5 Retrofit Takeaways From Homes UK 2024
..By Jack Portman —Wed 4 Dec 2024
“Trust and quality can be restored when retrofit works are delivered by local people invested with real skills training who feel a local connection to their worksites.”
Taking an area-based or street-by-street approach to retrofit is the quickest and most cost-effective way to retrofit at scale.
Action on Empty Homes attended this year’s Homes UK Unlock Net Zero event in London. With our Retrofit Empty Homes Action Partnerships work ongoing, we were particularly excited to learn about the state of retrofit and decarbonisation. Over two productive days in the London Docklands we dropped in on a wide variety of sessions covering topics ranging from finance for area-based retrofit to biodiversity net-gain for new-build developments. As always, we took careful notes and had a good think on the way home. Here are our 5 key takeaways from Homes UK 2024.
1. Trust and risk management are at the heart of scaling up retrofit
The construction sector is as hierarchical and as fragmented as it is in part as a way of managing risk. Layers and layers of subcontracting distributes risk downwards to smaller firms brought in for specialised tasks on worksites. This practice reduces the exposure to risk of any given firm, since smaller specialised contractors are typically only responsible for the narrowly defined tasks they were engaged to perform.
Hierarchical subcontracting slows the pace of retrofit at scale. Subcontractors are more often than not chosen because they promise to deliver the project at a lower cost than their competitors. This creates a “race to the bottom” which places cost ahead of quality. Small construction contractors are almost constantly dealing with cash flow problems due to late payments, small profit margins, and big outlays for materials, which means they are not highly incentivised to invest in upskilling or reskilling their workers. As a result, quality issues may emerge at the point of installation which impact the performance of the retrofit and require rework down the line.
These quality issues, stemming from the deprioritisation of skills training and the short-term focus of cash-strapped subcontractors, are just what concerns established primary contract firms and their clients, leading them to use their leverage to subordinate smaller firms. It’s a vicious cycle: risk management reduces quality which justifies risk management, and so on.
A less hierarchical and more decentralised approach to funding and delivering retrofit would improve the pace and quality of decarbonisation work. This is why community organisations must be empowered to carry out retrofit: trust and quality can be restored when works are delivered by local people invested with real skills training who feel a proprietary interest in their worksites.
2. Communities have an essential role to play in the retrofit revolution
Communities must be at the helm if retrofit is to unfold at pace with government energy efficiency and decarbonisation targets. The first section in this blog sketched out why community involvement in retrofit could improve quality and reduce the need for fragmentary risk management practices. But there are other crucial reasons why communities must lead the charge on retrofit.
One of the main hurdles slowing the pace of retrofit is resident refusal. Project managers rolling out large social housing retrofit projects claim that up to 45% of residents refuse entry to their homes for retrofit works, which immensely slows progress on decarbonisation.
Residents refuse entry for a variety of reasons, but what is clear is that the messaging and communication around retrofit is insufficient. Moreover, retrofit projects may involve up to a dozen different touchpoints where interaction is required between a resident and someone involved in managing the project. On large retrofit projects, residents might interact with a different person at each touchpoint, creating confusion around who to contact, who to trust, and who to allow into your home.
Community-based retrofit projects are likely better placed to communicate about retrofit and engage with residents. Their knowledge of local context, people, and institutions will help them to establish trust. They can provide opportunities for residents to participate in retrofit on their premises. And they can appeal to the holistic benefits of retrofit for the community, ranging from local job creation to capacity and partnership building. Large-scale corporate retrofit projects are already leveraging “resident heroes” to act as spokespeople for retrofit among their neighbours, but a truly community-based approach takes this further.
3. Skills shortages are slowing the pace of decarbonisation
Even though massive waves of funding are helping to grow the retrofit sector, skills training and recruitment has not developed at pace. Skills shortages have persisted across key retrofit trades and occupations, and stakeholders say this has prevented retrofit from scaling to meet national targets. Around 400,000 skilled retrofit workers will be needed in order to reach net-zero carbon emissions by 2050, but the home and building maintenance workforce currently stands at around 250,000. Less than 10% of the retrofit coordinators needed to hit national decarbonisation targets are currently certified, and key trades and occupations like insulation installation are struggling to attract both newcomers to the workforce and existing tradespeople.
So far, skills training has not been a high priority, for reasons addressed in the first section. The largest retrofit grants, those issued through the Social Housing Decarbonization Fund, are being captured by a handful of global construction and property services companies who project manage and service large retrofit programmes and subcontract out for on-site delivery. These companies work under tight cost-minimizing pressures in order to make a profit, creating incentives to subcontract for works at the lowest possible rates.
This creates a culture of financial precarity and instability in the lower tiers of subcontractors, forcing them to forgo green skills training and upskilling. The further education sector is beginning to incorporate green skills training across its curricula, however the industry’s skills shortage is the education sector’s teacher shortage. Without sufficient investment in training across industry and education, it can be difficult to find skilled retrofit contractors, creating a risk that poorly installed retrofit measures could damage homes.
4. For now, financing area-based retrofit requires dipping into diverse funding pots
Taking an area-based or street-by-street approach to retrofit is the quickest and most cost-effective way to retrofit at scale. By bringing in contractors to work on entire streets or neighbourhoods all at once, retrofit projects can cut down on inefficiencies and take advantage of economies of scale. The cost and time requirements of retrofitting houses one by one, what’s known as “pepper potting” in the industry, would far exceed those of area-based approaches.
However, when taking an area-based approach to retrofit, you are almost certain to encounter a diverse mix of housing tenure and grant eligibility that will complicate the process of drawing down funding for retrofit. Some homes will be private sector rented homes, others will be owner occupied, and still others will be empty homes. Council or housing association stock may be mixed in as well. Different homes and occupants will be eligible for different retrofit grants based on characteristics ranging from the income or health of the occupant to the condition of the home itself.
Projects taking an area-based approach must piece together funding from different grant schemes and programmes, as well as other sources. Funding sources for a street of mixed-tenure housing may include all or some of the following:
Grants
• Home Upgrade Grants (HUG)
• Energy Company Obligation Scheme (ECO)
• The Great British Insulation Scheme
• Social Housing Decarbonisation Fund (SHDF)
Council and local authority funding
Planned maintenance budgets
ESG loans, or green loans
Energy Redress funding
Carbon credits
This stacked funding model is the reality faced by area-based retrofit projects. It’s complicated, uncoordinated, and inefficient, yet some projects – like Groundwork Greater Manchester’s area-based retrofit programme – manage to make it work.
Clearly, a more coordinated approach to retrofit funding is required in order that area-based retrofit becomes more feasible. Negotiating numerous funding pots with differing and sometimes conflicting requirements multiplies the administrative and bureaucratic workload of retrofit, drawing focus and funding away from what’s most important: making sure retrofit work is done efficiently and at a high level of quality.
5. It may seem daunting, but we can do it
It is easy to be discouraged by the scale and complexity of retrofitting the entire country’s housing stock. But the UK has undergone energy transitions before and succeeded. Most people in the industry believe it is likely that government targets for home energy efficiency can be met over the next quarter century. The technical knowledge and understanding is in place, and the project of national decarbonisation promises to create hundreds of thousands of green skilled jobs.
This is a chance to mend regional disparities left over from the post-industrial transition and create more inclusive and sustainable communities across the country. It is also a chance to revalorise the role of community in social and political life; this means taking seriously the interconnectedness of our lives, our willingness to listen, share, and trust, and our commitment to caring for the wellbeing of others.
Decarbonisation will involve building capacity and solidarity within and between communities, and creating a culture of collaboration and problem solving that will eventually take the place of our current reliance on unsustainable and unequal hierarchies of work and production. Retrofit and decarbonisation are existential imperatives, but they are also, crucially, invitations to build a different way of life along the way. This invitation is too good to turn down.