Talks ongoing between government and UK Infrastructure Bank to ‘scale up’ social housing retrofit finance

A spokesperson from the department said: “We are continuing to work with the UK Infrastructure Bank to explore possibilities for unlocking financing to support the further scale-up of social housing retrofit. We will announce any further updates in due course.”

Details of any proposed models have not been revealed.

The UKIB told Social Housing that it is continuing to “work closely” with government departments, including DESNZ, to explore how its finance can work in partnership with government grant schemes.

A spokesperson from the bank said: “Retrofit is a key area of focus for the bank and we are keen to play a role in helping to reduce energy demand across buildings and industry by 15 per cent by 2030, in line with government targets.

“To support investment, we have £4bn worth of lending available to local authorities at market rates for projects over £5m. Alongside financing, we can provide local authorities with advice on the commercial, financial and funding aspects of projects.” 

They added: “On the private side we offer a range of financing, including debt, equity and guarantees for projects above £25m. We are working with market participants on live transactions that seek to stimulate the market, while also continuing to work closely with government departments, including DESNZ, to explore how our finance can work in partnership with government grants schemes.”

In March, the government awarded £778m through the latest wave of the SHDF.

At the time, DESNZ said that around 90,000 homes were expected to be upgraded and that funding would support around 13,000 jobs annually in the green energy sector.

Speaking in March, Ms Withey said the government was weighing up the approaches to grant funding through the SHDF and was open to exploring what other options there were for allocating funding.

Ms Withey told delegates at the Retrofit Challenge Summit that government match-funding was a “really important element” of the SHDF but that the department wanted to understand how it can go further.

She said: “We can’t rely on government only to provide funding for this. What opportunities are out there for you to be able to source the funding to support your journey on retrofit, because you will be coming from different places with different challenges looking ahead.

“So, we are considering what levels of co-funding are appropriate. And again, one size does not fit all. We are looking at the availability of finance for social housing moving forward, engaging with the UK [Infrastructure] Bank and other bodies.”

The UKIB

The UKIB’s mission is to partner with the private sector and local government to increase infrastructure investment in pursuit of two objectives.

These are to help tackle climate change, particularly in meeting the government’s net zero emissions target by 2050, and to support regional and local economic growth through “better connectedness, opportunities for new jobs and higher levels of productivity”.

In December last year, the UKIB partnered with the Department for Business, Energy and Industrial Strategy (BEIS), which it said would help fuel the growth of sustainable heating systems in towns and cities across England.

It said this would mean local authorities applying to the government’s Green Heat Network Fund (GHNF) could access lending from the UKIB at preferential rates on the basis of the same application information submitted to the GHNF grant funding scheme.

The UKIB said that streamlined access to the bank’s additional financing would help successful heat network projects to make their grant funding go further, helping them roll out solutions at larger scale and faster pace.

In November, leaders from the public and private sector met in Leeds to discuss the new Local Low Carbon Accelerator partnership.

This was formed by Lloyds Banking Group, Octopus Energy, Shell and National Grid, and is part of the Prime Minister’s Business Council. It aims to bring the private and public sectors together to help speed up the delivery of schemes to reduce carbon emissions, improve energy independence, and boost regional employment and growth.

One of its first projects involves the UKIB working with Leeds City Council to deliver a “major retrofit scheme” that is affordable and more accessible for homeowners in the city. 

Caroline Withey is speaking at the Social Housing Annual Conference, taking place on 30 November in London alongside the Inside Housing Development and Regeneration Summit. For more information, please click here.