Leading banks and building societies call upon Sunak to support home retrofit drive

by | Oct 28, 2022

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The Green Finance Institute, with support from the climate think tank E3G, has published recommendations to the new Prime Minister to spur private investment at scale to fix the UK’s cold and leaky buildings.

The recommendations were formed through dialogue with the UK’s leading financial institutions including Santander, NatWest and Nationwide and emphasise the need for long-term certainty on net zero policies, as well as incentives to encourage homeowners to install energy efficiency and low carbon heating measures in their buildings.

The Climate Change Committee has estimated that it will cost £360 billion to ensure all homes and buildings are in line with legally binding net zero obligations by 2050. Private finance provided by financial institutions will be critical to reach this target. The Green Finance Institute notes that further action from the government will be needed to address the market failures.

The report notes the potential of the sector to contribute to support long-term financial stability through reducing household and government spending – freeing up disposable income which can be spent in local economies.

Recommendations include:

⮚     Clarifying the government’s intentions regarding timelines for introducing minimum standards for energy efficiency and clean heat

⮚     Reforming the Consumer Credit Act to support innovative green financial products

⮚     Launching a nationwide awareness campaign and providing tailored, trusted advice

⮚     Introducing an Energy Saving Stamp Duty, with a tax rebate available for homeowners who retrofit their property within two years of purchase

⮚     Attractive concessional loans or guarantee schemes offered by the UK Infrastructure Bank,

⮚     Supporting skills and supply chains with a focus on training and education

Rhian-Mari Thomas, Chief Executive of the Green Finance Institute said:

“The UK’s leading banks and building societies are ready to support homeowners across Britain to make their houses warmer and cheaper to run. However, more action is needed from the Government – including a national awareness campaign and an energy-adjusted Stamp Duty – to boost consumer demand and incentivise a nationwide retrofit drive, as well as supporting supply chains to deliver. The prize is enormous, with significant opportunities to spur local economic growth and underpin British clean tech. Today’s report sets out what’s needed to get on track.”

Claire Tracey, Chief Strategy and Sustainability Officer for Nationwide said:

“Despite lenders like Nationwide making financial products available to help people green their homes, take up remains low due to a lack of consumer awareness and knowledge about where to find trusted tradespeople. We’d like to see the government working with the private sector to urgently develop a long-term, national retrofitting initiative that increases public awareness about energy saving and helps companies to build the skills base necessary for a thriving green retrofit industry. Banks and building societies are standing ready right now to help people fund their green home improvements. The goal should be to ensure that no home is left behind.”

Lloyd Cochrane, Head of Mortgages at NatWest said:

“This report by the Green Finance Institute and E3G brings to the fore the central role of finance in unlocking the energy efficiency puzzle. We welcome the fact that its observations and recommendations are strongly in line with the Sustainable Homes and Buildings Coalition’s own advocacy. All sectors and stakeholders now sing from the same hymn sheet when it comes to energy efficiency delivery – and this is perhaps most telling in the central importance of customer centric approaches, supply chain support and the unique role of energy efficiency in being about more than carbon savings. We look forward to continuing to work closely with E3G and the GFI in making sure that national energy efficiency moves from plan to reality and ensuring the lessons we learn from the pilots we are running up and down the country are shared far and wide. Energy efficiency is not a luxury: it is a matter of national and personal security.”

Mick Taylor, Group Marketing Manager at Santander said:

“The greening of UK housing stock is one of the biggest challenges the housing market has seen in modern times. Research has shown that despite a lack of awareness about reducing carbon emissions from homes, there’s a real willingness from UK households to change. Energy efficiency has become the new dynamic in the housing market and its importance looks set to grow. One of the biggest, and immediate challenges is to engage with UK households to raise awareness of the need to improve home energy efficiency and highlight the many benefits of low-carbon housing and living. The best ideas and solutions needed to deliver multiple demand drivers, design innovative green finance products and take the right steps to boost the retrofit supply chain will come from working collaboratively across industries. There will be no better time than now to gain buy in from households to support the reduction of carbon emissions from UK homes as we set out pathways to reaching net-zero.”

Juliet Phillips, Senior Policy Advisor at E3G said:

“A focus on retrofitting our cold and leaky buildings is a triple win for lower energy bills, boosting green jobs and industry, and reducing the UK’s exposure to volatile international fossil fuel markets. British lenders will have an important role to plan in financing this transformation of our building stock, but to date a market-failure has held back investment at scale. The recommendations set out in this report could help unblock this bottleneck, supporting consumers and businesses to benefit.”

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