A much needed sticking plaster - but still no systemic solutions for the fuel poor living in Europe's leakiest homes.
The government has responded to pressure to do more about the energy crisis and to Ofgem's statement on Tuesday 24 May,Wednesday that the price cap will arise to "in the region of £2,800", up from the £1,971 it is currently at. The regulator is warning that a huge 12 million, that is 4 in 10 households could fall into fuel poverty when the cap rises, almost double the 6.5 million already in that situation. This amounts to 4 in 10 households.
The Chancellor has put in place a 'temporary profits levy' - a windfall tax - on the oil and gas companies expected to raise £5bn over the first year. If they invest in extracting more oil and gas, however they will be 90% tax relief, which effectively amounts to a fossil fuel subsidy, (They are considering taxing windfall profits of electricity generators. If your organisation is making a windfall but has plans to use them constructively let us know so that we can write to the chancellor to exempt community energy.) The measures this will partly pay for include:
- Everyone will now get £400 off their energy bills. This replaces the £200 loan that was to be repaid from bills over the following 5 years. The £400 is a grant and will not have to be repaid. Residents in council tax bands A-D will get £150 rebate promised earlier. The Warm Homes Discount is being extended to 3 million households.
- Additionally those 8 million households on means tested benefits will receive a one off cost of living payment of £650, distributed by the Department of Work and Pensions in July and in the autumn and via HMRC in the case of tax credits.
- The 8 million pensioner households will receive an extra cost of living payment of £300 and household of disabled people will receive an additional one off payment of £150 in September.
- Benefits will rise by the equivalent of the consumer prices index rise in September and the triple lock will apply on state pensions.
Together these should apply to 1/3 of all households, 3/4 of those vulnerable households, and cost £37bn or1.5% GDP. You can find HMT briefings with full details here.
We welcome this as a much needed sticking plaster. But it fails completely to address a key cause, which is Europe's leakiest homes.
The C.H.E.E.S.E project cites a case where £100 invested in shallow retrofit or 'draught-busting' saved 1/3 of a household's energy bill, permanently, potentially hundreds of pounds every year. Where is the country-wide plan to support the community roll-out of such schemes? Community and mutual aid schemes gave life-saving aid in the pandemic. We need the government to enable communities to do the same in this crisis. £100 invested, year after year, in paying the bills of a leaky house, effectively heats the street. £100 invested once in keeping the heat in the house can save £100 year after year. We are calling on the chancellor and BEIS (see proposals below) to make that investment now, in time for this winter, to save lives and money for vulnerable customers. It will also increase long-term energy security, save carbon soon, and pave the way for public engagement in deeper retrofit down the line.
The government has previously pledged £6 billion for energy efficiency through the Public Sector Decarbonisation Scheme and the Home Upgrades Grant Scheme by which householders can claim a £5,000 contribution to energy savings measures. The Chancellor scrapped VAT on energy saving measures in the Spring Statement but this does not help those who cannot afford measures in the first place or do not know how to access them.
Community Energy England proposals
CEE, working with its Energy Efficiency Expert Working Group has made a proposal to BEIS for £14.2m for a pilot programme to upscale and upskill community energy delivery of local energy efficiency and fuel poverty advice and measures across all regions in the UK to 100,000 households this winter. Community energy is particularly effective at this compared with national telephone or web-based provision. We will be in discussion with the BEIS Energy Advice team about increasing long-term funding for community energy work in this area.
In parallel a proposal was submitted to BEIS by Kate Gilmartin and John Taylor of the NW and SE Net Zero Hubs, for £25m initially followed by £250m, to capitalise a revolving fund to pay for retrofit for unable to pay households.
Talks are ongoing. But meanwhile CEE is looking for funding to enable a first cohort of 30 people to train as energy advisors this summer and autumn, alongside 2 trainers who will be able to increase training capacity within the sector. If your organisation would be interested in these trainings please register your interest at bit.ly/e-advice