Government needs to cut consumer energy bills through energy efficiency

12 March 2016

The Energy and Climate Change Committee concludes in their report that the Government must do more to reduce consumer gas and electricity bills by improving the energy efficiency of new and existing homes - including reinstating the zero carbon homes policy scrapped following the election.

Energy efficiency is a win-win

Angus MacNeil MP, Chair of the Energy and Climate Change Committee:  

"Investing in warmer and more energy efficient homes is a 'win win'. For consumers it will mean lower energy bills and warmer homes that are more comfortable to live in. And as a country we can increase our energy security, cut the UK’s contribution to climate change and reduce costs by not unnecessarily generating more energy than we need.

We need to ensure all new houses are super insulated and fit for the future by reintroducing a zero carbon homes policy, especially as many building companies are prepared to deliver it, but it is the improvements we make to Britain’s existing housing stock that will make the most difference. Because many of our homes were built before the Second World War, Britain has some of the most inefficient and heat-leaking housing in the world.

Extra incentives need to be considered, as the Government's previous pay-as-you-save efficiency scheme – the Green Deal – failed to entice enough people to insulate their homes. Stamp duty and council tax discounts could encourage more households to make energy efficiency improvements. The Government must push ahead with driving demand for energy efficiency but the impact of introducing these sorts of incentives must first be properly assessed."

Zero carbon homes

The energy efficiency supply chain has been affected by inconsistent and unpredictable policy signals, the report warns, as schemes have been chopped and changed. In the last year the Government has announced an end to the Green Deal and reneged on a long-standing commitment to require all new homes to be zero carbon from 2016. The zero carbon homes policy would have saved future homeowners money on their energy bills. It should either be reinstated or the Government should set out a similar policy that will ensure that new homes generate no net carbon emissions and are inexpensive to heat and light. 

Angus MacNeil MP commented: 

"Sudden policy changes in this area, like other areas of energy policy, have created uncertainty in the market. It is crucial that the Government establishes a stable long-term framework for energy efficiency."

Tackling fuel poverty

The Committee has serious concerns regarding the Department’s proposed approach to tackling fuel poverty through energy suppliers. The inquiry heard that the Government's decision to use the new supplier obligation to do so may be misguided and that we are the only country in Europe to take this approach.

Commercial energy suppliers may not be best placed to reach those households who need it most, and a scheme which places costs on the very households it is designed to help is inherently regressive. The report calls on Government to re-evaluate the best approach to tackle fuel poverty. Given the huge number of homes yet to benefit from energy efficiency measures, the MPs also say that the reduced ambition of the new supplier obligation is a major disappointment. 

A long-term framework

The Department of Energy and Climate Change (DECC) must also reinvigorate the 'able-to-pay' market, the MPs argue.  There is now no support to help households who wish to install energy efficiency measures but cannot meet the costs upfront. DECC should also communicate the wider benefits of energy efficiency, understand the needs of different households, and encourage a locally-led approach. 

The report calls on the Government to consider making energy efficiency a national infrastructure priority. This approach would put energy efficiency much more at the forefront of energy policy making and create a sustainable and durable long-term policy view that goes beyond parliamentary cycles.  

Angus MacNeil MP concluded: 

"There is no 'silver bullet' to improving home energy efficiency. A combination of regulations, subsidy programmes, obligations, targeted grants and long term structural incentives must all be used in a concerted effort. A one-size fits all policy cannot bring about the change that is needed.

If the Government takes action now it can help to insulate consumers from future energy price rises, while preventing the requirement for wide-scale retrofits and costly energy efficiency programmes in the future.

Ministers should see taking action on energy efficiency as a cross-departmental priority. Action is not a cost today, but an important investment for the future.  The cheapest form of energy is the energy that we don’t need to use."

Further information

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