Over the weekend Labour announced a gigantic policy pledge. They want to spend £60bn upgrading the energy efficiency of 27m homes in the UK. Measures include double glazing, loft insulation and new heating systems.
Sounds good doesn’t it? All that money to throw at the window industry. But the more I look at the pledge, where the money is coming from, the promises being made and how it might work, the more I have serious concerns about it.
Magic money tree?
Labour’s pledge to upgrade 27m homes would be completed by 2030. They said it would cost £60bn to upgrade all those homes with new double glazing, loft insulation and new heating systems.
If you think £60bn sounds a lot, that’s because it is. But experts have said that the true cost of such a project would actually be closer to £250bn, which is eyewatering. Labour insists the £60bn would come from Government, with the remaining £190bn being covered by the energy savings made by households. That magic money tree must have had one hell of a summer.
There’s so many holes in this, but I want to start with the money. The £60bn pledged by Labour to cover the cost of this would be borrowed money. Nothing taxed to help pay for it, they’re sticking it on the UK’s credit card. They claim they can get it done in ten years, via the creation of 450,000 new jobs. That time scale is a fantasy. This country has struggled for far too long with a skills shortage, so when claims of hundreds of thousands of new jobs are thrown around, I am taking this with a bit more than a pinch of salt. There has been no explanation of how these new jobs will come about. No explanation on training on training and qualifications.
My concern is that if this were to be enacted, and Labour insisted it would be done in ten years, they would be forced to funnel through thousands of people through poorly organised, bad training schemes just to try and throw people at the project. The end result would be thousands of terribly qualified people doing shoddy work on millions of homes. It could create a massive problem. But I’ll elaborate on that more in a moment.
Labour claims that homes would save an average of £417 per year through the home improvement measures. So if they’re only putting £60bn towards the scheme, they’re hoping the remaining £190bn estimated costs would come via those savings. Lets break that down.
£190bn divided by 27m is £7037. If Labour wants this done in ten years, that would mean each household would have to achieve £703.70 in energy savings per year for ten years, assuming no energy prices rises over that decade. So, according to my rough maths thats a shortfall of nearly £300 if you believe Labour’s own figures. Their own maths isn’t even close. So, they would run over by four years minimum.
If you think you have heard something like this in the past, you have. It was called the Green Deal, and it was a complete flop from start to finish and was quickly canned.
Not enough people
Back to the amount of people it would take to carry out this pledge. Labour says it would create 450,000 new jobs. This is another fantasy. Our industry, along with the rest of construction, has struggled to cope with the skills crisis for years now. Pledges have been made by various people and Governments, most recently David Cameron with his promise to create 3m new apprenticeships. Not really seen much about that since he launched it.
Labour would be struggling to make this happen on two fronts. First, the education system is still far too heavily weighted towards getting as many kids to go to University as possible. They would have to change the education system at secondary school level from the ground up if they were to change that. It would take many years, money and the right people from different areas of industry. Thats a mammoth job in itself and wouldn’t be achieved in time.
Second, trades and construction are not areas of work young people don’t see themselves in when they leave school. For a multitude of reasons. Whether its pay, industry reputation, perception, or even just working outside. Our next generation of workers are far more likely to want to work in areas like IT, design, coding etc. How would Labour address that and rebalance our outlook to all areas of work? I have seen no ideas from them so far.
You wouldn’t even be able to import than many people from around the world to help get that done. So we wouldn’t be able to rely on immigration either.
But my biggest concern on this front is the quality of worker it would produce. Ten years to renovate 27m homes is ludicrous. But lets consider for a moment there is a chance it could be done. And there were 450,000 people to throw at it. They would all need training in areas like window installation, joinery, plumbing, electrical work etc. A plumbing apprenticeship can take between 2-5 years depending on where you’re working and who is teaching you. Labour wouldn’t have that time, so they would have to fasttrack people through training and rush them out into the field to get them working on homes. This would be a disaster.
You cannot rush trainee trades people into work without proper time, care and attention to how they are trained. Their work will be more than sub-par or worse. You would potentially create a national scandal if thousands, if not millions of homes were left in need of repair due to bad trades people forced into the market via a poorly thought through policy. Its a non-starter.
Free money vs debt
Labour has said that low income homes would get free funding to pay for new windows and insulation, whilst wealthier homes would still have access to funding, but it would be in the form of an interest-free loan. So more debt. Labour haven’t told us what the threshold would be before a home is classed as “wealthy”.
Labour’s own version of a class war is a discussion for another day. But I want to focus on the bigger picture. For at least ten years the industry has been fitting A rated new windows and doors to millions of homes. Since the first window to be classed as A rated came out things have got progressively better. Also, millions of homes have already been fitted with loft and cavity wall insulation. Many will already have decent new boilers. There are 29m homes in the UK. Labour wants to upgrade 27m of them. How many of these homes actually need these measures? How much better would Labour’s windows be to those fitted 5 years ago?
The more you look at this, the more poorly thought through this pledge is. Personally, I don’t believe there is 27m homes actually in need of this. I would like to know where Labour’s research has come from. I suspect they have taken a rough guess, nothing more.
Small company killer?
Labour wants this done in ten years. If they were to get it done in a decade, they would need the services of the biggest companies with the biggest workforces to be able to carry it out. Labour haven’t given any indications as to how the work programme would be rolled out. I’m guessing it would be similar to the Green Deal where home owners would approach companies for work, the company upon getting the order would apply to some sort of fund from the Government. We tried that with the Green Deal. It was clunky, poorly managed and demand was so bad it was shelved. Its not year clear whether these home improvements would be mandatory.
My bigger concern is whether small companies would be overlooked or forced out of the market. If home owners are going to get funding from Government for the works, they may be inclined to approve funding from companies who are the cheaper option from a range of quotes from home owners. A bit like how insurance companies work. They ask a home owner to obtain three quotes for whatever work they need doing under their insurance and more often than not they opt for the cheapest option.
This kind of scheme would potentially cut out the SME businesses who focus on product quality, bespoke design and high levels of service. These tend to be companies who command higher prices than most and are more profitable. These are the kinds of companies who would be undercut by their competition and end up winning the work. I am seriously worried that this sort of scheme would force out the smaller companies in our industry.
Overall, this appears to me to be a wild, irresponsible promise that would be nearly impossible to deliver on. Its not costed correctly. It would immediately run over time and over budget. There isn’t the people available to carry out the work. There isn’t the demand being advertised. There’s very little detail on how it would work. It could force some companies out of business. I would like to know where the data and research has come from for Labour to have come to the conclusion that an idea like this is needed. Have they spoken to window and doors companies? Have they spoken with insulation installers? My guess is not. They ought to. They might get a more realistic picture of how our companies operate.
As it stands, Labour require a minor miracle to win a majority in Parliament, so the chances of this coming to be exist are very slim right now. Still, it should serve as a warning as to Labour’s approach to business and managing the domestic housing stock.
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