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Invest to save: there’s never been a better time to ‘vaccinate’ our homes

Credit: Alamy

Sarah Kostense-Winterton, Executive Director

Sarah Kostense-Winterton, Executive Director | Mineral Wool Insulation Manufacturers Association

6 min read Partner content

If the Government is serious about Net Zero and cutting energy bills, investing in energy efficiency and working jointly with industry to deliver must be non-negotiable at the Autumn Budget.

The Government's £37bn emergency package has provided much-needed help for households struggling to pay their energy bills, but does little to address the structural drivers of the cost-of-living crisis or ease The Path To Net Zero. Ahead of the Autumn Budget, the government has the chance to INVEST TO SAVE, ensure our homes use less energy and are cheaper to run by

  • CUTTING HOUSEHOLD BILLS:  Improving the least efficient homes would save those households on average around £916 per year should the energy price cap rise to £2,800 this autumn.
  • IMPROVING ENERGY SECURITY: Moving the average EPC rating of households from D to C would reduce UK gas imports by 15%.
  • LEVELLING UP IN PRIORITY AREAS:  Investing in energy saving will support hard-hit families and boost economic growth in areas in the North and Midlands, where 55% of those in fuel poverty live.
  • CREATING JOBS:  A nationwide retrofit scheme could support nearly 100,000 jobs in all UK regions from 2022 to 2024, in line with the Levelling Up agenda.

The Opportunity is Crystal Clear but Government Must Act Now:

Soaring global gas prices are fuelling an unprecedented cost-of-living crisis with far-reaching, economy-wide impacts. Ofgem has announced a likely further increase in the energy price cap to £2,800 per year this autumn, potentially driving up to 2 million more UK households into fuel poverty.

  • The cheapest energy is the energy we don’t use. Supercharging the installation of energy efficiency measures is the permanent solution to reducing energy use, reducing energy bills and boosting energy security over the medium-term.

Significant progress and investment is needed to fix our cold and leaky homes. When the energy price cap rises, around 13 million families in homes with an EPC rating of D or below will pay on average £916 more per year for than households living in homes rated EPC C or higher.

  • Investing in energy efficiency is a ‘structural solution’ that will pay off in the medium-term. Given analysts estimates that fossil fuel prices will remain high until at least 2030, the Government could reduce the need for future expensive emergency financial packages. This could help reduce public debt and inflation in the long-term.

The current scope of existing and planned energy efficiency policies means at least two thirds of (or 9 million) poor-performing owner-occupied households will miss out on support to upgrade their homes to a C rating or higher by 2030 with limited or no access to government funding, and many with no ability to cover costs themselves. Green finance alone will not be enough to drive progress at scale.

  • By investing now in long-term, permanent solutions, the government can avoid the need for multi-billion packages each year. It allows the supply chain to build in resilience and supercharge – by planning, training and building capacity and jobs for the medium to longer-term. The EEIG is calling for a ten-year nationwide energy efficiency programme to 2025 to support struggling households.

The Solution is to ‘Vaccinate’ our Homes with:

  • Immediate Support for Struggling Households with lasting steps the Government can take now to support households to weather sharp energy bill hikes year-on-year:

    1. For fuel poor and low-income households provide urgent support by boosting existing energy efficiency schemes - fulfilling Manifesto commitments.

    a. This would allow the government to reach the support levels committed in the 2019 Conservative manifesto for homes and buildings – including the Home Upgrade Grant (£1.4bn gap against the commitment to 2025), Social Housing Decarbonisation Fund (£200m gap against a share of the commitment to 2030) and the Public Sector Decarbonisation Fund (£400m gap against the commitment to 2025).

    b. Although announced, The government must not allow any delay to the legislation for the fourth phase of its main fuel poverty energy efficiency scheme, the Energy Company Obligation (ECO4). Measures must be installed over summer 2022, before further energy prices rise hit.

    2. Support mid- to low-income households under increasing strain from new financial pressures and at risk of ‘slipping through the policy net’ with a nationwide retrofit scheme.

    The EEIG calculates that an energy efficiency subsidy worth around £1.2bn per year is needed from 2022/2033 to 2024/2025 to help hard-pressed homeowners not covered by the current suite of energy efficiency schemes. This support could be channelled via existing mechanisms including a means-tested, industry-led scheme building on ECO or a new grant scheme and/or subsidised loans. Any mechanism must be designed and delivered with the government working jointly with industry to ensure its smooth delivery - crucial for successful outcomes.
  • Near-Term Support to Reduce Energy Use and Boost Energy Security by:

    3. Encouraging mid- to high-income homeowners to retrofit their homes with incentives that propel action and investment by lenders and homeowners, including:

    a. Setting up concessional, low-interest loans made available to households via retail banks, underpinned by the new UK Infrastructure Bank, drawing inspiration from the successful German KfW model to spur economic additionality.

    b. Announcing an Energy Saving Stamp Duty incentive to support a gradual shift away from subsidies in time. The incentive would kick-in at a key ‘trigger point’ where motivation to retrofit a home is strongest, rewarded via a time-limited rebate, which can be designed to be revenue neutral and, with an enhanced rebate option for lower value homes.

    4. Supporting a cluster of policies to underpin an effective nationwide retrofit drive.

    Give certainty to the industry – even with a Statement of Intent – to plan, train and build capacity. Confirm regulatory timelines for minimum energy efficiency standards for all housing tenures, including tightening standards in the private rented sector and gradually introducing standards for owner occupiers. Focus on green skills and quality assurance, providing an impartial consumer advice and support service which offers tailored advice, and instigating a public engagement and communications campaign.

Sarah is the Executive Director of MIMA, the Mineral Wool Insulation Manufacturers’ Association, the UK’s industry trade body for non-combustible, breathable glass and stone wool insulation She is also Chairman of the EEIG, the Energy Efficiency Infrastructure Group, a broad-based coalition of over 25 industry groups, NGOs, charities and businesses.

This article was published in The Path to Net Zero, a special report to mark Net Zero Week 2022, with contributions from Anne-Marie Trevelyan MP, Alex Burghart MP and Kerry McCarthy MP. Read more here.

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