ENERGY EFFICIENCY STRATEGY AND INCENTIVES NEEDED TO BOOST NI CONSTRUCTION SECTOR

By Mark Wade, Hays

Caption: Gavin McGuire & Mark Wade

After a year of disruption, the construction industry has started to look ahead and make plans for recovery and growth in 2021, when we all hope the threat posed by Covid-19 will start to recede.

Although that’s far from a given, the industry and its various representative bodies have been active in coming up with new ideas and lobbying government to support schemes they believe will provide a boost to the sector, and to the wider economy.

For many years now we’ve been talking about making construction more energy efficient and sustainable, using environmentally friendly materials and processes and refreshing building codes and guidelines to improve quality across the board.

The Federation of Master Builders (FMB) believes that the discussion now needs to be matched by action, taking the strong view that building back better, means building back greener, and building back greener requires incentives.

At a UK-wide level, the FMB and the Royal Institution of Chartered Surveyors (RICS) are campaigning to urge the UK Government to cut VAT on home improvement works to 5% to boost jobs and stimulate the economy.

It might seem strange to be asking the Government to cut tax at a time when there are huge pressures on the state’s coffers from job and business support schemes. But according to independent research conducted on behalf of more than 60 organisations in the sector, cutting VAT to 5% for the period 2015 – the date such a VAT cut was first proposed – to 2020 would actually have generated an economic stimulus of £15.1bn and led to the creation of over 95,000 extra jobs.

Gavin McGuire, director of the FMB in Northern Ireland said: “The Government must prioritise measures that create jobs in every community, and that will tackle climate change. Cutting VAT is an oven-ready fiscal policy that will help to generate billions in economic stimulus and tens of thousands of jobs across the UK.

“Local builders train almost three quarters (71%) of the industry’s apprentices, so supporting the repair, maintenance and improvement sector will help industry to train, as well as build. Cutting VAT will also help us decarbonise our homes, as we know households prefer to do this as part of larger home improvement works.”

RICS policy manager Dr Patrice Cairns, who is based in Northern Ireland, added: “There is an urgent need to improve the energy efficiency within the UK’s building stock and retrofitting provides this opportunity. As the UK continues to spend more time at home, for our work as well as leisure, the benefits of green home improvements will continue to gather momentum. Government must use this unique opportunity to work with the professional expertise of industry and implement a holistic approach to retrofitting that will achieve significant carbon savings, both operational and embodied.”
As the UK Government begins to think about a strategy for rebuilding the economy in the wake of the coronavirus-induced recession, the groups believe that committing to a more sustainable stock of housing would provide an opportunity both to kickstart business activity and focus on the green agenda.

Dr Cairns added: “Government endorsing our call to reduce the VAT regime for home repairs, maintenance and improvement work would be a swift step in the right direction. Although the incentive to encourage retrofitting will carry an initial cost, it will be at least in part offset by the benefits associated with job creation, which will be much needed in the wake of the likely rise in unemployment as the furlough scheme concludes. It will also provide tangible long-term rewards both for the wider economy and individual households.”

While VAT is not a devolved matter, something that is within the Northern Ireland Executive’s control, is establishing a regional retrofitting strategy for bringing existing buildings up to ambitious energy efficiency standards and setting parameters for how we heat and insulate new homes.

Current energy performance requirements of buildings in Northern Ireland are the least demanding across all regions of the UK and Ireland. But from the start of 2021, new laws come into force that mean all new buildings erected in Northern Ireland must be nearly zero energy buildings.

According to the Royal Society of Ulster Architects, the law could require a 75% reduction in net energy consumption for a typical new family house in NI, compared to the same house being designed to meet current regulations.

As we get closer to the January deadline for nearly zero-energy buildings, Northern Ireland is the only UK region not to have provided the industry with guidance on how the requirements should be met or to have made meaningful steps towards a clear strategy on retrofitting of existing buildings. Guidance is already in place in the Republic of Ireland, which has put over €200m into residential and community retrofit schemes in its 2021 budget.

Gavin McGuire notes that while many people undertaking work on their homes are supportive of improved energy efficiency, the additional costs often put them off, so creating a meaningful shift that will lower carbon levels and heating bills will require intervention.

“Until it is incentivised, a lot of people won’t make changes. As a society, we can’t go on developing property the way we do if we’re serious about addressing energy efficiency and lowering carbon. The industry is ready, we are trying to come with solutions and recovery plans, and we want to work with government to bring forward positive ideas,” he said.

The move to a greener, more sustainable economy isn’t going to be without cost or challenges. But the benefits to the industry, the economy and to society as a whole will be all the greater if we can get it right.