Briefings, Reports

Future UK energy price support

Sustainable solutions for economic stability and energy security

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Colourful terraced houses in Dorset, UK.
Colourful terraced houses in Dorset, UK. Photo by Belinda Fewings on Unsplash

On 17th October 2022, the UK government announced that it would U-turn on its pledge to freeze all household energy prices for two years. The Energy Price Guarantee previously meant that an average household might have expected to pay £2,500 per annum in over the next two years. With the Guarantee now set to end in April 2023, average household energy bills could rise to £3,500– £4,300 next year. The government has pledged to develop a targeted approach and “incentivise energy efficiency”, in a bid to reduce public expenditure propping up household bills.

Devising a system to ensure adequate targeted financial support for low-income and vulnerable households should be the immediate priority. Investing in home retrofits to reduce household exposure to volatile gas prices is also key, and a matter of fiscal responsibility.

Addressing the cold and leaky nature of UK housing, as well as transitioning away from dependency on fossil gas for home heating will be essential for long-term energy security and economic stability. Fossil fuel prices are likely to remain high and volatile until 2030, and unless domestic structural drivers are addressed, the government could be left spending tens of billions on emergency financial support packages each year – or leaving millions of households in serious financial distress.

However, there is no magic button to ramp up the retrofit installation supply chain. Industry has been burnt by boom-bust decision-making and is sceptical of sugar-rush policies that inject billions of pounds one minute and withdraw it the next – leading to job losses and economic insecurity. What industry needs now is a commitment to long-term investment and a strong and predictable regulatory framework to provide clear investment signals to boost skills and supply chain development. A comprehensive suite of solutions is needed, as set out by the Energy Efficiency Infrastructure Group and other industry bodies.

To reap these benefits, we encourage the government to confirm energy efficiency as a national priority and mobilise government resources – setting a target for energy demand reduction, and forming a Delivery Taskforce with industry to support the following priorities:

  1. Public awareness raising and tailored advice, with a nationwide energy-saving campaign; and providing local, trusted advice on home retrofits.
  2. Support skills and supply chain resilience, taking a ‘whole supply chain’ approach and providing long-term certainty for industry to achieve scale. Boost skills and incentives; and raise awareness of training opportunities.
  3. Turn up the dial on existing government-backed retrofit programmes by providing additional financial firepower in line with 2019 Manifesto pledges and unblocking bottlenecks holding back delivery.
  4. New schemes and incentives to build a mass market such as concessional loans through the UK Infrastructure Bank, an Energy Saving Stamp Duty incentive and boosting green homes finance. New support should be additional to existing spending commitments.
  5. Underpin short-term measures with long-term certainty – confirming the timelines set in the Heat and Buildings Strategy to phase out fossil fuel heating in off-grid (2026) and on-grid homes (2035), as well as tightening Minimum Energy Efficiency Standards in the private rented sector and introducing standards for owner occupiers and social housing.

Read the briefing in full here.

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