Investing in insulation would have paid off now, minister admits

A minister has admitted that the huge support payments the government is providing to help households keep on top of their energy bills could have been spent more efficiently if it had not previously cut insulation budgets.

During a House of Lords debate on Tuesday (12 July) on legislation to introduce the next phase of the ECO (Energy Company Obligation) scheme, Liberal Democrat peer Lord Teverson slammed George Osborne’s post-2015 general election cuts to energy efficiency support.

He said the UK would be in a “better position than we are now” if the then chancellor of the exchequer had not “massacred various energy efficiency schemes”.

The £37 billion of cost-of-living support, already announced by the government, is a “stand still” measure that will not tackle the underlying problems of fuel poverty, the Lib Dem peer said: “If only we were managing to put that money into these sorts of schemes, those fuel poverty numbers would start to come down rather than inevitably skyrocketing, as they will.”

Lord Teverson added that the support offered via the ECO programme, which is due to help 350,000 households over the next four years, is “only a pinprick—a drop in the ocean” compared to the number of fuel poor homes that need to be upgraded.

Responding on behalf of the government, junior energy minister Lord Callanan said he “entirely accepted” the Lib Dem peer’s criticism.

“If we had spent some of this money on insulation schemes in previous years, that might have been a more efficient use of it, “ he acknowledged, adding that he will raise these points with the Treasury.

Lord Callanan also said the high level of energy prices expected this winter will mean that households benefiting from ECO4 upgrades are initially expected to save an average of £600 on their annual energy bills. This compares to an anticipated average saving of £290 over the scheme’s lifetime, he added.

The minister also denied that the delay to ECO4’s introduction, which was due to take place in April, had held back delivery of energy efficiency and low-carbon heating measures through the programme.

He said that since the official end date for the ECO3 at the end of March, nearly 33,000 measures have been installed.

The latest extension of ECO will see funding though the scheme increase from £640 million to £1 billion per year with a greater focus on support for low-income and vulnerable households in the least energy efficient homes.