The Impact of Funding Cuts on Green Home Upgrades
Fitters across the UK are scrambling to complete green home upgrades, with warnings that some projects may be left incomplete due to the abrupt cancellation of the country’s flagship grant program for households in fuel poverty. This decision by Chancellor Rachel Reeves has led to a crisis within the industry, as installers face significant challenges and even threats from frustrated customers.
Industry Warnings and Job Losses
The industry is sounding the alarm, stating that around 10,000 green jobs could be lost as a result of these cuts. This could lead to increased costs for green home renovations in the long term. At the Autumn Budget, Reeves scrapped the Government’s ECO4 scheme, which provided low-income households with grants ranging from £7,000 up to more than £20,000 for heat pumps, insulation, and solar panels.
The ECO4 scheme, launched in 2013, was funded by energy suppliers through a ‘green levy’ on household energy bills. However, Reeves announced that the green levy would be abolished, and instead, households would receive grants via a “warm homes plan” funded through general taxation. Unfortunately, the full details of this plan have yet to be announced, and it will likely take at least a year before it becomes operational. This leaves no immediate replacement for ECO4 when it ends in March.
Projects Left Unfinished
Installers have reported having to cancel jobs because they can no longer secure funding from energy companies to finish their work. David Macneil, managing director of Energy Pig, a Glasgow-based heating and insulation company, shared his experience of receiving “death threats” and negative reviews after being forced to cancel projects.
Macneil explained that his company is now paying for work they had already started, as they can no longer secure ECO4 funding. He mentioned that some jobs involve removing heating systems, which means they will have to reinstall them without making any profit.
Anna Moore, founder of retrofit company Domna, shared a similar story about a 90-year-old woman living in a central London flat without central heating. They were planning to use ECO4 funding to provide her with central heating and some insulation, but this project is now unlikely to proceed.
Redundancies and Financial Strain
Nigel Donohue, chief executive of the Installation Assurance Authority, noted that energy companies are trying to renegotiate the cost of work to drive prices down as installers compete for the remaining ECO4 funding. This means more expensive measures, like heat pumps or solid wall insulation, are less likely to get funding.
Donohue also highlighted that customers may have to rely on the goodwill of installers to complete their projects or be left with unfinished work. Some installers have already started issuing redundancy notices to staff due to cash flow issues, as they cannot wait for the new Warm Homes scheme to be introduced.
Macneill revealed that Energy Pig currently employs over 60 people and may have to reduce this number to around 20 if ECO4 is not extended. The company recently purchased a building in South Lanarkshire to turn into a training academy for green installers, but is now considering renting it out to other businesses.
Analysis and Job Loss Predictions
Analysis by the climate think tank E3G predicts that 10,000 jobs will be lost across the UK due to the cut to ECO4, including many apprenticeships. Scotland is expected to be the worst-affected region, with 3,940 jobs at risk.
Donahue emphasized the potential impact of these job losses, comparing it to the closure of steel works, which attracted national media attention. He warned that the government is in danger of decimating an entire sector, which includes small to medium-sized enterprises (SMEs) in every single constituency.
Faulty Upgrades and Ongoing Issues
An estimated 15 million households in fuel poverty have received upgrades since ECO4 was introduced. However, the scheme has faced criticism due to issues with the quality of insulation installed in many homes. A recent investigation by the National Audit Office found that poor workmanship and lack of oversight have led to problems such as damp and mould in 20-30,000 households.
While the government has promised to fix these issues at no cost to affected households, Donohue expressed concerns that redundancies in the industry could impact this work. Companies may not have the funds to carry out necessary repairs.
Future Plans and Support
Retrofit companies generally accepted that the latest iteration of ECO4 was not working and welcomed plans for a new scheme. However, they urged that ECO4 should be extended until the new government scheme is in place.
A Department for Energy Security and Net Zero spokesperson stated: “The ECO4 and GBIS schemes were not delivering value for money. We are instead investing an additional £1.5 billion into our Warm Homes Plan, taking it to nearly £15 billion – the biggest ever public investment to upgrade homes and tackle fuel poverty. We are doubling down on support for home upgrades and will shortly set out our plans to help households and support thousands more clean energy jobs.”