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Scrapping public sector energy efficiency policy could cost NHS £500m+

London. United Kingdom 25.11.2019. Ambulance at the Victoria Tra
London ambulance at the Victoria Train Station. Photo by forma82 on Adobe Photo Stock.

UK Government is considering diverting money from the Public Sector Decarbonisation Scheme (PSDS) to fund an expanded energy company obligation scheme to support household energy efficiency.  

The NHS stands to lose out on £519m if the programme is cut to make way for the new policy.

Expanding the energy company obligation to benefit more people is a good idea – industry figures show the new scheme could reach 700,000 homes with low-cost measures every year – but taking money from other energy efficiency schemes to fund is unnecessary.

Because of rising prices, the NHS’ energy costs are projected to more than double to £1.2bn this year. The PSDS is a lifeline to tackle these costs and free up more money for patient care. 

Story on UK Government scrapping public sector energy efficiency policy

The Government rightly wants to help more households improve the energy efficiency of their home. But cancelling the next phase of the Public Sector Decarbonisation Scheme (PSDS), which helps public sector institutions like hospitals and schools deal with their energy costs, would be counterproductive. The Government can easily afford both.  

Rising energy costs are currently crippling the public sector as well as many households across the country. Hospitals’ energy are bills predicted to more than double this year to £1.2bn. The independent climate think tank E3G has found that scrapping the PSDS would mean that the NHS could stand to miss out on £519m that it would have otherwise received to help tackle the rising costs of keeping hospitals running.  

New support for mid to low-income households to support energy saving measures is essential. Of English households with below average incomes living in the least energy efficient homes, 81% are currently ineligible for national government support. When the energy price cap rises again in October, over 15 million households in inefficient homes will pay £916 more per year for adequate heating than those living in homes rated Energy Performance Certificate C or better. Expanding the ECO scheme is a strong proposal that to tackle this ‘inefficiency penalty’  

But E3G’s analysis highlights that it would be counterproductive to move funds around to fund the new scheme and thereby load more costs onto the NHS. The Government pledged £9.2bn of investment in energy efficiency at the last general election, of which £1.4bn has still not been allocated to any scheme. The Government could use this money for the new ECO programme instead and avoid forcing an unnecessary choice between hospitals and homes. 

Quote on UK Government scrapping public sector energy efficiency policy

Colm Britchfield, Researcher at E3G said: 

“There is no need for the Government to choose between investing in hospitals or homes. It can and should do both, by keeping the public sector fund and expanding support to help households upgrade the energy efficiency of their homes and save money on their energy bills.” 

Available for comment 

Colm Britchfield is available for commentary – please contact them directly: 

m: +44 (0) 7542 865 564, 


Notes to Editors 

  1. E3G is an independent climate change think tank with a global outlook. We work on the frontier of the climate landscape, tackling the barriers and advancing the solutions to a safe climate. Our goal is to translate climate politics, economics and policies into action. About – E3G 
  2. For further enquiries email or phone +44 (0)7783 787 863 
  3. According to Government statistical releases, the Public Sector Decarbonisation Fund has allocated £1,627,914,155 over three rounds. In the most recent round (Phase 3A), which distributed £553,271,773, NHS bodies received 59.7% of the total (£329,562,913). Phase 3B is due to launch for applications in September. The total value of Phase 3 (3A and 3B) is set to be £1.425bn, meaning Phase 3B should allocate the remaining £871,728,227. If the NHS receives the same proportion in Phase 3B as it received in Phase 3A, it will receive £519,225,288.  
  4. The NHS was a significant recipient of Phases 1 and 2 of the PSDS as well. NHS institutions have received 37.58% of all funds allocated to date since 2020. If this proportion held instead of the more recent phase, the NHS would stand to receive £377,657,105 of Phase 3B. All data available at:  


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