Green construction in the UK: what does the future hold?

Just a few years ago, the government seemed set on achieving our carbon emission targets through building energy efficient homes and providing incentives for homeowners and landlords to retrofit their properties with insulation and solar panels. However, the new government has taken a couple of significant steps to reverse this approach, not only jeopardising the UK’s chance of reaching their climate change targets, but also threatening the very existence of the country’s green building industry.

The end of the Green Deal

The Green Deal was the government’s main mechanism for encouraging the uptake of insulation, energy efficient boilers and micro-generation, through the offering of loans to householders that covered the cost of the work. It also contained an element whereby grant money was occasionally released for specific green projects, culminating in a rush to apply, and funds disappearing within hours. The Green Deal was a much derided scheme, so it’s little surprise that the government quietly ceased funding it shortly after the budget. However, the lack of any replacement scheme is telling. Of course, department budgets are squeezed, but the dearth of support for green infrastructure is worryingly short sighted, and industry experts were not best pleased.

Zero-carbon homes

The target was an ambitious one: all new dwellings should be ‘zero-carbon’ by 2016. The target was set in 2006, so the construction industry had the best part of a decade to prepare, but following the recession and the housing crisis the government rather predictably scrapped the target in this year’s budget. In the government’s productivity plan – ‘Fixing the Foundations’ – they state that dropping the target was to reduce the burden of regulation on house builders. Similarly, more stringent energy efficiency goals were ditched for the same reason.

Budget cuts

As we all know, departmental budgets are under more pressure than ever. The Department for Energy and Climate Change, which oversees energy saving schemes like the Green Deal, is not a protected department and faced some of the biggest percentage cuts of any department during the last parliament. Over this parliament, the DECC will have to find a further £70 million of savings – no mean feat considering that the vast majority of the department’s spending (on nuclear decommissioning and clean-up) is protected. That means that any replacement green building schemes are unlikely to be generously funded by the government, leaving the sector to be forced to stand on its own two feet.

Of course, a self-sustaining green building sector is desirable, but consumers and businesses are still struggling to thrive in the current economic conditions. Homeowners may indeed hold off on installing efficiency measures such as a cavity wall insulation or solar thermal panels until the investment is more attractive. Similarly, construction companies are likely to hold back on expansion in the green building sector if the government continues to withdraw its support.

Overall, the immediate future of the sector looks bleak. With no Green Deal installations and little to no support from government, companies specialising in sustainable building will have to be more cautious about which jobs they take on and be more careful in how they grow and evolve. However, in the long term, improved energy efficiency and reduced carbon emissions are certainly in the interest of not only UK homeowners and landlords, but also the government. When public funds are a little more freely available, surely more incentives for green builders will be implemented.

In the meantime, if you are in the green building sector or have plans to expand into retrofitting or similar areas of construction, the best you can do is to keep a close eye on your finances for every job, and track how their profitability changes. Specialist builders’ accounting software makes that task easy rather than arduous – and you’ll cut your company's paperwork, leaving you in a great position to take advantage of future green building incentives as they emerge.

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