March 2020 Budget: Good in parts

March 2020 Budget, decarbonised heat policy, grants, Green Heat Network Fund, RHI

Karen Fletcher looks at what was in the recent Budget and considers what it might mean for the building services sector.

It’s fair to say that most of us have never seen the UK face a crisis on the scale that Coronavirus is causing right now. And it has rightly dominated the government agenda, including the recent Budget. With funding set aside to support the health service in the difficult times ahead very much at the top of the government’s priority list.

However, for the building services sector, there was some news delivered by Chancellor Rishi Sunak that may provide some light in these difficult times. There was a clear continuation of the decarbonised heat policy, with financial backing for a number of schemes to help support application of ‘new’ technologies such as heat pumps.

The Budget set aside £100 million between 2022 and 2024 to provide grants to householders and small non-domestic buildings so that owners can install heat pumps or biomass (where appropriate). The aim here is to create a supply chain ahead of future measures to phase out higher-carbon forms of heating.

There was also £270 million for a Green Heat Network Fund that will operate from 2022 to 2025. This follows on from the HNIP (Heat Network Investment Project). Heat networks have seen increased growth in UK projects, and this Fund will ensure that they use the most cost-effective low carbon heat sources – rather than ‘locking in gas generation’ to the heat network sector.

The Non-Domestic RHI will continue for currently eligible technologies, with a third allocation of Tariff Guarantees. And the Domestic RHI will continue into 2021/22 with support for heat pumps, biomass and solar thermal.

Graham Wright, chairman of the Heat Pump Association (HPA) welcomed the Budget’s focus on proactive investment: “This is exactly what we need to see from government if we are serious about meeting the aim for net zero carbon emissions by 2050. We have frequently stated that the low carbon heating technology is there and available, but only with the right policies, investment and awareness will we see the major uptake required.”

However, some groups spotted holes in the policies which they feel will hold the country back from embracing low carbon heating. Paul Rose, chief executive of OFTEC, commented: “While the Budget contained a packaged of measures relating to low carbon heat, the lack of support for home energy efficiency improvements such as insulation and double glazing is concerning. This is an urgent national infrastructure priority which should be placed ahead of further funding commitments for roads and rail.”

Rose pointed out that the £100 million allocated to support the move to heat pumps and biomass might end up serving only those who live in homes that area already well-insulated, or households that are able to fund the necessary fabric improvements themselves.

“The result of this omission is that government’s regressive approach to heat policy will continue, meaning many low income households carry on facing unnecessarily high heating bills. There is already a significant danger that poorer households will be left behind in the race to net zero and this Budget only increases the chances of this happening,” he said.

The Electrical Contractors’ Association (ECA) welcomed the budget, particularly its focus on boosting broadband infrastructure and a fast charging network for electric vehicles. However, the ECA also pointed out that training is going to be a key issue in delivering this major shift away from fossil fuels.

ECA director of Employment and Skills, Andrew Eldred, said: “ECA broadly supports the announcement of new spending on further education, adult retraining and T Levels. However, employers need to be actively involved to make sure this delivers value for money. A review of how well the Apprentice Levy works for smaller employers is also welcome.”

Graham Wright also touched on the skills issue, saying: “This is just the beginning. Industry must also fulfil its commitment to producing sufficient heat pumps, in both quality and quantity, and working with government to ensure the installer base has the necessary skills to install them correctly.”

Overall, this government has set out its stall as one that intends to improve the country’s infrastructure. As the Chancellor stated: “If the country needs it, we will build it.”

But in order for the construction industry to meet those goals there are other issues government needs to address soon. Late payment and retentions abuse are key reasons that innovation and training are low on the priority list for SMEs in our sector. That needs to be sorted quickly. It is to be hoped that government can join the dots between its own ambitions for a new approach and the old-fashioned, unnecessary practices that are holding us back.

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