Taxpayers ‘face £18bn bill’ for failure to insulate UK homes, new analysis finds

Home insulation fell of a cliff in 2013 after government support was cut

The decision to cut government support for home insulation means taxpayers face a £18bn bill, new analysis has found.

In 2012, the UK installed 2.3 million home insulation measures but those figures plummeted by 90 per cent in 2013 after reports circulated that then-Prime Minister David Cameron had ordered aides to ‘cut the green crap’ in reference to green levies on energy bills.

Had the support continued from 2013 to now, the Energy and Climate Intelligence Unit estimates that one million homes could have been upgraded each year for a decade, amounting to almost 40 per cent of the UK’s housing stock.

These homes would have used 15-20 per cent less gas, and the total gas demand from the overall housing stock would have been almost 10 per cent lower today. The average household gas bill would be £350–400 lower from this October when the price freeze kicks in, it adds.

This, according to ECIU analysis, could have saved taxpayers around £9bn in the first year of Liz Truss’s energy price guarantee scheme, which ensures that a typical household pays no more than £2,500 a year on their energy bill, for the next two years, from 1 October 2022.

The policy, announced earlier this month, is part of the government’s effort to support people with their energy bills, which have soared with the wholesale price of gas. If prices stay high, as some experts have predicted, it could cost taxpayers up to £18bn over the two-year freeze.

ECIU, which supports informed debate on energy and climate change issues in the UK, said meaningful insulation improvements – such as loft and cavity wall insulation – can be made for £1,000 per house. Loft insulation is lacking in 5 million homes and cavity insulation in 8 million homes, according to the charity.

These measures, plus draught exclusion, can be enough to shift the Energy Performance Certificate (EPC) rating from the average band D to the Government’s target band C. EPC ratings tell you how energy efficient your home is, with ratings ranging from A (very efficient) to G (inefficient.)

“Cutting the green levies on bills during the last cost of living crisis has come back to bite the Treasury in the coffers,” said Dr Simon Cran-McGreehin, head of analysis at the Energy and Climate Intelligence Unit.

“If it had instead shifted insulation programmes onto the Government balance sheet it would not only have made its money back, but saved the taxpayer up to £8bn as well as trimming hundreds of pounds off the energy bills of millions of homes.”

The government runs the Energy Company Obligation, which supports energy efficiency upgrades for households with low incomes or those living in fuel poverty. This is helping an extra 110,000 low-income households a year, according to ECIU.

Other smaller schemes include the Green Homes Grant Local Authority Delivery Scheme that also targets low-income households, the Social Housing Decarbonisation Fund for social housing, and Public Sector Decarbonisation Scheme for public buildings.

The Independent has contacted the government for comment.