This weekend we learned that, as expected, the government will be removing some social and environmental charges from energy bills in the hope of appeasing angry bill-payers. Most people will save £50 or so over the next year. It’s a small victory for enemies of environmental policy and those concerned about the rising cost of living, but it comes at the cost of further delays to the decades-long project of improving Britain’s leaky homes.
If there’s one thing that really can make a difference to your energy bill, it’s the efficiency of your home. To put that £50 in context, lagging your loft will save up to £180 a year, according to the Energy Saving Trust. Cavity wall insulation would save £140. A little draft-proofing will save you a further £50, and installing double glazing will save £170. Solid wall insulation could save as much as £460 a year.
The social levies on our energy bills help to pay for these genuine money-savers for those who couldn’t otherwise afford the up-front costs. The government is undermining the single thing that would make the biggest difference to people’s bills.
What’s particularly ironic is that the scheme that’s being removed from bills is the Energy Companies Obligation, which only came into effect in January 2013. It’s this government’s own scheme, and their web page explaining the measure is titled ‘Helping households to cut their energy bills.’ Here it is below, in case it gets taken down.
Amidst the fretting about levies and excess profits, the obvious solution of energy efficiency has somehow evaporated. What’s bizarre is that everybody would win from a major efficiency drive. We’d have lower bills, warmer homes, and lower carbon emissions all at once, while creating jobs in retrofitting. The only people who’d lose out would be the energy companies, who’d be selling less of their product. There is widespread support for greater energy efficiency, a huge coalition of organisations campaigning for it, and business groups like the CBI know it makes sense from a business point of view.
So what should the government be doing instead? The Green Alliance released a 7-step plan to reduce energy bills last week, and it’s a good place to start:
- Political leadership – all parties should be in favour of energy efficiency
- Make it a requirement for house owners to improve efficiency as part of renovation. This was in the works, but the media branded it the ‘conservatory tax’, there was a backlash against it from Tory MPs and it was buried. It remains a good idea and one with majority support, and at least one local council does this successfully already.
- Set stricter standards for private landlords renting out inefficient homes. There are plans for this already, but it makes the minimum requirement an E rating, from 2018. Since 90% of rented accommodation is E or above already, these targets need to be much more ambitious.
- Use financial incentives to reward owner-occupiers for improving the energy rating of their home. This could be done through variable council tax or reductions in stamp duty, creating a direct link between the energy rating of a house and its value.
- Simplify the existing Energy Company Obligation, and make it more flexible. The scheme is currently rather bureaucratic and it could be streamlined considerably.
- Use development spending to support retrofitting. Renovating housing stock has multiple benefits and can be a driver of economic growth.
- Make energy efficiency a health concern too, with strategies to deal with excess winter deaths and fuel poverty.