In the wake of increasing energy bills, the Chancellor of the Exchequer, Rishi Sunak, presented the Spring Statement to the House of Commons last week.
The Government reinforced their commitment to increasing the sustainability of homes in the UK by removing the 5% VAT charge from sustainable home improvements, such as solar panels or heat pumps, over the next five years. As a result, households will be paying less for their energy in the long run but still have to fork out for the installation in the first instance. According to the documents that accompanied the announcement, a typical family installing solar panels would save £1,000 because of the lack of VAT.
The Spring Statement was given two weeks after an independent assessment by the Climate Change Committee (CCC) said the government’s ambitious plans to reduce emissions from heating and buildings are “not yet comprehensive or complete and significant delivery risks remain.” The report, available to view here, sets out five key priorities, which are as follows:
- to fill policy gaps on home energy efficiency and funding;
- to build on initial proposals for skills, information, finance and governance;
- to coordinate wider proposals with devolved administrations and local plans;
- to address the relative costs of electricity and gas; and
- to move forward with the planned consultations and policy papers over the next year.
In April last year, the UK Government enshrined into law its target to slash emissions by 78% by 2035. This was the world’s most ambitious climate change target and would bring the UK more than three-quarters of the way to net zero by 2050.
The CCC reported that there are no clear policy plans on how to deliver this, as of yet, and there are significant funding gaps associated with this policy. The committee outlines that it is unclear how the Government plans to deliver this target.
The policy gaps outlined in the report largely affect energy efficiency in owner-occupied homes and social housing. The report reveals that the public funding allocated to improve the fabric efficiency of social homes is insufficient.
Aims previously set out by the Government include reducing public sector building emissions by 75% from 2017 to 2037, however, the funding for public sector buildings decarbonisation up to 2025 only covers around a third of what is needed.
The Committee stated that plans for future proofing the UK’s building stock must “integrate the need to adapt to a changing climate.” They argue that whilst there have been steps in the right direction regarding flooding, but current policy on overheating only covers new builds.
The delivery risks outlined in the CCC’s report reflects the fact that many policies are still in development. They argue that there is further progress needed on developing the policies and ensuring that they are coordinated with policies within the devolved administrations and local plans.
Skills shortages also pose a threat to delivery, the CCC has confirmed. They argue that Government action is needed to support the market in scaling up training and reskilling. They also state that Local Authorities play a part in effective enforcement, such as improving data sharing and “more effective local energy planning and heat network zoning.”
The CCC outlined a lack of pace and clarity from the Government due to their announcements of consultations, but failure to initiate them. Consultations on heat network zoning, energy efficiency regulations for the private rented sector and the heat pump market mechanism have concluded but are yet to be acted upon.
The Climate Change Committee concluded that, despite ambitious and high-level intentions for energy efficient homes, the specific details of policies and funding are missing, particularly in the medium to long term.
Whilst the Government’s VAT cut on sustainable measures for homes, such as solar panels and heat pumps, will be welcome to some, it is likely that the majority of the UK will have other worries. With the energy price cap being lifted, and the cost of living ever increasing, many families across the country will be unable to afford the initial cost of installing sustainable measures on their homes. Should the Government be doing more to cut the cost of purchasing and installing sustainable measures, to allow those affected by the energy crisis to reap the rewards of lower energy bills in the long run?