How Much Would it Cost?

Robin McAlpine – 7th October 2021

Did Glasgow City Council do Scotland a favour by saying out loud how much it would cost to get all its housing stock up to reasonable energy efficiency standards but then unconvincingly fluffing the line about how it was going to pay for it? Yes, it probably did, because it prompted a debate we very much need to have which we’re not having.

Heating houses in Scotland produces nearly three times as much carbon as all of our transport combined and many multiples of how much we belch out generating electricity. Everyone knows we need to fix this; no-one is talking about how to pay for it. But we really need to talk about it.

Glasgow has priced the cost of retrofitting insulation to all its houses at about £11 billion and that is roughly in line with Common Weal’s costings for the whole of Scotland where we think that about £40 billion is needed (plus another £25 billion to replace current heating systems).

This is big money because fixing the environmental performance of housing is expensive, time-consuming and varies greatly from house to house. We priced it at about £15,000 per household (£25,000 including heating) based on real-world case studies. Those case study numbers are higher but they have tended to be based on houses with particularly poor environmental performance. Economies of scale should help too – if it’s all done right.

But these are averages; some houses will cost a lot more, some much less. The problem is you don’t really know until you start looking at a specific house (though a street of houses of the same construction will have similar issues). There really is no ‘one size fits all.’ 

So there isn’t a cheap way to do it because it is labour- and material-intensive. Doing it ‘nearly’ properly can be as bad as not bothering. Insulating a loft badly is like fixing two out of three punctures in a bicycle tyre.

But there is an expensive way to do it. Do a house at a time so contractors drive to the same street on multiple occasions. Avoid efficiencies of scale by not bulk purchasing materials. And above all, do it twice.

Doing it twice is what happens if you upgrade a Band D house to Band C, and then go back later to get it from Band C to Band A. On your second visit you’ll create all the disruption to the householder again and then you’ll very probably have to undo work you did the first time.

For example, a more efficient gas boiler might get you from D to C but will then have to be replaced again if you want to get from C to A. Retrofitting a house is not an incremental process.

There are very broadly three steps which need to be taken to get to a decent environmental efficiency – they can and should all be done at the same time. First you need to stop heat that is escaping through surfaces which let heat pass through like single pane windows or uninsulated roofs. These need to be replaced or insulated.

Then you need to stop heat that is simply leaking through gaps in the form of drafts. That means tackling leaky window frames or gaps in the fabric of the building. By far the two biggest factors are heat escaping through roofs or windows and heat lost in drafts. Wall insulation is usually less important than draft-proofing.

The third element is reducing the energy needed to run the house by installing more efficient heating and using measures which reduce the amount of hot water needed for things like washing or electricity for lighting.

Common Weal would add to this that being environmentally responsible also means selecting what materials you use to carry out the work. Sure you we can buy foreign-produced plastic-based insulation products but the environmental impact of domestically-produced wood-based insulation is much, much lower.

So if this is the broad picture of where we need to go and what we need to pay, where are we now?

For years governments across the UK have ducked the issue by basically farming the problem out to householders through small grant schemes. You can do the survey, get told what needs installed in your house and get a partial grant to install it. You’ll be given a list of possible contractors (if they haven’t already cold-called you) and you need to get on with it from there.

But if you do a web search on the words ‘home insulation’ and ‘scandal’ or ‘scam’ you can spend the rest of your day working your way through examples of how this system is rife with abuse. And, problematically, it is not unreasonable to call the official approach dodgy as well.

Even if you go through a government-approved scheme administered by a government-approved agency you are still getting a shoddy service. You fill in a questionnaire, but you’re not a qualified surveyor and the entire remedial plan will be based on your guesstimates.

And the work will be done by a contractor but the quality of their work won’t be assessed after the job is done – and badly-fitted insulation can produce results which are in the ballpark of ‘not bothering’. (If you get solid foam insulation and the installer doesn’t taper it right in to the edges of your loft, heat will simply pour up the inside walls of your house and straight outside the big gap round the outside.)

Oh and if someone tells you that you’ll recoup the cost in saved energy bills they’re almost certainly not telling you the truth. At an average cost of installation you’d be lucky to save enough on your energy bills in your lifetime to break even.

But this is all very attractive to policy-makers because it’s cheap (for them) and it offloads the costs onto householders. Unfortunately it doesn’t deliver the outcome. The houses that need upgraded most are the ones which this scheme won’t help (often the poorest households which can’t afford the enormous costs, small grant or no small grant) and it’s hit and miss whether you get anything like the outcome the computer model says you will.

This is the problem Glasgow has – the Council hope that some of its other green schemes can pay for themselves through effective privatisation but there is no real financial return on fixing housing. It just needs done and someone needs to pay for it.

Until we bite this bullet we’ll continue to push this problem into the future. It will take time to scale up supply chains and train a workforce to do this properly and the longer we wait the more certain it becomes that the next 30 years will just be a string of missed environmental targets and increasingly desperate ‘offsetting’ measures to massage the figures and make it look like we reached ‘net zero’.

Common Weal has a clear plan. We would pay for this collectively through taxation so the burden is shared fairly. We’d link it to an industrial strategy to train a workforce and build up domestic supply chains. We’d set up a National Housing Company to employ staff and do the work.

We’d get rid of the daft guesstimate that is an Energy Performance Certificate and instead use real energy usage data to assess environmental performance and get professional surveyors to assess a building and prepare a plan for upgrade. We’d have the work done a neighbourhood at a time to maximise efficiency and minimise disruption.

And we’d do everything possible to repay the cost by maximising the economic impact of the work by integrating it into a comprehensive Green New Deal – with our model it could all pay for itself, but we’d really need the powers of independence to pull that off.

That model works – so if it’s not this, what is it? Setting more targets, chucking around a few million for insulation (which will just be sucked up by the ‘home energy efficiency empire’ which has grown up around the current scheme), and faking it for another ten years until it is clear this has all failed?

Sadly that seems to be the current plan. Which is why anything that will stimulate a serious national debate has to be welcomed.

13 thoughts on “How Much Would it Cost?”

  1. I cannot believe what I read in this piece – the suggestion that taxes will be needed to pay for the massive cost of upgrading our housing stock. It is nothing short of financial illiteracy and a lack of understanding of the nature of money. It is the same economics espoused by Sunak and also the Labour Party and is the basis for austerity economics. I am shocked that an organisation as well respected as Common Weal is advocating such nonsense.

    1. Bear in mind that MMT-type models don’t apply unless a country is monetarily sovereign – which Scotland isn’t (yet) – and we don’t really have time now to wait for that before we get started with the Green New Deal (though we can’t easily complete it without the powers of independence either)

      Even once Scotland becomes monetarily sovereign, tax must be used to reclaim and redistribute the effects of the Green New Deal so that the impact is collectively fair. Using an MMT-type financial model to fund a project but then allowing those funds to pool into unfair wealth and income sinks would be counter-productive.

      Ultimately, whether you look at this through a “tax pays” or a “tax reclaims” lens, the shape of the tax system applied is likely to be very similar.

    2. Robin McAlpine

      Sorry Jim – the piece precisely says ‘how do we pay for this?’. Perhaps one day an MMT solution will be open to us and I’m well aware of the work by the Green New Deal team and Richard Murphy in London, but borrowing for infrastructure will still be an aspect of fiscal policy even in an MMT universe. It could be that the borrowing comes from the Central Bank and that it could write that off in time if the economic boom from the scale of investment doesn’t overheat the economy and threaten higher interest rates, but all I’m saying is that this is a debate we’re not having and first of all we need to get policy-makers to look the scale of the task in the eye and be honest about it with the public.

  2. Spot on, Robin, this becomes clearer by the day.

    A quick win would be to require all new build to be built to Passiv Haus standards (ideally using locally sourced carbon-sequestering insulation) from, like, today. This is the only way I can see of forcing the industry to up-skill quickly enough; and increasing the scale of production and use of Passiv Haus technologies should also reduce costs of some elements required for retrofit.

    1. Robin McAlpine

      Hillary – oh dear goodness yes. For brevity I didn’t point out that a house being built today in Scotland on a ‘CATNAP’ basis (Cheapest Available Technology Narrowly Avoiding Prosecution) will then require public funding in the future to retrofit it again to achieve necessary levels of thermal performance must surely be the definition of madness…

  3. P Ciancanelli

    Its a good plan but what is missing is how we get from here (politically) to there. Were it to happen, a public good (slowing climate change) would be created worth much more ‘money’ to the children of the next generation than the cost borne by the next generation. At the household level, few can afford to take on the burden of producing this public good so oppose any plan like it. Intergenerational equity would dictate asking the builders (who, after all, put up the energy inefficient housing that is urban-peripheral Scotland) to pay for the retrofit of every house they built for the past 40 years. I don’t think they will agree to that. SO..its a good plan but I don’t see how we get from leaky roofs, bad windows and slum-lords to energy efficient housing.

    1. Robin McAlpine

      What I was really saying in this piece if that we had an honest debate about this then probably the political climate would change as a result. What isn’t being said to households just now is that if we don’t do this collectively they individually will have to stump up perhaps £50k (in some cases) to meet eventual building regulations. If the public understands they will be hit like this unless we take a collective public approach I’d hope it would shift the debate sharply. At the moment the Scottish Government is throwing comparatively minor amounts of money around and press releasing them. This gives the impression ‘something’ is being done so I don’t think there is enough public awareness that, no, actually nothing like enough is being done.

  4. Robin Gifford

    As a former renewable energy company owner I completely agree with your assessment on how to tackle this problem. Tinkering around the edges achieves nothing. The previous Governments attempts through various Green Deals have failed abysmally, and as you rightly state, were open to multiple scams.
    There are hosts of reasons for this – one of the most obvious being that the Government never involved players from the industry – installation companies etc – in their discussions. If they had done so they would have quickly learnt that everyone in the industry (scammers excepted) knew that the schemes could never work as envisaged, and consequently never supported them.

    What is required is an immediate audit of all Scotland’s housing stock on a street by street, area by area methodical basis. This audit would be a far more detailed examination than the present EPC, carried out by teams of well trained individuals who could easily produce exact requirements for each property. (Such audits could also provide the opportunity for a revision of house prices for council tax reviews – and a route to helping pay?). Employment opportunities are obvious.

    These teams are then followed by the teams who carry out the required works. Again the employment opportunities are huge – especially if these jobs are only carried out by local SME’s and not contracted to the usual big players.

    Who pays? That is for the politicians – but the returns from employment as well as socially will be immense.

    1. Robin McAlpine

      Robin – what you write here is virtually word for word the conclusion we came to when we started doing the Common Home Plan. EPCs are a nonsense – they use a formula which doesn’t even accord to the basic physics of heat loss in a building. They’re designed to be easy for the layperson, not to be accurate about the task. And now there is this giant industry built up around them which is lobbying to keep them as they are. We’re about to publish our submission to the inquiry into EPCs. It doesn’t pull punches.

      As for the rest – it’s basically the definition of ‘buy cheap, buy twice’. If a contractor comes to your house, drags furniture out so it can put in cavity wall insulation but doesn’t draft proof you will probably have to get another contractor in the future to come to your house, drag the furniture out, remove the cavity wall insulation, fix the drafts and then put the cavity wall insulation back in. This is the kind of approach that only makes sense if you look at the world through a short-term political lens.

      1. Robin Gifford

        Thanks for your reply Robin.
        Small business is the backbone of our economy, and yet our Governments’ ability to understand and communicate/interact with SME’s is dismal. This is a tragedy as the answers to so many of our economic issues lies exactly with SME’s.
        The problem in my opinion is simply one of risk and accountability. All Governments prefer to hedge their risk and place all their reliance on the usual big players. And then when a Carrillion or similar goes bust no one gets any blame for trusting them.
        If and when the Government engages with small business – and properly, not through their same old channels – I can see enormous opportunities to sort out many issues, but especially in the home energy market.
        Sadly it wont happen.

        1. Robin McAlpine

          It has been one of our constant rallying calls – the economy is rigged against smaller domestic businesses, especially producers. Big business acts as the gatekeeper far too often. It was really what Resilient Scotland was largely about.

          That said this is one of the occasions in which the scale of the work is probably not best delivered by a flotilla of small businesses. Actually we need all the small joinery and similar businesses to still be available to do all the other things they do and not all get sidetracked into house retrofit (that’s why we’re specifying the need for major workforce expansion so we’re not displacing existing capacity). It’s getting harder to find a tradesperson round my way and I know I’m not alone…

  5. Ian Davidson

    Robin. Stop greetin man. Our new climate hero, Patrick Harvie has announced his master plan for saving the world and getting rid of all these nasty noxious old boilers (clarification: gas boilers, NOT anyone over 70 who doesn’t vote for indy, as per super heroine nic and the Fiduciary Times). I have every faith that our future homes will be warm, clean and pleasant to live in on a safer planet, thanks to the great intellectual thinking of professor Harvie.

    1. Robin McAlpine

      On the Greens – I honestly didn’t know Harvie was going to be making that statement when I wrote this. but it kind of highlights the point – the £33bn he cites to get to something in the ballpark of £25k per household in Scotland. Just wait until someone actually explains that to everyone. You’ve got three years to start saving that up – and fingers crossed you’re below the average cost because if you’re above it… Oh, and that only gets you to Band C.

      And it seems the First Minister didn’t read Common Weal’s analysis of the Demographics of Independence. It shows (what international research has shown) that changing demographics do not mean that the views of the young from one generation become the views of the old in the next. Humans get more cautious and more small-c conservative in older age (very loosely and in general). The idea that you can just wait around until the population ‘catches up with you’ is a myth. It just doesn’t work like that.

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