Spring Budget 2022 Statement – OFTEC Reactive Comment
The current energy crisis means the government must provide help to enable households to reduce their bills, while also supporting the drive towards low carbon solutions.
Consequently, OFTEC welcomes Rishi Sunak’s decision to abolish VAT on energy saving materials such as insulation, central heating and hot water system controls, solar panels and heat pumps.
The best energy is the one you don’t need to use, so we particularly welcome the support for insulation measures. However, only households that can afford to take action will benefit from the VAT cut, so the announcement is essentially regressive in nature. Households in the greatest need simply cannot afford to make improvements to their homes. Consequently, we think the proposals don’t go far enough and the government must do more to help those living in energy inefficient homes.
We are particularly concerned about off gas grid households that use oil heating because 65% of these homes are in the least efficient EPC Bands E-G. The government has proposed that, from 2026, these households will in most cases be expected to install a heat pump when replacing their oil boiler.
It makes no sense to install a heat pump in a poorly insulated home and, given the dramatic rise of the cost of living, these households will be even less able to prepare their homes for this transition or build up their savings in anticipation of much higher installation costs. We think the government must now review its decarbonisation plans to avoid placing these mainly rural households in an impossible position.