‘We need to run, not walk’: Green groups react to energy efficiency spending plans in the Fiscal Statement
Chancellor Jeremy Hunt has issued his first fiscal statement, promising a new major funding plan for household energy efficiency upgrades and a slight uptick in the windfall tax for energy giants. While green groups have welcomed the broad ambitions of the statement, demands are being made for policy frameworks that will deliver immediate respite from rising energy bills.
Hunt said that the UK must “act radically” or risk “bankrupting our economy and harming our planet”, as he delivered his first fiscal statement since taking over as Chancellor from Kwasi Kwarteng.
A new ambition was set for the UK’s buildings and industry to reduce energy consumption by 15% against current levels. Hunt talked this up as equivalent to annual energy bill savings of £28bn.
The Treasury will continue with plans to spend £6.6bn on energy-efficient buildings this Parliament, Hunt confirmed, through schemes including the Public Sector Decarbonisation Scheme and the Social Housing Decarbonisation Fund.
It was also confirmed that the energy price guarantee level for homes will be increased by £600 in April 2023, to £3,100 per household. Hunt wants the guarantee to stay in, at this level, for up to three years if needed.
For businesses, Hunt said a new approach to the energy bill relief scheme will be implemented in April, also. Full details are not yet ready but should be published before the year is out.
But, what did green groups make of the announcements? While a funding pot for energy efficiency is much needed, how do green groups view the 2025 rollout plan? And, what do they make of the new levies introduced?
Here, edie rounds up all the key thoughts from businesses and NGOs.
Friends of the Earth’s head of policy, Mike Childs:
“Bold action to simultaneously tackle the cost-of-living and climate crises should have been at the heart of the Autumn Statement, but the Chancellor’s announcement falls woefully short.
“A nationwide energy efficiency drive is essential, but the Chancellor’s proposals are far too little and far too late. Kicking the can down the road on home insulation for another two years, means millions of people will continue to suffer cold homes and sky-high energy bills.
“The government should have listened to its own climate advisors, the Climate Change Committee (CCC), who only last week called for an urgent and rapid roll-out of loft and cavity wall insulation.
“A £5 billion a year street-by-street, home insulation programme, focussing on those most in need first, would reduce the nation’s use of expensive gas, slash energy bills, create jobs and cut carbon emissions.
“It’s a scandal that even with emergency financial support millions of people are still being left to shiver in heat-leaking homes due to soaring energy bills. With the price cap set to rise from next April, urgent action is needed to protect those most at risk.”
Ashden’s policy and impact lead Fiona Duggan:
“We are pleased the government recognises that retrofitting our homes at scale will enable us to tackle the energy crisis and climate emergency while also boosting business. But this mammoth task needs to start right now, and we need to front load support now, not wait until 2025. We also need to see more detail, how much of this is new money? We must remember people are struggling due to skyrocketing bills and with 7 million households already mired in fuel poverty, the most vulnerable need immediate support.
“To ensure energy efficiency funding can be used rapidly and efficiently, we must urgently train thousands of UK retrofitters to deliver low cost, low carbon solutions, including insulation and heat pump installation, as part of a comprehensive green skills strategy. The government now needs to set out and finance a clear, long-term, retrofit policy which addresses the massive skills shortage and empowers local authorities to take action.”
“The worst-case scenario would be public sector entities having to hand back government funding because they cannot find enough skilled retrofitters to carry out the required volume of work.”
UK100’s chief executive Polly Billington:
“Confirmation today that Britain is returning to austerity will alarm local leaders up and down the country. Local authorities are still grappling with the effects of the first round of spending cuts almost a decade ago. Our members have told us they will be forced to strip back services to the barest essentials, threatening climate action and disproportionately affecting the most vulnerable.”
“The Chancellor’s recognition of the importance of energy efficiency is welcome, however it would be better if he were to listen to the experts in local government about how to spend money more wisely, especially since it appears his announcement of £6bn investment in energy efficiency is not new money.
“For too long the energy efficiency can has been kicked down the road by successive governments. Before today, most Brits didn’t have a clue what the Government’s plan for energy efficiency was. Jeremy Hunt is taking a small step in the right direction — but he needs to run, not walk. We can’t wait until 2025.”
WWF’s director of advocacy and campaigns Becky Spencer
“There’s no economic security on a dead planet. The route to prosperity, reduced energy bills and tackling climate change is through funding for energy efficiency and committing to net zero. While it’s promising to see small steps being taken by the UK Government today, we need accelerated action.
“Extending the windfall tax on grotesquely rich oil and gas companies is the right thing to do, but loopholes will continue to allow companies to pour profits back into further extraction and pay less tax than renewable energy companies. Our long-term security and prosperity relies on putting an end to fossil fuels, not giving a helping hand to companies that sell them.
If the Chancellor wants to make the UK into a science superpower, he must harness the power of nature to build a green economy. We need urgent action to deliver on net zero and nature promises and bring our world back to life.”
Luke Murphy, head of the Fair Transition Unit and associate director for the energy, climate, housing, and infrastructure team at the IPPR:
“Rising energy bills are hitting households now and costing the taxpayer billions. We need greater action on energy efficiency now, not years in the future. It is beyond ridiculous that the government is waiting another two years to provide extra investment.
“Energy efficiency is a key weapon in bringing down energy bills and the cost to the taxpayer, reinforcing our energy security, and reducing emissions to achieve net zero. What we needed today was an increase in public funding of £5.8bn between now and 2025, a nationwide ‘GreenGo’ scheme with more generous grants and loans, new rigorous standards, and a commitment to focus on local delivery & skills for a retrofit army.”
“The chancellor is right to increase windfall taxes on unearned profits – it was always wrong that oil and gas companies should reap huge profits while ordinary families are struggling. However, it’s wrong that fossil fuel firms can continue to escape paying tax for their investments in climate-destroying fossil fuels even if at a reduced rate.”
Jess Ralston, senior analyst at the Energy and Climate Intelligence Unit (ECIU):
“The bill payer is clearly a loser from this budget. The government isn’t delivering on its manifesto commitment on energy efficiency during a cost-of-living crisis when bills are set to rise for millions to £3,000 come April. For those struggling through this winter and the next, investment in insulation in 2025 is two years too late.”
The Association for Distributed Energy’s (ADE) chief executive Lily Frencham:
“It’s fantastic to see Government’s recognition of the crucial role of energy efficiency as essential in reaching our long-term climate targets and energy needs. Today’s announcements offer a real boost to the energy efficiency sector, a boost that is essential to safeguarding the UK’s energy security and delivering net zero by 2050.
“Although the new funding will not come into play immediately, this is a significant and positive step – now we need buy-in from all corners of society, the energy sector and Government to work together in making this important goal a reality. The country has shown time and again how it can pull together to create real change when needed, and we look forward to seeing the incredible impact this could deliver.”
RenewableUK’s chief executive Dan McGrail:
“This windfall tax on low-carbon power risks deterring investment, at a time when the Chancellor should be incentivising clean energy. Unlike in oil and gas, under this levy companies which are making significant investments in renewables will get no tax relief and will be hit by a higher windfall rate.
“Any new tax should have focussed on large, unexpected windfalls right across the energy sector, instead profits at fossil fuel plants are inexplicably exempted from the levy. Many renewable generators are on long-term, fixed-price contracts and most other sold their power for this winter over a year ago, so they haven’t been making excess profits. We need to attract more than £175bn in new wind farms and our supply chain over the course of this decade, so we need to make the UK one of the most attractive destinations for private investment in renewables. Ministers now need to work with the industry to ensure that the implementation of these plans ensures a level playing field, rather than imposing unfair burdens on renewables.”
Green Alliance’s head of economy Sam Alvis:
“The chancellor is asking people to wait another three years to get their home insulated when they urgently need help now. Promises for after the next election isn’t good enough.
“Today was more about raising money than spending it. It’s right that oil and gas companies are being asked to pay more, but it’s still unclear why the UK isn’t levying the same tax rate as Norway. While the investment allowance has shrunk for oil and gas, electricity generators aren’t getting the same incentives”.
The Institution of Civil Engineers’s director of policy Chris Richards:
“In today’s Autumn Statement, the Chancellor needed to uphold confidence in long-term infrastructure projects. His commitment to maintaining investment in line with the National Infrastructure Strategy, the much-needed plan to increase energy efficiency, and the continued commitment to levelling up underperforming economic regions are all common-sense measures that acknowledge the critical role infrastructure development plays in building a more sustainable nation.
“However, there were a few cans kicked down the road. The choice to maintain capital budgets in cash terms from 2025/6, rather than increase them in line with inflation effectively means a cut. With inflation at over 11%, we will have to do more with less, and the spectre of project reprioritisation still looms large. If the government wants to avoid delivering bad news on infrastructure investment further down the line, then it should become an ardent champion of everything the industry is doing to deliver infrastructure better, like the initiatives outlined in the Construction Playbook and in Transforming Infrastructure Performance.
“These best-practice approaches will help the industry, and the country, get more from every pound of investment.”
Worcester Bosch’s chief executive Carl Arntzen:
“Today’s announcement to double the Government’s energy efficiency investment with an extra £6bn from 2025 – and estimated saving of £450 per household on their bills as a result – is an investment the heating industry has been calling for. This is a small step in the right direction.
“We would expect the priority will be to use these funds to support the most vulnerable as well as small businesses, but with another expected round of tough cuts to come in April, we hope this is not just a half-hearted quick fix to a long-term problem.What we need now from BEIS is a comprehensive strategy from the new task force that extends on today’s plans. One that clearly shows thinking on how to better heatproof our houses and businesses, by embracing the development of new technologies and implementation of essential equipment upgrades.”
Jamie Maddock, equity research analyst at Quilter Cheviot:
“One of the biggest questions we had when the windfall tax was placed upon oil and gas producers back in May was for how long it would remain in place. Jeremy Hunt seems clear that 2028 will be the end date, taking into account the cyclical nature of energy firms, so it is now very much a higher tax for longer. Even since May the political mood has shifted further, and many of the energy giants have recognised this, with Shell being the most prominent company calling for further windfall taxes to help ease the burden on the consumer. That 2028 date will remain very fluid as a result, so certainty cannot be guaranteed.
“As a result, the government has spotted an opportunity to help plug its black hole in the public finances. It is perhaps seeing elevated oil and gas prices for some time beyond when inflation is expected to fall back to more normal levels. It is worth noting that the oil market is undersupplied and with recent tightening by OPEC, high prices are likely to be sustained for as long as the war in Ukraine continues and demand remains elevated.”
Avinav Nigan, co-founder of IMMO, which plans to spend £1bn retrofitting more than 3,000 homes for rent:
“For years we have seen inaction on retrofitting Britain’s housing stock, which is some of the oldest and leakiest in Europe. There is a big question mark over whether today’s announcements on driving energy efficiency are enough. The leaky and old nature of Britain’s housing stock has obvious sustainability and personal finance implications, and the situation is particularly dire in the private rented sector, which has the greatest proportion of homes built before 1919.
“In addition to the funding committed today, the government should be looking to take advantage of the growing weight of institutional capital wanting to enter the UK rental market in search of liability-matching income streams with counter-cyclical, inflation-hedging qualities. No better time than now for a public-private partnership, with the intention to modernise housing and alleviate pressure on consumers and landlords, while resetting standards in the sector.”
Scottish Greens environment spokesperson Mark Ruskell MSP:
“Time and again the Tories have proven that they cannot be trusted with our environment, and this budget has been no exception. Nuclear power is unsafe, unreliable and leaves a long and toxic legacy. As Hinkley Point shows us, it is very costly and would need to be paid for on top of skyrocketing bills. Sizewell C will be no different.
“We are living through a brutal cost and climate crisis. The last thing we should be doing is throwing tens of billions of pounds at a nuclear industry that is bad for people and the planet. Meanwhile they have kept their commitment for even greater oil and gas exploration while their so-called windfall tax has kept all of the climate-wrecking incentives for more drilling that were built in last time.
“We must be investing in the renewable industries of the future. Renewables are far cheaper, cleaner and safer than nuclear. We can also get them scaled up far quicker than any other energy source.”
The Coalition for the Decarbonisation of Road Transport’s (CDRT) programme director Lauren Pamma:
“The Benefit in Kind tax incentive has been an important driver for EV uptake – in the first six months alone after 0% BIK was introduced, EV leasing sales increased by 91%. Keeping rates low, raising them by only 1% each year until 2028 from 2025, is a recognition of this success and a huge vote of confidence in the EV transition.
“More than this, the Government’s budget provides the market with clarity. Certainty is what businesses and consumers need to make decisions about purchasing a vehicle. Knowing what the BIK rate will be after this point provides the market with the confidence needed to invest in a low-carbon future.”
Uswitch.com’s director of regulation Richard Neudegg:
“This continues to be a very difficult period for households who are trying to manage their finances. From April, two key changes will happen. The average household energy bill will rise from £2,500 a year to £3,100, and the £400 energy bill support for all households will end.
“The current Government help means there is still protection in place for this winter. The impact of the changes will be mostly felt in winter 2023, when energy use is high and there’s no £400 support cushion.
“While there’s much talk of average figures, it’s important to remember that bills are not frozen. The Energy Price Guarantee is a cap on the unit rate of the energy you use – it is not a cap on your final bill. The less energy you use, the less you will pay, but it’s important to manage your energy usage in a safe way.”
The Aldersgate Group’s executive director Nick Molho
“The Chancellor understandably had to focus his attention today on tackling the gap in public finances. Despite this, it was positive to see the renewed commitment to the UK’s 2030 emission reduction goals made ahead of COP26 and to hear the Chancellor’s recognition that doubling down on low carbon power generation and increasing energy efficiency investments are both essential to address the cost of living and energy security crisis.
“We welcome the commitment for more funding on energy efficiency – although would add that this funding is needed before 2025 – and the creation of an Energy Efficiency Taskforce could also help tackle key policy gaps as long as it is conducted speedily. However, the Government must ensure that the application of vehicle excise duty on electric vehicles from 2025 does not materially make the purchase of these vehicles less attractive, especially given the cut in upfront grants in recent years.”
The REA’s director of policy Frank Gordon
“While the REA and its members recognise the immense economic challenges facing this country, we would question the wisdom of subjecting the cheaper, greener renewable power sector to a more punishing tax system than its oil and gas counterparts.
“We note the exemption for smaller sites, but I would strongly urge the Government to fix this disparity as there is a strong need for tax relief for low carbon investments to help stabilise energy prices and offer long-term energy security. This is crucial for getting investments in renewables moving again following the pause that resulted from the last few months of political and policy uncertainty. The added investment into energy efficiency is a welcome move, but action needs to be taken immediately. Additionally, more technologies, such as energy storage, need to be included under the Energy Saving Materials list which provides VAT exemptions.
“Finally, while we expected a change to Vehicle Excise Duty exemptions for electric vehicles, the Government needs to make sure that they are not disincentivising the transition for vans, in particular. It also must be ensured that financial incentives remain in place for the move to such vehicles in light of recent charging price rises and the withdrawal of grants for electric car purchases.
“Overall, there are a lot of outstanding questions from our sector that need to be answered by the Government.”
Environmental Audit Committee Chairman, Philip Dunne MP
“Boosting energy efficiency of our leaky housing stock is long overdue and I’m pleased that for the first time, the Government has set an interim target to reduce energy demand in this country by 15% by 2030. This plugs a gap in the Energy Security Strategy which did not address reducing demand.
“I welcome the pledge of an extra £6bn investment in energy efficiency measures but not until 2025. Tackling energy efficiency will be no easy feat: there are around 19 million homes across the UK in need of energy efficiency upgrades that contribute to a colossal 20% of our greenhouse gas emissions. To date, the Government’s approach has been piecemeal and nowhere near sufficient to rise to the challenge.
“While positive in their ambition, the numerous schemes can be confusing to consumers to know what they are eligible for and the stop-start approach of programmes over the years has bruised industry. This must end: the opportunity of a properly coordinated energy efficiency programme can boost jobs, skills and growth in local economies and get us on the path to net zero.”
The Building Research Establishment (BRE), chief executive Gillian Charlesworth
“Today’s announcement by the Chancellor of a new long-term ambition and funding to deliver energy efficiency across our buildings and cut energy consumption by 15% by 2030 is extremely welcome – and much-needed. As households and businesses grapple with soaring energy bills and rising costs, reducing demand for natural gas will be the only effective way of bringing bills down over the long-term and addressing the increasingly apparent climate emergency.
“The UK has one of the oldest and draughtiest building stocks in Europe – a fact which unnecessarily inflates our demand for natural gas and, consequently, leads to higher bills. By decarbonising our building stock, we can tackle the energy and climate crises head-on, shielding consumers and businesses from future volatility in gas prices and bolstering the efficiency of our buildings. We look forward to seeing further detail on the Government’s energy independence plans and the Energy Efficiency Taskforce that will deliver these.
“Ultimately, maintaining funding for the UK’s net zero commitments, including those related to the built environment, will ensure that momentum is not lost on Britain’s green transition and that households and the private and public sectors are not plunged into an even bleaker future.”
UKGBC’s director of communications, policy and places, Simon McWhirter
“This could signal the most important boost to energy saving and reduced energy bills in many years. The shift to make energy saving an equal priority with energy supply, setting a clear level of ambition and path forwards for industry, and new government funding could be the turning point needed.
“Getting the details and wider strategy right will be critical; but this is progress in the right direction. The new task force to advise Government is welcome news. Bringing in experience from across industry, academia and civil society will be essential to make this a success, and learn from the mistakes of the past.
“To succeed in a ‘shared mission with families and business’, targeting a whole-nation approach more funding will be needed – as well as complementary long term policies including incentives for owner occupiers and stronger minimum standards for the private rented and commercial sectors. The size of the prize is enormous, in terms of new and secure skilled jobs, accelerating levelling up across the country and scaling up the green economy.
“Fundamentally changing Investment Zones is the right thing to do; otherwise this sort of deregulatory approach risks a race to the bottom on planning and environmental protection, and it won’t deliver the high-quality and low-impact new homes and buildings the country so badly needs. Our members have shown that we can already build low carbon, nature-friendly homes. Anything else puts the next generation of new homeowners at risk of sky-high energy bills in places that don’t give us the wider access to nature and green spaces that we need to thrive.”