The secret bill behind ScotGov’s retrofit plans
The Scottish Federation of Housing Associations has this week warned that the Scottish Government’s estimate of the costs of replacing gas boilers with electric heat pumps has been “vastly underestimated” with the Scottish Housing Regulator estimating that the cost of the retrofits could be almost £10 billion - substantially higher than the £6 billion that the Scottish Government claimed.
This is in line with Common Weal’s own 2023 briefing paper The Secret Bill which found that the cost of retrofitting all houses in Scotland are being substantially inflated by the the approach taken by the Government.
The problem is that home owners (and landlords like Housing Associations) are essentially being left to their own devices both to retrofit the houses and to secure the finance to do it, often from private commercial banks that have only gotten more expensive to borrow from in recent years. They have to buy components and installation services from the private market and the fact that they’re all working individually and at their own pace leads to substantial cost, time and material inefficiencies. All of this pushes the price of the green transition up beyond what it should be.
The Secret Bill stated that instead of planning these retrofits the way a homeowner might plan redecorating their kitchen, we should be undertaking a collective effort of “public works” projects. The Scottish Government should bring the retrofitting services in-house via a National Infrastructure Company and should be planning the retrofits on a street-by-street rather than house-by-house basis. Mass purchasing of equipment will allow for economies of scale and the large scale coordinated works across multiple buildings at once would make it more feasible to install more efficient and effective technologies like district heat networks instead of individual electric heat pumps (this would also help take the strain off of an already overloaded electricity grid that the Scottish Government has fewer devolved powers to upgrade).
A mass public works programme would allow the Scottish Government to meet the SFHA’s demand for long term funding solutions as, in addition to normal public capital funding, it would enable patient finance institutions like the Scottish National Investment Bank (which we have called to be expanded to allow funding of projects on this scale) to offer loans that can be paid back on much longer terms and at lower rates than commercial banks will allow. The public ownership of much of the works - such as the district heat networks - will also allow for them to be paid back from the revenue generated by selling the energy rather than seeing our heating bills pad multinational shareholder profits. In this way, collective action with the costs spread across all of us will cost each of us less than if we’re forced to do things ourselves.
You can read more about our plans for retrofitting homes in Scotland and how that project fits into our broader blueprint for a true Green New Deal in our Common Home Plan.
