Consensus is building across the political spectrum around the need for a permanent solution to the problem of increasingly unaffordable energy bills in the UK. While some have suggested that green policies are to blame for the increasing costs, the main drivers have in fact been rising energy imports and price pressure due to increasing global energy demand. Indeed, the Coalition Government’s cut to the Energy Company Obligation to support energy efficiency has hindered rather than helped manage these impacts. Energy prices are still relatively low in the UK compared to many European countries, but the UK has some of the most inefficient housing stock in Europe. As such, it simply takes more energy to keep our homes warm compared to elsewhere in Europe and this drives up bills.
A new report out today by the Fabian Society and E3G outlines a number of steps the next government should take to address this challenge and get a grip on energy bills once and for all.
1. A new story on energy efficiency
Economic (‘saving money’) and environmental (‘going green’) arguments have failed to drive sufficient progress. We need a new politics of energy efficiency, focussed on putting people in control of their place in the world: their homes, their local environment and their family finances. This would directly address the sense of powerlessness people feel about their energy bills. It’s both a deeply conservative narrative, in that it talks of a spirit of duty and care to provide for our families and protect our neighbourhoods, and deeply progressive, as it invests in all of our futures.
2. Build on public attitudes
This report draws together existing public attitudes research to show how a new energy efficiency narrative can go with the grain of householders’ concerns. The main findings suggest:
- One big national story is better than lots of separate initiatives
- The environment matters as part of the big national story but won’t on its own drive individual action
- Trust must be built into the architecture of the scheme
- A roadmap with milestones is key to galvanising action
- Individual households see energy efficiency differently depending on their social and financial circumstances
3. Make the case for energy efficiency as a national infrastructure priority
In its inaugural National Infrastructure Plan, published in 2010, the government did set energy efficiency has one of its priorities, but then seemed promptly to forget all about it. Yet the scale of investment needed is comparable to the level of investment needed for other major infrastructure priorities and the value case is high. In value for money assessments, an ambitious household energy efficiency programme outperforms road or rail investment and as such energy efficiency could be a considered an effective driver of growth.
4. Raise current levels of ambition to create a sense of national mission
The task of getting buy-in to deliver a major energy efficiency programme should not be underestimated and the next government must show clear leadership to get the public on board. It will require a clear framework consisting of a well-coordinated, sustained and coherent public information campaign backed by substantial public investment and underpinned by clear regulatory standards.
5. Press the reset button on the Green Deal
The Green Deal is not currently fit for purpose and is in need of major reform. It is perceived as too complex by consumers and the focus now needs to be on making the policy fit for mass consumption:
- Shift from a measures-based approach to a holistic ‘whole house’ approach
- Streamline the incentives schemes into single package offerings for consumers.
- Community group and local authority-led schemes are increasingly the logical choice to lead on area-based delivery.
6. Support low income households with grants, incentivise the better off
Low income households should receive 100 per cent grants. For high income households, the focus of subsidies should be on persuading householders to act through providing information on the financial benefits of retrofitting and by offering a one-off cash incentive for action. For social housing landlords, aggregated pay-as-you-save schemes should be made available. Access to low cost loans and regulation should be the main driver of investment in the private rented sector.
7. Introduce new regulation of building energy performance to drive long-term demand and supply chain investment
Even if improved, financial incentives and encouragement alone are unlikely to be enough to deliver the scale of retrofit required to refurbish the nation’s building stock to a sufficient level, that addressed the UK’s fuel poverty and CO2 emission reduction challenges. Strong, enforceable minimum standards on efficiency in homes, to be phased in over a 10 year period, would underpin demand and generate a clear, consistent message about the direction and required radical nature of change. This approach will have the benefit of delivering certainty of outcome, reducing cost to government and driving innovation within the supply chain.
A suggested roadmap for the introduction of minimum efficiency standards to apply on the sale or rental of domestic properties would be:
- from 2018-2019 no home may be rented out unless it meets EPC E or above;
- from 2020 no home may be rented out unless it meets EPC D or above;
- from 2020 no home may be sold unless it meets EPC E or above; and
- from 2025 no home may be sold unless it meets EPC C or above.
In a testing fiscal climate, the next government is going to need all the levers and allies at its disposal to deliver an ambitious energy efficiency agenda. Businesses are often crying out for the certainty that government action can bring. Using smart regulation in this way can driver consumer demand and create opportunities for the supply chain and business investment to scale up, driving further demand and growth in the real economy.