Why politicians are ducking responsibility for bringing down energy bills
This post first appeared on BusinessGreen.
The current ‘green crap’ debate is a dispiriting failure of political leadership on energy. Not because it’s wrong to focus on reducing the burden of high energy bills on consumers, but because the solution being proposed: cutting environmental and social levies, will offer only a small bill reduction, while diverting attention from where it should be focused: on the UK’s shameful failure to implement a national energy efficiency programme.
Green levies are a smokescreen for high energy costs
Political leaders have pinned the blame for high energy bills firmly onto the Big 6 who have, in turn, tried to deflect attention onto the so-called green levies. This is a smokescreen. The reality is that high wholesale energy costs are the principal cause of high energy bills, to the tune of £610, ie roughly half of the average dual fuel bill. And neither government nor energy companies are in a position to control prices in the wholesale energy markets.
As a group of over 90 charities and businesses said in a letter to the chancellor last week, improving the energy efficiency of the UK’s homes – which are among the worst in Europe – is the only effective way to reduce energy bills. Yet most householders have done nothing to improve their home’s energy efficiency, encouraged instead by politicians and the media to believe that they are powerless victims of energy company profiteering. Recent polling by social enterprise Behaviour Change illustrates that, while energy is the household cost that most concerns people, only a minority understand that making energy efficiency improvements to their homes would enable them to bring down bills.
This move doesn’t protect consumers from rising world energy prices
It is ironic that the green levy most at threat in the autumn statement, the Energy Company Obligation (ECO), is the only government funding programme designed to significantly improve home energy efficiency. Only introduced at the start of this year, it is far less ambitious than previous government schemes, in terms of the number of properties it will improve. Cutting it – and extending the length of the programme without also increasing its targets is a cut – will lead to, at best, very limited bill reductions while increasing the vulnerability of UK householders to inexorably rising world energy prices. This would be a triumph for political expediency over leadership.
ECO is complex, prescriptive and expensive to deliver. But a new report by Green Alliance highlights that a number of straightforward reforms would eliminate a fair chunk of the cost while protecting the number of households it benefits. This would include removing some of the unnecessary bureaucracy around identifying and verifying eligible householders; and it would do away with the requirement for energy saving projections to be based on time consuming and unpredictable individual property surveys. The balance between subsidising expensive measures and helping the fuel poor could also be revised. Streamlining ECO in this way would enable much more to be done with the money.
Politicians should make home energy efficiency a national priority
But we cannot and should not rely on ECO to pay for all of the work necessary to retrofit the nation’s homes for energy efficiency. Many householders are in a position to pay for their own home improvements, and ways must be found to encourage many more of them to do so. Action on this scale won’t happen without leadership from politicians. First and foremost, party leaders need to commit publicly to energy efficiency as a national priority. Negative messages and political infighting reinforce consumer inertia and undermine industry confidence. Positive mood music will be vital to build action on the ground.
Warm words must also be accompanied by meaningful policies to deliver increased levels of retrofit. This includes smart regulation requiring energy efficiency improvements as part of home renovation projects. It means more stringent requirements for private landlords, preventing them profiting from inefficient properties and benefiting the many tenants stuck with high energy bills they can’t influence. These sticks should be supported with the carrot of lower stamp duty for properties with a good energy rating, applied retrospectively if new homeowners have made energy efficiency improvements within their first year of ownership. If this seems unpalatable to the Treasury, work by the UK Green Building Council has shown how it could be done at no net cost to the public purse.
It will also benefit local economies and reduce health costs
More can, and should, be done to support local delivery of retrofit programmes. Prioritising retrofit in Local Enterprise Partnership (LEP) growth and investment programmes would benefit both householders and local economies. There are already examples of how this could work; the Greater Birmingham and Solihull LEP is proposing to spend nearly £10 million of EU money on improvements to its building stock, prioritising hard to treat homes.
Forging stronger links with local Health and Wellbeing Board programmes to prevent excess winter deaths would access still greater financial resources in ways that benefit the most vulnerable households. The potential savings are considerable. A pioneering local retrofit partnership funded by the Oldham NHS Clinical Commissioning Group, Oldham Council and a local housing association aims to save the NHS £250,000 in one year by reducing the burden of fuel poverty on public health services.
These are pragmatic proposals that could be implemented quickly and require very little, if any, additional public expenditure. A meaningful national energy efficiency policy programme is the only effective way to protect consumers from rising energy bills. One thing is sure, scaling back ECO will only protect politicians, not energy users.