During this election, energy bills and security remain high in voters’ minds. The UK still has some of the leakiest homes in Europe, meaning millions of Brits are spending their hard earned cash on heating that is - quite literally - going out of the window. And so CEN has put forward a series of ambitious and pragmatic policies that we hope the next government will adopt to decarbonise our homes and cut our energy bills.
Although energy costs are coming down, British households are still paying a record chunk of their income on their energy bills which is still cause for significant financial concern. While the steps the government took in September 2022 were necessary to shield households from sky high energy prices, as responsible conservatives we know that we cannot repeatedly burden future generations with additional taxes. We must go even further to boost our energy security and wean ourselves off the global fossil fuel market which is subject to despots like Putin.
In the long term, this means we must move to produce more clean, cheap, and reliable domestic energy, whether that’s solar or wind. But in the short term, we can – and should – improve household energy efficiency. Research suggests that households in an average property with an Energy Performance Certificate (EPC) rating of D paid £235 more than band C properties, showing the potential savings from improving energy efficiency.
Yet, given the pressures on government finances and taxpayers, it is both unrealistic and undesirable for the government to stump up all of the cost. Simultaneously, it would be wrong to force these changes on homeowners; they deserve the right to decide what works best for them. Instead, the government should look at which mechanisms would encourage both owner-occupied homes and landlords to make sure we all have lower bills.
Introducing voluntary tax incentives such as creating a stamp duty rebate for the homes that are retrofitted within two years of purchase, creating an employee benefit scheme for home energy efficiency improvements, and allowing landlords to deduct the cost of energy efficiency improvements from their tax liability are all such measures. And to make sure these tax cuts are targeted effectively as well as informing households about their retrofit options, the system of EPCs should be reformed to measure energy efficiency as opposed to cost.
This way, homeowners and landlords have a financial incentive to insulate their homes — something that thus far has not been well covered by existing grant schemes. And by creating incentives through the tax system go with the grain of consumer behaviour and involve significantly less administration than complex government schemes.
We live in an increasingly volatile world, where international markets — like the global gas market – are likely to continue to be highly volatile too. Providing homeowners with incentives to insulate is a critical step that the next government should take to shield families from future price hikes and allow them to plan for the future.
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