) thinktank has proposed, but Labour insists it can be done with sufficient investment.

Dr Simon Cran-McGreehin, of the ECIU, anticipates significant challenges, not least reanimating an industry that was badly beaten down a decade ago and has had only scraps to feed off.

Help credit report

“The industry is severely jaded and wounded from all the changes,” he says. “The rug was pulled out in 2013 and they laid off thousands of people.

“The industry made an effort for no real return. So getting them to upsize now would need good long-term commitment and a programme that was really viable.”

  Should I sell my house now to avoid falling into negative equity?

You cannot get the staff these days either, according to Prof Sir Jim McDonald, president of the Royal Academy of Engineering.

He estimates that 30,000 new skilled workers would be required to retrofit buildings, while 60,000 technicians would have to be on hand to go one step further and install energy efficient heating systems in homes, offices and factories, with intensive training required.

“The ability to fill vacancies in these highly technical fields is restricted by the UK’s stagnating levels of engineering skills over the past decade,” he says.

Adams thinks the industry can rise to the challenge but that “fatigue” after years of broken promises means it could only do so in response to a bold and ambitious long-term strategy.

“What we don’t need it is a one or two-year programme again. They’re incredibly inefficient. You’ve got to hire and train people, buy loads of kit and then you end up having to lay them off again.”

It is hard to see where the insulation revolution is coming from. The only new measure on the table is a VAT cut – from 5% to 0% – on installing solar panels and energy efficiency materials, a welcome but small-scale measure announced in Rishi Sunak’s spring statement rather than the energy strategy.

That, says James Higgins, of the National Insulation Association, is “not a gamechanger”. The NIA has been supportive of government measures that do exist for funding home upgrades, particularly for the poorest households, but envisages more ambitious thinking.

The big challenge, says Higgins, is not simply returning to the high levels of cavity wall and loft insulation that were going on prior to Cameron’s 2013 U-turn, but the 9m homes that could benefit from more expensive solid wall insulation.

  Energy bills likely to rise by £800 in October, says Ofgem chief

“What we need as a country is to look at homes in the round and say what do they need to be compatible with net zero.

“It’s insulation but not just walls; there’s roof space, underfloor, draft exclusion, doors and windows. The whole house retrofit is the future but it’s a massive job.”

A chart produced by parliament’s climate change committee illustrates the eye-watering costs involved in implementing the most effective measures.

Nearly 11m homes are suitable for loft insulation, it says, at a cost of between £440 and £740 each. That’s £8bn for a 4% reduction in heat demand for a semi-detached home. An 18% reduction could be achieved with external wall insulation but that would cost up to £8,590 per home, or nearly £65bn.

With relations between Sunak and the business and energy minister, Kwasi Kwarteng, strained, it is hard to envisage the Treasury opening the purse strings for the most ambitious projects, even spread over a decade.

Insulation advocates think there are mechanisms that could complement direct government support, harnessing market forces to incentivise homeowners to spend their own money.

Ideas include council tax discounts for people who upgrade the energy efficiency of their home, or a sliding scale of stamp duty, with leaky homes taxed more highly but a rebate available for homeowners who make improvements within two years of buying.

“It means there’s no free money,” says Adams. “But it does encourage you to think about what needs to be done.”

Leave a Reply