Citizens Advice response to DESNZ’s consultation on the Home Energy Model: Energy Performance Certificates

Citizens Advice response to DESNZ’s Warm Homes Fund: Call for Evidence

Through investing £1.7 billion of financial transactions (and £300 million in subsidy) in the government-backed low-interest loan scheme, the Warm Homes Fund (WHF) can help homeowners (who are ineligible for fuel poverty schemes) with the upfront costs of low-carbon home upgrades, while saving them money on borrowing costs. Done well, these upgrades can lead to lower bills and a warmer home. 

In Question 2, we have outlined how the Government can make these loans more appealing to consumers, based on nationally representative polling data. This includes making the interest rates as low as possible; access to high quality, independent advice to support them throughout the consumer journey; and strong protections to ensure the work is done to the right standards and, if things go wrong, there is a simple route to getting things put right. Ultimately, consumers will only make these changes, and get finance to do it, if they are convinced it will save them money through lower bills and make their homes more comfortable. 

It’s important that the loan scheme includes support for fabric measures (like insulation). When installed properly, fabric measures make it cheaper to heat your home, including with low-carbon technologies like heat pumps. Alongside adequate ventilation, insulation can also reduce the risk of overheating. As with other measures, many homeowners who are not eligible for fuel poverty schemes will struggle to afford the upfront cost of insulation improvements. 

But we are concerned about a group of ‘missing middle’ homeowners who are not eligible for fuel poverty schemes and who can’t afford the loan repayments for the full cost of their upgrade. That’s why the Government should provide targeted grants (in addition to the BUS grant for heat pumps) for ‘missing middle’ homeowners living in inefficient homes (with an EPC of D or below) to partly cover the cost of measures like insulation, solar panels and batteries.This would align with the option of an ‘enhanced grant-loan blend’ that was suggested on page 20 of the Warm Homes Fund: Call for Evidence.  By reducing the amount of loan required, this would make upgrades more affordable for this ‘missing middle’ group. We discuss this in more detail in Question 4.  

We think that upgrading existing heat networks, to make them more efficient, should be a priority for the WHF. This would lead to less wasted energy and, therefore, lower bills and more comfortable homes. Many heat network consumers have been exposed to volatile gas prices and, if it wants heat networks to make up 20% of the UK’s space heating demand by 2050, the government needs to drive better standards and consumer outcomes in the heat networks that currently exist. These networks also house a disproportionate number of low-income and vulnerable residents. Without support, there is a very real risk that the cost of the vital Heat Network Technical Assurance Scheme (HNTAS) will be unfair and unaffordable for consumers. We discuss this in Section 2F, Questions 61-65. 

Overall, the Government should direct WHF funding towards groups, activities and low-carbon measures that achieve its aim of reducing consumer bills. For decarbonisation to be supported by consumers, it needs to deliver lower bills and more comfortable homes. However, we do not think that directing the WHF towards private landlords (as discussed in Question 21) or gas and electricity network companies (as discussed in Questions 37, 38 and 45) is a good use of limited WHF resources.