Biggest Costs: Many houses are poorly insulated and poorly heated already
In 2023 a large project was carried out at University College London under a group headed by Tadj Oreszczyn and fully written by Jessica Few. You can see the most important graph below. The most important finding to me was that people who lived in houses with a low Energy Performance Certificate (so they were relatively cold) simply did not use their money to warm up the house either by insulation, or by spending more on heat. The absolute reason for this is unclear. The large amounts of money saved by making the houses energy efficient were perhaps just missing from their budgets or they realised that any money spent on energy efficiency was not returned to them when the house was sold: see the graph below.
You can see by looking at the two lines in the graph that what was expected from poorly insulated houses (the blue line) could be predicted from the EPC rating…….but when they actually tried to find out if this was actually true they found the the black line. In other words people were just putting up with the cold when living in the poorly insulated house AND SO THEY WOULD SAVE MUCH LESS WHEN THEY DID INSULATE.
This changed things greatly. But when the calculations were done it turned out that Government Grants were needed for each house being insulated under law when they were bought. For the first 5 years after the law was brought in there would be a cost to the Government for the decrease in house price. The work was done for the Scottish Government and came to about £12,000 per house (but not for new-builds or first buys) or £58 million spread over 5 years. It also increased the time needing to pay back to the bank for the money needed to borrow by buyers coming from a poorly insulated house and buying another. This would need a grant of about the same as the VAT plus the income tax of the builders. Its highest figure for each house would be betwee £0 and £12,000 for each house having an EPC beteen D and G, the average being around £6000. The cost for this was was a one off grant and for each of 450,000 houses p.a. This was not for new builds or first buys tailing off to zero in 20 yrs. Only if interest rates rose above 5% were there any further costs. Also simply because of inflation the houses that were bought and sold early (<5yrs) felt the costs to them from the bank fading away earlier. Also with an EPC of C a house might be brought up to B with simple changes or PV cells put on the roof (which pay for themselves over time).
Rachel Reeves is now the new Chancellor of the Exchequer
She was trained in the Bank of England as a valuable person to decide what is best worthwhile for the UK Government. She appears to be excellent and would be expected to allow the money for HousingNetZero to be fully assessed before considering it. See politics
Our own findings that it would represent costs of £1 billion a year (and dropping to zero in 20 yrs) for the biggest problem in getting to Net Zero. The technology is well tested. The biggest effect is to council housing and Victorian terraces
