The government should reduce its dependence on the Energy Company Obligation (ECO) scheme to deliver energy-saving measures by putting more direct funding into efforts to upgrade England’s homes, a committee of MPs has recommended.
The Business, Energy and Industrial Strategy Committee’s latest report, published today (12 July), says central funding is required to achieve the “seven-fold” increase in energy efficiency installations needed for the UK to meet its new statutory net zero emissions target.
The committee concludes the government is “off-track” to meet its targets, with a “profound disparity” between the public money invested in residential energy efficiency schemes per capita in England and the devolved nations.
The report says the lack of funding for ECO, its focus on low cost rather than need and the requirement for top-up funds from recipients, make it “unsuitable” as the government’s only fuel poverty scheme.
And the committee says it is “unacceptable” for the government to continue to use ECO to “mask its lack of commitment towards energy efficiency”.
The report recommends the government supplement the ECO scheme by funding local authority schemes and creating a new safety net for fuel-poor households.
It also calls for the Winter Fuel Payment to be refocused on those most in need, with any savings invested in energy efficiency programmes.
And in the run up to this autumn’s comprehensive spending review (CSR), the report urges the Department for Business, Energy and Industrial Strategy (BEIS), to set out with “greater precision” how much public investment will be required to meet its Energy Performance Certificate (EPC) Band C targets.
The MPs express concern that BEIS will fail to secure investment for energy efficiency at the forthcoming CSR if it does not have a “sufficient grasp” of what its EPC targets mean in practice, nor the required costs to meet them.
The committee urges the government to explain how it plans to meet its goal of upgrading all homes to EPC band C by 2035 by publishing its energy efficiency action plan “without further delay”.
This plan should “drastically” increase the £5 million allocated to the Green Home Finance Innovation Fund in order to provide the “proper resources” to test a wide package of incentives, including a stamp duty enticement for those households “able to pay” for improvements.
The MPs also recommend that the current cost cap, above which private landlords are exempted from having to carry out energy efficiency works on their properties, should be raised from its existing level of £3,500 to £5,000.
Rachel Reeves MP, chair of the BEIS Committee, said: “Improving energy efficiency is by far the cheapest way of cutting our emissions and must be a key plank of any credible strategy to deliver net zero by 2050.
“More energy efficient buildings are not only crucial for tackling climate change but are vital for lowering customers’ energy bills and lifting people out of fuel poverty. Despite a consensus on what needs to be done, ministers have continued to sit on their hands and failed to deliver the policies needed to boost energy efficiency.
“The government needs to commit to investing in schemes to ensure all buildings are brought up to the highest energy efficiency standards.”
Responding to the report, Energy UK’s chief executive Lawrence Slade said: “With the net-zero target in place, there is an even greater imperative to get serious about making all our homes and businesses energy efficient and doing so would be a clear win-win – significantly cutting both emissions and reducing consumers’ bills.
“However, as the Committee on Climate Change recognised, we know installations of energy efficiency measures are actually falling and currently the only source of funding for these in England is the Energy Company Obligation, which in itself is nowhere near enough and unsuitable for an expanded programme of measures.
“Therefore government should follow the example of Scotland and Wales and provide centrally funded support for households most in need.
“We must also radically improve the efficiency standards of new homes and we would like to see government take a much stronger line on building regulations and standards, including to make it a requirement that homes being sold or rented meet EPC Band C.”