Providers secure £778m through Social Housing Decarbonisation Fund

The second wave followed Wave 1, which awarded £179m to 69 projects, and an earlier ‘demonstrator’ phase, which awarded around £61m as an initial investment to 16 local authorities for 18 projects to test innovative approaches to retrofitting at scale.

The government also announced that it had awarded £630m to councils in phase two of the Home Upgrade Grant, which will provide energy efficiency upgrades to low-income households with low energy efficiency ratings.

DESNZ said altogether more than 115,000 homes across England will get upgrades to their energy efficiency through £2.5bn of funding to upgrade social and private homes.

This figure is made up of the SHDF and the Home Upgrade Grant, which are collectively worth £1.4bn, along with £1.1bn in match funding from housing providers for the former scheme. Social Housing understands this relates just to wave 2.1 of the fund.

In its announcement, DESNZ said the money will go towards improvements to vulnerable households with an EPC rating of D or below and could save tenants between £220 and £400 a year on energy bills.

It added that these schemes could also support around 20,000 jobs in the construction and home retrofit sectors.

On top of this, a further £409m has been granted through the Public Sector Decarbonisation Scheme to help public sector buildings such as schools and hospitals to reduce their carbon emissions.

All of the government funding will be rolled out from April 2023 to upgrade homes over the next two years.

Energy-cutting and cost-saving measures provided through the schemes include exterior wall insulation, cavity wall insulation, loft insulation, new windows and doors, and draft-proofing measures, as well as heat pumps and solar panel installation.

Social Housing previously reported ahead of the Spring Budget on 15 March that sector bodies were calling on the government to release the remaining circa £2.8bn balance of the promised 10-year, £3.8bn SHDF. Taking the latest awards into account, around £1bn has been allocated to date.

Grant Shapps, secretary of state at DESNZ, said: “We know this is a difficult time for families, which is why the government is covering around half a typical household’s energy bill this winter.

“This is a huge investment that will help households save hundreds on energy bills and see them heat their homes for less, and stay warm for longer.”

Lord Callanan, minister for energy efficiency and green finance, said: “The UK is truly a world leader when it comes to reducing carbon emissions and the progress we’ve made over the last decade has been remarkable.

“But we can’t rest on our laurels and must continue to drive forward progress, setting a standard for other countries to follow.”

Tracy Harrison, chief executive at the Northern Housing Consortium, welcomed the government funding.

She said: “This latest wave of funding adds to the momentum already built around green home upgrades in the North. Retrofitting homes towards net zero is a key priority for councils and housing associations across the North. Our members want to continue to scale their activity to support the development of the supply chain, and to deliver good, green jobs.

“We were delighted to see even more ambitious partnership bids submitted to this wave – an approach which we hope to see followed through in delivery. But most importantly, these successful projects will help create warmer homes and improve the physical and mental health of people in our communities.”

However, James Grinstead, a solicitor from Devonshires, said while any funding for decarbonisation – which is set to cost the sector billions of pounds – is “welcome”, this announcement is “a little hollow in substance”. 

He said this is not “new funding” as the £1.8bn represents money that has already been injected into the sector through phase one of the Home Upgrade Grant, as part of the Sustainable Warmth Competition and Wave 1 of the SHDF.

Mr Grinstead said: “There appears to be no recognition of the fact that a significant portion of SHDF Wave 1 bidders had to return their grant funding due to not being able to deliver retrofit to the scale initially expected, or match the original funding provided.

“Stating now that a further £1.1bn will be available in match funding, thereby raising the overall amount being invested into the social housing and public sector buildings to £2.5bn, is somewhat misleading.”

Mr Grinstead added that “sugar-coating or gilding the statement” by suggesting 20,000 jobs will be created in the construction and home retrofit sectors is “unfounded”.

“It is well documented that the sector is under-resourced and a significant amount of up-skilling is required, in order to meet the growing demand for retrofit to be delivered at scale and pace,” he said. “This funding does not go towards up-skilling requirements, but is solely for social housing providers, charities, local authorities etc to invest in their stock. It will all be for nothing if there is no one to actually deliver the work.”

Update: at 4.03pm, 23.03.2023

This article was updated to include the points that the £1.1bn in match funding, and the claim that 90,000 homes are expected to be upgraded and funding will support around 13,000 jobs annually in the green energy sector, all relates just to wave 2.1 of the SHDF.