This is the third post in the series on Insulate Britain and the one in which I pledged (to myself, at least) that I would get to the point. So I will.
I will abandon the thick wad of stuff I am halfway through writing and get to the point.
What I am saying is this: If we are to succeed in making our homes fit for a low-carbon world it won’t be done through individual initiative, nor will it be done by grant schemes. It will require government regulation carefully and specifically designed to encourage a wide range of agents – individuals, companies and private entities (like housing associations) – to undertake retrofit programs in a way that is commercially viable.
So, under such a system of regulation, you might find a medium-sized building contractor acquiring a number of old properties and converting them to comfortable, healthy, energy-efficient homes. On completion they would be formally and rigorously certified and the eventual occupier would have an assurance of quality and the promise of reduced energy bills.
‘That sounds wonderful.’ I hear you say. ‘Let’s do it.’
There are one or two little problems of course.
Firstly, how do you arrange it that the old properties can be acquired cheaply enough for the builder to make a profit?
Answer: you would introduce a regulation stipulating that no property can be sold without an up-to-date carbon-impact certificate.
But why would certification, in itself, have the intended effect of depressing the price? To answer this question I need to explain the idea that motivated me to write these posts in the first place – non-linear energy tariffs.
‘Pssst: You just lost half your readers.’
The way a non-linear energy tariff would work is as follows: You pay £1 for the first 10 units of energy, £2 for the next 10, £4 for the next … and so on. The actual numbers aren’t important but it means that the energy bill for a well-insulated, energy efficient house will be extremely low while the bill for inefficient dwellings, whether large or small, will be (artificially) high.
The combined effect of certification together with a non-linear tariff would be to make domestic energy budgets highly predictable. More specifically however, it would serve to amplify the price differential between a high and low-carbon dwellings with the intention of making the cost of improvements financially viable.
Houses falling below a certain certification threshold would be ‘condemned’ in much the same way that cars failing their MOT must be taken of the road.
Non-linear tariffs would only apply to certified dwellings and certification would only be required on a change of ownership. This would be so as to avoid the situation where people on modest-incomes living in substandard housing might suddenly find themselves faced with enormous energy bills.
So there’s just one outstanding problem.
‘Well that’s a relief.’
And it’s a big one.
‘Oh OK. Give it to us anyway.’
Even if non-linear tariffs had the intended effect of shifting the economics of retrofit in a direction that would make it commercially viable, there would be an associated, unintended consequence – namely a widening of the gap between rich and poor homeowners with regard to the value of their assets.
Maybe we need to face up to the fact that bringing the nation’s housing stock into line with decarbonisation targets is inseparable from broader issues of housing inequity and fuel-poverty.
One solution would be to encourage a reduction in house prices across the board. As things stand, there are significant numbers of people for whom home ownership is out of the question.
I have said enough on this topic for now, though I continue to find it very interesting. If there is one point that I would wish to stand out from this series of posts it is that our ability to make a positive contribution to reducing greenhouse gas emissions is not limited to personal spending choices. We live in a democracy in which, in theory at least, we have the right to help shape broader government policy.
Whether things like novel energy tariffs and certification are part of the solution is somewhat irrelevant. It may be that we will have to talk more about land values and planning policy also.
We shouldn’t fool ourselves however; as things stand, we are nowhere near making our homes fit for the future.
Dave Now write about getting the government to put it into legislation
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You’re right Katy – this is the really interesting bit
Once again you provide really interesting ideas on how to start thinking differently. Pricing houses in a completely different way seems like a great idea.
Dave, first, might you better cry them “progressive tariffs”? But what I fear is their complexity, in application and calculation, associated routes to avoidance and the sheer people and paperwork in tracking it all – the evil of bureaucracy.
Similar is the current enthusiasm for “whole life carbon costs” – simple to say but incredibly complex to calculate as apparently-simple components are composites from multiple sources, many of which vary depending on supply-lines and price. Calculating it and adjusting too – for supply-lines waver depending on availability – is impossible.
Capitalism likes to suggest either selling us more stuff, or selling us more bureaucracy – admin and professional services, and I also note here the mutation of the simple and unarguable need for airtightness into the fanatical bureaucratic complexity and self-regarding, exclusionary, ersatz professionalism of passivhaus.
I believe we need to search for simple, dumb levers. I have spent nearly 20 years advocating, and lobbying for, the removal of the primary economic lever for waste and carbon-profligation that is 20% VAT for repair and retrofit, zero for newbuild. It’s simple and bureaucracy-removing, not creating. Up till now I argued for Flat VAT across construction but the emergency is so great it is clear we might need to reverse it – zero for repair, 20% newbuild.
Thanks Malcolm and specially for highlighting the value of reversing the way VAT is applied on construction. Such a simple move that could have massive implication for retrofit, reduction of embodied carbon etc.
I am also with you (more than you might imagine) in remaining sceptical about passivhaus.
Re: progressive tariffs. I don’t believe these would be so difficult to administer in the age of smart meters etc. Of course it would be a form of rationing (as opposed to leaving things to the free market).
Hi Dave,
Thanks for the posts on retrofitting. Some interesting ideas here that depend ultimately on government regulation [and financial incentives?]. I share your view, as well as your pessimism/realism about persuading this government to introduce such measures. After all, we have a prime minister who doesn’t even know when he’s at a party so not sure he can get his head around these more complex questions.
Do you think that writing such a blog from a village like Horsley [I know you have no other option] is going to get everyone thinking mainly about the problems of old Cotswoldy type houses that are relatively small in number against the whole housing stock? Could there be different solutions [and challenges] for different types of housing [terraced/semi-detached/apartments etc] and when they were built? For example, 1970’s private dwellings; post war social housing; late/early Victorian; Georgian etc ? Would the type and age of a dwelling help determine what was expected and feasible in terms of retrofitting?
Perhaps it might be cheaper to actually demolish some houses and replace them with high efficient factory built housing? I’ve seen really high quality German designed housing go up and occupied in three months, once the main utilities are in place. In other cases, we might have to accept that the cost of retrofitting is such that government cannot insist on retrofitting them by the owner although could encourage them to go as far as possible?
Might we not start with [a] more demanding requirements on new dwellings [I realise that this is not retrofitting] and [b] on any new proposals by developers to convert/upgrade a building plot [thinking of the leaseholder cladding and defect-correcting discussions but also the popular warehouse conversions in all major cities and indeed locally] and [c] social housing.
Your non linear tariff, like the poll tax [old habits …] might have to be adjusted according the type and age of property. Closing off the option of selling without a certificate might be a stretch too far but the possession or lack of one would surely impact on the selling price?
Ultimately, it’s hard to get away from the fact that individual owners will have to pay up [government loans might facilitate the process plus grants for those occupying lower valued dwellings]. Hard to know how that will impact on the housing market and whether it widens housing inequality or keeps it at a steady state [not perfect]. We could tax those who sell property on the basis of its energy efficiency.
Anyhow this would make a good topic for a village/town conversation or even a study group.