The Chancellor can give rural voters a lifeline at Autumn Statement
Conservative backbenchers are not the only ones holding out for a lifeline in the Autumn Statement later this month, rural voters are too. As the trade associations whose members are delivering vital heating services to the four million people that live in homes that are off the gas grid in the UK and heated by oil, we are hearing from our customers on a daily basis the overwhelming desire for the Government to bring forward at pace, concrete actions to show support for rural constituents.
The Autumn Statement provides the Chancellor with the opportunity to show that the Government is listening to the concerns of rural communities. By making a small change, at no cost to the Government, it could reduce the cost of HVO, a type of renewable liquid fuel. At the moment, HVO attracts a fuel duty of c.10p per litre, whereas traditional heating oil does not. Aligning these duties seems to us a win-win: lower costs for consumers and reduced (an 88% equivalent carbon reduction against kerosene) emissions – and all without cost to the Treasury or the need for a subsidy.
The situation faced by rural constituents who are off the gas grid is a tough one. They want to do their bit for the environment but have been faced with only one option to decarbonise: installing a heat pump. For some this will be the perfect option, but it's clear that not all homes are readily suited to heat pumps and these households must be provided with realistic alternatives.
There is now welcome recognition that the UK’s Net Zero ambitions will not be achieved unless the low carbon options are fair and affordable, and the Government should be praised for the positive steps it has taken already. The Government has announced a pause to the oil boiler ban proposal on new and replacement fossil fuel appliances from 2026 to 2035. It has also recognised the challenges posed by many off-grid homes and committed to never forcing anyone to remove a boiler and also to exempting certain homes from having to install a heat pump at all. The Energy Act also introduced a requirement for the Government to hold a consultation within 12 months on the potential of a Renewable Liquid Heating Fuel Obligation (RLHFO) for home and commercial building heating.
These announcements wholly support the industry’s position that the cost and disruption associated with heat pumps in rural communities will be too great for some households and businesses to embrace. The support needed to make HVO a reality must now be delivered in full to demonstrate the Government’s commitment to supporting a variety of heating technologies and to giving households options to reduce their emissions in an affordable way.
This will not only give the UK the best chance of reaching 2050 carbon reduction targets but will reflect the types of homes people live in, the way they purchase heating, promote innovation and competition, the affordability of these more practical solutions and, above all else, a fundamental fairness to all consumers.
Off-grid households and the industry that supports them, now need certainty that this policy will be delivered and that the use of renewable liquid fuels will become a reality. The Autumn Statement is the perfect opportunity to address the tax issue that is holding HVO back, and send a powerful message that the Government is committed to supporting rural communities. We hope they use it.
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