Decision details

The Department for Energy Security and Net Zero (DESNZ) has now released a competition for around £1.25bn grant funding through the rebranded Warm Homes: Social Housing Fund: Wave 3 (WH:SHF Wave 3). The delivery period for works commences on signing of legal documentation (expected April 2025), running through to 30th September 2028, with grant funding to be spent by 31st March 2028.

This decision is to agree to the inclusion of CBC in the consortium bid to be submitted by Stroud District Council (SDC) for grant funding under WH:SH Wave 3. If the bid submission is successful and grant funding is offered by DESNZ (outcome expected early 2025) then the decision to accept the funding, or not, will be taken by Cabinet.

The bid application alternatives which were considered are described in the Alternative options section below. This decision is to include, in the SDC consortium bid, the approach described in “Option 1: Full bid”.

It should be noted that CBC’s first priority is compliance and safety and that works in this regard will always be prioritised hence should funding be offered the programme of works will be reviewed to consider and mitigate any risks, this is especially pertinent as more data becomes available through the condition surveys.

The anticipated maximum grant level is estimated to be in the region of £4-5million with CBC match funding in the region of £3.5-4million through the Housing Revenue Account (HRA). The HRA has funds allocated (see the Financial Approval section below) towards decarbonisation of the housing stock, so will be able to meet this match funding requirement. This will fund improvements to approx. 600 homes. Funding is allocated for both capital and A&A (admin and auxiliary) costs.

The programme of works will seek to raise the energy performance of approx. 540 of CBC homes from below band C, up to that level, where feasible within the grant cost cap. Additionally 60 homes (on-gas grid) will be supplied with new LC (low carbon) heating, supporting these homes in the move to net-zero.

The works will target ‘fabric first’ but will also include some other measures:

·         Upgrading loft insulation to 400mm

·         Installation of wall insulation mainly external wall insulation (EWI), cavity wall insulation (CWI) and some internal wall insulation (IWI)

·         Other minor fabric improvements such as sloping ceiling and room-in-roof insulation, and measures which improve energy ratings within the modelling tool for EPCs (Energy Performance Certificates)

·         Installation of low carbon heating, such as heat pumps

·         Solar PV

·         Mechanical ventilation improvements

·         Facilitating works

All work undertaken must be compliant with the British Standards Institution’s framework of technical standards for retrofit (as detailed in PAS 2035:2019 Retrofitting Dwellings for Improved Energy Efficiency - Specification and Guidance). Adherence to the PAS 2035 standard may necessitate other measures such as improved ventilation systems as well as additional testing (air tightness testing) and monitoring (internal air quality).

The bid window for WH:SHF closes at midday on 25th November with information required by Stroud District Council by 20th November, due to these timescales and the extensive work involved in modelling the housing stock against the bid criteria, preparation and submission of the bid it is possible that the final bid numbers and values could vary slightly from the stated amounts, and for this reason a range of likely values is given at this time.

To allow CBC to progress with decarbonisation works to its housing stock. This also benefits tenants as works include energy efficiency measures (EEMs) which will mean savings on their energy bills.

Background Information

Under the Government’s £3.8bn Decarbonisation fund, CBC has already been successful in securing grant funding under the Social Housing Decarbonisation Fund (SHDF) Demonstrator Project, Wave 1 and Wave 2.1 bid rounds, through consortium bids with other Gloucestershire local authorities and registered social landlords. This work has won awards: Energy Efficiency Awards 2024 (South West): Regional Housing Association or Landlord of the Year (WINNER) and Energy Efficiency Awards 2024 (National): National Insulation and Fabric Project of the Year (2^nd).

Further works are required to meet the Government’s target of EPC C by 2030 and this will also mean progress towards CBC’s challenging target for Cheltenham to be net carbon zero by 2030, which includes decarbonisation of CBC’s existing social housing portfolio. This programme of works proposed within the grant funding bid will support significant progress to the target of reaching EPC by 2030.

The Department for Energy Security and Net Zero (DESNZ) has now released a competition for around £1.25bn grant funding through the rebranded Warm Homes: Social Housing Fund: Wave 3 (WH:SHF Wave 3). The delivery period for works commences on signing of legal documentation (expected April 2025), running through to 30th September 2028, with grant funding to be spent by 31st March 2028.

Three options have been considered:

1. Full bid (for approx. 600 homes)
   This option will improve approx. 600 homes. This reduces bills for those tenants and, of the options reviewed, it will provide the highest level of grant funding. However, carrying out works utilising Government funding can make project more costly to implement (i.e. through additional reporting requirements) and hence this can impact on overall value-for-money (vfm) on the HRA as it has to provide match funding. There are some risks associated with this approach: the bid for funds has to be completed before the results of the condition survey are known (which will inform future investment) and the funds will need to be handed back if not spent. In addition works must be managed to avoid diverting resources away from key priorities such as compliance and safety.
2. Reduced bid (apply for a smaller grant e.g. 300 homes)
   This option still improves a significant number of homes (albeit fewer than Option 1: Full bid), reducing bills for those tenants impacted and utilises grant funding to support the costs. As noted in Option 1, this raises the same concerns over carrying out works utilising Government funding, potentially impacting on overall value-for-money (vfm) on the HRA as it has to provide match funding. This has the same risks as noted above but these are reduced with a reduced bid.
3. Complete works as part of the HRA planned capital programme (no bid submitted).
   This approach would have no impact on existing resources, and would allow for the condition survey work to be completed, which would fully inform the investment approach and allow decarbonisation measures to be built in to a resulting programme of works, it also avoids the complexities of the government funding system and the associated risks on delivering vfm. However, with this approach there is a reputational risk of not bidding and potentially not moving as quickly towards the 2030 target, any delay would lead to a slower impact on reducing bills to tenants. There would also be the loss of grant funding which would mean no supporting investment to reduce the impact on the HRA of improvement/decarbonisation works.

This decision supports Option 1: Full bid.

The bid is being prepared as part of a consortium led by Stroud District Council the bid process  is being supported by RISE (Retrofit Information, Support and Expertise) a free support service funded by the Department for Energy Security and Net Zero (DESNZ).