Our evidence
The unprecedented rise in gas prices has delivered a major shock to the UK energy system, putting sustained pressure on household and business energy bills and highlighting the UK’s over-reliance on fossil fuels.
Despite lowering since the height of the crisis, energy bills are still at record high levels, with no sign of this changing over the next decade. Whilst the previous Government’s energy support package was crucial to support households and businesses deal with skyrocketing bills, a consistent lack of forward-looking, demand reduction policies failed to additionally shield households from the rise in energy prices.
The following areas must be addressed to ensure we lower people’s energy bills and make the UK more resilient to future crises.
Improving the energy efficiency of UK homes and businesses
Improving the energy efficiency of the UK housing stock and businesses is a key part of permanently lowering energy bills as it reduces our gas demand and therefore lowers our dependence on volatile international fossil fuel markets.
Research by Citizens Advice found that upgrading 13 million inefficient homes to EPC C could save consumers £24 billion on energy bills, whilst reducing CO2 emission by 33 million tonnes.
The new government’s forthcoming Warm Homes Plan is intended to upgrade 5 million homes by 2030. This ambition is welcome but the scale of delivery in a short period of time raises challenges.
The Warm Homes Plan will need to build on and improve current support to deliver energy efficiency at increased scale, ensure nationwide coverage and instil confidence in householders that they will be supported.
Prior to 2013, energy efficiency schemes were effective in reducing gas demand, accounting for a ~30% reduction between 2005 and 2013). However, since key schemes were withdrawn in 2013, attempts to improve energy efficiency at scale in England have been significantly less effective.
Except for the long running, fuel poverty focused Energy Company Obligation (ECO), energy efficiency schemes have also been short-term in nature undermining household and industry confidence. Had support for energy efficiency measures remained, an estimated 10 million more homes would have been insulated between 2013-23, resulting in £4.5 billion in energy bill savings.
There has also been insufficient long-term support for small and medium-sized enterprises (SMEs), who make up 99.9% of UK businesses, to reduce their energy bills.
Support has not been universal across the UK, with the Northern Ireland Executive providing only limited means tested financial support for low-income households to decarbonise heating. In contrast, financial support offered by the Scottish and Welsh Governments, where significantly more progress has been made, has gone beyond that offered by the UK Government, details of which are laid out below.
A national expert advice service for England
Decarbonising the UK’s housing stock to insulate us against future crises can only be successful if it’s happening in every part of the country. Whilst the energy crisis increased homeowners’ awareness of the benefits of energy efficiency, upgrading homes can be a complex process.
While national expert advice services exist in Wales and Scotland and Northern Ireland is exploring establishing a “one stop shop”, equivalent support is lacking in England, where advice provision is patchy and dependant on the existence of local support services.
England needs a national expert energy advice service which delivers consistent outcomes across the country, giving people clear, action-focused advice, tailored to their circumstances, on the most effective way to upgrade their homes (please refer to our advice service briefing uploaded).
From our experience delivering Home Energy Scotland on behalf of the Scottish Government, we know that tailored advice is a key driver of the high uptake of energy efficiency measures and low carbon technologies (LCT) in Scotland when compared to the rest of the UK. Each year, the network helps more than 130,000 customers; in 2021-22, 47% of people who used the service, installed at least one energy efficiency, low carbon heat or renewable energy improvement after receiving advice, with 38% more planning to do so within 12 months.
The advice is delivered online, by phone and in person, helping to overcome the behavioural and financial barriers. SMEs also need support to take action to reduce their energy demand and costs. Our experience delivering Business Energy Scotland on behalf of the Scottish Government underlines the vital role impartial advice plays.
We know that advice is a low cost, high impact measure which is proven to work; as a key piece of infrastructure, it can help more efficiently deliver government schemes and increase private sector delivery.
In response to the energy crisis, other countries around the world introduced policies that aimed to cut both costs and carbon emissions, including offering households tailored and impartial advice.
For example, France’s large-scale, wrap-around retrofit scheme offers comprehensive support and financial assistance programme for homeowners. In 2022 alone, 670,000 homes were renovated, including 156,000 heat pump installations. The provision of personalised expert advice ensures that households install the right measures for them. Our report for the Climate Change Committee (CCC) further outlines these policies.
Access to green finance
For many households and businesses, the upfront cost of energy efficiency improvements and LCT remains the main barrier to uptake. Through our experience delivering the Home Energy Scotland Grant and Loan Scheme, we have seen how effective access to green finance, alongside expert advice, can be in reducing upfront costs and accelerating action.
Furthermore, the current policy landscape creates a gap in support for those who are ineligible for fuel poverty schemes but are unable to afford upfront costs of upgrading their homes. For example, 81% of mid to low-income households living in the least energy efficient homes are not eligible for ECO.
Our report for the CCC detailed the French Government’s retrofit scheme, which provides financial support for whole-house retrofits on a tiered basis from low to high income, instead of a binary income threshold. This ensures fuel poor and low-income households can access support, as well as guaranteeing the additional market value of those on higher incomes who can install LCT.
Breaking the link with fossil fuels for heating
The new UK Government has a Clean Power target to decarbonise electricity supply by 2030. With the energy crisis rooted in the UK’s overreliance on fossil fuels, it’s critical that we rapidly transition to low carbon heating.
Heat pumps are one of the key technologies which increase our energy security by moving households from volatile fossil fuel markets and onto rapidly decarbonising electricity. For every heat pump installed, the UK can save around £1,100 in wholesale gas costs and, if all homes with gas boilers switched to a heat pump, wholesale gas cost savings would be equivalent to around 1.2% of GDP.
Heat pumps have been a key tool used by other countries (e.g. the US, Germany and the Netherlands) in response to the energy crisis[1] to swiftly cut ties with international gas markets and insulate households from unpredictable global gas markets.
It is vital that heat pumps and other low carbon heating options are affordable for all homes in the UK by reducing upfront and running costs. Key changes such as the rebalancing of levies and improving green finance support (e.g. a zero-interest loan alongside the BUS grant for the remaining upfront cost) will accelerate adoption. Having a national expert advice service in England in place would help people navigate low carbon heating options, normalise them as low-risk choices for their homes and give people the confidence to install them.