Why the Autumn Statement was a major missed opportunity for energy efficiency

Chancellor Jeremy Hunt’s Autumn Statement was delivered just a day before Ofgem confirmed an increase to the energy price cap from January 2024. Yet it contained no new measures to improve energy efficiency at scale, which would have helped in shielding homes and businesses from rising costs.

Why the Autumn Statement was a major missed opportunity for energy efficiency

Shortly after being chosen as Prime Minister Rishi Sunak’s Chancellor, Hunt promised £6bn of new funding for energy efficiency, to be allocated from 2025 onwards. This was intended to spur progress towards a new 2030 target to reduce the UK’s total energy demand by 15% against a 2021 baseline.

Government messaging on energy efficiency since then has been mixed at best.

The Energy Efficiency Taskforce launched by Hunt was disbanded within six months. The UK did not sway its G20 peers to support an agreement to double the global rate of energy efficiency improvements ahead of COP28.

And, in September, Sunak scrapped plans for new mandatory energy efficiency rules for landlords. This change came just days after the launch of a £1bn insulation scheme targeted at vulnerable homes, which should support 300,000 homes in England before March 2026.

Lloyds Bank has this week published the results of polls among landlords and homeowners evidencing the extent to which Sunak’s rollback will pause progress.

The bank’s poll of 252 landlords found that more than eight in ten have made efficiency improvements at their properties over the last five years. But government pressure was a key motivator; 53% are now less likely to invest in energy efficiency measures without Sunak’s mandate. Four in ten of the landlords who already knew about the announcement have cancelled plans to invest.

Regarding homes that are owned rather than rented, Lloyds also surveyed 2,001 homeowners. Only three in ten had acted in the past five years to boost their property’s energy efficiency. Upfront costs and confusion on what to do were identified as key barriers to action.

Too little, too late?

Green groups, civil society organisations and businesses alike have highlighted how a heightened energy efficiency focus at this moment in time could have been a vote winner. Brits are grappling with high energy bills for another winter and they are, in the main, are concerned about climate change.

Government polling has consistently found that some 80% of Brits have some level of climate-related concern. The built environment is the UK’s second-most emitting sector after transport and the Climate Change Committee has repeatedly pointed to slow decarbonisation rates within this space.

On energy bills, regulator Ofgem confirmed on Thursday (23 November) a 5% increase in the price cap which will take effect from January 2024. The Energy and Climate Intelligence Unit has calculated that, from January, homes rated EPC ‘F’ will pay £400 more for their annual heating bills than homes rated ‘C’ or higher.

The Autumn Statement this week could have been an opportunity the Government to intervene. Energy efficiency would have been more cost-effective and more of a long-term option than subsidizing energy bills.

A blanket payment to all homes, as was offered last winter, was off the table due to the cost to the Treasury – as was the Energy Bill Relief Scheme for businesses first introduced by Jacob Rees-Mogg.

Yet many observers have concluded that the Chancellor’s gifts relating to energy efficiency lacked the necessary scale and direction. IPPR’s senior research fellow Dr Maya Singer-Hubbs called home energy efficiency a “glaring omission” from the Statement.

Hunt did announce an extension to the Industrial Energy Transformation Fund and a new six-year Climate Change Agreement round from 2025, both of which will benefit businesses. He also confirmed a £3bn extension to the Affordable Homes Guarantee, with preferential loan financing rates available for energy-efficient homes.

However, it had been hoped that the Chancellor would introduce a stamp duty rebate for energy-efficiency homes. There were also more distant hopes for a street-by-street insulation scheme that would be far more wide-reaching than the £1bn Great British Insulation Scheme or its failed predecessor, the Green Homes Grant.

Ashden’s cities manager Cara Jenkinson said Hunt’s choices will “leave people exposed to cold homes and high bills”.

“A long-term investment in energy efficiency now would reduce our exposure to volatile gas prices, cut the cost of expensive upgrades to our energy grid, and improve the mental and physical health of millions of people facing fuel poverty,” she said.

“Time is running out for this government to take much needed and long called for decisive action that will both bring energy bills down and help realise the UK’s net-zero future,” added Energy Saving Trust’s head of policy Stew Horne.

TV presenter George Clarke, who supported the Lloyds Bank research, said there is one more major opportunity for intervention before the year is out. He said: “If COP28 can see the UK Government working together with banks and lenders on developing better support for households, there’s a chance this could unleash a wave of retrofit activity taking place in the UK, making our homes better for the environment – and warmer and cheaper to run in the long term.”

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