‘Sticking plaster’ solutions leaving customers exposed to bill hikes

Millions of households are set to waste £1.5 billion of energy in the next financial year thanks to a decision in 2013 to slash support for home energy efficiency measures, new research has stated.

Next month Ofgem is expected to announce an increase of more than £700 to the default tariff cap amid soaring wholesale costs.

The Energy and Climate Intelligence Unit (ECIU) said the impact of surging gas prices on bills could have been “roughly halved” had energy efficiency improvements kept pace over the past decade and David Cameron’s alleged ‘cut the green crap’ mantra ignored.

ECIU said as a result of this the current government’s ambitions to upgrade UK homes’ average energy efficiency from band D to band C were being undermined. It found that successive government cuts to support for insulation have reduced uptake from 2.3 million installations in 2012 to just 10% of that on average from 2013 to today.

It added that if current insultation rates kept pace with those seen in 2012, an extra 250,000 homes could be upgraded from January to the end of March, saving those households £170 when the increased price cap comes into force in April.

Furthermore, had the UK’s installation industry been given continued support, an extra one million homes could have received two major insulation upgrades each year. This forms the core part of a package of energy performance upgrades that can cut gas usage by 20% for the average home and move it from band D to reach the band C target.

ECIU calculated that the previous rates of upgrades could have helped 8 million homes by the end of 2020, saving a running total of £3 billion on gas.

Other organisations have reached similar conclusions following separate analysis. Last week Carbon Brief calculated that low insulation rates alone will account for costs of £900 million under the next price cap, as well as £2.5 billion costs as a result of wider policy decisions.

Responding to the findings Simon Cran-McGreehin, head of analysis at ECIU, said: “The legacy of David Cameron’s supposed ‘cut the green crap’ mantra is a short-term political decision leading to longer-term higher bills for millions.

“With talk of cuts to the ECO initiative, history could be repeating itself – sticking plaster solutions that don’t help Britons address poorly insulated homes will leave them vulnerable to future gas crises, to Russia turning off the taps and forcing up the price of gas.”

Meanwhile Labour MP and chair of the Business Committee, Darren Jones, said: “The rate of insulating homes has crashed since 2012 through cut backs on helping households reduce energy waste.

“The true cost of this short-termist thinking is now coming home to roost for millions of families struggling to pay their bills – bills that are now £170 higher than they would otherwise have been.

“This moment must be a wake-up call for the government to not repeat the mistakes of past and invest properly in helping people improve their homes. Gas prices are inherently volatile, so the best solution is to reduce this country’s reliance on gas.”

Responding to the findings, a government spokesperson said: “We are accelerating our progress in upgrading the energy efficiency of England’s homes, investing over £6.6 billion to decarbonise homes and buildings and bringing in higher minimum performance standards to ensure all homes meet EPC Band C by 2035.

“We are also insulating millions of consumers from high gas prices through the energy price cap.”