video Podcast Episode 13

Richard Ellis from Peabody

This week, we're talking with Richard Ellis, the Director of Sustainability at Peabody. We talk about how important social housing is to reaching national Net Zero goals, how Peabody has developed its carbon reduction strategy and how to ensure carbon reduction doesn't take a back seat.

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Podcast Transcript

Alastair:
Hi and welcome to another Switchee podcast. My name is Alastair Thorpe and I’m joined today by Richard Ellis, who has been with Peabody Group for around 13 years and is the new Director of Sustainability. Thanks very much for joining us, Richard. I just wanted to start really quickly by asking you - you've been with Peabody for over 13 years but how did you get into the housing sector in the first place?

Richard:
Well, as most people say, I kind of fell into it. I didn't quite get the grades at university I needed to become an economist working for a third world country. So I had to find something else to do and actually, I’ve been at Peabody for probably 20 years on and off but just in two stints. My last stint is the current one of 13 years.

Alastair:
Gosh, my researchers need to do better work and thank you for that. Look, I think one of the things that we wanted to chat to you about and I have spoken with you on a number of occasions about it. I understand you've moved from the world of asset management and into sustainability albeit the two have been linked for many years anyway. We've got these net-zero targets that we all keep hearing about and the housing sector seems to be making bigger, quicker noises about it as far as I can tell versus the private sector. I wanted your opinion on what impact you think the social housing sector is going to have on us reaching these net-zero targets in the UK?

Richard:
Well, that's a big question. I think one of the things that we're looking at and why we've made such a big move in the last year or so is that we've got 30 years until we've got to hit net zero. As an asset manager and all the other asset managers out there - we are working on 30-year programs. So if we're going to have to, as efficiently as possible, move into the zero-carbon future. We've got to start planning now to then deliver in 30 years time. So it seemed like the right place. Years ago, I sort of inherited the sustainability team through mergers and various other bits and pieces but it has seemed that over the last year or two that people have started to get very much more energized around zero-carbon, net-zero and how we're going to make it happen.

There is obviously always challenges around what we're trying to do at the moment. Around keeping decency. We've got fire, but we know that the next big thing after that is sustainability and the question that we're trying to answer is how do we help our residents in terms of fuel poverty. We know things are going to get more expensive so how do we make sure that our buildings are going to be fit for the future because we are going to be on a hotter planet. We've got to try and work out how we're going to make it liveable for our customers.

Alastair:
That's really interesting there. You've touched on a number of relevant topics. One of them which is close to our heart here is the fuel poverty side of things and you know, a lot of the measures that are going in under net-zero are great with regards to fuel poverty. If you're insulating properties, if you're giving them efficient heating systems and new heating systems that's all fantastic. There is this almost unanswered question about the affordability, at least in the short term, of some of the electric heating systems. Have you got any insight about whether you're looking to use renewable technologies in heating, heat pumps, ground-source, hydrogen perhaps what's the plan?

Richard:
Well, certainly I mean from our new build side what we're seeing is an awful lot of heat pumps coming in, air-source heat pumps, a few ground source heat pumps or even I think flirting with a water source heat pump. So there's a lot of that new technology coming in. But what we are finding is that because of the cost and electricity, it's quite difficult for our residents on that side to afford it even though the buildings are much tighter and much more thermally efficient. Now if you look at that in terms of what we've got to do to retrofit, the 98% of the rest of the stock along with the rest of the country. It's just not going to be possible for a lot of people especially with people who have not got an awful lot of spare cash around to suddenly ask them to spend an awful lot of money on electricity. It's just not going to happen.

For hydrogen, I’m not so sure. I think that might be a specialist solution for certain areas or maybe for a big plant but I’m not sure that it's going to be where we're going for everyone. I think it's going to be heat pumps and I think that we will put solar panels and various other bits to try and help that. But essentially at the start, we are looking for a fabric-first approach that reduces the amount that we use. As well as education so we're offering energy advice, or we will be offering energy advice to everyone who wants it. So, if we can get the amount of energy we use down, we've then got a chance with the renewables to actually power that. That's what we're trying to reduce. Reduce demand and then increase renewables going forward and as we get into the future. 10 years, 20 years time - we can actually bolt on those lower carbon technologies much more easily. The fabric is going to be there for a long time and any investment we make is a good solid investment.

Alastair:
That's interesting Richard. Yeah, the fabric first approach has been around for quite a while but it remains the right thing to do, if you can reduce the requirement for energy that's the best thing to do. An interesting approach that you do that first and then maybe the technology catches up. It becomes cheaper to run these bits of technology later down the line and we're all hoping that the electricity grid greens and becomes renewable, so that when you're flicking your light switches on, you know that it's a renewable source of electricity in the first place. You mentioned something there that I just wanted to pick up on again because it's something close to our hearts here.

One is the education piece. So we know that the control of these heat pump systems can sometimes be the downfall in whether they work for residents or work against them. But wrapped in with that is this energy advice stuff and I’m really, really excited by what you're saying there. So perhaps you could tell our viewers a little bit more about the plans to get energy advice out to every single customer I think you said?

Richard:
Yeah, so it was one of the things that the board when we were trying to sell the strategy (and we worked quite hard on making sure that they were on board), they were really focused on what we're going to do to make our residents lives better and to save them some money. So what we have done, and we've done this for a while, on a very small scale is identifying people who are in fuel poverty and then putting in smart thermostats or putting in different things, different bits of technology to try and help them reduce that. We know that actually, the most help that we can give them is by energy switching. It's a really simple thing - people do it all the time. I’m sure you do, I do it every year. That's your big saving in terms of just cost, it doesn't help the planet particularly but it's good for the cost.

So what we want to do and we're learning and we’re doing a project at the moment just having a look at the impact of what we did 2, 3 years ago in a place called “Thamesmead”. How that has played out and how effective our advice was in a longitudinal study. So at Thamesmead, we did an awful lot of work around there around damp and mould but it was around looking at what we can do to help people with fuel poverty. So we're using a longitudinal study there and with a smart meter, we've taken all the data to see how effective our measures have been. So learning from that what we want to do next is to create a website that is interactive that enables people to have the information that helps them to reduce down and change their behaviours. We also want to then link into when people ring up, we want to have a little bit of science behind some of our data on our customer contact centre that then offers to those people who we think are at-need a one-to-one telephone service. Then after that, we're looking at one-to-one house visits if we need to. So the offer will be filtered so a lot of people go to the website, then it will go down to telephone and then to individual house visits.

Alastair:
Thanks, Richard. Thamesmead is something that we've been involved with you and Peabody on for the last few years and it's nice to see some of the sustainability projects that have often been outside of the kind of day-to-day works of housing providers starting to provide some of the answers to what have become the future problems. With this focus on carbon reduction and net-zero as we've mentioned, do you think that the kind of traditional asset management role has changed or the role of asset management within housing has changed at all?

Richard:
Oh, since I first started in asset management which was just pretty much putting some windows in and putting in a couple of kitchens and bathrooms - it's changed beyond recognition. Especially in the last 5 years or so. The reliance on data is massive now - I work for quite a large organisation but the huge amounts of data that we have! There are large-scale reinvestment programs, lots of resident engagement and liaison to try and make these things that you're putting in a success and obviously we've got more complex ownership structures now as well. So you've got leaseholders, you've got freeholders, we've got managing agents all of which have to be brought together to make something successful. So I think that, as I say with 98% of the stock already existing, the only people really in the right place to do that are the asset managing teams. They have all the data. They know how something's performing. They know when something's due to be replaced and then it's a question of going over the top of that and enhancing it. So when we're looking to replace that boiler in 10 years time, we actually then schedule it for a low carbon option. So you're building on it all the time and you have almost like a plan for every property that gets you to zero carbon over the 30 years.

Alastair:
Good stuff, a plan for every property. I like that. I’m just gonna throw a little curveball at you here because you mentioned when we were talking previously about the spotlight that there has been in the last few years on fire safety. That's not quite the elephant in the room anymore but it's been a huge focus for housing providers and this sustainability thing whilst it's been there the whole time has become another big focus. How do you juggle day to day business as usual with the pandemic, fire safety and this new sustainability drive?

Richard:
Ah! I think you have to go to the one that's shouting the loudest. I don't think there's an easy way of doing it. We know that fire safety is the critical thing. So we've managed to transition to working at home okay. Not too bad. So we're all focused on making sure that people are safe in their homes. Once we've got that, we are preparing the data and the systems for what we want to do with sustainability. It's a tough thing and it's a tough sell sometimes but what you've got to realize is that we are looking over 30 years. We're not a private company that has to worry about money quite in the same way. We do know there's funding out there. We do know that this is something we've got to do and the government targets are much higher on us than they are on the private sector and we have the ability to do something because we own a lot of properties. We own 67,000 properties at Peabody. So it gives us the opportunity to get that going.

It's one of the things I feel personally that we have to do. We cannot not do it. So I’ve been spending a lot of time with the board. The board have backed me up and so have the directors - they've just said, “No, this is the right thing to do. This is good for our residents. It's good for the planet and it's we want to be a part”. We are already, but we want to have more of a positive impact on what we do for Londoners and people outside. So If you take all of that together, it's the next thing. So we put it into our programs, we make that change but we also want to change the culture and that's the difficult bit is actually just changing the culture. So that people think about this and think about that rather than they think about the quickest thing to do. It's actually taking a longer-term approach over our buildings and our stock.

Alastair:
Yeah. We've spoken to a few people within the sector quite recently actually who are saying the plan for the corporate entity of the housing provider to become net-zero first is quite a good one because you embed it within your culture. If everybody's working towards net zero within their working practices and what they do when it comes to your properties, they'll just kind of follow on the thinking and education of your colleagues is within that. We can't really move away from this subject without talking about the funding side of it and how on earth everybody's going to pay for all this stuff. So genuine open question here. How does a Peabody go about investing all this money into their properties over the next 30 years? Where does it come from?

Richard:
Well, we are quite fortunate in terms of we have a number of sources of income. Obviously, you've got rents. We have bond issues that we can do, and we have loans that we can draw down on. Within the government, you've got ECO3 funding which will shortly become ECO4, the green deal or green homes grant has been a bit of a damp squib but you know, it's still there. But the big one that I think everyone is looking at is the social housing decarbonization fund. There are the demonstrator projects coming out now. We've then got a small amount coming up this year and then they've got the bigger tranches of money coming from there. So we weren't successful in getting the demonstrator projects but we will apply for the ones this year. But again, it's about getting the data ready to a point where actually we can just say, “Yes we're confident and this is what we can deliver” and then off we go and that's what we want to do.

The other thing that we would like to do is some of our carbon offset payments that we paid for new developments is seeing whether or not (we're talking to a couple of accounts at the moment) whether we can recycle that within the borough on our own stock as well. To see whether or not that's a way of actually increasing it because it's the cost and this is an additional cost on top of the additional cost of fire, and the cost of just operating the business, as usual. We have to find the money somewhere. Government grant it's going to be a chunk of that. But it's going to be expensive. If we're going to get our stock up to where we need it to be.

Alastair:
Yeah. Which I guess will be challenging. There are sources but it will be challenging. Something that's quite exciting from my perspective is that given all of the economic issues related to the pandemic recently - there is this opportunity for the build back better stuff and the green recovery, that it can boost our economy. There might be a whole load of new jobs, green jobs, for everybody to do and to get all of this work done but at the moment, it looks like a skill shortage.

Richard:
I totally agree. I think one of the things that we're talking to BEIS at the moment about it and saying, “You've got to allow the supply chain to build up”. All of that's got to be built up so, especially if you give us a long time scale, the funding needs to not be done in 12 months but actually here's 3 years and then after that 3 years there's another 3 years worth of funding. The industry will move to that. It's so difficult to do something within 12 months. I cannot get a project that's an insulation project up and delivered in 12 months in a conservation area or if I need planning or leaseholder approval. There is just no way. So it's about having that consistency of approach from the government which will really help.

Alastair:
Indeed. We're just about out of time Richard, thank you so much for joining us and having the chat today. I think a few of the things that I’ll take away here is the reminder of fabric first is the right approach still. We're very reliant on data and need the right data to get things done. Plan now because it will come around like that and you don't want to leave it until the last 10 years to do it. And finally a plan for every home and to think about residents within that plan for every home, are some of the things that I shall remember from this conversation. So thank you very much for joining us today!

Richard:
Thank you!

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