Moli Birkinshaw, BA Economics & Management, Oxford
A generous description of British housing is ‘Victorian-era’. Cold and damp is the blunt way to put it. It may come as little surprise that British housing stock is amongst the oldest and worst performing in Europe. British housing guzzles energy, pumping out 20% of all UK carbon emissions. This figure does not even include the rest of our buildings. Despite the energy use, one in five houses are below the standard quality of living. Heating is inefficient, while damp and mould cause health issues.
The Case for Retrofit
While the push to build new houses may address affordability and health concerns, it neglects net zero targets as it does not address our existing stock. Demolishing and building new is not the answer, either. Even if a new building is more energy efficient in its day-to-day use than an old one, the production of an entirely new building is very carbon intensive.
Retrofitting is a solution to this problem. Retrofitting is renovation which improves the energy performance of a building. Unlike typical renovations, retrofit is concerned with the whole house, which requires consideration of its fabric, energy systems, and ventilation. Retrofitting is necessary to help us reach net zero and improve the health of the nation but is a formidable task. If we are to achieve net zero by 2050, we may need to retrofit as many as 30.1 million houses by then.
The Reality of Retrofit
The UK’s attempts to get started on this have been somewhat disastrous. The mismatch between design plans and the finished renovation can be greater than 100%. ECO4 was a national retrofitting scheme which resulted in 30,000 botched insulations. It caused residents to suffer serious health issues due to mould and damp.
Retrofitting, it turns out, is no simple task. Just under half of British Housing Stock is considered hard to treat (HTT). Many HTT properties were built before we had any formal energy standards or regulation. HTT properties are hard to treat because they either have solid walls, single glazing, no loft space or are off the gas grid.
Unlike new builds, each retrofitting project is different. No two houses are the same, making each project unique. Even if they were identical at construction, over time the conditions of the buildings evolve which result in performance differences. The first step in carrying out a successful retrofit is being able to understand the conditions of the house. This requires a theoretical understanding of building physics. The design plan then needs to consider the whole house as a system, because how well a building functions depends on how its fabric, energy systems, and ventilation interact.
One reason retrofits go wrong is unplanned product substitution where an inferior material is used in place of what was planned. In one study, new blocks of flats were shown to have overheating problems because the ventilation system and windows differed significantly from what was originally planned. Even if the plans are stuck to, poor workmanship can undermine the retrofit. For example, applying external wall insulation over walls that are already wet traps moisture inside the building.
Long story short, retrofitting is a tricky process which demands its own set of skills. It requires someone who can walk into a house, understand what needs to be done, and then roll up their sleeves and do the fitting, assembling, and installing. The question is, where are all the people with these skills?
“Thermal insulation” by Christian Bickel, via Wikimedia Commons, licensed under CC BY-SA 2.0 DE.
Low Skills Equilibrium
The UK construction industry has been characterised as having a low skills equilibrium. A low skills equilibrium is a persistence of low skills because there is no incentive to upskill. In professional services such as law or finance, firms are incentivised to train their employees as they typically retain their employees for a long time and people are expected to move up the career ladder. In construction, the responsibility to upskill often falls on the workers themselves.
This industry structure explains this result. Few of the UK’s large construction companies directly employ their workers. Most work is subcontracted to small and medium-sized (SMEs) businesses, and microbusinesses which often lack the time and resources to train workers. A retrofit installer cited lack of money as a reason they were unable to train staff, despite wanting to do so.
This structure means there is flexibility, but at the sacrifice of productivity. Large contractors do not have their own workforce to train, and SMEs do not have the resources to do so. The responsibility is devolved to the individual unskilled worker who may have limited information, resources, or inclination to upskill.
Policy Suggestions
In the following sections I suggest some policy ideas to develop a functioning retrofitting labour market.
Supply Side fixes
Funding
Last year the Government made £8million available in subsidies for training courses in its first phase of the Warm Homes Skills Programme. The intention was to create 9000 training opportunities. One might think that 9000 workers is not enough to tackle the challenge that is Britain’s housing stock. In comparison, the Government has committed £625million to developing construction skills, seventy-eight times more than what is available for retrofitting skills. Rather than treating retrofitting skills as an optional add-on, why not include retrofitting skills in the construction skills bundle? Retrofitting would address the need for more homes, given the availability of buildings that could be re-used for housing in Britain.
The length of time for which funds are available matters too. For the course provider, designing and offering a training course is a significant investment of time and resources. Providers want to know funding will not run out before their trainees get the chance to graduate. Whether the Warm Skills Programme will continue to run is uncertain, with its first phase lasting only one year. For providers, uncertain funding makes setting up and offering a course risky. Funding should be made available to competitive suppliers for several years at the very least.
Uptake
The low skills equilibrium means that responsibility to train falls on individual workers. An effective policy ensures the training format is accessible to potential trainees. Even if training is free, it carries the opportunity cost of missed work. Workers are also reluctant to retrain because of uncertainty of whether there is sufficient demand for those skills.
B4Box is an example of a training scheme that is accessible to individual workers. B4Box is an organisation which pays learners a living wage to train with them and then retains them as employees to carry out subcontracted work. It is accessible as it compensates workers for taking time to train and guarantees consistent employment afterwards.
Another barrier to uptake may be a lack of prestige and respect for construction work. Construction faces a twin crisis of an ageing workforce and few entrants. An interviewee for a study felt ‘pushed into construction’ because they were not considered capable of doing anything else. Construction in the UK also has a high fatality rate, with more than 1 in 3 incidents being fatal.Much needs to be done to make construction an attractive industry to go into. Improving health and safety may be a place to start.
Expanding Training Opportunities
Crafts Skills
The skills and knowledge of craftspeople can be particularly useful for a tricky element of retrofitting: many of the buildings are very old. Heritage sites have additional planning considerations because of their historic significance. Craftspeople can have invaluable knowledge in retrofitting these buildings. In Cahors, France, traditional bricklayers, carpenters, and plasterers helped to improve insulation of a historical site by developing an external lime-hemp insulating render. Historic England estimate we need 86,000 full-time workers per year to bring England’s historic buildings to net zero. Unfortunately, crafts skills are declining.
University Education
As well as construction skills, we also need professional retrofitting skills such as in architecture and in project management. The PAS2035 standard specifies professional roles needed on a retrofit project, such as retrofitting coordinator.
A dedicated master’s programme in retrofitting could provide a steady supply of professionals who are industry. For example, it could produce architects and project managers who specialise in retrofitting. This proposal suggests aligning the master’s programme with PAS2035 standards, with detailed proposals on potential modules to be included.
Integrating retrofitting into existing programmes could raise awareness about retrofitting as a career option. Few architectural programmes cover retrofit, with new builds dominating instead. A YouGov study shows 71% of Londoners do not know what retrofitting is. Offering optional modules in retrofitting may help to raise awareness and interest. This could be done similarly to how sustainability-related modules are offered in a range of university degrees.
Demand-Side fixes
One way to address the low skills equilibrium in construction may be to promote a self-sufficient retrofitting sector. Green (2016) argues that encouraging firms to move to a higher value product market can lead to derived demand for high skills. Retrofitting may be such a market. Gooding & Gul (2017) argue for greater professionalism needed in the sector. Self-sufficiency would reduce the sector’s reliance on government funded projects and provide training suppliers with certainty.
Homeowners
Research found that middle-class households who had retrofitted showed high technical competence and an ability to research and assess options. For example, they had calculated Watts per roof space for PV panels. This suggests that it is mostly those who have a very active interest in retrofitting who independently demand retrofits. There is a missed opportunity from people who have the financial means to fund their own retrofits, but not necessarily the time or interest to locate a competent retrofit installer.
Establishing a nationally recognised retrofit standard may help to simplify the process for the average homeowner. While publicly procured retrofitting projects must adhere to the PAS2035 standards for retrofitting, what ‘retrofit’ means in the private sector is less clear. Installers who have been removed from government schemes for poor workmanship are still able to work in the private sector. For the average homeowner in the UK, this makes locating a competent retrofitting provider difficult. A nationally recognised retrofitting standard would simplify this process, potentially driving private demand at little cost to the government.
Developers
A retrofit first policy may help drive demand for retrofitting skills. Westminster City Council launched its Retrofit First earlier this year. It requires development proposals to show that retrofit has been considered first, and only if deemed not feasible is new build considered. A wider adoption of similar policy across the UK could drive demand for retrofitting skills as developers are encouraged to re-use buildings rather than demolish them.
New builds requirements could indirectly drive demand for retrofitting skills. In Croatia, refurbishments are far more common than new builds. This is an indirect cause of Croatia’s adoption of the EU’s nearly net zero building (nZEB) legislation, which requires new builds to adhere to its low carbon standards. Combined with Croatia’s Environmental Protection and Energy Efficiency Fund (EPEED), private investors prefer to buy an old house and renovate it rather than build a new one because requirements for new builds are more stringent.
The UK can similarly consider tightening its building regulations around new builds, to ensure retrofit legislation isn’t disproportionately restrictive compared to new build. One example may be adopting the proposed Part Z to the Building Regulations, which would require embodied carbon emissions to be considered for major building projects.
Conclusion
The workforce needed to fix Britain’s buildings will not materialise if left to the market in its current state. On the supply side, funding needs to be made available for much longer to signal certainty to training providers. Support for the full range of skills needed should be considered, including installation, project management, architecture, and crafts skills. Workers will not train for a market that doesn’t exist, so demand must be addressed too. The government should extend policy beyond the low-income subsidy approach it has taken for the past decade and support the development of a self-sufficient retrofit market with a nationally recognised retrofit standard. Getting supply and demand to work together will help the retrofitting workforce that is desperately needed become a reality. Until then, 30.1 million houses await retrofitting.