Savings for a greener future
Almost a whole year of lockdown has had the nation doing new and unexpected things – or doing the usual things in more extreme ways.
Take DIY, for example. UK householders have always been keen to get out the drill and the paintbrush on a Bank Holiday. But lockdown has made us a lot more ambitious. According to the Moneysupermarket ‘Renovation Nation’ report*, UK homeowners have spent over £50 billion on home improvements in the past twelve months. That is an average of £4,000 each.
Renovations have included new home offices, home gyms – and some genius even installed their own home pub. Spending more time at home than ever before has set the UK’s homeowners to invest in making their domestic space as ideal as possible. And with more employers offering a new approach to home/office work in the future, it seems that chez nous will continue to be a hybrid space of activity, productivity and relaxation.
Other studies into the effects of lockdown show that many people have managed to boost their savings during this time. While some have really suffered financially due to business closures and layoffs, those fortunate enough to continue working or to be placed on furlough have set aside quite a pool of cash.
Again, saving money isn’t a new habit, but lockdown has pushed it to new levels. In July 2020 figures from the Office of National Statistics (ONS) showed that in March and April 2020 people set aside a total of £11 billion – compared to £2.7 billion in that same period in 2019*.
Chancellor of the Exchequer Rishi Sunak has expressed his hope that when lockdowns are over and we emerge, vaccinated, into a post-Covid world, those savings will boost the UK economy. I’d take a guess and say that people may well be more cautious about how they release their savings. Home improvement spending is generally regarded as an investment so is easier to justify to ourselves.
There are other indicators of the urge to be sensible with the extra cash. The ONS figures show that households with excess cash to hand paid down their debts – by a total of £18.5 billion. So it seems that people have been making decisions to spend their money sensibly, rather than splurging on nice-but-not-necessary items.
I don’t foresee a mad rush to the high street once we’re all out of lockdown. While that is not the news retailers would want, it might benefit other parts of the economy. If people have money to spend, and they’re inclined to the ‘sensible’ decisions, could it be time to start encouraging investment in new heating systems?
In order to deliver its goal of 600,000 heat pump installations a year by 2030, the Government will have to harness the spending power of middle class homeowners. They can’t do it all through the social housing system. With all those savings, and more time spent at home, a more energy efficient heating system would seem to be an easy sell to those with the extra savings to hand.
Another significant factor is that people are well aware that the climate emergency still needs to be addressed. Persuading homeowners to switch to ‘green’ electricity is the right thing to do – and in 2021 it looks like a fair number will have the inclination to listen to the message.
And on a more practical note, a winter spent at home rather than in an office, is bound to push up the heating bills. Come March and April 2021 when the bills come in, there are bound to be questions asked around the nation’s kitchen tables about more efficient ways to keep warm.
If we can find some hope from 2020 it’s that people learned to do things differently. In 2021, it could be a good opportunity to tap into that sense of change for good and to persuade those who can afford it to invest their cash in building the UK back greener, as well as better.
This guest blog first appeared on the Mitsubishi Electric hub in February 2021