The government should look beyond a windfall tax to see the merit of insulation
Labour leader Keir Starmer taunted the prime minister at the dispatch box last week, gloating that a windfall tax – the flagship proposal from the opposition to cut down energy bills – was now “inevitable”.
Such confidence from Starmer is not unearned, as it has been fuelled by a litany of u-turns from Boris Johnson’s government since he took office, from the country’s entire pandemic response to the legal status of buy-one-get-one-free offers for sugar-filled confectionary.
There are now suggestions of a growing rift in Downing Street over the viability of a one-off levy on energy giants such as BP and Shell, which are swimming in record profits powered by soaring oil and gas prices, to ease the cost-of-living crisis facing millions of households.
Johnson is under increasing pressure to act, with the price cap spiking 54 per cent to nearly £2,000 per year last month, and food and petrol prices also skyrocketing with inflation – peaking at a 40-year high of nine per cent.
However, rather than offering more and more temporary relief to consumers, the government should consider meaningful measures that could permanently drive down prices, such as transforming the UK’s ageing, crumbling and heat-escaping housing stock into homes fit for the 21st century.
Earlier this month, EDF Energy revealed 58 per cent of the country’s households only meet the insulation standards from 1976 or earlier.
Its data outlines that installing loft insulation could save £250 per year from people’s energy bills, and that the average semi-detached homeowner could shave £285 a year off their energy bill by upgrading cavity-wall insulation and a further £390 a year by updating solid-wall insulation to prevent heat escaping.
Separately, the Building Back Britain Commission, which consists of chief executives from some of the UK’s biggest housing groups, argued that £200 per year could be saved just from improving a home from an energy performance certificate (EPC) rating of D to C.
Meanwhile, less than half of household energy meters are currently defined as smart or advanced according to government statistics.
Insulation will also be key for enhancing the efficiency of heat pumps as the country transitions from boilers to greener energy sources, according to Peter Smith, chief executive of social housing provider Sureserve.
Until properties across the country are properly insulated “it will be difficult to significantly improve the energy efficiency of our housing stock”, he says.
On top of a strategy of improving insulation, there needs to be a shift from traditional gas boilers to renewable sources of energy like air source heat pumps.
Alongside political willpower, there is also a need for clear funding plans, but it’s worth noting the government pledged £9.2bn for energy efficiency measures across schools, homes and hospitals in its 2019 election manifesto for the current Parliament.
The Building Back Britain Commission has calculated that the government could spend £2.3bn per year to make 2.3 million of England’s poorest homes more efficient in a “retrofit revolution”.
Regardless of the merits or faults of a windfall tax, there are meaningful options for the government when it comes to setting an agenda and offering solutions to consumers.
All it would take is for them to honour their manifesto pledges.