If there’s one takeaway from the recent local elections, it’s that the cost of living and state of public services will define the results of the next general election. This was highlighted by the Conservatives’ widespread losses and reflected in recent polling. According to YouGov 57 per cent of the public say the economy is the most important issue facing the country, followed by health at 46 per cent.
Fortunately, there’s been no fall in concern about environmental issues. Research by Ipsos and the Centre for Climate Change and Social Transformation (CAST) at the end of 2022 found that most people continue to support most net zero policies, despite the cost of living crisis. The Green Party winning its first ever majority on a council corroborates this.
But the cost of living crisis is affecting public support for two important green policies: phasing out coal and gas boilers and subsidies for electric vehicles. This is likely largely due to people wanting to avoid large purchases in the current economic climate. Support for net zero is also weaker among those most affected by the cost of living crisis, suggesting that they may believe they are being asked to shoulder disproportionate financial burdens.
The independent review of the government’s net zero strategy, Mission zero, described it as “the growth opportunity of the 21st century”. But, with the country entering the second year of the cost of living squeeze, tighter than the 2008 financial crisis, the government needs to ensure everyone can access savings from low carbon technologies.
A lot people find it hard to manage but get no support
The large section of society known as ‘low to middle income households’, defined by the Resolution Foundation as working age adults living largely independently of the state (ie they derive less than a fifth of their income from benefits) but whose incomes are below the national average, make up just over a third of the adult population. In a stable economy, these households – also characterised as the ‘squeezed middle’ or ‘just about managing’ – usually have enough to get by, but little savings or disposable income. However, an average of 31 per cent of their income is spent on housing, utility bills and transport, so they depend on low interest rates and low inflation to keep costs manageable. Many of them are suffering from falling wages and tax bracket freezes but can’t qualify for much of the state support given to the poorest.
Better home insulation and electric vehicles could help them cope more easily. For example, upgrading homes to Energy Performance Certificate (EPC) C could save the average household £306 on their energy bills every year (based on December 2022 energy prices). Switching to an electric vehicle could save another £552.
But, despite their benefits, green technologies are still too expensive for many. The average air source heat pump installation cost ranges from £7,000 to £13,000 (ground source heat pumps cost up to £24,000) and the average new electric vehicle costs over a third more to buy than a petrol or diesel model. Although heat pumps are more efficient than most gas boilers, higher electricity prices make them more costly to run and put people off.
The government supports some households with these costs through subsidies like the Boiler Upgrade Scheme and the plug-in car grant. But a high proportion (44 per cent) of low to middle income households have savings and financial assets of less than £5,000, meaning they just can’t contemplate making the initial purchase, even with these schemes. They also usually don’t qualify for the help given to the poorest households, such as through the Energy Company Obligation (ECO). While the new ECO+ scheme broadens coverage, the £1 billion pledged won’t be nearly enough to cover all the retrofits needed.
As well as financial barriers, low to middle income households face other obstacles. Lack of electric vehicle charging points is one, especially when their homes have no off-street parking to enable home charging.
Voters need to believe policy is fair to them
The government could help to get rid of some of these barriers. For instance, the UK Infrastructure Bank could offer homeowners targeted loans for energy efficiency retrofits. And the date by which all private rented properties must be EPC C rated or higher could be brought forward from 2028.
Electricity prices are pegged to the price of gas, keeping them high. Breaking that connection would allow consumers finally to benefit from the cheaper cost of low carbon electricity, making heat pumps more appealing and electric vehicles even cheaper to run. Tax credits could be used as incentives to buy second hand EVs, as well as grants to buy used EVs or discounted leasing schemes, such as in France.
All this could have significant political implications. Over half of the heads of low to middle income households are in the social groups most likely to be swing voters, in permanent battleground seats such as Warwick and Leamington and the Vale of Clwyd. They are motivated more by a sense of fairness than strong party political allegiances.
As the cost of living crisis shows no sign of abating, it’s important to factor in how these voters will respond to the messages and ideas around the net zero transition. If they are not supported to make the changes required, they are likely to see climate policies as unfair, leading to backlash or at least changes being too slow. But tackling both the cost of living and the climate crisis together fairly with beneficial green technologies would bring emissions down faster, save people money and reap rewards at the ballot box.