This project analyses deep renovation policy initiatives and policy mixes across the world.
The Retrofit Salary Sacrifice (RSS) project is a novel approach to encourage household-level retrofit in order to reduce carbon emissions and lower energy costs. RSS will identify gaps in current retrofit policy, and develop a scheme ready for roll-out and pilot in the UK.
Why retrofit households?
The pandemic accelerated the trend to hybrid working arrangements. Businesses are starting to see the transfer of some of their energy costs and carbon emissions to their employees’ homes.
Although the Government’s support for household and business energy bills helps with affordability in the short-term, it doesn’t overcome the problem of leaky, inefficient housing. This must still be addressed to achieve building stock decarbonisation and more affordable energy bills longer-term. The challenge of retrofitting owner-occupied domestic buildings in the UK remains enormous.
RSS uses the trend for hybrid working as a trigger to encourage retrofit home improvements in able-to-pay households.
How it works
RSS is a tax-efficient incentive for home-owning employees to improve their properties using the model of the successful salary sacrifice schemes that are in place for the purchase of bicycles and EVs.
Homeowners directly benefit from more attractive and affordable finance for retrofit projects, the prospect of lower energy bills for the long-term and a more comfortable working environment.
Employers have an additional benefit to offer their workforce, as well as a route to addressing Scope 1–3 of their direct and indirect carbon emissions.
Why is it important?
RSS builds on:
- Government’s objectives like Net Zero without raising taxes
- Salaried homeowners for flexible future work patterns
- Health and safety for home-office improvement as a trigger
It changes:
- The narratives of home efficiency
- Employment and employees relationships & credentials
- Retrofit demand for able-to-pay
It introduces:
- Employee/homeowner ‘service’ for retrofit and Repair Maintenance & Improvement
- Another mechanism for balancing the grid
It pays:
- Service for detail assessment of a building’s existing condition & planning of bespoke retrofit solutions
And it creates:
- New action preposition to re-assess and reshape retrofit context and different actors’ activities
- Demand for roles & professionals as part of the retrofit ‘service’
Business model
Image text
- Government approves RSS scheme
- Local retrofitting construction companies are audited, for example using BEIS supply chain demonstrator projects. Employers sign up to RSS scheme. Lenders sign up to support RSS scheme and sign agreement between lender and employer to de-risk the process.
- Home-owning employees sign up to RSS scheme
- Contract with employee put in place
- Home is assessed, improvements costed
- Work packages agreed
- Employer pays construction company
- Construction costs reclaimed from employee via pre-tax salary sacrifice. Retrofitting, repairs & maintenance proceed
- Retrofit complete, Contributes to market development
Feasibility testing
The project builds on partnerships and conversations with specific stakeholders such as the Department for Energy Security and Net Zero (DESNZ, formerly BEIS), HM Treasury, Oxford Low Carbon Hub and the University of Oxford). Our aim is to identify gaps in retrofit policy, and the multiple benefits as well as any specific problems of the RSS scheme.
We want to test:
- Financial feasibility: For example, estimate how much the scheme will cost to the Government, employers, employees, private/public lenders and local construction sector
- Technical feasibility: Retrofit capacity and services with input from BEIS’s Supply chain demonstration project (i.e. Bristol, Bath Futureproof, Oxfordshire Cosy Homes) and collect interest from their networks (construction, home-owners and employees)
- Market feasibility: Expressions of interest from homeowners/employees and employers to sign-up for the RSS scheme, and the existing capacity of retrofit supply chain sector to support it
- Organisational feasibility: Hybrid working patterns (eg. number of employees and days in the home office, changes in office capacity etc) and expressions of interest from employers and employees
- Governmental feasibility: Preliminary discussions with HM Treasury & DESNZ (BEIS)
Timeline
Start
Retrofit Salary Sacrifice Feasibility project
- Testing the RSS scheme with different stakeholders to identify benefits and problems of the scheme to different sectors
March
Preliminary analysis and preparation
- Review of existing tax-benefit approaches (benefits and barriers) and preparation for data collection
April
Data collection
- Surveys late April, with all stakeholders on Financial, Technical, Market and Organisational feasibility, (online)
May
Interviews & workshop with key stakeholders
- Interviews early May, with key stakeholders (online)
- Workshop late May, with all stakeholders and project partners (in-person)
June
Data analysis
- Analysis of data from multiple sources. Peer review of findings from experts in the field and preparation of the new narrative of barriers and benefits of the RSS model
July
Reporting outcomes and exploration of next phase
- Report and dissemination of outcomes to all stakeholders.
- Researchers with guidance from key stakeholders to explore RSS’s model development for rolling-out and piloting.
Banner photo credit: Adobe Stock
