Matthew Henderson
Associate Director, Residential Research
The UK government is currently in consultation over legislation for ECO+ (or ECO Plus) - a scheme aimed at supporting ‘middle income’ homes to improve their energy efficiency and helping the UK to reach its CO2 targets.
The UK government has laid out a plan to help ‘middle income’ homes improve their energy efficiency and help the UK to reach its CO2 targets. They are currently in consultation over the necessary legislation for the scheme, named ECO+ (or ECO Plus), which they plan to launch in spring 2023, running for roughly three years until March 2026.
The Department for Business, Energy & Industrial Strategy claims that ECO+ will provide £1 billion to allow “hundreds of thousands of homes across the country receive new home insulation, saving consumers around £310 a year”. The purpose of the scheme is to encourage energy efficient practices, as well as helping homeowners reduce their energy bills by around 15% by 2030.
The existing ECO scheme (known as ECO4) is targeted at those who need support the most - including people living in social housing, those on a low-income or who are fuel poor. However, with the recent significant increases in energy bills, the government intends to use ECO+ to help reach a wider customer base, targeting those who are not currently eligible for the existing support. Crucially, this new fund will be aimed at households who are able to pay, which is unlike other schemes - such as the Affordable Warmth Scheme - which are focused on supporting households who cannot pay. Under ECO+, the government has proposed it will meet 75% of the installation costs, with homeowners covering the remaining 15%.
The majority of the funding, around 80%, will be made available to households who live in the least energy-efficient homes in the country – homes with an EPC rating of D or below.
ECO+ will extend support to those in in the lower Council Tax bands as well as assisting the most vulnerable. A household will either need to be in a council tax band A to D in England, A to C in Wales or A to E in Scotland, and have an EPC rating below a D. Or, they must be receiving a means-tested benefit, living in social housing with poor energy efficiency, or get referred by the council as living in fuel poverty or on a low income, and are vulnerable to the effects of living in a cold home. Alongside financial assistance, there will be public advice available with guidance on how each household can save on “their own bills without sacrificing comfort”.
Grants of up to £15,000 per household will be primarily available to fund the installation of loft insulation, cavity wall insulation and smart heating controls. The government has not yet defined exactly which works will be allowed under ECO+, however it currently seems very heavily focused on insulation - if this is the case, it will greatly limit the schemes potential reach due to the wide range of energy efficiency improvements that most homes need.
For the average home, the installation of smart heating controls offers the best cost-to-savings ratio, with annual savings making up 65% of the initial installation cost. Notably, because the government will cover three-quarters of the upgrade costs through the scheme, the cost of installing smart heating controls is made back over two-and-a-half times in the first year alone.
If the full £15,000 is taken advantage of by each household, the currently allocated £1 billion will service fewer than 66,700 homes; making light of the government’s target to assist “hundreds of thousands of homes”. However, it is likely that the full £15,000 will only be allocated in exceptional circumstances with up to £2,000 being around the average amount. Previous attempts by the government to contribute to the ‘greenifying’ of residential housing has been over complicated and opaque in its availability. Even if these pitfalls are avoided this time, it seems likely that the allocated funds will not make a significant dent in the circa six million properties in England and Wales that have an EPC rating of D or below.
Nevertheless, 28% of the households in Great Britain believe that “it would cost too much money” to make their home more energy efficient and 11% believe that making their home more energy efficient “does not represent good value for money”, according to the ONS’s Opinions and Lifestyle Survey.
In Strutt & Parker’s 2021 Housing Futures Survey. 15% of those surveyed – all of whom are looking to move in the next five years – said that they are not aware of how to make their home ‘greener’ but would like to know. A further 52% said they only have a loose idea of how to make their home greener. Education is therefore an issue that the government needs to tackle in order to reduce the carbon footprint created by residential housing. With the ECO+ scheme being as much about education as it is about the funding itself, this scheme – if done well – is a step in the right direction.
Table 1. Summary of Existing & Proposed Home Energy Improvement Programmes
