UK Government reportedly mulling new £1bn national home insulation scheme

The Times reported this morning (16 June) that Prime Minister Boris Johnson had approached Ministers at the Department for Business, Energy and Industrial Strategy (BEIS), requesting proposals to be drawn up for such a scheme. This report stipulates that Johnson would like to launch a £1bn programme which would provide grant funding for home insulation in the second half of this year. It would be called ‘The Great British Insulation Scheme’.

Groups representing the energy sector, the environment and civil society have been calling for the Government to launch a national home insulation scheme ahead of winter 2022, with the national net-zero commitment and ongoing gas price crisis in mind.

However, the new proposals are unlikely to be popular if they follow the reported approach. The Times’ report states that the £1bn could be raised for the scheme by raising the coffers for the £450m Boiler Upgrade Scheme and £1bn Public Sector Decarbonisation Scheme. The former was launched last month to help households in removing gas boilers and fitting heat pumps. The latter provides funding for energy improvements in public sector buildings such as schools, hospitals and fire and rescue centres.

Reducing funding for these schemes may well reduce their ability to reduce emissions and create jobs; BEIS had estimated up to 30,000 new jobs would be created if the Public Sector Decarbonisation Scheme was implemented in full. In the first instance, the likely benefits of the Boiler Upgrade Scheme were widely questioned.

Some of the funding, The Times’ sources told the national title, could potentially be raised through an extension to the existing ECO levy scheme. The scheme launched in 2013 and requires energy suppliers to provide energy efficiency support to vulnerable consumer groups.

An ECO extension has been advocated by groups including the Sustainable Energy Association, Construction Leadership Council, National Insulation Association and EDF. However, to date, the Government has kicked the metaphorical can down the road on extending ECO. The current scheme ran out at the end of March 2022 and its next phase, due to run through to 2026, is yet to be finalised.

A BEIS spokesperson told edie that no decisions have been taken about whether to launch a home insulation scheme this year – and, if so, how to raise the funds to provide it. The spokesperson added that existing Government-backed energy efficiency schemes will “remain in place”.

“We’re investing £6.6bn in total this parliament to improve the energy efficiency of homes and buildings across the country, benefiting tens of thousands of homes and delivering savings of £300 a year on average on their energy bills,” they said.

“We continue to look at ways to make UK homes more comfortable and cheaper to heat, which is particularly important in light of increased energy bills.”

edie has requested clarification, given that the 2019 General Election manifesto for the Conservative Party pledged £9bn for energy efficiency measures.

Green economy reaction

Reacting to today’s media report, Darren Jones MP, BEIS Committee Chair, said: “It’s good the government has finally realised we need to insulate our homes, but taking the money from the heat pump voucher and public sector decarbonisation schemes is shortsighted. Just do it properly.”

Ashden’s cities manager Cara Jenkinson said: “We welcome the government’s ambition to insulate poorer households before winter, because as laid out in our retrofit briefing this week, insulating houses is a triple win – its cuts emission, reduces fuel poverty and boosts local employment.

“But the Government is setting itself up for failure if does not strengthen the supply chains needed to deliver this ambitious goal. Local authorities may have to hand back government funding because they don’t have the installers to get the work done.

“So while it is right to set ambitious targets – so suppliers can see the long-term trajectory and invest, we need to do so much more on the skills front, so that they can deliver on this work. We need a significant capital investment in training facilities and we need a national campaign to encourage young people into retrofit careers, working with schools and colleges. Otherwise all this will remain a leaky uninsulated pipedream.

“We would also caution against shifting money away from the Public Sector Decarbonisation Scheme fundng, this ambitious programme needs new money, as schools and hospitals need to be retrofitted just like our homes. This shift of money, is a short term gain that will come back to bite the government in the long term, it really is robbing Peter to pay Paul.”

E3G’s senior policy advisor Juliet Philips said: “While E3G supports expanding ECO, this must be covered by new funding – not skimming money from other schemes. Schools and hospitals are facing sky-high energy bills and desperately need energy-saving measures. Robbing Peter to pay Paul is not the solution.”

Greenpeace UK’s lead oil and gas campaigner Georgia Whitaker said: “Diverting the cash from greening schools and hospitals, leaving patients and pupils to suffer from cold and draughty buildings, or from getting households off of gas and onto clean heating, would be counterproductive.

“There’s a simple way to raise this money and that’s to permanently raise the tax rate on the profits of fossil fuel giants that are making billions off the multiple crises the world is currently facing, not a levy that looks like more tax breaks than taxes.”

Friends of the Earth UK issued a statement reading: “It’s clear we need a free street-by-street insulation programme to stop people going cold this winter and to tackle rocketing bills. This would cost around £4-6 bn, much more than the PM is said to be seeking.

“Rather than backing a proper scheme to make the UK’s homes warmer, Johnson is more interested in poaching money from existing insulation funding pots. Instead of giving Windfall Tax handouts to fossil fuel giants, Johnson should urge the Chancellor to invest in British homes.”

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