**CHECK AGAINST DELIVERY**

Welcome to the annual UK Finance mortgage lunch and a heartfelt thank you to Capita for sponsoring the event. It is a real pleasure to see you all and to be here in person after two very difficult years. The provision of mortgage finance is vital to the well being of the economy and it gives millions of people the opportunity to dream, to own their own home, to protect their families and to feel secure.

The driver of those dreams and that feeling of security is not just the bricks and mortar but the value of the property and the belief that it will be resilient over time. Markets do fluctuate but people believe that over time property investment is good.  That confidence drives security. When that security is challenged the reaction is swift and vocal.

We have seen the impact that well intentioned fire safety changes have had on that presumption for leaseholders. We are still working our way through the cladding issues. The area is complex and hard to resolve but the impact is that regulatory changes left some leaseholders very concerned indeed. I think we will, along with government, RICS and builders find a way through. But it has been far from easy. The recent meetings we have had with Michael Gove have been encouraging.

Today I wanted to spend a few minutes thinking about what might become an even greater area of concern. The transition to net zero. I am aware that a few people in the room heard me speak at the UK finance annual dinner last November. Part of my speech talked about the transition to net zero and I drew on a real life example which I will use again. I should like to invite you all to come with me in your minds eye to Sheffield.

Picture a small street of red brick ex council terraced houses, part of a huge 1930s estate. two up two downs. twenty properties cheek by jowl. Parking for maybe ten cars. A friend of mine recently purchased one of these houses for £44,000 from the local authority. It was a really big moment for her after 20 years work and 13 years renting. She is a hardworking single Mum on her way to qualifying as a teacher. She drives a ten year old petrol car. My question is how will she and the thousands and thousands of people like her in Sheffield and other cities and towns around the country make the transition to net zero? My friend cannot just add £10,000 to her mortgage and upgrade her car to electric even if someone would finance it. She simply couldn't afford the payments. And that presupposes there will be systems that work in properties like that, that there will be enough installers to do the work and that somehow people will be able to charge vehicles on neighbouring streets at sensible cost.

Moreover the EPC rating that she needs to achieve is still subject to definition. That could mean that work could be undertaken which doesn't solve the issue. I raised this issue with Lord Callanan and whilst he recognised the issue it has yet to be fully resolved.

You will all be thinking about your portfolios and your own ESG agendas. You will have regulatory and investor pressure to move to a greener book of business. I am not in any way saying the transition is not vital. But how do we, as an industry, avoid creating a problem that dwarfs cladding while implementing laudable public policy changes?

We, and that is industry, government and regulators lack a plan. We have a fairly sketchy picture of where we start from. We have some dates and we have some idea of what we would like the world to look like by 2030 but we do not have a plan. Some of the dates are very close and will cause you to take portfolio and new business decisions soon. My very real worry is that people like my friend in Sheffield will either find it harder to borrow, will pay more and/or will see their already low value asset become much harder to sell.

We at UK Finance plan to try and help in this area by working with an associate member to come up with concrete, implementable ideas for government, regulators and industry so that the more vulnerable customers are helped and not excluded. So that we don't all pat ourselves on the back for being greener but in so doing exclude significant numbers of people and damage that feeling of security and confidence that property ownership gives. I have been speaking to Alex Hickman, special advisor to the Prime Minister who is very interested in this subject and I am hopeful that we might get some time with the PM to discuss this issue.

I don't have the answers yet and I realise they wont be easy to find but surely we must try. We need a plan or we risk sleepwalking into the sequel to cladding. I really look forward to working with you and hope that by the time of our next lunch we will have made some material progress.

Enjoy the rest of today and thank you for coming