Why Energy Security Starts at Home in the Home
The Chancellor must use the Spring Statement to invest in energy efficiency.
We are witnessing soaring global gas prices fuelling a cost-of-living crisis alongside the UK’s exposure to a volatile international gas market. To add into the mix, households in Levelling Up priority areas are the most exposed to fast rising energy prices. The very people who are living in the least efficient homes - rated EPC D and worse - and are more likely to be on low incomes.
As Business Secretary, Kwasi Kwarteng voiced recently, building energy efficiency is the permanent solution for lower fuel bills. Improving the least efficient homes currently rated ‘D’ or worse for energy performance to ‘C’ would save households over £500 each per year, totalling £8bn per year.
These benefits reach further afield and it is well known that home retrofits have a number of social, environmental and economic co-benefits:
- Reducing spending on energy will free up consumer spending and boost growth, including in Levelling Up priority areas such as the North and Midlands.
- Supporting nearly 100,000 jobs in every region in 2022-24 with a nationwide retrofit scheme. Many of these will be in Levelling Up areas since this is where upgrades are most needed.
- Securing savings to the NHS of £1.4bn per annum tackling fuel poverty and unhealthy homes.
However, the conundrum Is that over 80% of households with below average incomes living in inefficient homes are ineligible for nationally available support.
The Spring Statement provides a timely opportunity for the Chancellor to build on the positive steps already taken by the government this Parliament - the £6.6bn pledged for green homes and buildings and publication of the Heat and Buildings Strategy - by:
- Delivering the final £2bn promised by the end of the Parliament: This would ensure government met the £9.2bn committed in the Conservative 2019 manifesto for green homes and buildings.
- Introducing a new nationwide energy efficiency scheme: The EEIG calculates that an energy efficiency subsidy worth £1.2bn per year is needed from 2022-25 to get on track for the government’s climate, fuel poverty and levelling up targets.
- Setting out a set of measures to spur private investment, including:
- Making the built environment a priority of the UK Infrastructure Bank, reducing the financing cost and drawing in capital markets to back new green financial products at scale, including 0% loans to households and SMEs.
- Supporting a revenue-neutral Energy Saving Stamp Duty to shift away from subsidies. Introducing an incentive at a key ‘trigger point’ when a homeowner is likeliest to take action to retrofit their home.
- Incentivising investment with 0% VAT on retrofit measures to lower the costs.
- Supporting a wider range of measures needed to underpin a nationwide retrofit drive, announcing the intention to bring in minimum energy performance standards for owner occupiers, a focus on green skills, and an impartial consumer advice and support service.
Mr Chancellor, investing today will pay off long into the future – insulating households from future price shocks, lowering bills, and boosting green jobs and industries. Energy security must simply start at home in the home.
Sarah Kostense-Winterton, MIMA’s Executive Director comments:
“Whilst it is crucial to help those who need it most by supercharging existing funding such as the Home Upgrade Grant and Social Housing Decarbonisation Fund, the government must seek to seriously address the largest housing tenure - the 19 million homeowners, accounting for two thirds of homes, where the majority currently have no retrofit policy drivers or incentives. Now is the time for the Chancellor to take this opportunity to announce an intention to introduce a revenue-neutral Energy Saving Stamp Duty Incentive in 12 months time, together with additional support for homebuyers that improve low value homes. Policy should encourage and reward action and focus funding on the fuel poor and those struggling."
Sarah is the Executive Director of MIMA, the Mineral Wool Insulation Manufacturers’ Association, the UK’s industry trade body for noncombustible, breathable glass and stone wool insulation. She is also Chairman of the EEIG, the Energy Efficiency Infrastructure Group. For further information, please contact [email protected] or visit: www.mima.info or www.theeeig.co.uk.
Get the inside track on what MPs and Peers are talking about. Sign up to The House's morning email for the latest insight and reaction from Parliamentarians, policy-makers and organisations.