Government’s response to energy price crisis ‘already out of date’, MPs warn
The energy crisis is “racing ahead of the Government”, with plans not sufficient to support homes or businesses in a way that will avoid negative social and environmental impacts, MPs are warning.
The warning is coming from the Business, Energy and Industrial Strategy (BEIS) Committee, which has today (26 July) published a report on energy pricing and energy market design as part of its ongoing inquiry.
During that inquiry, MPs generally heard that things are likely to get far worse this Autumn in terms of the energy cost part of the energy trilemma, as Ofgem lifts its price cap once again. The price cap rose by 54% to £1,971 in February. A further rise to around £2,800 is in the calendar for October, but the Committee heard much evidence that the rise may well be steeper, as wholesale prices remain high. BEIS Committee Chairman Darren Jones MP said the rise could lead to “a full-on throttling of household finances and further tip the economy towards recession”.
MPs including Jones asked a range of expert groups and individuals about their proposals for further support in the coming months, in addition to the one-off payments for homes already confirmed through the Energy Bills Support scheme and the existing schemes for the private and public sectors.
Participants raised concerns that the current Energy Bills Support scheme has not been properly designed to prioritise vulnerable groups. In addition to the £400 available to all homes, the Scheme will grant a £650 means-tested one-off payment to eight million low-income households, £150 for those on disability benefits and £300 for pensioners.
But the MPs heard concerns that the richest may not need the £400, yet may try to claim it multiple times over for their multiple homes. The Committee also dubbed plans to put low-income homes who fail to pay bills in the future onto pre-payment meters “unacceptable”. It proposes, as an alternative, replacing the market-wide price cap with a discounted social tariff for vulnerable customers, and a relative tariff for the rest of the market, in addition to a better support mechanism for those in debt to energy suppliers.
Energy efficiency emergency
The report also concludes that the Government has repeatedly missed opportunities on energy efficiency, with the Green Homes Grant having failed and the Energy Security Strategy being dubbed an ‘Energy Generation Strategy’ due to the lack of new funding or measures to make buildings more energy-efficient or to help encourage behaviour change.
“Instead of abandoning energy efficiency policy, the Government should have learned lessons from the Green Homes Grant scheme and brought forward replacement policies,” the report states. It cites E3G research concluding that the average home with an EPC rating of ‘D’ or below will pay some £916 more per year for energy than the average home with a ‘C’ or higher rating, due to leaky homes.
The Committee is arguing that it is “urgent and essential that Ministers bring forward a fully funded, national campaign” for retrofitting buildings, stating that this is necessary to avoid the need for future one-off payments to be provided to families. The scheme, the report states, should be one that covers homeowners, tenants and business buildings. It emphasises the importance of ensuring that the scheme is delivered with new money, rather than being taken out of the budget for other low-carbon schemes such as the Public Sector Decarbonisation Scheme.
With last week’s heatwave in mind, the report also emphasises how well-insulated homes can help to reduce the cost of cooling in summer as well as heating in winter going forward.
Jones summarised: “Ultimately, Ministers know that the long-term solution is to reduce our need for energy through insulation works that keep our homes warm in winter and cool in summer. If the Government is really taking this energy crisis and the country’s net-zero targets seriously it will come forward with a bold, fully funded, national home insulation program before the end of the year.”
Whether the Government is taking net-zero seriously is debatable; the High Court ruled earlier this month that its Net-Zero Strategy is unlawful and will need to be updated. The update will ultimately rest with the next Prime Minister and their cabinet, with Rishi Sunak and Liz Truss the last two MPs remaining in the Conservative Party leadership race.
The Committee’s call to action on retrofitting comes shortly after the Energy Institute published the findings of its member survey, revealing an overarching desire for an “emergency” energy efficiency scheme ahead of this autumn and winter. 70% of the body’s members believe that UK energy efficiency policy has had no positive impact within the past 12 months.
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