Social Housing Decarbonisation Fund: how is the roll-out going?

This time, he says, they were “showing, anecdotally, the impacts it can have on electricity bills when using solar and battery, making real world examples”. A ‘show home’ where residents can come and see the technology is also part of the plans.

One of the risks that cropped up in Wave 1 projects was tenants refusing access to their homes. Mr Day explains that “we cannot force these works” on residents, but says more urgency is needed.

“We should treat it like gas safety,” he says, with some measure of enforcement. “We’ve been given a legal target [of net zero] to hit by a certain date.”

Getting and keeping a good contractor is essential, he says. “A once-a-month [update] for me is not regular, and you end up hearing about stuff too late... So I’m a weekly pain in the bottom for my development contractor to ensure that I know what’s happening, and we can act on things quickly.”

Most participants in the scheme are taking a fabric-first approach to retrofit, opting for external wall insulation and mechanical ventilation to keep the newly insulated properties cool and free of mould. Raven is installing solar panels and battery storage, while SNG is using its own funding to provide smart home sensors, after being turned down for extra digitalisation funding from the SHDF.

There is a real opportunity to use the planned retrofit works to gather more data, says Mr Dyer. “Fuel poverty in action; [tackling] damp and mould before it happens.”

How long the average retrofit takes – and therefore how long residents must endure the disruption – varies. Mr Day says six to eight weeks is a realistic estimate of the timescale for a deep retrofit, while Ms Musa says you could finish a complete retrofit of one property in two to three weeks, if all goes well, and with good co-ordination between contractors.

Costs can rise when landlords start work and discover additional repairs are needed. Several G15 members have done trials and “they all overran on costs”, says Patrick Flynn, director of compliance and planned works at SNG. “A lot of it is ‘let’s do the roof while we’re there’. And there is a case for it.”

Looking ahead

A 2023 report by thinktank the Centre for Social Justice argues that the government should extend the funding timelines to enable a more “strategic” and “cost-efficient” approach.

The National Housing Federation has called for the government to release the full £3.8bn allocated to the fund in one go.

“That would have been better from the start,” says Jamie Ratcliff, chief communities and sustainability officer at SNG. “Definitely, our ambitions would have been raised.” What SNG ended up with, he says, was “government saying, ‘Here’s what you can deliver in two years’, [which is] incredibly prescriptive… and you have to sign in blood that you definitely will deliver it.”

A key obstacle to retrofitting at scale is the nascent state of the contractor industry.

“Whether it’s fabric or process or procurement or trades or training, if the government sows seeds of doubt and delays and doesn’t believe, the supply chain won’t invest,” Mr Dyer says. The funding system is “fragmented, it’s broken, it’s de minimis in the scale of what we need, it’s uncertain”, he says.

The timing of the programme showed a lack of joined-up thinking from the previous government, says Mr Ratcliff. The deadline for bids for Wave 2.1 was less than a week before ministers would announce what the social rent cap would be for 2023: 3%, 5% or 7%. This created “quite a material level of uncertainty” for how much each housing association could afford to stump up for its retrofit ambitions, he says.

Eventually, officials said “we will let you reduce your bid if the rent cap turns out to be worse than you expect”, Mr Ratcliff recalls.

“Demanding spending of money before a certain deadline creates a bottleneck in the marketplace,” says Mr Day. “All the contractors are fully aware of that bottleneck, so you’re creating a false market.”

The government has outsourced the delivery of funding to consultants, such as Turner & Townsend.

“The representatives have been excellent,” Mr Day adds. “I just think the DESNZ [the Department for Energy Security and Net Zero] has not thought some of the practical realities through as well as it could.”

This, in a microcosm, is the SHDF: big ideas bumping up against practical realities. But it is heartening to see more flexibility being introduced in Wave 3, suggesting that officials have listened to some of these criticisms.

“Positive adjustments” such as the strategic partnerships route and allowing small landlords to make applications for fewer than 100 homes show that “DESNZ has taken on board feedback from the sector and should improve delivery over the coming years”, says Matthew Scott, policy and practice officer at the Chartered Institute of Housing.

Labour may have “stood down” its promise to spend £28bn a year on environmental projects, including £6bn a year on improving energy efficiency in homes, but the new government has vowed to be “laser-focused” on decarbonisation.

Inside Housing understands that the new Labour government will proceed with the SHDF and that dates for the application launch of Wave 3 will be confirmed in due course.

Sir Keir Starmer’s general election manifesto pledged to invest an extra £6.6bn over the next parliament to retrofit five million homes of all tenures, doubling the current planned government investment.

The Warm Homes Plan will offer grants and low-interest loans to support investment in insulation and other improvements such as solar panels, batteries and low-carbon heating, to cut bills. The government will partner with combined authorities and local and devolved governments to roll out the plan.

A DESNZ spokesperson says: “Our Warm Homes Plan will support investment in insulation and low-carbon heating, upgrading millions of homes over this parliament.

“By providing £13.2bn of investment to deliver this plan, we will protect bill-payers permanently, reduce fuel poverty and get the UK back on track to meet our climate goals.

“We will be working closely with councils to bring green upgrades to their communities.”

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