Chapters

Kieran Findlay

Hello and welcome to the Scottish Housing News Podcast. I’m Kieran Findlay and today with Jimmy Black we’re discussing the Scottish Government’s newly revised Heat in Buildings Bill.

Seen as a key part of efforts to decarbonise buildings and contribute towards Scotland’s net zero targets, the legislation’s future looked uncertain when acting cabinet secretary for net zero and energy Gillian Martin raised concerns over the potential financial costs being placed on homeowners.

Jimmy Black

But thanks to a number of revisions, it’s very much back on the table and should be brought forward before the end of this Parliament.

Two people who were campaigning for that to be the case are Gillian Campbell, director of the Existing Homes Alliance, and CIH Scotland’s policy and practice manager, Ashley Campbell, and they both join us now.

Kieran Findlay

Hi Gillian, welcome to the podcast. It’s already been some journey so far for all things connected to this Bill, not least our very own podcast, which has been drastically rewritten after the announcement this month. But I think it’s best to begin if you can provide an outline of what the Heat and Buildings Bill contains as we know it.

Gillian Campbell

Hi, thanks very much for having us along today. It’s great to get the chance to talk about the Bill and what we know about it so far. I suppose it’s important to point out at the moment, we still don’t know, there’s still a lot that we don’t know about the Bill. It’s been a long time coming.

It’s probably helpful to go back in time a little bit first of all to look at where this came from. So the Scottish Government published the Heat and Buildings Bill back in 2021 and said that we need a combination of policy and regulations to get us to net zero homes by 2045. Then, in November 2023, a consultation was published which set out a range of proposals for regulations. That consultation closed last March, and we’ve been waiting since then for something from the Scottish Government to tell us what the next steps would be.

We did have a statement from the acting minister for climate action last week which demonstrates that quite a lot of the proposals that were set out in the consultation last year were going to be rolled back with a greater focus on incentivising and supporting people to act rather than prohibiting fossil fuel heating, for example.

So what we do know is that the Bill is likely to include powers to set minimum energy efficiency standards for owner-occupiers and non-domestic properties. It looks like these won’t be on the face of the Bill though, it will be powers to introduce them in secondary legislation, so probably sometime in the next Parliament we’d see them.

Minimum energy efficiency standards for the private rented sector were going to be in the Bill, but it looks like these are going to be taken forward through existing powers. Now, if there’s a way to do that more quickly then that’s a positive step.

In terms of heating, the consultation proposed that homes would be prohibited from having fossil fuel heating from 2045. It looks like that’s being rolled back on, and we’re moving from a prohibition to a statutory target-based approach. It looks like there’ll be no requirement to replace heating after people buy a property; rather the Scottish Government is looking at setting targets and taking action to reduce costs for people.

There is some really important news in terms of heat networks, which is a step forward from the consultation last year. It’s proposed that there will be a requirement for large non-domestic properties, including public sector buildings, to connect to a district heating scheme where available. And that’s really important because it includes, it provides an anchor load for heat networks, giving certainty to heat network developers, making them more viable and more likely to come forward.

Kieran Findlay

What do you believe are the most significant benefits that the bill could bring to Scotland’s homes and residents?

Gillian Campbell

Well, clean heating has multiple benefits, first of all. As well as reducing carbon emissions, it helps with energy security. By reducing our reliance on fossil fuels, we’re reducing exposure to volatile global fossil fuel markets. And that was the primary reason for the price increases we’ve seen over the last few years. But there’s also evidence that shows that renewable energy improves air quality, for example, potentially reducing respiratory conditions such as asthma.

The energy efficiency elements of the proposed Bill are absolutely essential to reduce demand, making homes easier and more affordable to heat, healthier for occupants and reducing the burden on the grid, which is important as part of electrification.

Jimmy Black

Ashley, thanks for joining us. Have you got anything to add there about the key provisions and the objectives of the proposed bill? Maybe tackling fuel poverty, for example?

Ashley Campbell

Yep, I think one of the other benefits of introducing a bill like this is that it starts to create more of an alignment of standards across housing tenures. So while, as Gillian explained, the revised version of the Bill is likely only to place energy efficiency standards on owner occupation, there’s already minimum energy efficiency standards in the social rented sector, which is very much far ahead in terms of improving the standards of the fabric of our homes and in terms of reducing energy demand, reducing people’s bills and therefore potentially impacting fuel poverty.

The private rented sector minimum energy efficiency standards are likely to be taken forward under existing regulations and owner occupation within the Bill. So starting to align those standards across tenure, I think is really important in terms of ensuring that every home is energy efficient and easy to heat, regardless of whether you’re a private renter, a social renter or a homeowner.

I think that also starts to set a tone for energy efficiency in housing and that journey towards net zero, that it’s not just about the social sector, it’s about all homes across Scotland. The social housing sector only makes up about a quarter of all homes in Scotland. We need to tackle the private sector as well if we’re going to make progress on net zero, if we’re going to make sure that everybody is living in a good quality of home and you can afford to eat.

So I think setting that clarity and making sure that people understand what’s expected of them over the next 10 to 20 years is really, important so that people can start to plan what do they need to do in terms of energy efficiency. If their boiler is going to need replaced, what sort of solution should they be looking at? So I think that we need to be looking at creating that clarity for people. The Scottish Government needs to be looking at the communication around that.

So this is a long-term goal and 2045 is the statutory target for net zero, but we need to start putting those building blocks in place now and that needs to be across tenure. So think this Bill is really important and starting us on that journey towards a shared set of standards.

Kieran Findlay

Last month, when the government revealed it wasn’t entirely happy with the original proposal, the existing Homes Alliance, they highlighted the wide support for the Bill’s introduction. A range of organisations said the Bill would give confidence to a number of industries, kickstart investment in jobs and skills. So with this in mind, what, Gillian, would be the consequences if the Bill isn’t introduced before the parliamentary window closes?

Gillian Campbell

Well, that point about industry needing the bill is absolutely critical. One of the big barriers we have at the moment to decarbonising our homes is the lack of sufficient supply chain and skills base. And what we hear from industry stakeholders, including some of our supporting organisations, is that one of the barriers to industry scaling up is that they have no certainty that there’s going to be a sufficient pipeline of work in the future. So one of the biggest risks or consequences of not introducing the Bill in time is that we lose a clear timeline that will impact on industry investment. So the Bill should ideally set out a clear timeline giving industry that visible pipeline of work.

Jimmy Black

Gillian, has anyone actually in industry said we’re not going to invest now because the Bill’s been delayed? Has anyone scaled back investments or hesitated? Do we know that there is a real effect here or are we just kind of speculating?

Gillian Campbell

What we do know is that installers are not investing in retraining because they have no certainty that there will be work for them in the future. We know that retraining costs money, not just the training itself, but the lost income while you’re undertaking training. So for many, without that certainty of the regulations, it’s too big a risk to undertake that training without the certainty that would come through legislation that would deliver a pipeline of work.

Jimmy Black

Ashley, you’re wanting to come in.

Ashley Campbell

I think the other thing that delaying the Bill is going to do, the longer the Bill is delayed, the less time people have to act on the requirements that are to be put in place when the Bill does come in. So that minimum energy efficiency standards for homeowners as a homeowner myself, I want to know sooner rather than later what’s expected of me and when so that I’ve got time to plan what types of energy efficiency measures might I want to look into, what type of heating system. How am I going to pay for that? How am I going to start saving?

If I’m making changes to my home now, would it be a benefit for me to think about doing it at the same time? So I think the longer the bill is delayed, the less time people actually have to think about and plan for these changes and creating certainty now and communicating that now, I think, is in the interests of everybody.

Gillian Campbell

If I can just add to that as well, for a long time, Scotland was ahead of the game in this policy area in terms of the UK and that’s looking increasingly less like the case. The longer that the Bill is delayed, the more jobs training and economic growth opportunities are lost. The more likely it is that people in Scotland will be competing with the rest of the UK for the skills and supply chains needed and that will become increasingly difficult as we’re against a potentially bigger market down south.

Jimmy Black

One of the things that worries me about the Bill is that it just looks a bit like politics. You’re saying that the regulations will come after the next election very possibly. It means that people can carry on just replacing their gas-fuelled kitchen ranges and boilers and blame the government for climate change. And that’s the idea that the government will be responsible for meeting targets rather than individuals being responsible for looking after their own properties. So don’t you feel a certain sense of disappointment that we are where we are?

Gillian Campbell

Very much so. mean, the Bill as drafted was very much requiring individual action. The Scottish Government was clear that there would be protections for those in fuel poverty and support would be available, but it was recognising the fact that homeowners were essentially responsible for their homes. And one of the key elements of the proposals was that point of purchase trigger so that when you bought a property within a certain period of time, say two years, you’d be required to replace that heating system with a clean heating system.

Now, the dropping of that proposal, it does a few things. First of all, it removes that imperative for homeowners to take action, meaning that people will just continue to replace the gas boilers with more gas boilers, which means more emissions going into the atmosphere. And it means that we’re not making any progress because there’s continued uncertainty and people will be unwilling to take a risk in case they’re not fitting the right heating solution. So that slows everything down.

But what it also does, the removal of that proposal is that that sort of phased approach of having the purchase trigger gave a clear phased pipeline of work over the 2030s that would have meant that industry would be able to scale up over time to meet that gradually growing demand. The removal of that proposal means that there’s a risk that you get to the sort of late 30s, early 40s and everyone needs to switch at the same time and there’s just not the built-up supply chain to be able to deal with that scale of demand.

So it’s really disappointing on two counts. One, it will be off-putting for people to move ahead of regulations because of continued uncertainty, but it’s also not doing what it could do in terms of helping to prepare the supply chain for future demand.

Kieran Findlay

Ashley, one of the original concerns was that the original proposals wouldn’t necessarily prevent more people from falling into fuel poverty while decarbonising their homes. Do you think as it stands at this piece of legislation would strike the right balance between that?

Ashley Campbell

It’s quite difficult to say without seeing the detail of what’s actually going to be in the Bill. I absolutely support the government’s focus on tackling fuel poverty and not just focusing on climate change. think it’s really important to strike that right balance. We need the regulations in place to set out the requirements to drive people towards improving the energy efficiency of their homes, to moving towards clean heat. As Gillian said, we need to encourage people to do that as soon as possible so that it’s not just all bunched up towards the 2045 end target. We need people to start on that journey now.

We also need the Bill to be underpinned by support to make sure that people are getting financial support when they need it. So whether that’s interest-free loans for people that can afford that or grants to help people who are on the lowest incomes, we absolutely believe that we do not want this to be increasing the risk of fuel poverty.

We also do not want this to be increasing the risk of other types of poverty. So if people are having to spend money on energy efficiency measures rather than something else, or if rents are increasing to pay for this work, we would see that as a failure really of the legislation and of the government to provide for that legislation and to implement it in a way that’s fair and proportionate.

I think in terms of encouraging people to want to invest in their homes. It feels like within policy circles we’ve been talking about this for a long time. We’ve been talking about the legislation, we’ve been talking about requirements, we’ve been talking about how to work this across housing tenures and beyond the social housing sector. But I don’t think we’ve been as good at communicating this to the general public. So I think that the public are aware of energy efficiency and maybe their carbon footprint in other areas. So transport and consumables and recycling, but maybe not necessarily thinking about their own household and how their heating and their energy use contributes to that.

And I feel like we need to communicate to people why this is important. This isn’t just something that the government is doing to punish people. This is something that we collectively need to be working towards because as a society, we’ve decided that we need to tackle climate change. We need to invest in homes so that they’re warm and comfortable and affordable to heat. And this is not something that the government is implementing. It’s something that we all should be working towards.

And I was lucky enough to go on a study trip to Stockholm last year in Sweden to look at how they approach sustainable communities and cities and energy provision. And they didn’t just talk about environmental sustainability. They talked a lot about social sustainability and that it was a collective decision. It wasn’t an easy decision. It does cost money and it needs everybody to feel part of that decision.

So I feel like we need to work more on the communication of why this is needed and why people should want to improve their energy efficiency. It’s not a punishment. And this is a benefit for everyone across Scotland, potentially, if we get it right.

Kieran Findlay

One of the issues could be that there’s no one set solution that would help solve the problem for everybody in every area and every property.

Alasdair Allan says the bill will remain technology-neutral, reflecting that people in different properties will require different solutions. But Gillian, what do you think that means in practice?

Gillian Campbell

As Ashley said earlier, it will be good to see the Bill so we can have a more slightly more informed discussion about this. In practice, what that means is what we already know, to be honest, is that there’s no silver bullet, there’s no one size fits all, that different houses, locations will be more suited to different technologies. We know that people in more densely populated urban areas, for example, are much more suited to heat networks than sort of more individual solutions like a heat pump. And in rural areas, there will be other solutions. There may be heat networks in some cases, but there will also be areas where heat pumps are actually the best solution.

And you see that, for example, in the Western Isles, in the minister’s constituency, there’s a huge number of heat pumps being rolled out that are working incredibly well in fairly extreme weather situations but they’re heating homes to sufficient temperatures, they’re affordable to run and they are the right solution for a lot of people. So yes, we need to be flexible about and make sure that people are installing the right solution for the right property.

And that’s one part of the minister’s statements that I do welcome is that greater focus on the role of heat networks because heat networks are going to be a fundamental part of how we heat our homes in the future. And that commitment, that requirement that public sector buildings should be required to connect is a really positive step.

Jimmy Black

Gillian, the whole thing about heat networks is getting people to work together and also financing them. The Green Finance Taskforce group has reported and they’re talking about place-based solutions, which involve big public sector buildings, involve domestic properties, anyone else, shops and businesses, all together. But you know that even trying to get eight tenants in a tenement to work together is like herding cats. How do we actually do this? And how do we make it attractive to people to invest in these kind of heat networks? Because it’s got to be private money that’s going to do this.

Gillian Campbell

There’s a lot in that question. I suppose that the first point is the financing mechanisms coming out from the Green Heat Finance Taskforce. It’s good to see that reporting at last. one of the biggest barriers to decarbonising heating is the upfront cost. So we do need a range of financing mechanisms, place-based that address that upfront cost and spread over the long term. Also, individual solutions because a lot of people will be taking individual action. So we need finance and mechanisms for them so they can remove that barrier of upfront cost and pay up over a long period of time. So overall, they’re not seeing any loss of income or lower levels of household income.

In terms of how we practically do this working together, yes, as you say, a lot of this will be driven by the private sector, which is why, as I said, that assurance of having these anchor loads by requiring public sector bodies to connect, that’s really important for business cases for private sector investment.

But we do need to look at things like, for example, the tenement law in Scotland and move forward with the compulsory establishment of owners associations, for example. None of this is going to be very easy unless we have ways of collectively making decisions. As someone who lives in a flat and is trying to organise roof repairs just now, I’m very aware of how challenging it is just to fix a leaky roof, let alone connect to a heat network or carry out sort of communal energy efficiency works. So I’m not underestimating the complexity of this, but we do need to make sure that all the ducks are aligned, that we’ve got the tenement law reformed so people are enabled to carry out the work that needs to be done and that we’ve got the financing mechanisms in place to encourage and leverage the private sector investment that’s needed.

Kieran Findlay

Ashley, you’ve mentioned that the social housing sector is in many ways ahead of everyone else when it comes to energy efficiency. Some social landlords may even take the view that the government should be looking elsewhere to make real progress. But the sector is not perfect. There’s problems with damp and mould. And if you listen to the Regulator, this is significant. And there’s also tenants on low incomes and we have to make sure that they don’t struggle to heat any kind of existing homes.

What role is there for social landlords? What role do they play or can they play in meeting these new heating and energy efficiency standards?

Ashley Campbell

If you look across the social housing sector in general, the energy efficiency standard of homes is higher. It’s the highest across all housing tenures. So much work has been done over the last 15, 20 years in terms of improving that existing stock that there’s so much learning to take out the social housing sector.

We’ve done a lot of legwork about different building types, about what works, about what doesn’t work. You mentioned maybe some of the consequences of some of the work that’s been carried out in terms of damp and mould, but technology is really improving and a lot of landlords are now making use of sensors to monitor the heat of buildings, the moisture, the air quality. So there’s an awful lot that can be done and an awful lot that has been learned. I think we know broadly what works and it’s a case of making sure that that can be scaled up and expanded.

Again, for the social housing sector, we really need clarity. So the revised social housing net zero standard has been delayed and delayed. So it’s not clear exactly what new standard is going to come in, exactly what social landlords are required to do, how much it’s going to cost, how that’s going to be paid for, how social landlords access different finance. I think what we really need from government is a bit of clarity and longer-term financing in place so that landlords can build it into their longer-term business plans.

Social landlords will have an annual budget, but they’ll also be looking at a five-year plan and a 30-year business plan. So they need to have that more strategic approach. If they are looking at cyclical maintenance or if they’re looking at a programme of kitchens and bathrooms or windows, how can they build in these energy efficiency and clean heat measures? And they can’t do that if they don’t know what’s required of them or how it’s going to be funded or the long-term nature of that funding.

So we do know that there are effective projects in place as well. Area-based schemes where social landlords can take the lead on improving energy efficiency across tenures. We know that that works really, really well, but we also know that not all the funding is getting where it needs to go. We know that there’s underspend in projects. So, again, clarity and leadership is required. And I think that feeds into that point that we were just discussing about the difficulty of mixed tenure blocks, the difficulty of getting beyond social housing into the private sector where there might be multiple homeowners and private landlords involved.

Social landlords can play a really important role in leading on that work. And so whether that’s housing associations with a stake in a block or whether it’s local authorities who are helping to provide the advice, the information, maybe some project management. I think the social rented sector has an awful lot to offer if they can get the funding that’s required and if they can plan in advance.

So again, this Bill can help to set that clarity and direction for the whole housing sector, regardless of the fact that the social housing regulations may be out with this Bill. The Bill itself is going to start to create that alignment of standards across tenures and we really need that to be able to push forward.

Gillian Campbell

If I can just add to that as well, there’s an issue of fairness, so as well as that issue of mixed tenure blocks being one of the barriers and challenges that social landlords face. As Ashley said, the social sector has been ahead of the game on this for a long time, and there’s a concern amongst many that social landlords and tenants, being at the forefront of that, are potentially carrying an unfair burden in terms of cost and the costs will then start to come down just when all the occupiers have to pay for it.

So there’s an issue of fairness here. We need a single standard that applies across all tenures and we need social landlords to be getting the funding that’s needed to make sure that some of the most vulnerable and some of the people in the lowest incomes aren’t bearing the burden of the cost.

Jimmy Black

Moving on to the private rented sector, that’s clearly an area where there’s lot of disrepair, where the energy standards are thought to be fairly poor and where there’s quite a large number of people in the private rented sector who can’t afford to pay their rent, let alone high heating bills. So what can we do? Do we need to force private landlords to comply using, we can force them to do the repairing standard. We can reduce the rent payable to them. We can do all sorts of sanctions to private landlords. We could deregister them, take them out of game altogether. Is that the approach we should be following, I’m using these sanctions that are available to us?

Gillian Campbell

I would say that one of the main arguments for having a minimum energy efficiency standard for the private rented sector is that sort of protecting tenants’ interests argument because there’s a risk that if we’re talking about requiring people to move away from fossil fuel heating to clean heating. There is a risk that private landlords would go for the lowest capital cost, which would be potentially inexpensive to run electric heating system. So there’s a real danger there for the occupants, the tenants, that they end up bearing the burden of running costs. So I think there’s a really strong case for introducing minimum energy efficiency standards and placing that responsibility on the landlord, potentially through the repairing standard and that’s potentially what the Scottish Government’s looking at in terms of, when they’re talking about removing that from this Bill, and looking at existing powers to do that.

So yes, there are high levels of fuel poverty in the private rented sector. We know that private tenants don’t have the agency that a homeowner would have to upgrade their own energy efficiency, so I think it’s right, we think it’s right, that that should be a requirement on the landlords to ensure that the heating costs are affordable to them.

Jimmy Black

I’m just picking up on what you said there. If electricity was cheap, we could reach net zero without ever insulating a home or creating a heat network. We could have electric boilers, could have panel heaters, we could have three bar fires with pretend flames and plastic coal, if we wanted, like we used to have. In a country that produces a huge amount of relatively cheap renewable energy, we’re still pumping out emissions and struggling with fuel poverty. So, what are we doing wrong? What needs to change? Ashley?

Ashley Campbell

I would say regardless, if we were living in a utopia with clean, cheap energy abundance for everybody, that doesn’t negate the need to look at the energy efficiency in the fabric of our homes. So I think that reducing that heat demand is still important, making sure that it’s easy to heat at home is important, so dealing with drafts and cold is still important, but I think you’re right to raise the issue of the cost of electricity and that’s something that does need to be looked at in the whole when we’re looking at potentially switching people from a cheap to run gas system to a clean electric heating system.

We need to factor in the cost of that electricity, so we need to make sure that that system is super efficient. We need to make sure that the fabric of the building is very efficient so that you’re using less energy and I think there’s definitely more that we can do nationally and I’m talking about the UK government, to put pressure on the UK government to look at the cost of energy because as you say we do have a lot of renewable generation in this country and there’s potential for more but we need to make sure that that’s at the right cost.

Social landlords have done a lot of work in this area as well. So looking at some housing associations that have wind turbines or investment in solar energy and they are passing those savings and those costs on to tenants. So there is stuff that’s being done at a local level. I do think that we need to look towards the Scottish Government and UK government for this as well.

Gillian Campbell

I could just add to that as well. think we shouldn’t be wasting any resources. So yes, even if we have, as Ashley says, an abundance of energy we must also remember that we’re decarbonising everything. So that’s going to place a huge burden on the grid. We have a responsibility to make sure that we’re not overusing the renewable energy that we do have, otherwise we just want to produce more of it. So there’s a real strong argument for energy efficiency there as well.

Ashley’s also right in terms of the cost of energy and the role of the UK government in addressing that. This is something that the UK government has been talking about. The previous UK government talked about addressing the high cost of electricity in comparison to gas. And until that’s addressed, there’s going to be a real barrier to large-scale switching from fossil fuel to clean heat. An early way of addressing that is to do something about the levies that are added onto our electricity bills, which could be either moved to gas or moved to general taxation.

Kieran Findlay

Well, thanks everyone. I think we’ve covered just about everything that we can at this stage on this so we’ll be happy to have you guys on when this Bill makes its progress again. But until then, thanks to Gillian Campbell from Existing Homes Alliance and Ashley Campbell from CIH Scotland. Jimmy and I will be back with another episode in a few weeks.