DD2716 Decarbonising London buildings

1.1.    The Mayor wants to make London a net zero-carbon city by 2030, whilst protecting the most disadvantaged Londoners by tackling fuel poverty. This is an extensive ambition, given the scale of fuel poverty and the low take-up of energy-efficiency measures. 

1.2.    According to the latest data, in 2023 there were an estimated 379,000 households living in fuel poverty in London. This equates to 10.2 per cent of all households. The Mayor has set out his programme of actions to address fuel poverty in London (consistent with his powers) in his Fuel Poverty Action Plan. Homes account for around 36 per cent of London’s carbon emissions, so there is also significant potential to reduce emissions through retrofit. 

1.3.    London faces various challenges to delivering retrofit. These include having: the oldest housing stock of any English region, and attendant challenges in conservation areas; the highest proportion of private rented homes of any region; and the highest proportion of residents living in flats, often in mixed-ownership buildings. Due to these and other barriers, London has long lost out on national funding programmes such as the Energy Company Obligation (ECO). Since the start of ECO in 2013, London has received little more than half of its fair share according to population – and this share is falling (see 1.25). There is an urgent need to address this, to meet the 2030 target. 

1.4.    In Mayoral Decision (MD) 3245, the Mayor delegated authority to the Executive Director of Good Growth to approve (through further Director Decisions) expenditure of up to £5,315,000 on retrofit for net zero; electrification and decarbonisation; enablers; and accelerators. 

Retrofitting for net zero 

1.5.    Retrofit can be defined as making the fabric of existing buildings more efficient and using demand controls to reduce heat demand. Since the vast majority of buildings that will exist in 2030 are already built, this a critical area for decarbonisation. Reaching the Mayor’s 2030 target for net zero requires a 37 per cent reduction in total heat demand of domestic buildings. The Mayor’s Accelerated Green Pathway commits London to retrofit around 210,000 homes each year by 2030, a significant increase on existing activity.

1.6.    Previous GLA retrofit programmes have delivered significant benefits. Warmer Homes has been running since January 2018, with overall investment from the Mayor to date of £17.1m, alongside match-funding of £65m from central government, energy suppliers and boroughs. By August 2024 it had improved the homes of over 5,100 Londoners. The Warmer Homes Advice Service operated between February 2018 and March 2024, and supported over 24,000 households. 

1.7.    Most recently, the GLA successfully bid to the Department for Energy Security and Net Zero (DESNZ) for funding from the Home Upgrade Grant 2 competition, for use in London in 2023-25. Receipt of this funding was approved by the Mayor under MD3132; £3.8m is expected to be delivered in 2024-25. 

London Office for Retrofit 

1.8.    Whilst the programmes above have been run by the GLA, in coordination with some boroughs and other public-sector partners, the overall impact has been limited. In contrast, it is proposed that the future retrofit programme (the Retrofit for Net Zero London programme) will be a collective London-wide programme of coordinated work, across all tiers of London government, to accelerate and scale up retrofit. This will be led by the GLA and London Councils; and will involve boroughs and housing associations as key asset owners and managers. The aim will be to address the fragmented landscape across social housing retrofit in London; and tackle issues of funding and knowledge-sharing that are holding back London's progress on retrofit.

1.9.    One of the Mayor’s priorities is working with London’s councils and housing associations to forge a bold new approach to retrofitting buildings. This means more homes can be upgraded and energy costs can be reduced. This programme will help London step up its rate of social housing retrofit, to accelerate progress towards the Mayor’s 2030 target for net zero. London will need to retrofit around 500,000 homes a year that are social housing or sited within social housing blocks. This constitutes around one-seventh of the capital’s total housing stock; at the current rate of retrofit delivery, a 15-fold increase is needed by 2030. 

1.10.    The programme will help address issues of pipeline, funding and knowledge-sharing that are holding back London’s progress. These issues include the following:

•    The current system of bidding for funding from limited funds, such as the Social Housing Decarbonisation Fund (SHDF), results in wasted bid costs, an unpredictable pipeline, and a tumult of uncoordinated (often competing) projects. In turn, this is holding back supply-chain growth and the speed of delivery. The programme will bring about coherence and increase delivery speed.
•    Procurement routes are uncoordinated and use different processes. At the same time, there are a range of funding and financing streams that have proved successful in proof-of-concept projects but are currently under-exploited and far from universal. The programme will review and refine procurement processes; introduce efficiencies for housing stock owners; coordinate our bidding processes across London; and strengthen additional financing route, to provide better pipeline signals to the market and central government.
•    There are missed opportunities to learn from previous experience. Little data is shared between boroughs and housing associations. There is only a small amount of knowledge-sharing on knotty issues such as resident engagement, tall buildings and planning. Furthermore, when there is data sharing, it is not standardised, meaning it cannot be compared and combined for better insights across organisations. The programme will function as a centre of excellence for knowledge-capturing and sharing – pulling and pushing knowledge to the right places to increase the pace of retrofit delivery. 

1.11.    The programme will also help London to secure a devolved funding settlement for retrofit – like those secured by Greater Manchester and West Midlands Combined Authorities, as part of the ‘single settlement’ in their Trailblazer deals. 

1.12.    Sections 1.13 to 1.17, below, list the requirements for a programmatic approach to retrofit by a new London Office for Retrofit (LOfR) (the final name for this body is under discussion). The LOfR will provide a new pan-London enabling/support service that individual social landlords could not effectively set up on their own. The year-one LOfR priorities will also underpin a compelling bid to the DESNZ by a consortium of London boroughs and housing associations for Wave 3 of the SHDF (SHDF 3.0). The bid is being structured as a strategic partnership, enabling early adoption of the integration and innovation that the LoFR can facilitate when fully operational. The deliverables of the project each meet a strategic priority for SHDF 3.0 funding bids; and have support from London Councils’ Retrofit London SHDF Partnership members.

Resident engagement 

1.13.    This is rated as the highest priority amongst 20 of London’s boroughs and is fundamental for SHDF. The deliverable for this workstream will be a best-practice framework and toolkit for deployment by the SHDF 3.0 strategic partnership members, including partnership-wide resident-satisfaction monitoring and analysis.

Archetype defining, mapping and match making service 

1.14.    This is specifically mentioned as a strategic priority in SHDF 3.0 and is a highly desired service amongst strategic partnership members. It will allow the partnership to coordinate retrofit solutions for several London-specific building archetypes across authorities. The approach will enable more effective collaboration at scale; and will enhance and consolidate access to standardised data at a London level. 

Retrofit cost information and supply chain monitoring 

1.15.    This is another priority for strategic partnership members, aligned with the SHDF 3.0 framework. Cost information data will be aggregated and externally corroborated. This will support improved budgeting, measurable mix selection, contingency allocation, and negotiations with the supply chain through delivery. It will improve risk management by highlighting capacity constraints and potential supplier insolvencies; help target pre-market engagement; and strengthen supplier relationships. Similar exercises have been carried out successfully in other areas, but not at this scale and not with a London focus. 

Service for measuring retrofit outcomes 

1.16.    This expands on the damp and mould project led by the London Office of Technology and Innovation (LOTI) across 18 boroughs. It will combine the temperature and humidity sensors deployed by LOTI with energy efficiency and property characteristics data from the London Building Stock Model', and cost information generated through the monitoring described above (1.15). These datasets would create an evidence base for measuring retrofit benefits and meet SHDF criteria around innovation and preparing for the future.

Staffing costs

1.17.    Although the LOfR will initially be set up on a shadow basis, it will still require a programme management office; funding is required to support the associated staffing costs. Governance and political oversight will be provided jointly by the GLA and London Councils. Staffing costs in 2024-25 are expected to total £525,000. Other revenue costs associated with the requirements detailed above (1.13-1.16) are expected to total £391,000. If this work is successful, further costs of operating the SHDF 3.0 funding would be met by the boroughs through: a ring-fenced top slice of SHDF funding; and contributions via the existing Retrofit London Programme. Staffing costs include resourcing to lead the LOfR through the detailed set-up phase, so it can be formally launched in 2025-26.

Domestic decarbonisation 
Warmer Homes Advice Service

1.18.    Since 2018, the Mayor has grant-funded selected boroughs to provide a pan-London fuel-poverty advice and referral service, in the form of the Warmer Homes Advice Service. This supported over 24,000 households up to March 2024. In 2023-24, the two boroughs funded were Islington and Lewisham, providing support to households north and south of the river respectively. This recognises that they are the only boroughs capable of providing cross-borough services; and that they have successfully built a network of over 300 partner organisations. Croydon has also built up an effective local service and we propose to contribute to this too. It is proposed to provide a sixth round of funding to these three boroughs between October 2024 and March 2025, to a combined total of £250,000. This would see at least 1,900 households receiving support.

1.19.    This funding will ensure that we retain provision for fuel-poor households, while considering how any future advice service might be developed and delivered. Both boroughs will be among those consulted on future provision. 

Driving retrofit skills

1.20.    It is proposed to spend £75,000 in 2024-25 on continuing to train retrofit coordinators using PAS2035, the domestic retrofit standard sponsored by DESNZ. PAS 2035 Standard is the official framework for whole-house retrofit in the UK, outlining the processes and best practices for the industry. One of its chief aims is to address the risks of dampness, condensation and mould growth that may result from poorly installed insulation. Adherence to the standard is generally required for government-funded energy-efficiency programmes. 

1.21.    Retrofit coordinators will play a critical role in enabling a consistent standard of retrofit-measure rollout across London’s housing stock, using PAS2035. A training programme is being delivered by Retrofit Academy, which has received 53 applicants covering 34 organisations. Eleven of these organisations have qualified, and 23 are progressing with training. This programme received £50,000 of Mayoral funding, alongside leveraging £33,000 from the DESNZ Home Decarbonisation Skills Training Competition funding. The combined funding provided a zero-cost offer to the learner.

1.22.    With the further £75,000 requested, we can continue this vital stream of support (the current tranche of funding is coming to an end in November 2024) while a decision is taken on the long-term future of the programme (for which a full evaluation of this 2023-24 project is due in November 2024).

Maximising ECO funding

1.23.    London has long lost out on national energy efficiency funding. The current iteration of ECO, the energy supplier-delivered programme, has been running since 2013. In that time London has received 7.2 per cent of funding, compared to a population share of 12.9 per cent. In the last full year where data is available (to March 2024), this share fell to 5.4 per cent. With the annual value of ECO being £1bn, this means that fuel-poor Londoners lost out on £75m of funding in 2023-24 alone. 

1.24.    The first aspect of this is to increase the amount of Local Authority Flexible Eligibility funding that London secures. This is a component of ECO that enables local authorities to deem households eligible for funding, where they are not in receipt of means-tested benefits but have a low income or long-term condition. London’s fair share of such funding would be £65m annually. The GLA can deem any London household meeting our published criteria to be eligible, on receipt of an evidenced declaration request. Eligibility routes include low incomes and GP assessment. 

1.25.    We propose to establish a resource to increase annual Flexible Eligibility rates, from the current 40-50 London homes to at least 600. We currently work with one managing agent; we aim to expand this to three or four. These agents work with contractors to ensure quality, and to collate and review evidence of household eligibility. An evidence summary is provided to the GLA alongside a declaration request. We are obliged to review these and issue copies to the regulator, Ofgem. A dedicated resource, based at the GLA, and initially recruited on a fixed-term basis, is proposed to review and approve these submissions, and to work with the managing agents, Ofgem and the NHS. This will also be approved in parallel through Establishment Control processes. The cost in 2024-25 will be £30,000. 

1.26.    The second aspect is to develop an evidence base around the interventions that would enable London to address the barriers to it securing additional ECO funding, compared to other regions and nations. We propose to work at the level of a ward or two in a London borough; and to work with that borough, energy suppliers, installers and community groups to mitigate or remove barriers. Officers would identify an area with: housing stock requiring energy efficiency improvements; a significant number of people potentially eligible for ECO funding; and a cooperative borough (interest has already been flagged by several boroughs). A desktop exercise examining barriers and proposing solutions would be followed by a local demonstrator project. The cost will be £60,000. 

Data and Innovation 
Net-zero data assets, innovation and commercial models

1.27.    Data is a key strategic enabler of work to accelerate retrofit and achieve net zero. For example, data can help organisations understand the scale and nature of challenges and opportunities, and supply and demand; and support the development of new products, services and investment models.

1.28.    Currently, London local government lacks the capacity and specialist expertise to explore and ascertain data’s role in enabling retrofit and addressing other net-zero goals. The GLA – with the support of London Councils - has begun working with LOTI to consider how this gap can be addressed. In order to continue and accelerate this work, it is now proposed that a dedicated Data Projects Manager role should be created and funded within LOTI (including providing funding for supporting activity). The role is of strategic importance for generating and making available new data, evidence and insights both to solve specific problems to begin building a holistic data ecosystem that meets London’s current and future retrofit needs and to consider opportunities for new commercial models. LOTI is a London Councils-led project co-funded by the GLA and most London boroughs. Therefore, the postholder would be employed by London Councils. The cost will be £130,000 in 2024-25.

Built Environment Scanning System

1.29.    Innovate UK’s Net Zero Heat (NZH) programme seeks to overcome barriers to the UK moving away from gas as a heating source for space and water. Such barriers include a lack of information for end users, and a lack of project finance. As part of the NZH programme, Innovate UK has funded xRI to develop the world-leading Built Environment Scanning System (BESS). This gathers highly accurate data relating to buildings and their performance, at incredible granularity, significant scale and very low cost.

1.30.    Across winter 2024-25, xRI has made an offer to the GLA to deploy its pre-commercial BESS in London, capturing data on c. 1,300 GP surgeries and up to 1 million residential properties (both private and social housing). This will provide an unprecedented investment-quality database that can be used to make decisions (either directly or via third parties) on pathways to retrofit for decarbonisation. It will directly support the LOTI-led data innovation work on retrofit, as well as helping to identify suitable properties and increase delivery confidence for the proposed SHDF 3.0 strategic partnership.

1.31.    The cost to the GLA of taking up this opportunity, which has the support of Innovate UK, would be £850,000. The proposed investment would leverage more than £2.5m spend to date by Innovate UK and xRI and will provide retrofit pathway data to building owners that would cost more than £100 million using conventional in-person assessment methods. If we delay a decision the system will be redeployed to Scotland and we will lose the opportunity.

NHS London decarbonisation support 

1.32.    In parallel, it is proposed that a senior consultant (contractor) is appointed for seven months to provide sustainability and decarbonisation support for GP surgeries in London, drawing upon the data provided through the xRI scanning programme. The postholder would work across London’s five Integrated Care Boards (ICBs) to provide expertise and support on net-zero initiatives. This will both support decarbonisation within the NHS estate, but critically also provide valuable information about how London can support decarbonisation most effectively across other non-residential sectors. The cost to the GLA would be £96,000.
 

2.1.    The LOfR programme will:

•    help accelerate the delivery of London’s social housing retrofit programme, such that good progress towards achieving the Mayor’s Accelerated Green Pathway is made within two years
•    simplify delivery through addressing the fragmented landscape across social housing retrofit in London
•    lower the unit costs of the retrofit programme
•    support a just transition (through needs-based prioritisation)
•    bring forward innovative means of funding and financing, including from the GLA
•    increase pipeline certainty, supply chain capacity and capability
•    enable a better understanding across the GLA and boroughs of progress towards targets and priorities; begin to address challenges of co-located mixed ownership; and enable area-based action
•    upskill boroughs and housing associations.

2.2.    The domestic decarbonisation programme will:

•    build on the success of existing local advice providers
•    create collaboration between stakeholders to identify and overcome barriers to retrofit spend in London
•    improve access to ECO funding in London
•    support London retrofit businesses to deliver funded work to PAS2035 standards.

2.3.    The data and innovation programme will:

•    provide capacity (via LOTI) to develop and implement shared plans for the improved use of data in retrofit, including to support new commercial models
•    capture and secure access to a uniquely broad and deep database of visual, thermal and dimensional data on 1 million residential properties and 1,300 GP surgeries in London
•    increase delivery confidence for future bids for retrofit funding, including the proposed SHDF 3.0 strategic partnership
•    provide a sustainability lead to support the decarbonisation of GP surgeries and guidance to progress low-cost energy-efficiency actions 
•    provide learning and best practice on non-residential decarbonisation relevant to other sectors
•    leverage more than £2.5m of wider investment.
 

3.1.    Under section 149 of the Equality Act 2010, as a public authority, the GLA is subject to the public sector equality duty and must have due regard to the need to:

•    eliminate unlawful discrimination, harassment, and victimisation
•    advance equality of opportunity between people who share a relevant protected characteristic and those who do not
•    foster good relations between people who share a relevant protected characteristic and those who do not. 

3.2.    Protected characteristics under section 4 of the Equality Act are age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, sex, sex orientation, and marriage or civil partnership status (all except the last being “relevant” protected characteristics).

3.3.    The GLA will take appropriate steps to ensure there are no potential negative impacts on those with protected characteristics in relation to the development, design, targeting, marketing, and delivery of the scheme. This will be done by ensuring compliance with the Mayor’s Equality, Diversity and Inclusion Strategy; and developing and testing in line with GLA guidance on equalities and diversity. Those with protected characteristics will gain from the positive benefits of this scheme in equal measure, should their households be eligible; and there will be equality of access to participate in the delivery of, and benefit from, the scheme, without discrimination. 

3.4.    Black, Asian and Minority Ethnic communities are almost 60 per cent more likely to be fuel-poor than White households. Those with disabilities or long-term illnesses are 50 per cent more likely to be fuel poor. According to GLA polling (2023), 51 per cent of social housing tenants and 40 per cent of private tenants in London said they would definitely or probably struggle to meet their housing payments in the next six months. Londoners from a Black, Asian or Minority Ethnic background were more likely to have struggled to meet housing payments in the last six months; and to feel less confident about meeting them, without a struggle, in the next six months. 

3.5.    Efforts will be made to reach the above populations for retrofit programmes through engagement with partners. Resident engagement work, and the objectives that have been formulated through consultation with community energy groups, will need continued testing and refinement through working with community groups. 
 

Links to Mayoral strategies and priorities 

4.1.    The items listed in this paper will contribute towards delivery of the three Mayoral mandates for improving London’s housing stock, cutting non-residential emissions and upgrading London’s infrastructure. 

4.2.    The programmes funded through this MD will help achieve several relevant London Environment Strategy policy proposals: 

•    Proposal 10.1.2.a: To support start-ups and business growth across the economy, including in the low carbon and environmental goods and services sector.
•    Proposal 10.1.1.e: The Mayor will work with stakeholders from across the financial and environmental sectors to develop financing mechanisms.
•    Proposal 6.1.2.a: The Mayor will work with partners to help alleviate fuel poverty in London through implementing the recommendations of the Fuel Poverty Action Plan.
•    Proposal 6.1.1b: Pilot innovative methods to implement the stronger energy-efficiency retrofitting needed.
•    Proposal 6.1.1a: Contribute to helping Londoners improve the energy-efficiency of their homes, where appropriate, by providing technical assistance, support, and funding. 

4.3.    The relevant Equality, Diversity & Inclusion Strategy objectives are objectives 4 (to lower the city’s carbon emissions) and 6 (addressing financial hardship). 

4.4.    The relevant Health Inequalities Strategy objective is: through the Mayor’s London Food Strategy and Fuel Poverty Action plan, work with partners to tackle food poverty and fuel poverty and their impacts on vulnerable Londoners.

Key risks

4.5.    The key risks to the delivery of this programme are set out in the table below:

Conflicts of interest

4.6.    There are no conflicts of interest to note for any of the officers involved in the drafting or clearance of this decision form.
 

5.1.    Approval is requested for expenditure of: 

•    £916,000 on establishing the LoFR 
•    £415,000 for domestic decarbonisation programmes 
•    £1,076,000 for data and innovation programmes

5.2.    This expenditure will be funded from within the Energy team’s approved budget for 2024-25 – specifically the Retrofit for Net Zero, Electrification and Decarbonisation, Enablers and Accelerators budget. It is affordable within the budget envelope.

5.3.    The planned split of expenditure is shown below:

5.4.    Future spend in relation to these programmes will be approved as part of the Mayoral Delivery Plans process, as well as the GLA budget-setting process for 2025-26 and beyond. Where applicable, break clauses will be included within contracts to mitigate the risk of projects lacking sufficient resource in future years, following conclusion of these processes. However, it must be noted that, in the case of the LoFR, this will not be possible due to the longer-term nature of the project and the need for London Councils (the host organisation) to recruit staff. This would therefore represent a commitment of £2.8m against the budget in future years.

5.5.    All relevant budget adjustments will be made.
 

6.1.    The foregoing sections of this report indicate that the decisions sought concern the exercise of the GLA’s general powers, falling within the GLA’s statutory powers to do such things considered to further, or that are facilitative of, or conducive or incidental to, the promotion of the improvement of the environment in Greater London. In formulating the proposals in respect of which a decision is sought, officers must comply with the GLA’s related statutory duties to: 

•    pay due regard to the principle that there should be equality of opportunity for all people.
•    consider how the proposals will promote the improvement of health of persons, health inequalities between persons and to contribute towards the achievement of sustainable development in the United Kingdom
•    consult with appropriate bodies.

6.2.    In taking any decisions sought, the Director must have due regard to the Public Sector Equality Duty – namely the need to eliminate discrimination, harassment, victimisation and any other conduct prohibited by the Equality Act 2010; and to advance equality of opportunity, and foster good relations, between persons who share a relevant protected characteristic (race, disability, sex, age, sexual orientation, religion, gender reassignment) and persons who do not (section 149 of the Equality Act 2010). To this end, the Director should have particular regard to section 3 (above) of this report.

6.3.    If the Director makes the decisions sought, officers must ensure that:

•    any award of grant funding is made:

o    fairly, transparently, in accordance with the GLA’s equalities requirements and with the requirements of GLA’s Contracts and Funding Code and funding agreements are put in place between and executed by the GLA and recipients before any commitment to fund is made; and
o    in compliance with the principles set out in the Subsidy Control Act 2022; and, where the total of such funding to any one recipient exceeds £100,000 in aggregate (whether approved under cover of this or any other approval paper), they register the grant on the Department for Business and Trade’s Transparency Database

•    all services, supplies or works required are procured in liaison with TfL Procurement and in accordance with the GLA’s Contracts and Funding Code; and contracts are put in place between and executed by the GLA and contractors before commencement of such services.
•    to the extent that the activity approved concerns the creation of new posts, all applicable GLA HR protocols and procedures are followed, and approvals obtained.